Apa Corporation · NASDAQ:APA
Apa — Investor Presentation (March 2022)
26 slides from Apa's investor presentation, March 2022
Slide 1: Investor Update
Investor Update March 2022 Corporation
Slide 2: Notice to Investors
Notice to Investors Certain statements in this presentation contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 including, without limitation, expectations, beliefs, plans, and objectives regardin
Slide 3: APA Investment Case
APA Investment Case • Robust Free Cash Flow generation capacity and strong visibility into years of sustained production within legacy portfolio o Expect to generate ~$6.5 billion of free cash flow in 2022-2024 based on a WTI average price of $78/barrel (3-year strip)(1) • Returning a minimum of 60%
Slide 4: 2021 Highlights
2021 Highlights • Generated ~$1.8 billion of Free Cash Flow(1); highest in over a decade & one of the highest in 67-year history • Initiated shareholder return framework: minimum of 60% of Free Cash Flow to shareholders beginning in 4Q’21 o Returned ~$870 million to APA shareholders through share bu
Slide 5: 2022 Plan Overview
2022 Plan Overview Planned Drilling Activity • Egypt: 11 rigs increasing to 15 rigs by mid-year 2022 Plan • North Sea: 1 floating rig / 1 platform crew • Onshore U.S.: 3 rigs increasing to 4 rigs by mid-year • Upstream capital investment(1): o $1.4 billion development • Suriname: Exploration & appra
Slide 6: 3-Year Outlook Overview
3-Year Outlook Overview Free Cash Flow(1) ($MM) Upstream Capital Investment(1) ($MM) Adjusted Production(3) (Mboe/d) $3,000 $2,000 400 300 $2,000 $86 WTI $1,000 200 Gas & NGLs $1,000 Strip Oil 100 $0 $0 0 2021 2022 2023 2024 2021 2022 2023 2024 2021 2022 2023 2024 Strong Free Cash Flow Stable Activi
Slide 7: ESG Vision
ESG Vision Be at the forefront of industry’s efforts to measure, disclose AIR and mitigate emissions E WATER Preserve freshwater resources and leverage technology to maximize water reuse S COMMUNITIES +PEOPLE Provide fulfilling and rewarding careers for our employees and create shared value in the c
Slide 8: Compensation-linked ESG Goals
Compensation-linked ESG Goals Short-term Goals Long-term Goal • Egypt: 40% reduction of upstream flaring in Egypt by year-end Established inaugural, long-term • People: Develop and implement a future of work strategy inclusive of working model, incentive compensation-linked workplace and technology
Slide 9: APA Overview
APA Overview US Egypt North Sea Suriname
Slide 10: 4Q 2021 Operating Cash Margins
4Q 2021 Operating Cash Margins Egypt North Sea United States(2) $90 $80 $84 / Boe $70 $54 $60 Per Boe $55 / Boe + $8 $50 vs. 3Q $40 $42 $46 / Boe Per Boe $30 / Boe $34 $30 + $2 Per Boe vs. 3Q + $5 $20 North Sea cash operating cost per Boe $13 / Boe elevated due to lower production as a result vs. 3Q
Slide 11: United States
United States • Currently running 3 rigs onshore U.S. U.S. Acreage o 2 rigs operating in the Southern Midland Basin drilling NEW OKLAHOMA predominantly longer laterals (2-3 miles) MEXICO Permian o 1 rig conducting a year-long delineation and development drilling program in the Austin Chalk TEXAS Eas
Slide 12: Egypt: PSC Modernization Enables Return to Growth
Egypt: PSC Modernization Enables Return to Growth Apache Egypt Acreage: ~5 million acres • Country’s largest oil producer and onshore acreage holder; identified an extensive, high-quality inventory • 2.5 MM-acre high-density 3-D seismic survey driving strong drilling results o 10 Exploration/apprais
Slide 13: Egypt: Positive Near-Term Impacts of PSC Modernization
Egypt: Positive Near-Term Impacts of PSC Modernization 2022 plan to double average drilling rig count & increase well completions by ~3x compared with 2021 Gross oil production forecasted to increase 13 – 15% in 2022 APA / Sinopec Free Cash Flow(1) of $850 – $900 MM anticipated in 2022 (assuming $72
