* Fourth-quarter adjusted EPS $2.27 vs est. $2.30
* Costs higher than expected
* Apache shares fall 4.7 pct
* 2013 output growth seen at 3-5 percent
(Adds company forecasts, CEO comments, closing stock prices)
By Anna Driver
Feb 14 Apache Corp's fourth-quarter
profit fell short of expectations as expenses rose on labor and
maintenance costs, and the company's 2013 oil and natural gas
production outlook also disappointed.
The results marked Apache's fourth consecutive earnings
miss, and its shares fell nearly 5 percent on Thursday.
Apache and most other exploration and production companies
are spending more to drill for more profitable oil and natural
gas liquids (NGL) as heavy supplies weigh on natural gas prices.
Still, the Houston company said average oil prices fell
nearly 4 percent in the quarter while NGL prices dropped 26
This year, the company said it expects spending to be nearly
flat at $10.5 billion. Of that amount, about $4 billion is
earmarked for drilling for crude oil in the United States in
places like the Permian Basin in Texas, the company told
Apache ended 2012 producing more than 800,000 barrels of oil
equivalent per day (boepd), driven by a 12 percent increase in
North American oil production. But in the first quarter, Apache
said output would lag the fourth quarter's level because of
disruptions from a cyclone in Australia and maintenance in the
Gulf of Mexico.
Output from the Permian Basin rose 18 percent, while output
from the Anadarko basin shot up 37 percent last year, the
"The production growth has gotten back on track. The
question is, can they do that while maintaining their cost
structure?" said Brian Youngberg, an energy company analyst at
Edward Jones in St. Louis.
For the full year, Apache said it expects oil and gas output
to rise by 3 to 5 percent, below its long-term growth forecast
for 6 to 9 percent.
"There is no doubt that we have some properties that are
declining, but are going to more than make up for that in the
Permian and Anadarko basins this year," Apache CEO Steve Farris
told analysts on a conference call.
He said the company also plans to sell up to $2 billion in
assets this year, but declined to elaborate.
Wall Street analysts pointed to higher-than-expected lease
operating expenses as one reason behind the company's profit
miss. Factors affecting those expenses included higher North
American labor costs as well as spending on maintenance and
repairs, Apache told analysts.
Apache, which also drills for oil and gas in Canada, Egypt,
Britain, North Sea, Australia and Argentina, raised its
quarterly dividend 18 percent on Monday, citing strong cash-flow
generating capacity of its properties.
Net income fell to $649 million, or $1.64 per share, in the
fourth quarter, from $1.17 billion, or $2.98 per share, a year
earlier. Adjusted profit was $2.27 per share. Analysts on
average expected a profit of $2.30, according to Thomson Reuters
By contrast, smaller rival EOG Resources Inc
reported a fourth-quarter profit excluding items that topped
expectations on Wednesday. EOG is using
railroads to ship its shale oil from the Bakken and Eagle Ford
formations to the Gulf Coast, allowing the company to capture
prices that are higher than those for West Texas Intermediate
"In the fourth quarter our U.S. crude oil price realization
was $10.52 over WTI, up from $5.45 in the third quarter," Mark
Papa, EOG's chief executive officer, told analysts on a
Apache shares fell 4.7 percent to close at $80.33 on the
New York Stock Exchange on Thursday. The stock has gained 7
percent so far this year, trailing the 14 percent rise in the
broader Dow Jones U.S. Exploration and Production index.
EOG shares fell 0.2 percent to close at $133.33.
(Reporting by Anna Driver in Houston and Swetha Gopinath in
Bangalore; editing by Joyjeet Das, Maureen Bavdek and Matthew