-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mni4ezc0bqc3pNK/PH7bcG0gajl2a+4A47RnBnHu5YMHTZCRBSX6B8qjZCDYjKhE v85lxvlTH3UnT73ptpN3/A== 0000950129-95-000879.txt : 19950807 0000950129-95-000879.hdr.sgml : 19950807 ACCESSION NUMBER: 0000950129-95-000879 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950804 SROS: CSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APACHE CORP CENTRAL INDEX KEY: 0000006769 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 410747868 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04300 FILM NUMBER: 95559020 BUSINESS ADDRESS: STREET 1: 2000 POST OAK BLVD STREET 2: ONE POST OAK CENTER STE 100 CITY: HOUSTON STATE: TX ZIP: 77056-4400 BUSINESS PHONE: 7132966000 MAIL ADDRESS: STREET 1: 2000 POST OAK BLVD STREET 2: STE 100 CITY: HOUSTON STATE: TX ZIP: 77056-4400 FORMER COMPANY: FORMER CONFORMED NAME: APACHE OIL CORP DATE OF NAME CHANGE: 19660830 10-Q/A 1 APACHE CORPORATION 10-Q/A DATED 03/31/95 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 1 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________to____________________ Commission file number 1-4300 ------ APACHE CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 41-0747868 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) Suite 100, One Post Oak Central 2000 Post Oak Boulevard, Houston, TX 77056-4400 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (713) 296-6000 ------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ---- ---- Number of shares of Apache Corporation common stock, $1.25 par value, outstanding as of March 31, 1995.......................................................69,708,077
2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS APACHE CORPORATION AND SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME (UNAUDITED - RESTATED)
(In thousands, except per share data) For the Three Months Ended March 31, -------------------------- 1995 1994 --------- --------- REVENUES: Oil and gas production revenues $ 143,189 $ 124,978 Gathering, processing and marketing revenues 22,869 6,764 Equity in income of affiliates -- 95 Other revenues 1,660 884 --------- --------- 167,718 132,721 --------- --------- OPERATING EXPENSES: Depreciation, depletion and amortization 69,795 60,257 International impairments -- 3,500 Operating costs 44,979 35,639 Gathering, processing and marketing costs 21,461 5,583 Administrative, selling and other 9,689 9,287 Financing costs: Interest expense 18,561 7,848 Amortization of deferred loan costs 1,223 779 Capitalized interest (3,582) (1,259) Interest income (906) (169) --------- --------- 161,220 121,465 --------- --------- INCOME BEFORE INCOME TAXES 6,498 11,256 Provision for income taxes 2,415 3,031 --------- --------- NET INCOME $ 4,083 $ 8,225 ========= ========= NET INCOME PER COMMON SHARE $ .06 $ .12 ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 69,673 69,635 ========= =========
The accompanying notes to consolidated financial statements are an intergral part of this statement. 1 3 APACHE CORPORATION AND SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED - RESTATED) (In thousands)
For the Three Months Ended March 31, -------------------------- 1995 1994 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,083 $ 8,225 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 69,795 60,257 International impairments -- 3,500 Amortization of deferred loan costs 1,223 779 Provision for deferred income taxes 2,415 4,531 Cash distributions less than earnings of affiliates -- (95) Gain on sale of stock held for investment (350) -- Other 3 (134) Changes in operating assets and liabilities: Increase in receivables (5,956) (6,377) (Increase) decrease in advances to oil and gas ventures and other (328) 598 (Increase) decrease in deferred charges and other 609 (368) Decrease in payables (9,785) (3,807) Increase (decrease) in accrued operating costs 2,865 (6,984) Decrease in advance from gas purchaser (1,653) -- Increase in deferred credits and other noncurrent liabilities 1,608 790 --------- --------- Net cash provided by operating activities 64,529 60,915 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Exploration and development expenditures (79,431) (80,930) Acquisition of oil and gas properties (573,137) (4,489) Non-cash portion of net oil and gas property additions (7,846) (3,844) Purchase of AERC stock, net of cash acquired -- (13,885) Purchase of stock held for investment (305) (1,000) Proceeds from sale of oil and gas properties 20,401 3,768 Proceeds from sale of investments 5,383 -- Prepaid acquisition cost 25,377 -- Increase in inventory, net (3,550) (158) Other capital expenditures, net (1,751) (1,547) --------- --------- Net cash used in investing activities (614,859) (102,085) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Long-term borrowings 720,859 44,456 Payments on long-term debt (165,241) (7,034) Proceeds from issuance of common stock, net 600 1,124 Costs of debt and equity transactions (11,224) -- Dividends paid (4,301) (4,268) --------- --------- Net cash provided by financing activities 540,693 34,278 --------- --------- NET INCREASE IN CASH AND CASH EQUIVALENTS (9,637) (6,892) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 30,043 39,728 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20,406 $ 32,836 ========= =========
