Apache spent more than $11 billion snapping up assets in 2010, the most-active acquisition year in its history as it doubled its acreage in West Texas' Permian Basin and added Mariner Energy and its offshore portfolio along with major energy fields in western Canada and Egypt from BP PLC. (BP, BP.LN). Apache is also developing liquefied-natural-gas terminals in Canada and Australia.
With this capital program, we expect to deliver in 2011 strong double-digit [percentage] production growth, of between 13 and 17% over 2010," told investors during a conference call to discuss the company's fourth-quarter earnings.
Apache reported a fourth-quarter profit of $689 million, or $1.77 a share, up from $585 million, or $1.72 a share, a year earlier. Excluding items such as merger costs and foreign-exchange effects, earnings rose to $2.19 a share from $1.96. Revenue jumped 34% to $3.43 billion.
Analysts polled by Thomson Reuters most recently forecast earnings of $2.45 a share on $3.46 billion in revenue.
Total daily production climbed 24%. Average prices, including hedging effects, were up 14% for oil and 1.5% for natural gas.
Though Farris said Apache is open to further acquisitions this year, its growth over the next few years won't be dependent upon adding producing properties. Apache has the inventory to boost production by between 6% and 12% per year through 2015 if commodity prices justify doing so, he said.
President Roger Plank said that, because less than 20% of the company's revenue comes from natural gas, prices for the fuel "could literally fall by half and the impact would be relatively insignificant to our portfolio." And "well over half" of Apache's oil production is tied to Brent crude-oil prices, which are trading at a significant premium over that of the U.S. benchmark, West Texas Intermediate.
"With oil prices strong and double-digit [percentage] production growth, we're well positioned not only to bolster our balance sheet but also [to] be in a position to release more capital should current conditions remain," Plank said.
Apache also plans to sell about $1 billion worth of assets this year, likely conventional energy fields in Canada, to pay down debt and drill other properties, Farris said.
In Egypt, from which the Houston company derives about 25% of its output and 13% of its reserves, conditions have "improved markedly" from the unrest that caused Apache to pull its foreign staff from the country earlier this month, Farris said.
Apache's production in the North African country--which hit a record in November at the equivalent of 374,000 barrels of oil a day--was never interrupted during the civil strife. Farris said that about one-third of the evacuated employees have returned to the country.
Apache plans to drill 64 exploration wells in Egypt this year and, "assuming normal operating conditions," the company expects single-digit percentage production growth over last year, said Rodney Eichler, who heads Apache's international operations.
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