Brady Parish - Vice President of Investor Relations G. Steven Farris - Chairman, Chief Executive Officer and Member of Executive Committee Rodney J. Eichler - President and Chief Operating Officer Thomas P. Chambers - Chief Financial Officer and Executive Vice President

Arun Jayaram - Crédit Suisse AG, Research Division Bob Brackett - Sanford C. Bernstein & Co., LLC., Research Division Douglas George Blyth Leggate - BofA Merrill Lynch, Research Division Pearce W. Hammond - Simmons & Company International, Research Division John Freeman - Raymond James & Associates, Inc., Research Division John P. Herrlin - Societe Generale Cross Asset Research Matthew Portillo - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division Brian Singer - Goldman Sachs Group Inc., Research Division Eliot Javanmardi - Capital One Southcoast, Inc., Research Division David R. Tameron - Wells Fargo Securities, LLC, Research Division Charles A. Meade - Johnson Rice & Company, L.L.C., Research Division Mario Barraza - Tuohy Brothers Investment Research, Inc. Leo P. Mariani - RBC Capital Markets, LLC, Research Division Robert L. Christensen - The Buckingham Research Group Incorporated

Good afternoon. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Apache Corporation Third Quarter 2012 Earnings Release Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Brady Parish, Vice President of Investor Relations. Sir, you may begin.

Thank you, Regina. Good afternoon, everyone, and thank you for joining us for Apache Corporation's Third Quarter 2012 Earnings Conference Call. For all of you who have been impacted by Hurricane Sandy, we wanted to let you know that our thoughts are with you and your loved ones. This morning, we reported earnings of $161 million or $0.41 per diluted share. Adjusted earnings, which excludes certain items that impact the comparability of results, totaled $861 million or $2.16 per diluted share. Cash flow from operations totaled $2.4 billion for the quarter. On today's call, we will have 3 speakers making prepared remarks prior to taking questions. First, we will hear from Steve Farris, our Chairman and Chief Executive Officer; followed by Rod Eichler, President and Chief Operating Officer; and finally, Tom Chambers, Executive Vice President and Chief Financial Officer. We prepared our quarterly supplemental data package for your use, which also includes the reconciliation of any non-GAAP numbers that we discuss such as adjusted earnings, cash flow from operations or pretax margins. This data package can be found on our website at www.apachecorp.com/financialdata. Today's discussion will contain forward-looking estimates and assumptions based on our current views and most reasonable expectations. However, a number of factors could cause actual results to differ materially from what we discuss today. A full disclaimer is located with the supplemental data package on our website. With that, I'll turn the call over to Steve.

Thank you, Brady. And good afternoon, everyone, and thank you for joining us today. As I'm sure you've all read in our release this morning, during the third quarter, we accelerated our drilling momentum. Across our portfolio, we've got excellent results. In the U.S., we continued to step up our play activity and now run 63 rigs, 50% more than we did at the beginning -- had at the beginning of the year. And Rod is going to go on a lot more detail, but we've got outstanding well results in a number of plays, including the Cline, Wolfcamp and Wichita Albany and the Canyon Wash and the Permian Basin and also the Granite Wash and the Anadarko Basin. During the quarter, our growing drillbit momentum was also notable on the international front. In the North Sea, after consolidating our expanded portfolio early in the year, we're having very good drilling results with excellent flow rates from all discoveries across our fields. And the value of Apache as operator, I think, has just been endorsed by a major, with Shell last week announcing their purchase of half this [ph] position and many of the Apache-operated fields in the region. In Argentina, we completed our first Vaca Muerta horizontal well, which was a relatively short lateral. It was about 1,900 feet with only 7 fracs. It's early days, but the well results have been very encouraging. We continue to set the economics of the play. We have 4 additional horizontal tests that's planned over the next few months. We have 450,000 net acres in this play, and it has enormous resource potential. After a very successful portfolio expansion phase over the last 2.5 years, we really focused -- refocused back to the drillbit. We hold a leading position in some of…