The accompanying notes to consolidated financial statements are an intergral part of this statement. 2 4 APACHE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED - RESTATED)
(In thousands) March 31, December 31, 1995 1994 ----------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 20,406 $ 30,043 Receivables 117,290 111,310 Inventories 12,418 8,868 Advances to oil and gas ventures and other 10,820 10,093 ----------- ----------- 160,934 160,314 ----------- ----------- PROPERTY AND EQUIPMENT: Oil and gas, on the basis of full cost accounting: Proved properties 3,777,215 3,265,770 Unproved properties and properties under development, not being amortized 280,069 157,379 Gas gathering, transmission and processing facilities 25,809 25,809 Other 51,661 49,912 ----------- ----------- 4,134,754 3,498,870 Less: Accumulated depreciation, depletion and amortization (1,751,868) (1,682,039) ----------- ----------- 2,382,886 1,816,831 ----------- ----------- OTHER ASSETS: Deferred charges and other 38,644 59,482 ----------- ----------- $ 2,582,464 $ 2,036,627 =========== ===========
The accompanying notes to consolidated financial statements are an intergral part of this statement. 3 5 APACHE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED - RESTATED)
(In thousands) March 31, December 31, 1995 1994 ----------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ -- $ 100 Accounts payable 91,067 92,861 Accrued operating expense 18,437 16,722 Accrued exploration and development 12,746 25,077 Accrued interest 9,612 4,983 Accrued compensation and benefits 4,404 10,794 Other accrued expenses 13,580 12,980 ----------- ----------- 149,846 163,517 ----------- ----------- LONG-TERM DEBT 1,274,808 719,033 ----------- ----------- DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES: Income taxes 154,902 151,216 Advance from gas purchaser 65,723 67,376 Other 45,390 44,398 ----------- ----------- 266,015 262,990 ----------- ----------- SHAREHOLDERS' EQUITY: Common stock, $1.25 par, 215,000,000 shares authorized, 70,827,080 and 70,785,067 shares issued, respectively 88,534 88,482 Paid-in capital 500,650 500,101 Retained earnings 335,073 335,293 Currency translation adjustment (19,009) (19,337) Treasury stock, at cost, 1,119,003 and 1,118,975 shares, respectively (13,453) (13,452) ----------- ----------- 891,795 891,087 ----------- ----------- $ 2,582,464 $ 2,036,627 =========== ===========
The accompanying notes to consolidated financial statements are an intergral part of this statement. 4 6 APACHE CORPORATION AND SUBSIDIARIES STATEMENT OF RETAINED EARNINGS (UNAUDITED - RESTATED)
(In thousands) For the Three Months Ended March 31, -------------------------- 1995 1994 --------- --------- Retained earnings, beginning of period $ 335,293 $ 306,892 Net income 4,083 8,225 Dividends declared: Common stock, $.07 per share (4,303) (4,286) --------- --------- Retained earnings, end of period $ 335,073 $ 310,831 ========= =========
The accompanying notes to consolidated financial statements are an intergral part of this statement. 5 7 APACHE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods, on a basis consistent with the annual audited statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the Company's latest annual report on Form 10-K/A. INCOME TAXES Under the liability method specified by Statement of Financial Accounting Standards No. 109, deferred taxes were determined based on the estimated future tax effect of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted laws. INCOME PER SHARE Primary income per common share was calculated by dividing net income by the weighted average common shares outstanding. The effect of common stock equivalents, including shares issuable upon the exercise of employee stock options (calculated using the treasury stock method) and upon the assumed conversion of the Company's 3.93-percent convertible notes and 6-percent convertible debentures, was not significant or was anti-dilutive for all periods presented. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. These investments are carried at cost which approximates market.
