Apache’s Q2 loss narrower than expected, sales top

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(Nasdaq) Apache Corporation reported second-quarter 2020 loss per share — excluding one-time items — of 74 cents, narrower than the Zacks Consensus Estimate of a loss of 99 cents. This better-than-expected result is led by higher-than-anticipated production volumes. Precisely, the average daily production came in at 435,448 barrels of oil-equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 428,000 BOE/d.

However, the bottom line came against the year-ago quarter’s earnings of 11 cents per share due to weak oil price realizations.

Although revenues of $752 million outpaced the Zacks Consensus Estimate of $701 million, the same fell 53.1% from the year-ago quarter’s sales of $1.60 billion.

In a separate press release, management informed about a key find at Kwaskwasi-1, the company’s most precious well to date and its third successive exploit at Block 58. Post closure of drilling activities at Kwaskwasi-1, a fourth exploration prospect, Keskesi East-1, will be drilled nearly 10 kilometers to the southeast of the Sapakara discovery well.

Production & Selling Prices

Production of oil and natural gas averaged 435,448 BOE/d, which comprises 67.45% liquids. The figure slid 4.3% from the year-ago quarter due to an unimpressive contribution from the United States.

The U.S. output (accounting for 63.56% of the total) dipped 5.08% year over year to 250,589 BOE/d while the company’s international operations increased 9.2% to 143,657 BOE/d. Apache’s production for oil and natural gas liquids (NGLs) was 293,727 barrels per day (Bbl/d). Natural gas output totaled 850,329 thousand cubic feet per day (Mcf/d).

During the second quarter, Apache reduced 28,000 BOE/d of its production to lower the negative cash flow impacts of the plunge in oil and NGL prices. The company also curtailed an additional 7,000BOE/d of output due to the unscheduled pipeline downtime at Alpine High.

The average realized crude oil price during the second quarter was $25.77 per barrel, down 60% from the year-ago realization of $63.71. The number also fell short of the Zacks Consensus Estimate of $27.74. However, the average realized natural gas price improved to $1.68 per thousand cubic feet (Mcf) from $1.41 in the year-ago period and also came ahead of the Zacks Consensus Estimate of $1.53.

Costs & Financial Position

Apache’s second-quarter lease operating expenses totaled $264 million, down 32% from the year-ago period. Moreover, total operating expenses declined 42.8% from the corresponding period of 2019 to $1.01 billion. This was mainly on account of lower depreciation & amortization expenses and decreased costs related to asset impairment.

During the quarter under review, Apache generated $84 million of cash from operating activities while it invested $216 million as capital expenditures. The company reported an adjusted operating cash flow of $150 million in the second quarter.

As of Jun 30, this oil giant had approximately $135 million in cash and cash equivalents. Meanwhile, Apache had a long-term debt of $8.03 billion.

Guidance

This Houston, TX-based explorer and producer is expected to match the lower end of its annual capital view of $1.0-$1.2 billion dollars. The company projects third-quarter 2020 capital investment to be approximately $190 million.

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