Apache neared all-time record in 2022

Free cash flow mark stemmed from 2019 plan

Apache Corp. President-CEO John Christmann attributes 2022’s $2.5 billion in free cash flow, second highest in the company’s 68-year history, to a long-term plan made in 2019.

“We emphasized returns-focused investment, strengthening the balance sheet, right-sizing the organization and activity levels to deliver moderate, sustainable production growth, conservative budgeting and the selective pursuit of differentiated opportunities for value creation, most notably exploration,” Christmann said.

“World oil demand and commodity price dislocations in 2020 and 2021 required some difficult and necessary actions to preserve our business, but after a few years of hard work we have returned to and are delivering on this long-term plan.”

Making Apache’s fourth quarter earnings report Feb. 23, Christmann said from Houston that the company “has also increased our rig activity to a pace now capable of generating sustained production growth in Egypt and the U.S.

“The successful integration of our Texas Delaware Basin tuck-in acquisition compliments our legacy Delaware position and continues to exceed expectation,” he said. “On Block 58 in Suriname, the flow test of two appraisal wells at Sapakara South indicated a combined resource in place of more than 600 million barrels of low gas and oil ratio oil.”

Christmann said a Krabdagu discovery well was also successfully flow tested offshore at Suriname.

“Routine upstream flaring in Egypt was reduced by more than 40 percent,” he said. “This is a significant step toward our goal of eliminating one million tons of annualized CO2 equivalent emissions by the end of 2024.”

Addressing the substantial decrease in natural gas prices, Christmann said Apache is managing its portfolio for cash flow, not production volume. “Accordingly, our growth in 2023 will be entirely driven by oil,” he said.

“We expect a sequential decrease in U.S. production from the fourth quarter to the first primarily driven by our Permian Basin oil well completion cadence. However, natural gas curtailments at Alpine High and liquids volume reductions associated with ethane rejection during the month of January are significant contributors.

“Importantly, our Permian oil well completion cadence will accelerate in the second half of February, which should lead to significantly higher U.S. oil production in the second through the fourth quarters.”

Executive Vice President-Chief Financial Officer Stephen Riney reported that Apache’s consolidated net income was $443 million in the fourth quarter. “As usual, these results include items outside of core earnings,” Riney said. “The most significant of these was a pre-tax charge of $157 million to increase the net contingent liability for decommissioning the former Fieldwood properties in the Gulf of Mexico, partially offset by a $52-million pre-tax unrealized gain on derivatives and a $47-million release of evaluation allowance on deferred tax assets.

“Excluding these and other smaller items, adjusted net income for the fourth quarter was $476 million.”