For the Three Months Ended March 31, --------------------- (In thousands) 1995 1994 ------- ------- Cash paid during the period for: Interest (net of amounts capitalized) $ 8,485 $ 3,644 Income taxes (net of refunds) 342 204
6 8 ACQUISITIONS On May 17, 1995, Apache acquired DEKALB Energy Company (DEKALB, now known as DEK Energy Company), an oil and gas company engaged in the exploration for, and the development of, crude oil and natural gas in Canada, through a merger which resulted in DEKALB becoming a wholly-owned subsidiary of Apache. Pursuant to the merger agreement, DEKALB shareholders received .8764 shares of Apache common stock in exchange for each share of DEKALB Class A stock and Class B stock. As a result, 8.4 million shares of Apache common stock were issued in exchange for outstanding DEKALB stock and for DEKALB employee stock options. The estimated merger costs of approximately $10 million will be charged to expense in the second quarter of 1995. The merger was accounted for as a "pooling of interests". As a result, this Form 10-Q/A has been prepared to present restated information for 1995 and preceding years on a combined basis using the "pooling of interests" method of accounting. The common stock data presented herein includes DEKALB, restated based upon the .8764 exchange ratio for the merger. In connection with the DEKALB merger, the methods used by Apache and DEKALB in computing depreciation, depletion and amortization (DD&A) of proved oil and gas properties were conformed to the units-of-production method using physical units. This method was previously used by DEKALB and in conforming the methods used, Apache adopted the units-of-production method in lieu of the future gross revenue method. The conforming adjustments for DD&A have been reflected retroactively in the combined financial statements along with an adjustment to DEKALB's previously recorded deferred tax valuation allowance for U.S. operating loss carryforwards expected to be utilized by Apache in future periods. All other adjustments are reclassifications to conform financial statement presentation. A reconciliation of the previously separate results to the restated combined results is set forth below:
Quarter Ended Quarter Ended March 31, 1995 March 31, 1994 -------------- -------------- (In Thousands) Revenues: Apache $ 158,652 $ 121,591 DEKALB 9,066 11,130 --------- --------- $ 167,718 $ 132,721 ========= ========= Net income (loss): Apache $ 5,991 $ 9,407 DEKALB (409) 1,750 Conforming adjustments (1,499) (2,932) --------- --------- $ 4,083 $ 8,225 ========= ========= Net income (loss) per common share: Apache $ .10 $ .15 --------- --------- DEKALB $ (.04) $ .18 --------- --------- As combined $ .08 $ .16 Conforming adjustments (.02) (.04) --------- --------- $ .06 $ .12 ========= =========
7 9 On March 1, 1995, Apache completed the acquisition of 315 oil and gas fields from Texaco Exploration and Production Inc. (Texaco) for an adjusted purchase price of $564 million. The acquisition of the Texaco properties was accounted for using the purchase method of accounting and was included in the financial statements of the Company since the date of the acquisition. The following unaudited pro forma financial information shows the pro forma effect on the Company's consolidated results of operations as if the acquisition were effective on January 1 of the year indicated. The pro forma data presented is based on numerous assumptions and should not necessarily be viewed as being indicative of future operations. (In thousands, except per share data)
For the Three Months For the Three Months Ended March 31, 1995 Ended March 31, 1994 ------------------------ ------------------------- As Reported Pro Forma As Reported Pro Forma ----------- --------- ----------- --------- Revenues and other income $167,718 $191,493 $132,721 $174,391 Net income $ 4,083 $ 2,790 $ 8,225 $ 4,656 Net income per common share $ .06 $ .04 $ .12 $ .07 Weighted average common shares outstanding 69,673 69,673 69,635 69,635
