Apache 1Q Drops 30% Despite Higher Output
Apache Corporation reported record worldwide production in the first-quarter of 2012 as the company benefitted from higher prices for oil and natural gas liquids and its balanced approach helped it weather the continuing deterioration of North American natural gas prices. Daily production increased 7 percent over the same period the prior year, adjusted for dispositions.
Worldwide production was 769,000 barrels of oil equivalent (boe) per day, compared with 732,000 boe per day the same period the year before. Last year's total included 11,000 boe per day from certain assets in Canada and East Texas that were sold in the second half of 2011.
U.S. liquids production reached 148,000 barrels per day, representing an 11 percent increase over first-quarter 2011 results, as global liquids production rose 6 percent over the same period.
Apache reported earnings of $778 million, or $2.00 per diluted share, for the three-month period ending March 31, 2012, reflecting the impact of a $390-million non-cash, after-tax reduction in the carrying value of its oil and gas properties in Canada stemming from lower North American natural gas prices. For the same period last year, Apache reported earnings of $1.1 billion, or $2.86 per diluted share.
Apache's adjusted earnings, which exclude the write-down and certain other items that impact the comparability of operating results, totaled $1.2 billion or $3.00 per diluted common share compared to adjusted earnings of $1.1 billion or $2.90 per share in the prior-year period.
Apache reported record revenues of $4.5 billion in the first quarter. Cash from operations before changes in operating assets and liabilities rose 18 percent to $2.6 billion.
"Apache is off to a strong start with first-quarter daily production growth of 7 percent, adjusted for 2011 asset sales," said G. Steven Farris, chairman and chief executive officer. "We expect overall production to continue to grow on the strength of an active worldwide drilling program, including accelerated activity on the 312,000 newly acquired acres in the Anadarko Basin."
- Apache has increased onshore U.S. drilling activity from 36 rigs operating at the beginning of the year to 56 currently, a rise of 56 percent.
- Permian Basin production rose to 99,000 boe per day in the current quarter as a result of increased drilling and recompletion activity in liquids-rich plays, representing an 18 percent rise from the first quarter of 2011. Apache currently operates 31 rigs in the region, including six horizontals.
- With the recently completed acquisition of Cordillera Energy Partners III, Apache more than doubled its position in the Anadarko wash play to nearly 550,000 acres. The company has increased its exposure to the horizontal Granite Wash, Tonkawa, Cleveland and Marmaton gas condensate and oil plays. Rig count has increased from six at the beginning of the year to the current total of 22 of which 21 are horizontal.
Apache's diverse portfolio of worldwide assets enabled the company to post strong financial results despite low North American natural gas prices. Liquid hydrocarbons represented 50 percent of production but contributed 82 percent of revenues due to the wide gap between crude oil and natural gas prices.
Apache's results also reflect the benefit of higher prices realized on Dated Brent crude produced in the company's Australia, North Sea and Egypt regions, and on sweet crude from the Gulf of Mexico region. Apache received these premium prices on approximately 75 percent of its crude oil production. Worldwide, the overall average price received was $111.22 per barrel during the period, up from $97.83 in the first quarter of 2011.
While North American natural gas price realizations fell 22 percent over the prior-year period, Apache's international regions, which represent 38 percent of its total gas volumes, saw prices rise 17 percent to $4.02 per Mcf. The worldwide average price received this quarter for natural gas was $3.82 per Mcf, compared with $4.32 per Mcf in the same quarter the previous year.
Apache confirmed its projected 2012 production growth forecast of 7 percent to 13 percent from full-year 2011 production levels, after adjusting for 2011 divestitures.
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Operates 3 Offshore Rigs
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