APACHE PERMIAN. John Christmann. November 14, 2012

Transcription

1 APACHE PERMIAN John Christmann November 14, 2012

2 FORWARD-LOOKING STATEMENTS Certain statements in this presentation contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K available on our website, and in our other public filings and press releases. These forward-looking statements are based on Apache Corporation s (Apache) current expectations, estimates and projections about the company, its industry, its management s beliefs and certain assumptions made by management. No assurance can be given that such expectations, estimates or projections will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this presentation, including, Apache s ability to meet its production targets, successfully manage its capital expenditures and to complete, test and produce the wells and prospects identified in this presentation; to successfully plan, secure necessary government approvals, finance, build and operate the necessary infrastructure and LNG plants; and to achieve its production and budget expectations on its projects. Whenever possible, these forward-looking statements are identified by words such as expects, believes, anticipates, projects, and similar phrases. Because such statements involve risks and uncertainties, Apache s actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Unless legally required, we assume no duty to update these statements as of any future date. However, you should review carefully reports and documents that Apache files periodically with the Securities and Exchange Commission. Cautionary Note to Investors: The United States Securities and Exchange Commission ("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 presentation, such as resource, resource potential, potential reserves, unbooked resources, 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 December 31, 2011, and amendments thereto, available from Apache at or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling SEC-0330 or from the SEC's website at

3 3 APACHE: PROFITABLE LONG-TERM GROWTH MBOE/D, Net E

4 DELIVERING, BUILDING STRENGTH Production per Share (BOE/share) Reserves per Share (BOE/share) Cash Flow per Share ($/share) Adjusted Earnings per Share ($/share) The above measures are non-gaap measures. They are presented because management believes the information is useful for investors as it is used internally and widely accepted by those following the oil and gas industry. Reconciliation of Adjusted Earnings Per Share and Cash Flow are available on the company s website at

5 APACHE NOW: REALIZING UPSIDE Grow through the drill bit Leverage expanded U.S. onshore position 67K locations, 9.2 BN BOE Multi-year outlook: 6-9% production growth per share, with upside Living within our means Global exploration: Company-moving play portfolio Away from the herd Continue to build our value upside 5

6 3 RD QUARTER 2012 RESULTS 771 MBOE/D net (51% liquids) Impacted by 25,000 BOE/d of deferrals $2.4 billion cash flow* $861 million adjusted earnings* Permian and Central regions delivering double-digit YoY production growth *Cash from operations before changes in operating assets and liabilities and adjusted earnings are non-gaap measures. For supplemental and non-gaap information and a reconciliation of these measures, please go to 6

7 DIVERSIFIED PRODUCTION Q PRODUCTION: 771 MBOE/D Australia Argentina North Sea Egypt 8% 6% 9% 20% 16% Canada 41% U.S. Central Permian 14% 9% 12% 4% GOM Shelf 2% Gulf Coast - Onshore GOM Deepwater 7

8 APACHE PERMIAN A MAJOR GROWTH BUSINESS UP 18% YOY New Mexico Midland Texas 112 MBOE/D net (73% Liquids) +18% growth YOY 3.7 million acres (1.8 million net) +200% last 2 years Increasingly Drilling More Hz 201 total Q3 wells 26 horizontals 20 mi APA acreage Region Office (Open July 2010) District Office (5) Field Office (27) Gas Plant (2) 8 Production = Q3 2012

9 ACCELERATING ACTIVITY 5X INVESTMENT, 6X OPERATED RIG COUNT IN 2 YEARS Apache Permian Evolution: E Employees Investment $0.4B $1.2B $2.1B Cash Flow $1.1B $1.7B $1.8B Rigs Horizontal Wells Drilled Wells Drilled planned activity as of June Cash Flow is 2012 Outlook. Employee count for 2012 is an end of year estimate. Wells drilled is inclusive of horizontals.

