Apa Corporation · NASDAQ:APA
Apa — Investor Presentation (March 2023)
28 slides from Apa's investor presentation, March 2023
Slide 1: Investor Update
Investor Update March 2023 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 Corporation Strategy
APA Corporation Strategy Foundation For Disciplined Leveraging Long-Term Financial Approach Diversified Success Portfolio • Prioritize long-term, full-cycle returns • Return a minimum of 60% of Free • Diversify risk through a balanced through capital allocation Cash Flow to shareholders through a co
Slide 4: 2022 Highlights
2022 Highlights • Generated ~$2.5 billion of Free Cash Flow (FCF)(1); 2nd highest in APA’s 68-year history • Returned ~$1.6 billion (66% of FCF) to APA shareholders through share buybacks & dividends • Reduced outstanding shares by 10% and doubled annual dividend • Reduced Net Debt(1,2) by $1.5 bill
Slide 5: 2023 Plan Overview
2023 Plan Overview Planned Drilling Activity • Onshore U.S.: Average 5 rigs (2 SMB / 3 Delaware) 2023 Plan • Egypt: Average ~17 rigs • Upstream capital investment(1) of $2.0 - $2.1 billion • North Sea: Maintain 1 platform crew / Release Ocean Patriot semi in 2H23 o 57% U.S. / 36% Int’l / 7% Explorat
Slide 6: 2022 Debt & Share Repurchase Activity
2022 Debt & Share Repurchase Activity Bond Debt Activity ($ millions) Share Repurchase Activity (millions) Shares Repurchased Average Price Shares (MM) Price ($) Repurchased in 2022 (~$1.4BN) 15 $50 $44.40 3,400 $41.59 12 $36.07 $40 $33.85 9 $30 378 6 12.1 $20 449 9.8 270 7.2 7.0 3 $10 213 579 123 5
Slide 7: Significantly Improving Financial Position
Significantly Improving Financial Position Committed to Financial Discipline Material Debt Reductions ($ millions) (1) Credit Facilities and Finance Leases (2) Notes and Debentures 2022 Highlights 38% Reduction $8,661 $8,864 $444 $812 $8,217 $7,579 • Reduced leverage(3) to < 1.0x $8,052 $1,235 • Exe
Slide 8: APA Overview
APA Overview US Egypt North Sea Suriname
Slide 9: APA at a Glance: Diversified and Balanced
APA at a Glance: Diversified and Balanced 4Q22 Reported Production 4Q22 Commodity Mix North Sea 11% Global Portfolio Gas Oil Egypt U.S. 36% 48% 36% 53% NGL 16% UK North Sea 4Q22 Cash Flow(1,2) 4Q22 Upstream Capital(2) United States Egypt North Sea Suriname 16% 7% North Sea Suriname 13% U.S. U.S. 42%
Slide 10: United States
United States U.S. Acreage • Underlying base production & new well performance driving strong production across Permian Basin NEW OKLAHOMA MEXICO NEW MEXICO TEXAS • Five rig program (2 Midland / 3 Delaware) will continue into 2023 • Well completion timing & ethane rejection drive lower expected prod
Slide 11: 2023 U.S. Production Growth Trajectory
2023 U.S. Production Growth Trajectory U.S. Production & Wells Online Cadence Production (Mboe/d) Wells 250 25 • Over 10% oil growth expected from 4Q22 to 4Q23 218 200 199 20 150 15 • During 1Q23, anticipate 9% decline in U.S. production due to: o Only 4 wells brought online in 4Q22 (3 Austin Chalk
Slide 12: Egypt
Egypt Apache Egypt Acreage: ~5 million acres • Country’s largest oil producer & onshore acreage holder • Rig efficiency (wells per rig/yr) improved 18% in 4Q22 vs 1H22 average • Operating a 17-rig activity level in 2023 • Gross oil production expected to increase 10% from 4Q22 to 4Q23 o Expect 25-30
Slide 13: North Sea
North Sea • Focused on mitigating base decline & managing costs • Modest production growth expected in 2023 over 2022 due to increased wells online & shorter scheduled maintenance turnaround activity o Improved facilities uptime in 4Q22 at both Beryl and Forties; has continued into 2023 o Slight pro
Slide 14: Suriname
Suriname Block 58 (APA 50% WI, TTE Operated) • Announced successful flow test at Sapakara South-2 (SPS-2) o Encountered 36 meters (118 ft) of net oil pay o Analysis indicates incremental resource to Sapakara South-1 (SPS-1) of > 200 MMBbls of oil in place o Total estimated resource at Sapakara now e
Slide 15: APA Investment Case
APA Investment Case • Providing diversification across multiple fronts: o Play Type, Country, Hydrocarbon, Price Point, and Exploration • Returning a minimum of 60% of free cash flow to shareholders through share repurchases and ordinary dividends • De-leveraging: reduced APA debt(1) by~$3.3 billion
Slide 16: Appendix
Appendix
Slide 17: 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 18: ESG Compensation-Linked Goals
ESG Compensation-Linked Goals Short-Term Goals Long-term Goals • Safety: • Air: o Severe Incident Rate at or below 0.028 o Deliver projects that eliminate at least 1 million o Increase observation rate & actions by 10% tonnes of CO2e emissions annually by year-end 2024 o Reduce Scope 1 GHG Intensity
Slide 19: Guidance (Published February 22, 2023)
Guidance (Published February 22, 2023) 1Q 2023 FY 2023 Commentary Production (Mboe/d) United States………………………………………………………………………………….. 199 (35% oil) 217 (36% oil) Well completion timing & ethane rejection result in 1Q23 production decline Egypt (Reported)……………………………………………………………………………. 146 (60% oil) 14
Slide 20: 4Q 2022 Operating Cash Margins (Pre-Tax)
4Q 2022 Operating Cash Margins (Pre-Tax) Egypt North Sea United States $100 $90 $91 / Boe $80 $70 $68 $60 Per Boe $59 / Boe $50 - $3 vs. 3Q $40 $48 $44 / Boe $31 $30 Per Boe Per Boe - $9 $23 / Boe - $10 $20 vs. 3Q $13 / Boe vs. 3Q $11 / Boe $10 $0 Operating Cash Margin(1) Avg Realization Cash Operat
Slide 21: Cash Return Summary
Cash Return Summary 2021 2022 Total Shares Repurchased (MM) 31.2 36.2 67.4 Average Stock Repurchase Price $27.14 $39.34 $33.69 Share Repurchases ($MM) $847 $1,423 $2,270 Dividends ($MM) $52 $207 $259 Total Cash Return ($MM) $899 $1,630 $2,529 Free Cash Flow ($MM) $1,823 $2,458 $4,281 % Free Cash Flo
Slide 22: 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 capital investment for property acquisitions, capitalized interest, non-cash asset
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations 23
Slide 24: Non-GAAP Reconciliation: Adjusted EBITDAX
Non – GAAP Reconciliation Adjusted EBITDAX Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDAX Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator
Slide 25: Non-GAAP Reconciliation: Free Cash Flow
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 26: Non-GAAP Reconciliation: Segment Cash Flows
Non – GAAP Reconciliation Segment Cash Flows Reconciliation of Net Cash Provided by Operating Activities to Cash Flows from Continuing Operations before Changes in Operating Assets and Liabilities Cash flows from operations before changes in operating assets and liabilities is a non-GAAP financial m
Slide 27: Non-GAAP Reconciliation: Net Debt
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 28: Non-GAAP Reconciliation: Upstream Capital Investment
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 APA's expenditures related to our upstream capital activity. We define capital