EX-99.1 2 h77474exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
         
CONTACTS:
        
Media:
  Bill Mintz   (713) 296-7276
 
  Robert Dye   (713) 296-6662
Investor:
  Tom Chambers   (713) 296-6685
 
  Rob Rayphole   (713) 296-6160
 
        
Website:
  www.apachecorp.com    
APACHE’S THIRD-QUARTER EARNINGS INCREASE 74 PERCENT AS PRODUCTION RISES 10 PERCENT
     Houston, Nov. 4, 2010 — Apache Corporation (NYSE, Nasdaq: APA) today reported net income of $765 million, up 74 percent from $441 million in the prior-year period. Apache earned $2.12 per diluted common share in the third quarter compared with $1.30 per share in the year-earlier quarter.
     Worldwide production increased 10 percent from the year-earlier quarter to 667,460 barrels of oil equivalent (boe) per day.
     Cash from operations before changes in operating assets and liabilities* totaled $2 billion in the third quarter, up from $1.3 billion in the prior-year period. Apache’s third-quarter adjusted earnings,* which exclude certain items that impact the comparability of operating results, totaled $791 million or $2.19 per share, up from $534 million or $1.58 per share in the year-earlier period.
     Third-quarter production averaged 358,475 barrels of liquid hydrocarbons and 1.85 billion cubic feet of natural gas per day, both up 3 percent from the second quarter of 2010. Apache’s operations outside North America accounted for 54 percent of worldwide production. Liquids sales — crude oil and natural gas liquids — were 54 percent of worldwide production and 78 percent of revenue. Including the impact of hedging activities, Apache realized an average of $74.14 per barrel of oil, down slightly from the second quarter, and $4.01 per thousand cubic feet (Mcf) of natural gas, unchanged from the second quarter.
     “Apache’s portfolio balance again contributed to strong operational and financial results in the third quarter,” said G. Steven Farris, chairman and chief executive officer. “In Australia, the Pyrenees and Van Gogh developments of Apache’s Exmouth Basin oil discoveries continued to make significant

 

 

contributions. We also had higher production in the Permian Basin and Gulf of Mexico as a result of recent acquisitions that will continue to fuel Apache’s growth.
     “Apache’s focus is on integrating operations and building additional value from the assets acquired this year in the Gulf of Mexico, Permian Basin and western Canada as well as our previously announced acquisition in Egypt, which we expect will close during the fourth quarter,” Farris said. “We also are continuing our high-impact exploration programs in Australia and Egypt.
     “In December, after the acquisition activity is expected to be completed, we forecast production to exceed 775,000 boe per day, or 35 percent above the December 2009 level,” Farris said.
     Apache’s third-quarter results include production from Gulf Shelf assets acquired from Devon Energy Corp. in the second quarter as well as the partial-quarter impact of the acquisition of BP’s oil and gas operations, acreage and infrastructure in the Permian Basin of West Texas and New Mexico on Aug. 10.
     Apache’s subsidiary, Apache Canada Ltd., completed its acquisition of substantially all of BP’s upstream natural gas business in western Alberta and British Columbia on Oct. 8.
     Apache also expects to close the previously announced merger with Mariner Energy upon approval of Mariner’s shareholders at a special meeting scheduled Nov. 10. Mariner is an independent producer with operations in the Gulf of Mexico, the Gulf Coast and the Permian Basin.
     Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom North Sea, Australia and Argentina.
     Apache posts announcements, updates and investor information, in addition to all press releases, on its website, www.apachecorp.com.
     *Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below. For supplemental and non-GAAP information, please go to www.apachecorp.com/financialinfo.

 

 

     NOTE: Apache will conduct a conference call to discuss its third-quarter results at 1 p.m. Central time on Thursday, Nov. 4. The third-quarter conference call will be webcast from Apache’s website, http://www.apachecorp.com. The webcast replay and podcast will be archived on Apache’s website. The conference call will be available for delayed playback by telephone for one week beginning at approximately 4 p.m. on Nov. 4. To access the telephone playback, dial (800) 642-1687 (please note new playback number) and provide Apache’s confirmation code, 19776911.
Forward-Looking Statements
     This news release contains certain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K available on our website, http://www.apachecorp.com/, and in our other public filings and press releases. There is no assurance that Apache’s expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements. We assume no duty to update these statements as of any future date. However, readers should review carefully reports and documents that Apache files periodically with the Securities and Exchange Commission.

