CORPORATION Analyst Review. Jon Jeppesen Senior Vice President Gulf Coast Region

Transcription

1 2008 Analyst Review Jon Jeppesen Senior Vice President Gulf Coast Region The following discussions contain certain forward looking statements as defined by the Private Securities Litigation Reform Act of 1995 including, without limitation, estimates, expectations, plans and goals regarding Apache s production, reserves, financings, acquisitions, exploration and exploitation prospects, energy prices, operating costs, and results of operations. Such forward looking statements involve estimates, assumptions and uncertainties. No assurance can be given that Apache s expectations or goals will be realized, and actual results may differ materially from those expressed in the forward looking statements. For reconciliations of non GAAP financial measures, see our web site

2 Gulf Coast Region Operating Philosophy Generate excess cash flow to fund other activities Explore / exploit high-quality multi-zone opportunities Utilize existing infrastructure to reduce costs, accelerate production, increase 3 rd party processing revenue and increase exposure to 3 rd party prospects Acquire properties and exploit overlooked opportunities benefiting ng from technology and seasoned workforce Upgrade / expand 3D seismic coverage over both shelf and deep water acreage Expand exploration opportunities into deep water and new resource plays Continue to operate with sense of urgency by capitalizing on flat management / organization structure

3 Gulf Coast Region Properties 2008 Gulf Coast Operations Dry Land / Marsh / Offshore Onshore 783 Producing Wells Offshore 459 Operated Platforms 803 Producing Wells HOUSTON L O U I S I A N A Lafayette MISS. New Orleans Mboe/d T E X A S M E X I C O Corpus Christi Gulf of Mexico Apache Properties Apache Minerals Gulf Coast Region Gross Operated Daily Production* Onshore 81 MMcf/d + 7,300 bopd Offshore 590 MMcf/d + 70,000 bopd Total Net Daily Production 440 MMcf/d 62,000 bopd *Pre-Hurricane

4 Total Net Oil Production Actual bopd 70,000 60,000 Hurricane Ivan 50,000 40,000 Hurricanes Katrina / Rita Current Prod Rate 37,200 bopd X 30,000 20,000 10,000 Actual Forecast Hurricanes Gustav / Ike

5 Total Net Gas Production Actual Mcf/d 600, , ,000 Hurricane Ivan Hurricanes Katrina / Rita 300,000 Current Prod Rate 249 MMcf/d X 200, ,000 Actual Forecast Hurricanes Gustav / Ike

6 Hurricane Gustav / Ike Damage Summary Hurricane Gustav No major damage to facilities Fair amount of minor damages in central GOM and onshore Louisiana Hurricane Ike Major Platform Damage Gross Prod Net Prod bopd Mcf/d bopd Mcf/d EI 175 E (Toppled) EI 296 B (Fire) 175 7, ,300 VR 284 A (Toppled) SS 291 (Toppled) Operated TOTAL 525 8, ,645 Non - Operated EI 330 A & C (Toppled) 900 2,000 Extensive minor damage to platforms and producing infrastructure in west central GOM and onshore Louisiana

7 Significant Excess Cash Generation 3,500 3,000 LLI Capital Lease Level Income vs. Capex 3,063 CENTRAL REGIION 2,500 2,214 2,000 $MM 1,500 1,318 1,468 1,596 1,532 1,700 1,000 1,160 1, (E) Note: Lease level income = revenue - operating expense transportation expense - severance taxes

8 Gulf Coast Region Acquisitions Offshore - Shell / Oxy BP / Anadarko Onshore - Castex Activity - Drill exploration / development targets in fields with existing production infrastructure - Accelerate identified projects - Evaluate exploration potential / monetize undeveloped properties

9 Major GOM Acquisitions Summary Investment MMboe Cost / boe As of Acquisition $3, $8.44 Production (9,111) (262.3) Strategic Acquisitions Asset Sales (191) (10.8) Capital Investment 4, As of 6/30/08 ($1,368) ($5.19) Investment Returned 143% Remaining Reserves 69% June 2008 Average Rates: 58,620 bopd MMcf/d Includes Shell 1999, OXY 2000, BP & Shell 2003, Anadarko 2004, & BP 2006 (Reduced for VPPs)

10 Gulf Coast Region Lease Holdings Largest HBP leaseholder in GOM water depth <1200' 2 nd largest Mineral Lease owner in South Louisiana Provide opportunities to : - Leverage into more drilling opportunities - Take advantage of ORRI / royalty positions on marginal capital projects - Access to potential resource plays / reserves

