Apache Corporation's (NYSE:APA) balanced portfolio of oil and gas assets continued to pay off for the company, as it turned in solid production growth in the third quarter of 2010.
IN PICTURES: Break Into Forex In 12 Steps
Apache Corporation reported average daily production of approximately 667,000 barrels of oil equivalent (BOE) per day during the third quarter of 2010, up about 10% from the 607,000 BOE in the same quarter of 2009. Some of this production growth came from acquisitions, as the company purchased Gulf of Mexico properties from Devon Energy (NYSE:DVN) earlier in 2010. Apache Corporation will also close on its purchase of Mariner Energy (NYSE:ME) in November, 2010, and expects the effect of all these acquisitions to boost production the following month to an average of 775,000 BOE per day.
Apache already has what many of its peers in the exploration and production industry are striving for: a production profile heavily towards oil and liquids. Fifty-four percent of the company's third-quarter production was crude oil and natural gas liquids, and 78% of its revenue was derived from these hydrocarbons in the third quarter of 2010. The company's portfolio of assets is also balanced geographically, with 54% of production from areas outside the United States and Canada.
The international portfolio is anchored by the company's operations in Egypt, which contributed an average of approximately 163,000 BOE per day of production during the third quarter of 2010. The company continues to add more resources here, and recently closed on the purchase of assets here from BP (NYSE:BP). It paid $650 million for four leases and one exploration concession. Australia is another core area for the company, and production here during the quarter was approximately 89,000 BOE per day, almost double the amount from last year. Apache also has international production from oil and gas properties in the North Sea and Argentina.
In the United States, Apache is aggressively developing on-shore assets. The company has 200,000 gross acres under lease in Oklahoma that are prospective for various Granite Wash formations. It has an ambitious development plan for its Granite Wash acreage, and plans to drill 40 horizontal wells here in 2010. Nineteen of these wells are on production, and are currently producing an average of 2,600 barrels of oil per day. The company has nine rigs operating here and plans to add another in 2011.
Apache just reported the completion of two wells drilled to the Hogshooter formation, each with initial production rates above 2,000 BOE per day. The company plans to drill 10 more wells to this formation in 2011.
The Bottom Line
Apache has a diverse portfolio of assets spread across various countries. The company also has the majority of its production from oil and liquids, a situation that many of its peers are desperate to achieve. (This options strategy will help you lock in profit while keeping your upside potential. Check out Using LEAPS With Collars.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!