10 PERMIAN OIL: DELIVERING ASSET UPSIDE Net MBOE/D (Bar) APA Permian Region Established Mariner Closing BP Closing Operated Rigs (Line)

11 SOLID COMPETITIVE POSITION Apache the top operator in the Permian Basin Total Active Rig Count Source: Bentek September 2012

12 CURRENT PLAY INVENTORY* Known Locations to Drill 34,518 Net MMBOE 3,785 % of MMBOE PUD 6.2% CBP + N/NW Shelf Locations 9,798 Net MMBOE 691 New Mexico Central Basin Platform + N/NW Shelf Midland Basin Texas Midland Vertical Locations 17,816 Net MMBOE 1,714 Yeso Locations 1,789 Net MMBOE 108 Yeso Delaware Basin Shale Cline Shale Cline Shale Locations 2,321 Net MMBOE 642 Delaware Basin Locations 1,823 Net MMBOE 284 Shale Locations 971 Net MMBOE mi 12 * As of May 2012

13 MIDLAND BASIN MULTI-PLAY GROWTH ENGINE APA acreage Midland Basin Cline Shale Leonard Leonard Lime Leonard Upper Spraberry Midland Vertical Target Cline Shale Target Shale Target Shale Lower Spraberry Dean Upper Middle Lower 21 mi APA controls 1.1MM acres across Midland Basin Main area of APA acreage expansion Proven impact: Deadwood Area 7.5x to 23 MBOE/D Decades of growth ahead across plays, from vertical Wolfberry to Cline and shales Pennsylvanian Miss. Devonian Silurian Ordovician Upper Cline Shale Lower Cline Shale Strawn Atoka Barnett Woodford Devonian Fusselman Sylvan Ellenburger 13

14 MIDLAND BASIN VERTICAL MULTI-STACKED VERTICAL PAYS Hartley 38-9 (/Strawn) 30-day IP BOE/D 408 EUR MBOE 641 Squire 9 #5 (Fusselman) 30-day IP BOE/D 451 EUR MBOE 380 Craig 16 #5 (Devonian/U ) 30-day IP BOE/D 196 EUR MBOE 230 Acres (000) 1,100 (625 net) Net MBOE/D (Sept) New Wells 396 Thomas #3 (Wolfberry) 30-day IP BOE/D 143 EUR MBOE 219 Riley 37 #8 (Fusselman) 30-day IP BOE/D 208 EUR MBOE 170 Drilling Inventory 17,816 Locations 1,714 MMBOE net Windham 120-9SW (Wolfberry) 30-day IP BOE/D 306 EUR MBOE 211 SAU/Dean 45-4A (Spraberry/Dean) 30-day IP BOE/D 105 EUR MBOE 223 APA acreage APA highlight wells SRH #1328 (Wolfberry) 30-day IP BOE/D 66 EUR MBOE mi Most active APA drilling area in 2012 More than 3,000 feet of productive section Spraberry through Fusselman pay zones Predictable drilling results Upsides being pursued: Improving completions, efficient drilling Currently drilling on 40-acre spacing: 20-acre spacing tested successfully Stacked horizontals in Cline, Atoka, and shale plays 14

15 MIDLAND BASIN DEADWOOD: IMPACTIVE GROWTH Oil (Gross MBBL/D) rd Party Operated Apache Operated Gas (Gross MMCF/D) mi APA acreage APA wells 1H 2012 Aggressive growth: production up 7.5x to 23MBOE/D in 23 months of APA as operator Wolf-Wood and Fusselman play 5.9K identified future vertical locations Upside in horizontal targets in the, Lower Cline and Atoka/Barnett shales 15

16 MIDLAND BASIN VERTICAL DRILLING INVENTORY ECONOMICS 16 Midland Stacked Vertical Well* D+C Cost $MM 2.0 EUR MBOE 144 % Liquids 82% ROR 27% WI / NRI 89% / 70% Current Inventory Spraberry Vertical Well D+C Cost $MM 1.4 EUR MBOE 127 % Liquids 68% ROR 30% 13,341 (5% PUD) WI / NRI 82% / 67% Month BOE/D 70 Current Inventory 4,475 (13% PUD) Month ROR based on forward curve as of 25 May ROR after royalties, before income tax. See Appendix for Economic Assumptions * Includes:, Wolfberry, Wolfwood, Strawn and Fusselman BOE/D

