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ndependent energy company Apache Corp reported a massive loss of $4.48 billion for first quarter earnings after the close Wednesday. $APA followed major oil shale players $XOM, $CVX, $OXY and $FANG in reporting.

Apache Portfolio

Collapsing Oil Prices See Apache Earnings Collapse

Apache Corp (NYSE: $APA) Reported Earnings After Close Wednesday

($0.13) Beat ($0.30) EPS and $1.28 billion Missed $1.32 billion Forecast in Revenue 

Earnings

Apache (APA) reported first-quarter earnings of a loss of $4.48 billion. On a per-share basis, the Houston-based company said it had a loss of $11.86. Losses, adjusted for asset impairment costs and non-recurring costs, came to $-0.13 on revenue of $1.28B. Consensus was for EPS of $-0.3 on revenue of $1.32B. This compares EPS of $0.1 on revenue of $1.64B in the same period a year before.

Apache reported EPS of $0.08 on revenue of $1.7B in the previous quarter. Analysts are expecting EPS of $-0.98 and revenue of $833.25M in the upcoming quarter.

Apache Corporation NYSE: $APA

Market Reaction After hours $11.00 −0.61 (-5.25%)

Highlights

“While the 2020 outlook for the global economy and the oil and gas industry, specifically, is uncertain, we have made great strides in this environment to reduce our cost structure, protect our balance sheet, and manage our operations to preserve cash flow. Our teams have done an exceptional job implementing our organization redesign, responding to the recent changes in activity levels and operational protocols, and are delivering very good results in both our exploration and development programs. When market conditions improve, I am confident we will successfully leverage Apache’s diversified portfolio to differentiate our long-term value proposition for shareholders,” concluded Christmann.

  • Responded quickly and decisively to COVID-19 global pandemic by closing offices and implementing work-from-home-processes and stringent operational protocols in the field to protect Apache employees and communities;
  • Revised 2020 upstream capital budget following oil price collapse to approximately $1.1 billion; down nearly 55% from 2019;
  • Reduced the company’s quarterly dividend by 90% and outlined plans to use the $340 million of cash retained annually from the dividend reduction to further strengthen the company’s financial position;
  • Highlighted the company’s ample liquidity through its $4 billion revolver and ability to manage bonds maturing between February 2021 and January 2023; Increased estimated cost savings associated with the previously announced organizational redesign; annual cost reduction target doubled to more than $300 million;
  • Announced two significant oil discoveries at Maka Central-1 and Sapakara West-1 in Block 58 offshore Suriname; and Delivered first-quarter reported production of 468,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 423,000 BOE per day.

Apache Portfolio Q1 2020 Permian

United States – Operated an average of seven rigs, drilled and completed 24 gross-operated wells, all of which were in the Permian, and reported production of 283,000 BOE per day. Permian Basin production averaged 273,000 BOE per day, including oil production of 97,000 BOE per day.

Following the significant drop in oil prices in early March, Apache decided to reduce its rig count to zero in the Permian. The company is down to one rig in the Delaware Basin, which is currently finishing its last well. After which, the company will have approximately 70 drilled and uncompleted (DUC) wells in the unconventional Midland and Delaware Basins, 15 of which are in Alpine High.

Midland Basin – Averaged four rigs and placed 12 wells on production, all on multi-well pads.Substantially completed drilling the company’s first 3-mile lateral pad, achieving significant cost savings. Completion of these five wells has been deferred due to the current price environment.

Delaware Basin – Averaged three rigs and placed 11 wells on production. Alpine High production averaged 94,000 BOE per day with a 39% liquids mix.

International – Operated an average of 14 rigs, drilled and completed 20 gross-operated wells and reported production of 185,000 BOE per day.

Apache Portfolio Q1 2020

2020 capital budget and outlook

Following the rapid drop in oil prices in early March, Apache announced a plan to reduce activity in Egypt and the North Sea and to eliminate all U.S. drilling and completion activity.

This resulted in a $650 million decrease in planned upstream investment, compared to the company’s initial budget announced in late February. Approximately 60% of the revised 2020 investment will be in international assets, compared to approximately 45% in the previous budget.

Apache Hedging Q1 2020

Liquidity update 

Apache has a strong liquidity position, supported by a $4.0 billion revolving credit facility that matures in March of 2024. The facility has commitments from 18 banks, 17 of which are rated A or better, is not subject to borrowing base redeterminations, has no covenants that are triggered by credit ratings, and includes a $2 billion committed sublimit for letters of credit.

In April, Apache posted letters of credit (LCs) under the LC sublimit aggregating approximately $800 million related to asset retirement obligations in the U.K. North Sea. These postings utilize a portion of that facility.

In addition to the company’s ample liquidity, Apache also maintains a very manageable bond maturity profile. In the event the company is unable to generate free cash flow to retire or refinance its bond maturities over the next three years, the revolver could be used to pay them down.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom and exploration activities offshore Suriname. Apache posts announcements, operational updates, investor information and all press releases on its website, www.apachecorp.com.

Source: Apache

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