CHANGE IS consTanT - Apache Corporation

180 Pages·2012·1.25 MB·English

CHANGE
IS
consTanT
ANNUAL REPORT 2011
THESE
THINGS
CHANGE
- 12 - 11 - 10 - 9 - 8 - 7 - 6 - 5 - 4 - 3 - 2 - 1
CANADA
2011 NATURAL GAS PRODUCTION
632,550 MCF/DAY
2011 LIQUID HYDROCARBON PRODUCTION
20,210 BARRELS/DAY
PROVED RESERVES
765 MMBOE
GROSS ACREAGE
7.5 MILLION
UNITED STATES EGYPT
2011 NATURAL GAS PRODUCTION 2011 NATURAL GAS PRODUCTION
864,742 MCF/DAY 365,418 MCF/DAY
2011 LIQUID HYDROCARBON PRODUCTION 2011 LIQUID HYDROCARBON PRODUCTION
141,526 BARRELS/DAY 103,961 BARRELS/DAY
PROVED RESERVES PROVED RESERVES
1,290 MMBOE 292 MMBOE
GROSS ACREAGE GROSS ACREAGE
10.3 MILLION 9.7 MILLION
ARGENTINA
2011 NATURAL GAS PRODUCTION
212,311 MCF/DAY
2011 LIQUID HYDROCARBON PRODUCTION
12,615 BARRELS/DAY
(MMboe)
PROVED RESERVES
117 MMBOE 3000
GROSS ACREAGE
3.7 MILLION
2500
2000
1500
1000
500
0
2 3 4 5 6 7 8 9 0 1
0 0 0 0 0 0 0 0 1 1
0 0 0 0 0 0 0 0 0 0
2 2 2 2 2 2 2 2 2 2
WORLDWIDE RESERVES
- 12 - 11 - 10 - 9 - 8 - 7 - 6 - 5 - 4 - 3 - 2 - 1
0 + 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12
NORTH SEA
2011 NATURAL GAS PRODUCTION
2,284 MCF/DAY
2011 LIQUID HYDROCARBON PRODUCTION
54,545 BARRELS/DAY
PROVED RESERVES
197 MMBOE
GROSS ACREAGE
786,000
AUSTRALIA
2011 NATURAL GAS PRODUCTION
185,079 MCF/DAY
2011 LIQUID HYDROCARBON PRODUCTION
38,228 BARRELS/DAY
PROVED RESERVES
329 MMBOE
GROSS ACREAGE
8.8 MILLION
(Mboe/d)
800
700
600
500
400
300
200
100
0
2 3 4 5 6 7 8 9 0 1
0 0 0 0 0 0 0 0 1 1
0 0 0 0 0 0 0 0 0 0
2 2 2 2 2 2 2 2 2 2
WORLDWIDE PRODUCTION
0 + 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12
THESE
THINGS
REMAIN
MANAGEMENT
SYSTEMS
PROFITABILITY
TECHNOLOGY SUSTAINABILITY
cuLTure
E
C
G
N
R
A
O
L
W
A
T
B
H
CAPTURING 10
VALUE CORE AREAS
PEOPLE
1
feLLow
share
hoLders,
In the 57 years since Apache was established,
CHANGE HAS BEEN CONSTANT: Wide swings in
Production climbed 14 percent to
commodity prices, unsettled politics,
748,000 barrels of oil equivalent per day.
evolving regulation and rapidly advancing
technologies continually reshape the We increased proved reserves to
landscape of our industry. 3 billion boe, replacing 125 percent of
production through drilling.
Confronting change without being swept
away by it requires a fi rm foundation. Earnings increased 50 percent to $4.5 billion;
At Apache, OUR FOUNDATION REMAINS THE SAME: earnings per share climbed 36 percent to
our relentless pursuit of opportunity and $11.47 per diluted common share.
dedication to our mission — growing a profi table
Cash from operations before changes in
independent oil and gas company in a safe
operating assets and liabilities* surpassed
and environmentally responsible manner for
$10 billion, up 39 percent.
the long-term benefi t of our shareholders.
Our progress comes through a combination
of balance, growth and profi tability.
What enables Apache’s continued profi table
growth is our team. OUR CULTURE empowers
We have not linked Apache’s future to a
employees at every level of the organization
single play, region or commodity, but to a
to make decisions and achieve the company’s
BALANCED PORTFOLIO of producing assets and
goals. At Apache, people have a sense of
large acreage positions in 10 core areas in
ownership and the knowledge that no matter
six countries — all in proven hydrocarbon
who comes up with ideas, the best answers win.
basins. Our GROWTH comes by both capturing
value on existing acreage and exploration
From 3-D seismic to horizontal drilling and
in promising areas.
multi-stage well completions, Apache employs
advanced technology to enhance the chances
The result is a sustained record of
of exploration success and increase effi ciency
PROFITABILITY, enhanced by management
of our drilling programs. Our commitment to
systems that focus our team on rate of
sustainability includes high standards for
return and maximizing production through
safe operations, creative solutions that
incentives based on measured results.
minimize the impact of our operations on the
In 2011, Apache delivered new records environment, and support for the communities
in several key metrics: where we operate.
