Posted on 11/21/2014 5:39:47 AM PST by thackney
Apache will cut its North American capital budget from $5.4 billion to $4 billion, the company told analysts at a presentation in New York, but said it will be able to spend that money more efficiently.
The forecast comes at a time when oil prices continue to fall. Amid pressure from investors, Apache is working to shrink its portfolio to focus on North American liquids production.
Still, company officials said despite the sliding oil prices, they believe they can be successful.
“We’re very excited about what we can do at $80,” said Gary Clark, Apache’s vice president for investor relations. “The corporation is also very comfortable… even all the way down to $70.”
West Texas Intermediate, the U.S. benchmark crude, was trading at $75.11 per barrel Thursday morning.
Apache chief executive G. Steven Farris said the company will take a disciplined approach to spending, with capital expenditures within 10 percent of the company’s cash flow.
Generally, U.S.-focused exploration and production companies’ budgets are more susceptible to oil price volatility than those of major integrated companies.
Despite declining crude prices, Farris was undeterred. “We want to be the premiere North American, unconventional player,” Farris said. “This is not a pipe dream. We’ve done this before.”
The company is in the midst of a major effort to sell off assets, shedding more than $10 billion of them in recent years.
Farris said it would be “a hell of a lot easier if we got $100 oil” and acknowledged that crude’s price declines would limit the number of rigs it will run.
Despite the capital budget cut in North America, the company plans to spend its money more effectively, said John Christmann, the company’s chief operating officer for North America. Instead of allocating money to various regional divisions than then decide how to spend it in individual plays, the company has a new policy of viewing all of its North American plays as part of a single portfolio and funding them accordingly.
“Today we’re taking all the plays and looking at them as one big portfolio,” Christmann said. “There’s a lot fo plays that got capital that won’t get capital now.”
The company plans to steer 55 percent of its capital budget to the Permian — up from 47 percent in its 2014 budget . On the lower end, it’s steering 10 percent of its capital to Canada, which got 11 percent in the 2014 budget.
No, no, ..... No tax.
When it comes to most business:
Less complications - good
More complications - bad
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