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Apache Breaks Output Records in Permian, Anadarko Basins

Higher rig counts and new infrastructure contributed to record production from the Permian and Anadarko basin operations, Apache Corp. said last week.

The Houston-based independent's total output in 3Q2012 was 771,000 boe/d, up about 18,300 boe/d, or 2.4%, from the same period a year ago. Deferred production impacted the latest volumes by an estimated 25,000 boe/d. Permian Basin and Central region production totaled 183,961 boe/d, including a contribution from onshore producer Cordillera Energy Partners III LLC, which Apache bought earlier this year (see NGI, Jan. 30). For the same period in 2011, the Permian and Central regions produced 141,020 boe/d.

"We are continuing to add drilling rigs and accelerate activity in the Permian and Anadarko basins," said CEO G. Steven Farris. "Today, we are running 56 rigs in these regions with plans to expand throughout next year. All are drilling oil and liquids-rich targets and more than half are drilling horizontal wells. Production in these two regions increased 30% from a year ago, accounting for nearly a quarter of Apache's overall production, compared with less than a fifth in 3Q2011. We expect this growth trajectory to continue well into the future."

Another contributor to Apache's quarterly growth, said Farris, was securing additional takeaway capacity, which the company achieved with new infrastructure projects.

"Our joint venture gas plant at the Deadwood Field in West Texas became fully operational during the third quarter, processing more than 50 MMcf/d. We also installed a nine-mile pipeline in our Bivins Ranch area in the Texas Panhandle. The line is currently transporting 3.3 MMcf/d of associated gas and will enable us to continue to develop the area well beyond its present rate of 5,000 b/d. Both projects can be expanded with production growth. We continue to pursue marketing arrangements aggressively to move our production and enhance margins."

The company is "committed to growth through the drillbit across our portfolio, and Apache has nearly 100 rigs operating worldwide right now. With drilling activity and production on the rise, we look forward to concluding 2012 with our strongest quarter of the year." A "balanced portfolio of North American and international assets, as well as oil and gas producing properties, helped to stabilize the effects of volatile prices in the commodity markets," management said.

From July through September, Apache's North American operations produced more oil, natural gas and natural gas liquids (NGL) volumes than a year ago, rising to 437,833 boe/d from 407,734 boe/d.

North American oil volumes in 3Q2012 rose year/year (y/y) to 148,976 b/d from 133,380 b/d. U.S. oil volumes jumped to 148,076 b/d from 133,380 b/d, while in Canada, oil volumes were higher at 15,075 b/d from 13,027 b/d. In the U.S. onshore, oil volumes climbed to 133,001 b/d, versus 120,353 b/d. Central Region volumes jumped to 17,003 b/d from 7,873 b/d, while Permian output rose to 60,822 b/d from 51,410 b/d. Only the Gulf Coast onshore oil volumes were lower y/y at 9,621 b/d from 9,858 b/d.

U.S. and Canadian natural gas volumes overall were lower than a year earlier at about 1.468 Bcf/d from 1.478 Bcf/d. However, in the United States, including in the onshore and the Gulf of Mexico, gas volumes y/y climbed to 863 MMcf/d from 858 MMcf/d. Canadian gas volumes were down at to 604.4 MMcf/d from 619.9 MMcf/d.

U.S. onshore gas volumes in Apache's Central Region rose to about 282 MMcf/d from 221 MMcf/d, while Permian volumes fell to 180.6 MMcf/d from 181.1 MMcf/d. Gulf Coast onshore gas volumes were sharply higher at an estimated 93.2 MMcf/d, compared with 80.8 MMcf/d in 3Q2011.

North American NGL volumes also climbed sharply y/y to total about 45,121 b/d, compared with 28,039 b/d in the year-ago period. The biggest NGL gains were seen in the Central Region, where production jumped to 8,305 b/d from 1,961 b/d, as well as in the Permian Basin, where Apache produced 20,739 b/d versus 12,733 b/d. Gulf Coast onshore volumes declined y/y to 1,886 b/d from 1,939 b/d.

Earnings fell sharply in the latest period, reflecting lower natural gas prices in Canada, to $161 million (41 cents/share) from the year-ago profits of $983 million ($2.50). Excluding the one-time charges, net profits were $861 million ($2.61/share) versus $1.16 billion ($2.95), "as the impact of higher production was offset in part by lower prices for natural gas and natural gas liquids." Cash from operations, before changes in operating assets and liabilities, totaled $2.42 billion, down from $2.69 billion a year ago.

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