Apache Q1 Net Down 66%; To Sell Deepwater GOM Interests For $1.4 Bln

(RTTNews) - Oil and natural gas producer Apache Corp. (APA) Thursday reported a 66 percent decline in net profit for the first quarter from last year, reflecting lower revenues and a wider loss from discontinued operations.

Separately, Apache also said it will sell its interests in the Deepwater Gulf of Mexico or GOM, including non-operated interests in the Lucius and Heidelberg oil development projects and 11 deepwater exploration blocks, to Freeport-McMoRan Copper & Gold Inc. (FCX) for $1.4 billion.

Apache has intensified its focus on North America liquids production following sale of its Argentina operations and selected natural gas properties in Canada.

Houston, Texas-based Apache reported net earnings attributable to common shareholders for the first quarter of $236 million or $0.60 per share, down from $698 million or $1.76 per share in the prior-year quarter.

The latest quarter's results included loss from discontinued operations of $517 million or $1.30 per share, compared to $61 million or $0.15 per share loss last year.

Excluding items, earnings were $707 million or $1.78 per share, compared with $797 million or $2.00 per share in the year-ago quarter.

On average, 31 analysts polled by Thomson Reuters expected the company to report earnings of $1.62 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the three-month period declined 9 percent to $3.68 billion from $3.95 billion in the same quarter last year. Analysts' had a consensus revenue estimate of $3.56 billion.

Oil and gas production revenues also declined 9 percent to $3.65 billion. Apache's total worldwide production of oil, natural gas, and natural gas liquids for the quarter averaged 639,804 barrels of oil equivalent or boe per day, down from last year's 738,324 boe per day.

Worldwide, Apache received an average price of $101.03 per barrel of crude oil, down 1 percent from the year-ago period. Average price for natural gas rose 18 percent from the prior-year quarter to $4.46 per thousand cubic feet or Mcf.

The Deepwater GOM assets being sold by Apache to Freeport-McMoRan, including its working interests in the Lucius and Heidelberg projects, have estimated proved, probable and possible reserves of 55 million barrels of oil equivalents.

Apache's working interest in the Lucius unit is 11.7 percent and comprises Keathley Canyon blocks 874, 875, 918 and 919.

The company holds a 12.5 percent stake in the Heidelberg unit, which includes Green Canyon blocks 859, 903, 904 and 948. Apache's working interest in the 11 primary term blocks ranges from 16.67 to 60 percent.

Apache noted that none of its producing operations are involved in the sale announced today. The company has working interests in about 650 blocks in the Gulf of Mexico. In addition to the exploration and development of properties in shallower water, Apache continues to pursue joint venture and monetization opportunities for its deepwater prospects.

Separately, Freeport-McMoRan said that its oil and gas subsidiary, Freeport-McMoRan Oil & Gas or FM O&G, has agreed to acquire certain of Apache interests in the Deepwater Gulf of Mexico or GOM.

Freeport-McMoRan will fund the acquisition with proceeds from the previously reported sale of FM O&G's Eagle Ford Shale assets for $3.1 billion. The company will use the estimated combined after-tax net proceeds from these transactions of about $1.3 billion to repay outstanding debt following closing of the transactions.

Upon closing of this transaction, FM O&G will own a 35 percent working interest in the Lucius development, which is on track to commence production in the second half of 2014.

Heidelberg, which is a large oil development project located in 5,000 feet of water in the Green Canyon area, is operated by Anadarko Petroleum and is expected to commence production in mid-2016.

The transaction has an effective date of May 1, 2014 effective date and is expected to close by the end of the second quarter of 2014.

APA is currently trading at $87.55, down $0.21 or 0.24 percent on a volume of 479,630 shares.