aPACHE 2012 earnings - Apache Corporation
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
TABLE OF CONTENTS Overview ............................................................................................................................................................................... 2 NORTH AMERICA .............................................................................................................................................................. 4 Permian......................................................................................................................................................................... 4 Central ......................................................................................................................................................................... 7 Gulf of Mexico Shelf.................................................................................................................................................... 10 Gulf of Mexico Deepwater .......................................................................................................................................... 10 Gulf Coast Onshore .................................................................................................................................................... 11 Canada ........................................................................................................................................................................ 12 INTERNATIONAL ............................................................................................................................................................. 14 Egypt ........................................................................................................................................................................... 14 Australia ...................................................................................................................................................................... 15 North Sea .................................................................................................................................................................... 16 Argentina .................................................................................................................................................................... 17
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
NOTICE TO INVESTORS This operations supplement contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and, whenever possible, are identified by use of the words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, our assumptions about the market prices of oil, natural gas, NGLs and other products or services, our commodity hedging arrangements, the supply and demand for oil, natural gas, NGLs and other products or services, production and reserve levels, drilling risks, economic and competitive conditions, the availability of capital resources, capital expenditure and other contractual obligations, and our ability to complete, test and produce the wells identified in this supplement. Because such statements involve risks and uncertainties, Apache’s actual results and performance may differ materially from the results expressed or implied by the forward-looking statements contained in this Supplement. Other important factors that could cause actual results to differ materially from expected results are described in “Risk Factors” in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q and amendments thereto, available on our Web site and in our other public filings and press releases. There is no assurance that Apache's expectations will be realized, and readers are cautioned not to place undue reliance on forward looking statements, which speak only as of the date hereof. Unless otherwise required by law, we assume no duty to update these statements as of any future date. 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 operational update supplement, such as “resources,” “potential resources,” “resource potential,” “reserves potential,” 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 www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 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. Certain information provided in this supplement includes financial measurements that are not required by, or presented in accordance with, generally accepted accounting principles (GAAP), including these measures: adjusted earnings, pre-tax margin, and cash from operations. These non-GAAP measures should not be considered as alternatives to GAAP measures, such as net income or cash from operating activities, and may be calculated differently from, and therefore may not be comparable to, similarly titled measures used at other companies. Reconciliation to the most directly comparable GAAP financial measure has been provided. None of the information contained in this document has been audited by any independent auditor. This supplemental document is prepared as a convenience for securities analysts and investors and may be useful as a reference tool. Apache intends to continue to publish this supplement in conjunction with our quarterly earnings release, but may elect to modify the format or discontinue publication at any time, without notice to securities analysts or investors.
1
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Overview Record fourth quarter production in Permian and Central Regions drives overall production growth
Worldwide net daily production of oil, natural gas, and natural gas liquids averaged 800,005 barrels of oil equivalent per day (Boe/d) in the fourth quarter of 2012 (53 percent liquids), a 4 percent increase over third quarter 2012. The Permian and Central Regions grew 7 percent quarter over quarter, with average combined net production of 197 thousand barrels of oil equivalent per day (Mboe/d) constituting approximately 25 percent of worldwide production in the fourth quarter. Apache drilled or participated in the drilling of 316 wells in the fourth quarter with a 94 percent drilling success rate. During 2012, Apache replaced 131 percent of production through exploration and development activities and 156 percent including acquisitions (excluding revisions predominately related to lower natural gas prices).
Apache has a substantial producing asset base as well as large undeveloped acreage positions and interests in large, long-term projects. Collectively, these provide a platform for organic production growth through sustainable, lower-risk drilling, project development and exposure to higher-risk, higher-reward exploration.
As of December 31, 2012, Apache had total gross acreage exceeding 42 million acres across Apache’s ten operating regions and new venture opportunities. With an inventory of more than 67,000 identified future drilling locations and an estimated net resource potential of 9.2 billion barrels of oil equivalent (Bboe) in the onshore United States alone, Apache is well positioned to grow through an active drilling program in the coming years as drilling and exploration shifts its focus to targeting oil and liquids-rich gas plays. Apache also continues to advance several longer-term, individually significant development projects.
