Apco Oil and Gas International Inc. (NASDAQ:APAGF) today
announced that for the three-month period ended March 31, 2014, it
generated unaudited net income attributable to Apco of $3.1
million, or $0.10 per share, compared with net income of $9.9
million, or $0.34 per share for the same period in 2013.
Net income decreased quarter-to-quarter due to the combination
of lower operating revenues, higher operating costs and expenses,
and lower equity income. Apco’s 2014 results reflect the impact of
a 23 percent devaluation of the Argentine peso during the first
quarter.
During the first quarter of 2014, the devaluation impacted oil
price realizations, operating costs including foreign exchange
losses, and equity income from Argentine investment in Petrolera
Entre Lomas S.A. (Petrolera).
Total operating revenues decreased by $4.7 million during
first-quarter 2014 compared with the same period of 2013. Lower oil
sales volumes and decreased revenues from the Oil Plus hydrocarbon
subsidy program in Argentina were the primary drivers of lower
operating revenues compared with first-quarter 2013. Oil price
realizations in Argentina were temporarily impacted by the peso
devaluation and economic conditions during the first quarter of
2014.
Total costs and operating expenses were higher for first-quarter
2014 compared with the same period of 2013 primarily due to higher
depreciation expense and greater foreign exchange losses. These
variances were partially offset by decreased production and lifting
costs and lower exploration expenses in 2014.
Apco also experienced lower equity income from its 40.72 percent
interest in Petrolera. During first-quarter 2014, the impact of
lower operating revenues, higher operating costs and greater
foreign exchange losses contributed to a $3.9 million decrease in
equity income from Argentine investment compared with first-quarter
2013.
“We see certain aspects of the situation improving in Argentina,
including commodity prices, and continue to invest with a goal to
increase our production. Looking ahead, we anticipate additional
growth from our exploration drilling in Colombia,” said Bryan
Guderian, Apco’s chief executive officer.
Colombia Exploration Success, 2014 Capital Program and
Operations Update
During first-quarter 2014, capital expenditures of $21.5 million
attributable to Apco’s consolidated interests were invested
primarily in exploration drilling in Colombia and development
drilling in Neuquén basin properties.
Through early May, Apco drilled eight of the nine exploration
wells originally planned in all of its blocks in Colombia for 2014.
In the Llanos 32 block where Apco has a 20 percent interest, three
wells planned for the year have been drilled. The first well, the
Kananaskis-1, was drilled in the southwestern part of the block
approximately 24 kilometers from the Maniceño discovery drilled in
2012. The well reached a total depth of 10,764 feet in April and
encountered approximately 262 feet of hydrocarbon column in the
Mirador and Gacheta formations.
Initial short-term production testing of the Kananaskis-1 well
was completed in May. Four separate zones were tested in the well
and all four zones produced hydrocarbons. The Mirador zone tested
an average of 3,555 barrels of oil per day of 30-degree API oil
over an eight-hour test under natural flowing conditions. The
additional three zones tested produced both natural gas and
condensate. Further production history will be required to
determine the stabilized flow rates and the extent of all the
reservoirs. The well is expected to be placed on long-term testing
after governmental approval which is expected by the end of
May.
The second well drilled in Llanos 32, the Carmentea-1, reached a
total depth of 11,625 feet in April and encountered approximately
197 feet of oil column in the Mirador and Gacheta formations. The
third exploration well, the Calona-1, encountered approximately 128
feet of hydrocarbon column in the Mirador, Guadalupe and Gacheta
formations. Long-term testing of these wells is expected to begin
by the end of July.
In the Llanos 40 block where Apco has a 50 percent working
interest, four exploration wells planned for 2014 have been
drilled. The first two wells, the Celtis-1 and Ardisia-1, were
drilled from the same pad to total depths of 9,900 and 9,516 feet,
respectively, and cased for testing.
The Celtis-1 well encountered approximately 18 feet of oil
column in the Une formation. The well was tested using an electric
submersible pump. The stabilized production rate was 600 barrels of
oil per day over a seven-day period with a 38 percent water cut.
The Ardisia-1 well was tested in April and did not recover
commercial hydrocarbon volumes. The Ardisia-1 was subsequently
converted to a water disposal well to handle future volumes of
water produced from the Celtis-1 discovery.
The third well drilled in the Llanos 40 block, the Begonia-1,
reached a total depth of 9,458 feet in April and encountered
approximately 28 feet of oil column in the Carbonera 7 formation.
The Begonia-1 well tested in April at stabilized rates of 2,050
barrels of oil per day over a seven-day period with a less than one
percent water cut. In April, the fourth exploration well of the
Llanos 40 campaign, the Berbena-1, was drilled and reached a total
depth of 9,670 feet. The Berbena-1 well was determined to be
unproductive and was converted to a water disposal well to handle
anticipated future volumes of water produced from the Begonia-1
well.
Apco anticipates commencing long-term production testing at the
Celtis-1 and Begonia-1 discoveries by the end of the second
quarter. Apco and its partner will evaluate these prospects when
results from the long-term production tests provide sufficient
information to estimate reserves and future net revenues from these
investments.
