Apache Takes Cautious Step Toward 2019 With $2.4B Budget
Zacks Investment Research | Feb 10, 2019 09:20PM ET
Apache Corporation (NYSE:APA) recently announced 2019 capital budget of $2.4 billion, which reflects uncertainty regarding oil price volatility. The company’s 2019 spending plan is 22.6% less than its 2018 spending guidance of $3.1 billion and 20% lower than its previous 2019 expenditure guidance of $3 billion. The company plans to allocate 70-75% of its capital budget toward U.S. operations.
WTI, the American benchmark, popped above $76 a barrel and touched multi-year highs in early October last year. However, it plunged nearly 30% at the end of the year, denting the confidence of the energy companies. As a result, several oil and gas companies cut short their spending for 2019.
Production
The company doesn’t expect the reduction in its planned capital expenditure to affect much of its production guidance, which is now estimated to be at the midpoint of its previously announced guidance range of 410,000-440,000 barrels of oil equivalent per day.
In other words, Apache expects 6-10% production growth in fourth-quarter 2019 from the prior-year period. Production in the United States is projected to grow at a 12-16% rate during this period, including 5% anticipated growth from the prolific Permian Basin. However, production from international assets is expected to be marginally lower.
Cashflow
Apache assumes oil price to average $53 per barrel in 2019, while natural gas price is estimated to average $2.80 per thousand cubic feet (Mcf). This is expected to make the company’s operations cash flow neutral, after dividend payments. Notably, the U.S. Energy Information Administration (EIA) expects Original post
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