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2010     2009     2010     2009  
REVENUES AND OTHER:
                                
Oil and gas production revenues
   $ 3,046,445     $ 2,325,705     $ 8,708,835     $ 6,003,663  
Other
     (33,786 )     6,726       (51,015 )     55,971  
 
                        
 
     3,012,659       2,332,431       8,657,820       6,059,634  
 
                        
 
                                
COSTS AND EXPENSES:
                                
Depreciation, depletion and amortization
                                
Recurring
     786,237       625,898       2,154,486       1,779,874  
Additional
     —       —       —       2,818,161  
Asset retirement obligation accretion
     24,783       26,053       73,545       79,274  
Lease operating expenses
     506,556       445,535       1,392,751       1,248,297  
Gathering and transportation
     42,840       36,232       126,243       103,050  
Taxes other than income
     158,627       183,931       522,398       387,211  
General and administrative
     96,908       82,492       275,887       258,443  
Financing costs, net
     59,350       61,684       174,374       181,426  
 
                        
 
     1,675,301       1,461,825       4,719,684       6,855,736  
 
                        
 
                                
INCOME (LOSS) BEFORE INCOME TAXES
     1,337,358       870,606       3,938,136       (796,102 )
Current income tax provision
     206,709       262,430       888,834       483,171  
Deferred income tax provision (benefit)
     352,384       166,160       705,833       (409,069 )
 
                        
 
                                
NET INCOME (LOSS)
     778,265       442,016       2,343,469       (870,204 )
Preferred stock dividends
     13,276       1,420       13,276       4,260  
 
                        
 
                                
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK
   $ 764,989     $ 440,596     $ 2,330,193     $ (874,464 )
 
                        
 
                                
NET INCOME (LOSS) PER COMMON SHARE:
                                
Basic
   $ 2.14     $ 1.31     $ 6.78     $ (2.61 )
 
                        
Diluted
   $ 2.12     $ 1.30     $ 6.72     $ (2.61 )
 
                        
 
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
     356,718       336,159       343,826       335,637  
 
                        
 
                                
DILUTED SHARES OUTSTANDING
     367,439       337,872       348,784       335,637  
 
                        

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2010     2009     2010     2009  
CAPITAL EXPENDITURES (1):
                                
Exploration & Development Costs
                                
United States
   $ 422,001     $ 178,890     $ 1,039,479     $ 747,691  
Canada
     227,489       102,476       592,593       312,791  
 
                        
North America
     649,490       281,366       1,632,072       1,060,482  
 
                        
Egypt
     205,054       146,282       509,947       534,893  
Australia
     105,604       135,798       401,023       420,960  
North Sea
     207,459       77,160       437,325       293,451  
Argentina
     72,551       26,596       166,412       108,892  
Chile
     5,659       196       20,034       4,145  
 
                        
International
     596,327       386,032       1,534,741       1,362,341  
 
                        
Worldwide Exploration & Development Costs
   $ 1,245,817     $ 667,398     $ 3,166,813     $ 2,422,823  
 
                        
 
                                
Gathering, Transmission and Processing Facilities
                                
Canada
   $ 34,769     $ 13,094     $ 107,167     $ 69,235  
Egypt
     20,540       14,527       110,369       109,607  
Australia
     12,806       10,841       102,269       23,213  
Argentina
     673       599       2,036       1,729  
 
                        
Total Gathering, Transmission and Processing
   $ 68,788     $ 39,061     $ 321,841     $ 203,784  
 
                        
 
                                
Capitalized Interest
   $ 29,007     $ 14,344     $ 64,359     $ 45,325  
 
                        
 
                                
Capital Expenditures, excluding acquisitions
   $ 1,343,612     $ 720,803     $ 3,553,013     $ 2,671,932  
 
                        
 
                                
Acquisitions
   $ 2,516,902     $ 15,123     $ 3,550,296     $ 258,343  
 
                        
 
(1)   Accrual basis
                 
    September 30,     December 31,  
    2010     2009  
BALANCE SHEET DATA:
                
