• Reported second-quarter production of 464,000 barrels of oil equivalent (BOE) per day and adjusted production of 390,000 BOE per day, which excludes Egypt noncontrolling interest and tax barrels; 
• Delivered U.S. production of 255,000 BOE per day, exceeding guidance by 7,000 BOE per day driven by strong oil production in the Permian Basin; 
• Achieved record Permian Basin production of 202,000 BOE per day;
• Reported Alpine High net production of 32,000 BOE per day during the quarter, which increased approximately 70 percent to 54,000 BOE per day by the end of July;
• Realized significant capital efficiency improvements in the Permian Basin, reducing both Midland Basin completion cycle times and Alpine High well costs per lateral foot by 25 percent over 2017 averages; and
• Raising 2018 U.S. production guidance to 260,000 BOE per day, from previous guidance of 250,000 to 258,000 BOE per day.

Apache Corporation this week announced its financial and operational results for the second quarter of 2018.

Apache reported earnings of $195 million or $0.51 per diluted common share for the second quarter of 2018. These results include a number of items outside of core earnings that are typically excluded by the investment community in their published earnings estimates. When adjusted for these and certain additional items that impact the comparability of results, Apache’s second-quarter earnings were $192 million or $0.50 per share. Net cash provided by operating activities in the quarter was $1.1 billion. Before working capital changes, Apache generated $932 million in operating cash flow. Adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (adjusted EBITDAX) was $1.3 billion.

“Apache’s operational and strategic delivery have been exceptional through the first half of 2018. We are proactively managing our costs, operating at an activity level that maximizes capital efficiency, and we have established considerable momentum that is now showing up in our results,” said John J. Christmann IV, Apache's chief executive officer and president. “In the United States, the Permian Basin was our primary growth driver, with oil production in the Midland and Delaware basins up 20,000 barrels per day year-over-year and 6,000 barrels per day over the first quarter.”

Second-quarter operational summary

United States
U.S. production averaged 255,000 BOE per day. The company averaged 17 rigs and drilled and completed 70 gross-operated wells.

Midland Basin – Activity continues to focus on pad development in the Wolfcamp and Spraberry formations. During the quarter, the company brought 22 wells online in the Midland Basin. Learnings from strategic testing are enabling highly efficient and optimized full-field development. Apache has recently made significant changes to its completion designs, resulting in lower cycle times and cost reductions of nearly $400,000 for the average completion.
  
Delaware Basin – Apache’s activity in the Delaware Basin includes operations in Dixieland and Alpine High in Reeves County and the slope play in southeast New Mexico. The company brought 41 Delaware Basin wells online, most of which were late in the quarter.

At Alpine High, production in the second quarter averaged 32,000 BOE per day, a 23-percent increase over the first quarter of 2018. Well costs in the play continue to come down despite upward pressure on service costs. Year-to-date, average costs per treated lateral foot are down by 25 percent. After analyzing successful results from its strategic testing programs, the company is increasing its investment in longer laterals and larger stimulations.

Egypt
Apache averaged 13 rigs during the quarter and drilled and completed 34 gross-operated wells. Adjusted production in Egypt, which excludes minority interest and the impact of tax barrels, averaged 80,000 BOE per day. The company recently added a third new concession of 650,000 gross acres in the East Bahariya area, bringing Apache’s total Egypt position to more than 6 million gross acres. This further enhances a highly prospective acreage position and provides a substantial inventory of opportunities for many years to come.
  
North Sea
Apache averaged three rigs during the quarter and produced 54,000 BOE per day, which was relatively flat over the first quarter. Two high-rate wells at Callater and Garten are expected to materially increase the North Sea production profile in late 2018 and early 2019.

Capital investment and financial position 

Oil-and-gas capital investment was $833 million during the quarter, including $116 million for Alpine High midstream. Total capital investment for the first half of the year was $1.7 billion. The company anticipates maintaining this pace of investment in the second half of the year, bringing the full-year spending outlook to approximately $3.4 billion, compared to prior guidance of $3 billion. This spend level anticipates a full year of Alpine High midstream investment, which may change with a potential transaction.

The incremental capital is necessary to align and optimize drilling and completion activity in the Midland Basin and to fund investment in longer laterals, larger completions and facility expansions at Alpine High. These activity modifications incorporate learnings from the company’s recent strategic tests and are expected to result in increased productivity and improved returns.

At current strip prices, the capital increase will be fully funded through cash flow from operations and will provide significant incremental production in 2019 and beyond.

2018 outlook and guidance update

Strong execution and well performance in the second quarter are prompting the company to raise its 2018 U.S. production guidance for the second time this year. The updated guidance of 260,000 BOE per day is above the high-end of the previous range of 250,000 to 258,000 BOE per day.  At Alpine High, full-year 2018 guidance is now 45,000 BOE per day, or the midpoint of the previous guidance range.

Adjusted international production guidance for 2018 is expected to be approximately 134,000 BOE per day, just below the midpoint of the previous range of 130,000 to 140,000 BOE per day. This includes a significant impact of higher-than-planned Brent prices on Egypt net production volumes.