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Apache Misses Estimates as Profit Declines on Prices

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Aug. 2 (Bloomberg) -- Apache Corp., the third-largest U.S. independent oil and natural-gas producer by market value, fell the most in more than seven months after quarterly profit trailed analysts’ estimates.

Apache, based in Houston, dropped 4.9 percent to $82.58 at the close in New York, the biggest decline since Dec. 14.

Net income declined 72 percent to $356 million, or 86 cents a share, from $1.26 billion, or $3.17, a year earlier, the company said in a statement today. Excluding one-time items such as reducing the value of Canadian properties on low gas prices, profit was $2.07 a share, 46 cents less than the average of 27 analysts’ estimates compiled by Bloomberg.

Apache said it got an average of $97.66 a barrel for oil in the second quarter, an 8.1 percent drop from a year earlier. The company’s realized gas price in North America fell 35 percent from a year earlier to $3.17 per thousand cubic feet. At the same time, unscheduled maintenance on production projects reduced output by the equivalent of about 16,000 barrels of oil a day in the quarter.

“Production was lower than expected” in the quarter, Leo Mariani, an analyst at RBC Capital Markets in Austin, Texas, said in an e-mail today. He has a sector perform rating on Apache shares and doesn’t own any.

Expectations for the company rose after the company’s meeting with analysts in June, said Eliot Javanmardi, an analyst at Capital One Southcoast in New Orleans.

Bad Memories

Apache’s production has been affected by maintenance in the past, and today’s report is “bringing back some of the bad feelings” related to output, Javanmardi said in a telephone interview. Javanmardi doesn’t own Apache shares and rates them as an add, meaning the stock may perform better than peers.

The company said output was the equivalent of 774,486 barrels of oil a day in the second quarter, a 3.5 percent increase from a year earlier. Capital One’s Javanmardi said he was looking for about 800,000 barrels a day. In the first quarter of this year, Apache’s output was more than 769,000 barrels a day.

The company also reported an average realized natural-gas liquids price of less than $34 a barrel in the second quarter, while Javanmardi said he expected it to be about $38.

Apache said it expects to meet a global production growth forecast of 6 percent to 9 percent in 2012 compared with last year, excluding some assets sold in 2011.

ConocoPhillips and Anadarko Petroleum Corp. are the largest U.S. independent oil and gas producers by market value. Independent oil companies produce crude and gas and don’t own refineries.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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