Oil and natural gas producer Apache Corp. (APA) Thursday reported a decline in first-quarter profit, despite higher worldwide production, reflecting lower commodity prices. Adjusted earnings and revenues missed analysts' expectations. The company also announced its plan to divest $4 billion in assets by the end of 2013.
Apache intends to use initial proceeds of $2 billion to reduce debt and enhance financial flexibility. The firm will use the additional proceeds to repurchase about $2 billion of its common shares under a 30-million-share repurchase program authorized by the board.
The company said its board and management team conducted a strategic portfolio review to identify assets that no longer fit its growth profile. It plans to divest non-core assets and retain those that drive long-term growth and generate cash from operations. The firm is also pursuing other monetizations including joint venture partnerships.
During the first quarter, worldwide production increased to 781,819 barrels of oil equivalent or boe per day from 769,296 boe per day in the prior-year period, driven by a 45 percent increase in North American onshore liquid hydrocarbons output.
Steven Farris, chairman and chief executive officer of the company stated, "We are showing strong results from the strategic shift that we outlined in 2012, with production from onshore North American liquids plays of 165,000 barrels per day in the first quarter. We expect our onshore drilling programs will continue to contribute significantly to meeting our production targets."
Average price was $101.72 per barrel of oil, down from $111.22 per barrel in the year-ago period. Apache received an average of $3.72 per thousand cubic feet or Mcf of natural gas, lower than $3.82 per Mcf last year.
In the first quarter, net income attributable to common stock declined to $698 million or $1.76 per common share from $778 million or $2.00 per share in the previous year.
Adjusted earnings per share were $2.02 in the recent quarter, while, the company posted $3.00 per share last year. On average, 26 analysts polled by Thomson Reuters expected the company to earn $2.21 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter dropped to $4.08 billion from $4.54 billion in the prior-year quarter. Fifteen analysts had consensus revenue estimate of $4.31 billion for the quarter. Oil and gas production revenues were $4.15 billion, lower than $4.46 billion reported a year earlier.
APA is currently trading at $80.41, up $2.65 or 3.41 percent, on a volume of 2.24 million shares.
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