Thank you, Steve. Our total reported net production for the third quarter was approximately 771,000 boe per day. Hurricane Isaac in the Gulf of Mexico and outages in the North Sea due to scheduled maintenance activities reduced production by 13,000 boe per day and 12,000 boe per day, respectively. Currently, all of this production is back online and we have entered the fourth quarter with record worldwide net production. During the third quarter, we continued the conversion of our extensive onshore oil and hydrocarbon liquids-rich inventory into production and cash flow. We rank among the most active drillers in North America, having operated an average of 66 drilling rigs in our U.S. regions during the quarter, including 35 in our Permian region and 24 in our Central region, with outstanding results. Our Permian and Central region averaged combined net production of approximately 184,000 boe per day during the third quarter, nearly 1/4 of our total worldwide net production. Moreover, this represents an increase of 15% over the second quarter averaged net production of 160,000 boe per day and an increase of 30% over third quarter 2011 net boe production of 141,000 boe per day. With the inventory of over 67,000 locations in these 2 regions alone, we remain on track to deliver double-digit growth in the oil and liquids-rich Permian and Central regions for years to come. In addition, we are continuing our very active new venture exploration program. Steve already elaborated on our encouraging results in the Mississippi Lime and Williston Basin and Vaca Muerta shale, so I'll not address these plays here. In Alaska, we are on track to spud our first well in the Cook Inlet during the fourth quarter. Finally, in October we signed a new production shoring agreement to explore a high-potential area in Block…

Thanks, Rod. And good afternoon, everyone. As Steve and Rod mentioned, we are actively focused on our significant inventory of drilling opportunities and realizing the potential we've built through these acquisitions. Record rig counts continue to increase in our Permian and Central regions, and significant infrastructure investments in all the regions has set the groundwork for a positive momentum adding into year-end. Underpinning this activity is our ability to generate strong consistent revenues and cash flow. For the third quarter, we reported earnings of $161 million or $0.41 per diluted share and adjusted earnings of $861 million or $2.16 per share when we adjust for certain items that affect the comparability of results. Third quarter adjustments totaled $700 million and include a noncash property write-down in Canada, a change in tax rate on decommissioning expenditures for North Sea oil and gas facilities, a foreign currency fluctuation adjustment and some small merger acquisition and transition costs. The noncash after-tax write-down of our Canadian oil and gas properties totaled $539 million, which brings the year-to-date amount to $1.4 billion. Our Canadian regions reserves were over 77% natural gas at year-end 2011 and a decline in natural gas prices over the prior year continues to impact us under full-cost accounting rules. The other large noncash item impacting earnings was the $118 million charge related to decommissioning facilities in the North Sea. As you'll recall, in 2011, the U.K. increased the corporate income tax rate on North Sea oil and gas profits from 50s -- 50% to 62% and at that time also proposed that the tax relief attributable to decommissioning expenditures remain at 50%. The decommissioning-related legislation was not formally enacted but was included in the finance bill introduced in 2012 and enacted in July of this year, necessitating the change in the…

All right. Thank you, Tom. That concludes our prepared remarks. I do want to apologize to the listeners on the call if you hear any background noise. But I'll turn it over to the operator now, and we're ready for questions.

[Operator Instructions] Our first question will come from the line of Arun Jayaram with Credit Suisse. Arun Jayaram - Crédit Suisse AG, Research Division: Steve, we've seen some pretty interesting announcements regarding majors, including Exxon, I think, some pretty high valuations for Canadian gas acreage. I just wanted to see if you could maybe comment on some of the potential implications for Apache. Are there opportunities for you to monetize some of your acreage in places where you're not spending capital? And does this have any implications? Could you partner with Exxon regarding Kitimat where the market is concerned about?

Two different questions. I'll take the first one, about the acreage. Interestingly -- and I think the number is correct because I asked our guys and gals in Canada. We have about 300,000 acres in that same play that just traded. And in fact, we're starting to drill some wells there at the end of this year and in the first of next year. How we actually exploit all of that acreage? We got 6.5 million acres in Canada and we just went through the same process that we've done in the Anadarko Basin and the Permian Basin in the -- in our Canadian region in terms of resource potential, and we're going to be rolling that out here in the coming months. But the potential for liquids and liquids-rich gas in Canada are actually much stronger than I thought they were. In terms of partnering with Exxon, I can't comment on that. But despite some of the things you hear in the press, we're -- Kitimat is still going forward, and we have -- we're very positive about it. Arun Jayaram - Crédit Suisse AG, Research Division: Okay, I'll leave it at that. Obviously, Steve, this year, you've had some production disruptions. It sounds like those are in the rearview mirror. How comfortable are you, Steve, with your 6% to 9% target for 2013? And I just wanted to also see if we could get a little bit more color on the next couple of quarters for the North Sea given -- with the ESP issues back online, things like that. So some more color on the North Sea.

