Apache Sees Higher Rig Rates, Although Still Profitable

NEW YORK Aug 14, 2006 (Dow Jones Commodities News)

Apache Corp. (APA) said the cost to lease rigs has been on an upswing; however, the company estimates it is still profitable to drill in the Gulf of Mexico.

Compared with the low of two or three years ago, the prices for drilling have doubled and in some instances have tripled, Chief Financial Officer Roger Plank told CNBC on Monday.

However, "the price has too - so our margins are very strong as a company," Plank said.

Apache plans to invest somewhere between $3.5 billion to $4 billion in drilling this year. In acquisitions, so far the company has invested about $1.7 billion to $1.8 billion.

"That's equivalent to about one quarter of our entire market cap of our company," Plank said.

"We are making very significant investments. As a result, we expect to see our production increase some 10% to 15% this year."

Copyright (c) 2006 Dow Jones & Company, Inc.

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