The operator introduces the APA Corporation's Third Quarter 2023 Results Conference Call and reminds participants that the call is being recorded. Gary Clark, Vice President of Investor Relations, introduces the CEO and President, John Christmann, who will give an overview of the company's financial and operational results. Executive Vice President and CFO, Steve Riney, will also provide further information. Other executives are available for questions and the call will include a 10-minute prepared remarks and a Q&A session. Non-GAAP financial measures may be discussed and a reconciliation can be found on the company's website. The discussion will also include forward-looking estimates and assumptions based on current views and expectations.

The speaker discusses the factors that may affect the company's actual results and directs listeners to the full disclaimer on the company's website. They then provide an overview of their third quarter performance, highlighting strong execution and production in the Permian and North Sea. They also mention steady activity in the US and Egypt, and a focus on safety and maintenance in the North Sea. In Suriname, they achieved an important milestone with the completion of a successful drilling program and plans for a new oil hub. The speaker then moves on to discuss the company's outlook.

The company has issued fourth quarter guidance which predicts slightly lower production on a BOE basis due to a temporary shut-in at Brae Bravo in the North Sea. In the U.S., there will be flat oil production and a small decline in natural gas, while in Egypt there will be growth in BOE but not enough to offset the downtime in the North Sea. The company is increasing work over activity and accelerating completion of Permian wells, resulting in an increase in estimated fourth quarter upstream capital. This will not have a significant impact on fourth quarter production. The company will provide a formal outlook for 2024 in February.

APA reported their third quarter results, with a planned upstream capital budget of $2.0 billion to $2.1 billion for 2024. They expect low-single-digit oil production growth, with increases in the Permian and Egypt. The company remains committed to returning at least 60% of their free cash flow to shareholders this year. They have recently achieved a milestone in reducing methane emissions and are continuously working to reduce their environmental impact. APA also emphasizes their commitment to maintaining a diversified portfolio and investing in exploration projects. In the third quarter, they reported a consolidated net income of $459 million.

The article discusses the results of the third quarter for the company, including items outside of their core earnings. These include a release of a valuation allowance, losses on stock ownership and derivative swaps, and higher G&A expenses due to stock price appreciation. North Sea taxes were also higher than expected due to an unexpected cargo lifting. The company has returned a significant portion of their free cash flow to shareholders and follows Generally Accepted Accounting Principles in recognizing cargo liftings in the quarter they occur.

In the third quarter, the Cheniere gas sales contract contributed two months of free cash flow and pre-tax income of $32 million. It is expected to contribute $90 million in the fourth quarter and $375 million for the full-year 2024. The second half of 2023 is expected to see improved production and free cash flow compared to the first half. The company remains on track with its original full-year guidance and plans to return capital to shareholders through dividends and share repurchases. They also recognize the need for further progress on debt reduction. The operator then opened the call for Q&A, with the first question coming from Doug Leggate of Bank of America. He asks for more information on the North Sea and the declining curve with no capital, mentioning the gas compressor.

The speaker is discussing the decline in production and free cash flow in the North Sea due to the assets being taken off the platform. They are currently working on a plan for 2024 and will have more information in February. The speaker also mentions the possibility of higher free cash flow in 2024 compared to 2023, but it is too early to confirm. The speaker also brings up a question about the timing of first oil in Suriname and mentions that SBM has been selected with an early hull.

John Freeman from Raymond James asked about the sixth rig being added in the Permian and whether it will operate exclusively in the Delaware or also in Alpine High. John Christmann responded that it will be a spot rig, starting in the Delaware but with flexibility to move between pads. Freeman also asked about the preliminary 2024 outlook and Christmann explained that the budget will likely be flattish compared to 2023, with the sixth rig being largely funded by reductions in North Sea CapEx and Egypt remaining status quo. The wildcard is expiration, and Christmann clarified that the flattish budget includes expiration and that they will have to carefully manage activity ahead of FID.

The speaker confirms that the budget for 2024 includes $150 million for expiration, with a full-year without drilling in the North Sea, an increase in the Permian, stable drilling in Egypt, and $100.5 million for expiration. They also mention that the timing of completions in the Permian will drive quarterly production cadence, and that an FID in Suriname has been factored into the budget. The speaker is then asked about plans for Egypt, and they confirm that the 2024 plans will likely have similar levels of exploration and development activity.

The speaker discusses the stability and growth in Egypt's oil production, with plans to continue 18 rigs for both development and exploration. They also mention the potential for increased activity in the Permian gas market, depending on pricing stability. In regards to Egypt, they anticipate growth in both year-over-year and exit-to-exit measures. They also mention a future project in Suriname and a $1 billion commitment from Total.

John Christmann, CEO of the company, discusses the impact of a recent deal on their cap allocation across the portfolio. The deal was structured to ensure success and will bring in carry once the project reaches FID. In terms of Egypt, the company is currently focused on oil production but there is potential for increased gas production in the future. The company also saw a slight increase in working capital in Egypt during the quarter.

The company has made progress in reducing its receivables from EGPC since the first quarter of the year. The increase in receivables in the third quarter is due to exporting more cargoes and selling to third parties. This is a normal seasonal change and there is nothing to be concerned about. There was also a seasonal increase in working capital due to a large tax payment in the UK.

During a conversation between John Christmann and Michael Furrow, the topic of exploration in Suriname was discussed. Christmann stated that APA's focus this year was on appraising Krabdagu and moving it into the next phase. They also see several high quality, low risk prospects in Block 58 and plan to work with their partner to explore them in the future. When asked about other exploration prospects, Christmann mentioned that they see more potential in Block 58 than in Block 53. He also mentioned that their recent farm-in in Alaska fits their exploration strategy of building a high quality portfolio. They have a proven operator and the acreage is very prospective. More information will be shared in February.

The speaker discusses the importance of having a diverse portfolio in the exploration side of the business and making choices that will create the most shareholder value. They mention APA's approach to both organic and inorganic growth, with a focus on bolstering acreage in the Delaware and investing in exploration in Suriname. The speaker also mentions that with their current rig pace, they have ample inventory for the next decade and are constantly high-grading their assets. In response to a question, they mention that $150 million has been earmarked for exploration, but do not specify how much of that is for Suriname exploration.

John Christmann and Dave Deckelbaum discuss the growth trajectory of the program in Egypt and the increased work over activity. Christmann mentions that they will provide more color on the program in February and Deckelbaum asks for more information on the increased work over activity. Christmann explains that they have had an increase in well failures and are working to address it. Pursell adds that they are conducting a root cause analysis and the base level of work over inventory has increased from 5,000 to 10,000 barrels a day. They have added a work over rig and are taking steps to reduce the backlog over time.

The speaker, Leo Mariani, asks about the recent addition of a rig in Egypt and expresses concerns about potential instability in the region. The CEO, John Christmann, explains that their operations are not affected by the current conflict and that the government prioritizes oil and gas production. Mariani also asks about the $150 million budget for exploration next year, and Christmann clarifies that it is a placeholder for their plans, including potential activities in Suriname.

The speaker discusses the company's plans for seismic activity in Suriname, and a question is asked about the recent increase in U.S. oil production. The speaker attributes the increase to a continuous program and the deliberate approach taken by the company, and mentions plans to add a sixth rig in the Permian. The call concludes with the speaker thanking participants and leaving them with final thoughts.

The company has successfully completed an appraisal program in Suriname and will move forward with a project in 2024. Gross oil production in Egypt is increasing due to a successful drilling program. In the Permian, the company has added a sixth rig and expects continued success. More information will be shared in February. The call has ended.

This summary was generated with AI and may contain some inaccuracies.