17 CLINE SHALE HORIZONTAL EXPLOITATION Apache Acreage in Play Fairway Acres (000) 650 (520 net) Net MBOE/D (Sept) New Wells 6 Drilling Inventory 2,321 Locations 642 MMBOE net Deadwood area Running 2 horizontal rigs in 2H wells to be drilled in 2012 (3 drilled YTD) APA acreage 20 mi Apache has one of the largest Cline Shale petrophysical databases in the industry Drilling inventory identified across multiple Apache fields Augments Apache s vertical drilling inventory and activity in the Midland Basin 17

18 18 CLINE SHALE STACKED SHALE HORIZONTAL TARGETS Leonard Pennsylvanian Miss. Devonian Silurian Ordovician Midland Basin Leonard Lime Leonard Upper Spraberry Lower Spraberry Dean Upper Middle Lower (Deadwood) Upper Cline Shale Lower Cline Shale Strawn Atoka Barnett Woodford Devonian Fusselman Sylvan Ellenburger 1,700 ft Apache Acreage Type Log Gamma Ray Organic Indicator Deadwood Shale L. Cline Shale Strawn Atoka Proven Horizontal Targets Testing Horizontal Targets Reservoir Parameters (Lower Cline) Prolific, Pennsylvanian age organic shales Average thickness 350 gross Net to gross shale pay: 40% Average porosity: 7.0% Average TOC: 3.0% OOIP = 23.4 MMBOE/section API gravity: degrees 1400 BTU associated gas Additional shale targets tested and currently being appraised across our acreage: Deadwood shale (Lower ) Average thickness 228 gross feet OOIP = 11.7 MMBOE/section Books 11-13h lateral Peak IP 230 BOPD, 0.2MMCFD Atoka/Barnett shales Average thickness 247 gross feet OOIP = 18.9 MMBOE/section Anderson 26 # lateral Peak IP 385 BOPD, 0.6 MMCFD

19 CLINE SHALE LEADING GLASSCOCK CO. CLINE PLAYER Squire 9-2H 30-day IP BOE/D 306 EUR MBOE 397 Mack 8-2H 30-day IP BOE/D 329 EUR MBOE 397 ED Books 11-3H 30-day IP BOE/D 90 EUR MBOE mi APA acreage APA Cline horizontal wells Additional 2012 locations PhilMac 1HR 30-day IP BOE/D 353 EUR MBOE 440 Peer activity Barracuda 45-2H 30-day IP BOE/D 623 EUR MBOE 600 Bell 18-1H 30-day IP BOE/D 469 EUR MBOE 440 Glasscock Co. Well Spud Date Peak IP (BOE/D) 30d Avg (BOE/D) EUR (MBOE) Lateral (ft.) Apache has completed 6 horizontal Lower Cline shale wells over the last year. Still on learning curve. Increasing EURs with longer laterals, additional frac stages, changing frac design, and optimized landing points. Three active rigs in 2012 Frac Stages E D Books 11-3H May , Mack 8-2H Jun , Squire 9-2H Aug , Bell 18-1H May , PhilMac 1HR Sep , Barracuda 45 #2H June , Bell 18-1H is a non-operated well (50% WI).

20 CLINE SHALE DRILLING INVENTORY ECONOMICS Cline Shale Well* D+C Cost $MM 7.6 EUR MBOE 423 % Liquids 87% ROR 28% WI / NRI 85% / 65% Current Inventory 2,321 (3% PUD) BOE/D Month 20 * Based on 6,800 ft lateral, 15 frac stages

21 WOLFCAMP SHALE PROVEN HORIZONTAL OPPORTUNITY Apache Acreage in Play Fairway Acres (000) 450 (345 net) Shale Net MBOE/D (Sept) New Wells 25 Drilling Inventory 971 Locations 347 MMBOE net APA acreage 20 mi Industry proven resource, with world class OOIP Play identified in many Apache operated fields and leases throughout southern Midland Basin 17 wells spud year-to-date: 11 producing, remainder drilling/completing Robust well results 3 rigs running in Irion county on a small portion of APA acreage Current production is 4,587 BOE/D from the area 21

