Q2 2024 APA Corp Earnings Call
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Speaker Change: Good day and thank you for standing by. Welcome to APA Corporation's second quarter financial and operational results conference call.
Operator: Thank you for standing by. Welcome to APA Corporation's 2nd Quarter Financial and Operational Results Conference Call. At this time, all participants are in a listen-only mode.
Speaker Change: At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please 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.
Speaker Change: 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.
Gary Clark: Good morning, and thank you for joining us on APA Corporation's second quarter 2024 Financial and Operational Results conference call. We will begin the call with an overview by CEO John Christmann. Steve Riney, President and CFO, will then provide further color on our results and outlook. Also on the call and available to answer questions are Tracey Henderson, Executive Vice President of Exploration, and Clay Bretschus, Executive Vice President of Operations. Our prepared remarks will be less than 15 minutes in length, with the remainder of the hour allotted for Q&A.
Gary Clark: Good morning and thank you for joining us on APA Corporation's second quarter 2024 Financial and Operational Results conference call.
Speaker Change: We will begin the call with an overview by CEO John Christmann.
Steve Riney, President and CFO , will then provide further color on our results and outlook.
Speaker Change: Also on the call and available to answer questions are Tracey Henderson, Executive Vice President of Exploration, and Clay Bretschus, Executive Vice President of Operations.
Speaker Change: Our prepared remarks will be less than 15 minutes in length.
Gary Clark: In conjunction with yesterday's press release, I hope you have 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 measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website.
Speaker Change: with the remainder of the hour allotted for Q&A. In conjunction with yesterday's press release, I hope you have had the opportunity to review our financial and operational supplement, which can be found on our investor relations website at investor.apacorp.com.
Speaker Change: Please note that we may discuss certain non-GAAP financial measures.
Speaker Change: A reconciliation of the differences between these measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website.
Gary Clark: Consistent with previous reporting practices, adjusted production numbers cited in today's call are adjusted to exclude non-controlling interest in Egypt and Egyptian 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 on today's call. A full disclaimer is located with the supplemental information on our website.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: However, a number of factors could cause actual results to differ materially from what we discussed on today's call. A full disclaimer is located with the supplemental information on our website.
Gary Clark: Please note that the Callen Acquisition closed on April 1st. Accordingly, our full year 2024 guidance reflects first quarter APA results on a standalone basis, plus three quarters of APA and CALIN combined. And with that, I will turn the call over to John. Good morning, and thank you for joining us.
Speaker Change: Please note that the Callen Acquisition closed on April 1st. Accordingly, our full year 2024 guidance reflects first quarter APA results on a stand-alone basis.
Speaker Change: plus three-quarters of APA and CALIN combined.
Speaker Change: And with that, I will turn the call over to John .
John Christmann: On the call today, I will review APA's second quarter performance. We're going to discuss the Cowan integration and review our activity plan and production expectations for the remainder of 2024. Our second quarter results were strong across the board, with higher than expected production in all three operational areas. CapEx was lower than expected, mostly due to the timing of the spin.
John Christmann: Good morning and thank you for joining us.
John Christmann: On the call today, I will review APA's second quarter performance.
John Christmann: discuss the CALIN integration, and review our activity plan and production expectations for the remainder of 2024.
John Christmann: Our second quarter results were strong across the board, with higher than expected production in all three operational areas.
John Christmann: CapEx was lower than expected, mostly due to timing of spend.
John Christmann: In the U.S., oil volumes of 139,500 barrels per day were up 67% from the first quarter as we incorporated Talon into our operations. Production and costs were significantly better than expected on a BOE basis, after adjusting for asset sales in discretionary natural gas and NGL curtailment. Our Permian Basin continues to perform at a high level, and we marked our sixth quarter in a row of meeting or exceeding U.S. oil production. On a BOE basis, oil now comprises 46% of our total US production following the Callon transaction. With this increased exposure, APA's cash flow sensitivity to a $5 per barrel change in oil price is approximately $300 million annually. In Egypt, production also exceeded expectations.
John Christmann: In the U.S., oil volumes of 139,500 barrels per day were up 67% from the first quarter as we incorporated talon into our operations.
John Christmann: Production and costs were significantly better than expected on a BOE basis after adjusting for asset sales and discretionary natural gas and NGL curtailments.
John Christmann: Our Permian Basin continues to perform at a high level, and we marked our sixth quarter in a row of meeting or exceeding U.S. oil production guidance.
John Christmann: On a BOE basis, oil now comprises 46% of our total U.S. production following the Callon transaction.
John Christmann: With this increased exposure, APA's cash flow sensitivity to a $5 per barrel change in oil price is approximately $300 million annually.
John Christmann: We saw a positive contribution from new wells, improved results from recompletion, and continued strong base production. Base production is particularly benefiting from the implementation of several new water injection projects. We are also beginning to see a decrease in offline oil volumes waiting on workover as we moderate the drilling rig count to free up workover rig resources. Turning to the North Sea, operations were relatively smooth in the second quarter, with better-than-forecast facility runtime driving higher production.
John Christmann: In Egypt, production also exceeded expectations.
John Christmann: We saw a positive contribution from new wells, improved results from recompletions, and continued strong base production.
John Christmann: Our ongoing focus in the North Sea is right-sizing our cost structure for late-life operations. In Suriname, our partner, Total, recently announced that it has secured the FPSO hole for our first offshore development, and we remain on track for FID before year end and first oil in 2028. And in Alaska, we are still working through options for the upcoming winter drilling season and look forward to returning to exploration activities.
John Christmann: Turning now to the Cowan Acquisition. Note that in last night's release, we increased our estimate of annual cow and cost synergy from $225 million to $250 million as we leverage the economies of scale of the combined APA and Cal and Permian businesses. Steve will speak in more detail about some of the specific initiatives driving these cost reductions.
John Christmann: Steve will speak in more detail about some of the specific initiatives driving these cost reductions.
John Christmann: More importantly, we are just beginning to implement drilling unit design and operational changes that we expect will create substantial value on the Callan acreage via improved well performance and capital efficiency. Our preliminary estimate is that we can drill a standardized two-mile lateral for roughly $1 million less than Callen was spending in 2023. We recently spud our first APA-designed drilling unit on Cowan Acres, the five-well Coleman unit in the Midland Basin, and should begin to see initial flow back results in the fourth quarter.
John Christmann: Turning now to our activity plans and outlook for the second half of 2024. In yesterday's release, we provided guidance for the 3rd and 4th quarters, which contained some notable positives. In the U.S., we will average 9-10 rigs for the remainder of this year, consisting of approximately 5 rigs in Delaware and 4 rigs in the Midland. We plan to run three to four frack crews and complete about 90 wells by year end.
Steve Riney: In yesterday's release, we provided guidance for the third and fourth quarters, which contained some notable positives.
John Christmann: This sets the stage for strong oil growth in the second half of the year. Accordingly, we are increasing our fourth quarter U.S. oil guidance to 150,000 barrels per day, which is up 1,500 barrels per day after adjusting for the impact of asset sales closed in June. This represents organic production growth of roughly 8% compared to the second quarter.
Steve Riney: This represents organic production growth of roughly 8% compared to the second quarter.
John Christmann: We also expect an increase in natural gas and NGL production, driven primarily by fewer discretionary curtailments than in the first half of the year. In Egypt, we expect a continuation of the operational progress that we made in our second quarter. There will be some volume impacts from the rig count decrease, but this should be mitigated by strong base production performance and increased workover capacity to remediate wells offline. By year end, we project that backlogged oil production will be closer to more normalized operating levels.
Steve Riney: We also expect an increase in natural gas and NGL production, driven primarily by fewer discretionary curtailments than in the first half of the year.
John Christmann: On our May call, we said that adjusted production in Egypt would remain relatively flat in 2024 while gross oil production would be flat to slightly down through the remainder of the year. While there are a number of moving parts to the program in Egypt, we see no material variances to our May outlook, and therefore, guidance is unchanged. Similarly, our four-year production guidance in the North Sea is unchanged.
Steve Riney: On our May call, we said that adjusted production in Egypt would remain relatively flat in 2024, while gross oil production would be flat to slightly down through the remainder of the year.
John Christmann: Though we now expect a bit larger decrease in third quarter volumes associated with maintenance and turnaround activity at Beryl and a slightly larger subsequent rebound in the fourth quarter. In closing, the second quarter was an excellent quarter operationally, and we continue to execute at a high level in the Permian Basin. We are realizing greater-than-expected cost savings from the Callon acquisition and have a clear pathway and plan to improving capital efficiency on those assets. Egypt also had a very good quarter and is beginning to deliver significant capital efficiency improvements.
Steve Riney: In closing, second quarter was an excellent quarter operationally, and we continue to execute at a high level in the Permian Basin.
John Christmann: Egypt also had a very good quarter and is beginning to deliver significant capital efficiency improvements.
John Christmann: Though our drilling rig count is coming down, continued strength in base production and the return of wells offline will help sustain volumes in the near term. At current strip prices, the second half of the year is setting up to deliver a substantial increase in free cash flow compared to the first half. And lastly, I am very proud of our teams for delivering these results while remaining on track to achieve our safety and environmental goals for the year. For a detailed review of APA's safety and environmental performance, I encourage you to review our recently published 2024 Sustainability Report, which can be accessed via our website.
Steve Riney: At current strip pricing, the second half of the year is setting up to deliver a substantial increase in free cash flow compared to the first half.
