The largest contributor to performance for the quarter was Apache (NYSE:APA) (U.S.), a global oil and gas exploration company, which returned 14%. In addition to higher oil prices, Apache benefitted from solid first quarter results that demonstrated better production at lower costs. The results also showed that Apache continues to reduce its capital intensity with North American well costs down 45% since 2014 due to service prices and efficiencies. In our view, Apache has the balance sheet and asset quality to survive continued volatility in oil and gas prices, and we like how the management team is preserving and growing per share value. One of the reasons we purchased Apache last year was our confidence in the newly appointed CEO, John Christmann. He acted quickly, replacing the operating heads of each region and changing compensation metrics to focus on return, better aligning management with the shareholders. We continue to believe that Apache is inexpensive relative to the value of its properties.
From David Herro (Trades, Portfolio) and Bill Nygren's Oakmark Global Select Fund second quarter 2016 commentary.
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