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APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
FOURTH-QUARTER PRODUCTION BY REGION 800 Mboe/d Australia North Sea
2012 YEAR-END RESERVES BY REGION 2.9 Bboe Canada
Argentina
8%
Argentina
6%
19%
Canada
9%
4%
14%
Central
9%
Australia
12% Egypt
20% 6%
15%
Permian North Sea
28%
10% 2% GOM DW
4%
Permian
10%
12%
GC Onshore
Egypt
GC Shelf
FOURTH-QUARTER PRODUCTION BY PRODUCT 800 Mboe/d 8%
International Liquids
3% 8%
16% 26%
2% 2%
GOM DW GC Onshore
Central
8% GC Shelf
FOURTH-QUARTER REVENUE BY PRODUCT $4.4 Billion
North American Liquids
International Liquids
27%
North American Liquids
46%
14%
17% 26%
35%
6%
International Gas
30%
7%
12% 2% 3%
North America
International Gas
North American Gas
International
3
Liquids
12% North American Gas
Natural Gas
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
NORTH AMERICA Permian
Fourth quarter 2012 production in the Permian Region averaged 117,898 Boe/d, of which 74 percent was liquids. This was a 6 percent increase over PERMIAN KEY STATS Fourth-Quarter 2012 the third quarter of 2012 and a 22 percent increase over the fourth quarter of 2011. Q4 Production: 117,898 Boe/d Due to the recent production growth in the region, the Permian has now Q4 Wells: 174 wells, 136 net Q4 Rigs: Avg 33 rigs become the second largest region in Apache’s portfolio on a production basis. Full-Year 2012 For the quarter, the Permian Region averaged 33 drilling rigs and drilled 2012 Production: 108,338 Boe/d 2012 Wells: 781 wells, 605 net 136 net wells. 2012 Rigs: Avg 32 rigs Completion activity for the fourth quarter included 850 frac stages in 175 Drilling Success Rate: 100% vertical wells along with 463 frac stages in 22 horizontal wells for a total of 196 wells stimulated with 1,313 stages. Drilling at Deadwood (Midland Basin) and Yeso continue to be large contributors to growth, while Irion County Wolfcamp shale horizontal activity and Cline shale potential continue to expand. During 2012, Apache replaced over 262 percent of its production in the Permian Region through exploration and development activities (excluding revisions) and ended the year with 800 million barrels of oil equivalent (MMboe) of proved reserves, making the Region now the largest in Apache’s portfolio on a proved reserve basis.
PERMIAN WELL HIGHLIGHTS Fourth-Quarter 2012
PLAY/TARGET
WELL NAME
TD
LATERAL
IP
Midland Basin Vertical – Fusselman
Nichols #2206
10,738’
N/A
362 Boe/d (30-day)
Keathley 46 #12
10,657’
N/A
340 Boe/d (30-day)
Midland Basin Vertical – Wolfwood Midland Basin Vertical – Wolfwood Cline Shale
ED Books 1B #11
10,440’
N/A
280 Boe/d (30-day)
Ballenger 32 #3
10,397’
N/A
318 Boe/d (6-day)
Mack 6 Carter 432H
9,327’
6,705’
320 Boe/d (30-day)
Sugg 2829 M 1H
7,003’
7,676’
445 Boe/d (30-day)
Bennie 4342 9H
7,155’
9,233’
792 Boe/d (30-day)
105-H
7,018’
5,296’
1,198 Boe/d (30-day)
103-H
7,126’
4,166’
376 Bo/d, 750 Mcf/d (tested)
Wolfcamp Shale Central Basin Platform – Wichital Albany/ABO
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APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Permian (Continued) MIDLAND BASIN VERTICAL
Apache has an estimated 1.1 million gross acres (625,000 net) in the Midland Basin Vertical play area with an estimated 1.7 Bboe of resource potential from over 17,800 identified drilling locations. During the fourth quarter, Apache continued its vertical program targeting Wolfwood and Fusselman in its Deadwood area averaging 15 vertical rigs. The final migrated reciprocal HD3D seismic survey acquired early in the year has been refined and is directly affecting the development of Fusselman potential in Deadwood. Success rates when targeting this prolific reservoir have been greatly increased and new locations are being cultivated for the rig lines. The new Deadwood plant was processing 50 million cubic feet per day (MMcf/d) of gas at the end of the quarter.
NORTHWEST SHELF - YESO
Apache has approximately 105,000 gross acres (70,000 net) in the Yeso play with 1,800 identified locations and an estimated 108 MMboe of resource potential. The Yeso Area averaged three vertical drillings rigs in fourth quarter completing 31 wells. During the quarter, production from the area increased 1,532 Bo/d and 5.8 MMcf/d of gross production. A horizontal rig was added in fourth quarter to begin drilling the Cedar Lake horizontal well program.
