HOUSTON Feb. 1, 2007 (Dow Jones Newswires)
Apache Corp. (APA) will reduce its 2007 exploration and development spending in North America by $600 million, with further cuts possible if costs don't keep pace with falling gas prices, Chief Executive G. Steven Farris said Thursday.
"If service costs don't stay in line with prices, us and others will reduce drilling to stay in line with the margins you get between service costs and prices," he said in a conference call with analysts.
Spending will increase by a similar amount outside North America, leaving the overall budget flat, he said, in a conference call with analysts.
Natural gas prices have fallen sharply from record highs at the end of 2005. With rigs and manpower scarce in the U.S. and Canada, service costs have continued to grow, however, leading Houston-based Apache and other gas-heavy companies to reduce spending for 2007.
In the fourth quarter, Apache received $4.77 per thousand cubic feet of gas, down from $7.86 per Mcf in the same period in 2005. Oil, by contrast, fetched an average$54.51 a barrel in the fourth quarter, up from $53.63 a year earlier.
Copyright (c) 2007 Dow Jones & Company, Inc.
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