Yes. In terms of -- there's nothing -- honestly, if you -- and I -- this is an excuse and I don't like to give excuses, but if you were to adjust our production, which you can't do because we didn't get the cash and we didn't get the production, but if you were to adjust it, we would have been right on our -- for the hurricane, which you can't do a damn thing about, and the events in the North Sea would be right on our production forecast. And I know that sounds like an excuse, but as we move to the drillbit, those kind of things, we've got to get over. We've got to get past those kind of things. So far, I will tell you, from an outlook for the fourth quarter, we're very positive about it. And there's nothing changed with respect to our forecast for 2013, 6% to 9%. I mean, I think we have the inventory and we have the asset base in order to do that.

Your next question will come from the line of Bob Brackett with Bernstein Research. Bob Brackett - Sanford C. Bernstein & Co., LLC., Research Division: A question on Beryl. If anybody knows what the value of Beryl is, it's you folks. You saw Shell take out Hess' interest. What's the sense there? Why didn't you either match or beat the bid? And is that a sign that you got too many things to do and you don't want to do more bolt-on acquisitions?

I really can't comment on that at the present time. Bob Brackett - Sanford C. Bernstein & Co., LLC., Research Division: Okay, I'll try again, moving to a different country. Can you -- a bit more color on the Vaca Muerta then?

Yes, I will. We're a -- it's a little early to give rates. I will tell you we were pleasantly surprised by the initial rates that we got out of that well. We've been -- we've had it on now almost a month. I will tell you, it's still making 300 barrels a day. And for a well that's been frac-ed 7 times in only 1,900 feet of lateral, it's -- we're very satisfied with it.

Your next question will come from the line of Doug Leggate with Bank of America Merrill Lynch.

I -- a couple for me, please, if I may. Steve, it's obviously pretty nice to start seeing the momentum picking up in the Lower 48. Can you tell us where you see the rig count going in terms of relative capital allocation between, I guess, international and U.S., particular, Lower 48 in particular, 63 [ph] now. Where do you think that tops out? Or are you at a level now where you think you're -- you've got enough to say grace over?

Well, I think -- as I said in my prepared remarks, I think you're going to see that momentum build. Certainly, from an opportunity standpoint, we have the opportunity to -- and I'm going to be redundant. But if you remember in 2010, we spent $500 million in the Permian, then we went to about $1 billion. This year, we're going to spend a little over $2 billion, and in next year, we're going to spend more than that. We'll probably run 40 rigs next year in the Permian. And the Anadarko Basin, our results there, actually better than we expected. So we're going to -- you're going to see an increase in the Anadarko Basin also, which speaks to the allocation of capital. Certainly, we haven't allocated our capital for 2013 yet. We're going to do that in December. But it's certainly -- we're going to put it into best projects, wherever those projects are.

And then Steve, this might be a dumb question as a follow-up, but I'm going to have a go, anyway. Your stock prices, when you did the BP deal last time, your share equity was above where the share price is now. You obviously -- you've done Analyst Day, you've given us insight to everything that's going on, and you spent a lot of money buying assets. As you say, you've got a very deep portfolio. One could argue that you could buy back reserves cheaper by buying back your own stock. I'm just curious as to how that plays into how you're thinking about trying to address some of the recent performance in the share price which seems to contrast with the tremendous portfolio you've built up.

Yes, and I -- we've had this discussion before. I think, in terms of the rates that we're getting for the investment dollars that we have in our portfolio -- it's -- other than perception, would be rates of return, which would be cost of capital to buying our stock back. We're not -- at the present time, we're not considering diverting capital from the base program to buy our stock back.

So what do you think it is the market is missing here? Because I'm just really going to take your perspective as to how patient you're going to be on this.

Well, I -- the -- I -- obviously, we're disappointed that we had the down time. I'm optimistic that we'll have a good quarter in the fourth quarter and I think we got to continue to post quarters.

