Fitch Ratings has affirmed the ratings of Apache Corporation (Apache) (NYSE:APA) as follows:
--Issuer Default Rating (IDR) 'A';
--Senior unsecured notes 'A';
--Commercial paper 'F1';
--Short-term IDR 'F1'
The Ratings Outlook is Stable.
Apache's operational performance remains strong. In 2007 the company generated record EBITDA of $7.32 billion, lifted by solid production growth and higher crude oil prices. Total production for 2007 was 561,000 boepd (barrels of oil equivalent per day), a 12% increase from last year's levels. Proven reserves grew by just under 6% to approximately 2.45 billion boe. Approximately 69% of total reserves were proven developed at year-end (YE) 2007. All-in reserve replacement was 167%, while organic reserve replacement was a very solid 132%, according to Fitch calculations.
Total debt also increased since year end 2006. As of Dec. 31, 2007, total debt was approximately $4.23 billion, a significant increase from the $3.82 billion seen at year-end 2006. Debt/boe of proven (P1) reserves was $1.73/barrel, up from $1.65/barrel at YE2006. Apache's near-term maturities are light with $215 million due in 2008, $100 million due in 2009, and nothing due in 2010. Approximately $2.75 billion of Apache's long term debt is redeemable at management's option, subject to a make whole-premium. At year end 2007 Apache's asset retirement obligation (ARO) stood at $1.87 billion.
Apache's ratings reflect the company's significant leverage to oil, superior operational metrics, diversified portfolio of properties, and strong organic reserve and production growth. Downsides include increased capital expenditures planned for 2008, and increased absolute debt levels, as the company financed acquisition activity in 2006 and 2007 primarily with debt. Higher debt levels have eroded key debt metrics monitored by Fitch including debt/boe of proven reserves and debt/pdp. Note that with the increases in debt since 2006, the company is at the low end of its rating category.
Apache is a large independent oil company engaged in the exploration and development of crude oil and natural gas. The company's core operations are conducted primarily in six regions of the globe -- the lower 48 states (including shallow water Gulf of Mexico), Canada, Egypt, Australia, Argentina, and the North Sea.