Apache Corp.’s North American production fell 14% year/year during the third quarter, while writedowns contributed to a $5.66 billion loss. The Permian Basin, its biggest U.S. onshore focus, only has 10 rigs running today, versus 42 a year ago.

The nearly $5.7 billion third quarter net loss (minus $14.95/share), compares with the year-ago losses of $1.33 billion (minus $3.50). Impairments to the value of the natural gas and oil portfolio totaled $3.716 billion versus more than $1 billion a year ago.

Revenue fell by more than half to $1.49 billion in the quarter from $3.44 billion. Net cash provided by continuing operating activities was $835 million.

“For the last two quarters, we have essentially been running our business at an activity level where cash flow was roughly equal to capital expenditures under a $50 West Texas Intermediate oil price deck,” CEO John Christmann said during a conference call Thursday. Commodity prices will be a “big driver” of Apache’s capital expenditures (capex) and activity in 2016 because the company intends to live within cash flow.

“Looking into 2016 with the reductions we’ve had on the cost structure side, specifically on the costs we have in the house at this point at 30% down, capital’s going to continue to go further. I can also tell you that a lot of that capex this year was spent early in the year when we had higher costs. And we see things even now that are going to point to lower costs going forward. So, the best thing to do is look at what we’ve done this year and kind of translate off of that.”

North American onshore production averaged 306,000 boe/d, down 3% from 317,000 boe/d in 2Q2015 and 14% from a year ago when Apache was producing 355,000 boe/d. The operator expects to produce 307,000-309,000 boe/d this year in the onshore, which would be 2% higher pro forma from 2014. Global production was 542,000 boe/d in the quarter, with international/offshore output 12% higher year/year.

Apache operated an average of 28 rigs worldwide and drilled 111 gross operated wells, including 92 in North America’s onshore. The rig count in North America fell by six sequentially during the third quarter.

“Given the decrease in oil price during the third quarter, we elected to defer the addition of two rigs in the Permian Basin and one of our two planned rig additions in the Eagle Ford Shale,” Christmann said. “As a result, we are decreasing the high end of our 2015 capital spending guidance range by $100 million to $3.8 billion. The deferral of these three rigs will not materially impact our 2015 production, but will result in a lower drilled but uncompleted well count at the end of 2015 than we previously expected.”

In the U.S. onshore, Apache’s biggest area of expertise is the Permian, where it has worked for decades. After ramping up its rig count to a high of 42 by the end of 2014, Apache today is operating only 10 rigs across the play, with four working in the Delaware, three in the Midland and three in the Central Basin Platform/Northwest Shelf.

In the Permian, 59 net wells were completed, versus 47 in 2Q2015. Natural gas production rose 14% year/year and 5% sequentially to 246 MMcf/d. Oil output from the play fell 1% year/year and 5% sequentially to 93,048 b/d.

Midcontinent/Eagle Ford gas production combined fell 7% from 2Q2015 and 4% year/year to almost 180 MMcf/d. Oil production from the two regions also fell, down 12% sequentially and 5% year/year to 21,441 b/d. Canada onshore gas output declined 2% sequentially and 1% from a year ago to 695 MMcf/d, while oil output was down 6% from the second quarter and 2% from a year ago at 129,284 b/d.

In the Permian’s Delaware sub-basin, Apache targeted the Bone Spring and Wolfcamp formations in the Pecos Bend and Waha areas, completing 22 wells using only one fracturing crew. Well costs averaged $5 million. Twenty-five wells also were completed in the Midland sub-basin, primarily in the Wolfcamp and Spraberry. In the Northwest Shelf, the Yeso formation was the big focus, where average completed well costs fell by half from a year ago to $2.6 million.

Apache had its other two rigs working in the Midcontinent between July and September, one targeting the Woodford Shale/South Central Oklahoma Province and the other working the Marmaton formation. In Canada, the first Duvernay formation pad went online in October and two rigs now are planned for 2016. One more rig is to be used in the adjoining Montney formation next year.

In the Eagle Ford, Apache primarily worked on optimizing well completions in Area A, with eight wells completed and tied to sales. Late in the quarter, after improving the production rates and cost efficiencies in the focus area, Apache resumed drilling in the Eagle Ford using one rig.

Capital expenditures during 3Q2015 totaled $762 million, 16% lower than in the second quarter.

Apache also continued to pursue growth in Western Canada.

“In Canada, we put our seven-well Duvernay pad online in late October,” Christmann said. “Completion and connection of the pad came in under budget and the flow results we have seen to date are very encouraging. The team is doing an excellent job with costs in Canada and we plan to drill another Duvernay pad during the upcoming winter season.”

Apache also is in advanced discussions with third parties concerning a joint venture (JV) on the Montney acreage in the Wapiti area. “Our objective for the JV is to fund early-stage drilling and infrastructure. This will enable us to jump-start the investment program and begin to generate cash flow without having to divert our capital dollars from other areas of the portfolio.”

“Despite a significantly reduced capital program, production volumes have shown tremendous resiliency,” Christmann said. As a result, Apache has raised its 2015 production guidance, with full-year North American onshore guidance by 2% pro forma to 307,000-309,000 boe/d from 305,000-308,000.