Apache Apache has been hit by some tough times in the past two quarters. They've had to take over a half billion write down in the past quarter. So it maybe that they need to conserve cash and focus on their core plays and cut down on exploration.
3rd Quarter Earnings
Apache's third-quarter 2012 earnings totaled $161 million, or 41 cents per diluted common share, reflecting the impact of a $539 million non-cash, after-tax write-down in the carrying value of its properties in Canada resulting from lower natural gas prices. For the same period last year, Apache reported earnings of $983 million, or $2.50 per diluted share.
Apache's adjusted earnings,* which exclude the write-down and certain other items that impact the comparability of operating results, totaled $861 million, or $2.16 per diluted common share, in the third quarter as the impact of higher production was offset in part by lower prices for natural gas and natural gas liquids. In the prior-year period, Apache reported adjusted earnings of $1.16 billion, or $2.95 per share. Cash from operations before changes in operating assets and liabilities* totaled $2.42 billion in the third quarter, down from $2.69 billion in the prior-year period.
2nd Quarter Earnings
Houston-based Apache Corp. reported a 73 percent drop in second-quarter earnings as it was hit hard by lower oil and gas prices.
The independent exploration and production company earned $337 million, 86 cents per diluted share, down from $1.24 billion, $3.17 per share, in the April-June period in 2011.
Second-quarter revenue dropped 9 percent to $3.97 billion.
The lower commodity prices contributed to the decline, as did unscheduled maintenance that reduced Gulf of Mexico output by about 16,000 barrels of oil equivalent a day for the quarter.
Benchmark U.S. crude dropped from $105 a barrel in early April to $85 as the quarter ended. Natural gas rose from $2.15 to $2.82 per million British thermal units, but remained near 10-year lows.
In an earnings call with analysts, Chief Operating Officer Rodney Eichler said that Apache plans to make up for any production lags by the end of the year.
"Our major prospects are progressing and are on schedule," Eichler said. "With the results of our accelerated drilling program beginning to take hold, we anticipate most of our 2012 growth to be in the second half of the year."
Apache's stock closed Thursday down $4.28 at $82.58, and analysts predict that investors will be watching its production schedule closely in upcoming months.
Back online
"Per management's comments, the majority of the downtime that hit Apache this quarter is back on line," said Eliot Javanmardi, an analyst with Capital One, Southcoast. "Investors will be looking for them to execute on track with their plan to meet production guidance."
The deterioration in energy prices was reflected in Apache's depreciation expenses for the quarter, as it reported $648 million in additional depreciation expenses, up from $26 million for the same time last year.
Onshore plays
Apache plans to continue with an aggressive drilling strategy, with an inventory of 67,000 drillable locations in liquids-rich onshore plays, CEO G. Steven Farris said. It has added 10 new rigs in the Permian Basin and 17 new rigs in the Anadarko Basin, up from 26 and seven, respectively.