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Analyzing Apache’s 3Q15 Production and Prices

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Apache’s 3Q15 production and prices

The primary reason Apache’s (APA) revenues and profits fell was its average realized price fall in 3Q15 over 3Q14. In North America, Apache’s crude oil and natural gas realized prices crashed 51% and 38%, respectively, in 3Q15 from 3Q14.

As noted in the table above, APA’s crude oil and natural production volume in North America fell by 11% and 19%, respectively, in 3Q15 over 3Q14. On the other hand, production volume in its international operations fared much better.

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What caused APA’s North America production decline?

In 3Q15, APA’s North America production decline resulted from:

  • facility downtime in the Permian Basin
  • the natural declining rates of wells
  • the timing of well completions

During 3Q15, APA operated 12 rigs in North America, ten in Egypt, and six in Europe’s North Sea. In total, the company operated six fewer rigs in 3Q15 than in 2Q15. APA’s planned rig additions in the Permian Basin were deferred due to low crude oil prices.

Factors benefiting APA’s international production

Among APA’s international operations, Egypt and the North Sea production were strong in particular due to the following factors:

  • higher production efficiency
  • strong sustained production from existing wells
  • better-than-expected contributions from new wells completed
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APA’s production guidance for 2015

In 2015, APA’s production in North America is expected to increase to between 307,000 barrels of oil equivalent (or boe) and 309,000 boe per day. This is 2% higher than its 2014 North America production. Meanwhile, its international production is expected to increase 10% to 12% compared to 2014’s international production volume. Better quality production in North America and APA’s recent exploration in the North Sea and Egypt drove 2015 production guidance higher.

APA’s capex guidance

In 2015, APA plans to spend $3.8 billion on capex, which is 65% lower than its 2014 capex. In comparison, Continental Resources (CLR), another independent upstream producer, plans to spend $2.7 billion in capex in 2015, which is 46% lower than its 2014 capex. APA makes up 1.4% of the Vanguard Energy ETF (VDE).

Next, we will discuss APA’s year-to-date performance.

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