EX-99.1 2 h32609exv99w1.txt PRESS RELEASE DATED FEBRUARY 2, 2006 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 2005 EARNINGS CLIMB 56 PERCENT TO $7.84 PER SHARE; PRODUCTION, RESERVES ALSO REACH NEW HIGHS FOURTH-QUARTER EARNINGS UP 55 PERCENT TO $2.35 PER SHARE DESPITE HURRICANE IMPACT Houston, Feb. 2, 2006 - Apache Corporation (NYSE, Nasdaq: APA) today reported 2005 earnings rose 56 percent to a record $7.84 per diluted common share, or $2.6 billion, fueled by record-high oil and natural gas prices. Apache earned $5.03 per share, or $1.7 billion, in 2004. In the fourth quarter, Apache earned $787 million, or $2.35 per share, up 55 percent from the prior-year period, a record, despite the continuing impact of Hurricanes Katrina and Rita on Gulf of Mexico operations. "Overall, we are pleased with Apache's performance in 2005," said G. Steven Farris, president, chief executive officer and chief operating officer. "Despite losing approximately 5 percent of our production to hurricanes, we were able to increase worldwide production by 1.4 percent. We replaced 216 percent of our 2005 production, adding 352 million barrels of oil equivalent (boe) - 98 percent through the drill bit, with single-digit finding costs. Our year-end reserves increased 9.3 percent to a record 2.1 billion boe - the 20th consecutive annual increase." Apache spent $3.4 billion on acquisitions and exploration and development capital in 2005, excluding a $547 million non-cash accrual for future asset retirement obligations. "We are positive about the outlook for the year ahead," Farris said. "We started 2006 by completing our $269 million acquisition of Permian Basin assets from Amerada Hess and agreeing to purchase Pioneer's assets in Argentina for $675 million. At year-end, we had restored 85 percent of our gross operated gas production and 67 of gross operated oil production in the Gulf coast Region. "We see potential for production growth in every one of our core areas," Farris said. "We anticipate 2006 production will grow 6 percent to 10 percent above 2005 levels, excluding the Pioneer transaction in Argentina. "Our Gulf Coast Region has been a key core area for Apache," Farris said. "It had the highest gross margin of any of our regions in 2005 and generates exceptional rates of return on capital invested. It continues to be an integral part of our overall portfolio." In 2005, Apache drilled 2,383 wells with a 91 percent success rate, Farris said. "Barring a major political or economic event, such as the counterproductive adoption of a windfall profits tax, we should be more active in 2006." Apache is planning wildcat wells in the North Sea outside the Forties Field, the Exmouth Basin in Australia, Northeast British Columbia in Canada and the Western Desert of Egypt, as well as possible wells targeting deep gas formations on Apache's acreage in the Gulf of Mexico, Farris said. Apache's liquid hydrocarbon production increased 1 percent to 243,900 barrels per day during 2005 and natural gas production rose 2 percent, to 1.26 billion cubic feet (Bcf) per day, marking the 26th time that Apache has increased production in the last 27 years. Apache's fourth-quarter worldwide production was below prior-year levels as a result of hurricane-related shut-ins, which peaked during the period. Apache's liquids production averaged 227,100 barrels of liquids per day during the quarter, 10 percent below the prior-year period, and 1.23 Bcf of gas, 1 percent below the year-earlier quarter. Cash from operations before changes in operating assets and liabilities totaled $4.7 billion, up 39 percent from 2004. In the fourth quarter, cash from operations totaled $1.4 billion, up from $1.1 billion in the year-earlier period. (Cash from operations before changes in operating assets and liabilities is a non-GAAP measure; see reconciliation below.) Apache's fourth-quarter financial results included $79 million in claims for business interruption insurance for production lost because of the hurricanes. Apache incurred $12 million of storm-related expenses including insurance premiums and additional lease operating expenses. At year-end, Apache's debt was 17 percent of total capitalization. Apache was established in 1954 committed to profitable growth for the benefit of our shareholders; the same goal motivates our people today. -end- NOTE: Apache will webcast its conference call live at 1 p.m. Central Time on Feb. 2, 2006, 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 853853. The telephone replay will be available for one week beginning at approximately 5 p.m. on Feb. 2. 