22 WOLFCAMP SHALE 1400 FEET OF STACKED PAY SECTIONS 22 Leonard Pennsylvanian Miss. Devonian Silurian Ordovician Midland Basin Leonard Lime Leonard Upper Spraberry Lower Spraberry Dean Upper Middle Lower Upper Cline Shale Lower Cline Shale Strawn Atoka Barnett Woodford Devonian Fusselman Sylvan Ellenburger 1,400 ft Apache Acreage Type Log Gamma Ray Organic Indicator Dean Upper Middle Lower Primary Horizontal Targets Potential Additional Zones Reservoir Parameters (Upper & Middle ) Prolific, Permian age organic shales Average thickness: gross (Upper and Middle ) Net to gross shale pay: 60% Average porosity: 6.0% Average TOC: 5.4% OOIP = 106 MMBOE/Section API gravity: degrees 1470 BTU associated gas NGL yield: 150 BBL/MMCF Multiple horizontal landing zones in Upper and Middle

23 BARNHART WOLFCAMP/CLINE ACTIVITY & RESOURCE POTENTIAL Clinch Acreage Basin(West) Bennie Acreage Apach Acreage Scott-Sugg #1H Sugg 2829 #2H Sugg-Scott 1208E #1 (East)Shelf Dean Upper Middle Lower L Clastics Cline Shale Ellenburger Penn? 23 Flow Units Drlg,Testing Flow Units Producing Microseismic Frac Height

24 WOLFCAMP SHALE ROBUST ACTIVITY & UPPER WOLFCAMP RESULTS Clinch Lease: 5 Producers, 1 Fracking Daily Prod: 1,633 BO MMCFG + 3,781 BWPD Bennie Lease: 4 Producers,1 Drilling Daily Prod: 860 BO MMCFG BWPD APA acreage Scott Sugg Lease: 2 Producers,2 Drilling 1 Fracking Daily Prod: 1,053 BO MMCFG BWPD Well Status Peak IP (BOE/D) 30d Avg (BOE/D) EUR (MBOE ) Lateral (ft.) Frac Stages Scott Sugg #1H Prod , Bennie #1H Prod , Clinch #1H Prod , Bennie #2H Prod , Clinch #2H Prod , Bennie #6H Prod , Clinch #5H Prod , Clinch #6H Prod , Clinch #4H Prod , Bennie #5H Prod days 9, Sugg #7H Prod days 7, Clinch #3H Frack g U Wolf 8, Sugg 2829 M-1H Frack g M Wolf 7, Producing Wells ( since 3/2012): MBO MMCFG = 413 MBOE 11/7/12: 3,546 BO + 6,243 MCFG = 4,587 BOE/D Bennie 4342M-9H Drlg M Wolf Sugg 2829 C-7H Drlg Cline *Middle and Cline Shales currently being Tested or Drilled 24

25 WOLFCAMP SHALE DRILLING INVENTORY ECONOMICS Shale Well* D+C Cost $MM 7.7 EUR MBOE 598 % Liquids 91% ROR 44% WI / NRI 79% / 60% Current Inventory 971 (0% PUD) BOE/D Month 25 * Based on 7,200 ft lateral, 23 frac stages

26 CENTRAL BASIN PLATFORM PRODUCTION HEART OF THE BASIN, WITH UPSIDE mi APA acreage Northwest Shelf North Shelf Central Basin Platform Includes North Shelf + Northwest Shelf Apache s base waterflood and CO2 business: Strong cash flow generation Numerous incremental downspacing opportunities Industry leader in horizontal redevelopment of large fields Multiple horizontal targets Acres (000) NET MBOE/D (Sept) New Wells 146 Drilling Inventory Stratigraphy Target Formations Permian Guadalupe Leonard Pennsylvanian Miss. Devonian Silurian Ordovician 1,700 (780 net) 9,798 Locations 691 MMBOE net Tansil Yates Seven Rivers Queen Grayburg Judkins San Andres McNight Glorieta Upper Clearfork Tubb Lower Clearfork Wichita Albany Lime Cisco Canyon Strawn Atoka Mississippian Woodford Devonian Silurian Montoya Simpson Ellenburger

