AUSTRALIA ARGENTINA CANADA EGYPT NORTH SEA U.S. CENTRAL U.S. GULF. Bank of America Investor Visit Buenos Aires, Argentina

Transcription

1 AUSTRALIA ARGENTINA CANADA EGYPT NORTH SEA U.S. CENTRAL U.S. GULF Bank of America Investor Visit Buenos Aires, Argentina February 28, 2011

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. Whenever possible, these forwardlooking statements are identified by words such as expects, believes, anticipates 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. 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 U.S. Investors: Effective January 1, 2010, 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 uses certain terms in this presentation, such as "resource potential" and similar terms that the SEC's guidelines strictly prohibit Apache from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in Apache's Form 10 K for the year ended Dec. 31, 2009, available from Apache at 2

3 Outline Apache Argentina Overview Project Highlights Development Exploration Summary 3

4 Apache Argentina Largest US independent in Argentina Gained critical mass in 2006 via 2 transactions assuming $1/MCF 46.7 MBOE/D Net (Q % Oil, 7% NGLs, 71% NatGas) 2010: Drilled 56 wells. 93% success rate Broad portfolio: Neuquen Basin 60% of production Austral Basin 40% of production Cuyo Basin exploration Noroeste Basin new entry 5MM gross acres (4.2MM net) 968 active wells 4

5 Major, Underdeveloped Hydrocarbon Province Major Hydrocarbon Area: Production Last 30 Years US Midcontinent (Oklahoma) 12 BN BOE Argentina 12 BN BOE (100%) Underdeveloped: Wells Spud in 2010 US Midcontinent (Oklahoma) 2.8K Argentina 1.4K (50%) Sources: EIA, BP Statistical Review, Argentina Energy Ministry, IHS. 5

6 The Rocks are Good Neuquen Basin as example: Multiple proven productive formations Material accumulations: multi hundred MMBOE fields Both oil and gas opportunities Stacked pay provides recompletion running room Inventory of formations for development evaluation Horizontals can unlock thinner formations Shales (Vaca Muerta, Los Molles): Unlocking their rich hydrocarbon content is a game changing opportunity Apache has created value for decades in similar basins: US Midcontinent, Egypt... Other Apache basins in Argentina have similar attributes 6

7 Our Natural Gas Opportunity Natural Gas Demand: 4.2BCF/D in 2009 Largest consumer in Latin America Unmet demand: 38% shortage during winter 2010 GDP Growth: 9% (real terms) in 2010: unmet demand growing Gas Production: 6% fall in multi year decline Alternatives to Gas Drilling: Source of Supply Cost: $/MMBTU Bolivia Pipeline Gas $7.60 LNG $ Fuel Oil $12.00 (2010) Diesel $14.00 (2010) Argentina needs large scale domestic gas drilling. Gas Plus contracts at $ /MMBTU enable Apache to grow by meeting that need in a cost effective manner for the country. Source: Platts, IHS, BP Statistical Review, El Cronista Comercial. 7

8 Apache Leads Gas Plus Market Gas Plus Sales Contracts (MMCF/D)* Gas Realization in New Contracts ($/MMBTU) Gas Plus contracts = 32% of region s Q gas production Incremental contracts under discussion = $ /MMBTU * Does not represent average production for the year, as timing of individual project sales start varies. New contracts refers to initial sales volume start year. 8

9 Our Oil Opportunity Grow value by applying proven Apache capabilities to an underdeveloped region: Recompletions Continuous generation of workover opportunities Infill drilling, field redevelopment opportunities Waterflooding Enhanced recovery Horizontal drilling development Grow opportunity set through exploration 9

10 Our Exploration Opportunity 5MM acres in prolific basins not thoroughly explored with latest technology: Limited 3D seismic in large parts of basins Material trend exploration opportunities Testing undeveloped formations Game changing potential for shales and other unconventional resources Steady flow of additional exploration opportunities, including new basin entries Example: Cuyo Basin oil 2BN BBL produced No 3D to date in large on trend acreage Recent success by smaller operators Apache has 1.2MM acres Drilling Q

11 Challenges Main Challenges: Regulatory burden (product prices, labor, other) and uncertainty Cost management Inflation Highly unionized industry Oilfield service availability Apache s Approach: Operator of choice: Proactive relationships with industry partners, governments, labor unions and local communities Strict rate of return focus in capital budgeting, balance our cash flow Work with service companies to create the future supply we need... Apache has a track record of creating value in challenging operating environments Discipline, patience and demonstrated value addition for host country are key 11

12 Our Inventory and Direction We expect Apache Argentina production to grow by over 10% in 2011 Based on initial $330MM capital allocation for 2011 Gas Plus development main driver (3 out of 4 development rigs) Our current inventory of risked opportunities allows us to double our 2010 Argentina production economically by Primary drivers: Gas Plus development of 6 fields already technically approved by authorities Workovers+recompletions on base properties 12 waterflood projects Current risked exploration inventory We expect our Argentina inventory to continue growing: Ongoing generation of inventory on our acreage Further shale and unconventional resource opportunities Steady stream of farm in and licensing opportunities, with benefit of our critical mass and global capability set 12