ACQUISITION FINANCING On March 1, 1995, in connection with the acquisition of certain oil and gas properties from Texaco, lenders increased the size of Apache's revolving credit facility from $700 million to $1 billion, subject to borrowing base availability. The borrowing base is the estimated loan value of the Company's oil and gas reserves, not including reserves outside the United States and subject to certain other exclusions, based upon forecast oil and gas prices and rates of production, as periodically redetermined by the lenders. Upon closing of the Texaco transaction on March 1, 1995, Apache had approximately $840 million in loans outstanding under the facility with approximately $60 million unborrowed and available. Under terms of the credit facility, as amended March 1, 1995, the Company must (i) maintain a minimum tangible net worth of $650 million, which is adjusted quarterly for subsequent earnings and securities transactions, and (ii) maintain a ratio of (A) earnings before interest expense, state and federal taxes and DD&A to (B) consolidated interest expense, of not less than 3.7:1. Restrictive covenants under the facility include certain limitations on indebtedness and contingent obligations, as well as certain restrictions on liens and investments in international subsidiaries. The Company has complied with its financial ratios and covenant requirements at all times since the inception of the revolving credit facility in July 1991. The facility matures on March 1, 2000, and may be extended in one-year increments with the lenders' consent. 8 10 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW On May 17, 1995, Apache Corporation (Apache or the Compamy) acquired DEKALB Energy Company (DEKALB, now known as DEK Energy Company) through a merger which resulted in DEKALB becoming a wholly-owned subsidiary of Apache. (See "Acquisitions" in the notes to the consolidated financial statements.) The merger was accounted for as a "pooling of interests". As a result, the following discussion and analysis has been prepared on a combined basis using the "pooling of interests" method of accounting. FINANCIAL RESULTS For the first quarter of 1995, Apache reported net income of $4.1 million, or $.06 per share, on total revenues of $167.7 million compared to net income of $8.2 million, or $.12 per share, on total revenues of $132.7 million a year ago. The 50-percent decline in earnings reflected the impact of lower gas prices coupled with higher financing costs. Apache's financial performance for the first quarter of 1995 was impacted by the following items: Acquisitions: On March 1, 1995, Apache completed the acquisition of 315 oil and gas fields from Texaco Production and Exploration Inc. (Texaco) for an adjusted purchase price of $564 million. With the acquisition, Apache's total equivalent reserves increased 34 percent over year-end 1994. Oil reserves, as a percent of total reserves, increased from 34 percent to approximately 43 percent. Estimated production volumes from the Texaco properties during the month of March were 18,114 barrels of oil per day (bopd) and 73 million cubic feet per day (MMcfd), which on a quarterly basis added 6,420 bopd to reported oil volumes and 25 MMcfd to reported gas volumes. This acquisition accounted for 22 percent of the increase in total gas production over a year ago. Acquisitions completed in the second half of 1994 added approximately 53 MMcfd of gas and 3,700 bopd of oil to 1995 production. The Texaco transaction, and four smaller acquisitions in which Apache purchased additional interests in existing properties, added 111 million barrels of oil equivalent (MMboe) of reserves for the quarter. Oil and Gas Production and Pricing: The company posted record oil and gas production during the first quarter of 1995, boosting total revenues to $167.7 million. A $4.03 per barrel increase in Apache's average realized oil price in 1995 partially offset a 28-percent decline in realized gas prices. 9 11 RESULTS OF OPERATIONS Volume and price information concerning the Company's 1995 and 1994 first quarter oil and gas production is summarized in the following table:
