Proved reserves climbed to a record 2.3 billion barrels of oil equivalent (boe), up 9 percent for the 21st consecutive annual increase. Cash from operations before changes in operating assets and liabilities totaled a record $5 billion in 2006, up from $4.7 billion in 2005. (Cash from operations before changes in operating assets and liabilities is a non-GAAP measure; see reconciliation below.)
"The strength of our diversified portfolio enabled Apache to deliver another solid year of profitable growth," said G. Steven Farris, president and chief executive officer.
In the fourth quarter, Apache earned $519 million or $1.56 per share, down from $787 million or $2.35 per share in the prior-year period, reflecting substantially lower natural gas prices. Fourth-quarter cash from operations totaled $1.2 billion, down from $1.4 billion in the year-earlier period. The fourth quarter was the ninth consecutive period in which Apache's earnings exceeded $500 million and cash from operations surpassed $1 billion.
Apache received $4.77 per thousand cubic feet (Mcf) of gas in the fourth quarter, down from $7.86 per Mcf in the prior-year period, and $54.51 per barrel of oil, up from $53.63 per barrel in the fourth quarter of 2005.
Apache's production averaged 501,131 boe per day during 2006, up 10 percent; 2006 was the first year for the company's production to exceed one-half million equivalent barrels per day and the 27th increase in the past 28 years. Apache's liquid hydrocarbon production averaged 236,286 barrels per day and natural gas output averaged 1.59 billion cubic feet per day.
In the fourth quarter, Apache's production averaged 533,000 boe per day, up from 433,000 boe per day in the prior-year period, when production was curtailed as a result of hurricane damage.
Apache replaced 213 percent of its 2006 production, adding 390 million boe of proved reserves through drilling and acquisitions; half of the new reserves were added through the drillbit.
The company invested $6.4 billion in acquisitions and exploration and development activities in 2006, while divesting $635 million worth of non-core properties.
"Apache's 2006 drilling results and acquisitions in the Permian Basin, Gulf of Mexico and Argentina provide strong momentum for continued growth in 2007," Farris said. "Our seven core areas, each with a large acreage position, provide a basis for continued growth of production and reserves.
"We expect production growth of 6 to 10 percent in 2007, excluding the impact of the recently announced $1 billion acquisition of Anadarko's assets in the Permian Basin and any other acquisition and divestiture activity," he said.
"We have a deep inventory of identified drilling opportunities lined up for 2007, including a number of higher-risk, higher-reward exploration wells planned in Egypt, the North Sea, Australia and Canada," Farris said.
"While service costs have moderated somewhat from the unsustainable levels of 2006, a rebound in costs would require Apache to revisit its 2007 capital plans -- especially in North America, which experienced the greatest cost increases," he said.
Apache Corporation discovers and produces oil and gas in the United States, Canada, the United Kingdom sector of the North Sea, Egypt, Australia and Argentina.
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