11 Gulf Coast Region Properties 2008 District T E X A S Wells Offshore 67 Onshore 56 Total 123 Giddings (Eagleford) HOUSTON L O U I S I A N A Lafayette New Orleans MISS. ALA. Golden Meadow Corpus Christi M E X I C O Garden Banks Geauxpher Ewing Banks Gulf of Mexico Apache Properties Apache Minerals Gulf Coast Region

12 Geauxpher Prospect GB 462 Apache acquired interest in GB 462 from 2004 Anadarko acquisition (ENI - operator 45%, Apache 45%, Hydro 10%) Remington (Helix) announced Noonan Prospect discovery in Block 506 in spring 2007 at least 100 Bcfe Water depth 2,820 Apache evaluated and called partner meeting no interest by partners in pursuing Both partners non-consented Apache s s AFE proposal and forfeited their lease ownership Lease expiration 12/31/07 needed operator with toys (semi-submersible rig, subsea trees, etc) Apache brought in Mariner to operate field 60% WI / Apache 40% WI

13 Geauxpher Prospect GB mile 8 8 pipeline Garden Banks Banks Host Host Platform Garden Banks Banks

14 Geauxpher Prospect GB 462 Apache GB 463 AMP AMP 11 UPTHROWN UPTHROWN DEEP DEEP AMPS AMPS Schematic Cross-Section 18,000 18,000 SDS SDS GB GB #3 #3 PBHL PBHL GB GB #2 #2 ST1 ST1 GB GB #1 #1 BP BP GB GB #3 #3 GB 506 GB GB #1 #1 AMP AMP 1 1 GB

15 Geauxpher Schematic Cross Section W GB 462 GB 462 #4 #5 GB 462 #2ST1 GB 462 #3 E ' Amp ' PBHL 18000' Sd ' PBHL Amp ' Deep Amps Proposed Wells PBHL

16 Geauxpher Prospect GB 462 Currently installing equipment Pipeline installation: 08/08 09/08 Umbilical installation: 11/08 Well #1 and #2 completions: 08/08 11/08 Platform production equipment: 05/08 12/08 Geauxpher: First well drilled 05/08 First production 1Q09 Forecast Economics: $115.3 MM AFIT PV % AFIT ROR

17 Ewing Bank 826 Field Profile Discovery Date: 1986 Water Depth: 483 APA WI / NRI 100.0% / 83.3% Operator Apache Active Wells: 12 Gross Cum Production 8/08: Gross Daily Production (Base): 18.8 MMbo 55 Bcf 700 bopd 2.0 MMcf/d Gross Daily Production: 4,500 bopd (A-17, A-18, A-19 BP1, A-20) 5.0 MMcf/d Reserves: 7.1 MMbo (A-17, A-18, A-19 BP1, A-20, A-21BP3) 13 Bcf Economics: $44.7 MM AFIT PV10 87% AFIT ROR 11 Additional Drilling Locations Ewing Ewing Bank Bank

18 Ewing Bank 826 A-1 B-1 C-1 C-8 D-1 CP-1 A-18 A-1 A-2 B-1 B-2 D-1 D-2 F H-1 H-2 A-19 A K Prop Loc APA #A A-20 A Sd. S A L T A-19 Sd. A-21 A Prop Loc APA #A A-19 A-18 Sd Prop Loc APA #A-24 L Sd. A-20 I Sd MP-2 A-17 Arb Line 1 K-3 L-1 A-21 MP-3 L-1 L-2 K-3 L-2 M N C1 C2 A ,435 bopd 1.9 MMcf/d 0 bwpd L-1 L-2 1,476 bopd 1.4 MMcf/d 0 bwpd 1,882 bopd 1.5 MMcf/d 38 bwpd MP-3 Sd. 2,291 bopd 2.7 MMcf/d 0 bwpd

19 Ewing Bank 826 Arb Line 1 APA A-20 AA-20 APA APA -18 AA-18 APA AAPA -19 AA-19 APA A- APA A-17 AA-17 APA

20 Ewing Bank 826 Oil Production 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 A-20 A-18 A-19BP1 A-17 Base Hurricane Downtime A-21 A-22 bopd

21 Golden Meadow Field Field Profile Discovery Date: 1938 Operator: Apache WI / Avg NRI: 100.0% / 79.0% All Laterre Wells: 98% NRI Active Wells: 40 Gross Cum Production 12/07: 102 MMbo 284 Bcf Gross Daily Production (Base): 790 bopd 4.2 MMcf/d Golden Golden Meadow Meadow Field Field Economics: $31.5 MM AFIT PV10 100% AFIT ROR 2700 Sand Wide variance in production due to coning Previously watered out wells produced oil several years later Replacement well drilled in away original oil water contact Poor recovery efficiency

