Apache Corp. (APA) Comments on Financial Position and Liquidity

Apache Corporation (NYSE: APA) today provided additional information related to the strength of its liquidity position and capital structure in response to Standard and Poor’s decision yesterday to lower Apache’s credit rating.

On March 26, 2020, Standard & Poor’s reduced Apache’s credit rating from BBB to BB+. The primary impact of the ratings change is that Apache will post letters of credit aggregating approximately $650 million related to asset retirement obligations in the U.K. North Sea. While credit ratings serve a valuable purpose and are important to Apache, the company does not expect this ratings change will have any other material impact on its financial position, liquidity or business strategy.

“Apache has ample liquidity and a very manageable bond maturity profile for the next five years. We have taken aggressive actions to protect our balance sheet and cash flows: decreased planned 2020 upstream capital investment by approximately $1.3 billion, or 54% year over year, reduced our annual dividend by $340 million, and targeted more than $150 million of annualized cost structure reductions through organizational changes we began in late 2019. In addition, we recently added significant near-term oil price hedges to protect 2020 cash flows from further price deterioration,” said Stephen J. Riney, Apache’s chief financial officer. “Together, these actions put us closer to a path for cash flow neutrality in the current price environment.”

Apache has a $4.0 billion credit facility, which is contractually committed through March 2024. The facility has commitments from 18 banks, 17 of which are rated A or better, is not subject to borrowing base redeterminations, has no covenants that are triggered by ratings agency actions, and includes a $2 billion committed sublimit for letters of credit, which will easily accommodate the North Sea asset retirement obligation postings.

Apache has posted a presentation at investor.apachecorp.com/events-and-presentations with a review of its recent strategic actions related to the current market environment, including near-term hedges to protect cash flow from oil price dislocations, its liquidity position and debt maturity profile, and implications of S&P’s ratings action.

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