Apache Corp's (APA.N) quarterly profit missed analysts' estimates for the fourth quarter in a row as prices were weak and operating costs exceeded expectations.
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 percent.
Apache exited 2012 producing more than 800,000 barrels of oil equivalent per day (boepd), driven by a 12 percent increase in North American oil production.
Output from the Permian Basin rose 18 percent, while output from the Anadarko basin shot up 37 percent last year, the company said.
"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.
Wall Street analysts pointed to higher-than-expected lease operating expenses as one factor in the company's profit miss.
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 I/B/E/S.
By contrast, smaller rival EOG Resources Inc (EOG.N) reported a fourth-quarter profit excluding items that topped expectations. EOG is using railroads to ship its shale oil from the Bakken and Eagle Ford formations to the Gulf Coast, allowing them to capture prices that are higher than those for West Texas Intermediate crude.
"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 conference call.
Apache shares fell 1.5 percent to $83.01 in late morning New York Stock Exchange trading. 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. .DJUSOS
EOG shares edged up less than 1 percent to $134.41.
(Reporting by Anna Driver in Houston and Swetha Gopinath in Bangalore; Editing by Joyjeet Das and Maureen Bavdek)