Apache Earnings Beat on High Oil Prices and Record Permian Production

Independent energy company Apache Corp reported better than expected second quarter earnings after the close Wednesday. $APA also raised it’s production outlook with record Permian production

Independent energy company Apache Corp reported better than expected second quarter earnings after the close Wednesday. $APA also raised it’s production outlook with record Permian production. 

Apache Portfolio

Apache Corp (NYSE: $APA) Beat Earnings After Close Thurssday

$0.50 Beat $0.35 EPS and $1.9 billion Beat $1.8 billion forecast in revenue 

Earnings

Reported second-quarter earnings per share, excluding one-time items of 50 cents, beating the consensus 35 cents and up from from year-ago adjusted loss of 21 cents. Revenues of $1.9 billion were above the Zacks consensus of $1.8 billion and  39.4% above the second-quarter 2017 sales of $1.4 billion.

Apache Corporation NYSE: $APA

Market Reaction  > Close 44.41 −0.53 (-1.18%)

Production

  • Production of oil and natural gas (excluding divested assets and non-controlling interests) averaged 389,734 oil-equivalent barrels per day (BOE/d) (67% liquids), up 16% from last year.
  • Apache’s production for oil and natural gas liquids (NGLs) was 259,887 barrels per day (Bbl/d),
  • Natural gas output was 779,085 thousand cubic feet per day (Mcf/d).
  • In the company’s Permian Basin acreage, average production volumes improved to a record 201,832 BOE/d from 145,533 in the second quarter.
  • For 2018, the company forecasts its Permian resources to continue the high-return growth. 

Prices Received

  • The average realized crude oil price during the second quarter was $69.35 per barrel, representing an increase of 47.9% from the year-ago realization of $46.89.
  • The average realized natural gas price during the June quarter of 2018 was $2.50 per thousand cubic feet (Mcf), down 3.8% from the year-ago period.

Guidance

  • Apache increased its 2018 annual production guidance in the United States to 260,000 BOE/dfrom 250,000-258,000BOE/d, representing year over year volume growth of 26%.
  • The expected improvement in this year’s volume was prompted by robust execution and well performance in the second quarter.

Balance Sheet

  • As of Jun 30, 2018, the oil giant, with a market capitalization of around $18 billion, had approximately $972 million in cash and cash equivalents.
  • The company had long-term debt of $7.9 billion, representing a debt-to-capitalization ratio of 51.0%.

CapEx

  • Apache spent $3.1 billion in 2017, representing a 75% increase over its 2016 spending. Apache projects 2018 oil and gas investments of $3.4 billion, up from the prior guidance of $3 billion.
  • Majorityof its capital investments (or 70%) will be allocated toward the Permian Basin.

Operating Expenses

  • Apache’s second-quarter lease operating expenses totaled $356 million, down 4.3% from the year-ago quarter.
  • Ttotal operating expenses increased 3.3% from the corresponding period of 2017 to $1.4 billion.

 

 Apache Q1 Earnings Recap

Earnings

Profit totaled $145 million, or $0.38 per share, comapred to $213 million, or $0.56 per share in the same quarter last year. Excluding items, Apache Corp. reported adjusted earnings of $124 million or $0.32 per share for the period. Analysts had expected the company to earn $0.30 per share, according to figures compiled by Thomson Reuters. Revenue fell 7.4% to $1.74 billion from $1.88 billion last year.  

  • Apache Corp NYSE: $APA
  • Reaction After hours 40.90 −0.16 (-0.39%)

“Internationally, production was in line with our guidance, and our exposure to Brent oil pricing contributed to high margins, high cash returns and strong free cash flow. The first quarter was very good from an execution and cost-control standpoint, and we are seeing continued momentum into the second quarter,” said CEO Christmann.

Highlights

  • Reduced average Alpine High well costs by 20 percent from 2017 average;
  • Announced oil discovery at Garten prospect in U.K. North Sea with reserve potential in excess of 10 million barrels of oil (APA has a 100-percent working interest)
  • Raising U.S. production guidance range to 250,000 to 258,000 BOE per day, from 245,000 to 255,000 BOE per day.

Production

  • Reported first-quarter production of 440,000 barrels of oil equivalent (BOE) per day and adjusted production of 367,000 BOE per day, which excludes Egypt noncontrolling interest and tax barrels;
  • Achieved U.S. production of 232,000 BOE per day, exceeding guidance by 9,000 BOE per day;
  • Delivered record Permian Basin production of 183,000 BOE per day, with oil up 14 percent and total production up 24 percent year over year;
  • Raising U.S. production guidance range to 250,000 to 258,000 BOE per day, from 245,000 to 255,000 BOE per day.

Source: Apache

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