Apco Oil and Gas International Inc. (NASDAQ:APAGF) today
announced net income attributable to Apco of $31.7 million in 2011,
or $1.08 per share, compared with net income of $25.8 million, or
$0.88 cents per share in 2010.
The improvement in 2011 net income is primarily due to higher
average sales prices, greater equity income from Argentine
investment and lower exploration expense compared with 2010. These
favorable variances were partially offset by higher non-exploration
costs and operating expenses.
Total operating revenues increased by $17 million compared with
2010. Higher average sales prices accounted for $14.3 million of
the increase during 2011. A 1 percent sales volume increase – which
resulted in 2.5 million barrels of oil equivalent (BOE) for the
year applicable to Apco’s consolidated interests – also contributed
to higher operating revenues.
Total costs and operating expenses for the year increased by
$14.7 million, primarily from higher production costs including
depreciation, depletion and amortization expense and taxes other
than income.
Higher production costs during 2011 were partially offset by
lower exploration expenses. The decrease in exploration expense
reflects lower exploration activity including the absence of
significant seismic acquisition investments made in Colombia during
2010.
Apco also experienced higher equity income from its 40.72
percent interest in Petrolera Entre Lomas S.A. (Petrolera). For
2011, the benefits of higher average sales prices and greater sales
volumes contributed to an increase of $4.3 million in equity income
from Argentine investment compared with 2010.
Sales volumes applicable to Apco’s equity interest in Petrolera
were 2.2 million BOE in 2011 – an increase of 7 percent.
First-Quarter 2012 Dividend
Apco’s board of directors has approved a regular quarterly
dividend of 2 cents per share on the company's shares. The dividend
is payable on April 26, 2012, to shareholders of record at the
close of business on April 16, 2012.
2011 and 2012 Capital Program and Operational Update
Capital expenditures attributable to the company’s consolidated
interests during 2011 were $35.8 million. Apco’s capital program
for 2011 focused on development and exploration drilling in its
Neuquén basin properties, including drilling in the Coirón Amargo
exploration permit where Apco completed its drilling commitments
during 2011 to earn a 45 percent interest in the joint venture.
Exploration activity in the Neuquén basin properties had
positive results during the year. Apco tested natural gas in the
Lotena formation in development wells that have been placed on
production from the Tordillo formation and commenced its
investigation of the Vaca Muerta shale in the Coirón Amargo
block.
Apco’s primary objectives for 2012 are:
- Obtain the 10-year concession
extensions for the company’s properties in Río Negro and Tierra del
Fuego
- Continue development of existing fields
and conventional exploration drilling in Apco’s core properties in
the Neuquén basin
- Investigate the productive potential of
the Vaca Muerta and Molles shales in the company’s properties in
the Neuquén basin
- Commence development drilling and
continue exploration efforts in Coirón Amargo
- Initiate exploration drilling in
Colombia
- Complete 3D seismic acquisitions in Sur
Río Deseado Este in southern Argentina and over the Llanos 40 block
in Colombia.
Apco’s 2012 oil and gas capital expenditure budget is $58
million. After taking into consideration the portion of capital
expenditures attributable to the company’s equity interest in
Petrolera, the combined consolidated and equity capital budget for
2012 is $96 million – the highest level in Apco’s history. In
addition, Apco plans to spend approximately $8 million for the
acquisition of 3D seismic information.
In December 2011, Apco commenced a three-stage fracture
stimulation of a well that was drilled earlier in the year – the
CAS x-1. The CAS x-1 well discovered oil in the Tordillo formation,
but was placed on production from the Vaca Muerta from which it
produced small volumes of oil on an intermittent basis.
After completing the fracture stimulation, the first stage of a
long-term production test of the Vaca Muerta commenced on Feb. 8,
2012. During the next 14 days, the well was on intermittent
production for 159 hours flowing at an average of 241 barrels per
day of 32-33 degree API gravity crude oil through a 2 millimeter
choke (approx. 1/12 inch) at flowing pressures of 2,000 psi and
above. Over the balance of the testing period, the well was taken
off production to enable pressure recovery. Production testing will
resume in the near future.
Also during December, Apco commenced drilling the CAS x-4 well
in the southeastern portion of the Coirón Amargo exploration
permit. This well reached a total depth of 12,149 feet. A core
sample of the Vaca Muerta formation has been taken for laboratory
analysis. Apco plans to perform a multi-stage fracture of this well
after the core analysis is completed and the company has evaluated
results of the production test of the CAS x-1 well. In the
meantime, completion of the well will proceed in order to test
formations underlying Vaca Muerta.
In February 2012, Apco commenced drilling the CAS x-2 well in
the central sector of the Coirón Amargo block. The objective of
this well is to investigate both the Tordillo and Vaca Muerta
formations.
A third multi-stage fracture of an existing well in one of
Apco’s producing fields north of Coirón Amargo is preparing to get
under way in the near future.
“Our drilling program in the Neuquén basin during 2011 has
allowed us to deliver strong results and the ability to grow our
business through the drill bit,” said Thomas Bueno, Apco’s
president and chief operating officer. “During 2011, we experienced
an overall 4 percent year-over-year increase in total sales
volumes.
“Our 2012 capital program once again emphasizes development
drilling, but provides a strong exploration component that includes
start up of exploration drilling in Colombia and continued
investigation of the Vaca Muerta shale in the Neuquén basin,” Bueno
added.
“Although our test results from the CAS x-1 to date are
encouraging, exploration of the Vaca Muerta in this basin is in the
very early stages. At this point, the productive behavior of the
formation is not well understood.”
Apco Oil and Gas International Inc. Summary of
Earnings (In Thousands of Dollars Except Per Share Amounts)
2011 2010 Three
months ended December 31 Operating
revenue
30,951
24,501 Costs and operating expenses
25,065
18,179 Investment income
7,289
4,668 Net income attributable to Apco
9,811
8,098 Per share
0.33
0.28
2011 2010
Twelve months ended December 31
Operating revenue 104,780 87,815 Costs and operating
expenses 83,556 68,881 Investment income
20,626 16,594 Net income attributable to Apco 31,746
25,800 Per share 1.08 0.88
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 eight 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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"forward-looking statements" within the meaning of Section 27A of
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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
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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 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.