Interview: Chief Financial Officer Robert Blank
>> the former chief accountant at worldcom sentenced to a year and a day in prison. buford yates cooperated with prosecutors in the case against bernie ebbers, the former c.e.o. yates faces 15 years in prison for the fraud that drove the company into bankruptcy. his sentence may offer clues to what scott sullivan may get when sentenced on thursday. sullivan was the government’s star witness. ebbers, sentenced to 25 years in prison, is appealing his conviction. we stpb our coverage from the denver oil and gas conference. we go from an investor’s point of view in the oil industry. apache has seen an increase in the cost of dog business. joining me now is the chief financial officer robert blank. he joins us from denver. we welcome you to the show.
>> thank you. pleasure to be here.
>> we were speaking with tom petrie and started by asking him what tone there is at conference. i’m curious to get that from you. i have to imagine being an executive of an oil company right now when you have $63 a barrel oil is very different from several years ago. so what are you finding when you speak to people from your peer companies?
>> well, i think we’re all pleased to be able to report the kind of profits that our shareholders have been hoping for for some time. yet those of us in the business for some period of time -- apache has been around 50 years i guess we’re cautiously optimistic about price and prospects going forward.
>> and how do you plan for that? what prices are you planning for?
>> well, in our case we’re fortunate, ellen, because we established a portfolio of properties during the 1990’s when it was a little easier to obtain them. now the prices are higher. we have some 30 million acres around the world where we are extremely active. we’ll drill over 1,000 well this is year and spend some $3 billion. because we have that portfolio that was put together in sort of yesterday’s time frame, we’re in an excellent position to make economics even with what i call an artificially low price forecast at $4.50 of m.c.f. gas and $25 a barrel for crude oil.
>> how do you proceed in this environment? are you picking up what you are looking for, slowing down at all?
>> apache has been inquisitive over the years. over the last decade we have invested something like $9 billion in acquisitions and $9 billion in drilling coincidental enough. we’re cautious about that, too. it’s a tougher environment with the industry sort of awash in cash, if will you, to make acquisitions. but the other side of being around 50 years is you have to be fleet of foot and look for opportunities where others don’t. i think we’ll get our fair share going forward.
>> where are those?
>> in our instance, they’re in our core areas. that would start in the gulf of mexico, canada, our central region which is the anadarko basin of oklahoma, performian basin. the north sea is an area we have had extremely good experience over the two years we have been there now. egypt where we’ll probably grow through the drill bit and wouldn’t be quite as interested in acquisitions but we have phenomenal growth prospects in egypt. also in australia.
>> what is your biggest challenge right now?
>> i think it’s always the biggest challenge is to grow and do it profitably. with costs on the rise, you have to be very cautious but also very active in your program and in order to drive growth forward.
>> what is the single most important thing can you do to control those costs? that’s a concern for investors.
>> we have a thing around apache and that is get production up and costs down. even when absolute costs are on the rise as now throughout our industry, we need to make sure we continue to grow our production growth. we have good prospects for doing that. in egypt we have the largest discovery coming online. it produce 60 million a day. out to go to 300 million over the next 18 months. good prospects for growth tkpht north sea and canada. a lot easier to grow abroad than it is in the united states where the country still has very good economics. but it’s hard to reinvest that cash flow.
>> mr. plank, thank you for joining us.
>> thank you very much.
>> chief financial officer with apache. we take a break and come back with more on oil. albert reese joins us with his forecast for supply as well as demand.
点击播报
Listen Market briefing --- Ellen (slow)
Interview: Petrie Parkman & Company
going on having to do with michael ovitz and his severance from the company. the board of directors met its legal duties to investors, so says the judge in the case. it ends an eight-year fight over michael ovitz’s severance from the company. during the three-month trial, michael eisner and board members including roy disney testified that the severance pay was fair. other current and former board members including sydney potier and george mitchell testified. they said they should not have to reimburse the company. now the investors asked the judge to award the company more than $262 million in damages. again, news after the bell. disney directors are absolveed of liability in the lawsuit. in the meantime, let’s catch up what happened on wall street today. a look at stock market . gains across the board. dow ending the day up 78 points, s&p eight and the nasdaq nine. federal reserve out with the latest rate decision raising rates but essentially telling investors inflation is not a problem. oil prices very much a factor today. they have come down from record highs. refineries in texas and illinois coming back online following brief shutdowns. prices remain at $63 a barrel. we head to denver, colorado. company executives as well as investors have come together for the oil and gas conference. joining us right now is tom petrie with petrie parkman & company. we welcome you to our show. thank you for taking time from the conference.
>> my hrerb aour.
>> very interesting time for energy executives and investment bankers to come together with oil price off this record high. what is the tone of the conference?
>> the tone is very upbeat. this is i think a record turnout for the conference. it’s a great midyear look at where we are and where we’re going. it’s also a mid decade look at where we are and where we’re going. really the balance of the decade will be one of great effort on the part of the industry to bring on new supply in response to the kind of price stimulus we’re now seeing.
>> let’s put it in context of your business. we have had a number of deals, m&a deals in the energy industry right now. where are you seeing the most interest among your client base?
>> i think very much on the upstream. both on natural gas and oil. it’s become focused on the development of unconventional resources here in north america and more conventional reservoirs in the deep water environs in the gulf of mexico and elsewhere around the world.
>> can you be more specific in terms of the alternatives that we might see?
>> what we see in terms of unconventional on the oil side, quite clearly oil sands of canada have been featured. we have seen a lot of activity there including interest on the part of u.s., canadian and chinese companies in more aggressive development of what is already a million barrel a day resource base on its way to two and three million barrels a day. on the natural gas side, we’re seeing development activities really accelerate in the barnett shale and in tight reservoirs of the rocky mountains as well as methane. all of those types of projects are getting increased attention.
>> in terms of potential sellers and people who are actively looking to sell, how specific -- we’d love to hear specifics from you in terms of how the landscape has changed. are a lot of people rushing to sell who say six months ago would not have been out in the market ?
>> there is some of that going on on the private side. there are parties who were there in 1998 and 1999 acquiring properties and where they have exploited them and brought them to higher potential and looking to monday advertise. but i would also say on the buy side there are parties who are recognizing that with innovation and the use of today’s state of the art technology there’s still great returns to be had as long as one is disciplined about one’s price expectations and using the much better hedging thaopgs are available today to lock in prices in the $50 range on a floor and as much as $80 or more on the ceiling. within that range of $50 to $80, there’s great opportunity to chase. but we used to think of it as uneconomic resources.
>> assuming that prices continue to go up from here on the crude side, how is that going to change the pace of deals that we see?
>> well, higher prices from here may not be all that productive. i’m not convinced that’s what we’ll see. i made the comment i think we’ll be in a $40 or $60 range 80% of the time in the second half of this decade. periodically as we are now we’ll be higher than that. i think very rarely, if ever, will we be lower than somewhere around $40. so―but the point is the industry has only begun to, if you will, incorporate this kind of new price range into its thinking. that’s understandable because lots of experience in the past told us be careful of overstating the party when the prices are high. geopolitical forces at work are likely to be with us for the foreseeable future. at least three, maybe five. given that we have a great outlook.
>> thank you for joining us.
>> my pleasure.
>> tom petrie, chairman and chief executive of petri parkman. we get the corporate perspective this time. robert plank with apache corporation will be our guest. he joins us straight ahead.
