Record Production Fuels Apache's 2Q Results
Apache has reported record worldwide oil and natural gas production of 587,400 barrels of oil equivalent (boe) per day in the second quarter, up 7.1 percent from the first quarter and 6.5 percent from the prior-year period.
Apache reported net income of $443 million, or $1.31 per diluted common share, compared with $1.4 billion, or $4.28 per share, in the prior-year period. Second-quarter cash from operations before changes in operating assets and liabilities* totaled $1.26 billion, compared with $2.3 billion in the prior-year period.
Apache's second-quarter adjusted earnings,* which exclude certain items that impact the comparability of operating results, totaled $474 million, or $1.41 per share, compared to adjusted earnings of $1.44 billion, or $4.28 per share, in the prior-year period.
"The strength of Apache's geological and geographical diversity, along with our balanced product mix, fueled our second-quarter results," said G. Steven Farris, chairman and chief executive officer.
"Initial production from development projects in the Gulf of Mexico and the Western Desert of Egypt, combined with rebounding oil prices, more than offset the continuing deterioration of North American natural gas prices during the quarter," he said. "With continued drilling successes in Egypt, the Gulf and the North Sea, Apache has strong momentum going into the second half of the year."
Oil production comprised 48 percent of Apache's worldwide output, but 72 percent of oil and gas revenues. The company's oil and gas revenue per boe increased 19 percent from the first quarter. Apache received an average of $58.15 per barrel of oil, up 37 percent from the first quarter, and $3.48 per thousand cubic feet of gas, down 9 percent from the first quarter. Prices for both commodities were substantially below year-earlier levels.
"Our regions' focus on driving down lifting costs has resulted in lower costs on a boe basis for two quarters in a row, including a 6-percent decline from the first quarter to the second," Farris said.
Recent drilling and operational highlights included:
- The Falcon-1x discovery in Egypt's Matruh Concession tested 4,400 barrels per day from the Lower Cretaceous Alam El Buieb formation, with production expected to commence in the third quarter. The well also tested an aggregate of 46 million cubic feet of gas (MMcf) and 2,368 barrels of condensate per day from two other zones that will not be produced until additional processing and transportation capacity is developed.
- The Hydra-5x, an appraisal well in Egypt's Shushan Concession, tested 21 MMcf and 3,744 barrels of condensate per day from the Jurassic Upper Safa formation. The Hydra field is expected to be developed after completion of a gas sales agreement with the Egyptian General Petroleum Corp.
- Three new horizontal wells in the Horn River shale gas play in northeast British Columbia had initial gross production rates of about 16 MMcf per day each, strengthening estimates that individual wells in the play potentially can recover about 10 billion cubic feet (Bcf) of natural gas. Apache and EnCana each have a 50-percent interest in a joint venture that holds approximately 425,000 acres at Horn River.
- In the North Sea, the Forties Charlie 6-3 well commenced production at a rate of 10,500 barrels per day. The well is the seventh development well brought on production at Forties in 2009; its initial production rate is the field's highest since 1994.
- In Egypt, Apache ramped up production through two new processing trains at the Salam gas plant and is expected to reach gross production capacity of 200 MMcf and 10,000 barrels of condensate per day during the third quarter.
- The deepwater Geauxpher Field at Garden Banks Block 462 -- in water 2,700 feet deep about 150 miles off the Louisiana coast in the Gulf of Mexico -- came on line May 15 and produced a total of 4.3 Bcf by June 30. The field is currently producing 105 MMcf per day from two wells. Apache has a 40-percent interest in the field.
"Apache's strong financial position - with debt at 25 percent of capitalization and $772 million of cash on the balance sheet - provides many avenues for continued growth, either through our deep inventory of drilling prospects or through acquisitions," Farris said.
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