For the Three Months Ended March 31, --------------------- Increase 1995 1994 (Decrease) -------- ------- ---------- Selected Oil and Gas Operating Statistics - -------------------- Gas Volume - Mcf per day: U.S 486,028 382,763 27% Canada 61,165 51,879 18% Australia 6,125 4,140 48% ------- ------- Total 553,318 438,782 26% ======= ======= Average Gas Price - Per Mcf: U.S $ 1.52 $ 2.09 (27%) Canada .97 1.70 (43%) Australia 1.99 1.89 5% Total 1.47 2.05 (28%) Oil Volume - Barrels per day: U.S 39,738 32,019 24% Canada 1,966 2,103 (7%) Australia 3,072 2,643 16% ------- ------- Total 44,776 36,765 22% ======= ======= Average Oil Price - Per barrel: U.S $ 16.69 $ 12.56 33% Canada 16.69 12.26 36% Australia 18.94 16.37 16% Total 16.84 12.81 31% Natural Gas Liquids (NGL) - Barrels per day: U.S 1,562 1,323 18% Canada 559 650 (14%) ------- ------- Total 2,121 1,973 8% ======= ======= Average NGL Price - Per barrel: U.S $ 12.77 $ 11.03 16% Canada 10.21 8.24 24% Total 12.10 10.11 20%
Oil and gas production revenues for the first quarter of 1995 increased 15 percent to $143.2 million compared to $125 million last year. A 24-percent increase in equivalent production and 31-percent rise in realized oil prices mitigated the impact of lower gas prices from the comparable period of 1994. 10 12 In 1995, gas sales declined $7.8 million, or ten percent, from last year to $73 million. A $.58 per Mcf drop in average realized gas prices from last year negatively impacted gas sales by $23.6 million, while increased production added $15.8 million to gas revenues. The Company reported natural gas production of 553.3 MMcfd in the first quarter of 1995, a 114.5 MMcfd increase from 1994 levels. Acquisitions, both in the second half of 1994 and the first quarter of 1995, accounted for 68 percent of the increase. First quarter oil production of 44.8 Mbopd rose 8 Mbopd, or 22 percent, over the same period in 1994. Oil sales rose by $25.5 million to $67.9 million for the first quarter 1995 from increased production, resulting principally from acquisitions, and from increased oil prices. In the first quarter of 1995, oil prices increased by $4.03 per barrel to a realized price of $16.84. The increase in oil volumes impacted 1995 oil sales by $9.2 million while the rise in oil prices impacted sales by $16.3 million. Revenues from the sale of natural gas liquids (NGL) for the first quarter of 1995 increased $.5 million from a year ago to $2.3 million. Higher production and increased prices drove the 27-percent increase in NGL sales. Gathering, processing and marketing revenues of $22.9 million in the first quarter of 1995 tripled the revenues from a year ago. The activity reflects increased volumes of purchase and resale transactions by Apache's oil and gas marketing subsidiaries. These marketing transactions generally carry a low margin. Depreciation, depletion and amortization (DD&A) expense for the first quarter of 1995 rose $9.5 million, or 16 percent, to $69.8 million. DD&A expense for oil and gas properties was higher due to increased oil and gas production compared to a year ago. Apache's amortization rate decreased from $6.33 in 1994 to $5.57 in 1995 due to the impact of the Texaco properties. There were no international impairments in the first quarter of 1995. Reflecting the impact of acquisitions, operating costs for the first quarter of 1995 rose 26 percent from a year ago to $45 million. Operating costs include lifting costs, workover expense, production taxes and other taxes. Based on an equivalent unit of production, operating costs rose $.06 barrel of oil equivalent (boe), or one percent, in 1995 to $3.60 boe. The unit cost increase reflects the acquisition of the Texaco properties which are 69 percent oil on an energy equivalent basis. Oil properties typically have a higher expense than gas properties. The unit cost increase was partially offset by $.9 million of production tax refunds in 1995. First quarter administrative, selling and other costs increased $.4 million compared to a year ago, while declining $.16 on a boe basis. The decline in administrative costs per barrel of oil equivalent reflects continued cost controls and the increase in production. Administrative costs increased due to expenses to assimilate the Texaco properties into Apache's operations. Net financing costs increased $8.1 million, or 112 percent, for the first quarter of 1995, to $15.3 million due to an increase in debt outstanding and higher interest rates since last