Your next question will come from the line of Pearce Hammond with Simmons & Company. Pearce W. Hammond - Simmons & Company International, Research Division: I was just curious, just thinking broadly about 2013 CapEx spending. Is it roughly fair to think, in terms of it mirroring the growth in cash flow year-over-year, that it might move up in lockstep with that?

Yes, we're going to -- we have the opportunity base. It's -- we're going to spend our cash flow in the E&P business. Pearce W. Hammond - Simmons & Company International, Research Division: And then a second question is to follow up if you can kind of broadly compare and contrast the economics and opportunities of LNG projects in Australia versus those in Canada.

Well, for different reasons, they're very similar, actually. I mean, obviously -- let's assume that the pricing of the LNG is exactly the same in Australia versus they are in Canada. I will tell you a -- the add-ons of trains in Canada would be much more lucrative than they would be in Australia just because of the cost. So that project really is a long-term project. And there's tremendous amount of gas in the United States and/or in British Columbia right now.

Your next question will come from the line of John Freeman with Freeman James (sic) [Raymond James]. John Freeman - Raymond James & Associates, Inc., Research Division: I didn't know that I took over the company. The -- on the North Sea, the 12,000 that was offline, the -- specifically just to the ongoing pump issues, how much of the 12,000 was related to just the pump issues?

It's only about 2,000 or 3,000 barrels of oil per day specifically attributed to the pumps. We had 9 ESPs that were off and those are being cycled into the drilling, scheduled to be replaced, along with new drills that we do that -- based on economics so that -- we haven't got all of those 9 replaced yet, but they probably will be by the -- in the second quarter of 2013.

But the real down -- production off was the -- was our turnaround at Alpha. John Freeman - Raymond James & Associates, Inc., Research Division: Right. And I think you all mentioned that Nelson returns in November. How much of a production impact is that?

That's 1,900 barrels of oil a day net. And that's been down for about almost 100 days. John Freeman - Raymond James & Associates, Inc., Research Division: Okay, great. And then last question for me, it's still on the North Sea. Did the 3D seismic killer [ph] you're shooting on Beryl, did that get completed last month?

It's only partially completed. We have about -- 30% of it was acquired in the current shooting weather window this last summer. The balance of it we acquire in 2013.

But the 40% is we're currently processing.

Right.

Your next question will come from the line of John Herrlin with Societe Generale.

Just some quick ones for me. With Suriname, will you shoot the seismic and then bring someone out to promote [ph] ?

Yes, well, let me put it this way. We're not that -- we wouldn't go drill that well 100%. And we -- and -- but frankly, John, we've already had a lot of interest. That's a very good block, frankly.

Yes, I would assume so. Yes, Atlantic margin turbidites are in. What about services cost, Steve? We're seeing -- or hearing on a lot of the other conference calls that prices for rigs and frac-ing are coming down. What are you seeing?

Oh yes, they're -- actually, frac-ing costs came down really in the third quarter in a big way, and you're starting to see rigs come down. If you look at the rig count in the Permian Basin over the last 2 months, I mean we're -- it's the historic or the continuous ebb and flow of prices, service costs and capital. And what you're seeing right now is we were on the back end of all those service costs going up, we're on the front end of it now because we -- I think they'll continue to go down.

Okay. Last one for me. Would you consider ever doing not a stock buyback but a more competitive common stock dividend? You've got a great balance sheet, you're very diversified and you're suffering benign neglect.

I -- we did that many years ago, actually. And I mean, honestly, we consider pretty much all avenues of what -- how to reward our shareholders, frankly, from a cash dividend to a stock dividend to stock buybacks. And frankly, when you look at our portfolio, all we have to do now is deliver honestly. Our -- as I told our planning meeting group, we have 280 people in Dallas and we have nobody to look at but ourselves. We just need to perform because we've got the asset base and we've got the people, so...

Okay, last one for me. Steve, would Mississippi Lime be a good water disposal access?

I'm sorry. What, John?

Would the Mississippi Lime be a good water disposal access, wells being wells.

Yes, you're going to -- I mean, you're going to get -- yes, it would. I mean, that -- if you've looked at not just us but all the operators out there, that's a good oil play, but you've got to move a lot of water, which we anticipated.