APACHE PERMIAN REGION ACREAGE AND KEY PLAYS Texas New Mexico
Midland Basin
Central Basin Platform + N/NW Shelf
Yeso
Cline Shale
Delaware Basin
Wolfcamp Shale
APA acreage
5
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Permian (Continued) WOLFCAMP SHALE
Apache has an estimated 450,000 gross acres (345,000 net) prospective for Wolfcamp Shale development with an estimated 347 MMboe of resource potential from 971 identified drilling locations. The horizontal development of the Wolfcamp Shale has been focused primarily in Irion County. Through year-end 2012, Apache drilled 17 Wolfcamp Shale wells with an average 30-day IP rate greater than 600 Boe/d including 15 wells that have been on production more than 30 days. During the fourth quarter, Apache drilled four Upper Wolfcamp laterals using two horizontal rigs with hydraulic stimulation expected in early 2013. Additionally, Apache completed its first successful producers in the Middle Wolfcamp shale.
CLINE SHALE
Apache has an estimated 650,000 gross acres (520,000 net) prospective for Cline Shale development with an estimated 642 MMboe of resource potential from 2,300 identified drilling locations. Apache has one of the largest Cline Shale petrophysical databases in the industry. Apache completed an additional two wells during the fourth quarter in the lower Cline horizontal program in the Deadwood area. To date, a total of eight operated wells have been completed and are currently producing at a combined rate of 1,050 Bo/d and 1.4 MMcf/d.
CENTRAL BASIN PLATFORM (CBP)
Apache has an estimated 1.7 million gross acres (780,000 net) in the CBP with an estimated 690 MMboe of resource potential from nearly 9,800 identified drilling locations. Horizontal activity targeting the Wichita Albany / ABO (“WABO”) interval at the Three Bar field in Andrews County resulted in two more successful well tests during the fourth quarter. By year-end, the Three Bar Shallow Unit had produced 145,000 barrels of oil from three completed wells. Three additional wells were drilled at the end of 2012 and will be completed in 2013.
DELAWARE BASIN
Apache has an estimated 609,000 gross acres (287,000 net), which are prospective for the Wolfbone and Avalon/Bone Springs formations with an estimated 284 MMboe of resource potential from over 1,800 identified drilling locations. This is an emerging area for Apache that will receive more activity and investment during 2013.
6
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Central
Fourth quarter 2012 production in the Central Region was 79,250 Boe/d, up 10 percent over third quarter 2012 and up 75 percent over fourth CENTRAL KEY STATS quarter 2011. Fourth-Quarter 2012 Oil production increased 24 percent in the fourth quarter versus the third Q4 Production: 79,250 Boe/d quarter to a record 21 thousand barrels of oil per day (Mbo/d) (27 percent Q4 Spudded Wells: 77 wells of total production) and total liquids increased 24 percent to 31.3 Mbo/d Q4 Rigs: Avg 23 rigs (39 percent of total production). Full-Year 2012 For the quarter, the Region spud 77 new wells, of which 22 were 2012 Production: 61,169 Boe/d completed by year-end. 2012 Wells: 192 wells, 101 net For the year, the Region drilled and completed 192 wells, of which all but 2012 Rigs: Avg 18 rigs 4 percent were horizontal. Drilling Success Rate: 99% Apache continues to work numerous plays across its 1.9 million gross acreage position focusing on the liquids-rich Granite Wash and the oily Tonkawa, Marmaton, Cottage Grove, Cleveland and Canyon Wash plays. During 2012, Apache replaced over 341 percent of its production through exploration and development activities and 644 percent including acquisitions (but excluding revisions) and ended the year with approximately 267 MMboe of proved reserves in the Central Region.
CENTRAL WELL HIGHLIGHTS Fourth-Quarter 2012
TARGET TOP
TOTAL LENGTH
30-Day IP
STILES 3 SL #20-3H
12,712’
18,500’
429 Bo/d, 639 Bngl/d, 5,420 Mcf/d
BARTZ 19 SL #20-19H
13,273’
18,150’
261 Bo/d, 488 Bngl/d, 4,140 Mcf/d
SPORTSMAN GW #6-49H
11,360’
16,000’
140 Bo/d, 357 Bngl/d, 4,466 Mcf/d
PATSY 9 #3HA PUD
11,361’
16,000’
98 Bo/d, 349 Bngl/d, 4,364 Mcf/d
Marmaton
GREEN, A TRUST 1-16H
13,000’
18,000’
320 Bo/d, 3,385 Mcf/d
Cottage Grove
STILES 1 #14-1H
10,587’
15,700’
920 Bo/d, 165 Bngl/d, 760 Mcf/d
STILES 4 #17-4H
10,660’
15,950’
986 Bo/d, 109 Bngl/d, 859 Mcf/d
PLAY/TARGET
Granite Wash
WELL NAME
Cleveland
LELAND MEKEEL 226 #4H
7,963
12,163
449 Bo/d, 370 Mcf/d
Canyon Wash
BIVINS-LIT 115 #4
9,700’
N/A
512 Bo/d, 195 Mcf/d
BOYS RANCH 116 #3
9,700’
N/A
631 Bo/d, 776 Mcf/d
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APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Central (Continued) GRANITE WASH
Apache holds approximately 720,000 gross (350,000 net) acres prospective for the Granite Wash with an estimated resource potential of 4.5 Bboe from 22,800 drilling locations. In general, Apache is finding enough oil in the Granite Wash that it remains economic despite low natural gas and NGL prices.
