Apco Oil and Gas International Inc. (NASDAQ:APAGF) today
announced that for the three and nine-month periods ended Sept. 30,
2012, it generated unaudited net income attributable to Apco of
$10.2 million and $33.0 million, or $0.35 and $1.12 per share,
compared with net income of $6.1 million and $21.9 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
and greater equity income from Argentine investment. These benefits
were partially offset by greater costs and operating expenses that
included increases in production and lifting costs, depreciation
and exploration expense, and higher income tax expense.
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 Argentine investment, and other
income. These improvements over last year were partially offset by
higher costs and operating expenses that included an $8.9 million
increase in exploration expense compared with the first nine months
of 2011. During 2012, Apco incurred significant 3D seismic costs in
its Sur Río Deseado property in Argentina and in the Llanos 40
block in Colombia.
The benefits of higher sales prices and greater sales volumes
resulted in an increase in operating revenues of $8.8 million for
the third quarter and $24.2 million for the year-to-date period
compared with the same periods in 2011. The quarter and
year-to-date periods also benefited from initial sales revenues
from Apco’s Colombian operations.
Total sales volumes applicable to Apco’s consolidated interest
on a barrel of oil equivalent (BOE) basis were 10 percent higher
than third-quarter 2011 and 4 percent higher than the first nine
months of 2011.
Total costs and operating expenses for the quarter and the first
nine months increased by $5.3 million and $17.3 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 Argentine investment
for the third quarter and the first nine months of 2012 compared
with the same periods in 2011.
“Although the benefit is just starting because production and
sales deliveries from Colombia have yet to normalize, we are
pleased to see the results of our exploration activities in
Colombia generating income during the quarter,” said Ralph Hill,
Apco’s chief executive officer.
“We are fortunate to have benefited from higher prices and
pleased to have accomplished increased volumes and their
contributions to improved operating results,” Hill added.
2012 Capital Program and Operational Update
During the first nine months of 2012, capital expenditures of
$43 million were invested primarily in development drilling in
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 – was
put into production in July. At the end of the quarter, the well
was producing at a rate of 3,500 barrels of oil per day. A second
exploration well in Llanos 32 – the Samaria Norte 1 well –
successfully tested oil and is waiting on approval to be put on a
long-term production test of the Guadaloupe formation. Apco has a
20 percent working interest in the Llanos 32 block.
In early October, Apco spud its first and only committed well on
the Turpial exploration block. Initial log interpretations are
favorable, and the well was cased and cemented for testing.
Also in Colombia, Apco completed the acquisition of 305 square
kilometers of 3D seismic over the Llanos 40 block during the year.
The data processing and interpretation phase is under way, with
exploration drilling expected to commence in 2013.
“Our development drilling in our core area in the Neuquén basin
continues to produce strong results. We are satisfied with our
exploration successes in Colombia and will soon commence
exploration drilling in our Sur Río Deseado block in Argentina,”
said Thomas Bueno, Apco’s chief operating officer.
“While the political and business environment in Argentina
remains challenging, we are hopeful the situation will stabilize
and the government will allow companies to focus on investing and
finding hydrocarbons,” Bueno added.
Apco Oil and Gas International Inc. Summary of
Earnings (In Thousands of Dollars Except Per Share Amounts)
2012 2011 Three months ended Sept. 30
Operating revenue
34,966 26,170 Costs and
operating expenses 27,552 22,207
Investment income 6,363 3,961
Net income attributable to Apco 10,231
6,076 Per share 0.35 0.21
2012 2011 Nine
months ended Sept. 30
Operating revenue 98,009
73,829 Costs and operating expenses 75,827
58,491 Investment income 21,864
13,337 Net income attributable to Apco
32,987 21,935 Per share
1.12 0.75
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 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.