U.S. energy firm Apache Corp. (APA) reported better-than-expected fourth quarter earnings, reflecting strong North American liquids production. Earnings per share – excluding one-time items – came in at $1.07, well above the Zacks Consensus Estimate of 76 cents
However, Apache’s performance deteriorated from the year-ago adjusted profit of $1.52 per share amid a plunge in oil prices.
Revenues of $2,952 million were down 14.3% from the year-ago quarter and were also lower than the Zacks Consensus Estimate of $3,069 million.
Plans Move to Stay Afloat
Importantly, Apache has decided to slash its rig count – from an average of 91 (in the third quarter of 2014) all the way down to an estimated 27 by the end of Feb – as it focuses on controlling costs amid plummeting crude realizations. SandRidge Energy Inc. (SD) announced a similar move earlier in the week.
The Zacks Rank #3 (Hold) oil and gas explorer is also considering streamlining its capital expenditure to deal with the soft market conditions, walking in the footsteps of companies like ConocoPhillips (COP) and Suncor Energy Inc. (SU).
Operational Performance
The production of oil and natural gas (excluding divested assets) averaged 608,689 oil-equivalent barrels per day (BOE/d) (62% liquids), up 11.6% year over year. Apache’s production for oil and natural gas liquids (NGLs) was up 18% at 376,063 barrels per day (Bbl/d), while natural gas production of 1,395.8 million cubic feet per day (MMcf/d) was 2.7% higher from the fourth quarter 2013 level.
The average realized crude oil price during the fourth quarter was $70.89 per barrel, representing a decrease of 29.9% from the year-ago realization of $101.12. However, the average realized natural gas price during the December quarter of 2014 was $3.89 per thousand cubic feet (Mcf), up 2.9% from the year-ago period.
Apache’s lease operating expenses totaled $617 million, up 4.8% from $589 million in the year-ago quarter.
Balance Sheet & Capital Spending
As of Dec 31, 2014, Apache had approximately $769 million in cash and cash equivalents. The company had a long-term debt of $11,245 million, representing a debt-to-capitalization ratio of 30.2%.
During the three months ended Dec 31, 2014, Apache’s exploration and development investments (excluding acquisitions) totaled $2,629 million.
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