Steve Riney: And with that, I will turn the call over to Steve. Thank you, John. For the second quarter, under generally accepted accounting principles, APA reported consolidated net income of $541 million, or $1.46 per diluted common share. As usual, these results include items that are outside of core earnings. The most significant of these were a $216 million after-tax gain on divestiture and $98 million of after-tax charges for transaction reorganization and separation costs, mostly associated with the Callan Acquisition. Excluding these and other smaller items, adjusted net income for the second quarter was $434 million, or $1.17 per share.
Steve Riney: Excluding these and other smaller items, adjusted net income for the second quarter was $434 million or $1.17 per share.
Steve Riney: During the first half of the year, we generated roughly $200 million of free cash flow and returned $311 million to shareholders, nearly half of which consisted of share repurchases. That's a lot compared to the $200 million of free cash flow, but we like buying at those share prices. And we anticipate free cash flow will be much higher in the second half of the year. That said, the balance sheet remains an important priority, and I will talk about plans for further debt reduction in a few minutes.
John Christmann: During the first half of the year, we generated roughly $200 million of free cash flow and returned $311 million to shareholders, nearly half of which consisted of share repurchases.
Steve Riney: That's a lot compared to the $200 million of free cash flow, but we like buying at those share prices, and we anticipate free cash flow will be much higher in the second half of the year.
Steve Riney: That said, the balance sheet remains an important priority, and I will talk about plans for further debt reduction in a few minutes.
Steve Riney: Now let me turn to progress on the Calendar integration. As John noted, we increased our estimate of annual synergies to $250 million. Since we announced the Callon acquisition, we have categorized synergies into three buckets, overhead, cost of capital, and operation. We are now increasing our estimate of expected annual overhead synergies to $90 million.
Speaker Change: Now let me turn to progress on the CALIN integration.
Speaker Change: As John noted, we increased our estimate of annual synergies to $250 million.
Speaker Change: Since we announced the Callen Acquisition, we have categorized Synergies into three buckets – overhead, cost of capital, and operational.
Steve Riney: We are now increasing our estimate of expected annual overhead synergies to $90 million.
Steve Riney: Most of this was captured by the end of the second quarter on a run rate basis, and the remainder will be done by year end. At this time, we anticipate that our quarterly core GNA run rate, as we enter next year, will be approximately $110 million. With that, we will have eliminated about 75% of cow and overhead costs, so no material further synergies are likely. Our cost-of-capital-synergy estimate of $40 million annually assumes terming out Callen's $2 billion debt at APA's lower long-term cost of borrowing. At closing, we used cash from the revolver and a $1.5 billion three-year term loan to refinance this debt.
Steve Riney: And the remainder will be done by year-end.
Steve Riney: At this time, we anticipate that our quarterly core GNA run rate as we enter next year will be approximately $110 million.
Steve Riney: With that, we will have eliminated about 75% of cow and overhead cost. So no material further synergies are likely.
Steve Riney: At the closing, we used cash from the revolver and a $1.5 billion three-year term loan to refinance this debt.
Steve Riney: Instead of terming this debt out, our current intention is to use asset sales and free cash flow to simply pay off the loan before the end of its three-year term. This would represent a significant step forward in the goal to strengthen the balance sheet and fully realize these synergies. And lastly, we are increasing our operational synergies to $120 million annually, approximately 60% of which is associated with capital savings and 40% attributable to LOE. To reiterate, these cost synergies do not include capital productivity benefits associated with uplifting type curves and improving well economics through spacing, landing zone optimization, and FRAC size.
Steve Riney: Instead of terming this debt out, our current intention is to use asset sales and free cash flow to simply pay off the loan before the end of its three-year term.
Steve Riney: This would represent a significant step forward in the goal to strengthen the balance sheet and to fully realize these synergies.
Steve Riney: To reiterate, these cost synergies do not include capital productivity benefits associated with uplifting type curves and improving well economics through spacing, landing zone optimization, and frac size.
Steve Riney: We believe this will be a source of material long-term value accretion. Turning to our 2024 outlook, John has already discussed our activity plans and production guidance, so I will just add a few items of note. We now expect that our original full-year capital guidance of $2.7 billion may start trending down a bit.
Steve Riney: We believe this will be a source of material long-term value accretion.
Steve Riney: Turning to our 2024 outlook, John has already discussed our activity plans and production guidance, so I will just add a few items of note.
Steve Riney: A number of factors could contribute to this, including further synergy capture from the Cowan combination, lower service costs, improving capital efficiency, and potential minor reductions in the planned activity set, mostly in the U.S. For purposes of third-quarter U.S. VOE production guidance, we are estimating further Permian gas curtailments of 90 million cubic feet per day. This would also result in the curtailment of 7,500 barrels per day As most of you are aware, our income from third-party oil and gas purchased and sold can change significantly from quarter to quarter.
John Christmann: For purposes of third quarter U.S. BOE production guidance, we are estimating further Permian gas curtailments of 90 million cubic feet per day.
Steve Riney: This would also result in the curtailment of 7,500 barrels per day of MGLs.
Steve Riney: As most of you are aware, our income from third-party oil and gas purchased and sold can change significantly from quarter to quarter. This is primarily driven by the volatility and differentials between Oahu and Gulf Coast gas pricing, regardless of the absolute pricing levels.
Steve Riney: This is primarily driven by the volatility and differentials between Mojave and Gulf Coast gas prices, regardless of the absolute pricing level. It's important to note that APA's gas marketing and transportation activities are generally more profitable when WAHA gas price differentials are wider. For example, the WAHA differential was very wide in the second quarter. While Gulf Coast gas prices averaged around $1.65, Oahu gas prices averaged closer to negative $0.34.
Steve Riney: It's important to note that APA's gas marketing and transportation activities are generally more profitable when WAHA gas price differentials are wider. For example, the WAHA differential was very wide in the second quarter.
Steve Riney: While Gulf Coast gas prices averaged around $1.65, Oahu gas prices averaged closer to negative 34 cents.
Steve Riney: Because of the nearly $2 differential, income from our third-party marketing and transportation activities was well above expectations. At current strip gas prices, we expect a similar dynamic in the third quarter. Accordingly, we are raising our full-year estimate of income from third-party oil and gas purchased and sold by $120 million to around $350 million. Approximately half of the full-year estimate is attributable to the Chenier gas supply contract, and half is attributable to our marketing and transportation activities. Lastly, APA is now subject to the U.S.
Steve Riney: Because of the nearly $2 differential, income from our third-party marketing and transportation activities was well above expectations.
Steve Riney: At current strip gas pricing, we expect a similar dynamic in the third quarter. Accordingly, we are raising our full-year estimate of income from third-party oil and gas purchased and sold by $120 million to around $350 million.
Steve Riney: Approximately half of the full year estimate is attributable to the Chenier gas supply contract and half is attributable to our marketing and transportation activities.
Operator: The Alternative Minimum Tax, and accordingly, we are introducing new guidance for current U.S. tax accruals of $95 million for the year. And with that, I will turn the call over to the operator for Q&A. Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one, one on your telephone and wait for your name to be announced. To withdraw the question, please press star 1, 1 again.
Steve Riney: Lastly, APA is now subject to the U.S. Alternative Minimum Tax, and accordingly, we are introducing new guidance for current U.S. tax accruals of $95 million for the year.
Speaker Change: And with that, I will turn the call over to the operator for Q&A.
Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star, 1, 1.
Speaker Change: on your telephone and wait for your name to be announced. To withdraw the question, please press star one, one again.
Operator: You may ask one question and one follow-up question. Please stand by while we compile the Q&A roster. Our first question comes from Doug Legate of Wolf Research. Your line is now open.
Steve Riney: You may ask one question and one follow-up question. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Doug Leggate of Wolf Research. Your line is now open.
Doug Legate: Hey guys, I'm still getting used to the new moniker, so bear with me. Thanks for having me on. Welcome back into the fray, Doug. Thanks John, so I guess there's so many things on the quarter that I could go after, and I'm going to just try a couple. But, Steve, it looks to us that your CAPEX run rate... exit, call it fourth quarter, looks like you're going to be around 600 million bucks, um, which would be about a 10 percent decline year over year if that held into 2020. 5.
Doug Liggett: Hey guys, I'm still getting used to the new moniker, so bear with me. Thanks for having me on. Welcome back into the fray, Doug.
Speaker Change: Thanks John . So I guess there's so many things on the on the quarter that I could I could go after and I'm going to just try a couple but
Steve Riney: Steve, it looks to us that your CAPEX run rate...
Speaker Change: Exit, call it fourth quarter, looks like you're gonna be around 600 million bucks, which would be about a 10% decline year over year if that held into 2020.
Steve Riney: Is the objective, after you grow, you know, you've got the momentum from Callum, is the objective to hold that flat, in which case should we be thinking something around 2.4, 2.5 for next year? Yeah, Doug, I'd be careful just using the fourth quarter. We're probably going to be a little bit behind on depletion activity in the fourth quarter because a lot of that has been bunched into the second and third quarter this year just because of the timing of availability of wells for completion. So I think the easier way to do that would be to look at, you know, full year spend, take out the first quarter, which is just APA.
Speaker Change: 5. Is the objective after you grow, you know, you've got the momentum from Callan, is the objective to hold that flat? In which case, should we be thinking something around 2.4, 2.5 for next year?