22 2700 Sd Structure Map Wells Drilled Wells to be Drilled Laterre 305 Laterre 303 Laterre 306 SL 378 Catfish Lake #144 ST SL SL #144 #144 Laterre Laterre Laterre Laterre Laterre Laterre Laterre Laterre Laterre SHALE OUT

23 Golden Meadow Oil Production bopd Sand Project Gross Daily Production (8 wells): 2,150 bopd 450 Mcf/d Hurricane Downtime Reserves: Current Activity: Completing 3,952 Mbo 600 MMcf S/L 378 #144ST LL&E # Drilling Drilling Program Program Base 0 0 6/1/ /1/2007 6/1/ /1/2008 6/1/ /1/2007 6/1/ /1/2008

24 Golden Meadow 2700 Sd Structure Wells Drilled Wells to be Drilled Apache Leasehold LL&E Laterre SL SL #144 #144 Laterre Laterre Laterre LL&E LL&E Laterre Laterre Laterre

25 Eagleford Shale Play

26 Eagleford Shale Play Type Log Shale Characteristics Hot GR High Resistivity Mud log shows

27 +52 miles Eagleford Shale Continuity MILAM ROBERTSON MADISON BRAZOS GRIMES LEE BURLESON +116 miles WASHINGTON BASTROP FAYETTE WALLER COLORADO Area Area of of Interest Interest Apache Properties EnerVest Acreage

28 Eagleford Drilling Activity Horizontal Well Drilled Horizontal Completed & Frac d Horizontal Currently Drilling ROBERTSON BRAZOS MADISON MILAM Chachere 2H Childers 3H Giesenschlag-Groce 2H Giesenschlag C 3H BURLESON LEE Reser-Sanders E-1 Myers Cattle E-1 GRIMES WASHINGTON BASTROP WALLER FAYETTE AUSTIN Apache Properties EnerVest Acreage COLORADO

29 Eagleford Production Profile Well Name Giesenschlag Groce 2H Childers 3H Giesenschlag C 3H Chachere 2H Production Frac Type / Size 9 stage hybrid / 1,333,000# sand 4 stage hybrid / 660,000# sand 4 stage hybrid / 495,000# sand 5 stage hybrid / 789,000# sand Initial Rate bopd bopd Days of Production Giesenschlag - Groce 2H Childers 3H Giesenschlag C 3H Chachere 2H

30 Eagleford Work Progress Improved acreage position Recovered multiple sets of whole cores Drilled grass roots horizontal wells with increasing lateral length Optimizing fracture stimulation Continuing on steep learning curve Testing in different areas Monitor economics

31 Future Cost Savings: Economy of Scale Multi-well pads Multi-well facilities Centrally located water pits for multiple pad usage Re-use of flowback water for fracs Reduction in KCL concentration for frac water Estimated Well Cost Saving: 20% = $1.6 MM / Well

32 Eagleford Oil Production Economics AFIT PV10 Breakeven Price vs. Reserves Breakeven Price $/bbl Current Cost ($8.1 MM) 20% Cost Reduction 40% Cost Reduction Reserves MBO

33 Eagleford Potential Apache will earn deep right under EnerVest s 425,000 HBP acres through identified 2009 drilling program Apache will control over 450,000 acres of Eagleford play With a 50% minimum productive area, Eagleford play would generate over 700 potential drilling 320 acre spacing Reserve potential 105 MMboe ( Mboe / well) Upside reserve potential 315 MMboe (1, acre spacing and 225 Mboe / well)

34 Gulf Coast Growth Strategy Exploit & Explore 3D Coverage Acreage Position Deep Shelf Potential Experienced Technical Teams Technology Application Acquire Multi-pay Plays Geologically Complex Production Enhancement Cash Generation Consistent Results Dependable Market Premium Prices Excess Cash Flow Fund Corporate Ventures Nearly $8 Billion Lease Level Income Over Last 5 Yrs

35 2008 Analyst Review Jon Jeppesen Senior Vice President Gulf Coast Region The following discussions contain certain forward looking statements as defined by the Private Securities Litigation Reform Act of 1995 including, without limitation, estimates, expectations, plans and goals regarding Apache s production, reserves, financings, acquisitions, exploration and exploitation prospects, energy prices, operating costs, and results of operations. Such forward looking statements involve estimates, assumptions and uncertainties. No assurance can be given that Apache s expectations or goals will be realized, and actual results may differ materially from those expressed in the forward looking statements. For reconciliations of non GAAP financial measures, see our web site