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 ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- ------------------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- REVENUES AND OTHER: Oil and gas production revenues $2,004,363 $1,493,723 $7,457,291 $5,308,017 Other 97,310 41,180 126,953 24,560 ---------- ---------- ---------- ---------- 2,101,673 1,534,903 7,584,244 5,332,577 ---------- ---------- ---------- ---------- OPERATING EXPENSES: Depreciation, depletion and amortization 360,099 326,667 1,415,682 1,222,152 Asset retirement obligation accretion 13,704 13,337 53,720 46,060 Lease operating costs 271,879 247,991 1,040,475 864,378 Gathering and transportation costs 26,731 21,563 100,260 82,261 Severance and other taxes 144,085 16,057 453,258 93,748 General and administrative 45,812 49,373 198,272 173,194 China litigation provision -- -- -- 71,216 ---------- ---------- ---------- ---------- Total operating expenses 862,310 674,988 3,261,667 2,553,009 ---------- ---------- ---------- ---------- OPERATING INCOME 1,239,363 859,915 4,322,577 2,779,568 FINANCING COSTS: Interest expense 41,829 45,595 175,419 168,090 Amortization of deferred loan costs 522 657 3,748 2,471 Capitalized interest (14,335) (11,797) (56,988) (50,748) Interest income (1,853) (1,533) (5,856) (3,328) ---------- ---------- ---------- ---------- Net financing costs 26,163 32,922 116,323 116,485 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 1,213,200 826,993 4,206,254 2,663,083 Provision for income taxes 424,978 317,248 1,582,524 993,012 ---------- ---------- ---------- ---------- INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE 788,222 509,745 2,623,730 1,670,071 Cumulative effect of change in accounting principle, net of tax -- (1,317) -- (1,317) ---------- ---------- ---------- ---------- NET INCOME 788,222 508,428 2,623,730 1,668,754 Preferred stock dividends 1,420 1,420 5,680 5,680 ---------- ---------- ---------- ---------- INCOME ATTRIBUTABLE TO COMMON STOCK $ 786,802 $ 507,008 $2,618,050 $1,663,074 ========== ========== ========== ========== INCOME ATTRIBUTABLE TO COMMON STOCK BEFORE CHANGE IN ACCOUNTING PRINCIPLE $ 786,802 $ 508,325 $2,618,050 $1,664,391 ========== ========== ========== ========== BASIC NET INCOME PER COMMON SHARE Before change in accounting principle $ 2.39 $ 1.55 $ 7.96 $ 5.10 ========== ========== ========== ========== After change in accounting principle $ 2.39 $ 1.55 $ 7.96 $ 5.10 ========== ========== ========== ========== DILUTED NET INCOME PER COMMON SHARE Before change in accounting principle $ 2.35 $ 1.53 $ 7.84 $ 5.04 ========== ========== ========== ========== After change in accounting principle $ 2.35 $ 1.52 $ 7.84 $ 5.03 ========== ========== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 329,859 327,203 328,929 326,046 ========== ========== ========== ==========
APACHE CORPORATION FINANCIAL INFORMATION (In thousands)
FOR THE QUARTER ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- ------------------------------- 2005 2004 2005 2004 -------- -------- ---------- ---------- COSTS INCURRED: North America exploration and development $602,807 $447,096 $2,260,136 $1,511,968 International exploration and development 233,531 277,859 1,107,696 829,153 -------- -------- ---------- ---------- $836,338 $724,955 $3,367,832 $2,341,121 ======== ======== ========== ========== Oil and gas property acquisitions $ 3,402 $573,019 $ 39,228 $1,063,851 ======== ======== ========== ========== Capitalized interest $ 14,335 $ 11,797 $ 56,988 $ 50,748 ======== ======== ========== ========== Asset retirement costs $469,963 $ 56,927 $ 546,669 $ 193,953 ======== ======== ========== ==========