Speaker Change: Yeah, Doug, I'd be careful just using fourth quarter. We're probably going to be a little
Speaker Change: on depletion activity in the fourth quarter
Speaker Change: has been bunched into second quarter and third quarter this year, just because of the timing of availability of wells for completion. So I think the easier way to do that would be to look at
Speaker Change: You know, full year spend, take out the first quarter, which is just APA.
Steve Riney: And then, you know, I would probably first adjust that for the exploration spend and then just divide it by three quarters because the quarter was high or the third quarter is going to be about average-ish, and the fourth quarter is probably going to be a little low. And then I think you'll get a number of something close to around 700 per quarter. All right, that's that's a really helpful guide, and we'll get a chance.
Speaker Change: and then you know I would I would probably first adjust that for the exploration spin.
Speaker Change: And then just divide it by three quarters, because the...
Speaker Change: Recorder was high.
Speaker Change: Her third quarter is going to be about average-ish, and fourth quarter is probably going to be a little low.
Steve Riney: And then I think you'll get a number of something close to around 700 per quarter.
Speaker Change: Okay. All right. That's really helpful, guys, and we'll get a chance to talk about it. Sorry. If you take out the exploration...
Steve Riney: Sorry, if you take out the exploration, you'll probably get something closer to six hundred and seventy five a quarter, six hundred and seventy five million a quarter of capital spent on basically the U.S. onshore and in Egypt. There's not a whole lot of capital activities, you know, going on in the North Sea. Okay, that's what I was trying to get, so that's really helpful.
Speaker Change: You'll probably get something closer to $675 million a quarter of capital spend on basically the U.S. onshore and Egypt. There's not a whole lot of capital activity, as you know, going on in the North Sea.
Speaker Change: Okay, that's what I was trying to get
John Christmann: John, I wonder if you've not wanted to be drawn on inventory depth since the Callan deal, but I'm guessing you're getting your hands around that now. So when you look at the drilling pace with, I guess you're gonna be at nine rigs in the second half. What are you thinking with the upspacing and so on? What is your inventory that looks like now in the lower 48? Yeah, Doug, it's a great question.
Speaker Change: John , I wonder if you've not wanted to be drawn on inventory depth since the Callan deal, but I'm guessing you're getting your hands around that now.
Speaker Change: So when you look at the drilling pace with I guess you're going to be at nine rigs in the second half What are you thinking with the upspacing and so on what are you thinking about your inventory depth looks like now in the lower 48? I'll leave it there
John Christmann: It's one we're, you know, working every day. What I would say is, if you look at the existing U.S. Permian run rate, we've always said kind of the end of the decade with the rig rate we're at. And when we said we were bringing Cowan in, pretty similar duration.
John Christmann: I think there's one upside to the Cowan acquisition is that if we can drive the productivity improvements that we think we can, then there will be more inventory that comes into play that we did not, you know, pay for in our acquisition. So, that's something we're currently working on. You know, if you look at where we sit today, we've got a lot of flexibility going into next year.
John Christmann: We're going to grow Permian at a very strong clip from second quarter to fourth quarter, you know, on 9 to 10 rigs, about 8%. And so, it gives us a lot of flexibility going into next year at the pace we want to go, and we've got plenty of, you know, inventory that we have visibility on now to carry us to the end of the decade. And, you know, we'll keep working on that. Yeah, just just a bit to add on to what John just said, just to enhance that a bit.
Speaker Change: you know on nine to ten rigs about eight percent and so it gives us a lot of flexibility you know going into next year pace we want to go and we've had plenty of you know inventory that we have visibility on now to carry us to the end of the decade and you know we'll keep working that.
John Christmann: You know, when we were working on the acquisition, of course, we were looking at a lot of outside service providers that look at inventory counts, and most of them probably would have said that Cowan had more, running room, more inventory, more years of inventory than we did, uh based on our analysis as John said which is is fairly a fairly conservative view of the world we said now it's probably more similar to ours in duration and you know as John indicated the or we can get... Capital efficiency, capital productivity into the right place on the cow and acreage, the more that inventory quantum could grow back to what some of the other people thought it was, which is something that would extend beyond the end of this decade. Got it. Thanks guys, I'll see you next week.
John Freeman: Thank you. One moment for our next question. Our next question comes from John Freeman of Freeman James. Your line is now open.
Speaker Change: Based on our analysis, as John said, which is a fairly conservative view of the world, we said, no, it's probably more similar to ours in duration. And, you know, as John indicated, the...
John Christmann: Or we can get capital efficiency, capital productivity into the right place on the gallon acreage. The more that inventory quantum could grow back to what some of the other people thought it was, which is something that would extend beyond the end of this decade.
Speaker Change: Our next question comes from John Freeman of Raymond James. Your line is now open.
John Freeman: Good morning, guys. Good morning, John. Just to kind of follow up on some of Doug's questions. I mean, the Permian and Egypt both exceeded guidance and, specifically on Egypt, did a pretty solid job of getting that turned around. And I'm just trying to make sure that, you know, I'm thinking about this right, where you have got, you average, 16 rigs in the first half of the year, and you're going to drop down to 11 rigs in the second half of the year.
John Freeman: And am I kind of reading it right that even at that lower rig cadence in the second half of the year, because of all the steps that y'all outlined in terms of the improved kind of base production management, catching up on the re-completions, you know, resolving kind of that backlog of oil offline in the back half of the year, is that 11 rigs sort of cadence in the second half of I mean, is that like an acceptable number to kind of maintain volumes? Just trying to make sure I understand kind of what the moving pieces are. That's a great question, John.
John Freeman: Good morning, guys.
John: Good morning, John.
Speaker Change: But just to kind of follow up on some of Doug's...
Speaker Change: You know, specifically on Egypt, you know, pretty solid job of getting that turned around. And I'm just trying to make sure that, you know, I'm thinking about this right where you've got.
Speaker Change: You know, you average 16 rigs in the first half of the year, you're going to drop down to 11 rigs in the second half of the year, and am I kind of reading it right that even at that lower rig cadence in the second half of the year, because of
Speaker Change: All the steps that y'all outlined in terms of the improved kind of base production management.
Speaker Change: in the back half of the year. Is that 11 rigs sort of cadence in the second half of the year? I mean, is that like an acceptable number to kind of maintain volumes? Just trying to make sure I understand kind of what's...
John Christmann: And, you know, you're on the right track. I'd say that the benefit we've had by dropping the rigs is it's been able to free up work over rig time, which is critical because we have a lot of re-completions. And really, we also have a lot of CTIs, which are conversion to injection projects that we've been able to get to. And so, you know, when we were running, you know, 20 workover rigs and 18 drilling rigs, there was not much slack.
Speaker Change: And really, we also have a lot of CTIs, which are conversion to injection projects.
John Christmann: By ratcheting that back, it's freed up time, and it's letting us get to some very meaningful, you know, projects that are making a huge impact. Is 11 rigs, you know? This year we kind of guided to flat to slightly down. Is 11 the right number?
Speaker Change: By ratcheting that back, it's freed up the time, and it's letting us get to some very meaningful projects that are making a huge impact.
John Christmann: It's early to tell on that front. But, you know, just having gotten back from Egypt, there are also a lot of other projects that we're talking to Egypt about, you know, for example, some gas drilling and other things too, which could be pretty impactful as well. So, you know, there's lots of flexibility there and, you know, we'll be working through that as we work through our planning cycle.
Speaker Change: There's 11 rigs, you know, this year we kind of guided to...
Speaker Change: Flat, slightly down. Is 11 the right number? It's early to tell on that front.
Speaker Change: But, you know, just having gotten back from Egypt, there's also a lot of other projects that we're talking to Egypt about, you know, for example, some gas drilling and other things too, which could be pretty impactful as well. So, you know, there's lots of flexibility there and, you know, we'll be working through that as we work through our planning cycles.
John Christmann: And then just my follow-up question, John, you mentioned that you might see the gas volumes on the US side actually grow some, and it had to do with sort of the well, one of the drivers was the fact that you'd have less curtailed gas volumes, potentially in 4Q. So in the current guidance, does it assume any curtailments in 4Q? I mean, obviously, y'all, you had some in 2Q; you had even more in 3Q.
Speaker Change: Great, and then just my follow-up, John , you mentioned that you might, you'd see the
John Christmann: The gas volumes on the U.S. side actually grow some, and it had to do with sort of the, well, one of the drivers was the fact that you'd have less curtailed gas volumes potentially in 4Q. So in the current guidance,
Speaker Change: Does it assume any curtailments in 4Q? I mean, obviously, y'all, you had some in 2Q, you have even more in 3Q. I'm just trying to get something built into that for your guidance. Today, 4Q, you know, fourth quarter, does not have any curtailments built in.
John Christmann: I'm just trying to get something built into that for your guidance. Today, 4Q, you know, 4th quarter does not have any curtailments built in, but obviously, we had to up the 3rd quarter with September with where WAHA sits. Yeah, and just, you know, 2nd quarter actuals, the amount that was curtailed. We had 78 million cubic feet per day of gas and 7.6 thousand barrels of NGLs curtailed during the quarter on an average day.
Speaker Change: But obviously we had to up the third quarter of September with where Waha sits.
John Christmann: You know, that's nearly 21,000 BOEs per day. And our forecast for the 3rd quarter, what we've effectively left out of our guidance is 90 million cubic feet per day of gas and 7.5 thousand barrels of NGLs. That's 22 and a half thousand BOEs per day.
Steve Riney: Those are really large numbers, as you might imagine. Appreciate it, guys. Nice quarter.
