Apache Corp., Houston, has set a 2016 total capital spending program of $1.4-1.8 billion, a reduction of more than 60% from 2015 levels and more than 80% from 2014 levels.
The new budget follows a 2015 net loss of $23.1 billion, including a $7.2-billion net loss in the fourth quarter.
“With current 2016 strip prices 30-35% below year-ago levels, we believe a conservative plan and a flexible capital spending program are paramount to protecting the financial position we have worked hard to establish over the last 18 months,” said John J. Christmann IV, Apache chief executive officer and president.
Apache expects total pro forma production volumes in 2016 to range 433,000-453,000 boe/d, a decline of 7-11% from pro forma 2015 production of 486,000 boe/d.
With 45% of its 2016 budget allocated to North America onshore, pro forma production is projected to range 263,000-273,000 boe/d, which represents a decline of 12-15% compared with that of 2015.
The remaining 55% of the budget will be allocated to the firm’s international and offshore areas, where pro forma production is projected to be 170,000-180,000 boe/d, or roughly flat when compared with 2015 pro forma production.
“While returns in select areas are still adequate at the well level, we believe it is better to wait until fully burdened rates of return improve to higher double-digit percentages, before materially increasing our rig count and developing our acreage,” Christmann explained.
“We will also continue investing in our highly successful exploration portfolio in the North Sea and in our highly prospective Blocks 53 and 58 in offshore Suriname,” he said. “We have a portfolio of high-quality assets with robust inventory in North America, higher-cash-margin assets in Egypt and the North Sea, and exciting longer-term exploration prospects.”
Apache’s worldwide estimated proved reserves at yearend 2015 totaled 1.6 billion boe, down from 2.4 billion boe a year earlier.
The firm primarily attributes the decrease to significant divestitures in Australia and Canada; a significant decline in oil, gas, and NGL prices used to calculate reserves volumes and values; and a 60% year-over-year reduction in capital spending.