DECEMBER 31, 2005 DECEMBER 31, 2004 ----------------- ----------------- BALANCE SHEET DATA: Current Assets $ 2,162,077 $ 1,348,782 Property and Equipment, net 16,791,340 13,860,359 Goodwill 189,252 189,252 Other Assets 129,127 104,087 ----------- ----------- Total Assets $19,271,796 $15,502,480 =========== =========== Current Liabilities $ 2,186,564 $ 1,282,891 Long-Term Debt 2,191,954 2,588,390 Deferred Credits and Other Noncurrent Liabilities 4,352,063 3,426,778 Shareholders' Equity 10,541,215 8,204,421 ----------- ----------- Total Liabilities and Shareholders' Equity $19,271,796 $15,502,480 =========== =========== Common shares outstanding at end of period 330,121 327,458
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 ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- ------------------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Net cash provided by operating activities $1,172,174 $ 910,981 $4,332,270 $3,231,519 Changes in operating assets and liabilities 179,882 173,773 412,063 193,835 ---------- ---------- ---------- ---------- Cash from operations before changes in operating assets and liabilities $1,352,056 $1,084,754 $4,744,333 $3,425,354 ========== ========== ========== ==========
APACHE CORPORATION FINANCIAL INFORMATION
FOR THE QUARTER ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31, ---------------------------------- ------------------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- FINANCIAL DATA (In thousands, except per share data): Revenues and other $2,101,673 $1,534,903 $7,584,244 $5,332,577 ========== ========== ========== ========== Income Attributable to Common Stock $ 786,802 $ 507,008 $2,618,050 $1,663,074 ========== ========== ========== ========== Basic Net Income Per Common Share: Before change in accounting principle $ 2.39 $ 1.55 $ 7.96 $ 5.10 ========== ========== ========== ========== After change in accounting principle $ 2.39 $ 1.55 $ 7.96 $ 5.10 ========== ========== ========== ========== Diluted Net Income Per Common Share: Before change in accounting principle $ 2.35 $ 1.53 $ 7.84 $ 5.04 ========== ========== ========== ========== After change in accounting principle $ 2.35 $ 1.52 $ 7.84 $ 5.03 ========== ========== ========== ========== Weighted Average Common Shares Outstanding 329,859 327,203 328,929 326,046 ========== ========== ========== ========== Diluted Shares Outstanding 334,307 332,878 333,749 330,477 ========== ========== ========== ========== PRODUCTION AND PRICING DATA: OIL VOLUME - BARRELS PER DAY United States 49,677 70,144 66,268 67,872 Canada 23,310 24,993 22,499 25,305 Egypt 58,202 53,603 55,141 52,183 Australia 15,544 22,593 15,379 25,174 North Sea 67,036 61,680 65,488 52,836 China 4,892 8,960 8,132 7,583 Argentina 1,424 638 1,163 566 ---------- ---------- ---------- ---------- Total 220,085 242,611 234,070 231,519 ========== ========== ========== ========== AVERAGE OIL PRICE PER BARREL United States $ 49.03 $ 44.03 $ 47.97 $ 38.75 Canada 55.70 44.14 53.05 38.57 Egypt 54.80 41.78 53.69 37.35 Australia 56.31 45.36 57.61 41.96 North Sea 54.91 26.29 53.00 24.22 China 54.82 33.16 44.24 32.88 Argentina 38.82 31.89 37.54 32.89 Total 53.63 38.72 51.66 35.24 NATURAL GAS VOLUME - MCF PER DAY United States 513,695 636,559 597,481 646,619 Canada 386,827 340,590 371,917 326,965 Egypt 197,972 143,777 165,710 137,737 Australia 130,823 116,681 123,295 118,108 North Sea 2,360 2,172 2,306 1,871 Argentina 3,030 3,282 3,114 3,808 ---------- ---------- ---------- ---------- Total 1,234,707 1,243,061 1,263,823 1,235,108 ========== ========== ========== ========== AVERAGE NATURAL GAS PRICE PER MCF United States $ 9.07 $ 5.82 $ 7.22 $ 5.45 Canada 10.12 5.84 7.29 5.30 Egypt 4.41 4.19 4.59 4.35 Australia 1.68 1.69 1.72 1.65 North Sea 13.60 7.87 9.17 5.53 Argentina 1.11 0.77 1.14 0.65 Total 7.86 5.24 6.35 4.91 NGL VOLUME - BARRELS PER DAY United States 4,655 8,416 7,553 8,268 Canada 2,378 2,359 2,235 2,588 ---------- ---------- ---------- ---------- Total 7,033 10,775 9,788 10,856 ========== ========== ========== ========== AVERAGE NGL PRICE PER BARREL United States $ 39.75 $ 30.76 $ 32.44 $ 26.66 Canada 40.56 29.62 31.07 24.44 Total 40.02 30.51 32.13 26.13