John Freeman: Thank you, John. One moment for our next question, which comes from Neal Dingmann of Truist. Your line is now open. Morning guys, nice update.
John: Thank you, John .
Neal Dingmann: John, maybe sticking with on the Permian or the Callan, specifically the Callan acreage development, really just wondering here. You all talked about, I think pretty openly, potentially upspacing a little bit. I'm just wondering, besides potentially future upspacing, is there any sort of material, other changes, either on the completion or other side going forward you could see potentially doing at this point? Yeah, as I said in the prepared remarks, Neil, one of the advantages, too, is that we're seeing impacts on the combined business just from the supply chain and how we design the wells.
Speaker Change: Really just wondering here, you all talked about, I think pretty openly,
Speaker Change: Yeah, as I said in the prepared remarks, Neil, that one of the advantages, too, is we're seeing impacts on the combined business just from the supply chain.
Neal Dingmann: You know, we think we can drill a standard two-mile lateral for about a million dollars less than what Calum was spending last year, which is 20 percent. So we're anxious to see those numbers start to come through. But, you know, excited about what we're seeing.
Speaker Change: We think we can drill a standard two-mile lateral for about a million dollars less than what Calum was spending last year.
Speaker Change: which is 20%. So, we're anxious to see those numbers start to come through. But, you know, excited about what we're seeing. And quite frankly, we're just now starting to spud some of the Apache plan pads.
John Christmann: And quite frankly, we're just now starting to spud some of the Apache planned pads on the Calum acres. So, you know, excited to see those results, but things are going extremely well on the integration side. Yeah, the only thing I would add to that on the completion side, you know, with the Callan drilled wells or Callan spud wells, since they were spaced, uh... quite a bit tighter than we would space them, we haven't really changed the profit loading much on those we did on a few but not many, uh... but we significantly increased the fluid loading on those on those fracs.
Speaker Change: on the Callan Acres. So, you know, excited to see those results, but things are going extremely well on the integration side.
Speaker Change: Yeah, I look forward to it and then, go ahead, Steve. Yeah, the only thing I would add to that on the completion side, you know, with the Callan drilled wells or Callan spud wells since they were spaced.
Speaker Change: quite a bit tighter than we would space them. We haven't really changed the profit loading much on those. We did on a few, but not many, but we significantly increased the fluid loading on those on those fracks.
Speaker Change: As we get to our wells, the ones that we drill, obviously, the prop and the loading will be quite a bit larger.
Steve Riney: And then maybe, Steve, for you, just a second question on shareholder return. Specifically, your shareholder return continues to be quite active. You know, I think it was down a little bit sequentially in this last quarter.
Speaker Change: Great, great. And then maybe speak for you just a second question on shareholder return. Specifically, your shareholder return continues to be quite active. You know, I think it was down a little bit sequentially in this last quarter. I'm just wondering, can we anticipate
Steve Riney: I'm just wondering, can we anticipate, you know, a large step up for the remainder of the year? Or how would you like to think about, think us, think about the program for the remaining 24 to 25? I tend to think of that on an annual basis, a calendar year basis. We've got at least 60% of free cash flow through dividends and through care buyback, both with April 1st acquisition using shares, the outlook for dividends, and for free cash for quite a bit. But the framework doesn't change.
Speaker Change: You know, a large step up for remainder of the year. How would you like to think about, think us, think about the program for remainder 24 to 25?
Speaker Change: I tend to think of that on an annual basis, a calendar year basis, we've got
Speaker Change: through dividends and through care buybacks.
Speaker Change: Both with April 1st acquisition using shares, the outlook of dividends and for free cash flow changed quite a bit, but the framework doesn't change.
Steve Riney: 60% at a minimum. We're obviously way ahead of that in the first half of the year. And we'll see what the second half brings. I think we've demonstrated in the past that we're not afraid to go well over the 60% framework. But let's also recognize that there's continued need for balance sheet strengthening after the.
Speaker Change: 60% at a minimum. We're obviously way ahead of that in the first half of the year. And, you know, we'll see what the second half brings. We, I think we've demonstrated in the past that we're not afraid to go over well over the 60%.
Mark: and Mark but let's you know we also recognize there's continued need for balance sheet strengthening way after the
Steve Riney: And so we're going to, we'll balance that on a, you know, third-by-quarter, really day-by-day basis. We'll see where we are as we go from one year to the next. Very good. Thank you. Our next question comes from Charles Meade of Johnson Rice. Your line is now open.
Mark: And so we'll balance that on a, you know, third-by-quarter, really day-by-day basis. We'll see where we are as we go from one year to the next.
Mark: Very good, thank you.
Speaker Change: Our next question comes from Charles Meade of Johnson Rice. Your line is now open.
Charles Meade: Good morning, John and Steve and the rest of the APA team there. Um, John, yeah, thank you. I'm wondering, maybe you didn't surprise the whole market, but you surprised a few people at least with these last couple of asset sales and I'm curious if you can share or you might want to share what is next and I guess I'm thinking most prominently about the Central Basin Platform which is an asset or an area that we don't really talk about much anymore and it doesn't seem like you guys are deploying capital there.
Charles Mead: Good morning, John and Steve and the rest of the APA team there.
Charles Mead: [inaudible]
Speaker Change: Yeah, thank you.
Charles Mead: I'm wondering, you kind of said, maybe you didn't surprise the whole market, but you surprised a few people, at least, with these...
Speaker Change: last couple of asset sales and I'm curious if you can share or you might want to share what what is next and I guess I'm thinking most prominently about the Central Basin Platform which is an asset
Speaker Change: or an area that that we don't really talk about much anymore and it doesn't seem like you guys are deploying capital there.
Charles Meade: No, Charles, I mean, you know, we typically wait to talk about property sales, but, you know, there's a chance there's other things that we're looking at that are not core to us in places that we're not investing in capital. So, you know, you may have some decent intel out there. Fair enough.
Speaker Change: No, Charles, I mean, you know, we typically wait to talk about property sales, but, you know.
Speaker Change: You know, there's a chance there's other things that we're looking at that are not core to us in places that we're not putting capital, so, you know, you may have some decent intel out there.
John Christmann: Thank you, John. And then I have a question about the shut-ins and marketing in the Permian. As I think about how I would manage that, you know, the production, Given that you have that valuable firm transported to the coast, I would, I guess I'm surmising that that 90 million a day and 7,500 barrels of NGLs, is that essentially all of your dry gas and some of your liquids-rich gas, or is there more that you could curtail if that basis got wider? Yeah, Charles. So, there's And so what that is, is that it's an average for the quarter.
Charles Mead: Fair enough, thank you John . And then I have a question about the the shut-ins in the marketing in the Permian. As I think about how I would manage...
Speaker Change: that, you know, the production.
Speaker Change: Given that you have that valuable firm, Transport to the Coast, I would, I guess I'm surmising that that 90 million a day and seven and a half thousand barrels of NGLs
Speaker Change: Is that essentially all of your dry gas and some of your liquids-rich gas, or is there more that you could curtail if that basis got wider?
Steve Riney: But it's an anticipation of there being periods of time where we're curtailing quite a bit of gas and dipping into the rich gas. We'll especially do that when prices are negative or significantly negative. When prices are just low, we'll typically just go with clean gas and not dip into the richer gas.
Charles: Yeah, Charles, so...
Speaker Change: There's, yeah, we can...
Speaker Change: We can actually curtail quite a bit more than that, a little more than twice that amount. And so what that is, is that's an average for the quarter, but it's an anticipation of there being periods of time where we're
Speaker Change: where we're curtailing quite a bit of gas and dipping into the rich gas.
Speaker Change: We'll especially do that when prices go negative or significantly negative.
Charles: When prices are just low, we'll typically just go with clean gas.
Steve Riney: So we do that based on a price basis. We do it; we have specific prices; we move from one tranche to another. We've got four specific tranches of gas going from lean to richer gas that we can shut off using different pricing mechanisms. And so I just want to make sure that we're really clear about one fact, and that is that the curtailment of gas volumes in Hermian Basin and in Alpine High, in particular, is totally independent of our marketing activities because marketing is something that we have to do because we have firm transport on two large pipelines, more pipelines now with with Cowan.
Charles: and not dip into the to the richer gas. So we do that based on a price
Charles: basis we do it we have a we have specific prices we move from one tranche to another we've got four specific tranches
Charles: of gas going from lean to richer gas.
Speaker Change: that we can shut in.
Speaker Change: different pricing mechanisms. And so I just want to make sure that we're really clear about one fact, and that is that the curtailment of gas volumes in Hermion Basin and in Alpine High in particular.
Speaker Change: is totally independent of our marketing activities.
Speaker Change: because marketing is something that we...
Speaker Change: have to do.
Speaker Change: Because we have firm transport on two large pipelines, more pipelines now with Gowen. And we have to fulfill those transport obligations, and we do that with purchased gas in the Permian Basin, which we then sell on the Gulf Coast.
Steve Riney: And we have to fulfill those transport obligations, and we do that with purchased gas in the Permian Basin, which we then sell on the Gulf Coast. And we have various access points, both in the Permian and on the Gulf Coast, to be able to buy and sell that gas. So we don't have a choice about doing that. If we choose not to transport gas, we have to pay the transport fee anyway.
Speaker Change: And we have various access points, both in the Permian and on the Gulf Coast, to be able to buy and sell that gas. So, we don't have a choice of doing that. If we choose not to transport gas, we have to pay the transport fee anyway.
