Feb. 26, 2021, 6:19 a.m. EST

10-K: APACHE CORP

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(EDGAR Online via COMTEX) -- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to Apache Corporation (Apache or the Company) and its consolidated subsidiaries and should be read together in conjunction with the Company's Consolidated Financial Statements and accompanying notes included in Part IV, Item 15 of this Annual Report on Form 10-K, and the risk factors and related information set forth in Part I, Item 1A and Part II, Item 7A of this Annual Report on Form 10-K. This section of this Annual Report on Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Annual Report on Form 10-K are incorporated by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (filed with the SEC on February 28, 2020). Overview

During 2020, Apache reported a net loss attributable to common stock of $4.9 billion, or $12.86 per share, compared to a net loss of $3.6 billion, or $9.43 per share, in 2019. The results for both periods were driven by asset impairments. In 2020, the Company recorded impairments totaling $4.5 billion in connection with fair value assessments stemming from the global crude oil price collapse on lower demand and economic activity resulting from the impacts of COVID-19 and related third-party actions. The Company recorded asset impairments during 2019 of $2.9 billion, primarily related to a material reduction in planned investment at Apache's Alpine High development that triggered fair value assessments of the Company's upstream Alpine High proved properties and Altus' associated midstream assets.

In late 2020, the Company commenced drilling a fourth exploration well in the block at the Keskesi prospect. In January 2021, Apache and Total S.A announced a discovery that confirmed oil in the eastern portion of the block. The Keskesi East-1 well is continuing to drill to deeper targets. Apache is transferring operatorship of Block 58 to its partner, Total S.A, which will conduct all exploration and appraisal activities subsequent to completion of drilling operations at Keskesi. For a more detailed discussion related to the Company's various geographic segments, refer to "Upstream Exploration and Production Properties-Operating Areas" set forth in Part I, Item 1 and 2 of this Annual Report on Form 10-K. Acquisition and Divestiture Activity

Results of Operations







        Oil and Gas Production Revenues
        Apache's oil and gas production revenues and respective contribution to total
        revenues by country are as follows:
                                                                                                 For the Year Ended December 31,
                                                               2020                                             2019                                           2018
                                               $ Value              % Contribution             $ Value             % Contribution             $ Value             % Contribution
                                                                                                         ($ in millions)
        Oil Revenues:
        United States                       $    1,209                            39  %       $ 2,098                            40  %       $ 2,271                            39  %
        Egypt(1)                                 1,102                            35  %         1,969                            38  %         2,396                            41  %
        North Sea                                  795                            26  %         1,163                            22  %         1,179                            20  %
        Total(1)                            $    3,106                           100  %       $ 5,230                           100  %       $ 5,846                           100  %
        Natural Gas Revenues:
        United States                       $      251                            42  %       $   293                            43  %       $   458                            50  %
        Egypt(1)                                   280                            47  %           295                            44  %           339                            37  %
        North Sea                                   67                            11  %            90                            13  %           122                            13  %
        Total(1)                            $      598                           100  %       $   678                           100  %       $   919                           100  %
        NGL Revenues:
        United States                       $      304                            91  %       $   372                            91  %       $   550                            94  %
        Egypt(1)                                     8                             3  %            12                             3  %            13                             2  %
        North Sea                                   21                             6  %            23                             6  %            20                             4  %
        Total(1)                            $      333                           100  %       $   407                           100  %       $   583                           100  %
        Oil and Gas Revenues:
        United States                       $    1,764                            44  %       $ 2,763                            44  %       $ 3,279                            45  %
        Egypt(1)                                 1,390                            34  %         2,276                            36  %         2,748                            37  %
        North Sea                                  883                            22  %         1,276                            20  %         1,321                            18  %
        


(1)Includes revenues attributable to a noncontrolling interest in Egypt.







