Apco Reports First-Quarter 2014 Results and Colombia Exploration Success
TULSA, Okla. -- May 8, 2014
Apco Oil and Gas International Inc. (NASDAQ:APAGF) today announced that for
the three-month period ended March 31, 2014, it generated unaudited net income
attributable to Apco of $3.1 million, or $0.10 per share, compared with net
income of $9.9 million, or $0.34 per share for the same period in 2013.
Net income decreased quarter-to-quarter due to the combination of lower
operating revenues, higher operating costs and expenses, and lower equity
income. Apco’s 2014 results reflect the impact of a 23 percent devaluation of
the Argentine peso during the first quarter.
During the first quarter of 2014, the devaluation impacted oil price
realizations, operating costs including foreign exchange losses, and equity
income from Argentine investment in Petrolera Entre Lomas S.A. (Petrolera).
Total operating revenues decreased by $4.7 million during first-quarter 2014
compared with the same period of 2013. Lower oil sales volumes and decreased
revenues from the Oil Plus hydrocarbon subsidy program in Argentina were the
primary drivers of lower operating revenues compared with first-quarter 2013.
Oil price realizations in Argentina were temporarily impacted by the peso
devaluation and economic conditions during the first quarter of 2014.
Total costs and operating expenses were higher for first-quarter 2014 compared
with the same period of 2013 primarily due to higher depreciation expense and
greater foreign exchange losses. These variances were partially offset by
decreased production and lifting costs and lower exploration expenses in 2014.
Apco also experienced lower equity income from its 40.72 percent interest in
Petrolera. During first-quarter 2014, the impact of lower operating revenues,
higher operating costs and greater foreign exchange losses contributed to a
$3.9 million decrease in equity income from Argentine investment compared with
“We see certain aspects of the situation improving in Argentina, including
commodity prices, and continue to invest with a goal to increase our
production. Looking ahead, we anticipate additional growth from our
exploration drilling in Colombia,” said Bryan Guderian, Apco’s chief executive
Colombia Exploration Success, 2014 Capital Program and Operations Update
During first-quarter 2014, capital expenditures of $21.5 million attributable
to Apco’s consolidated interests were invested primarily in exploration
drilling in Colombia and development drilling in Neuquén basin properties.
Through early May, Apco drilled eight of the nine exploration wells originally
planned in all of its blocks in Colombia for 2014. In the Llanos 32 block
where Apco has a 20 percent interest, three wells planned for the year have
been drilled. The first well, the Kananaskis-1, was drilled in the
southwestern part of the block approximately 24 kilometers from the Maniceño
discovery drilled in 2012. The well reached a total depth of 10,764 feet in
April and encountered approximately 262 feet of hydrocarbon column in the
Mirador and Gacheta formations.
Initial short-term production testing of the Kananaskis-1 well was completed
in May. Four separate zones were tested in the well and all four zones
produced hydrocarbons. The Mirador zone tested an average of 3,555 barrels of
oil per day of 30-degree API oil over an eight-hour test under natural flowing
conditions. The additional three zones tested produced both natural gas and
condensate. Further production history will be required to determine the
stabilized flow rates and the extent of all the reservoirs. The well is
expected to be placed on long-term testing after governmental approval which
is expected by the end of May.
The second well drilled in Llanos 32, the Carmentea-1, reached a total depth
of 11,625 feet in April and encountered approximately 197 feet of oil column
in the Mirador and Gacheta formations. The third exploration well, the
Calona-1, encountered approximately 128 feet of hydrocarbon column in the
Mirador, Guadalupe and Gacheta formations. Long-term testing of these wells is
expected to begin by the end of July.
In the Llanos 40 block where Apco has a 50 percent working interest, four
exploration wells planned for 2014 have been drilled. The first two wells, the
Celtis-1 and Ardisia-1, were drilled from the same pad to total depths of
9,900 and 9,516 feet, respectively, and cased for testing.
The Celtis-1 well encountered approximately 18 feet of oil column in the Une
formation. The well was tested using an electric submersible pump. The
stabilized production rate was 600 barrels of oil per day over a seven-day
period with a 38 percent water cut. The Ardisia-1 well was tested in April and
did not recover commercial hydrocarbon volumes. The Ardisia-1 was subsequently
converted to a water disposal well to handle future volumes of water produced
from the Celtis-1 discovery.
The third well drilled in the Llanos 40 block, the Begonia-1, reached a total
depth of 9,458 feet in April and encountered approximately 28 feet of oil
column in the Carbonera 7 formation. The Begonia-1 well tested in April at
stabilized rates of 2,050 barrels of oil per day over a seven-day period with
a less than one percent water cut. In April, the fourth exploration well of
the Llanos 40 campaign, the Berbena-1, was drilled and reached a total depth
of 9,670 feet. The Berbena-1 well was determined to be unproductive and was
converted to a water disposal well to handle anticipated future volumes of
water produced from the Begonia-1 well.
Apco anticipates commencing long-term production testing at the Celtis-1 and
Begonia-1 discoveries by the end of the second quarter. Apco and its partner
will evaluate these prospects when results from the long-term production tests
provide sufficient information to estimate reserves and future net revenues
from these investments.
In the Turpial block where Apco has a 50 percent working interest, Apco
drilled and cased the first of two planned exploration wells for the year –
the Turpiales-2 – during the first quarter and encountered approximately 52
feet of hydrocarbon column in the Real formation. A core sample was taken from
the well. Completion and testing operations are anticipated during the second
In Argentina, Apco participated in the drilling and completion of five
development wells and one exploration well in Neuquén basin properties during
first-quarter 2014. An additional five wells were in various stages of
drilling or completion at the end of the quarter. During the quarter, two
conventional horizontal wells spud in 2013 were put on production from the
Tordillo formation in the Bajada del Palo and Coirón Amargo concessions. Apco
plans to drill four more horizontal wells in these areas during the remainder
“We are pleased with the results of our conventional horizontal drilling
activities and expect additional wells to help stem recent production declines
from our mature properties in Argentina,” said Michael Kyle, Apco’s president
and chief operating officer.
“Through May, we have nearly completed our significant exploration plan in
Colombia for 2014 and are encouraged by the initial results. In the second
quarter we will begin to evaluate the potential of these wells. We expect to
commence development activities during the remainder of 2014,” Kyle added.
Apco Oil and Gas International Inc.
Summary of Earnings
(In Thousands of Dollars Except Per Share Amounts)
Three months ended March 31
Operating revenue 30,586 35,279
Costs and operating expenses 28,275 27,271
Investment income 1,950 5,465
Net income attributable to Apco 3,054 9,933
Per share 0.10 0.34
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
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Apco Oil and Gas International Inc.
Kelly Swan, 539-573-4944
David Sullivan, 539-573-9360
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