Having moved to our shores four years ago from central United States, Jim Bass entered his 24th year with the company on 1st June. He's one of a few who can claim to have been with Apache as long, excluding, of course, Chairman Raymond Plank who remains at the helm after forming the company in 1954.

Bass has been employed with Apache for almost half the life of the company – starting out as a geologist in 1981, progressing through the technical ranks, and in 1994 to exploration manager for central USA, then Vice President of exploration and production in 1996 – so he is in a good position to comment on Apache's point of difference from other corporations of its ilk.

He said the values and vision originally imbued in the company through founder Raymond Plank, and subsequently shared by the Apache management team which Plank assembled, has been pivotal to its success.

"Raymond is a great lateral thinker… and when you look back, even when you look at the companies that Apache has owned and at some point in time divested, if they maintained some of Raymond's sense of urgency, some of his 'don't be afraid, just go get it done' attitude, they went on to be successful", Bass said.

One of these entities, S&J Ranch, appeared at first to be a move into a speculative real estate play in Fresno California, but eventuated into a highly successful agriculture business.

Reflecting on this venture, Bass commented, "You have a decision that you can make there: you can maintain the solely speculative future real estate play that brought you into ownership of the land in the first place, but then there is an opportunity to shift gears and do something different, so do you just ignore it because you're waiting on the speculative play which was the original idea and don't wish to take a risk associated with change?"

"You could do that, but that's not Raymond or Apache's style. There was an opportunity to actually utilise the land, to move forward, and it turned into a very profitable agriculture business on its own."

The eclectic mix of industries that Apache has dabbled in over the years includes auto parts manufacturing, telecommunications and even agriculture (pistachios and walnuts).

"Raymond has always been a big outdoorsman and hunter, and at the same time a conservator of the environment", Bass said.

"And when we owned Midwest Walnut, we were at one point in time a supplier of walnut blanks to Sturm-Ruger Firearm Company for their walnut rifle and shotgun stocks. So yeah, a lot of diversity in the past.

"And that goes for the financial vehicles that Raymond and Apache created. I'm pretty sure we were the first publicly traded limited partnership on the New York Stock Exchange. The evolution was, prior to being an oil and gas company drilling for our shareholders and the corporation's own account; we were a drilling fund program company. Raymond and his team perfected that investment vehicle prior to the limited partnership endeavour.

"We would go out and raise money through private investors, then put together a drilling program – with a certain number of wells and prospects, and we'd try to diversify the opportunities internal to the programs in an effort to increase chances for each program's success. Revenue resulting from success was distributed to the investors. This type of investment vehicle had attractive tax treatment at the time.

Bass said this kind of situation was probably unique at that time because it was created out of a need to fill a certain niche for investors "… it wanted to do something different than just own shares in a company, but it also had significant tax advantages."

"When the associated tax advantages went away, the programs went away and we rolled everything into Apache Corporation", he said. That gave Apache a chance to focus on the E&P game which we felt was our strength and the best chance to grow a significant company for the shareholders.

"We created a separate small entity at that time called Key Production Company. When all of the partnerships were rolled up, you still had to give investors a choice and, if they wanted to keep their previously producing program units, they took shares of Key instead of Apache Corporation. They essentially did not explore or spend any money to a large degree: they just produced the existing reserves and when they were done, they were done."

Bass said that since 1987, Apache has been drilling for its own account, strictly oil and gas related exploration and production, and all upstream.

"We saw our strength lying in the E&P sector", he said. "We had been building an acreage position primarily in the Mid-Continent of the United States and the Gulf of Mexico over the years and we liked the competitive advantage that we had because of those holdings and the expertise we had with the staff working the properties. "With the proper focus in that arena, we thought we could really do something special."

The management team saw a significant future [with oil and gas], but it wasn't all about throwing your eggs in one basket and saying 'that's the horse that's going to win'. We knew we had to be strong in several geographic areas over the long haul to be successful.

Prior to founding Apache, Plank had a small accounting concern in Minneapolis, Minnesota and became interested in the oil and gas industry while managing the finances of owners of Oklahoma-based oil and gas investments.

"He saw numerous things that could perhaps be done differently, with a bit of creativity employed, and he actually ran upon a few scoundrels in the business and was digging up a few facts to make sure his clients were being treated properly", Bass said. "Through that, he gained his initial knowledge of the business. He loved it – he was intrigued by it. So he set off to focus on that business."

Bass said Apache was kicked off with a mere US$250,000 capital, not to mention "… Raymond's courage to lean forward and not be afraid to stretch. What contributed to our early success was Raymond's entrepreneurial vision... the perseverance, the wherewithal that he had, and a sense of urgency to get things done", he said.

"One of our core values is our 'sense of urgency'. We talk about it all the time, but it's true. They are not just hollow words we hear. We want to get things done.

"If we believe in and are successful in what we're doing, we want to do as much of it as we can, generate cash flow, reinvest it and do some more. Raymond has surrounded himself over the years with oil and gas professionals that he has confidence in, and you know, if you get good horses, you let 'em run as hard as they can." Our President and CEO, Steve Farris, embodies the same spirit and personal drive.
Strong and supportive leadership
Apache Energy's new Regional Vice President and Managing Director in Australia, Eve Howell, who has been with the company for a decade (excluding three years with Hadson Energy prior to it being acquired by Apache), said Apache staff have a strong interest in the industry and enjoy being kept busy. After all, there's nothing a hard-working, intelligent person hates more than twiddling their thumbs.

