EX-99.1 2 h22012exv99w1.txt PRESS RELEASE DATED JANUARY 27, 2005 EXHIBIT 99.1 CONTACTS: (MEDIA): TONY LENTINI (713/296-6227) BILL MINTZ (713/296-7276) DAVID HIGGINS (713/296-6690) (INVESTOR): ROBERT DYE (713/296-6662) (WEB SITE): WWW.APACHECORP.COM FOR RELEASE AT 7:45 A.M. CENTRAL TIME APACHE'S 2004 EARNINGS CLIMB 49 PERCENT TO RECORD $1.7 BILLION, OR $5.03 PER SHARE, AS CASH FROM OPERATIONS, PRODUCTION, RESERVES ALSO REACH NEW RECORDS FOURTH-QUARTER EARNINGS UP 90 PERCENT TO $1.52 PER SHARE Houston, Jan. 27, 2005 - Apache Corporation (NYSE, Nasdaq: APA) today reported that record production combined with continued strong commodity prices drove 2004 net income to a record $1.7 billion, or $5.03 per diluted common share, up from $1.1 billion, or $3.43 per share, in 2003. In the fourth quarter, Apache recorded net income of $507 million, or $1.52 per share, up 90 percent on a per-share basis from the year-earlier period. Apache earned $260 million, or 80 cents per share, in the fourth quarter of 2003. "We added 467 million barrels of oil equivalent from a capital investment of $3.4 billion, which fueled 7 percent production growth," said G. Steven Farris, president, chief executive officer and chief operating officer. "With that growth and strong commodity prices, Apache turned in a very good year. We enter 2005 with record production and a strong portfolio of drilling opportunities across our core areas." -more- APACHE'S 2004 EARNINGS CLIMB 49 PERCENT - ADD ONE Apache's 2004 operational and financial highlights included: o Cash from operations before changes in operating assets and liabilities totaled $3.4 billion, up 22 percent from 2003. In the fourth quarter, cash from operations totaled $1.1 billion, up from $786 million in the year-earlier period. (Cash from operations before changes in operating assets and liabilities is a non-GAAP measure; see reconciliation below.) o Proved reserves increased for the 19th consecutive year, climbing 17 percent or 280 million barrels of oil equivalent (MMboe) after production and revisions, to 1.94 billion barrels of oil equivalent. o For the year, Apache produced an average of 448,000 barrels of oil equivalent (boe) per day, up from 417,000 boe per day in 2003. Apache's production has increased in 25 of the last 26 years. o In total, Apache added 467 MMboe of proved reserves through drilling and acquisitions during 2004, substantially more than the 164 MMboe produced during the year. Apache added proved reserves of 335 MMboe from exploration and development activities - the most ever - and 132 MMboe through acquisitions. The company spent $2.3 billion on exploration and development activities and $1.1 billion on acquisitions. o At year-end, Apache's debt was 24 percent of total capitalization despite $3.4 billion in spending for acquisitions and exploration and development activities. In the fourth quarter, Apache's production of 461,000 boe per day was up slightly from the third quarter despite the lingering effects from Hurricane Ivan in the Gulf of Mexico, which curtailed production by an estimated 9,700 barrels of oil and 34 million cubic feet (MMcf) of gas per day during the quarter. -more- APACHE'S 2004 EARNINGS CLIMB 49 PERCENT - ADD TWO Apache's fourth-quarter financial results also included $44 million in other income - business interruption insurance for reimbursement for production lost because of the storm. Apache expects to file an additional claim for production curtailments continuing into 2005. Apache also incurred $12 million in additional expenses related to storm damage. A change in accounting rules concerning stock-based compensation has reduced the earlier projected fourth-quarter expense associated with achievement of goals in Apache's share appreciation plan to less than 1 cent per share. More than 1,900 employees were awarded shares of Apache stock after the company's share price doubled over the four-year term of the plan, which ended on Dec. 31, 2004. Non-executive employees were awarded more than 90 percent of the incentives. Apache Corporation is a large oil and gas independent with core operations in the United States, Canada, Egypt, the United Kingdom North Sea and Western Australia. -end- NOTE: Apache will webcast its conference call live at 1 p.m. Central Time on Jan. 27, 2005, from its Web site, www.apachecorp.com. The replay will be available on the Web site or by dialing (719) 457-0820 and using pass code 105392. The telephone replay will be available for one week beginning at approximately 5 p.m. on Jan. 27. 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 production, operating costs, exploration and acquisition activities. 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. APACHE CORPORATION FINANCIAL INFORMATION (In thousands, except per share data)
