The quarter-to-quarter difference mainly is because of higher operating and depreciation costs and lower investment income which combined to more than counterbalance a raise in operating revenues.

Total costs and operating expenses raised by $2.9 million from higher production and lifting costs, increased depreciation, depletion and amortization, higher selling and administrative expense, and greater foreign exchange losses because of depreciation of the Argentine peso.

Additionally, Apco Argentina experienced a turn down in interest and other income and lower equity income from the company’s equity investee, Petrolera Entre Lomas S.A. Petrolera’s net income was lower as a result of higher costs and expenses attributable to operations in the Entre Lomas and Bajada del Palo concessions.

Oil, natural gas and liquefied petroleum gas (LPG) sales volumes for the combined consolidated and equity interests totaled 711 thousand barrels, 1.8 billion cubic feet and 4.6 thousand tons in first-quarter 2009, compared with 625 thousand barrels, 1.7 billion cubic feet and 4.7 thousand tons in year-ago quarter.

Crude oil, natural gas and LPG sales prices for the combined consolidated and equity interests averaged $41.43 per barrel, $1.83 per thousand cubic feet and $258.47 per ton in first quarter of 2009, compared with $42.01 per barrel, $1.39 per thousand cubic feet and $454.37 per ton in the year-ago quarter.

Successful exploration and development drilling, particularly in our Neuquen basin properties, has resulted in increased production volumes, which has helped to alleviate the affect of higher operating costs, said Ralph Hill, Apco Argentina’s chairman and chief executive officer.

2009 Capital Program

Apco Argentina’s 2009 capital expenditure budget – net to the company’s direct working interests – is about $11 million.

So far, $4.3 million of that amount has been invested, mainly for development drilling in the Entre Lomas and Bajada del Palo concessions, along with a seventh productive well in the Agua Amarga exploration consent.

On a basis it also comprises of a capital expenditures attributable to Apco Argentina’s equity interest in Petrolera, Apco Argentina’s combined consolidated and equity capital expenditures is anticipated to total $23 million for 2009.