"They like the fact that they are working a lot – busy, but not burned out", she said.

Howell added that CEO Steve Farris is a strong leader, very supportive of staff ideas.
"He always opens a door for a project if it makes sense, as long as it meets our corporate hurdles", she said.

"He loves the game and gets very much involved. And when you take a look at the number of wells we have going on at any one time across the company, you wonder how he'd have time for it. You get all the support you need and if you're wrong on an exploration prospect, he simply moves on with no recriminations."

"One thing that has always given us financial flexibility – to be able to move quickly on an acquisition or to redeploy our money so as to extend drilling, or even to buy properties – comes from controlling our costs.

Bass said another basic tenet that Plank has bound Apache to is integrity. "If you don't have it, you don't have anything", he said.

Highlights: It's the thrill of the hunt

In many ways, the past decade has indeed been one of the most interesting in Apache's 50-year history, and Bass says his favourite moments are too numerous to mention but singled out the pleasure of being able to work with all the people who have comprised Apache over the years.

"We've had lots of successes as a company, but for me as an individual… I guess I'd have to say the opportunity to start off as a young explorationist, as I did with Apache, and having somebody say 'well, that's an interesting idea, lets drill it and see what's there. There is an immediate feeling of thrill and anticipation", he said. You don't forget those early trials in your career. Nor the thrill of the hunt or adrenaline of competition. Apache people thrive on those feelings and have a desire to keep winning."

The same goes for working on acquisition opportunities. "We've always been a fairly contrarian company. We've bought when others weren't buying and sold when others weren't selling. Not always, but a good deal of the time. And most of the time it has worked out well for us."

Rather than acquiring companies, Apache prefers to acquire assets.

"If you look at everything we've done over the last 50 years or so, generally it's been the acquisition of assets without people", Howell said. "There are exceptions where there have been large asset sales, such as in Canada and more recently the Forties field in the UK, where we took on a lot of the people associated with the assets. " Many of those people have stayed with Apache and have enjoyed their introduction to our culture", added Bass.

"But we don't do hostile takeovers" said Howell.

Despite having a reputation for being an aggressive explorer, Apache has been reasonably conservative in regard to acquisitions.

"Aggressive explorer is one way of putting it, but we just know that you've got to play the game", Howell said. "It's an odds game, you know you're going to get one in five or whatever. If you don't have enough rolls of the dice, you're not going to win. You can't just drill a few wells, get disappointed and leave.

"The other aspect, and we look at this differently from others, is that we're realistic about the sort of field sizes you can find, and have the ability in many cases to commercialise fields that others can't – that is tied to having infrastructure, of course, as we do already in the Carnarvon Basin."

Howell said that in addition to knowing the odds, Apache was a company characterised by staying power.

She said in the case of the Simpson and Double Island discoveries, the company sought to turn them around and have to them in production within a year – again, acting quickly with a 'sense of urgency' and restraining costs by having a continuous drilling program.

"It can become extremely cost effective", she said.

"We've been able to drill wells as part of a sequenced program… instead of bringing a rig in to do a small program and stopping, we're able to put it to work elsewhere, and gain efficiencies with the rig right across the operations, whether the rig is drilling exploration wells, development wells or installing platforms.

"It does become a bit of a conveyor belt, a production line. Right from the team generating the prospects to doing all the applications to drill, well reports… we keep steaming along."

"We can maintain that type of program because of our people", added Bass.

Bass said the company had looked hard at other opportunities such as the Timor Sea and New Zealand, but hadn't found the right 'fit' yet. "I still think there are some excellent long-term [offshore] opportunities in New Zealand… but we're not going to run out and drill four or five wells, say 'OK, we're done' and walk away," he said. "It needs to be a program whereby if we put a stake in the ground, we're going to be there for a while and really have an opportunity to grow something."

Howell confirmed that the company regards entering a new country very seriously. "Everything has got to line up and New Zealand had some problems for us", she said.

Fast track expansion for Australia

Bass said a key strategic objective of the company was to gain efficiencies and economies of scale by continually generating enough opportunities ahead of time to be able to keep long term drilling programs going.

"We've had at least one, sometimes two or three rigs on contract now for many years in Australia – which has been tremendous", he said.

"We've drilled 212 wells in the last 10 years here, as of 2003 year-end, but out of the 212, we've drilled 142 of them in the last five years. It's really ramped up.

"We had to establish our core operating base here and that was primarily our natural gas business on [Varanus] Island. We provide approximately 25-30% of WA's daily domestic natural gas now and that's stayed pretty steady over the last few years. Once we had a solid foundation of income, it was time to expand our efforts, which we've done in the recent past.

"We expanded into the Perth Basin and we'll be drilling at least two wells there this year. We've also had some tremendous success in the Exmouth Sub-basin the past year and we'll drill somewhere between four and eight wells there this year. In fact, before the end of the second quarter, we'll drill four wells there: two appraisals at Ravensworth and Crosby, and two additional exploration wells" (See left column on Stickle-1).

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