Apco Oil and Gas International Inc. (NASDAQ:APAGF) today
announced that for the three and six-month periods ended June 30,
2012, it generated unaudited net income attributable to Apco of
$12.7 million and $22.8 million, or $0.43 and $0.77 cents per
share, compared with net income of $7.7 million and $15.9 million
for the same periods in 2011.
Net income improved quarter-to-quarter from increased operating
revenues due to higher average sales prices and increased volumes,
greater equity income from Apco’s Argentine investment and a
one-time credit to other income attributable to the farm-out of
part of the company’s interest in the exploration area within the
Sur Rio Deseado Este concession. These improvements were partially
offset by higher costs and operating expenses that included
increases in production and lifting costs, depreciation expense,
exploration expense, taxes other than income and income taxes.
The increase in net income for the year-to-date period is also
due primarily to higher average oil sales prices and increased
volumes, greater equity income from Apco’s Argentine investment,
and other income. These improvements over last year were partially
offset by higher costs and operating expenses that included a $6.6
million increase in exploration expense compared with the first six
months of 2011. During 2012, Apco incurred significant 3D seismic
costs in its Sur Rio Deseado property in Argentina and in the
Llanos 40 block in Colombia.
Higher average sales prices were the largest contributor to the
increase of $8.4 million in operating revenues during the quarter
and $15.4 million for the first six months. Total sales volumes
applicable to Apco’s consolidated interest on a barrel of oil
equivalent (BOE) basis were 1.5 percent higher than second-quarter
2011 and 3 percent higher than the first six months of 2011.
Total costs and operating expenses for the quarter and the six
months increased by $4.2 million and $12 million, respectively,
primarily the result of higher production and lifting costs,
depreciation expense, exploration expense and higher taxes other
than income.
The benefits of higher average sales prices and increased
volumes also led to greater equity income from its Argentine
investment for the second quarter and the first half of 2012
compared with the same periods in 2011.
In May 2012, the Argentine congress approved a law that
expropriated 51 percent of the shares of YPF S.A., previously owned
by Repsol S.A., and declared that the oil and gas sector in
Argentina was a matter of public interest.
Consistent with that declaration, in July 2012 President
Kirchner issued a decree giving the federal government increased
control over the oil and gas industry that, among other matters,
includes assuring reasonable hydrocarbon prices in the country and
the approval of capital spending plans to be submitted annually by
oil and gas companies.
“Ultimately, it will take some time to see how these actions
play out,” said Ralph Hill, Apco’s chief executive officer.
“In the meantime, we’ll continue to build on our track record of
active exploration and development that has resulted in increases
in both production and reserves over the years,” Hill added.
2012 Capital Program and Operational Update
During the first six months of 2012, capital expenditures of
$26.1 million were invested primarily in development drilling in
its Neuquén basin properties and exploration drilling in
Colombia.
In Argentina, development drilling in Apco’s core Neuquén basin
properties is on schedule, with results in line with
expectations.
In Colombia, the company has drilled two exploration wells in
the Llanos 32 block. The first of these, the Maniceño 1 well,
reached a measured depth of 11,027 feet and encountered
approximately 50 feet of oil column in the Mirador formation. This
well was put into production on July 6. Daily production rates have
since ranged from 1,500 to 3,200 barrels of oil per day.
On May 26, Apco’s second exploration well in Llanos 32, the
Samaria Norte 1 well, was spud and recently reached its target of
11,000 feet. Subsequent logging activities encountered prospective
oil pays in the Gacheta, Guadaloupe and Mirador formations, and
casing was set in the well. A completion rig has been mobilized to
test each of these prospective oil zones.
Also in Colombia, Apco completed the acquisition of 305 square
kilometers of 3D seismic over the Llanos 40 block in the second
quarter. The data processing and interpretation phase is under way,
with exploration drilling expected to commence in 2013.
“We are pleased with the results of our development drilling in
the Neuquén basin where we have a sizeable inventory of wells left
to drill. Drilling results there in 2012 have enabled us to achieve
year-over-year increases in production,” said Thomas Bueno, Apco’s
chief operating officer.
“The positive results of our exploration efforts in Colombia,
including the Maniceño discovery and the prospects for testing our
Samaria Norte well, give us hope that Colombia can make a solid
contribution to the future growth of Apco,” Bueno added.
Apco Oil and Gas International Inc. Summary of
Earnings (In Thousands of Dollars Except Per Share Amounts)
2012
2011 Three months ended June 30
Operating revenue 32,967 24,576 Costs
and operating expenses 23,249 19,026
Investment income 7,163 4,510 Net income
attributable to Apco 12,680 7,699 Per share
0.43 0.26
2012
2011 Six months ended June 30
Operating revenue 63,043
47,659 Costs and operating expenses 48,275
36,284 Investment income 15,501 9,376 Net
income attributable to Apco 22,756 15,861 Per
share 0.77 0.54
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
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 exchange rates, tax rate changes, 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.