Apache’s plan: Cut capex spending a whopping 60% in 2015



Capex plan for 2015

Apache Corporation (APA) expects to spend $3.8 billion in capex (capital expenditures) in 2015. This is 60% less than 2014’s capital budget.

Apache joined the increasing number of oil and gas companies slashing their capex budgets. These include ConocoPhillips (COP), Occidental Petroleum (OXY), and Chevron Corporation (CVX). All these companies and Apache make up ~22% of the Energy Select Sector SPDR ETF (XLE).

Check out ConocoPhillips’, Occidental’s, and Chevron’s latest earnings results on Market Realist.

Apache said on the earnings call that while it does have significant inventory of projects capable of making economics at current oil prices, it would be prudent to curtail its activities until costs become lower and prices recover.

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Budget breakdown and production guidance

In onshore North America, Apache expects to spend between $2.1 billion and $2.3 billion. Production in this region in 2015 is projected to remain flat at ~302,000 barrels of oil equivalent per day (or Boe/d) relative to 2014 Boe/d, as adjusted for 2014 sales. The company will operate ~17 rigs in 2015 compared to ~85 rigs in 2014.

Internationally as well as offshore, Apache (APA) plans to spend between $1.5 billion and $1.7 billion in 2015. Pro forma production is slated to increase slightly over 2014 levels of 207,000 Boe/d, adjusted for 2014 and 2015 asset sales.

John Christmann, Apache’s president and chief executive officer, noted, “We have planned our budget and operations in such a way that we can dynamically manage our activity levels and capital spending to respond quickly to material changes in commodity prices. Should we see a meaningful rebound in oil prices from current strip levels or a notable shift in our cost structure, we have the organizational capability to add rigs and production quickly and efficiently from our ready inventory of highly economic projects in North America.”


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