By Tess Stynes
Apache Corp. (APA) swung to a fourth-quarter loss as the
oil-and-gas producer took a big write-down related to declining
commodities prices and said it plans to put the brakes on some
drilling activities until service costs decline and prices
recover.
Chief Executive John J. Christmann IV said a substantial decline
in oil and gas prices since the company issued its update on its
North American business in late November prompted Apache to act
quickly to cut activity levels and reset its well cost
structure.
For the latest period, Apache noted average selling prices for
oil dropped 30% globally. In its North American onshore business,
the company said its average selling prices for oil slid 26%.
Mr. Christmann said Apache has reduced its rig count to an
estimated 27 rigs by the end of this month from an average of 91 in
the third quarter. Apache reduced its hydraulic fracturing crews by
roughly 50% during that period and also is delaying some well
completions until service costs decrease materially.
For 2015, the company is planning to run a streamlined capital
program that focuses on efficiency improvements, downspacing and
other strategic tests to further delineate its inventory of energy
assets, he said.
"While we are fortunate to have a substantial inventory of
projects that can make economics at these oil prices, we believe it
more prudent to curtail our activity until costs are lower and
prices recover," he said.
Overall, Apache reported a loss of $4.81 billion or $12.78 a
share, compared with a year-earlier profit of $174 million, or 43
cents a share. Excluding asset write-downs and other items,
earnings were $1.07. Revenue decreased 14% to $2.95 billion.
Analysts polled by Thomson Reuters expected per-share profit of
76 cents and revenue of $3.09 billion.
Apache, under pressure from activist investor Jana Partners LLC,
had been considering a possible sale or spinoff of its
international operations to focus on shale drilling in the U.S.
During December, Apache agreed to sell its stakes in two
international liquefied-natural-gas projects to Woodside Petroleum
Ltd. for a combined $2.75 billion amid concerns about commodities
prices.
On Thursday, Apache said it announced the sale of $7 billion of
assets globally during 2014, while also adding $1.2 billion of
assets in North America.
Write to Tess Stynes at tess.stynes@wsj.com
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