APACHE CENTRAL REGION ACREAGE AND KEY PLAYS Oklahoma
Granite Wash
Tonkawa Texas
Cleveland
Marmaton Canyon Wash
APA acreage
TONKAWA
Apache holds an estimated 634,000 gross (310,000 net) acres prospective for the Tonkawa with an estimated resource potential of 202 MMboe from 2,800 drilling locations.
MARMATON
Apache holds an estimated 662,000 gross (512,000 net) acres in the Marmaton with an estimated resource potential of 161 MMboe from 1,593 drilling locations. For the year, Apache drilled two vertical and six horizontal wells with impressive results. The 30-day vertical production averaged 177 Bo/d, 286 Bngl/d and 2,729 Mcf/d and horizontal rates averaged 625 Bo/d, 753 Bngl/d and 7,176 Mcf/d. A total of 90 resource locations have been identified in this play to date.
8
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
CLEVELAND
Apache holds an estimated 527,000 gross (268,000 net) acres in the oil-rich Cleveland play with an estimated resource potential of 195 MMboe from 2,302 drilling locations.
CANYON WASH
Apache holds an estimated 141,000 gross (93,000 net) acres prospective for the Canyon Wash in the Bivins Ranch area (Whittenburg Basin) with an estimated 101 MMboe of resource potential from 1,016 drilling locations. Apache is now operating two drilling rigs in the Bivins Area, drilling the Central Region’s only vertical wells. During the quarter, Apache drilled and completed four Canyon Wash wells, for a total of nine producing wells averaging 700 Bo/d and 500 Mcf/d in 2012. To de-bottleneck growing production, Apache completed a nine-mile pipeline to transport stranded natural gas, thereby securing Apache’s takeaway from the area. Total production has grown from zero to over 5,000 Boe/d in 14 months.
9
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Gulf of Mexico Shelf
Fourth quarter 2012 production in the Gulf of Mexico Shelf was 95,980 Boe/d, a 7 percent increase quarter over quarter. During the quarter, Apache averaged five rigs and drilled a total of nine operated wells. Apache continued its seismic acquisition program and has completed 25 percent of the wide azimuth (“WAZ”) seismic shoot in the Main Pass Area. Apache was awarded 60 of the 66 blocks bid on in the June 2012 Federal Lease Sale and now has an interest in 666 blocks and approximately three million gross acres.
GOM SHELF KEY STATS
Fourth-Quarter 2012 Q4 Production: 95,980 Boe/d Q4 Wells: 12 wells, 9 net Q4 Rigs: Avg 5 rigs Full-Year 2012 2012 Production: 97,170 Boe/d 2012 Wells: 36 wells, 26 net 2012 Rigs: Avg 5 rigs Drilling Success Rate: 80%
Gulf of Mexico Deepwater
Fourth quarter 2012 production in the Gulf of Mexico Deepwater was 17,903 Boe/d, a 17 percent increase quarter over quarter. In 2012, the Deepwater Region drilled six wells, one operated and five non-operated. Apache was awarded 28 blocks in the June 2012 Central GOM Lease Sale and now has an interest in 166 blocks in the GOM Deepwater with approximately 900,000 gross acres. The Region also added 850 blocks of new high quality, 3-D WAZ seismic data to their inventory bringing the total to 2,030 blocks.
During the fourth quarter, a development well on the western flank of the field encountered 910 net feet of oil pay. Four additional development wells are scheduled for 2013. The truss spar is expected to be transported to the GOM during 2013. First production is estimated for the second half of 2014.
HEIDELBERG
LUCIUS DEVELOPMENT
GOM DW KEY STATS
Heidelberg is still in appraisal phase. Apache has received the field development plan from the operator.
