Apache Hits Milestone for Third Quarter Production
Apache reported that for the first time average worldwide production surpassed 600,000 barrels of oil equivalent (boe) per day during the third quarter, increasing 3.4 percent from the second quarter and 19 percent from the prior-year period.
"Apache's regional growth drivers put the company on track for record production and solid financial results in 2009, and we will enter 2010 with strong momentum, including two development projects in Australia that should add 40,000 barrels of oil per day to worldwide output when they commence operations in the first half," said G. Steven Farris, chairman and chief executive officer.
The company produced 607,118 boe per day in the third quarter. Liquid hydrocarbons production averaged 297,997 barrels per day, up 2 percent from the second quarter. Gas production averaged 1.85 billion cubic feet per day, up 5 percent from the second quarter.
Apache reported net income of $441 million, or $1.30 per diluted common share, compared with $1.2 billion, or $3.52 per share, in the prior-year period. Third-quarter cash from operations before changes in operating assets and liabilities* totaled $1.3 billion, compared with $2.1 billion in the prior-year period.
Apache's third-quarter adjusted earnings,* which exclude certain items that impact the comparability of operating results, totaled $534 million, or $1.58 per share, compared to adjusted earnings of $1.1 billion, or $3.19 per share, in the prior-year period.
Apache had approximately $1.4 billion in cash at the end of the third quarter. Debt was 24.7 percent of total capitalization.
Third-quarter operational highlights included:
- The Egypt Region achieved a new record for gross operated production of 290,452 boe per day, up 6 percent from the second quarter and 27 percent from the prior-year period, driven by increased gas output from two new processing trains at the Salam Gas Plant and increased oil production from the Faghur Basin in the Khalda Offset Concession. Net production was down slightly because higher oil prices and lower capital spending reduced cost-recovery barrels under the terms of production-sharing contracts.
- In Australia, net gas production averaged a record 225 million cubic feet (MMcf) per day.
- At the Forties field in the North Sea, record net production of 71,472 boe per day during the month of July contributed to the second-best quarter since Apache took over operations in 2003. Third-quarter oil output increased 13 percent from the second quarter to 67,288 barrels of oil per day on strong drilling results and increased field efficiency.
- The deepwater Geauxpher field at Garden Banks Block 462 in the Gulf of Mexico produced 98 MMcf per day during the third quarter; Apache's net was 39 MMcf per day.
Projects that will drive Apache's growth in 2010 include:
- In Australia, the Ningaloo Vision floating production, storage and offloading vessel (FPSO) is expected to arrive at the Van Gogh field in the Exmouth Basin in November, with first production expected in early 2010. Van Gogh is projected to add 20,000 barrels per day to Apache's annual net oil production. Pyrenees, a second oil project in the Exmouth Basin, is projected to begin ramping up to 20,000 barrels per day (net) during the first half.
- Production at Apache's Ootla development in the Horn River Basin shale play in northeast British Columbia is projected to ramp up during the second quarter. Apache and its joint venture partner EnCana plan to have 27 horizontal wells (gross) on production by the end of the first half.
- Apache is planning to drill more than 20 horizontal wells in the Granite Wash play in western Oklahoma and the Texas Panhandle during 2010. The Hostetter #1-23H, Apache's first operated horizontal Granite Wash well, is producing 17 MMcf of natural gas and 800 barrels of liquids per day.
Apache also took steps to build its pipeline of long-term growth projects.
- Apache and Kuwait Foreign Petroleum Exploration Co. (KUFPEC) signed an exclusive agreement to supply gas from their Julimar and Brunello discoveries and become foundation equity partners in Chevron's Wheatstone liquefied natural gas (LNG) hub in Western Australia, unlocking an estimated 2.1 trillion cubic feet of gross gas reserves from two of Apache's largest discoveries. Apache holds a 65-percent interest in the discoveries.
- In Argentina, Apache received government approvals of new contracts to supply 50 MMcf of gas per day from two fields in Argentina's Neuquen and Rio Negro provinces at a price of $5 per million British thermal units (MMBtu). The new contracts -- the first approved by the secretary of energy under the government's Gas Plus program - are scheduled to commence in January 2011, although the customer -- a power plant operator -- has indicated it may begin taking gas in mid-2010. Apache has submitted five additional development projects for approval under Gas Plus.
"Apache's diverse asset base comprises a mix of near-term investments with a pipeline of impactive projects that provide a foundation for solid long-term growth," Farris said.
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