What Are Apache’s Key Objectives for 2017?

Apache’s capex budget in 2017

Apache (APA) has forecast capex (capital expenditure) of $3.1 billion for 2017, which is ~60.0% higher than its 2016 capex. It plans to spend 44.0% of its 2017 capex at the Delaware Basin and Midland Basin. Its total Permian investment is expected to be 63.0% of its 2017 spending.

What Are Apache’s Key Objectives for 2017?

About 29.0% of Apache’s 2017 capex will be allocated to its international operations. The remaining will be spent in its other North America operations, excluding the Permian Basin.

Permian focus

As you can see in the above chart, the Permian Basin gets the lion’s share of APA’s 2017 capital investments. The company plans to be selective about investments in other parts of North America. In the Permian Basin, the company will be focusing on the Midland Basin and the Alpine High play. We’ll look at that in more detail in the rest of this series.

International operations

Outside the United States, APA plans to focus on Egypt with a ten-rig program and on the North Sea. APA noted in its 4Q16 earnings release that it will invest at levels sufficient to “sustain long-term free cash flow generation from Egypt and the North Sea.” We’ll look at this in the following part of this series. APA noted that it will focus on “low-risk development and step-out exploration opportunities” in the region.

Capital spending

APA noted that its 2017 capex will exceed its planned cash flow from operations in 2017. However, the company believes that the increased budget would be a strategic decision. APA noted, “Based on current strip pricing, the remaining outspend will be funded primarily by proceeds from non-core asset sales, more than $400 million of which were already received in the first quarter.”

Read What’s Upstream: Capex Upgrades and Production Forecasts to find out more about upgrades in 2017 capex for major upstream companies.

Next, we’ll see how Apache divides its portfolio into growth engine and cash flow generators.