13 Development Project Highlights Gas Plus Waterflood Horizontal wells 13

14 Development Highlights: Gas Plus Example EFO Field Gas Plus Project Tight gas (Lower Lajas) development Drilling Location Map N 15 new wells, 2 recompletions 10 11YTD Average IPs: 3.7MMCF/D, 184BO/D 27MMCF/D, 500BO/D delivered Lower Lajas - Structural Map m EFO Schematic Cross Section Well Summary Year Well Net Pay IP MMCF/D IP BO/D 2010: wells, 1 Recompl Recompl : 85 Recompl wells, 1 Recompl Completing Completing 91 Drilling 104 Drilling 14

15 Development Highlights: Waterfloods Waterflood Opportunity Only 20 of 77 oil reservoirs in portfolio actively waterflooded 30 fields with waterflood potential identified: OOIP: 750+ MMBO Additional waterflood resource (10% OOIP estimate): 75 MMBO Example: La Sara Field Waterflood 2 8MMBO incremental resource Structure Map Water Injection Model Multi Disciplinary Approach Assisted history matching (Petrel, Eclipse Models) with brute force computing & evolutionary algorithm Development optimization: test 000 s of development scenarios for highest NPV Water injection optimized with streamline modeling 15

16 Development Highlights: Horizontal Wells Horizontal Well Opportunity Limited horizontal drilling in Apache portfolio until reservoirs initially identified with horizontal development potential Early stages of evaluating development options: 2 wells in 2010, 4+ in Example: Borde Colorado Field (Oil) Target: Quebrada del Sapo formation oil K FT Deep, K FT lateral PARO BO/D 2011 Example: Puesto Lopez Field (Oil) Target: Quintuco formation oil 3.2K FT Deep, 2.3K FT lateral IP Estimate BO/D BC-1018h (Schematic) PL-2001 (Petrel Structural Model) BC-1015h (Schematic) 16

17 Exploration Project Highlights Cuyo Basin Neuquen Basin La Calera Deep Shale Gas Austral Basin 17

18 Exploration Highlights: Cuyo Basin Oil Apache Acreage 2D based leads, D Seismic Oil basin: 2 BN BO cumulative production Apache holds 1.2MM acres (100% WI) On trend exploration, first time with 3D Seismic Structural stratigraphic traps, 21 leads (2D based) Offsets recent 3D discoveries (14MMBO) Rich oil prone source rock to evaluate 3D acquisition completed, first drilling Q2, st wireless 3D seismic in South America 20 km 18

19 Exploration Highlights: La Calera Deep Neuquén Closure, Locations Identified Potential locations 300FT closure 1 Mile 1.5 km Large Pre Cuyo volcanics structure: 8.5K acre Pmean closure 410 BCFE (Pmean); 1.1 TCF (P10) Additional shale resource potential (offsets YPF s shale gas discovery) Gas Plus development approved: $6.80/MMBTU First Well: Spud Dec. 2010, TD in Q K FT deep 1st well: $16MM D+C cost Pg = 60% Development scenario: 51 wells (8BCF EUR/well) Pre Cuyo volc 19

20 Exploration Highlights: Neuquen Basin Shale Gas Neuquén Apache: 1.7MM acres in Neuquen Shale Gas Fairway Shale reservoirs: 2 stacked formations: Los Molles, Vaca Muerta Depth 8,000 13,000, thickness Wet to dry gas window Ro , TOC % Neuquen Shale Gas Fairway Apache: 1.7MM acres in the fairway (940K net) Nearly half gained in 2010 via early moves, farm ins as major operator in basin Recent shale play entrants: Exxon, EOG, Total Current resource estimate: Net Apache TCF RGIP (Unrisked) Vertical wells and coring in 2010 First horizontal currently drilling: 13,800 TVD, 3,280 lateral Target: Los Molles Completion: 10 frac stages (May 2011) 20

21 Exploration Highlights: Austral Basin Apache s Austral Basin Exploration Portfolio Proven, prolific basin: 1.9BN BOE cumulative production (25% oil) Apache footprint: 0.8MM acres on Argentina side alone (70% WI) +1.0MM gross/net acres on Chile side Built 745k acre 3D database, lead inventory Focus to date on single formation (Springhill). Potential in multiple other formations TDF concession extensions underway to support multi year exploration program 2/28/

22 Summary 22

23 Summary Opportunity Major, underdeveloped hydrocarbon province Gas short, growing economy. Substitution cost of gas drilling $ /MMBTU $ /MMBTU contracts provide gas growth: Apache leads market (with 63MMCF/D) Recompletions, waterfloods, 3D exploration: oil growth opportunities Shale gas and unconventionals: game changing opportunities Apache well positioned: critical mass, portfolio diversity, deploy global capabilities Inventory and Direction Argentina production to grow by over 10% in 2011 Current inventory allows us to 2x 2010 Argentina production by 2015 economically 23