Steve Riney: It's a nice piece of business to have. Thanks for that detail, Steve. Thank you. Our next question comes from Roger Reed of Wells Fargo Securities. Your line is now open. Hey, good morning.
Speaker Change: It's a nice piece of business to have. Thanks for that detail, Steve.
Steve Riney: Thank you.
Speaker Change: Our next question comes from Roger Read of Wells Fargo Securities. Your line is now open.
Roger Read: Good morning, Roger. I'd like to maybe follow up on some of your discussions on Egypt just to understand, like, where the decision is coming from on the switch from drilling to workovers. Is that, you know, all the partners? Is that your decision? Is it Egypt's decision?
Roger Reed: Hey, good morning.
Roger: Good morning, Roger.
Roger Reed: Yeah, I'd like to maybe follow up on some of your discussions on Egypt, just to understand
Roger Reed: Where's the decision coming from on the switch from drilling to workovers? Is that, you know, all the partners? Is that your decision? Is it Egypt's decision?
John Christmann: And then how should we think about that? Maybe reversing as we exit 24 into 25, to the extent you can offer any sort of guidance that way. Well, I mean, you know, we have a joint venture there. We are a one-third partner with Sinopac. But, you know, we never have issues in terms of direction, what we think is the right thing to do, and we have full support.
Speaker Change: And then how should we think about that, maybe reversing as we exit 24 into 25 to the extent you can offer any sort of guidance that way.
Speaker Change: Well, I mean, you know, we have a joint venture there. We have a one-third partner with Sinopac, but
Speaker Change: You know, we never have issues in terms of direction of what we think is the right thing to do.
John Christmann: And I think the good news is that performance has been strong, and the projects are very impactful. And, you know, it just shows that getting that workover rig and drilling rig balance into play really gives us a lot more flexibility. I would just say there's, you know, it would be our choice in terms of adding activity. And there is flexibility to do that. And, you know, we were recently over there, met with President Sisi, met with some of his new cabinet members, very impressed with the new minister and excited to work with him.
Roger Reed: and have full support. And I think the good news is the performance has been strong. The projects are very impactful. And, you know, it just shows that getting that work over rig and drilling rig, you know, balance into play really gives us a lot more flexibility.
Speaker Change: I would just say there's...
Roger Reed: You know, it would be our choice in terms of adding activity, and there is flexibility to do that. And, you know, we were recently over there.
Speaker Change: met with President Sisi, met with some of his new cabinet members.
John Christmann: And, you know, outlined some frameworks under which we could, you know, think about bringing in some other volumes of things. So, very constructive meetings. And it's just something we'll factor in as we go into the, you know, planning process. Okay, I appreciate that. And then just to come back around on the Calen integration, understand the, you know, the changes in the synergies and all, but if you were to just give us an idea, in the old baseball terms or football game quarters, or whatever, as you think about the integration and the understanding of what Calen really brings to the Apache family, like, are we early, we mid, are we late in the process of really kind of understanding all this? Yeah There are phases where you get ahead early and phases that you're still developing, right?
Speaker Change: I'm very impressed with the new minister and excited to work with him and, you know, outline some frameworks under which we could, you know, think about bringing on some other volumes and things. So, very constructive meetings and it's just something we'll factor in as we go into the, you know, the planning process.
Speaker Change: Okay, appreciate that.
Speaker Change: And then, just to come back around on the CALIN integration, understand the, you know, the changes and the synergies and all, but if you were to...
Speaker Change: Just give us an idea, you know, in the old baseball terms or football game quarters or whatever, as you think about the...
Speaker Change: integration and the understanding of, you know, what Kallen really brings to the Apache family. Like, are we early? Are we mid? Are we late in the process of really kind of understanding all that?
Speaker Change: Yeah, I think it's probably more like going through fall camp, there's phases that get ahead early.
John Christmann: But, you know, in terms of the organization and so forth, we've worked through that very quickly with the integration of the assets in the portfolio. You know, obviously, the piece that's the most exciting is still to come is going to be what we can drive on the productivity improvements and what that does in terms of inventory and location. So, you know, we're just now getting to the first pads and putting our first Apache planned wells in, and we're obviously anxious to get on with those results. Yeah, I mean, I characterize it using the baseball analogy.
Speaker Change: phases that you're still developing, right?
Speaker Change: You know, in terms of the organization and so forth, we've worked through that very quickly with the integration of the assets in the portfolio, we've worked through that quickly.
Speaker Change: You know, obviously, the piece that's the most exciting is still to come is going to be what can we drive on the productivity improvements and what does that do in terms of inventory locations. So, you know, we're just now getting to the first paths.
Speaker Change: and sputting our first Apache planned wells and you know obviously anxious to get on with those results.
Speaker Change: Yeah, you want to add something?
Speaker Change: I'd characterize it using the baseball analogy, I think, uh...
Steve Riney: I think, you know, going through the synergies and going through the headcounts and all of that, getting the organization integrated, that's kind of the pregame warmup. And, you know, as John said, we've just drilled our first well out there on Cowan Acreage. So, you know, I would say that we're in the first inning, and we haven't taken the first pitch yet.
Speaker Change: You know, going through the synergies and going through the headcount and all of that, getting the organization integrated, that's kind of the pregame warm-up.
Speaker Change: And, you know, as John said, we've just drilled our first well out there on McAllen Acreage. So, you know, I would say that we're, you know, we're at bat the first inning and we haven't taken the first pitch yet. So it's just starting. The game's just beginning.
Steve Riney: So it's just starting. The game's just beginning. I appreciate that. Thank you. Our next question comes from Scott Hanold of RBC. Your line is now open.
Speaker Change: I appreciate that. Thank you.
Scott Hanold: Thanks. I was wondering if we could pivot to Suriname and, you know, what are your high-level thoughts on how you look at activity, maybe spending, in 2025? I know it may be a bit early and your partner has an upcoming analyst day, and we're going to get more color there, but, you know, what is your understanding at this point? Yeah, Scott, I mean, we've been pretty consistent since this time last year that, you know, after we finished the Crab Dagu appraisal, we were highly confident we were going to have a project.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Scott Hanold of RBC. Your line is now open.
Scott Hanold: Thanks. I was wondering if we could pivot to CERNM and, you know, what are your high-level thoughts on how you look at activity, maybe spending in 2025? I know it may be a bit early.
Speaker Change: your partner has a upcoming analyst in that we're going to get more color there but you know what what what is your understanding at this point?
Speaker Change: Yes, Scott, I mean, we've been...
Speaker Change: It's been pretty consistent since this time last year that
Speaker Change: You know, after we finished the Crab Dagu appraisal, we were highly confident we were going to have a project.
Scott Hanold: And we stated, you know, we plan to have an FID by year end 24, and obviously we remain on track. It's consistent with the message that Total has now put out. I think that is the next step.
Speaker Change: and we stated we, you know, plan to have an FID by year-end 24 and obviously we remain on track. It's consistent with the message that TOTAL has now put out.
John Christmann: And, you know, once we get to that step, then we can obviously talk a lot more about what that means and all of that. But things are going extremely well. Teams are working very well together, and they are doing their thing.
Speaker Change: I think that is the next step.
Speaker Change: And, you know, once we get to that step,
Speaker Change: Then we can obviously talk a lot more about what that means and all of that, but things are going extremely well.
John Christmann: So, you know, right now, I'd say we remain on track for year-end FID and, first of all, by 2028, and they're working hard to accelerate those. Okay, understood. And, you know, my follow-up question is, you know, back to, you know, kind of the Permian inventory runway. You know, you talked about being, you know, competent to the end of the decade at this point in time. Do you all think that's a strong enough position? And so what I'm trying to get to is, what is your appetite for further consolidation? Do you feel comfortable with that position now?
Speaker Change: Teams are working very well together.
Speaker Change: and they are doing their thing so you know right now I'd say we remain on track for year-end FID and first of all by 2028 and they're working hard to accelerate those.
Speaker Change: Okay, understood. And, you know, my follow-up question is, you know, back to, you know, kind of the Permian Inventory Runway.
Speaker Change: Um, you know, you talk about being, you know, confident to the end of the decade at this point in time. You know, do you all think that's a strong enough position? And so what I'm trying to get to is like, what is your appetite for further consolidation? Do you feel comfortable with that position now or are there other opportunities there for you?
Scott Hanold: Or are there other opportunities here for you? You know, today we feel very comfortable with where we sit. I mean, and when we talk about inventory, we're talking about long laterals with, you know, extremely high PIs, so it's high quality inventory. As you know, we've got a large acreage footprint in the Permian. We're always working on how we bring, you know, more acreage into drillable prospects, but it just takes time as you march through, and you've got a lot of tests along the way.
Speaker Change: You know, today we feel very comfortable with where we sit, I mean, and we talk about inventory, we're talking about long laterals with, you know, extremely high, you know, PIs.
Speaker Change: So it's high quality inventory. As you know, we've got a large acreage footprint in the Permian.
Speaker Change: We're always working on how we bring, you know, more acreage in to drillable prospects, but it just takes time as you march through, and you've got a lot of tests along the way. But today, we're very comfortable with our inventory. You know, we know there's a lot more inherently to do there, and we will get to that and prove that as time goes on.
Scott Hanold: But today, we're very comfortable with our inventory. You know, there's a lot more intrinsically to do there, and we will get to that and prove that as time goes on. I think when it comes to, you know, transactions and things, you've got to continue to have a very high bar. You know, we have had one.