In the Turpial block where Apco has a 50 percent working
interest, Apco drilled and cased the first of two planned
exploration wells for the year – the Turpiales-2 – during the first
quarter and encountered approximately 52 feet of hydrocarbon column
in the Real formation. A core sample was taken from the well.
Completion and testing operations are anticipated during the second
quarter.
In Argentina, Apco participated in the drilling and completion
of five development wells and one exploration well in Neuquén basin
properties during first-quarter 2014. An additional five wells were
in various stages of drilling or completion at the end of the
quarter. During the quarter, two conventional horizontal wells spud
in 2013 were put on production from the Tordillo formation in the
Bajada del Palo and Coirón Amargo concessions. Apco plans to drill
four more horizontal wells in these areas during the remainder of
2014.
“We are pleased with the results of our conventional horizontal
drilling activities and expect additional wells to help stem recent
production declines from our mature properties in Argentina,” said
Michael Kyle, Apco’s president and chief operating officer.
“Through May, we have nearly completed our significant
exploration plan in Colombia for 2014 and are encouraged by the
initial results. In the second quarter we will begin to evaluate
the potential of these wells. We expect to commence development
activities during the remainder of 2014,” Kyle added.
Apco Oil and Gas International
Inc.
Summary of Earnings (In Thousands of Dollars Except Per
Share Amounts)
2014
2013 Three months ended March 31
Operating revenue 30,586 35,279 Costs and operating
expenses 28,275 27,271 Investment income 1,950
5,465 Net income attributable to Apco 3,054
9,933 Per share 0.10 0.34
About Apco Oil and Gas International Inc. (NASDAQ:
APAGF)
Apco Oil and Gas International Inc. is an
international oil and gas exploration and production company with
interests in nine oil and gas concessions and two exploration
permits in Argentina, and three exploration and production
contracts in Colombia. More information is available at
www.apcooilandgas.com. Go to
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Our reports, filings, and other public announcements may contain
or incorporate by reference statements that do not directly or
exclusively relate to historical facts. Such statements are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We make these forward
looking statements in reliance on the safe harbor protections
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"planned," "potential," "projects," "scheduled," "will" or other
similar expressions. These forward-looking statements are based on
management's beliefs and assumptions and on information currently
available to management and include, among others, statements
regarding:
- Amounts and nature of future capital
expenditures;
- Volumes of future oil, natural gas, and
LPG production;
- Expansion and growth of our business
and operations;
- Financial condition and liquidity;
- Business strategy;
- Estimates of proved gas and oil
reserves;
- Reserve potential;
- Development drilling potential;
- Cash flow from operations or results of
operations;
- Seasonality of natural gas demand;
and
- Oil and natural gas prices and
demand.
Forward-looking statements are based on numerous assumptions,
uncertainties and risks that could cause future events or results
to be materially different from those stated or implied in this
announcement. Many of the factors that will determine these results
are beyond our ability to control or predict. Specific factors that
could cause actual results to differ from results contemplated by
the forward-looking statements include, among others, the
following:
- Availability of supplies (including the
uncertainties inherent in assessing, estimating, acquiring and
developing future oil and natural gas reserves), market demand,
volatility of prices, and the availability and cost of
capital;
- Inflation, interest rates, fluctuation
in foreign currency exchange rates, and general economic conditions
(including future disruptions and volatility in the global credit
markets and the impact of these events on our customers and
suppliers);
- The strength and financial resources of
our competitors;
- Development of alternative energy
sources;
- The impact of operational and
development hazards;
- Costs of, changes in, or the results of
laws, government regulations (including climate change regulation
and/or potential additional regulation of drilling and completion
of wells), environmental liabilities and litigation;
- Political conditions in Argentina,
Colombia and other parts of the world;
- The failure to renew participation in
hydrocarbon concessions granted by the Argentine government on
reasonable terms;
- Risks related to strategy and
financing, including restrictions stemming from our loan agreement
and the availability and cost of credit;
- Risks associated with future weather
conditions, volcanic activity and earthquakes;
- Acts of terrorism; and
- Additional risks described in our
filings with the Securities and Exchange Commission ("SEC").
Given the uncertainties and risk factors that could cause our
actual results to differ materially from those contained in any
forward-looking statement, we caution investors not to unduly rely
on our forward-looking statements. We disclaim any obligations to
and do not intend to update the above list or to announce publicly
the result of any revisions to any of the forward-looking
statements to reflect future events or developments.
In addition to causing our actual results to differ, the factors
listed above may cause our intentions to change from those
statements of intention set forth in this announcement. Such
changes in our intentions may also cause our results to differ. We
may change our intentions, at any time and without notice, based
upon changes in such factors, our assumptions, or otherwise.
Investors are urged to closely consider the disclosures and risk
factors in our most recent annual report on Form 10-K filed with
the SEC and our quarterly reports on Form 10-Q available from our
offices or from our website at www.apcooilandgas.com.
Apco Oil and Gas International Inc.Media Contact:Kelly
Swan, 539-573-4944orInvestor Contact:David Sullivan,
539-573-9360