Apache Corp. reported that severe winter storms and outages at third-party owned facilities adversely affected the company’s oil and gas production from its Permian basin and central region operations during fourth-quarter 2013.
Widespread power outages and icy road conditions primarily in West Texas and New Mexico in late November and early December caused delays in operations, Apache said.
It said it also temporarily reduced drilling activity in its central region in the Texas Panhandle and western Oklahoma during the quarter as part of its capital discipline program, scaling back from 31 drilling rigs in the third quarter to 25 in the fourth.
Apache believes downtime and pipeline outages offset new production added through its drilling program.
A production increase of at least 1,000 boe/d is expected for the Permian in fourth quarter compared with the third quarter, when the region averaged 131,700 boe/d. The rise represents an increase over fourth-quarter 2012’s 117,900 boe/d.
However, a slight production decrease is expected for fourth quarter compared with third quarter, when the region averaged 94,800 boe/d, due to unusually severe weather, pipeline outages, and reduced drilling in the central region, Apache said. It remains an increase over fourth-quarter 2012’s 79,300 boe/d.
Impact of divestitures
The company has undertaken several large-scale divestitures over the past year, which will be reflected in fourth-quarter volumes.
Recent deals include the sale of a one-third minority participation in its Egypt oil and gas business that closed on Nov. 14 (OGJ Online, Aug. 30, 2013), divestment of its Gulf of Mexico shelf operations that closed on Sept. 30 (OGJ Online, July 18, 2013), and the sales of selected Canadian assets, which closed in late September and mid-October (OGJ Online, Aug. 15, 2013).
In May, Apache disclosed plans to divest properties worth $4 billion by yearend 2013, hoping to use half the divestment proceeds to reduce debt and increase financial flexibility and the other half to buy shares of its common stock representing about 7.5% of the total outstanding (OGJ Online, May 9, 2013).
Apache anticipates quarter-over-quarter asset sale volumes will reflect a 134,000 boe/d reduction in total production volumes from the third quarter. This includes adjustments for amounts attributable to the sale of a one-third, noncontrolling partnership interest in Apache’s Egypt oil and gas operations.
The Gulf of Mexico shelf, for example, averaged 91,200 boe/d while Egypt averaged 147,700 boe/d of production in third-quarter 2013. The divested Canadian properties averaged 18,000 boe/d in third-quarter 2013.