10
Fourth-Quarter 2012 Q4 Production: 17,903 Boe/d Q4 Wells: 2 wells,
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
TABLE OF CONTENTS Overview ............................................................................................................................................................................... 2 NORTH AMERICA .............................................................................................................................................................. 4 Permian......................................................................................................................................................................... 4 Central ......................................................................................................................................................................... 7 Gulf of Mexico Shelf.................................................................................................................................................... 10 Gulf of Mexico Deepwater .......................................................................................................................................... 10 Gulf Coast Onshore .................................................................................................................................................... 11 Canada ........................................................................................................................................................................ 12 INTERNATIONAL ............................................................................................................................................................. 14 Egypt ........................................................................................................................................................................... 14 Australia ...................................................................................................................................................................... 15 North Sea .................................................................................................................................................................... 16 Argentina .................................................................................................................................................................... 17
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
NOTICE TO INVESTORS This operations supplement contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and, whenever possible, are identified by use of the words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, our assumptions about the market prices of oil, natural gas, NGLs and other products or services, our commodity hedging arrangements, the supply and demand for oil, natural gas, NGLs and other products or services, production and reserve levels, drilling risks, economic and competitive conditions, the availability of capital resources, capital expenditure and other contractual obligations, and our ability to complete, test and produce the wells identified in this supplement. Because such statements involve risks and uncertainties, Apache’s actual results and performance may differ materially from the results expressed or implied by the forward-looking statements contained in this Supplement. Other important factors that could cause actual results to differ materially from expected results are described in “Risk Factors” in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q and amendments thereto, available on our Web site and in our other public filings and press releases. There is no assurance that Apache's expectations will be realized, and readers are cautioned not to place undue reliance on forward looking statements, which speak only as of the date hereof. Unless otherwise required by law, we assume no duty to update these statements as of any future date. 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 operational update supplement, such as “resources,” “potential resources,” “resource potential,” “reserves potential,” 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 www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 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. Certain information provided in this supplement includes financial measurements that are not required by, or presented in accordance with, generally accepted accounting principles (GAAP), including these measures: adjusted earnings, pre-tax margin, and cash from operations. These non-GAAP measures should not be considered as alternatives to GAAP measures, such as net income or cash from operating activities, and may be calculated differently from, and therefore may not be comparable to, similarly titled measures used at other companies. Reconciliation to the most directly comparable GAAP financial measure has been provided. None of the information contained in this document has been audited by any independent auditor. This supplemental document is prepared as a convenience for securities analysts and investors and may be useful as a reference tool. Apache intends to continue to publish this supplement in conjunction with our quarterly earnings release, but may elect to modify the format or discontinue publication at any time, without notice to securities analysts or investors.
1
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Overview Record fourth quarter production in Permian and Central Regions drives overall production growth
Worldwide net daily production of oil, natural gas, and natural gas liquids averaged 800,005 barrels of oil equivalent per day (Boe/d) in the fourth quarter of 2012 (53 percent liquids), a 4 percent increase over third quarter 2012. The Permian and Central Regions grew 7 percent quarter over quarter, with average combined net production of 197 thousand barrels of oil equivalent per day (Mboe/d) constituting approximately 25 percent of worldwide production in the fourth quarter. Apache drilled or participated in the drilling of 316 wells in the fourth quarter with a 94 percent drilling success rate. During 2012, Apache replaced 131 percent of production through exploration and development activities and 156 percent including acquisitions (excluding revisions predominately related to lower natural gas prices).
Apache has a substantial producing asset base as well as large undeveloped acreage positions and interests in large, long-term projects. Collectively, these provide a platform for organic production growth through sustainable, lower-risk drilling, project development and exposure to higher-risk, higher-reward exploration.
As of December 31, 2012, Apache had total gross acreage exceeding 42 million acres across Apache’s ten operating regions and new venture opportunities. With an inventory of more than 67,000 identified future drilling locations and an estimated net resource potential of 9.2 billion barrels of oil equivalent (Bboe) in the onshore United States alone, Apache is well positioned to grow through an active drilling program in the coming years as drilling and exploration shifts its focus to targeting oil and liquids-rich gas plays. Apache also continues to advance several longer-term, individually significant development projects.
