Apco Oil and Gas International Inc. (NASDAQ:APAGF) today
announced net income of $18.5 million, or $0.63 per share, compared
with net income of $39.1 million, or $1.33 per share, in 2012.
The decrease in net income for 2013 compared with 2012 was
attributable to higher income tax expense in Argentina, lower sales
volumes, higher operating costs and expenses, a non-cash impairment
charge, and lower equity income. Partially offsetting these impacts
to net income were higher oil and natural gas sales prices, lower
exploration expense and benefits realized from the Oil Plus
hydrocarbon subsidy program in Argentina during 2013.
Higher income tax expense for 2013 reflects a non-cash deferred
income tax of $14.1 million related to new tax legislation enacted
by the Argentine government in the third quarter.
In September 2013, the Argentine government enacted certain tax
reform legislation related to dividends and capital gains. The tax
reform imposes a 10 percent tax on dividends and reinstated a 13.5
percent capital gain tax from the sale of shares and other
securities. Consequently, Apco recorded the deferred tax expense in
the third quarter of 2013 for the new Argentine capital gains tax
associated with its equity investment in Petrolera Entre Lomas S.A.
(Petrolera).
Full-year 2013 results also include a non-cash impairment charge
of $3.3 million recorded in fourth-quarter 2013 related to
heavy-crude producing properties in Colombia. Absent the deferred
income tax and impairment charges, adjusted net income would have
been approximately $35.9 million, or $1.22 per share, for the
year.
Total operating revenues increased by $15.8 million during 2013
compared with 2012. Sales revenues from Apco’s Colombian operations
and benefits realized from the Oil Plus hydrocarbon subsidy program
in Argentina were the primary drivers of higher operating revenues
experienced in 2013.
Total sales volumes applicable to Apco’s consolidated interest
were 2.5 million on a barrel of oil equivalent (BOE) basis, or 4
percent lower than 2012. The change in volumes reflects a decline
in volumes from Apco’s Argentine operations, partially offset by
the positive impact of volumes from its Colombian operations which
began production during the third quarter of 2012.
Total costs and operating expenses were higher for 2013 compared
with the same periods of 2012 primarily due to higher production
and lifting costs, depreciation expense, greater foreign exchange
losses and the impact of a non-cash impairment charge in the fourth
quarter. These variances were partially offset by lower exploration
expenses in 2013.
Apco also experienced lower equity income from its 40.72 percent
interest in Petrolera. During 2013, the impact of lower operating
revenues, higher operating costs and greater foreign exchange
losses contributed to a decrease of $6.6 million in equity income
from Argentine investment compared with 2012.
Total sales volumes applicable to Apco’s equity interest in
Petrolera were 2.1 million BOE in 2013 – a decrease of 8
percent.
“During 2013, we have benefited from an improving commodity
price environment in Argentina. At the same time, we are challenged
by an unpredictable policy environment in the country,” said Bryan
Guderian, Apco’s chief executive officer.
“We are hopeful the investment environment will improve to
encourage growth for oil and gas producers in Argentina,” Guderian
added.
2013 Capital Program and Operational Update
Full-year capital expenditures of $49.9 million attributable to
Apco’s consolidated interests were invested primarily in
development and exploration drilling in Neuquén basin properties
and exploration drilling in Colombia. During 2013, Apco
participated in the drilling of 31 wells. Two of the wells were
determined to be unproductive.
“We are working to overcome drilling delays caused by increased
rig utilization rates in Argentina during 2013, which caused
postponement in several of our planned development and exploration
drilling efforts,” said Michael Kyle, Apco’s president and chief
operating officer.
“In 2014, our plan is to continue to execute on our development
drilling opportunities to stem production declines from our mature
properties in Argentina and to seek growth through exploration
drilling.
"In Colombia, we have significant exploration activity ongoing.
Nine exploration wells are planned for 2014 in the Llanos 32,
Llanos 40 and Turpial blocks,” Kyle added.
Apco Oil and Gas International
Inc.
Summary of Earnings (In Thousands of Dollars Except Per
Share Amounts)
2013 2012 Three months ended December
31 Operating revenue
38,282 35,254 Costs and operating
expenses 35,844 31,365 Investment
income 4,644 4,244 Net income
attributable to Apco 1,081 6,074 Per
share 0.04 0.21
2013 2012 Twelve months
ended December 31
Operating revenue 149,023 133,263 Costs
and operating expenses 120,621 107,192
Investment income 20,713 26,108 Net
income attributable to Apco 18,496
39,061 Per share 0.63 1.33
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
http://www.b2i.us/irpass.asp?BzID=1671&to=ea&s=0 to join
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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
provided under the Private Securities Litigation Reform Act of
1995. You typically can identify forward-looking statements by
various forms of words such as "anticipates," "believes," "seeks,"
"could," "may," "should," "continues," "estimates," "expects,"
"forecasts," "intends," "might," "goals," "objectives," "targets,"
"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