Your next question will come from the line of Matt Portillo with Tudor, Pickering, Holt. Matthew Portillo - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just 2 quick questions for me. Firstly on the CapEx side. Looking at Q3, it looks like the run rate CapEx spend is about $2.7 billion for drilling and then also gathering. Is that a reasonable rate that we should think about going forward? And then as we head into 2013, kind of can you talk a little bit about the rig count that you're currently employing by basin and then -- and how that may change over time? I think you mentioned the Permian will increase to about 50% horizontal rig. So I'm just trying to get a sense of how those rigs are shifting around.

I think we've got 34 rigs. I mean, I might be off one, but I think we have 34 rigs in the Permian. We've got 24 or 25 in the Anadarko Basin. I think we're up to 7 in Canada and we've got 8 offshore Gulf of Mexico. That's not exact, but that's pretty close.

Your next question will come from the line of Brian Singer with Goldman Sachs.

Can you refresh us on Australia, on production trajectory and your latest thoughts on Van Gogh platform remediation and just what we should expect production trajectory-wise over the next 4 to 7 quarters?

Yes. I mean, Van Gogh has been very good. It's paid out 9 months. We're still producing, I think, about 16,000, 17,000 barrels a day there. We have a turnaround on our FPSO coming in about the middle of -- I mean, middle of 2013. And the real reason that's important is we're going to -- when we bring it back. In the meantime, we're going to be drilling Coniston wells, which is a sister field to the north of Van Gogh that will start ramping up our oil production going through that FPSO. But frankly, we've seen the peaks of the production at both Van Gogh and Pyrenees. And the way we replace that is we've got Balnaves, which is about a 20-million-barrel oil field we should have on broad win [ph] 2014.

2014.

2014. We also got Macedon, which is gas, but it's not like North American gas. It is -- that contract is north of $7. So we've got Macedon coming on in the third quarter of 2013. So we've got -- we're going to see a little dip in Australia and then we're going to see a big ramp-up again.

And I guess, when we think about that ramp-up on the oil side, does that ramp-up just kind of get back to the levels that you've been producing, which has been relatively consistent for this year in the 28,000 to 30,000 barrels a day range? Or does it step up beyond that?

Well, I don't have that. I can't answer that question. I just -- and it's not that I wouldn't, I just don't have it in front of me. I don't know what our profile looks like.

And lastly, in Egypt. Can you just talk to any discussions with the government you've had since your last update? And any thoughts on royalty rates and overall government take?

Yes, I had. And in fact, both Rod and I spent a week in September in Egypt. I happen to be the Head of the U.S.-Egyptian Business Council. And we had 48 U.S. companies there, some of the largest companies in the world. We met with the president, the prime minister. I think we had government officials with us from the U.S. Quite frankly, we've been very pleased and very positive about not only that trip but our relationship with the government. Rod alluded to that we have a new Petroleum Minister, who is, frankly, a breath of fresh air. We've got more things done in the last 90 days than we got done in the last 2 years in terms of development leases approved, issues that we needed to get solved, a new gas contract at Hydra, so -- and honestly, I'm very positive about their direction, at least for our sector.

[Operator Instructions] Your next question will come from the line of Eliot Javanmardi with Capital One Southcoast.

Yes, guys, just wanted to see if you could speak to the increase in LOE for this quarter. I noticed a significant amount of it was related to repair and maintenance, and just wanted to see if that would essentially roll off for next quarter and come back down?

That will roll off next quarter. We had -- we talked about the Grand Isle 43 corrosion issue that we had. That production was off in the second quarter. That cost hit us in the third quarter, that's a onetime cost. And then we had the North Sea tire cost and some of the Canada SemCAMS plant downtime cost, turnaround costs in there as well. So those are all one-period type costs. So you should see that coming down. And with the production back up, the per boe should drop as well.

Very good. And also then in regards to exploration in Gulf of Mexico, what wells could we see just expecting to come forward then -- as far as results are concerned? Is there any left this year? Or is it in 2013? Do you have some 1Q '13?

No, it's going to be -- it'll be 2013. We don't pick up our rate until, I think, the first quarter of 2013 for our drilling, our first prospects.

In the deepwater.

