Apache's 14% Production Growth Lifts Earnings 50% to Record $4.5 Billion in 2011
Production increased 14 percent to 748,000 barrels of oil equivalent (boe) per day. Cash from operations before changes in operating assets and liabilities* rose 39 percent to
$10.2 billion. Excluding certain items that management believes affect the comparability of operating results, Apache reported adjusted earnings* of $4.7 billion or $11.83 per share, up from $3.2 billion or $8.94 per share in 2010.
"Apache's balanced portfolio and returns focus fueled an outstanding year in 2011, setting records for production, earnings, revenues, proved reserves and cash flow," said
G. Steven Farris, chairman and chief executive officer.
In the fourth quarter, earnings totaled
$1.2 billion or $2.98 per diluted share, up from $670 million or $1.77 per share in the prior-year period. Production totaled 759,000 boe per day, up 4 percent from the year-earlier quarter, and cash from operations before changes in operating assets and liabilities* totaled $2.7 billion, up from $2 billion in the year-earlier period. Apache reported fourth-quarter adjusted earnings* of $1.2 billion or $2.94 per share.
Apache's oil and natural gas liquids production was 50 percent of total volume in 2011 but contributed nearly 80 percent of revenues because of the wide gap between global crude oil and North American natural gas prices. Apache's results also benefited from the price differentials between oil prices in basins linked to the West Texas Intermediate benchmark and higher prices for oil produced in the
Gulf of Mexico, Egypt, Australia and the North Sea that represents approximately 76 percent of its crude production.
Apache ended 2011 with proved reserves of 3 billion boe, up 1 percent from 2010. Apache's 2011 production was 273 million boe (MMboe). The company added 422 MMboe, or 155 percent of production, through extensions, discoveries and acquisitions. Divestitures and revisions totaled 113 MMboe. Apache spent
$9.1 billion on exploration, development and acquisitions capital, excluding asset retirement obligations and capitalized interest.*
During 2011, with the continued downward pressure on North American natural gas prices, Apache transitioned its North American drilling program to oily and liquids-rich targets in the Permian and Anadarko basins, the
Gulf of Mexico and Canada.
Apache also sanctioned several long-lead-time projects in
Australia that are expected to contribute to future growth, including the Julimar/Wheatstone LNG project and the Macedon, Coniston and Balnaves developments. The company also sanctioned development of the Anadarko Petroleum-operated Lucius unit, a world-class discovery in the Keathley Canyon area of the deepwater Gulf of Mexico.
Additional drilling is planned in 2012 in the
North Sea, where Apache completed its acquisition of Mobil North Sea Limited, including the operated Beryl, Nevis, Ness, Nevis South, Skene and Buckland fields. First production from the Bacchus development near the Forties Field is planned in March.
Apache plans to spend
$9.5 billion of drilling capital in 2012, up from $8 billion in 2011, Farris said. "We will live within our cash flow, and we will review capital allocations quarterly.
"We are planning to drill up to 20-30 percent more wells in 2012 than in 2011, when we drilled approximately 1,100 gross wells," he said. "More than half of the wells planned in 2012 will be drilled in the Permian and Anadarko Basins to exploit stacked oil and liquids-rich pay opportunities in these prolific basins."
Apache also plans active exploratory drilling programs in
Australia, the deepwater Gulf of Mexico, Egypt, Alaska, Kenya and New Zealand.
"We are in a good position to deliver profitable growth in 2012 and future years," Farris said. "Based on our current capital program, we anticipate production will increase in the range of 7-13 percent in 2012."
Apache recently announced that it has increased the regular quarterly cash dividend on the company's common shares by 13 percent to
17 cents per share. "With our balanced portfolio and deep inventory of drilling locations and development projects, we have confidence in Apache's future," Farris said.