APA Corporation (NASDAQ:APA) Q3 2023 Earnings Call Transcript

John Freeman: Okay. And then, just my follow-up question, I appreciate the preliminary sort of outlook on 2024. If I take kind of what you said about the budget being in a kind of flattish versus 2023, and I think about like the sixth rig that’s largely kind of funded with the North Sea CapEx reduction. And then Egypt, you’ve said previously is kind of status quo next year. And so it seems like just of your three main operating areas that’s kind of flattish and the wild cards kind of expiration. Was your commentary about kind of a flattish budget? Is that all in? Does that include the expiration side? If you can kind of just walk us through kind of how you see the expiration in a year where there’s probably a step down in activity and concern on ahead of FID?

John Christmann: Yes, John, it’s a great question. Yes. It includes about $150 million of expiration. I think you laid it out pretty accurately. You’ll see a full-year without drilling in the North Sea. You’ll see an increase in the Permian, relatively stable drilling lines in Egypt, and you will see about $100.5 million in terms of expiration is what we’re sketching out at this point. So relatively stable program with continued exploration investment like we’ve done over the last several years.

Operator: Our next question comes from Bob Brackett with Bernstein Research. Bob, your line is open. Please go ahead.

Bob Brackett: Yes. Good morning. You talked about in terms of the Permian; if we think about 12 net completions in 3Q is kind of driving flat production QonQ in 4Q, 20 net completions in 2Q allowed you to grow the following quarter. And it sounds like you’ve already connected 12 wells in October with 18 coming in the rest of the queue. Does that imply a pretty strong cadence into sort of 1Q of next year in terms of the Permian?

Dave Pursell: Yes. It’s a good question, how timing of completions drives the quarterly production cadence, this is Dave Purcell, by the way. The remaining completions this quarter will be weighted more towards December, and then we’ll provide you in February with what the cadence of completions looks like in 2024. And as you can imagine, there’ll still be some lumpiness and we’ll provide that in February once we get the plan finalized.

Bob Brackett: Okay. Quick follow-up, if there is an FID in 2024 around Suriname, does that change that CapEx budget of 2.0 or 2.1 or it’s kind of a rounding error?

John Christmann: No, at this point, we’ve factored that in, Bob.

Operator: Our next question comes from Neal Dingmann with Truist Securities. Neal, your line is open. Go ahead.

Neal Dingmann: Thanks for the time. So my first question is just on Egypt. I’m just wondering if the 2024 plans will continue to have sort of a similar level of exploration development activity. And if so, should we assume somewhere around I mean in your estimate around that sort of same drill and success next year?

John Christmann: Yes. Neal, program it will be pretty stable. We’re running 18 rigs in Egypt and it is a steady diet of both development and exploration and I anticipate that to be very similar next year. And we do expect to be able to continue to show good growth in Egypt.

Neal Dingmann: Very good. And then, my second John asked a little bit on this but just on the Permian gas plans. I’m just curious if your decisions if and when to go back and boost that activity. Is that based more on how those gassy well economics compete against your oily Southern Midland or Delaware economics or is it just simply if those gas returns would provide a certain rate of return?

John Christmann: I mean it’s really more a function of stability in the Waha pricing. And the wells we’ve drilled this year have been strong and very competitive. I mean I think at $3 at Waha, they’re very, very competitive with Permian oil. So — but it’s really more a function of when we believe we’ll have stability there at Waha that you can produce some end of the infrastructure.

Operator: Our next question comes from Scott Gruber with Citigroup. Scott, your line is open. Go right ahead.

Scott Gruber: Thanks. Can you just coming back to Egypt, you mentioned growth next year. Is that going to be on a year-over-year basis or do you think the exit to exit will be up as well?