year. Apache's effective interest rate increased from 5.68 percent in the first quarter of 1994 to 7.40 percent in the first quarter of 1995 primarily due to increases in market rates. Debt increased $556 million since December 31, 1994, primarily as a result of increased borrowings to fund acquisitions. CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES CAPITAL COMMITMENTS Apache's primary needs for cash are for exploration, development and acquisition of oil and gas properties, repayment of principal and interest on outstanding debt and payment of dividends. The Company generally funds its exploration and development activities through internally generated cash flows. Apache budgets its capital expenditures based upon projected cash flows and routinely adjusts its capital expenditures in response to changes in oil and gas prices and corresponding changes in cash flow. 11 13 Expenditures for exploration and development decreased to $79.4 million for the first quarter of 1995 from $80.9 million during the comparable period last year. Apache completed 22 producing wells out of 38 U.S. wells drilled for the first quarter of 1995. By comparison, the Company completed 55 producing wells of 64 gross U.S. wells during the first quarter of last year. U.S. expenditures declined slightly from 1994 while international exploration and development costs rose 85 percent to $9.8 million. Apache acquired $573.1 million of oil and gas properties during the first quarter of 1995, compared with $4.5 million a year ago. On March 1, 1995, the Company completed its acquisition of 315 oil and gas fields from Texaco for an adjusted purchase price of $564 million. Apache also divested $20.4 million of non-core oil and gas properties in the first quarter of 1995. Other capital expenditures during the first quarter of 1995 increased $1.8 million from $1.5 million for the same period a year ago. CAPITAL RESOURCES AND LIQUIDITY Apache's primary capital resources are net cash provided by operating activities, proceeds from financing activities and proceeds from the sale of non-strategic assets. Net cash provided by operating activities during the first quarter of 1995, rose to $66.6 million compared to $61 million for the same period last year. On January 4, 1995, Apache completed the issuance of $172.5 million principal amount of its 6-percent Convertible Subordinated Debentures due 2002, which are convertible into Apache common stock at a conversion price of $30.68 per share. Net proceeds were used to reduce bank debt, provide funds for acquisitions and general corporate purposes. The 6-percent debentures have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. Costs associated with the issue of the 6-percent debentures totaled $4.1 million. On March 1, 1995, the Company's revolving credit facility was amended and restated, increasing it from $700 million to $1 billion. The facility matures on March 1, 2000, and may be extended in one-year increments with the lenders' consent. Based on the Company's ratio of debt to total capital, the interest rate margin over LIBOR at March 31, 1995, was 1.125 percent. The Company also pays a facility fee based on its ratio of debt to total capital. The facility fee at March 31, 1995, was .375 percent of the available portion of the commitment and .1875 percent of the unavailable portion of the commitment. As of March 31, 1995, the available portion of the commitment was $881 million, of which $836 million was outstanding. Costs associated with the amendment of the facility totaled $7.2 million. At March 31, 1995, Apache had a total of $1.3 billion in long-term debt outstanding, up $556 million from the end of 1994. The Company had $20.4 million in cash equivalents on hand at March 31, 1995, down $9.6 million from December 31, 1994. The Company's ratio of current assets to current liabilities at the end of first quarter of 1995 of 1.1:1 increased from 1:1 at year-end 1994. Management believes that cash on hand, net cash generated from operations and unused available borrowing capacity under the revolving credit facility will be adequate to meet future liquidity needs for the next two fiscal years, including satisfying the Company's financial obligations and funding exploration and development operations and routine acquisitions. 