The Permian Basin led the way in helping Apache Corp. boost its output in North America during the second quarter, but low commodity prices forced another huge writedown, the second quarter in a row.

The first half of the year required a lot of hard choices, some of which will impact the company through 2015, CEO John J. Christmann IV said Thursday. Among other things, since the start of the year, 20% of the workforce has disappeared, either through asset sales or layoffs.

“In February, we established a plan to maintain relatively flat pro forma production in 2015, despite an aggressive 60% reduction in budgeted capital expenditures from 2014 levels,” Christmann said. The plan was established after Apache recorded a $5.2 billion writedown in 1Q2015 because of falling commodity prices, and it set in motion drastic spending cuts that included decimating the North American rig count and cutting $2 billion from capital spending plans (see Shale Daily, Feb. 12).

Apache failed to escape the orbit of low commodity prices again in 2Q2015, with a one-time charge of $3.7 billion. Net losses in 2Q2015 totaled $5.6 billion (minus $14.83/share), which included the asset impairment and $1.9 billion one-time charges associated in part with selling a big chunk of its portfolio. Adjusted for the one-time items, 2Q2015 profits were $82 million net (22 cents/share). In 2Q2014, Apache earned $505 million ($1.17/share).

However, less spending didn’t negatively impact North American production, which rose 3% sequentially in 2Q2015 to 317,000 boe/d. Output was led by a 13,500 boe/d increase in the Permian. Worldwide, Apache operated 34 rigs, with about half in North America.

Production delivery has gone well enough for Apache to raise its 2015 guidance in North America at 1-2% from a February forecast of no growth. Based on its results year-to-date, North American production guidance was raised to 305,000-308,000 boe/d.

In the Permian, Apache was operating 10 rigs during 2Q2015 and it completed 53 wells, down sequentially from 15 rigs and 88 wells. However, production averaged 172,000 boe/d, almost 9% more than in the first quarter. In the Delaware subbasin, five rigs were working, the same as in the first three months, while the Midland subbasin averaged three rigs and 20 completed wells. In the Permian’s Central Basin platform/Northwest Shelf, two rigs on average were targeting the Yeso formation in Eddy County, NM.

In the Midcontinent area, Apache reduced its rig count to two, putting a target on the Woodford Shale/South Central Oklahoma Oil Province, Canyon Lime and Marmaton plays. Production fell 7% from 1Q2015, attributed to declining completion activity. The Gulf Coast area of Texas, where Apache is working the Eagle Ford Shale, Apache dropped all four rigs that had been working in 1Q2015. However, production still rose 20% sequentially by 2,400 boe/d as four new high-volume wells were placed on production.

Meanwhile, in Canada, output declined 3% or 1,900 boe/d from the first quarter. However, that actually was better than forecast, primarily because of decreased operational downtime and better well performance, Apache said.

The 2015 capital spending guidance has been reduced to $3.4-3.9 billion from $3.6-3.9 billion. Even so, capital efficiencies and lower costs are enabling the company to increase its onshore North American activity levels in the second half of the year, where it plans to average 16 rigs in the second half of the year, with all but three in the Permian.

“Apache expects to reach total depth on an additional 40-50 wells and complete an additional 30-35 wells beyond its original plan for 2015. The company continues to anticipate that it will have a backlog of 80-100 drilled-but-uncompleted wells in North America at the end of 2015.”

The increase in activity to the end of the year is not expected to have a material impact on our full-year 2015 production; however, it will establish a positive production trajectory in the fourth quarter and heading into 2016,” Christmann said.

During 2Q2015, Apache completed the sale of its liquefied natural gas business and its remaining Australian assets.

“Exiting these businesses eliminated our exposure to projects with large capital spending commitments and uncertain project timing,” the CEO said. “We deployed a portion of the proceeds from these sales to pay down debt, leaving our balance sheet in excellent shape and positioning us for success in this low commodity price environment.

“Importantly, during the first half of 2015, we quickly and cost effectively reduced our drilling and completion activity, commensurate with the deteriorating oil-and-gas price environment. We have also restructured our operational organization to better align with and support our more focused asset base.”

The producer made progress on its cost structures, realizing a 25% reduction year/year in average per-well drilling/completion costs. Lease operating costs/boe fell by 13% from 2Q2014. It also received $5.7 billion for its asset sales during the quarter and a portion of the proceeds was used to repay $2.7 billion of outstanding debt. At the end of June, Apache’s long-term debt was $9.7 billion and it had $3 billion in cash.