Reporting record profits for all of last year and record fourth quarter production, Apache Corp. senior executives Thursday painted a bullish outlook for this year that includes moving ahead with its newly acquired Kitimat liquefied natural gas (LNG) export project in western Canada and stepping up production of the Permian Basin assets it acquired from BP plc.
Even in Egypt, which amounts to 13% of its reserves and 24% of its production, Apache execs are sanguine, having experienced no loss of production during the current political upheaval, according to executives speaking to financial analysts on a conference call Thursday.
Apache reported $3 billion, or $8.46/share, in record earnings last year, compared to a $285 million loss, or a minus 87 cents/share, in 2009. It set an annual record for production of nearly 658,000 boe/d in 2010, a 13% increase from its average production the previous year.
CEO Steven Farris said Apache will step up and expand the production and other activities tied to the $7 billion of assets his company acquired from BP (see Daily GPI, July 21, 2010). That acquisition included acreage and infrastructure in the Permian Basin of West Texas and New Mexico, "substantially all" of the upstream natural gas business in western Alberta and British Columbia, which takes in the Kitimat project, and property in Egypt's Western Desert.
"The bottom line is that we are looking at an opportunity set for many years to come," said Farris, who characterized the company's Egyptian operations currently as not being impacted by the government toppling and nearly one-third of the company's ex-patriot staff that had been removed at the U.S. State Department's request last month are now back working in the fields. All of the company's personnel and families remain safe and unhurt by the social unrest, he said.
"We have experienced no production interruptions as the result of the developments in recent weeks; we have created an 'Egypt floor' in Houston, and production activity is ongoing as usual," said Farris, noting that the overall situation in Egypt has "improved markedly" in recent days.
While noting that Apache is and always has been "an opportunistic company," Farris said there are no BP-sized potential acquisitions on the horizon now, but nevertheless the company will be looking at both potential asset sales and acquisitions during this year. "We are seeing more of the quality assets we like, we never plan for acquisitions, but we will capture those opportunities if and when they make sense, based on our experience."
Other executives indicated that the Kitimat LNG project, in which Apache now holds a 51% interest, is well under way with engineering and design work, and it has the prospect for several Asia-Pacific buyers with whom the project's backers are now in discussions. Those potential buyers are targeting investment decisions by the end of this year, Apache said. Apache and EOG also now have full control of the 287-mile pipeline project that would link the British Columbia gas supplies to the proposed coastal liquefaction facility needed to launch the export project (see Daily GPI, Feb. 8).
Apache plans to begin exports through the Kitimat project in late 2015. During the question-and-answer period of its earnings conference call with analysts, Farris said that the Kitimat project will not work with anything but an oil-based price for the LNG.
"Even though we haven't signed anything yet, there is a tremendous amount of interest in this project," said John Crum, co-COO for North America. "There is a real benefit for anyone who has to import LNG to do so from the North American market because the North American market has no limits."
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