2
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
FOURTH-QUARTER PRODUCTION BY REGION 800 Mboe/d Australia North Sea
2012 YEAR-END RESERVES BY REGION 2.9 Bboe Canada
Argentina
8%
Argentina
6%
19%
Canada
9%
4%
14%
Central
9%
Australia
12% Egypt
20% 6%
15%
Permian North Sea
28%
10% 2% GOM DW
4%
Permian
10%
12%
GC Onshore
Egypt
GC Shelf
FOURTH-QUARTER PRODUCTION BY PRODUCT 800 Mboe/d 8%
International Liquids
3% 8%
16% 26%
2% 2%
GOM DW GC Onshore
Central
8% GC Shelf
FOURTH-QUARTER REVENUE BY PRODUCT $4.4 Billion
North American Liquids
International Liquids
27%
North American Liquids
46%
14%
17% 26%
35%
6%
International Gas
30%
7%
12% 2% 3%
North America
International Gas
North American Gas
International
3
Liquids
12% North American Gas
Natural Gas
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
NORTH AMERICA Permian
Fourth quarter 2012 production in the Permian Region averaged 117,898 Boe/d, of which 74 percent was liquids. This was a 6 percent increase over PERMIAN KEY STATS Fourth-Quarter 2012 the third quarter of 2012 and a 22 percent increase over the fourth quarter of 2011. Q4 Production: 117,898 Boe/d Due to the recent production growth in the region, the Permian has now Q4 Wells: 174 wells, 136 net Q4 Rigs: Avg 33 rigs become the second largest region in Apache’s portfolio on a production basis. Full-Year 2012 For the quarter, the Permian Region averaged 33 drilling rigs and drilled 2012 Production: 108,338 Boe/d 2012 Wells: 781 wells, 605 net 136 net wells. 2012 Rigs: Avg 32 rigs Completion activity for the fourth quarter included 850 frac stages in 175 Drilling Success Rate: 100% vertical wells along with 463 frac stages in 22 horizontal wells for a total of 196 wells stimulated with 1,313 stages. Drilling at Deadwood (Midland Basin) and Yeso continue to be large contributors to growth, while Irion County Wolfcamp shale horizontal activity and Cline shale potential continue to expand. During 2012, Apache replaced over 262 percent of its production in the Permian Region through exploration and development activities (excluding revisions) and ended the year with 800 million barrels of oil equivalent (MMboe) of proved reserves, making the Region now the largest in Apache’s portfolio on a proved reserve basis.
PERMIAN WELL HIGHLIGHTS Fourth-Quarter 2012
PLAY/TARGET
WELL NAME
TD
LATERAL
IP
Midland Basin Vertical – Fusselman
Nichols #2206
10,738’
N/A
362 Boe/d (30-day)
Keathley 46 #12
10,657’
N/A
340 Boe/d (30-day)
Midland Basin Vertical – Wolfwood Midland Basin Vertical – Wolfwood Cline Shale
ED Books 1B #11
10,440’
N/A
280 Boe/d (30-day)
Ballenger 32 #3
10,397’
N/A
318 Boe/d (6-day)
Mack 6 Carter 432H
9,327’
6,705’
320 Boe/d (30-day)
Sugg 2829 M 1H
7,003’
7,676’
445 Boe/d (30-day)
Bennie 4342 9H
7,155’
9,233’
792 Boe/d (30-day)
105-H
7,018’
5,296’
1,198 Boe/d (30-day)
103-H
7,126’
4,166’
376 Bo/d, 750 Mcf/d (tested)
Wolfcamp Shale Central Basin Platform – Wichital Albany/ABO
4
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Permian (Continued) MIDLAND BASIN VERTICAL
Apache has an estimated 1.1 million gross acres (625,000 net) in the Midland Basin Vertical play area with an estimated 1.7 Bboe of resource potential from over 17,800 identified drilling locations. During the fourth quarter, Apache continued its vertical program targeting Wolfwood and Fusselman in its Deadwood area averaging 15 vertical rigs. The final migrated reciprocal HD3D seismic survey acquired early in the year has been refined and is directly affecting the development of Fusselman potential in Deadwood. Success rates when targeting this prolific reservoir have been greatly increased and new locations are being cultivated for the rig lines. The new Deadwood plant was processing 50 million cubic feet per day (MMcf/d) of gas at the end of the quarter.
NORTHWEST SHELF - YESO
Apache has approximately 105,000 gross acres (70,000 net) in the Yeso play with 1,800 identified locations and an estimated 108 MMboe of resource potential. The Yeso Area averaged three vertical drillings rigs in fourth quarter completing 31 wells. During the quarter, production from the area increased 1,532 Bo/d and 5.8 MMcf/d of gross production. A horizontal rig was added in fourth quarter to begin drilling the Cedar Lake horizontal well program.
