APA Corporation

Good day, and thank you for standing by. Welcome to the APA Corporation's third quarter 2023 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone, and you will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Gary Clark, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us on APA Corporation's third quarter 2023 Financial and Operational Results Conference call. We will begin the call with an overview by CEO and President John Chrisman, Steve Reine, Executive Vice President and CFO, will then provide further color on our results and outlook. Also on the call and available to answer questions are Dave Purcell, Executive Vice President of Development, Tracy Henderson, Executive Vice President of Exploration, and Clay Bratches, Executive Vice President of Operations. Our prepared remarks will be about 10 minutes in length, with the remainder of the hour allotted for Q&A. In conjunction with yesterday's press release, I hope you've had the opportunity to review our financial and operational supplement, which can be found on our investor relations website at investor.apacorp.com. Please note that we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website. Consistent with previous reporting practices, adjusted production numbers cited in today's call are adjusted to exclude non-controlling interest in Egypt and Egypt tax barrels. I'd like to remind everyone that today's discussion will contain forward-looking estimates and assumptions based on our current views and reasonable expectations. However, a number of factors could cause actual results to differ materially from what we discussed today. Full disclaimer is located with the supplemental information on our website. And with that, I'll turn the call over to John.

Good morning, and thank you for joining us. On today's call, we will review third quarter highlights, discuss our outlook for the fourth quarter, and provide a high-level overview of our capital plan and anticipated production in 2024. For the third quarter in a row, adjusted oil production exceeded the high end of our guidance range. Good execution and strong well performance in the Permian are the primary drivers of this trend. We also achieved the high end of our guidance in the North Sea during the quarter, which benefited from the production ramp of the store north well. In Egypt, gross oil volumes grew by approximately 4,000 barrels per day, which was a bit below expectations as previously disclosed. On a total company basis, Third quarter reported oil volumes were up more than 15% from the same quarter in the prior year, and we are very pleased with this progress. Activity in the U.S. and Egypt remained steady while we suspended drilling activity around mid-year in the North Sea. Our investment program in the North Sea is now directed towards safety, base production management, and asset maintenance and integrity. In Suriname, we achieved a very important milestone during the third quarter with the completion of a successful appraisal drilling program at Crab Dagu on Block 58 and the subsequent announcement by our partner, Total Energies, of plans to proceed with feed work for a 200,000 barrel per day FPSO in the eastern portion of the block. The planned oil hub is underpinned by an estimated 700 million barrels of recoverable oil resource at Sapakara and Crab Dagu and is targeted FID by the end of 2024. Turning now to our outlook. In yesterday's financial and operational supplement, we issued fourth quarter guidance, which anticipates slightly lower production on a BOE basis compared to the third quarter. The primary contributor is in the North Sea, where the temporary shut-in at Barrel Bravo will result in volume deferrals of about 5,000 barrels of oil equivalent per day. In the U.S., completion timing will lead to a relatively flat quarter consisting of unchanged oil production and a small decline in natural gas. And in Egypt, a combination of higher oil and lower natural gas volumes should deliver BOE growth. but not enough to fully offset the downtime in the North Sea. Let me provide a bit more color on production operations in Egypt. In February, we established a gross oil target of 154,000 barrels per day for the fourth quarter. We now estimate that number will be closer to 150,000 barrels per day, which is up about 5,000 barrels per day from the third quarter. After successfully working through the challenges associated with ramping our rig count from 11 to 18, our drilling program is now performing as planned. However, we have experienced a growing backlog of workover projects over the last two quarters and a corresponding uptick in barrels offline. To address this, we have begun to increase our workover activity, which Dave can discuss further in Q&A. During the fourth quarter, we are opportunistically accelerating the completion of eight Permian wells from January into December and adding a sixth rig in the Delaware Basin. This will result in an increase in our estimated fourth quarter upstream capital to around $500 million and bring four-year upstream capital to just under $2 billion. I should note that these investments will not have a material impact on fourth quarter production. As we typically do at this time of year, I would like to provide a high-level overview of our 2024 outlook, which we will follow up with formal guidance in February. Recall that we entered 2023 with a planned upstream capital budget of $2.0 to $2.1 billion. As of today, we expect a similar range in 2024, albeit with some changes in regional allocations. We are targeting low single-digit oil production growth next year, with expected increases in the Permian and Egypt more than offsetting declines in the North Sea. APA remains committed to returning at least 60% of our free cash flow this calendar year to shareholders. During the first three quarters of the year, we generated $673 million of free cash flow, 65% of which we returned to shareholders via dividends and stock buybacks. This leaves more to do in the fourth quarter and we will fulfill our minimum 60% commitment for the full year. One of APA's core principles is to produce oil and gas safely and to reduce the environmental impact of our operations. I am pleased to announce that we recently achieved an important milestone in reducing methane emissions with the conversion of over 2,000 pneumatic devices in the Permian to lower emitting technologies. Our programs to identify and eliminate emissions throughout our global asset base are ongoing, and we continuously seek to expand and improve them. In closing, we are committed to our strategy of maintaining a diversified portfolio and maintaining operational flexibility to respond quickly to commodity price volatility and other externalities. We are demonstrating this today through the reallocation of capital from the North Sea into the Permian and Egypt. We also remain committed to the investment in a portfolio of exploration projects which have the potential to drive differentiated future growth and competitive full cycle economics. And with that, I will turn the call over to Steve Ryan.