APA Corporation (NASDAQ:APA) Q3 2023 Earnings Call Transcript

David Deckelbaum: Thanks for taking my questions, guys. John, I wanted to just ask, are you able to tell us the $150 million you have earmarked for exploration next year? This I guess to be more pointed about it, how much of that is included for ex-Suriname exploration?

John Christmann: At this point, we’ll come back with more color next year on the program. It’s a placeholder and we’re working through. There’s some other things we’ll be doing. You’ve got exploration in Egypt that we’ve always funded and some other things, but we’ll come back with more color in February.

David Deckelbaum: Appreciate that. Maybe if I could just follow-up on Egypt. You talked about the growth trajectory in the next year and I certainly know that U.S. oil is anticipated growing next year. Can you give a little bit more color just on what’s happening with the increased work over activity? What’s driving that? And are there any alterations being made that this won’t be a drag into next year? Or is this being factored in with greater frequency now that you have this increased rig count?

John Christmann: Yes. I mean it’s a situation where we’ve always had, I’ll call it a wells or a volume offline that requires work over. We have a lot of sub pumps in Egypt and we’ve had some increase in the failures in a few areas and that number’s ticked up. And Dave can get into some more color, but we’ve just got more barrels offline that we need to get to on the work over side. And we’re addressing that, so it’s something we’re jumping all over.

Dave Pursell: Yes. And so just to follow-on what John said, we’re working on a root cause analysis just to understand, are we seeing a structural change in well failures, we’ve seen a reduction in ESP run times, but we’re doing a broader look at that. And to put some numbers on John’s comment, on base level of work over inventory, that typically represents about 5,000 barrels a day of production that’s offline at any given time. We’ve seen that increase to over 10,000 barrels a day, really from the end of the second quarter through today. So we’ve added a work over rig. We’re doing some other things to start working that backlog down over time.

Operator: With Roth MKM, Leo, your line is open. Go ahead.

Leo Mariani: Hey guys just wanted to follow-up briefly on Egypt here. I think you guys maybe added a rig recently. I think you were at 17 earlier in the year, if I sort of got it right. So just curious, is that just because of lower North Sea activity or just kind of reallocating dollars here? And then I guess just in general, obviously there’s been significant instability there kind of in that Sinai Peninsula area bordering Israel there with the conflict that’s happening right now. I mean, do you guys have any concerns over potential spillover into Egypt and have you been kind of in contact with the Egyptian government regarding them?

John Christmann: Yes. It’s something that it’s interesting. We’re coming up on our 30th anniversary of being in Egypt. So we’ve got a great history there. We’ve been there a long time and we’ve been through watched Egypt go through a lot of trying times. This year has been difficult for them and it’s really been driven more by inflation and currency devaluation and some of those factors. We’re closely monitoring the situation. I think the good thing from our perspective is our operations are all West of Cairo into the Western desert. And if you go back in history, even over the Arab Spring, we have not had any shut-ins or major interruption in our operations. So I think the good news there is the government continues to prioritize oil and gas operations. They know they need the in country production and we’ve been watching things very, very closely, so.

Leo Mariani: Okay. That’s helpful. And then, in terms of the $150 million in exploration next year, I don’t want to beat a dead horse here, but as you kind of looking at that at a high level in your mind, does that include some dollars in Suriname at this point or is that just sort of kind of still an open ended proposition?