Apache Corp. (NYSE:APA) Q4 2015 Earnings Conference Call - Preliminary Transcript
Feb 25, 2016 • 02:00 pm ET
[Operator Instructions]And your first question comes from the line of Pearce Hammond with Simmons & Company. Your line is open.
Good afternoon. John, does the Egyptian government help drive your thinking regarding capital allocation among your different regions. I assume the Egyptian government wants you to produce as much oil and gas as possible to bolster both domestic energy security as well as the Egyptian treasury. And so just curious if it limits your capital allocation flexibility in any ways.
Yes, Pearce, clearly they would like us to invest more money, but like everything else, we decide where we put the investments in place, so it has not had an impact. We are going to generate cash flow in both Egypt and the North Sea, and they understand that. And it obviously will flow with our budget as we're flexible.
Great. And then my follow-up around the offshore Suriname blocks, if this is a legacy position from when Apache had a more defined exploration program like in New Zealand, Cook Inlet and places like that, is this a bit more of a one-off or is this a type of business that you want to build over the next few years.
Yes, I think it is something -- it fits with our international portfolio. Actually, we've got a lot of questions about that position, Pearce. We felt like it was important to go ahead and get a map out there. We drilled the well this year, our Popokai well, and we actually had picked up the other block prior to either Exxon drilling there Liza well or our well going down.
So, we've got those two blocks there, not a huge capital commitment. We're going to be shooting seismic over block 58 this year, and we'll go from there.
And your next question comes from the line of Brian Singer with Goldman Sachs. Your line is open.
With regards to the CapEx and activity reductions, when we think about your cost base and your lowered cost, including on the SG&A side, when it's time to ramp back up, what is your operational and scale flexibility to do this. And what flexibility, if any, may be reduced, at least, temporarily. I mean, in other words, if you wanted to take the Permian and bring it back to a 10 or 15 or 20 rig count again, would this require re-staffing and the passage of time to make that happen.
Brian, with the way we've done our staffing, we strategically designed this organization for a $50 plus world. So, we do not envision needing to add a lot of staff to be able to flex back up. Clearly, I think if you get into a significantly lower time period where you've got lower prices, 24 months, 36 months out at that point you'd probably reduce further.
But, we've maintained the flexibility so we can ramp up our capital programs when appropriate.
Great. Thanks so much. My follow-up is actually a