John Christmann: We've been very patient. You know, we saw a lot of opportunity in Cowan, which is why we moved on it. But today, you know, we're very content with where we sit and believe that there will be even more to do than what we have visibility into today.
Speaker Change: I think when it comes to transactions and things, you've got to continue to have a very high bar. We've had one. We've been very patient. We saw a lot of opportunity in Cowan, which is why we moved on it. But today, we're very content with where we sit.
Speaker Change: and believe that there will be even more to do than what we have visibility into today.
Speaker Change: Thanks.
Operator: Thank you. One moment for our next question. Our next question comes from Bob Brackett of Earthstein Research. Your line is now open.
Speaker Change: Thank you. One moment for our next question.
Speaker Change: Our next question comes from Bob Brackett of Bernstein Research. Your line is now open.
Bob Brackett: Good morning, a bit of a follow up on Suriname. Two interesting things that I interpret from your update. One is that you all have gone out and secured a state of the art slot on an FPSO from a leading contractor. That's about the most expensive long lead item I can think of. Does that... tell me about your conviction in an FID or am I overreacting?
Bob Brackett: Good morning. A bit of a follow-up on Suriname. Two interesting things that I interpret from your update. One is, you all have gone out and, with a partner, secured a state-of-the-art slot on an FPSO from a leading contractor.
Speaker Change: That's about the most expensive long lead item I can think of. Does that tell for your conviction in an FID or am I overreaching?
John Christmann: Bob, I think we were really confident we'd have a project, right? So, but we still need to get to FID. So, you know, it just tells you the seriousness and the timeline that, you know, they're looking to accelerate, but it's, you know, they did declare commerciality earlier this year. Um, you know, we just got a lot of work, the technical work it takes to get to an FID decision, but, you know, we've said year end, and I wouldn't change that now, but just know we're trying to accelerate that.
Speaker Change: Bob, I think we've been really confident we'd have a project, right? But we still need to get to FIB. So, you know, it just tells you the seriousness and the timeline that, you know, that they're looking to accelerate.
Bob: You know, they did declare commerciality earlier this year. You know, we just got a lot of work, technical work, it takes to get to an FID decision. But, you know, we've said year end, and I wouldn't change that now, but just know we're trying to accelerate that.
John Christmann: And then the second issue is you've disclosed that the field development area is agreed upon for kind of a joint Sopocara-Crab-Degout development. If I sharpen my crayon and draw a ring fence around Sopocara through Crab-Degout, I could capture the vast majority of all your discoveries out there, ring fence that, and then under the PSC, cost recover that and have a pretty good cost pool for future work Am I thinking correctly there? I would just say when we, you know, when we talk about Sopocora, it's pretty much a defined field as we have it defined today.
Speaker Change: And then the second issue is you've disclosed that the field development area is agreed upon.
Bob: for kind of a joint Sapakara-Crab-Degout development. If I sharpen my crayon and draw a ring fence around,
Speaker Change: Sapakara through Crabdegoo. I could capture the vast majority of all your discoveries out there, ring-fence that, and then under the PFC, cost recover that and have a pretty good cost pool for future work. Am I thinking correctly there?
Speaker Change: I would just say when we, you know, when we talk about Sopocora, you know, it's pretty much a defined field as we have it defined today. When we talked about appraising Crab Dagger, we talked about appraising a fairway.
John Christmann: When we talked about appraising Crab Dagu, we talked about appraising a fairway, and seismically driven, right? And so, and if you go back to the comments when we announced the Crab Dagu appraisal wells, we said that not only did it confirm and appraise Crab Dagu, but it obviously de-risked a lot of other processes. So, you know, at this point, let's, Uh, you know, the next step will be an FID, and we need to get there, but, um, you know, you're definitely, you know, starting to think about things, you know, directionally in the right way.
Speaker Change: and seismically driven, right? And so, and if you go back to the comments when we announced the Crab Dagu appraisal wells, we said that not only did it confirm and appraise Crab Dagu, but it obviously de-risked a lot of other prospects.
Speaker Change: So, you know, at this point, let's, you know, the next step will be an FID and we need to get there. But, you know, you're definitely, you know, starting to think about things, you know, directionally in the right way.
John Christmann: And I'll just throw a last one in, which is to say you guys increased your acreage in Alaska by 20%. That suggests that you see something interesting there, or perhaps the option value of that acreage is pretty low.
Speaker Change: And I'll just throw a last one in, which is to say you guys increased your acreage in Alaska by 20%.
Speaker Change: That suggests that you see something interesting there, or perhaps the option value of that acreage is pretty low. Is that a good way to think of it?
John Christmann: Is that a good way to think of it? I would just say we're, you know, excited about Alaska. The King Street discovery is, you know, it's proof of concept. It proves the play that we're chasing sits, you know, 80 to 90 miles east of where it's been proven.
Speaker Change: I would just say we're, you know, we're excited about Alaska. The King Street Discovery is, you know, it's proof of concept, it proves the play that we're chasing.
John Christmann: So, you know, we're in a good area. We said it was a high-quality discovery, oil, and high-quality sands. So, you know, we are anxious to get back and continue exploring in Alaska in the near future. Thanks for that.
Speaker Change: sits, you know, 80 to 90 miles.
Speaker Change: east of where it's been proven.
Speaker Change: So, you know, we're in a good area. We said it was a high-quality discovery, oil, high-quality sands.
Speaker Change: So, you know, we are anxious to get back and continue exploring in Alaska in the near future.
Speaker Change: Thanks for that.
Speaker Change: Thank you.
Leo Mariani: Thank you. Our next question comes from Leo Mariani. From Roth, your line is now open.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Leo Mariani from Roth. Your line is now open.
John Christmann: Hey guys, wanted to quickly follow up here on Egypt. So I know you reiterated your comments from May where you thought that gross oil would be flattened slightly down in Egypt. I certainly noticed that gross oil in the second quarter was up a little bit, you know, versus the first quarter. Just trying to get a sense, I know the rig count's coming down a little bit in the second half, but do you think you can maybe hold that second quarter gross oil run rate in Egypt? Or do you think it's more likely that it comes down by the end of the year with some of the lower rig activity?
Leo Marani: Yeah, guys, wanted to quickly follow up here on Egypt. So I know you reiterated your comments from May where you thought that...
Leo Marani: Gross oil would be flattened slightly down in Egypt. Certainly notice that gross oil in the second quarter was up a little bit, you know, versus the first quarter. Just trying to get a sense, I know the rig count is coming down a little bit in the second half, but...
Speaker Change: Do you think you can maybe hold that second quarter gross oil run rate in Egypt, or do you think it's more likely that it comes down by the end of the year with some of the lower rig activity?
John Christmann: Yeah, I would just say, we'll stick to what we said in the script, you know, the second quarter was strong, things are going well in Egypt, uh, but at this point, we didn't see any reason to, you know, alter our guidance. Okay, any update on the receivables situation there in Egypt that you guys can share? Yeah, I'd say we just got back from, you know, being over there. As I said, had a good meeting with the president, got to meet, you know, some of his new cabinet. You know, things are going well in Egypt. I mean, I think if you step back and look at it, you know, President Sisi has done a really good job of managing a fairly difficult situation.
Speaker Change: Yeah, I would just say, we'll stick to what we said in the script, you know, clearly second quarter was strong, things were going well in Egypt, but at this point we didn't see any reason to, you know, to alter our guidance.
Speaker Change: Okay, any update on the receivable situation there in Egypt that you guys can share?
Speaker Change: I'd say I just got back from, you know, from being over there.
Speaker Change: As I said, had a good meeting with the president, got to meet some of his new cabinet.
Speaker Change: You know, things are going well in Egypt. I mean, I think if you step back and look at it.
Speaker Change: You know, President Sisi has done a really good job of managing a fairly difficult situation, so we've been impressed with that. You know, we have been receiving some payments this year, so, you know, all in all, things are going well, and they continue to.
John Christmann: So we've been impressed with that. You know, we have been receiving some payments this year. So, all in all, things are going well, and they continue to, you know, work through a difficult situation. But, you know, we see no reason to be concerned at this point. And a lot of positive things on numerous fronts. Steve?
Speaker Change: You know, worked through a difficult situation, but, you know, we see no reason to be concerned at this point, and a lot of positive things on numerous fronts.
Steve Riney: Yeah, I know that. The only thing I would add to that, John, is that the new Minister of Petroleum has a set of priorities, and high on that list of priorities is to get the oil companies paid off. And, uh, we sat down and discussed all of that with him as well, and he's serious about his list of priorities, and he's one of those he's anxious to get started on. Okay, I know that's really And you guys intimated in your comments that there could be some opportunities from additional gas there. I know Egypt's been short of gas this summer. Sounds like they're a little desperate to get back at it.
Speaker Change: Steve? Yeah, the only thing I would add to that, John , is that the new Minister of Petroleum has a set of priorities, and high on that list of priorities, is to get the oil companies paid off.
Speaker Change: And, you know, we sat down and discussed all of that with him as well. And he's serious about his list of priorities. He's anxious to get started on those.
John Christmann: Would you anticipate some opportunities and, potentially, you know, that could be associated with a price change on some of the gas going forward? Yeah, I would just say, you know, historically, we have explored for oil in the Western Desert. And, you know, we've mainly focused on oil, but we do produce a lot of gas. We had a very large discovery in Kosher a couple of decades ago.
Speaker Change: Okay, I know that's really helpful. And you guys intimated in your comments that there could be some opportunities for some additional gas there. I know Egypt's been short gas this summer. It sounds like they're a little desperate to get back at it. Would you anticipate?
