-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P2qcwJoDnEiofqCgsuYo7rQNfkVsNr+izE644I69x1HgRU1wAWNaUIkY5SbVUggk OFSuGGR4mUcHphUanZ/JCA== 0000950129-03-003599.txt : 20030714 0000950129-03-003599.hdr.sgml : 20030714 20030714090420 ACCESSION NUMBER: 0000950129-03-003599 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030624 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030714 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04300 FILM NUMBER: 03784608 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 8-K 1 h07408e8vk.txt APACHE CORPORATION - JUNE 24, 2003 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): June 24, 2003 APACHE CORPORATION (Exact name of registrant as specified in Charter) DELAWARE 1-4300 41-0747868 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification Number) ONE POST OAK CENTRAL 2000 POST OAK BOULEVARD SUITE 100 HOUSTON, TEXAS 77056-4400 (Address of Principal Executive Offices) Registrant's telephone number, including area code: (713) 296-6000 =============================================================================== ITEM 5. OTHER EVENTS On June 24, 2003, Apache Corporation issued a press release announcing that it will begin directly marketing its U.S. natural gas production, beginning with its July production. Apache also announced that Cinergy Marketing and Trading, LLC and Apache had terminated the marketing arrangement between the two companies and dismissed the arbitration pending between them. This news release is filed as Exhibit 99.1 to this report. On July 3, 2003, Apache announced that it had acquired producing properties on the Outer Continental Shelf of the Gulf of Mexico from Shell Exploration and Production Company for $200 million, subject to normal post-closing adjustments, including adjustment for the exercise by third parties of preferential purchase rights. The properties were subject to a volumetric production payment, which was sold by Shell to Morgan Stanley Capital Group, Inc. for $300 million. Accordingly, Apache will not report any of the volumes delivered to Morgan Stanley as reserves or production. Apache is recording a liability of approximately $60 million, representing the estimated costs to operate and deliver the production to Morgan Stanley. Apache will book proved reserves of 124.6 billion cubic feet (Bcf) of natural gas and 6.6 million barrels of oil, (which is net of the 68.4 Bcf equivalent production payment as of the acquisition date). The news release announcing the acquisition is filed as Exhibit 99.2 to this report. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) EXHIBITS. EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Press Release, dated June 24, 2003, "Apache to Expand Gas Marketing Operations" 99.2 Press Release, dated July 3, 2003, "Apache Buys Gulf of Mexico Properties from Shell for $200 Million" 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. APACHE CORPORATION Date: July 14, 2003 By: /s/ ROGER B. PLANK ------------------------------------- Roger B. Plank Executive Vice President and Chief Financial Officer 3 INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Press Release, dated June 24, 2003, "Apache to Expand Gas Marketing Operations" 99.2 Press Release, dated July 3, 2003, "Apache Buys Gulf of Mexico Properties from Shell for $200 Million" EX-99.1 3 h07408exv99w1.txt PRESS RELEASE - EXPAND GAS MARKETING OPERATIONS EXHIBIT 99.1 CONTACTS: - --------- (MEDIA): TONY LENTINI (713) 296-6227 BILL MINTZ (713) 296-7276 (INVESTOR): ROBERT DYE (713) 296-6662 (WEB SITE): WWW.APACHECORP.COM FOR RELEASE AT 8 A.M. CENTRAL TIME ---------------------------------- APACHE TO EXPAND GAS MARKETING OPERATIONS Houston, June 24, 2003 - Apache Corporation (NYSE: APA) today announced that it will begin directly marketing its U.S. natural gas production, beginning with its July production. The company has marketed its international oil and gas production, Canadian gas and North American liquid hydrocarbons for some time. Apache's U.S. natural gas production has been marketed by Cincinnati-based Cinergy for the last five years. Apache and Cinergy have agreed to terminate that relationship and also dismissed the arbitration pending between them. "Five years ago, Apache was producing around 500 million cubic feet (MMcf) of gas per day in the United States and Canada and our arrangement with Cinergy made sense," said G. Steven Farris, chief executive officer and president. "Today, with more than 1 billion cubic feet (Bcf) per day of gas production in North America and significant changes in the gas marketing arena, it is time for Apache to market its own gas." -over- APACHE MARKETING OPERATIONS--ADD 1 Including gas from other producers, Apache will market approximately 1.2 Bcf of gas per day in North America: approximately 830 million cubic feet (MMcf) per day in the United States and about 420 MMcf per day in Canada. The company has established an oil and gas marketing department headed by Janine