Apache Corporation (APA, Financial) this month announced its financial result for the third quarter 2014 and reported a net loss of $1.3 billion or $3.50 per diluted common share. Net cash provided by operating activities totaled approximately $1.9 billion in the third quarter of 2014, with cash from operations before changes in operating assets and liabilities totaling $2.1 billion. The net loss in the quarter has been attributed a variety of reasons. The company officials said that a $8014 million U.S. deferred tax charge related to the company’s change in policy and outlook regarding the permanent reinvestment of its foreign earnings. The company also blamed the after-tax reduction policy that is levied by the government as one of the reasons.
Management comments
"Our North American onshore regions delivered another strong quarter as we continued to execute our strategy to profitably grow North American liquids production," said G. Steven Farris, Apache chairman, chief executive officer and president. "Liquids production increased 5 percent from the second quarter and 15 percent from the prior-year quarter when adjusted for asset sales.
"We are excited about the progress we have made in North America thus far in 2014, particularly in the Permian and Eagle Ford. Our Permian Region continues to deliver impressive liquids growth increasing 26 percent from the prior year quarter," Farris said. "In our Eagle Ford program we spud 29 wells during the quarter and have now ramped to 10 rigs. We anticipate this region will be a key contributor to profitable liquids growth going forward."
Operational highlights
Apache is advancing its unconventional resource capabilities and high-grading its North American onshore portfolio. During the third quarter, the company opportunistically invested $521 million in new leasehold and property acquisitions. In addition, the company is currently marketing non-core North American asset packages as part of its portfolio high-grading initiative and continues to acquire acreage in key growth areas. During the quarter, Apache returned capital to shareholders through the purchase of an additional 5.7 million shares of its common stock on the open market. This brings total shares repurchased as of Sept. 30 to approximately 32 million of the 40 million shares authorized. Apache continues to see share buy-backs as an attractive use of capital.
The highlights from the quarter include:
- Onshore North American liquids production exceeded 211,000 barrels of oil equivalent (boe) per day, up 15 percent from the prior year when adjusted for asset sales
- Permian production reached 162,000 boe per day, up 23 percent from the prior year
- Worldwide production averaged 637,000 boe per day; pro forma worldwide production averaged 562,000 boe per day, up 6 percent from the prior year
- Operating activities provided net cash of $1.9 billion; cash flow from continuing operations before changes in operating assets and liabilities of $2.1 billion
- Non-cash charges resulted in net loss attributable to common stock of $1.3 billion or $3.50 per diluted share
- Adjusted earnings of $528 million or $1.38 per share
- Repurchased 5.7 million shares of common stock during the third quarter; 8.2 million shares remained under existing authorization as of Sept. 30
- 2014 onshore North American liquids growth anticipated at the high end of previously disclosed guidance range of 15-18 percent, adjusted for asset sales
- Company to provide North American onshore business update on Nov. 20 in New York City
To conclude
In the fourth quarter of 2014, Apache has oil hedges covering 62,500 barrels per day at an average West Texas Intermediate price of $90.83 per barrel and 62,500 barrels per day at an average Brent price of $100.05 per barrel.
Apache's hydrocarbon production during the third-quarter 2014 consisted of approximately 60 percent liquids and 40 percent natural gas. Liquids contributed 84 percent of the company's revenue during the period. The company has not lived to the expectation in the last quarter. The officials have blamed it on the stringent tax policies. However, the company has also faltered in production and operational aspects. The goings for the last quarter of this fiscal cannot be predicted as yet. The results for the next quarter can just be waited for till announced.