Speaker Change: Some opportunities and then potentially, you know, that could be associated with a price change on some of the gas going forward.
Speaker Change: Yeah, I would just say, you know, historically, we have explored for oil in the Western Desert. And, you know, we've mainly focused on oil. We do produce a lot of gas. You know, we had a very large discovery in Kosher a couple of decades ago.
John Christmann: You know, there is gas in the Western Desert, and we've had some conversations about what it would take to, you know, maybe go after some gas projects that could be helpful to the country. So it's something that, you know, we're discussing with them. But it's early, and, you know, obviously, you'd probably look at something that made more economic sense with a higher price for future gas exploration. But it's early, but definitely something that could come into play in the future.
Speaker Change: You know, there is gas in the Western Desert, and we've had some conversations about what it would take to...
Speaker Change: uh, you know, maybe go after some gas projects that could be helpful to the country. So it's something that, you know, we're discussing with them, um, but it's early and, you know, obviously...
Speaker Change: You'd probably look at something that made more economic sense with a higher price for future gas exploration. But it's early, but definitely something that could come into play in the future.
Speaker Change: Okay, thank you.
Leo Mariani: Okay, thank you. Our next question comes from Scott Gruber of Citigroup. Your line is now open. Yes, good morning.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Scott Gruber of Citigroup. Your line is now open.
Scott Gruber: I want to come back to the upside on the Cowan acreage. So as we think about the productivity improvement potential from upspacing and the completion redesign, will there be a material improvement in 30-day IPs, or will the improvement manifest more over time in the 6- and 12-month queues? I'm just wondering if the shift in the completion design targets a shallower decline and what that means for the 30-day IP improvement potential versus, you know, the longer-term improvement potential.
Scott Gruber: Yes, good morning. I wanted to come back to the upside on the Cowan acreage.
Speaker Change: So as we think about the productivity improvement potential from upspacing and the completion redesign.
Scott Gruber: Will there be a material improvement in 30-day IPs, or will the improvement manifest more over time?
Speaker Change: I'm just wondering if the shift in the completion design targets a shallower decline and what that means for the 30-day IP improvement potential versus the longer-term CUME improvement potential.
Scott Gruber: Yeah, Scott, we just need to get some down. But I mean, obviously, with the changes we'd be looking at, we're pumping a lot more fluid, and I think you could see increases there. But also, you know, with a little wider spacing, you should see better long-term performance.
Speaker Change: Bye.
Speaker Change: Scott, we just need to get some down, but I mean obviously with the changes we'd be looking at, we're pumping a lot more fluid.
Speaker Change: I think you could see increases there, but also, you know, with a little wider spacing, you should see better longer-term performance. So, you know, we just need to get some wells down and talk from, you know, delivered results.
Speaker Change: at this point, which we're getting on to and anxious to demonstrate.
John Christmann: So, you know, we just need to get some wells down and talk from, you know, delivered results at this point. So, which we're getting on to and anxious to demonstrate. Okay, okay. Um, and then just another follow-up on Egypt.
Scott Gruber: So you guys spent about $135 million a quarter running 16 rigs on average in the first half, and that'll drop to 11 in the second half. Roughly, you know, how much will the fiber reduction drop Egyptian CapEx mean to you? Yeah, I don't have that number to hand. It should be relatively proportional, but we're running 20 workover rigs and some of that work is capital as well. And that won't change. So, you could probably get with Gary.
Speaker Change: Okay, okay.
Speaker Change: And then just another follow-up on Egypt, so you guys spent about $135 million a quarter running 16 rigs on average in the first half, and that'll drop to 11 in the second half.
Speaker Change: Roughly, you know, how much will the fiber deduction drop Egyptian CapEx net to you?
Speaker Change: Yeah, I don't have that number to hand. It should be relatively proportional, but we're running 20 work over rigs and that some of that work is capital as well. And that doesn't change. So.
Speaker Change: You could probably get with Gary, he could give you some.
Speaker Change: Some data on that.
Speaker Change: Okay, okay, just curious. Okay, I'll follow up. Thank you.
Steve Riney: He could give you some... some data on that. Okay, okay, just curious. Okay, I'll follow up. Thank you. Thank you. Our next question comes from Arun Jayaram of J.P. Morgan Securities, LLC. Your line is now open. Good morning.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Arun Jayaram of J.P. Morgan Securities, LLC. Your line is now open.
Arun Jayaram: John and Steve, I wanted to get your thoughts on how we should start thinking about, Um, spending in 2025. You mentioned, maybe a run rate of 6.75 per quarter heading into next year. And I was wondering, as we think about some of your exploration activities in Alaska, as well as assuming an FID at Suriname, I was wondering if you could maybe help us think about, you know, maybe a placeholder for CAPEX for areas outside of your base DNC program. Yeah, so, first of all, let me make sure I was clear about the 675.
Arun Jairam: Good morning. John and Steve, I wanted to get your thoughts on how should we start thinking about
Arun Jairam: Spending in 2025, you mentioned maybe a run rate of $6.75 per quarter, you know, heading into next year.
Speaker Change: And I was wondering, as we think about some of your exploration activities in Alaska,
Speaker Change: as well as assuming an FID at Suriname. I was wondering if you can maybe help us think about, you know, maybe a placeholder for CAPEX for areas outside of your base, you know, DNC program.
Steve Riney: That was a number that Yeah, there was, it was about 2024 capital spending. And that was, how do you get a grip on how much are we actually spending on a run rate basis? Uh, you know, with the current structure of the company with Cowan included as well as exploration excluding exploration activity, and so that's what the 675 was. That's about how much we're spending on average between the third, second, and fourth quarter of 2024, if you exclude exploration.
Speaker Change: yeah so so let first of all let me make sure I was clear about the 675 that was a number that
Speaker Change: It was about 2024 capital spending.
Speaker Change: And that was how do you get a, it was a conversation about how do you get a grip on how much are we actually spending on a run rate basis?
Speaker Change: you know, with the current structure of the company, with Callen included as well.
Speaker Change: exploration, excluding exploration activity. And so that's what the 675 was.
Steve Riney: Suriname and Alaska exploration type of activity, um, as far as and so on, the point being that that was not an indication that that's what our run rate's going to be going into 2025. Just to be clear about that. And I think that, you know, I think the best thing that we can do as we normally do is, you know, we are in the middle of the planning process right now.
Speaker Change: If you exclude
Speaker Change: Suriname and Alaska exploration type of activity.
Speaker Change: As far as, and so the point being that that was not an indication that that's what our run rate is going to be going into 2025.
Speaker Change: just to be clear about that and I think that you know I think the best thing that we can do as we as we normally do is
Steve Riney: The great thing about our portfolio, John mentioned earlier, we've got a huge amount of optionality. It's a complex portfolio, actually, and you've got to make a lot of capital allocation decisions with a full review of where you would be allocating capital, where the best returns are going to be through the portfolio.
Speaker Change: We're in the middle of the planning process right now. The great thing about our portfolio, John mentioned earlier, we've got a huge amount of optionality. It's a complex portfolio actually, and you've got to make.
John: a lot of capital allocation decisions with a full looking view of where you want to be allocating capital, where the best returns are going to be, through the opportunity of
Steve Riney: And so that's why we typically run our planning process starting in midsummer through the fall. We have an upcoming conversation with the board about that plan, a preview of that plan. And, you know, we've got a process that we run through. We typically give a high-level view of what 2025 will look like in November, and then all of the details we typically give in February.
John: And so that's why we typically run our planning process starting in midsummer through the fall.
Speaker Change: We have an upcoming conversation with the board about that plan, a pre-preview of that plan. And, you know, we've got a process that we run through. We typically in November ...
Speaker Change: give a high-level view of what 2025 will look like and then all of the details we typically give in in February.
Steve Riney: Okay, great. Yeah, the only thing I was going to say, Arun, if you looked at what Steve was saying on the 675, Permian's actually growing at about 8% in the back half of this year. So there's a lot of room in terms of moderating, if we choose, you know, what is the right plan going into next year, and that's a lot of what we'll put into the decision-making process. Yeah, that's a great point, John.
Speaker Change: Okay, great.
Speaker Change: If you look at what Steve was saying on the 675
Steve Riney: Permian is actually growing at about 8% the back half of this year, so...
Speaker Change: There's a lot of room in terms of moderating if we choose to what is the right plan going into next year. And that's a lot of what we'll put into the decision making process.
John Christmann: You know, a lot of people talk about, well, okay, what does it take to run flat going into 2025? And we had a little bit of a conversation about that around Egypt, we're running 11 rigs, can you hold flat, Egypt flat with 11 rigs, and, you know, we're down to 11 rigs because we had to create the workover capacity to get back at the, to get at the recompletions and workover backlog, and we're also using that time to do some conversion to injection for water injection on So can 11 rigs hold Egypt flat? You know, maybe, maybe not.
Speaker Change: Yeah, that's a great point, John. You know, a lot of people talk about, well, OK, what's it take to run flat going into 2025? And we had a little bit of a conversation about that around Egypt. We're running 11 rigs. Can you hold flat?
John: Egypt flat with 11 rigs
Speaker Change: And, you know, we're down to 11 rigs because we had to create the work over capacity to get back at the, to get at the recompletions and work over backlog. And we're also using that time to do some, some convert to injection for water injection on a number of these fields.
Speaker Change: So can 11 rigs hold Egypt flat?