*Cash from operations before changes in operating assets and liabilities is a non-GAAP
measure. Please see reconciliations, page 11.
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BALANCE
Portfolio management has long been a key Apache Our portfolio balance has multiple dimensions: North America and
characteristic. Over the course of the last two years, we international; 50 percent of production from liquids and 50 percent
have strengthened Apache’s portfolio through transactions from natural gas; conventional and unconventional resources;
totaling $14 billion that added oil and gas producing onshore and off shore; and fi elds with high initial production,
assets and acreage in eight of our 10 operating regions rapid decline and early payout and others with long reserve life
and diversifi ed our production so that no single region that will generate stable production and cash fl ow for many years.
contributes more than 22 percent of production. The most
Today, Apache holds 41 million gross acres in 10 regions.
signifi cant changes were in our onshore U.S. regions and
Our experience demonstrates that these large acreage positions
Canada, which now represent 38 percent of production.
will continue to bring new opportunities as diverse as the Granite
In addition to their immediate impact on production and
Wash, Tonkawa, Cleveland and Marmaton in the Anadarko basin,
cash fl ow, these transactions also brought signifi cant new
multiple formations in the Permian Basin, and deeper zones in
undeveloped acreage that will provide drilling opportunities
Egypt’s Western Desert. With solid core areas, we have opportunities
for decades to come.
to employ our capital in areas that provide the highest returns.
PRODUCTION REVENUE
6%
17%
22% 15%
31%
33% 28%
48%
N Amer Gas N Amer Liquids N Amer Gas N Amer Liquids
Intl Gas Intl Liquids Intl Gas Intl Liquids
2011 COMMODITY MIX
3
GROWTH
Since our inception in 1954, growth has been a part of For example, our Central Region – Apache’s operations in
Apache’s DNA; 2011 was our 31st year of production growth Oklahoma and the Texas Panhandle – has moved almost completely
of the last 33 years. from vertical wells targeting dry gas to a technology-driven
operation drilling horizontal, multi-stage fracture-stimulation wells
Throughout the history of oil and gas exploration and
that enable Apache to access oil and natural gas liquids
development, technology has played a central role in
(NGLs) trapped in tight rocks across the Anadarko
accessing new resources. In the 1990s, 3-D seismic
basin. The Cordillera Energy Partners III
revolutionized the hunt for oil and gas, and
acquisition, which we announced in
that technology continues to improve.
January 2012, will bring substantial
In the last decade, the most signifi cant operations that include approximately
advance was the coupling of horizontal 254,000 net acres, doubling our position
drilling with hydraulic fracturing in this prolifi c fairway. With more than
techniques that enable our industry 14,000 identifi ed drilling locations, we
to develop and produce resources plan to triple drilling activity in this
otherwise trapped in shales and other area in 2012. With the completion of the
low-permeability rocks. Apache is Cordillera acquisition expected in the
applying this technology worldwide. second quarter, Apache’s Anadarko basin
The combination of these two technologies acreage is projected to total 1.6 million
has transformed the industry in the United gross acres (837,000 net acres).
States and Canada, unlocking more enormous Apache also acquired approximately
natural gas resources. For be(cid:3) er or worse, this 96,000 net acres in the Bivins Ranch area, a
has created continuing downward pressure on 200-square-mile block in the Whi(cid:3) enburg basin
North American gas prices. As a result, we are directing in Hartley, Oldham, Po(cid:3) er and Moore counties in the Texas
much of our capital toward horizontal drilling in areas where the Panhandle, immediately south of the prolifi c Panhandle Dolomite
targets are rich in higher-priced crude oil and natural gas liquids. fi eld and north of two 25-well Canyon Wash fi elds. This acreage play
4
is part of our program to explore in underdeveloped areas that can Apache is applying other technologies to enhance the search for
benefi t from our technical expertise and fi nancial capacity. Prior to oil and gas across our global portfolio, including advanced seismic
Apache’s entry in the area, just 21 wells had been drilled on the block techniques that improve drilling results in mature basins.
located about 100 miles west of Apache’s Anadarko basin properties.
In the Gulf of Mexico Shelf and the Gulf Coast Onshore, new
We were encouraged by our early drilling results – fi ve oil producers
methods of processing 3-D seismic provide enhanced imaging and
from our fi rst six vertical wells, each producing from 100 to 1,000
create many opportunities across Apache’s acreage, including the
barrels per day – and we plan to expand our program in 2012 to
largest position in Gulf waters of 600 feet or less.
include horizontal drilling.