12 14 FUTURE TRENDS The Company plans to implement several strategic initiatives designed to accelerate the integration of acquired properties, streamline operations and strengthen its balance sheet. To maximize profit margins and rationalize its enlarged asset base, Apache announced plans on February 15, 1995 to accelerate the disposition of all of its oil and gas properties in its Rocky Mountain region and non-strategic assets in other operating regions, and to close the Denver, Colorado office. Funds received from property sales will be applied toward the reduction of debt. Capital and human resources from Apache's Rocky Mountain region will be redeployed within the Company. Apache has continually followed a practice of expanding and upgrading its reserves through a combination of exploratory and development drilling, acquisitions, reworkings and recompletions and upgrading its production base by disposing of lower-margin and non-strategic properties. 13 15 PART II. - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The information set forth in Note 9 to the Consolidated Financial Statements contained in the registrant's restated 1994 annual report on Form 10-K/A, for the year ended December 31, 1994, filed August, 2, 1995, is incorporated herein by reference. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION On April 17, 1995, the Securities and Exchange Commission declared effective Apache's Registration Statement on Form S-4 relating to the Company's previously announced merger agreement with DEKALB Energy Company. In February 1995, Apache announced plans to accelerate the disposition of lower margin and non-strategic properties, including sales of a substantial portion of its Rocky Mountain properties and non-strategic assets from its other regions. In 1995 to date, divestitures closed or under contract total $239 million, as discussed below. On July 18, 1995, Apache entered into a purchase and sale agreement to sell certain of its Rocky Mountain properties to Citation Oil & Gas Corporation for $55 million, subject to adjustment. The assets being sold include Apache's interest in 138 fields with approximately 1,600 active wells located in Colorado, Montana, North Dakota, South Dakota, Utah and Wyoming. Apache issued a press release dated July 19, 1995, which is attached hereto as Exhibit 99.1 and incorporated herein by reference. In addition to the sale of Rocky Mountain properties described above, Apache has sold or agreed to sell $84 million of its non-core properties in 22 other transactions. The assets sold or being sold include Apache's interest in 1,226 wells in the Midcontinent region for $55 million, 65 wells in the Gulf of Mexico region for $14 million, eight wells in the Permian Basin region for $12 million, and 13 wells in the Rocky Mountain region for $3 million. 14 16 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits. 11.1 Computation of Earnings per Share. 27.1 Financial Data Table. 99.1 Press release dated July 19, 1995 (Apache to sell Rocky Mountain Properties to Citation for $155 million). b. Reports filed on Form 8-K. During the fiscal quarter ended March 31, 1995, Apache filed a Current Report on Form 8-K and Amendment No. 1 on Form 8-K/A, each dated March 1, 1995 for: Item 2. Acquisition or Disposition of Assets-Registrant closed the purchase of the interest of Texaco Exploration and Production Inc. in approximately 315 oil and gas properties. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits-Relating to the Texaco transaction, Apache filed (i) the Statement of Combined Revenues and Direct Operating Expenses for the Oil and Gas Properties of Texaco Exploration and Production Inc. Sold to Apache, for the years ended December 31, 1993 and 1994; (ii) the Unaudited Pro Forma Consolidated Condensed Statement of Operations of Apache Corporation and Subsidiaries, as of December 31, 1994; and (iii) the Unaudited Pro Forma Consolidated Condensed Balance Sheet of Apache Corporation and Subsidiaries, as of December 31, 1994. 15 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 on Form 10-Q/A to be signed on its behalf by the undersigned thereto duly authorized. APACHE CORPORATION Dated: August 4, 1995 /s/ Mark A. Jackson --------------------------------------- Mark A. Jackson Vice President, Finance Dated: August 4, 1995 /s/ R. Kent Samuel --------------------------------------- R. Kent Samuel Controller and Chief Accounting Officer 16 18 EXHIBIT INDEX Exhibit No. 11.1 Computation of Earnings per Share. 27.1 Financial Data Table. 99.1 Press release dated July 19, 1995 (Apache to sell Rocky Mountain Properties to Citation for $155 million). EX-11.1 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.1 APACHE CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA)
