Egypt’s Western Desert: Is Capex Boost Enough For Output Rebound?

Egypt’s Western Desert overtook the Gulf of Suez to become Egypt’s key oil province in the first years of this decade. But output peaked at 390,000 b/d in 3Q 2015. It slumped over the subsequent 18 months – the result of sustained under-investment in the wake of the collapse in oil prices in the second half of 2014.

But the rebound in oil prices over the past year has seen key regional producer Apache double capex to $156mn for 1Q 2018 from the low of $78mn plumbed in 3Q 2016. With spending having averaged $154mn for each of the last three quarters, up from $83mn for the same period a year earlier (ie 3Q16-1Q17) output is beginning to show tentative signs of recovery. And Apache is confident this growth will continue despite only modest plans for further spending increases as the company applies new technologies and efficiencies it has developed on its core Permian Basin acreage in the US. (CONTINUED - 1481 WORDS)

DATA INSIDE THIS ARTICLE

chart 1. Egypt's Oil Output Peaked* At 700,000 B/D In Mid-2015, Bottomed Out At 620,000 B/D In Early 2017, And Has Since Edged Higher ('000 B/D)
chart 2. Apache* Egypt Oil Output Peaked At 217,000 B/D In 3q15 On The Back Of Three Straight Years Of $1bn-Plus Capex. By 2q 2016 Capex Had Been Slashed And Output Slumped
chart 3. Apache 'Cash Margin' By Region ($/Boe Output)
chart 4. Western Desert Rig Count Remains At 3-Year High 69 In March
chart 5. Gross Output From Kuwait Energy's Western Desert Concessions Edged Up In 1Q18 After Precipitous Fall In 2016-17 ('000 B/D)