FOR THE QUARTER FOR THE YEAR ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------------- ------------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- REVENUES AND OTHER: Oil and gas production revenues $1,493,723 $1,069,413 $5,308,017 $4,198,920 Other 41,180 (4,620) 24,560 (8,621) ---------- ---------- ---------- ---------- 1,534,903 1,064,793 5,332,577 4,190,299 ---------- ---------- ---------- ---------- OPERATING EXPENSES: Depreciation, depletion and amortization 326,667 293,696 1,222,152 1,073,286 Asset retirement obligation accretion 13,337 10,663 46,060 37,763 International impairments -- 12,813 -- 12,813 Lease operating costs 247,991 184,668 864,378 699,663 Gathering and transportation costs 21,563 16,520 82,261 60,460 Severance and other taxes 16,057 22,910 93,748 121,793 General and administrative 49,373 45,427 173,194 138,524 China litigation provision -- -- 71,216 -- ---------- ---------- ---------- ---------- Total operating expenses 674,988 586,697 2,553,009 2,144,302 ---------- ---------- ---------- ---------- OPERATING INCOME 859,915 478,096 2,779,568 2,045,997 FINANCING COSTS: Interest expense 45,595 41,182 168,090 169,090 Amortization of deferred loan costs 657 539 2,471 2,163 Capitalized interest (11,797) (14,819) (50,748) (52,891) Interest income (1,533) (541) (3,328) (3,290) ---------- ---------- ---------- ---------- New financing costs 32,922 26,361 116,485 115,072 ---------- ---------- ---------- ---------- Preferred interests of subsidiaries -- -- -- 8,688 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 826,993 451,735 2,663,083 1,922,257 Provision for income taxes 317,248 190,121 993,012 827,004 ---------- ---------- ---------- ---------- INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE 509,745 261,614 1,670,071 1,095,253 Cumulative effect of change in accounting principle, net of tax (1,317) -- (1,317) 26,632 ---------- ---------- ---------- ---------- NET INCOME 508,428 261,614 1,668,754 1,121,885 Preferred stock dividends 1,420 1,420 5,680 5,680 ---------- ---------- ---------- ---------- INCOME ATTRIBUTABLE TO COMMON STOCK $ 507,008 $ 260,194 $1,663,074 $1,116,205 ========== ========== ========== ========== INCOME ATTRIBUTABLE TO COMMON STOCK BEFORE CHANGE IN ACCOUNTING PRINCIPLE $ 508,325 $ 260,194 $1,664,391 $1,089,573 ========== ========== ========== ========== BASIC NET INCOME PER COMMON SHARE Before change in accounting principle $ 1.55 $ 0.80 $ 5.10 $ 3.38 ========== ========== ========== ========== After change in accounting principle $ 1.55 $ 0.80 $ 5.10 $ 3.46 ========== ========== ========== ========== DILUTED NET INCOME PER COMMON SHARE Before change in accounting principle $ 1.53 $ 0.80 $ 5.04 $ 3.35 ========== ========== ========== ========== After change in accounting principle $ 1.52 $ 0.80 $ 5.03 $ 3.43 ========== ========== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 327,203 324,248 326,046 322,498 ========== ========== ========== ==========
APACHE CORPORATION FINANCIAL INFORMATION (In thousands)
FOR THE QUARTER FOR THE YEAR ENDED DECEMBER 31, ENDED DECEMBER 31, ---------------------------- --------------------------- 2004 2003 2004 2003 ---------- ----------- ----------- ----------- COSTS INCURRED: North America exploration and development $ 447,096 $ 267,448 $ 1,511,968 $ 986,557 International exploration and development 277,859 139,386 829,153 466,215 ---------- ----------- ----------- ----------- $ 724,955 $ 406,834 $ 2,341,121 $ 1,452,772 ========== =========== =========== =========== Acquisitions: Oil and gas properties $ 573,019 $ 66,794 $ 1,063,851 $ 1,568,106 Gas gathering, transmission and processing facilities -- -- -- 5,484 ---------- ----------- ----------- ----------- $ 573,019 $ 66,794 1,063,851 1,573,590 ========== =========== =========== =========== Capitalized interest $ 11,797 $ 14,819 $ 50,748 $ 52,891 ========== =========== =========== =========== Asset retirement costs $ 55,836 $ (36,100) $ 185,961 $ 365,953 ========== =========== =========== ===========