In the North Sea, Apache is employing advanced seismic
In the Permian Region, we ramped up activity on an asset base
technology and reservoir modeling to identify high-impact
that now encompasses 3 million gross acres (1.5 million net) – the
drilling targets in the Forties Field. Our drilling program has
second-largest acreage position in the basin. We drilled and
been driven by 4-D seismic, which uses a sequence of 3-D surveys
participated in 507 wells in 2011, and our currently identifi ed
to gain an enhanced view of the movement of oil through this
inventory includes more than 10,000 future drilling locations
prolifi c reservoir.
across nearly every play area.
Since acquiring Forties in 2003, Apache has invested $4 billion in
Experience brings new effi ciencies. We have cut drilling time in half
drilling and new facilities to improve effi ciency. We have produced
at the Wolfcamp play in the Deadwood area in Glasscock County,
approximately 180 million barrels of oil equivalent (MMboe), which
Texas, enhancing the economics in a play encompassing 100,000
exceeds the estimated proved reserves at the time of the purchase
net acres that represents about half of Apache’s Permian drilling
by 25 percent. At year-end 2011, remaining estimated proved reserves
activity. We have 30 rigs operating in the Permian, up from fi ve in
were 131 MMboe. Production averaged 54,000 boe per day in 2011.
2010, and we are in the early phase of applying horizontal drilling
techniques in one of the most prolifi c oil-producing basins on Earth. The acquisition of ExxonMobil’s Mobil North Sea Limited,
completed at year-end 2011, was the fi rst expansion of our North
We are pu(cid:3) ing horizontal drilling and completion technologies to
Sea position since 2003 and fortifi ed our operations beyond Forties
work in Argentina, where Apache will continue to appraise an area
to include operating interests in the Beryl, Nevis, Ness, Nevis South,
in the Neuquén basin that is believed to be one of the largest shale
Skene and Buckland fi elds, the Beryl/Brae gas pipeline and the SAGE
resource basins outside North America.
3
. 9 2 2 0 5 0
4 . . . . . 9 5 2 9 7 7
0 5 0 5 0 7 2 6 9 2 9 1
1 4 6 2 2 1 1 7 2 3 1 1
S A T A A A S A T A A A
E D P I E N E D P I E N
T A Y L S I T A Y L S I
A N G A T A N G A T
T A E R H N T A E R H N
S C T T E S C T T E
S R G S R G
D U O R D U O R
E A N A E A N A
T T
I I
N N
U U
TOTAL 273.1 (million Boe) TOTAL 2990 (million Boe)
2011 PRODUCTION 2011 PROVED RESERVES
5
gas plant. These are the best North Sea assets we have evaluated addition to Western Australia’s ability to supply its booming
since acquiring Forties. The fi elds have signifi cant remaining economy with energy. We expect to realize prices for this new
life, high production effi ciency, quality reservoirs and a portfolio production that are substantially higher than our legacy contracts;
of exploitation projects. Our goal is to replicate our experience the new price realizations will be evidenced in 2012 results.
at Forties.
Working with our partners EOG Resources and
As Apache has grown, two trends have emerged: EnCana, we achieved several milestones for our
More of our capital is directed to developments planned Kitimat LNG project in Canada.
that will have signifi cant impact but This planned facility on British Columbia’s
have longer lead times, and our global Pacifi c coast is designed to export
exploration activities are expanding. gas produced in the Horn River
basin – containing one of North
More than half of the capital we plan
America’s top-quality gas shales –
to spend in 2012 will go to projects that
to Asia at oil-indexed prices. Kitimat
will contribute signifi cant production
received the fi rst 20-year natural gas
beginning in 2013 and beyond.
export license to be granted by Canada’s
We sanctioned the Chevron-operated National Energy Board, and we continue
Wheatstone liquefi ed natural gas (LNG) discussions with potential LNG off -takers
project in Australia, which will enable interested in a new source of fuel in a
Apache to sell natural gas from our large stable political environment and a short sail
Julimar/Brunello discovery at LNG prices from north Asian ports.
indexed to crude oil prices. We also have begun
Discovery of new oil and gas resources has long been
development of our Coniston and Balnaves oil
a contributor to Apache’s growth. We have built our Egypt
discoveries and the Macedon natural gas discovery off shore
and Australia regions into signifi cant businesses mainly through
Western Australia. In December 2011, we commenced production
the drillbit, and we expect to continue on this path.
from Reindeer Field via the Devil Creek Gas Plant, an important
2011

16.9
2007 10.0 12.1 2010
8.6
12.4

8002 9002( $ billions)
REVENUES
6