Cash and Cash Equivalents
   $ 1,211,439     $ 2,048,117  
Other Current Assets
     3,039,021       2,537,732  
Property and Equipment, net
     28,346,116       22,900,615  
Goodwill
     189,252       189,252  
Deposit Related to Acquisition of BP Properties
     3,500,000       —  
Other Assets
     642,521       510,027  
 
            
Total Assets
   $ 36,928,349     $ 28,185,743  
 
            
 
                
Short-Term Debt
   $ 135,369     $ 117,326  
Other Current Liabilities
     2,391,361       2,275,232  
Long-Term Debt
     6,380,579       4,950,390  
Deferred Credits and Other Noncurrent Liabilities
     6,075,658       5,064,174  
Shareholders’ Equity
     21,945,382       15,778,621  
 
            
Total Liabilities and Shareholders’ Equity
   $ 36,928,349     $ 28,185,743  
 
            
 
                
Common shares outstanding at end of period
     364,425       336,437  

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2010     2009     2010     2009  
PRODUCTION DATA:
                                
OIL VOLUME — Barrels per day
                                
Gulf Coast
     54,683       51,440       52,009       50,778  
Central
     3,767       2,189       3,027       2,224  
Permian
     39,374       34,584       37,033       34,833  
 
                        
United States
     97,824       88,213       92,069       87,835  
Canada
     13,868       14,595       14,252       15,586  
 
                        
North America
     111,692       102,808       106,321       103,421  
 
                        
Egypt
     99,818       93,550       96,387       90,848  
Australia
     56,876       10,849       48,324       9,732  
North Sea
     58,764       67,288       58,254       62,515  
Argentina
     9,645       11,026       9,812       11,799  
 
                        
International
     225,103       182,713       212,777       174,894  
 
                        
Total
     336,795       285,521       319,098       278,315  
 
                        
 
                                
NATURAL GAS VOLUME — Mcf per day
                                
Gulf Coast
     402,777       401,094       388,760       359,787  
Central
     216,189       198,700       204,446       204,002  
Permian
     117,557       99,268       101,440       94,718  
 
                        
United States
     736,523       699,062       694,646       658,507  
Canada
     334,945       371,516       329,443       367,562  
 
                        
North America
     1,071,468       1,070,578       1,024,089       1,026,069  
 
                        
Egypt
     380,598       372,312       377,051       355,824  
Australia
     197,090       225,349       202,473       176,457  
North Sea
     2,372       2,983       2,483       2,771  
Argentina
     202,381       183,504       180,219       189,303  
 
                        
International
     782,441       784,148       762,226       724,355  
 
                        
Total
    1,853,909       1,854,726       1,786,315       1,750,424  
 
                        
 
                                
NGL VOLUME — Barrels per day
                                
Gulf Coast
     6,481       5,045       5,433       4,096  
Central
     592       385       529       315  
Permian
     9,426       1,589       5,814       1,401  
 
                        
United States
     16,499       7,019       11,776       5,812  
Canada
     2,134       2,166       1,956       2,110  
 
                        
North America
     18,633       9,185       13,732       7,922  
Argentina
     3,047       3,291       3,151       3,174  
 
                        
Total
     21,680       12,476       16,883       11,096  
 
                        
 
                                
BOE per day
                                
Gulf Coast
     128,293       123,334       122,235       114,838  
Central
     40,390       35,690       37,631       36,539  
Permian
     68,393       52,718       59,753       52,020  
 
                        
United States
     237,076       211,742       219,619       203,397  
Canada
     71,827       78,680       71,115       78,957  
 
                        
North America
     308,903       290,422       290,734       282,354  
 
                        
Egypt
     163,251       155,602       159,228       150,152  
Australia
     89,724       48,408       82,070       39,142  
North Sea
     59,159       67,785       58,668       62,977  
Argentina
     46,423       44,901       43,000       46,523  
 
                        
International
     358,557       316,696       342,966       298,794  
 
                        
Total
    667,460       607,118       633,700       581,148  
 
                        

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2010     2009     2010     2009  
PRICING DATA:
                                
AVERAGE OIL PRICE PER BARREL
                                
Gulf Coast
   $ 75.79     $ 66.70     $ 76.53     $ 55.07  
Central
     72.43       64.11       73.73       51.97  
Permian
     72.47       60.37       73.78       49.05  
United States (1)
     73.67       64.57       74.05       54.89  
Canada
     69.01       63.79       71.76       51.95  
North America (1)
     73.09       64.46       73.74       54.45  
Egypt
     75.91       65.64       76.15       56.67  
Australia
     74.80       73.70       74.66       58.74  
North Sea
     75.25       65.76       76.13       56.68  
Argentina
     57.31       48.53       56.84       47.29  
International
     74.66       65.13       74.91       56.15  
Total (1)
     74.14       64.89       74.52       55.52  
 
