Cash-flow neutrality remains as Apache's key strategic objective in 2016. Q1 realised prices were lower than the company's planning prices (US$35/bbl oil and US$2.35/mcf Henry Hub), which led to a US$148 million cash deficit for the quarter (US$435 million in cash flow from continuing operations minus US$583 million in upstream and midstream capex). We estimate the recent rebound in oil prices, if sustained, would enable Apache to generate cash surpluses in subsequent quarters and comfortably achieve cash-flow neutrality for the full year. But the company has refrained from locking in current price levels despite suggesting last quarter that it could initiate a hedge programme if the futures market improved.
The upstream oil and gas industry conducts activities against a backdrop of growing energy and environmental challenges. Political instabilities, international conflicts and government and environmental regulation have all impacted the production process.
This has forced companies to re-examine their corporate strategy, moving away from high-risk exploratory drilling to lower-risk exploration in mature basins as they search for increased returns.
This Upstream Oil and Gas Reported Results Analysis report provides rapid response analysis on company quarterly results and strategy presentations. Use it to gain the upper hand with Wood Mackenzie's opinion on the latest corporate developments.
Widely used by both the energy and financial sectors, our report gives you a unique perspective on key strategic and financial challenges, as well as opportunities facing this oil and gas company.
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Company report | Nov 2016
Apache corporate - reported results analysis
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