Apache Doubles Net Income in 2Q10
Apache reported that higher oil output from international operations fueled record production in the second quarter as net income climbed to $860 million or $2.53 per diluted common share, nearly double the net income of $443 million or $1.31 per share in the prior-year period.
Production totaled 646,866 barrels of oil equivalent (boe) per day, up 10 percent from the prior-year period. Liquid hydrocarbon production climbed to 348,272 barrels per day, up 19 percent from the prior-year period and 16 percent from the first quarter of 2010. Natural gas production increased to 1.79 billion cubic feet per day, a 1-percent increase from the year-earlier period and up 5 percent from the first quarter.
Apache's increased oil production was the result of a nearly sixfold increase in output in Australia, including a full quarter of production from the Van Gogh and Pyrenees oil developments, and higher output from the Faghur Basin in Egypt's Western Desert. Natural gas production was higher in Australia, Gulf Coast, Egypt and the Anadarko Basin of western Oklahoma.
Cash from operations before changes in operating assets and liabilities totaled $1.8 billion in the second quarter, up 46 percent from $1.3 billion in the year-earlier period. At the end of the quarter, Apache's cash balance was $1.8 billion.
Apache's second-quarter adjusted earnings, which exclude certain items that impact the comparability of operating results, totaled $829 million or $2.44 per diluted share, up from $474 million or $1.41 per share in the prior-year period.
"Apache's second-quarter results illustrate the benefit of our focus on long-term growth," said G. Steven Farris, chairman and chief executive officer. "We are realizing the benefit of significant discoveries and the investments Apache made to bring them on production. Apache's financial results also benefited from our balanced commodity mix at a time when oil prices remain strong relative to North American natural gas prices."
Apache's international operations accounted for 56 percent of worldwide production. Liquids sales were 54 percent of worldwide production and 78 percent of revenue. Apache realized an average of $74.89 per barrel of oil, essentially unchanged from the first quarter, and $4.01 per thousand cubic feet (Mcf) of natural gas, down from $4.60 per Mcf in the first quarter.
Apache's second-quarter results include production from June 9 on Gulf Shelf assets acquired on that date from Devon Energy for $1.05 billion. The acquisition brought year-end 2009 estimated proved and probable reserves of 83 million boe across approximately 150 blocks.
Apache also expects to close its previously announced merger with Mariner Energy upon approval of regulators and Mariner's shareholders. Mariner is an independent producer with operations in the Gulf of Mexico, the Gulf Coast and the Permian Basin with year-end 2009 estimated proved reserves of 181 million boe (47 percent liquid hydrocarbons) as well as unbooked resource potential of 2 billion boe. Approval is projected for the third quarter.
Operates 4 Offshore Rigs
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