Slide 14: North Sea
North Sea Apache North Sea Acreage • Focused on sustaining cash flow generation capacity Apache o Forties: mitigating declines & managing costs Beryl o Beryl: high-volume subsea tiebacks • Planned activity set: 1 floating rig & 1 platform crew • Expected 2022 production at a similar level to 2021 o
Slide 15: Suriname Update
Suriname Update • Block 58 (APA 50% WI): Five exploration discoveries since Jan. 2020, appraisal program underway • Announced discovery at Krabdagu-1 exploration well o Encountered 90 meters (295 feet) of net oil pay in good quality reservoirs in Maastrichtian & Campanian intervals Sapakara South-1
Slide 16: Appendix
Appendix
Slide 17: Glossary of Referenced Terms
Glossary of Referenced Terms • Upstream Capital Investment: Includes exploration, development, gathering, processing, and transmission capital, capitalized overhead, and settled asset retirement obligations. Excludes capitalized interest, non-cash asset retirement additions and revisions, Egypt nonc
Slide 18: Debt Maturity Profile
Debt Maturity Profile Current(1) Apache Notes & Debentures(2) $6,131MM • Reduced notes(2) by $1.7 BN in 2021 Avg. Coupon 5.138% $1,500 o Annual bond interest expense lowered by 20% (~$79 MM) Avg. Maturity 14.1 Years 1,333 • $542 MM drawn on the revolving credit facility at YE 2021 $1,250 o Up from $
Slide 19: Continuing Down the Path to Investment Grade
Continuing Down the Path to Investment Grade Renegotiate revolver Paydown 2022 notes Retire 2023 notes in 4Q 2022 Deconsolidate Altus Continue incremental debt reduction & manage maturity profile 19
Slide 20: Pro Forma Impact of Egypt PSC Modernization on 2021 & 2022
Pro Forma Impact of Egypt PSC Modernization on 2021 & 2022 2022 @ ~$72 2021 @ ~$72 Brent Brent Previous Modernized APA / Sinopec JV Terms Terms Modernized Terms Gross Volume (Mboe/d) 232 - 234 250 - 255 Reported Volume(1) (Mboe/d) 114 141 158 2022 CFFO Sensitivity of $170 million to a $10/bbl move i
Slide 21: Egypt Oil Production Returning to a Growth Trajectory
Egypt Oil Production Returning to a Growth Trajectory Oil Oil Production (Mbo/d) Production (Mbo/d) • Anticipate significant increase in long- 200 term oil production from 15-rig program 150 • Gross gas production expected to remain relatively stable at 550 – 600 mmcf/d 100 • Net Contractor entitlem
Slide 22: Guidance
Guidance 1Q 2022 FY 2022(2) Commentary Production (Mboe/d) United States……………………………………………………………………………………………………. 212 210 Mineral rights sales package impact of ~7 Mboe/d FY’22 Egypt (Reported)……………………………………………………………………………………………… 156 160 North Sea…………………………………………………………………………………………………………. 44 45 Total R
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations 23
Slide 24: Non – GAAP Reconciliation
Non – GAAP Reconciliation Cash Flow Before Changes in Operating Assets & Liabilities and Free Cash Flow Reconciliation of Net Cash Provided by Operating Activities to Cash Flows from Operations before Changes in Operating Assets and Liabilities and Free Cash Flow Cash flows from operations before ch
Slide 25: Non – GAAP Reconciliation
Non – GAAP Reconciliation Net Debt Reconciliation of Debt to Net Debt Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company's outstanding debt obligations that would not be readily satisfied by
Slide 26: Non – GAAP Reconciliation
Non – GAAP Reconciliation Upstream Capital Investment Reconciliation of Costs Incurred to Upstream Capital Investment Management believes the presentation of upstream capital investments is useful for investors to assess the Company's expenditures related to our upstream capital activity. We define