APACHE CORPORATION OIL & GAS RESERVE INFORMATION For the Year Ended December 31, 2005 OIL
Other U.S. Canada Egypt Australia North Sea Int'l Total --------- --------- --------- --------- --------- ------ --------- Balance - Dec 31, 2004 458,477 158,261 77,984 54,312 174,188 8,818 932,040 Extensions 27,055 16,531 37,431 2,623 44,977 1,307 129,924 Purchases 2,020 1,874 -- -- -- -- 3,894 Revisions 4,039 2,591 (4,396) -- 1 (65) 2,170 Production (26,945) (9,028) (20,126) (5,613) (23,904) (3,392) (89,008) Sales (3,078) (32) -- -- -- -- (3,110) --------- --------- --------- ------- ------- ------ --------- Balance - Dec 31, 2005 461,568 170,197 90,893 51,322 195,262 6,668 975,910 ========= ========= ========= ======= ======= ====== =========
GAS
Other U.S. Canada Egypt Australia North Sea Int'l Total --------- --------- --------- --------- --------- ------ --------- Balance - Dec 31, 2004 2,405,580 1,984,371 934,492 694,318 6,804 2,364 6,027,929 Extensions 388,844 526,876 241,420 175,502 1,441 1,350 1,335,433 Purchases 17,792 5,749 -- -- -- -- 23,541 Revisions 23,470 (13,717) (35,071) -- 72 17 (25,229) Production (218,080) (135,749) (60,484) (45,003) (842) (1,137) (461,295) Sales (51,419) (938) -- -- -- -- (52,357) --------- --------- --------- ------- ------- ------ --------- Balance - Dec 31, 2005 2,566,187 2,366,592 1,080,357 824,817 7,475 2,594 6,848,022 ========= ========= ========= ======= ======= ====== =========
TOTAL BOE
Other U.S. Canada Egypt Australia North Sea Int'l Total --------- --------- --------- --------- --------- ------ --------- Balance - Dec 31, 2004 859,407 488,990 233,733 170,032 175,322 9,212 1,936,695 Extensions 91,862 104,344 77,668 31,873 45,217 1,532 352,496 Purchases 4,985 2,832 -- -- -- -- 7,818 Revisions 7,951 305 (10,241) -- 13 (62) (2,035) Production (63,292) (31,653) (30,207) (13,114) (24,044) (3,582) (165,890) Sales (11,648) (188) -- -- -- -- (11,836) --------- --------- --------- ------- ------- ------ --------- Balance - Dec 31, 2005 889,266 564,629 270,953 188,792 196,508 7,100 2,117,248 ========= ========= ========= ======= ======= ====== ========= Net Change (Growth) 29,859 75,639 37,220 18,760 21,186 (2,112) 180,553 ========= ========= ========= ======= ======= ====== ========= 2005 BOE Percentages 42.0% 26.7% 12.8% 8.9% 9.3% 0.3% 100.0% ========= ========= ========= ======= ======= ====== =========
APACHE CORPORATION COSTS INCURRED For the Year Ended December 31, 2005 RESERVE ADDITIONS (BOE'S)
Central Gulf Coast U.S. Canada Egypt Australia North Sea Other Int'l Total ------- ---------- ------- ------- ------- --------- --------- ----------- ------- Extensions 72,071 19,791 91,862 104,344 77,668 31,873 45,217 1,532 352,496 Revisions 7,821 130 7,951 305 (10,241) -- 13 (62) (2,035) Purchases 2,101 2,884 4,985 2,832 -- -- -- -- 7,818 ------ ------ ------- ------- ------- ------ ------ ----- ------- Total Adds 81,993 22,805 104,798 107,481 67,427 31,873 45,230 1,470 358,279 ====== ====== ======= ======= ======= ====== ====== ===== =======
COSTS INCURRED
Central Gulf Coast U.S. Canada Egypt Australia North Sea Other Int'l Total ------- ---------- --------- --------- ------- --------- --------- ----------- --------- Exploration & Development 365,995 706,045 1,072,040 1,188,096 352,324 217,816 489,072 48,484 3,367,832 Acquisitions 12,660 808 13,468 24,252 -- -- -- 1,508 39,228 ------- ------- --------- --------- ------- ------- ------- ------ --------- Total 378,655 706,853 1,085,508 1,212,348 352,324 217,816 489,072 49,992 3,407,060 ======= ======= ========= ========= ======= ======= ======= ====== =========