Apache Corp. reported a bigger-than-expected quarterly loss on Oct. 30 as the U.S. oil and gas producer battled lower crude prices and a decline in output, and the company said it had begun reorganizing its operations to save costs.
The reorganization, expected to save at least $150 million annually, began in late summer, and should be mostly completed by the end of the first quarter of 2020, the company said.
RBC Capital Markets analyst Scott Hanold called the restructuring "significant."
U.S. shale players have struggled as oil prices hovered around the mid-$50s in the September quarter, down more than 18% on average from a year earlier.
Apache said its average price per barrel of oil fell 15.2%, while gas prices dropped 35.2% per thousand cubic feet in the third quarter.
Total production dropped 5.4% to 450,644 barrels of oil equivalent per day, hit by temporary delays in its Permian operations which are expected to continue into the current quarter as well.
Apache said it has reduced drilling activity at Alpine High, a region in West Texas, and deferred completion activity into next year, resulting in a 5% decrease in production from the region in the current quarter.
Alpine High recently struggled with weak natural gas pricing, which prompted the company to temporarily halt production and say it would reassign capital to other areas if pricing did not recover.
Apache said it would spend less on exploration and production next year, setting its capital budget at 10% to 20% below this year’s budget of $2.4 billion.
The Houston-based company also expects modest growth in its oil production next year.
The company's net loss attributable to shareholders came in at $170 million, or 45 cents per share, in the third quarter ended Sept. 30, compared with a profit of $81 million, or 21 cents per share, a year earlier.
Excluding items, it posted a loss of 29 cents per share, bigger than analysts' average estimate of 19 cents, according to IBES data from Refinitiv.
Revenue plunged 25.5% to $1.48 billion.
In a further sign of worsening supply chain dislocation, BP temporarily closed some of its 1,200 U.K. petrol stations due to a lack of both unleaded and diesel grades, which it blamed on driver shortages.
Oil prices jumped 2.5% on Sept. 23 after data from the U.S. Energy Information Administration showed U.S. crude stocks in the week to Sept. 17 fell by 3.5 million barrels to 414 million—the lowest total since October 2018.
Crude oil inventories in the U.S. now sit at their lowest levels since October 2018, and that tightness, along with strong demand, has helped drive oil prices higher.