The Apache Corp. reports a successful 2023 with problems in Egypt and the North Sea more than offset by bountiful results in the Midland and Delaware basins of the Permian Basin.
President-CEO John Christmann said in his fourth quarter earnings call from Houston that 66 percent of his company’s $1 billion of free cash flow during the year was returned to shareholders.
“Adjusted oil production increased 4 percent from the fourth quarter of 2022 to the fourth quarter of 2023, driven by Midland and Delaware production, which was up in excess of 20 percent over the same time period,” Christmann said. “We successfully appraised the Sapakara and Krabdagu discoveries on Block 58 in Suriname, identifying 700 million barrels of recoverable oil resource, and on the environmental, social and governance front we now have implemented more than 70 percent of the projects necessary to achieve our 2022 goal of eliminating 1 million tons of annual CO2 equivalent emissions by the end of this year.”
Christmann added that Apache replaced or converted more than 2,000 pneumatic devices in the United States during 2023 in alignment with the goal of reducing methane emissions across its operations.
“I want to recognize our operation teams for delivering the lowest recordable incident rate since we began tracking and reporting this metric,” he said. “We highly value this commitment to safety and excellence and we thank you for your continued diligence on this front.”
During the fourth quarter, Christmann said, upstream capital investment of $520 million was slightly above guidance as Apache spent $27 million on the initial phase of its winter exploration program in Alaska.
“The U.S. delivered another strong quarter with oil production being up 12 percent compared to the fourth quarter last year,” he said “Throughout 2023 our 5-rig drilling program was highly efficient.”
The president-CEO said his company’s Midland and Delaware Basin teams “are driving outstanding results and we expect that will continue this year.
“In the North Sea production for the quarter was below guidance due to unplanned compression downtime at both the Beryl Alpha and Forties fields during the month of December and in Egypt adjusted production exceeded guidance primarily due to higher natural gas production and the positive impact of lower oil prices on volumes.
“For several quarters now we have been working through some activity delays and scheduling constraints associated with limited available workover rig capacity in Egypt. In addition to routine well maintenance and uphole recompletions we also utilize workover rigs for completing many of our new drill wells.
“With the increased size and improving efficiency of our drilling program the demand for workover rigs to complete new wells has exceeded expectations.”
Christmann said production from new wells in Egypt was a little better than expectations, but Egyptian gross oil volumes fell behind as the recompletion and workover programs could not be adequately supported.
“Compounding this we also experienced a number of early life failures on new electrical submersible pumps,” he said. “During 2023 we had nine new wells impacted by early ESP failures, two of which occurred in the fourth quarter on high-volume wells. We have traced this problem to one manufacturing facility and the situation is in the process of being remediated.”
Executive Vice President-Chief Financial Officer Steve Riney reported consolidated net income of $1.8 billion or $5.78 per diluted common share during the fourth quarter.
Riney said Apache’s adjusted net income for the quarter was $352 million or $1.15 per share with free cash flow of $292 million.
