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Independent energy company Apache Corp reported better than expected fourth quarter earnings this week. $APA also raised it's production outlook by 7-13% for 2018. The average realized crude oil price during Q4 was $58.36 per barrel, up 23.1% from year-ago $47.39.

APA Permian Production

Earnings

Fourth-quarter earnings per share, excluding one-time items of 33 cents beating the consensus of 21 cents. $APA swung back to profit from the year-ago adjusted loss of 6 cents. Revenue of $1,586 million beat consensus $1,540 million and was 9.3% above the fourth-quarter 2016 sales of $1,451 million.

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$APA received an average realized natural gas price during the December quarter of 2017 was $2.90 per thousand cubic feet (Mcf), up 1.8% from the year-ago period.

APA Q4 revenues

Production

  • Delivered reported production of 440,000 barrels of oil equivalent (BOE) per day and adjusted production of 362,000 BOE per day;
  • Achieved U.S. production of 222,000 BOE per day, at the high end of guidance;
  • Permian oil volumes grew 10 percent from the third quarter. T
  • Total Permian production achieved a record, exceeding the previous high set two years ago;
  • Apache’s production for oil and natural gas liquids (NGLs) was 246,672 barrels per day (Bbl/d),
  • Natural gas output came in at 693,477 thousand cubic feet per day (Mcf/d). \
  • $APA forecasts production to grow 7-13% in 2018.

APA Regions Q4

Cash Position

As of Dec 31, 2017, Apache had approximately $1,668 million in cash and cash equivalents with long-term debt of $7,934 million, representing a debt-to-capitalization ratio of 51.7%.

Capital Spending

Apache spent $3,089 million in 2017, representing a 75% increase over its 2016 spend. Keeping with the company’s planned shift in strategic objective, Apache’s oil and gas capital investments are set to total $3000 million during 2018.

Lease Operating Expenses

Apache’s fourth quarter lease operating expenses totaled $334 million, down 10.9% from the year-ago quarter. Moreover, total costs and expenses fell 16.4% from the fourth quarter of 2016 to $1,308 million.

APA expects to benefit from a reduction of approx. $800 million in asset retirement obligations from the balance sheet from the Canadian exit.

2018 outlook

  • Establishes a 2018 capital budget of $3 billion, including $500 million for Alpine High midstream;
  • Directs more than 70 percent of the capital program toward the Permian; 
  • Projects 7 percent to 13 percent adjusted production growth worldwide and 9 percent oil growth in the Permian.

Three-year outlook (2018 to 2020)

  • Planned aggregate upstream investment of approximately $7.5 billion;
  • Total Alpine High midstream investment of $1 billion;
  • Anticipates a compound annual growth rate of 11 to 13 percent worldwide, 19 to 22 percent in the United States, and 26 percent to 28 percent in the Permian Basin;
  • Expects strong and growing Cash Returns on Capital Invested (CROIC) of 18, 20 and 22 percent, respectively, over the three-year period.

Source: Apache

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