McArdle, a corporate vice president with an extensive energy marketing background. "We've put together a great team and we are eager to get started," McArdle said. "We want to get closer to our customers and provide them with the services they need," McArdle said. "In this new era of gas marketing, we believe more direct interaction between producers and consumers is good for both ends of the energy chain." Apache Corporation is a large oil and gas independent with core operations in the United States, Canada, Egypt, the United Kingdom North Sea, and Australia. -end- EX-99.2 4 h07408exv99w2.txt PRESS RELEASE - BUYS GULF OF MEXICO PROPERTIES EXHIBIT 99.2 CONTACTS: - --------- (MEDIA): TONY LENTINI (713) 296-6227 BILL MINTZ (713) 296-7276 (INVESTOR): ROBERT DYE (713) 296-6662 (WEB SITE): WWW.APACHECORP.COM FOR RELEASE AT 10:58 A.M. CENTRAL TIME APACHE BUYS GULF OF MEXICO SHELF PROPERTIES FROM SHELL FOR $200 MILLION Houston, July 3, 2003 - Apache Corporation (NYSE: APA) today announced that it has completed the acquisition of producing properties on the Outer Continental Shelf of the Gulf of Mexico from Shell Exploration and Production Company for $200 million, subject to normal post-closing adjustments, including preferential rights. The acquisition includes 26 fields covering 50 blocks (approximately 209,000 acres) and interests in two onshore gas plants. Apache will operate 15 of the fields with 91 percent of the production. Apache will book proved reserves of 124.6 billion cubic feet (Bcf) of natural gas and 6.6 million barrels of oil at a cost of approximately $1.22 per thousand cubic feet of gas equivalent (Mcfe). Prior to the transaction, Morgan Stanley paid Shell $300 million to acquire an overriding royalty interest in a portion of the lower-risk reserves to be produced over the next four years. Apache acquired the remaining reserves at a low cost per Mcfe and retains all of the potential upside from future exploration and development activities. Apache's acquired production for the last six months of 2003 is expected to average 70.4 million cubic feet of gas and 4,600 barrels of oil per day. "We are pleased to have negotiated another mutually beneficial transaction with Shell," said Apache Chief Executive Officer and President G. Steven Farris. "These assets lay down well with our existing Gulf of Mexico properties. We will not have to add additional staff and we expect to create efficiencies in our field operations. The Gulf Coast enjoys the highest netback natural gas pricing in North America. With the current shortage of natural gas, we are hopeful of adding production to help bring on new supplies." -over- APACHE GULF OF MEXICO ACQUISITION--1 Farris said, "These assets have been capital-constrained for several years. Just as with the Gulf of Mexico property package we purchased from Shell in May 1999, we plan to invest money to maximize production and add new reserves." In the May 1999 transaction, Apache paid Shell $716 million and has invested another $550 million in exploitation activities. "By year-end 2002, we had recouped 91 percent of our total investment and still had 74 percent of the proved reserves that we booked at the time of the acquisition," Farris said. "Morgan Stanley's acquisition of the high-value, low-risk barrels enables us to concentrate our capital and abilities on adding reserves and value to mature fields, an Apache core competence," Farris said. Shell's sale of an overriding royalty interest to Morgan Stanley is commonly known in the industry as a volumetric production payment. Under its terms, Morgan Stanley is to receive a fixed volume of 68.4 Bcf equivalent estimated to be produced over the next four years. These reserves will not be booked by Apache. Overriding royalties are not burdened by production costs and therefore Apache will record a $58 million liability for the future cost to produce and deliver these volumes to Morgan Stanley. These costs will be amortized as the volumes are produced. Apache Corporation is a large oil and gas independent with core operations in the United States, Canada, the UK North Sea, Egypt and Australia. -end- For more information about this transaction, please go to Apache's Web site, www.apachecorp.com. Apache will webcast its conference call to discuss this transaction at 10 a.m. Central time on Monday, July 7, 2003. The conference call also will be archived on the Apache Web site and will be available for telephone replay for one week beginning at approximately 1 p.m. on Monday, July 7. To listen to the replay, please call (719) 457-0820 and provide passcode number 344475. This news release contains certain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding Apache's reserves, reserve life, production, exploration potential, and capital expenditures. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions and uncertainties. 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. -----END PRIVACY-ENHANCED MESSAGE-----