Apache Corporation has reported that strong crude oil and natural gas prices fueled third-quarter net income of $1.2 billion or $3.52 per diluted common share, up 94 percent from $612 million or $1.83 per share in the prior-year period.
Third-quarter cash from operations -- prior to changes in operating assets and liabilities* -- totaled $2.1 billion, compared with $1.6 billion in the prior-year period.
Third-quarter production declined 9 percent from the prior-year period and 7 percent from the second quarter to 510,672 barrels of oil equivalent (boe) per day. The decline was the result of two hurricanes that curtailed production in the Gulf of Mexico and onshore Louisiana and continued shut-ins following the June 3 explosion at the gas processing and transportation hub at Varanus Island in Australia. Most of the curtailed production in the Gulf and Australia is expected to be restored by year end, setting the stage for renewed growth in 2009.
"We faced several challenges on the production side during the third quarter; we also had strong earnings, continued progress on our pipeline of development projects, and drilling success in several areas," said G. Steven Farris, Apache's president and chief executive officer.
Three developments are expected to impact Apache's 2009 production: Two new gas processing trains are expected to commence operations in Egypt by year end, boosting net production by approximately 100 million cubic feet (MMcf) of gas and 5,000 barrels of condensate per day; the Van Gogh field in Australia is expected to contribute a net 20,000 barrels of oil per day beginning in mid-2009; and the Geauxpher field in the Gulf of Mexico is expected to commence production during the first quarter at a net rate of approximately 50 MMcf of gas per day.
Apache had notable drilling results in Egypt, where the company drilled four discoveries; at its emerging Ootla shale play in Canada; and in the North Sea, where nine new wells fueled a 25-percent increase in third-quarter production compared with the prior-year period.
"Apache continues to show operational progress, in spite of the recent turmoil in the commodity and equity markets and the global economic slowdown," Farris said. "Although we have an abundant inventory of drillable prospects across 36 million acres, Apache intends to continue to live within our means. Our major development projects are critical to Apache's future growth - and we intend to fund them -- but we will adjust other capital spending to a level that does not exceed operating cash flow."
During the third quarter, Apache received an average of $101.04 per barrel of oil and $7.43 per thousand cubic feet of gas. Oil and gas prices were up 43 percent and 49 percent, respectively, above year-earlier levels, but both were 8 percent below second-quarter prices.
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