Independents' quarterly earnings affected by commodity prices, costs

By the OGJ Online Staff

HOUSTON, Oct. 25 -- Large independents Apache Corp. and XTO Energy Inc. had third quarter earnings of $156.8 million and $70.3 million respectively, while Anadarko Petroleum Corp. declared a loss of $270 million.

A $483 million noncash after-tax impairment of the carrying value of producing properties in Canada and South America contributed to Houston-based Anadarko's loss. Before special items, Anadarko's net income was $213 million on total revenue of $1.74 billion.

For the same quarter a year ago, Anadarko posted earnings of $247 million on revenue of $1.82 billion.

Robert J. Allison Jr., Anadarko chairman and CEO, said, "Our third-quarter financial results were impacted, like everyone else's in the energy industry, by lower oil and natural gas prices and higher costs for drilling rigs and other oil field services, but our operating results were better than expected."

He said the company produced more than 51 million boe in the third quarter, slightly more than forecast, because of higher production from Alaska and Algeria and increased recovery of natural gas liquids. In third quarter 2000, Anadarko produced 40 million boe.

Anadarko's natural gas prices averaged $2.89/Mcf, down 94¢ from third quarter 2000.

Exploration activity continues, especially in the US Gulf of Mexico, where Anadarko agreed to farm into 95 blocks owned by BP Exploration & Production Inc. (OGJ Online, Oct. 25, 2001).

Houston-based Apache's third quarter revenue totaled $652.4 million, up from $618.5 million for the same quarter 2000 when the company earned $202.2 million.

During the latest quarter, the company increased production by 90,000 boe/d to 360,000. Those gains partially offset price declines: The quarter's average $2.80/Mcf natural gas price was down 24% from a year ago, and the average $24.14/bbl oil price was down 17%.

Apache Chairman and CEO Raymond Plank said, "Declining natural gas prices are causing North American drilling activity to plummet, threatening energy supplies ... Regrettably, at a time when stability and rationality should be the call words, we find ourselves in the most volatile natural gas pricing environment in history."

Plank attributed gas price volatility to "excessive speculation inherent in a gas market driven by paper trades" and said market conditions jeopardized US security.

XTO Energy
Fort Worth-based XTO Energy reported $197.3 million in revenue for the third quarter, up from $160.5 million for the same quarter a year ago when XTO posted earnings of $31.8 million.

The company produced 426 MMcfd of gas in the latest quarter, up sharply from 342 MMcfd a year ago.

A successful development program and hedged gas prices contributed to a good quarter and bode well for the future, said Steffen E. Palko, vice-chairman and president.

For the fourth quarter, XTO has hedged 413 MMcfd of gas at $4.11/Mcf.

The company expects fourth quarter natural gas production of 450-455 MMcfd, bringing its yearly average to 415-420 MMcfd.

XTO expects its natural gas liquids production to remain flat at 4,000-4,500 b/d. Its oil production should average 13,300-13,800 b/d for the fourth quarter and for the year, officials said.

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