APACHE PERMIAN REGION ACREAGE AND KEY PLAYS Texas New Mexico
Midland Basin
Central Basin Platform + N/NW Shelf
Yeso
Cline Shale
Delaware Basin
Wolfcamp Shale
APA acreage
5
APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Permian (Continued) WOLFCAMP SHALE
Apache has an estimated 450,000 gross acres (345,000 net) prospective for Wolfcamp Shale development with an estimated 347 MMboe of resource potential from 971 identified drilling locations. The horizontal development of the Wolfcamp Shale has been focused primarily in Irion County. Through year-end 2012, Apache drilled 17 Wolfcamp Shale wells with an average 30-day IP rate greater than 600 Boe/d including 15 wells that have been on production more than 30 days. During the fourth quarter, Apache drilled four Upper Wolfcamp laterals using two horizontal rigs with hydraulic stimulation expected in early 2013. Additionally, Apache completed its first successful producers in the Middle Wolfcamp shale.
CLINE SHALE
Apache has an estimated 650,000 gross acres (520,000 net) prospective for Cline Shale development with an estimated 642 MMboe of resource potential from 2,300 identified drilling locations. Apache has one of the largest Cline Shale petrophysical databases in the industry. Apache completed an additional two wells during the fourth quarter in the lower Cline horizontal program in the Deadwood area. To date, a total of eight operated wells have been completed and are currently producing at a combined rate of 1,050 Bo/d and 1.4 MMcf/d.
CENTRAL BASIN PLATFORM (CBP)
Apache has an estimated 1.7 million gross acres (780,000 net) in the CBP with an estimated 690 MMboe of resource potential from nearly 9,800 identified drilling locations. Horizontal activity targeting the Wichita Albany / ABO (“WABO”) interval at the Three Bar field in Andrews County resulted in two more successful well tests during the fourth quarter. By year-end, the Three Bar Shallow Unit had produced 145,000 barrels of oil from three completed wells. Three additional wells were drilled at the end of 2012 and will be completed in 2013.
DELAWARE BASIN
Apache has an estimated 609,000 gross acres (287,000 net), which are prospective for the Wolfbone and Avalon/Bone Springs formations with an estimated 284 MMboe of resource potential from over 1,800 identified drilling locations. This is an emerging area for Apache that will receive more activity and investment during 2013.
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APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Central
Fourth quarter 2012 production in the Central Region was 79,250 Boe/d, up 10 percent over third quarter 2012 and up 75 percent over fourth CENTRAL KEY STATS quarter 2011. Fourth-Quarter 2012 Oil production increased 24 percent in the fourth quarter versus the third Q4 Production: 79,250 Boe/d quarter to a record 21 thousand barrels of oil per day (Mbo/d) (27 percent Q4 Spudded Wells: 77 wells of total production) and total liquids increased 24 percent to 31.3 Mbo/d Q4 Rigs: Avg 23 rigs (39 percent of total production). Full-Year 2012 For the quarter, the Region spud 77 new wells, of which 22 were 2012 Production: 61,169 Boe/d completed by year-end. 2012 Wells: 192 wells, 101 net For the year, the Region drilled and completed 192 wells, of which all but 2012 Rigs: Avg 18 rigs 4 percent were horizontal. Drilling Success Rate: 99% Apache continues to work numerous plays across its 1.9 million gross acreage position focusing on the liquids-rich Granite Wash and the oily Tonkawa, Marmaton, Cottage Grove, Cleveland and Canyon Wash plays. During 2012, Apache replaced over 341 percent of its production through exploration and development activities and 644 percent including acquisitions (but excluding revisions) and ended the year with approximately 267 MMboe of proved reserves in the Central Region.
CENTRAL WELL HIGHLIGHTS Fourth-Quarter 2012
TARGET TOP
TOTAL LENGTH
30-Day IP
STILES 3 SL #20-3H
12,712’
18,500’
429 Bo/d, 639 Bngl/d, 5,420 Mcf/d
BARTZ 19 SL #20-19H
13,273’
18,150’
261 Bo/d, 488 Bngl/d, 4,140 Mcf/d
SPORTSMAN GW #6-49H
11,360’
16,000’
140 Bo/d, 357 Bngl/d, 4,466 Mcf/d
PATSY 9 #3HA PUD
11,361’
16,000’
98 Bo/d, 349 Bngl/d, 4,364 Mcf/d
Marmaton
GREEN, A TRUST 1-16H
13,000’
18,000’
320 Bo/d, 3,385 Mcf/d
Cottage Grove
STILES 1 #14-1H
10,587’
15,700’
920 Bo/d, 165 Bngl/d, 760 Mcf/d
STILES 4 #17-4H
10,660’
15,950’
986 Bo/d, 109 Bngl/d, 859 Mcf/d
PLAY/TARGET
Granite Wash
WELL NAME
Cleveland
LELAND MEKEEL 226 #4H
7,963
12,163
449 Bo/d, 370 Mcf/d
Canyon Wash
BIVINS-LIT 115 #4
9,700’
N/A
512 Bo/d, 195 Mcf/d
BOYS RANCH 116 #3
9,700’
N/A
631 Bo/d, 776 Mcf/d
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APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Central (Continued) GRANITE WASH
Apache holds approximately 720,000 gross (350,000 net) acres prospective for the Granite Wash with an estimated resource potential of 4.5 Bboe from 22,800 drilling locations. In general, Apache is finding enough oil in the Granite Wash that it remains economic despite low natural gas and NGL prices.