In the deepwater. We have a well going right now at Heidelberg, a development well by Anadarko -- I'm sorry, Lucius, that Anadarko is drilling, but that's development drilling. So you won't see any real impact from our drilling activity in the deepwater Gulf of Mexico until next year. And we're actively drilling shelf well, Gulf of Mexico shelf wells as we speak.

Your next question will come from the line of David Tameron with Wells Fargo.

Back to the Permian Basin. It -- kind of the Midland, parts of the [ph], I guess I'll call it the Deadwood area. What would you characterize as your best part of the basin?

Well, I'll tell you, it's hard to tell. I mean, we thought the stuff we were doing down in the -- hang on one second. I've got -- now he's going to give me a chart here. Well, actually the best results we've had so far in the individual wells is the Wolfcamp Shale, but I don't know that, if you caught -- if we drilled a well on the Central Basin platform in the Wichita Albany, those wells came on 900 barrels a day, still making about 8 -- over 600 barrels a day, both of them. And we have about 23 locations to drill in there. So the one thing I would say about the Permian Basin and the reason we started getting in there in 1991 and made a number of acquisitions before we made BP is exactly where we are today: We've got a tremendous acreage position. It is the oiliest place in North America, oiliest place in the world outside of Russia. So it has a lot potential for horizontal drilling. And I think Rod mentioned we're going from -- I don't -- we're going to drill 123 wells this year horizontal. Next year, we're -- it's going to be more like half of our wells. We're just on the cusp. Not just us, everybody is, in terms of understanding the Permian Basin and the kind of oil that's out there.

Okay. And then a follow-up. You guys talked about -- at the Analyst Day talked about some similar basin, drilling you're doing, it was 15 to 20 wells you're going to drill out there. Any comment -- and maybe I missed it in the prepared remarks, but any comment on kind of overall the results from that program and what you're seeing over there?

As I said in my prepared remarks, in the Delaware, the Yeso, in particularly [indiscernible] is our principal area outside the Central Basin Platform in the Midland Basin. The program there has been vertical up to this point, but will be turning horizontal soon. It certainly met our expectations per drill.

Okay, okay. So you're just -- you got nothing from the Avalon and Bone Spring.

No, it's -- the main part of the Delaware is the Bone Spring for you. It's a modest part of our portfolio compared to the other drilling we've been doing out in the basin.

Your next question will come from the line of Charles Meade with Johnson Rice. Charles A. Meade - Johnson Rice & Company, L.L.C., Research Division: I was curious, is there an update you can share with us on the Mbawa well offshore Kenya and, if you have any results or indication there, what the implications might be for the [indiscernible]?

I think we've talked about it at the last conference, I mean, call. But we found gas. It had a real chance of finding gas. We thought we'd find an oil leg. We drilled on big structure, we found some gas. That's not what we were looking for. We're now reevaluating that block. We got 1 million acres there. So we're reevaluating that block. I happened to see we're too low, just drilled another oil well onshore Kenya. But we're -- this -- what we were looking for is not in the same horizon that Tullow is drilling onshore. And I think they're in the Cretaceous. Charles A. Meade - Johnson Rice & Company, L.L.C., Research Division: My apologies if I missed that. And the follow-up question, going back to the Permian Basin. Are -- you mentioned there are -- you guys mentioned in your prepared remarks some good Cline results, I thought. And I wondered if you could offer your thoughts on the relevant maturity and attractiveness of the Cline horizontal play versus the Wolfcamp horizontal play.

I think Rod pointed out that well is making 600 barrels a day. So it tested -- first 30 days, I think, 600 barrels a day. And I -- and if you look at our acreage position and what we showed at the resource potential and what we're looking at now, I mean, it's different. It's bigger because what we found is just -- we drilled the Barnett Shale well in the Deadwood area. We didn't drill it that far horizontal, it's made 300 barrels a day. I'll go back to my statement from a question earlier, and that is, we -- as an industry, we haven't yet fully evaluated the most important plays in the Permian Basins. And I'll go back to the Wichita Albany. I mean, I'm shocked that the Wichita Albany is making 900 barrels a day.

Your next question will come from the line of Mario Barraza with Tuohy Brothers.

Just had a question more on the -- was it the cottage? I'm sorry.

Cottage Grove? Hello?

The activity for this level in the Granite Wash?

