Apache Profits Collapse on Write-Down

Energy

Published: November 1, 2012 10:03 am

Apache Corp. (NYSE: APA) reported third quarter 2012 earnings this morning. The oil and gas exploration and production company posted adjusted earnings per share (EPS) of $2.16 on revenues of $4.14 billion. In the same period a year ago, the company reported adjusted EPS of $2.96 on revenues of $4.33 billion. First-quarter results compare to the Thomson Reuters consensus estimates for EPS of $2.26 and $4.06 billion in revenues.

On a GAAP basis, the company posted EPS of $0.41. The company took a noncash, after-tax write-down of $539 million on the carrying value of its Canadian properties due to the low price of natural gas.

The company’s CEO said:

We are continuing to add drilling rigs and accelerate activity in the Permian and Anadarko basins. Today, we are running 56 rigs in these regions with plans to expand throughout next year. All are drilling oil and liquids-rich targets and more than half are drilling horizontal wells. Production in these two regions increased 30 percent from a year ago, accounting for nearly a quarter of Apache’s overall production compared with less than a fifth in third-quarter 2011. We expect this growth trajectory to continue well into the future.

Production in the Permian Basin rose by about 42,000 barrels of oil equivalent a day, compared with the third quarter of 2011. The company’s average realized price for a barrel of oil rose slightly year-over-year to $102.62, mainly as a result of production of higher-priced Brent crude in Australia, the North Sea and Egypt.

Natural gas prices were a different story. North American price realizations fell 27% year-over-year to $3.51 per thousand cubic feet. International prices rose 13% to $4.21 per thousand cubic feet. International production accounted for 36% of Apache’s total natural gas production in the quarter.

Apache’s shares are trading down freactionally this morning, at $82.21 in a 52-week range of $77.93 to $112.09. The consensus target price for the shares was around $114.54 before today’s report.

Paul Ausick

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