Apache Corporation Announces First-Quarter 2019 Financial and Operational Results
- Reported first-quarter production of 503,000 barrels of oil equivalent (BOE) per day. Adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 437,000 BOE per day, up 19 percent over first-quarter 2018;
- Achieved U.S. production of 292,000 BOE per day, exceeding guidance by 5,000 BOE per day, and reached record Permian Basin production of 248,000 BOE per day;
- Achieved International reported production of 211,000 BOE per day; adjusted production of 145,000 BOE per day exceeding guidance by 7,000 BOE per day;
- Invested $597 million in upstream capital program and remain on track for $2.4 billion for the year;
- Secured sales agreements for approximately $300 million of noncore assets; progressing additional sales; and
- Reiterating 2019 production guidance of 6 to 10 percent from fourth-quarter 2018 to fourth-quarter 2019 on an unchanged annual upstream capital program of $2.4 billion.
HOUSTON, May 1, 2019 – Apache Corporation (NYSE, Nasdaq: APA) today announced its financial and operational results for the first quarter of 2019.
Apache reported a quarterly loss of $47 million or $0.12 per diluted common share for the first quarter of 2019. These results include a number of items outside of core earnings that are typically excluded by the investment community in their published earnings estimates. When adjusted for items that impact the comparability of results, Apache’s first-quarter earnings were $38 million or $0.10 per share. Net cash provided by operating activities in the quarter was $598 million. Adjusted EBITDAX was $1.1 billion.
“Apache had an excellent first quarter with strong execution, well performance and delivery against our production and capital guidance. We exceeded both our U.S. and international production guidance on a lower than expected capital budget.
“In the Permian Basin, we grew 5 percent quarter over quarter and maintained oil production near fourth-quarter levels, despite placing one of our two completion crews on a frac holiday for the entire first quarter. At Alpine High, where we also had a relatively low number of completions, production was up significantly from the fourth quarter and was in-line with our guidance of 70,000 BOE per day.
“International production grew 6 percent compared to the fourth quarter and benefited from high facilities uptime across our operations, strong early production rates from two new wells in the North Sea, and a continuation of good results from our revamped waterflood program in the Forties Field,” said John J. Christmann IV, Apache's chief executive officer and president.
First-quarter operational summary
Highlights from the company’s three principal areas include:
United States – U.S. production averaged 292,000 BOE per day. The company averaged 16 rigs and drilled and completed 39 gross-operated wells.
First-quarter production in the Permian Basin averaged 248,000 BOE per day, a record for the region, and an increase of 36 percent year over year. The company averaged 14 rigs and drilled and completed 39 gross-operated wells.
- Midland Basin – During the quarter, the company drilled and completed 18 gross-operated wells and maintained production despite significantly fewer wells placed online compared to the previous quarter.
- Delaware Basin – Apache’s activity in the Delaware Basin currently includes operations in Alpine High, Dixieland, and Pecos Bend in Reeves County and the slope play in southeast New Mexico.
At Alpine High, production in the first quarter averaged 70,000 BOE per day, a 165-percent increase over the first quarter of 2018. During the quarter, the company drilled and completed 17 gross-operated wells. The company continues to make significant progress on drilling and completion costs in the play and has delivered a 20 percent and 32 percent reduction, respectively, from 2017 averages for the quarter. Further improvements are expected as Alpine High moves further into development and optimization mode. As previously announced, Apache initiated the deferral of certain natural gas production volumes near the end of the quarter in response to severe Waha Hub gas price weakness. These deferrals had a small impact on first-quarter volumes.
Outside of Alpine High in the Delaware Basin, four new wells were placed online during the quarter.
Egypt – Apache averaged 10 rigs during the quarter and drilled and completed 23 gross-operated wells with an 83-percent success rate. Adjusted production in Egypt, which excludes noncontrolling interest and the impact of tax barrels, averaged 79,000 BOE per day. As a result of recently awarded concessions and the company’s ongoing broadband seismic acquisition program, Apache has added several hundred new leads and prospects in the region.
North Sea – Apache averaged 3 rigs during the quarter and produced 66,000 BOE per day, the highest quarterly production in two years. Strong production levels were the result of a full quarter of production from Garten, a new development well at Callater and strong uptime on producing facilities for the quarter.
Capital and production outlook
Upstream oil and gas investment was $597 million in the first quarter, and the company reiterates its annual capital investment guidance of approximately $2.4 billion for the year.
The company is reiterating its previously stated production guidance of 6 to 10 percent growth from fourth-quarter 2018 to fourth-quarter 2019, including 12 to 16 percent growth in the U.S. and 5 percent growth in Permian oil.
Details on additional financial and operational guidance can be found in the First-Quarter 2019 Financial and Operational Supplement at www.apachecorp.com/financialdata.
“We previously stated Apache’s commitment to returning at least 50 percent of our incremental cash generation from all sources to investors, before increasing our planned activity set. In keeping with this commitment, our 2019 planned capital activity and budget remains unchanged, and we will begin returning incremental cash to investors in the coming months. This is of course in addition to our current regular dividend.
“In summary, 2019 is progressing very well. Overall production was strong in the first quarter, and we are demonstrating excellent capital discipline and cost control. The North Sea and Egypt continue to deliver robust free cash flow with their leverage to premium Brent crude prices and higher natural gas and NGL netbacks. In the Permian, we are poised to deliver attractive oil growth and a substantial cash flow uplift at Alpine High in the second half of the year. We will also be advancing our differential exploration initiatives, most notably in Suriname.
“Our strategy remains the same – we will fund an activity level and investment program capable of delivering long-term returns and sustainable growth while living within cash flow at reasonable oil prices and returning capital to investors,” concluded Christmann.
Apache will host a conference call to discuss its first-quarter 2019 results at 10 a.m. Central time, Thursday, May 2. The conference call will be webcast from Apache's website at www.apachecorp.com and investor.apachecorp.com, and the webcast replay will be archived there as well. A replay of the conference call will be available for seven days following the call. The number for the replay is (855) 859-2056 or (404) 537-3406 for international calls. The conference access code is 2197977. Sign up for email alerts to be reminded of the webcast at http://investor.apachecorp.com/alerts/email-alerts-subscription.
Additional information follows, including reconciliations of adjusted earnings, cash flow from operations before changes in operating assets and liabilities, adjusted EBITDAX, upstream capital investment and net debt (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. Apache’s quarterly supplement is available at www.apachecorp.com/financialdata.
Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com, and on its Media and Investor Center mobile app.
Non-GAAP financial measures
Apache’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, cash flow from operations before changes in operating assets and liabilities, upstream capital investment, adjusted EBITDAX and net debt are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “guidance,” “outlook,” “projects,” “will,” and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations and objectives for Apache’s operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See "Risk Factors" in our 2018 Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) for a discussion of risk factors that affect our business. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.
Cautionary note to investors
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. Apache may use certain terms in this release, such as "resources," "potential resources," "resource potential," "estimated net reserves," "recoverable reserves," and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov.
Investor: (281) 302-2286 Gary Clark
Media: (713) 296-7276 Phil West
Click here for the first-quarter 2019 materials.