For the Three Months Ended For the Three Months Ended March 31, 1995 March 31, 1994 -------------------------- ------------------------- Weighted Average Calculation: Net income $ 4,083 $ 8,225 ======== ======== Weight average shares outstanding 69,673 69,635 ======== ======== Net income per share, based on weight average common shares outstanding $ .06 $ .12 ======== ======== Primary Calculation: Net income $ 4,083 $ 8,225 Assumed conversion of 3.93-percent debentures 549 539 -------- -------- Net income, as adjusted $ 4,632 $ 8,764 ======== ======== Common Stock Equivalents: Weighted average common shares outstanding 69,673 69,635 Stock options, using the treasury stock method 87 204 Assumed conversion of 3.93-percent debentures 2,778 2,778 -------- -------- 72,538 72,617 ======== ======== Net income per common share primary $ .06 $ .12 ======== ========
The assumed conversion of the 6-percent convertible debentures due 2002 would be anti-dilutive for the first quarter of 1995. EX-27.1 3 FINANCIAL DATA SCHEDULE
5 APACHE CORPORATION AND SUBSIDIARIES RESTATED FINANCIAL DATA TABLE PURSUANT TO ARTICLE 5 OF REGULATION S-X 1,000 3-MOS DEC-31-1995 MAR-31-1995 20,406 0 117,290 0 12,418 160,934 4,134,754 (1,751,868) 2,582,464 149,846 1,274,808 88,534 0 0 803,261 2,582,464 143,189 167,718 112,478 136,235 0 0 16,203 6,498 2,415 4,083 0 0 0 4,083 .06 .06
EX-99.1 4 PRESS RELEASE DATED 07/19/95 1 EXHIBIT 99.1 (LETTERHEAD OF APACHE CORPORATION) CONTACTS: (MEDIA): TONY LENTINI (713/296-6227) DEBBIE SIEGFRIED (713/296-6218) (INVESTOR): ROGER PLANK (713/296-6106) FOR IMMEDIATE RELEASE --------------------- APACHE TO SELL ROCKY MOUNTAIN PROPERTIES TO CITATION FOR $155 MILLION Houston, July 19, 1995--Apache Corporation announced today that the company has signed an agreement to sell its Rocky Mountain properties to Houston-based Citation Oil & Gas Corp. for $155 million, subject to adjustment. Upon closing, approximately 5 percent of the sales price will be paid to Apache-managed interests. Apache will retain its assets in the Green River Basin of Colorado and Wyoming and in the San Juan Basin of Colorado and New Mexico. "With nearly $875 million of acquisitions, 1995 has been a time of extraordinary growth for us," said Apache Chairman and Chief Executive Raymond Plank. "Early in the year, we decided to concentrate on those areas that provide the greatest return to shareholders. Consistent with that strategic focus, in February we announced our intention to sell Apache's non-core Rocky Mountain assets." He said proceeds will be used to pay down debt. The transaction is subject to government and other approvals, with closing expected in late August. The assets include Apache's interests in 138 fields with approximately 1,600 active wells in Colorado, Montana, North and South Dakota, Utah and Wyoming. The properties' daily production is approximately 9,500 barrels of oil and 9 million cubic feet of gas. Following the sale, Apache plans to close its Denver office and integrate the remaining assets with its Permian Basin region located in Houston. Plank said that, including the Rocky Mountain divestiture, the company has closed on or signed agreements to sell $239 million of properties thus far in 1995. "We're well on our way toward our goal of reducing debt to 50 percent of total capitalization," Plank noted. Apache Corporation, with operations in North America and overseas, is one of the nation's larger independent gas and oil companies. Its securities are traded on the New York and Chicago stock exchanges under the symbol APA. -----END PRIVACY-ENHANCED MESSAGE-----