Independent producer Apache Corp. reported the fourth quarter was its best period during 2002, with earnings up significantly from both the third quarter and the comparable 2001 period due to higher prices for natural gas and crude oil.

Income after payment of stock dividends was $179.3 million, or $1.24 per common share, for the quarter ending Dec. 31, 2002, compared to $73.7 million, or 53 cents per common share, for the year-ago fourth quarter, Apache said. This compared to earnings of $145.1 million, or $1 per diluted common share, for the third quarter of 2002.

The Houston-based producer’s performance, however, fell short of the analysts’ consensus estimate for the company of $1.27 a share for the fourth quarter, as reported by Thomson/First Call.

Despite its improved fourth quarter, Apache finished the year on a down note. Income was $543.5 million, or $3.78 per common share, for 2002, compared to $703.7 million, or $4.97 per common share, for the prior year, according to the company. This was shy of the analysts’ consensus estimate of $3.83 for the producer. Revenue for the year fell to $2.55 billion from $2.8 billion in 2001.

“We began 2002 with very low prices and high volatility,” said Apache Chairman Raymond Plank. But “prices have recovered, and we started 2003 with a strong balance sheet. Even after Apache’s largest acquisition, we have the only across-the-board ‘A’ credit rating among the publicly traded U.S. independent E&P companies.”

At the end of 2002, Apache said its total debt was 34.4% of total capitalization, down from 36.9% at the end of 2001. The producer also reported it was able to replace 138% of production due to increased drilling in the second half of the year, the acquisition of South Louisiana producing properties in December, and its $1.3 billion purchase of North Sea and Gulf of Mexico assets from BP.

Apache said the acquisition of the BP assets will be funded by cash, debt and a recently completed common stock offering that raised net proceeds of $553.7 million. The Gulf of Mexico portion of the transaction is expected to close at the end of the fourth quarter, while the North Sea segment is targeted for completion in late May, it noted.

The producer estimated its fourth quarter production averaged 338,339 barrels of oil equivalent per day (boe/d), slightly above its production level of 335,962 boe/d in the third quarter, but below its production level of 362,594 boe/d in the fourth quarter of 2001. For the year, Apache reported it produced 341,491 boe/d compared to 344,129 boe/d in 2001.

The company said its year-end reserves rose 4% to 1.31 billion equivalent barrels, for the 17th consecutive increase. Natural gas reserves were up 1% to 4.05 Tcf, while liquid hydrocarbon reserves rose 6% to 636.8 million barrels. Apache said its all-in finding cost for 2002 was $7.04 per equivalent barrel.

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