Apache's Second-Quarter Net Income Swells to $1.4B, $4.25 per Share

Apache Corporation reported that high crude oil and natural gas prices fueled record quarterly net income of $1.4 billion or $4.28 per diluted common share, a 128% increase from $632 million or $1.89 per share in the prior-year period.

Second-quarter cash from operations before changes in operating assets and liabilities totaled $2.3 billion, compared with $1.5 billion in the prior-year period, and surpassed the record of $1.9 billion set in the fourth quarter of 2007.

Second-quarter production declined 3.6% from the prior-year period and 1% from the first quarter to 551,600 barrels of oil equivalent (boe) per day. The decline is primarily the result of an explosion that disrupted operations at the gas processing and transportation hub at Varanus Island in Australia as well as a strike at a refinery in Scotland that shut in production from all of the fields on the Forties Pipeline System, including Apache's Forties Field.

"The second quarter was highlighted by record financial results, continued exploration success, and sustained progress in delivering our pipeline of development projects," said G. Steven Farris, Apache's president and chief executive officer. "Despite the challenges we faced during the quarter, we remain positive about the long-term outlook. Driven by successful drilling programs and seven development projects that are expected to add 135,000 boe per day to worldwide net production over the next four years, we are confident Apache is entering a period of accelerating production growth in 2009-2012."

Drilling highlights included:

  • The Geauxpher discovery in the deepwater Gulf of Mexico has estimated proved and probable reserves of 100 billion cubic feet. Apache has a 40% working interest in the field
  • The Heqet-2 well in Egypt tested 2,100 barrels per day from a depth ofmore than 14,000 feet
  • The Umbarka-174 well in Egypt tested 4,300 barrels per day
  • In Canada, two Ootla shale wells drilled by Apache's partner EnCanaadded further support to the current estimated potential of 9-16 trillion cubic feet net to Apache
  • Five wells drilled in the Forties Field in the North Sea during the first half of 2008 averaged an aggregate of 8,900 barrels per day in the second quarter. Apache has a 97% working interest in the Forties Field.

In Egypt, Apache expects to commence production through the Salam gas plant expansion in October. The gas plant project -- one element of Apache's development pipeline -- is forecasted to contribute additional net production of 100 million cubic feet (MMcf) of gas and 5,000 barrels of condensate per day by the end of the year.