27 CENTRAL BASIN PLATFORM HORIZONTAL REDEVELOPMENT RESULTS Slaughter 3Bar Slaughter (San Andres) 3Bar SU (Wichita Albany) TBSU #101H 30-day IP BOE/D 919 EUR MBOE 602 TXL N. McElroy Continued success drilling horizontals in multiple formations across waterfloods and primary producing fields CS Dean A-264H 30-day IP BOE/D 156 EUR MBOE 294 TXL North/South (Clearfork) TBSU #105H 30-day IP BOE/D 979 EUR MBOE 600 N. McElroy (Grayburg) Targeting by-passed oil zones; adding new reserves TXLSU #5118H 30-day IP BOE/D 406 EUR MBOE 259 NMU #3231BH 30-day IP BOE/D 299 EUR MBOE 231 Lower well costs than unconventional plays; benefit from infrastructure 47 operated waterflood fields Fields successfully tested horizontally: 2011: 6 fields Univ Lands 42 #1HR 30-day IP BOE/D 813 EUR MBOE : 8 additional fields APA acreage APA wells 27

28 CENTRAL BASIN PLATFORM DRILLING INVENTORY ECONOMICS 28 Vertical Well D+C Cost $MM 1.5 EUR MBOE 83 % Liquids 80% ROR 36% WI / NRI 79% / 66% Current Inventory Horizontal Well D+C Cost $MM 4.2 EUR MBOE 196 % Liquids 90% ROR 37% WI / NRI 88% / 74% Current Inventory 8,086 (9% PUD) 1,712 (9% PUD) BOE/D BOE/D Month Month

29 YESO RAMPING UP ACTIVITY Birdie Federal #17 30-day IP BOE/D 121 EUR MBOE 194 Tony Fed #39 30-day IP BOE/D 150 EUR MBOE 218 Eddy Co. Acres (000) Net MBOE/D (Sept) (70 net) Horizontal Program 2012 New Wells 110 Drilling Inventory 1,789 Locations 108 MMBOE net D State #71 30-day IP BOE/D 103 EUR MBOE 91 N B Tween St. #24 30-day IP BOE/D 170 EUR MBOE 156 Lee Federal #62 30-day IP BOE/D 242 EUR MBOE 161 Type Log Horizontal Landing Zones 4,000 Glorieta Paddock 4 mi APA acreage 2012 highlights 4,500 Development on 10-acre spacing Ran 4 drilling rigs (vertical wells) in 3Q 5,000 Blinebry Yeso 4 th rig transitioned to Hz in 4Q to commence our multi-year Cedar Lake Hz drilling program 5,500 Tubb 29

30 YESO DRILLING INVENTORY ECONOMICS Vertical Well D+C Cost $MM 1.7 EUR MBOE 128 % Liquids 82% ROR 59% WI / NRI 50% / 43% Current Inventory Horizontal Well D+C Cost $MM 5.5 1,677 (31% PUD) BOE/D Month BOE/D 400 EUR MBOE % Liquids 84% ROR 56% 200 WI / NRI 53% / 40% 100 Current Inventory 112 (16% PUD) Month 30