Steve Riney: It might be a little low, but you know, we were running 18 rigs earlier this year, and running flat in Egypt is much closer to 11 rigs than it is to 18. 18 was clearly more than we needed to be running in Egypt. And as John said, in the Permian, we're running, you know, nine to ten rigs for the second half of the year, and we're growing eight percent from second quarter to fourth quarter, so clearly the number is below that in terms of how many rigs you have to run in the Permian to stay flat.
Speaker Change: You know, maybe, maybe not. It might be a little low, but, you know, we were running 18 rigs earlier this year, and running flat in Egypt is much closer to 11 rigs than it is to 18. 18 was clearly more than we needed to be running in Egypt.
Speaker Change: And as John said, in the Permian, we're running, you know, 9 to 10 rigs for the second half of the year, and we're growing 8% from second quarter to fourth quarter, so clearly the number is below that in terms of how many rigs do you have to run in the Permian to stay flat.
Steve Riney: Great, and just my follow-up. This year's financials are obviously benefiting from weak waha prices and your ability to arbitrage that along the Gulf Coast. Steve, how do you think about maybe a more normalized earnings picture for that midstream, call it, piece when you have Matterhorn on and maybe some other pipes? So just wanted to know how you think about kind of the normalized earnings potential there. Well, I don't know what normalized is anymore after the last several quarters.
Speaker Change: Great. And just my follow-up.
Speaker Change: This year's financials are obviously benefiting from weak waha prices and your ability to arbitrage that along the Gulf Coast.
Speaker Change: Steve, how do you think about maybe a more normalized earnings picture for that midstream call it piece?
Speaker Change: when you have Matterhorn on and maybe some other pipes. So just wanted to think about how you think about kind of the normalized earnings potential there.
Steve Riney: But, you know, in general, market dynamics would tell you that, You know, a balanced situation would be that the differentials between Oahu and the Gulf Coast would be formalized, and that should have. [inaudible] We're basically just making money on the Permian end by buying something slightly below WAHA pricing because we've got multiple receipt points, and we can take the best price. We typically do, but you're talking about pennies per MCF.
Steve Riney: Well, I don't know what normalized is anymore after the last several quarters, but you know, in general, you know, market dynamics would tell you that
Speaker Change: you know a balanced situation would be that that differentials between Oahu and Gulf Coast
Speaker Change: formalized would be that that should
Speaker Change: are tied
Speaker Change: We're basically just making money on the Permian end by buying something slightly below.
Speaker Change: WAHA pricing because we've got multiple receipt points and we can we can take best price we typically do but you're talking about pennies per MCF
Steve Riney: And then on the Gulf Coast side, multiple delivery points where you can sell for pennies, maybe above the Houston Ship Channel, here or there, and you can squeeze a few pennies out on both ends, but on 674 million cubic feet a day, that makes a difference over time. And it just pays for the transport and fuel costs. But in that oil and gas purchased for resale. Remember, that still includes the Chenier contract, which, of course, has nothing to do with Waha differentials. Okay, thanks a lot.
Speaker Change: and then on the Gulf Coast side
Speaker Change: multiple delivery points where you can sell for pennies maybe above Houston ship channel here or there and you can squeeze a few pennies out on both ends but on 674 million cubic feet a day that makes a difference over time and it just pays for for the transport and fuel costs but in that
Speaker Change: oil and gas purchased for resale, remember that still includes the Chenier contract which of course has nothing to do with Waha differentials.
Speaker Change: Okay, thanks a lot.
Jeff J.: Thank you. Your next question comes from Jeff J. of Daniel Energy Partners. Your line is now open.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Jeff J. of Daniel Energy Partners. Your line is now open.
Steve Riney: Hey guys, just wanted to get some clarification on the DNC savings you guys talked about, I mean, kind of $100 a foot per cow and two miles. I guess those are like $72 million of the total synergy. Just wondering, kind of, you know, if you can give me any more granular detail about what's in there and are there any service cost deflation numbers in that figure? Thanks. Yeah, so what we've included in the $150 million of annualized synergies excludes the benefit of lower rig rates for FREC. Like that, we have some integrity, and I like the idea.
Speaker Change: Hey guys, just wanted to get some clarification on the DNC savings you guys talked about.
Speaker Change: kind of $100 a foot for a cow and two mile. I guess those are like $72 million of the total synergy. Just wondering kind of, you know, if you can give me any more granularity about what's in there and are there any service cost deflation numbers in that figure? Thanks.
Speaker Change: Yeah, so...
Speaker Change: So what we've included in the $150 million of annualized synergies excludes the benefit of lower rig rates for FREC.
Speaker Change: Like that, we...
Speaker Change: have some integrity and I like the idea
Steve Riney: [inaudible] is that this is excluding any market synergies. So while John talked about a million dollars cheaper or lower cost to drill a single well, that includes the market benefit. But we only took about 70 percent of that number because 30 percent of that is some of the market benefits on steel, on rigs, on frack, and other things. [inaudible] What is included in the $250 million? is about 60 million dollars of annualized run rate for the lower drilling costs on these wells. And what that $60 million is basically with nine to ten rigs running in the Permian Basin. That's about how many Callum wells we would drill in a given year.
Speaker Change: [inaudible]
Speaker Change: that is excluding any market synergies. So while John talked about a million dollars cheaper or lower cost to drill a single well,
John: That includes the market benefit, but we only took about 70% of that number because 30% of that is some of the market benefits on steel, on rigs, on frack, and other things.
Speaker Change: and I'm going to talk about the anthropomorphic relationship between the human and the plant. So, I'm going to start with the anthropomorphic relationship between the human and the plant. So, I'm going to start with the anthropomorphic
Speaker Change: What is included in the $250 million?
Speaker Change: is about $60 million of annualized run rate for the lower drilling costs on these wells.
Speaker Change: And what that $60 million is, is basically with
Speaker Change: [inaudible]
Speaker Change: Nine to ten rigs running in the Permian Basin, that's about how many Callum Wells we would drill in a given year.
Steve Riney: And so that's how we got to that number. We're obviously not drilling 60 wells this year, so it's not like we're going to capture a full 60 million dollars in benefits in calendar year 24. But if we keep running at a similar rate that we're running these days, then we'll probably capture something near that in 2025.
Speaker Change: and so that's that's how we got to that number. We're obviously not drilling 60 wells this year so we're not it's not like we're going to capture a full 60 million of benefit in calendar year 24.
Speaker Change: But if we keep running at a similar rate that we're running these days, then we'll probably capture something near that in 2025.
Jeff J.: Excellent. Thanks. That's very helpful. Our next question comes from Paul Cheng of Scotiabank. Your line is now open.
Speaker Change: Excellent. Thanks. That's very helpful.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Paul Chang of Scotiabank. Your line is now open.
Paul Cheng: Hey, guys. Good morning. Just one quick one. Alaska.
Paul Chang: Hey guys, good morning. Just one moment.
John Christmann: John, can you share with us what's the drilling plan over there? I mean, how many wells are you guys going to drill, whether it's all exploration or it's going to be doing some appraisal on King Street? And what, how much spending that we may be talking about?
Paul Chang: Good morning. Just one real quick one. Alaska, John, can you share with us that what's the drilling plan over there? I mean, how many wells are you guys going to drill, whether it's all exploration or it's going to be doing some upgrades on the King Street? And what, how much spending that we may be talking about? Thank you.
Paul Cheng: Thank you. Yeah, Paul, it's early. I mean, we're working through plans with a partner.
Speaker Change: Yeah, Paul, it's early. I mean, we're working through plans with a partner, so at this point, no update on Alaska specifically for plans other than that we will be doing some more drilling up there.
John Christmann: So at this point, no update on Alaska specifically for plans other than that we will be doing some more drilling up there. Okay, all right. Well, we do.
Speaker Change: Okay, all right, we're good. Thank you.
Operator: Thank you. Thank you. This concludes the question and answer session. I would now like to turn it back to John Christmann, CEO, for closing remarks. Thank you. And to wrap up, I really just have a couple points here. Number one, we're delivering strong results in the Permian, and the Cal integration is going extremely well. Secondly, freeing up the workover rigs in Egypt is letting us do two things. One, implementing some very impactful water flood initiatives.
Speaker Change: Thank you. This concludes the question-and-answer session. I would now like to turn it back to John Christmann, CEO, for closing remarks.
Operator: 2. Reducing the backlog of wells waiting for workover or recompletion, and the results of both of those are very visible. And lastly, we are raising four-year oil production guidance while seeing a downward bias on our four-year capital.
John Christmann: Thank you. And to wrap up, really just a couple points here. Number one, we're delivering strong results in the Permian and the Cal integration is going extremely well.
Speaker Change: Secondly, freeing up the work over rigs in Egypt is letting us do two things. One, implementing some very impactful waterflood initiatives.
Speaker Change: Two, reducing the backlog of wells waiting for workover or recompletion, and the results of both of those are very visible. And lastly, we are raising four-year oil production guidance while seeing a downward bias to our four-year capital. And with that, I'll turn it back to the operator. Thank you.
John Christmann: And with that, I'll turn it back to the operator. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Good day and thank you for standing by.
Operator: Welcome to APA Corporation's second quarter financial and operational 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 will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Speaker Change: ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪
Speaker Change: Good day and thank you for standing by. Welcome to APA Corporation's second quarter financial and operational results conference call.
Speaker Change: At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 1 1 on your telephone.
Speaker Change: You will then hear an automated message advising your hand is raised.
Gary Clark: 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.