        Production
        The following table presents production volumes by country:
                                                                                           For the Year Ended December 31,
                                                                                Increase                                         Increase
                                                        2020                   (Decrease)                  2019                 (Decrease)                2018
        Oil Volumes - b/d:
        United States                                   88,249                   (16)%                    105,051                    -                   104,800
        Egypt(1)(2)                                     75,384                   (11)%                     84,617                  (10)%                  93,656
        North Sea                                       50,386                     1%                      49,746                   6%                    46,953
        Total                                          214,019                   (11)%                    239,414                  (2)%                  245,409
        Natural Gas Volumes - Mcf/d:
        United States                                  561,731                   (12)%                    639,580                   8%                   593,254
        Egypt(1)(2)                                    274,175                    (4)%                    285,972                  (12)%                 326,811
        North Sea                                       57,464                     5%                      54,642                   20%                   45,466
        Total                                          893,370                    (9)%                    980,194                   2%                   965,531
        NGL Volumes - b/d:
        United States                                   74,136                     8%                      68,381                   19%                   57,451
        Egypt(1)(2)                                        754                   (19)%                        931                   1%                       923
        North Sea                                        1,936                    11%                       1,739                   46%                    1,189
        Total                                           76,826                     8%                      71,051                   19%                   59,563
        BOE per day:(3)
        United States                                  256,007                    (9)%                    280,029                   7%                   261,126
        Egypt(1)(2)                                    121,834                    (9)%                    133,209                  (11)%                 149,048
        North Sea(4)                                    61,899                     2%                      60,592                   9%                    55,719
        Total                                          439,740                    (7)%                    473,830                   2%                   465,893
        


(1)Gross oil, natural gas, and NGL production in Egypt were as follows:







                                      2020                2019                2018
        Oil (b/d)                   164,104             193,886             206,378
        Natural Gas (Mcf/d)         641,069             708,682             769,468
        NGL (b/d)                     1,429               1,722               1,502
        


(2)Includes net production volumes per day attributable to a noncontrolling interest in Egypt of:







                                      2020                2019                2018
        Oil (b/d)                    25,206              28,220              31,240
        Natural Gas (Mcf/d)          91,540              95,539             109,169
        NGL (b/d)                       251                 310                 308
        


(3)The table shows production on a boe basis in which natural gas is converted to an equivalent barrel of oil based on a 6:1 energy equivalent ratio. This ratio is not reflective of the price ratio between the two products.







        Pricing
        The following table presents pricing information by country:
                                                                               For the Year Ended December 31,
                                                                       Increase                                  Increase
                                                   2020               (Decrease)              2019              (Decrease)              2018
        Average Oil Price - Per barrel:
        United States                         $     37.42                (32)%             $  54.71                (8)%              $  59.36
        Egypt                                       39.95                (37)%                63.76                (9)%                 70.09
        North Sea                                   42.88                (34)%                65.10                (6)%                 69.02
        Total                                       39.60                (34)%                60.05                (8)%                 65.30
        Average Natural Gas Price - Per
        Mcf:
        United States                         $      1.22                (3)%              $   1.26                (41)%             $   2.12
        Egypt                                        2.79                (1)%                  2.83                  -                   2.84
        North Sea                                    3.19                (29)%                 4.48                (39)%                 7.33
        Total                                        1.83                (4)%                  1.90                (27)%                 2.61
        Average NGL Price - Per barrel:
        United States                         $     11.21                (25)%             $  14.95                (43)%             $  26.28
        Egypt                                       27.83                (18)%                33.87                (14)%                39.17
        North Sea                                   29.73                (19)%                36.83                (20)%                45.84
        Total                                       11.84                (25)%                15.74                (41)%                26.87
        


Crude Oil Prices A substantial portion of our crude oil production is sold at prevailing market prices, which fluctuate in response to many factors that are outside of the Company's control. Average realized crude oil prices for 2020 were down 34 percent compared to 2019, a direct result of the decreasing benchmark oil prices over the past year resulting from the COVID-19 pandemic and related third-party actions. Crude oil prices realized in 2020 averaged $39.60 per barrel.

NGL Prices Apache's U.S. NGL production, which accounts for 96 percent of the Company's total 2020 NGL production, is sold under contracts with prices at market indices based on Gulf Coast supply and demand conditions, less the costs for transportation and fractionation, or on a weighted-average sales price received by the purchaser.

Feb 26, 2021

COMTEX_381776814/2041/2021-02-26T06:19:10

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