Well, we drilled a couple of Cottage Grove wells. Actually, more than that, I think we drilled 4. It's a very good play. The Anadarko Basin has sands from the Tonkawa all the way down to the Atoka, and as you get deeper, it gets gassier. But that's another area that we've just scratched the surface as an industry and finding things, like Hogshooter. I mean, we go down there and drill a couple of Hogshooter wells and 2 or 3 of them make 4,000 barrels a day. And I can't emphasize enough, you want to be in basins that have a lot of thickness and a lot of hydrocarbons, and we're in 2 of the best. And I will tell you, one of these days, the western sedimentary basin of Canada is going to look like this. They're just way -- they're a lot further back in terms of their learning curve and exploiting it.

Your next question will come from the line of Leo Mariani with RBC Capital Markets.

Wanted to dig into each of the [indiscernible] a little bit more here. So if I'm looking at the numbers right, your gross oil production on a gross basis in Egypt has kind of dropped for it looks like the past 4 quarters here. That had been an area that you had grown for years and years and it's kind of reversed trend. Has that been kind of a slowdown with the transition government you talked about? Maybe getting more traction here with the new energy minister? How should we expect gross Egyptian oil production to sort of change gears [ph] again into '13?

Yes, and we're going to have to put on a little presentation. It's -- or maybe put something out. Actually, our gross production, gross operated production in Egypt is higher than it was at the beginning of the year. And our gross operated gas is higher than it was. What happens is, is that you get -- because of the way that the concession agreement works, if -- the price of crude oil has an awful lot to do with what you report for net production. So we need to start putting out our gross production and our net production because it's -- Egypt is still very good and going to continue to be good. And we're going to continue to see bumps in our net production based on oil prices.

Okay, I guess I was looking at some of those numbers in your supplement, and I guess maybe I was looking at them wrong. But I saw you did 211,000 gross barrels a day this quarter. And I saw like...

No, that’s about right. And what do we do in the quarter before, 216?

I saw 215 in the first quarter of '12 and it was, like, 220 in the third quarter of '11. So it's kind of been slowly coming down. So I wasn't sure if that was sort of a Permian issue or bottlenecks or you guys just weren't...

Yes, there's -- some of that is. I will tell you. Yes, we had a plant turnaround at Terric [ph] for the third quarter.

Okay, got you. And you mentioned getting good traction in last 90 days with the new Petroleum Minister over there. I guess, do you expect that to really kind of change things as we get into 2013 in Egypt for you?

Right. I -- we've got 26 rigs running. We -- it still gives us the highest rate of return in the company. And I don't -- that's probably what we're going to run all of next year.

Okay. I guess, looking at your gas production in Egypt, the other thing I noticed was that it looked like your net take in the third quarter was a fair bit lower, I'm seeing about 36% of the gas versus the gross. And previously, it had always kind of been 40% or higher. Is there anything in particular that happened in the third quarter? Should we expect it to stay at that kind of a 36% level going forward, or is that going to rebound? How should we think about that?

There's been no material change in the gross gas production, except for the turnaround we just mentioned. Some of this is PSC related and which Steve just mentioned. But I should point out that the value of the gas, all that gas we produce in Egypt, is only about 18% on a revenue basis compared to the value of the oil. So all the value in Egypt is coming from the oil and condensate we produce.

Our final question will come from the line of Robert Christensen with Buckingham Research.

A little bit more on the Williston Basin, if you might. Just you've got, I think, 3 permits, maybe 1 well drilled and testing. And just a little more color on that, that's question one. Question two, I've heard you've been actively leasing up there even more land. And question three, have there been any other well results by other companies that have been encouraging to you?

We are in the process, actually, of frac-ing our first well up there and we're drilling our second well. I think, yesterday, we were at 2,700 feet. So we're going to have 2 wells down by the end of the year. We're not picking up big amounts of acreage before filling into the land block that we've put together, which is -- I think is about 300,000 acres or so. And there have been some other operators, it's not right next door, that have announced pretty good results. I mean, the play is moving that way, so hopefully, it moves all our way. We're going to find out here pretty quick.

I would now turn the conference back over to Brady Parish for any closing remarks.

We just wanted to thank everybody for participating today. And have a great remaining week.

Ladies and gentlemen, this does conclude today's conference. Thank you, all, for joining. And you may now disconnect.