Apache Sees Earnings Drop in First-Quarter 2014 After Last Year's Asset Sale, Expects Strong Year in Production

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Researched by Industrial Info Resources (Sugar Land, Texas)--Oil and gas exploration and production company Apache Corporation (NYSE:APA) (Houston, Texas) saw a drop in earnings for first-quarter 2014, driven by lower per-barrel crude oil prices and the absence of revenues from the company's sold-off assets in the Gulf of Mexico Shelf. Net income was reported to be $236 million, compared with $698 million in first-quarter 2013.

Total revenues stood at $3.68 billion, a 6.87% decrease from the same period last year. Apache's global production averaged 639,804 BBL/d, a 13.34% decline. The company said it was the most active driller in onshore North America, with record production of 149,564 BBL/d in the Permian Basin, where it has 38 operational rigs. Total North American liquids production of 198,500 BBL/d also was a record. Internationally, Apache's production in Egypt, Australia and Scotland's North Sea declined 5.37% to a total 271,704 BBL/d.

Much the global decline was attributed to Apache's near-absence in the Gulf of Mexico Shelf, where the company saw more than 92,000 BBL/d in first-quarter 2013. In September 2013, Apache sold these operations to Fieldwood Energy LLC (Houston, Texas), a portfolio company of Riverstone Holdings (New York, New York), for $3.75 billion. Apache retained 50% of its ownership interest in all exploration blocks, and in horizons below production in developed blocks.

Apache received an average price of $101.03 per barrel of crude oil, compared with $102.42 in first-quarter 2013. This offset the average price of $4.46 per thousand cubic feet of natural gas, compared with $3.77 in the same period last year. Crude oil and NGLs accounted for 82% of Apache's revenue during the first quarter.

In March, Apache sold its Argentina operations to YPF Sociedad Anonima (Buenos Aires, Argentina) for $800 million.

Capital expenditures were reported to be $2.9 billion, compared with $2.71 billion in first-quarter 2013. Total exploration and development costs increased in all established geographic segments, except Argentina. Gathering, transmission and processing expenditures stood at $332 million, compared with $249 million in the same period last year, although almost all of the increase came from the U.S. and Canada.

Industrial Info is tracking about $6 billion in active projects involving Apache, including $375 million in upgrades and refurbishments at the Ningaloo Vision Floating Production, Storage and Offloading (FPSO) facility in the Van Gogh Oil Field, which is about 65 kilometers north of Exmouth, Western Australia. Apache Energy recently awarded a contract to Argonautica (Upper Ferntree Gully, Victoria) to serve as construction manager. Keppel Shipyard Limited (Singapore) also was awarded a contract.

"During the quarter, we experienced weather impacts in the North Sea, as well as in our central [U.S.] region, where weather not only impacted our production, but also delayed our drilling schedule," said Steven Farris, the chairman, president and chief executive officer of Apache, in a conference call. "Despite these significant disruptions, our first-quarter production numbers were ahead of our internal plan."

Farris said that the company remains on track to deliver within its previously stated full-year 2014 production guidance for 15% to 18% North American onshore liquids production growth, and 5% to 8% global barrel-oil-equivalent growth on our pro-forma 2013 production of 537,000 BBL/d.

"We are currently testing new plays and completion ideas along the Gulf Coast and are encouraged by early results in Canada, where a focus on liquids-rich plays contributed to a 10% increase in crude oil and natural gas liquids compared with the preceding quarter," Farris said in an accompanying press release. "Internationally, we are on track for first oil from significant development projects offshore Australia later this year at the Balnaves and Coniston fields, and we announced two new discoveries at the Matruh and Shushan basins in Egypt's Western Desert."

Apache also announced that it will sell several non-operated interests and 11 deepwater exploration blocks in the Gulf of Mexico to a subsidiary of Freeport-McMoRan Copper & Gold Incorporated (NYSE:FCX) (Phoenix, Arizona)for $1.4 billion. The sale is expected to close by June 30, 2014.

For more information, visit Industrial Info's North American Oil and Gas Production Project Database.

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.