                                
AVERAGE NATURAL GAS PRICE PER MCF
                                
Gulf Coast
   $ 4.67     $ 3.59     $ 4.93     $ 4.03  
Central
     4.41       3.28       4.76       3.34  
Permian
     4.64       4.56       5.49       4.16  
United States (1)
     5.10       3.99       5.41       4.13  
Canada (1)
     4.42       3.61       4.72       4.04  
North America (1)
     4.89       3.86       5.19       4.10  
Egypt
     3.57       3.86       3.55       3.78  
Australia
     2.20       2.04       2.21       1.85  
North Sea
     16.54       14.89       17.35       11.66  
Argentina
     1.79       1.89       1.93       1.92  
International
     2.80       2.92       2.86       2.85  
Total (1)
     4.01       3.46       4.19       3.58  
 
                                
AVERAGE NGL PRICE PER BARREL
                                
Gulf Coast
   $ 32.81     $ 33.95     $ 42.64     $ 29.49  
Central
     48.38       28.43       45.90       25.36  
Permian
     34.11       31.96       36.31       27.85  
United States
     34.11       33.20       39.66       28.87  
Canada
     34.18       24.22       36.58       23.03  
North America
     34.12       31.08       39.22       27.32  
Argentina
     26.39       15.44       28.98       16.13  
Total
     33.03       26.96       37.31       24.12  
 
(1)   Prices reflect the impact of financial derivative hedging activities.

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
NON-GAAP FINANCIAL MEASURES:
Reconciliation of income attributable to common stock to adjusted earnings:
The press release discusses Apache’s adjusted earnings. Adjusted earnings exclude certain items that management believes affect the comparability of operating results and are meaningful for the following reasons:
•   Management uses adjusted earnings to evaluate the company’s operational trends and performance relative to other oil and gas producing companies.
 
•   Management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends.
 
•   The reconciling items below are the types of items management believes are frequently excluded by analysts when evaluating the operating trends and comparability of the company’s results.
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2010     2009     2010     2009  
Income (Loss) Attributable to Common Stock (GAAP)
   $ 764,989     $ 440,596     $ 2,330,193     $ (874,464 )
 
                                
Adjustments:
                                
Foreign currency fluctuation impact on deferred tax expense
     26,272       93,089       1,345       116,172  
Additional depletion, net of tax
     —       —       —       1,981,398  
 
                        
Adjusted Earnings (Non-GAAP)
   $ 791,261     $ 533,685     $ 2,331,538     $ 1,223,106  
 
                        
 
                                
Adjusted Earnings Per Share (Non-GAAP)
                                
Basic
   $ 2.22     $ 1.59     $ 6.78     $ 3.64  
 
                        
Diluted
   $ 2.19     $ 1.58     $ 6.72     $ 3.62  
 
                        
 
                                
Average Number of Common Shares
                                
Basic
     356,718       336,159       343,826       335,637  
 
                        
Diluted
     367,439       337,872       348,784       337,417  
 
                        
Reconciliation of net cash provided by operating activities to cash from operations before changes in operating assets and liabilities:
The press release discusses Apache’s cash from operations before changes in operating assets and liabilities. It is presented because management believes the information is useful for investors because it is used internally and widely accepted by those following the oil and gas industry as a financial indicator of a company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt. It is also used by research analysts to value and compare oil and gas exploration and production companies, and is frequently included in published research when providing investment recommendations. Cash from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity, but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities.
The following table reconciles net cash provided by operating activities to cash from operations before changes in operating assets and liabilities.
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2010     2009     2010     2009  
Net cash provided by operating activities
   $ 1,714,753     $ 1,312,742     $ 4,800,194     $ 2,679,471  
Changes in operating assets and liabilities
     269,905       (16,822 )     587,067       859,092  
 
                        
Cash from operations before changes in operating assets and liabilities
   $ 1,984,658     $ 1,295,920     $ 5,387,261     $ 3,538,563