DECEMBER 31, DECEMBER 31, 2004 2003 ------------ ------------ BALANCE SHEET DATA: Current Assets $ 1,348,782 $ 899,072 Property and Equipment, net 13,860,359 11,260,085 Goodwill 189,252 189,252 Other Assets 104,087 67,717 ----------- ----------- Total Assets $15,502,480 $12,416,126 =========== =========== Current Liabilities $ 1,282,891 $ 820,378 Long-Term Debt 2,588,390 2,326,966 Deferred Credits and Other Noncurrent Liabilities 3,426,778 2,735,984 Shareholders' Equity 8,204,421 6,532,798 ----------- ----------- Total Liabilities and Shareholders' Equity $15,502,480 $12,416,126 =========== =========== Common shares outstanding at end of period 327,458 324,497
NON-GAAP FINANCIAL MEASURES: 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 YEAR ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------------- ---------------------------- 2004 2003 2004 2003 ---------- -------- ---------- ---------- Net cash provided by operating activities $ 910,981 $626,791 $3,231,519 $2,705,900 Changes in operating assets and liabilities 173,773 159,309 193,835 94,658 ---------- -------- ---------- ---------- Cash from operations before changes in operating assets and liabilities $1,084,754 $786,100 $3,425,354 $2,800,558 ========== ======== ========== ==========
APACHE CORPORATION FINANCIAL INFORMATION
FOR THE QUARTER FOR THE YEAR ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------------------ ----------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- FINANCIAL DATA (In thousands, except per share data): Revenues and other $ 1,534,903 $ 1,064,793 $ 5,332,577 $ 4,190,299 =========== =========== =========== =========== Income Attributable to Common Stock $ 507,008 $ 260,194 $ 1,663,074 $ 1,116,205 =========== =========== =========== =========== Basic Net Income Per Common Share: Before change in accounting principle $ 1.55 $ 0.80 $ 5.10 $ 3.38 =========== =========== =========== =========== After change in accounting principle $ 1.55 $ 0.80 $ 5.10 $ 3.38 =========== =========== =========== =========== Diluted Net Income Per Common Share: Before change in accounting principle $ 1.53 $ 0.80 $ 5.04 $ 3.35 =========== =========== =========== =========== After change in accounting principle $ 1.52 $ 0.80 $ 5.03 $ 3.43 =========== =========== =========== =========== Weighted Average Common Shares Outstanding 327,203 324,248 326,046 322,498 =========== =========== =========== =========== Diluted Shares Outstanding 332,878 327,280 330,477 325,330 =========== =========== =========== ===========
PRODUCTION AND PRICING DATA: NATURAL GAS VOLUME - Mcf PER DAY United States 636,559 685,704 646,619 665,156 Canada 340,590 328,089 326,965 318,528 Egypt 143,777 116,579 137,737 113,554 Australia 116,681 121,881 118,108 111,061 North Sea 2,172 1,400 1,871 1,714 Argentina 3,282 6,186 3,808 7,144 --------- --------- --------- --------- Total 1,243,061 1,259,839 1,235,108 1,217,157 ========= ========= ========= ========= AVERAGE NATURAL GAS PRICE PER MCF United States $ 5.82 $ 4.70 $ 5.45 $ 5.22 Canada 5.84 4.16 5.30 4.69 Egypt 4.19 4.13 4.35 4.18 Australia 1.69 1.57 1.65 1.44 North Sea 7.87 5.94 5.53 2.77 Argentina 0.77 0.46 0.65 0.47 Total 5.24 4.18 4.91 4.61 OIL VOLUME - BARRELS PER DAY United States 70,144 71,982 67,872 69,404 Canada 24,993 25,450 25,305 25,220 Egypt 53,603 47,982 52,183 47,551 Australia 22,593 26,553 25,174 30,589 North Sea 61,680 40,950 52,836 29,260 China 8,960 7,943 7,583 2,791 Argentina 638 557 566 579 --------- --------- --------- --------- Total 242,611 221,417 231,519 205,394 ========= ========= ========= ========= AVERAGE OIL PRICE PER BARREL United States $ 44.03 $ 27.38 $ 38.75 $ 27.48 Canada 44.14 28.58 38.57 29.06 Egypt 41.78 28.64 37.35 27.64 Australia 45.36 31.35 41.96 29.87 North Sea 26.29 24.13 24.22 25.40 China 33.16 26.82 32.88 26.33 Argentina 31.89 29.53 32.89 29.23 Total 38.72 27.65 35.24 27.76 NGL VOLUME - BARRELS PER DAY United States 8,416 8,504 8,268 7,578 Canada 2,359 1,515 2,588 1,565 --------- --------- --------- --------- Total 10,775 10,019 10,856 9,143 ========= ========= ========= ========= AVERAGE NGL PRICE PER BARREL United States $ 30.76 $ 23.50 $ 26.66 $ 21.70 Canada 29.62 20.51 24.44 19.25 Total 30.51 23.05 26.13 21.28