31 DELAWARE BASIN EMERGING OPPORTUNITIES Acres (000) 609 (287 net) Net MBOE/D (Sept) 3.3 Avalon/ Bone Spring 2012 New Wells 18 Drilling Inventory 1,823 Locations 284 MMBOE net APA acreage Wolfbone Stratigraphy Target Formations Delaware Mountain Group Bell Canyon Cherry Canyon Bushy Canyon 31 Peer activity 20 mi Emerging Apache opportunity Reservoir studies to identify horizontal potential completed in H Avalon/Bone Spring: 2 horizontal wells to be drilled in 2012 Wolfbone: 1 vertical wells to be drilled in wells to be drilled in other formations Bone Spring Pennsylvanian Bone Spring Lime Avalon Shale 1 st Bone Spring 2 nd Bone Spring 3 rd Bone Spring Cisco Canyon Strawn W O L F B O N E Bone Spring/ Shale Undifferentiated

32 AVALON/BONE SPRING 3500 PAY SECTION WITH MULTIPLE TARGETS Delaware Mountain Group Bone Spring Pennsylvanian Delaware Basin Bell Canyon Cherry Canyon Bushy Canyon Bone Spring Lime Avalon Shale 1 st Bone Spring 2 nd Bone Spring 3 rd Bone Spring Cisco Canyon Strawn 3,500 ft Apache Acreage Type Log Gamma Ray Organic Indicator Avalon Shale 1st Bone Spring 2nd Bone Spring 3rd Bone Spring Shale Reservoir Parameters (Avalon, 1 st +3 rd Bone Spring) Reservoir Prolific, Permian age organic shales/sandstones gross feet with multiple horizontal conventional and unconventional targets API gravity: degrees 1200 BTU associated gas OOIP MMBOE/Sec. Average Thickness Average Porosity Average TOC Net/Gross Pay Avalon Shale ft 13% 4.4% 92% 1st Bone Spring ft 8.4% 3.4% 66% 3rd Bone Spring ft 10% 1.8% 51% Secondary Objectives in 2nd Bone Spring and Shales 32 Primary Horizontal Targets Potential Additional Zones

33 WOLFBONE 2400 VERTICAL SHALE PLAY WITH HORIZONTAL UPSIDE Delaware Mountain Group Bone Spring Delaware Basin Bell Canyon Cherry Canyon Bushy Canyon Bone Spring Lime Avalon Shale 1 st Bone Spring 2 nd Bone Spring 3 rd Bone Spring W O L F B O N E Bone Spring/ Shale Undifferentiated 2,400 ft Apache Acreage Type Log Gamma Ray Organic Indicator Top Bone Spring Reservoir Parameters Prolific, organic-rich Bone Spring (Wolfbone) intervals throughout Delaware Basin acreage position Organic shales with minor carbonate and sand stringers gross Wolfbone interval Net to gross ratios: 60 70% (average) Average porosity: 6% OOIP = 47.5 MMBOE/Section API gravity: degrees Initial GORs: 1,000 to 2,500 scf/stb 1500 BTU associated gas 33 Pennsylvanian Cisco Canyon Strawn Vertical wells to 12,000 feet Frac d with up to 10 stages or more Reservoir characterization studies to identify potential horizontal targets

34 DELAWARE BASIN DRILLING INVENTORY ECONOMICS 34 Vertical Well (Wolfbone) D+C Cost $MM 3.6 EUR MBOE 280 % Liquids 61% ROR 37% WI / NRI 64% / 49% Current Inventory Horizontal Well (Avalon/Bone Spring) D+C Cost $MM 6.6 EUR MBOE 313 % Liquids 74% ROR 30% WI / NRI 88% / 70% Current Inventory 1,419 (2% PUD) 404 (3% PUD) BOE/D Month BOE/D Month

35 13% PRODUCTION CAGR (WITH UPSIDE) LIVING WITHIN CASH FLOW Net MBOE/D Cline Shale Yeso Delaware Basin Shale Midland Basin Vertical Central Basin Platform Production Base E 2013E 2014E 2015E 2016E Average Rigs

36 EXPANDING OPPORTUNITY DRIVERS: SCALE+BREADTH, TECHNICAL WORK, HORIZONTALS All APA locations are specifically identified and technically supported May 2011: >5000 Locations June 2012: 34,518 Locations Opportunity expansion expected: Increased experience across APA s 3.7MM Permian acres More horizontal drilling: already >50% of new production by 2016 More To Come 36