APACHE CENTRAL REGION ACREAGE AND KEY PLAYS Oklahoma
Granite Wash
Tonkawa Texas
Cleveland
Marmaton Canyon Wash
APA acreage
TONKAWA
Apache holds an estimated 634,000 gross (310,000 net) acres prospective for the Tonkawa with an estimated resource potential of 202 MMboe from 2,800 drilling locations.
MARMATON
Apache holds an estimated 662,000 gross (512,000 net) acres in the Marmaton with an estimated resource potential of 161 MMboe from 1,593 drilling locations. For the year, Apache drilled two vertical and six horizontal wells with impressive results. The 30-day vertical production averaged 177 Bo/d, 286 Bngl/d and 2,729 Mcf/d and horizontal rates averaged 625 Bo/d, 753 Bngl/d and 7,176 Mcf/d. A total of 90 resource locations have been identified in this play to date.
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APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
CLEVELAND
Apache holds an estimated 527,000 gross (268,000 net) acres in the oil-rich Cleveland play with an estimated resource potential of 195 MMboe from 2,302 drilling locations.
CANYON WASH
Apache holds an estimated 141,000 gross (93,000 net) acres prospective for the Canyon Wash in the Bivins Ranch area (Whittenburg Basin) with an estimated 101 MMboe of resource potential from 1,016 drilling locations. Apache is now operating two drilling rigs in the Bivins Area, drilling the Central Region’s only vertical wells. During the quarter, Apache drilled and completed four Canyon Wash wells, for a total of nine producing wells averaging 700 Bo/d and 500 Mcf/d in 2012. To de-bottleneck growing production, Apache completed a nine-mile pipeline to transport stranded natural gas, thereby securing Apache’s takeaway from the area. Total production has grown from zero to over 5,000 Boe/d in 14 months.
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APACHE 2012 EARNINGS RELEASE OPERATIONS SUPPLEMENT
Gulf of Mexico Shelf
Fourth quarter 2012 production in the Gulf of Mexico Shelf was 95,980 Boe/d, a 7 percent increase quarter over quarter. During the quarter, Apache averaged five rigs and drilled a total of nine operated wells. Apache continued its seismic acquisition program and has completed 25 percent of the wide azimuth (“WAZ”) seismic shoot in the Main Pass Area. Apache was awarded 60 of the 66 blocks bid on in the June 2012 Federal Lease Sale and now has an interest in 666 blocks and approximately three million gross acres.
GOM SHELF KEY STATS
Fourth-Quarter 2012 Q4 Production: 95,980 Boe/d Q4 Wells: 12 wells, 9 net Q4 Rigs: Avg 5 rigs Full-Year 2012 2012 Production: 97,170 Boe/d 2012 Wells: 36 wells, 26 net 2012 Rigs: Avg 5 rigs Drilling Success Rate: 80%
Gulf of Mexico Deepwater
Fourth quarter 2012 production in the Gulf of Mexico Deepwater was 17,903 Boe/d, a 17 percent increase quarter over quarter. In 2012, the Deepwater Region drilled six wells, one operated and five non-operated. Apache was awarded 28 blocks in the June 2012 Central GOM Lease Sale and now has an interest in 166 blocks in the GOM Deepwater with approximately 900,000 gross acres. The Region also added 850 blocks of new high quality, 3-D WAZ seismic data to their inventory bringing the total to 2,030 blocks.
During the fourth quarter, a development well on the western flank of the field encountered 910 net feet of oil pay. Four additional development wells are scheduled for 2013. The truss spar is expected to be transported to the GOM during 2013. First production is estimated for the second half of 2014.
HEIDELBERG
LUCIUS DEVELOPMENT
GOM DW KEY STATS
Heidelberg is still in appraisal phase. Apache has received the field development plan from the operator.
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Fourth-Quarter 2012 Q4 Production: 17,903 Boe/d Q4 Wells: 2 wells,
