Apache Corp.’s production boost in onshore North American liquids was “drill-bit generated growth,” unaided by acquisitions and a signal of the company’s trajectory as it sells international and offshore assets, chief executive Steven Farris said Thursday.
It was also a byproduct of the company’s “relentless focus on efficiency,” which led Apache to pay down billions in debt, repurchase stock and reinvest capital in the Permian Basin and other North American regions during the third quarter, Farris said during a conference call with investors and analysts.
Apache is shooting to drill 800 wells in the Permian and 500 in its central North American region this year, higher than its original projections of 700 wells and 500 wells in those regions, respectively, said Farris. He added that he would highlight just one number from the company’s third-quarter earnings report: 35 percent.
That was the year-over-year growth in the Houston producer’s North American oil and natural gas liquids production for the three-month period ended Sept. 30, which drove Apache’s profits 86 percent to $300 million in the third quarter, the company reported Thursday.
Farris said the company’s remaining international assets would provide excess cash flow to fund growth in North America. During the quarter, Apache began selling international and offshore assets to put more muscle behind its operations in the Permian Basin in West Texas and other North American assets.
Apache nearly doubled its spending in its central North American region over last year to $1.2 billion, and bolstered its Permian spending 17 percent to $1.9 billion, according to investor materials.
The company, once the biggest player in Egypt, agreed to sell a third of its Egyptian oil and gas assets to China’s Sinopec for $3.1 billion in August. The deal is expected to close by the end of the year. Apache also sold offshore assets in the Gulf of Mexico for $3.6 billion in September. Farris said the company has done “the lion’s share” of its asset sale this year, but is looking at other pieces of its production business as part of its restructuring.
Revenues slid 4 percent to $4 billion during the three months ended Sept. 30, driven by lower natural gas sales and a $422 million derivatives loss. But Apache’s drilling and completion costs sank in the Permian and Anadarko basins, driven by a reduction in the days needed between drilling wells, Farris said.
Oil production in the Houston producer’s central North American region climbed to more than 25,000 barrels per day, a 51 percent increase, while it pumped more than 73,000 barrels per day, up 22 percent from the same year-ago period. Oil revenues increased 10 percent to $3.5 billion in the same period.
Apache’s North American natural gas liquids production increased 43 percent to more than 64,000 barrels per day, and revenues from NGLs jumped 35 percent to $179 million in the third quarter.
After repurchasing about 8 million Apache shares, the company expects to pay down $2 billion in debt by the end of 2013, Farris said.
Apache shares dipped 11 cents to $88.33 in mid-day trading Thursday on the New York Stock Exchange.