EX-99.1 2 h64689exv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
             
CONTACTS:
            
(Media):
  Bill Mintz   (713) 296-7276    
 
            
(Investor):
  Robert Dye   (713) 296-6662    
 
  David Higgins   (713) 296-6690    
 
            
(Web site):
  www.apachecorp.com        
FOR RELEASE AT 7:45 A.M. CENTRAL TIME
APACHE REPORTS THIRD-QUARTER NET INCOME
OF $1.2 BILLION OR $3.52 PER SHARE
     Houston, Oct. 30, 2008 — Apache Corporation (NYSE, Nasdaq: APA) today reported that strong crude oil and natural gas prices fueled third-quarter net income of $1.2 billion or $3.52 per diluted common share, up 94 percent from $612 million or $1.83 per share in the prior-year period.
     Third-quarter cash from operations — prior to changes in operating assets and liabilities* — totaled $2.1 billion, compared with $1.6 billion in the prior-year period.
     Third-quarter production declined 9 percent from the prior-year period and 7 percent from the second quarter to 510,672 barrels of oil equivalent (boe) per day. The decline was the result of two hurricanes that curtailed production in the Gulf of Mexico and onshore Louisiana and continued shut-ins following the June 3 explosion at the gas processing and transportation hub at Varanus Island in Australia. Most of the curtailed production in the Gulf and Australia is expected to be restored by year end, setting the stage for renewed growth in 2009.
     “We faced several challenges on the production side during the third quarter; we also had strong earnings, continued progress on our pipeline of development projects, and drilling success in several areas,” said G. Steven Farris, Apache’s president and chief executive officer.
     Three developments are expected to impact Apache’s 2009 production: Two new gas processing trains are expected to commence operations in Egypt by year end, boosting net production by approximately 100 million cubic feet (MMcf) of gas and 5,000 barrels of condensate per day; the Van Gogh field in Australia is expected to contribute a net 20,000 barrels of oil per day beginning in mid- 2009; and the Geauxpher field in the Gulf of Mexico is expected to commence production during the first quarter at a net rate of approximately 50 MMcf of gas per day.

 

 

     Apache had notable drilling results in Egypt, where the company drilled four discoveries; at its emerging Ootla shale play in Canada; and in the North Sea, where nine new wells fueled a 25-percent increase in third-quarter production compared with the prior-year period.
     “Apache continues to show operational progress, in spite of the recent turmoil in the commodity and equity markets and the global economic slowdown,” Farris said. “Although we have an abundant inventory of drillable prospects across 36 million acres, Apache intends to continue to live within our means. Our major development projects are critical to Apache’s future growth — and we intend to fund them — but we will adjust other capital spending to a level that does not exceed operating cash flow.”
     During the third quarter, Apache received an average of $101.04 per barrel of oil and $7.43 per thousand cubic feet of gas. Oil and gas prices were up 43 percent and 49 percent, respectively, above year-earlier levels, but both were 8 percent below second-quarter prices.
     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.
-end-
 
*    Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below.
     NOTE: Apache will conduct a conference call to discuss its third-quarter results at 1 p.m. Central time on Oct. 30, 2008. The call will be webcast from Apache’s Web site, http://www.apachecorp.com. The webcast replay and podcast will be archived on Apache’s Web site. The conference call will be available for delayed playback by telephone for one week beginning at approximately 3 p.m. on Oct. 30. To access the telephone playback, dial (719) 457-0820 and provide Apache’s confirmation code, 4705013.
     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 2007 Form 10-K and on our Web site. 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.

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2008     2007     2008     2007  
REVENUES AND OTHER:
                                
Oil and gas production revenues
   $ 3,368,882     $ 2,498,594     $ 10,450,949     $ 6,965,692  
Other
     (3,998 )     6,364       1,867       14,685  
 
                        
 
     3,364,884       2,504,958       10,452,816       6,980,377  
 
                        
 
                                
COSTS AND EXPENSES:
                                
Depreciation, depletion and amortization
     600,887       600,796       1,849,044       1,722,816  
Asset retirement obligation accretion
     24,970       24,436       77,146       72,634  
Lease operating expenses
     488,166       409,528       1,389,542       1,198,302  
Gathering and transportation
     42,375       34,887       123,118       100,585  
Taxes other than income
     304,280       139,461       845,406       393,222  
General and administrative
     57,561       61,405       218,856       200,065  
Financing costs, net
     33,291       60,367       116,594       165,788  
 
                        
 
     1,551,530       1,330,880       4,619,706       3,853,412  
 
                        
 
                                
INCOME BEFORE INCOME TAXES
     1,813,354       1,174,078       5,833,110       3,126,965  
Current income tax provision
     305,735       200,878       1,495,641       684,458  
Deferred income tax provision
     316,794       359,852       679,902       702,672  
 
                        
 
                                
NET INCOME
     1,190,825       613,348       3,657,567       1,739,835  
Preferred stock dividends
     1,420       1,420       4,260       4,260  
 
                        
 
                                
INCOME ATTRIBUTABLE TO COMMON STOCK
   $ 1,189,405     $ 611,928     $ 3,653,307     $ 1,735,575  
 
                        
 
                                
NET INCOME PER COMMON SHARE:
                                
Basic
   $ 3.55     $ 1.84     $ 10.93     $ 5.23  
 
                        
Diluted
   $ 3.52     $ 1.83     $ 10.84     $ 5.19  
 
                        
 
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
     334,825       332,668       334,145       331,903  
 
                        

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2008     2007     2008     2007  
COSTS INCURRED: (1)
                                
North America exploration and development
   $ 960,624     $ 647,266     $ 2,505,259     $ 2,029,302  
International exploration and development
     641,028       491,381       1,932,257       1,425,624  
 
                        
 
   $ 1,601,652     $ 1,138,647     $ 4,437,516     $ 3,454,926  
 
                        
 
                                
Oil and gas property acquisitions
   $ 4,863     $ 17,025     $ 155,658     $ 1,050,019  
 
                        
 
(1)   Includes noncash asset retirement costs and capitalized interest as follows:
                                 
Capitalized interest
   $ 18,674     $ 16,383     $ 53,730     $ 54,057  
Asset retirement costs
   $ 178,866     $ 28,369     $ 350,372     $ 155,197  
                 
    September 30,     December 31,  
    2008     2007  
BALANCE SHEET DATA:
                
Cash and Cash Equivalents
   $ 1,644,604     $ 125,823  
Other Current Assets
     2,527,688       2,626,428  
Property and Equipment, net
     28,118,818       25,231,593  
Restricted Cash
     13,844       —  
Goodwill
     189,252       189,252  
Other Assets
     498,226       461,555  
 
            
Total Assets
   $ 32,992,432     $ 28,634,651  
 
            
 
                
Current Liabilities
   $ 2,916,306     $ 2,665,016  
Long-Term Debt
     3,917,327       4,011,605  
Deferred Credits and Other Noncurrent Liabilities
     7,395,693       6,580,051  
Shareholders’ Equity
     18,763,106       15,377,979  
 
            
Total Liabilities and Shareholders’ Equity
   $ 32,992,432     $ 28,634,651  
 
            
 
                
Common shares outstanding at end of period
     334,670       332,927  

 

 

APACHE CORPORATION
FINANCIAL INFORMATION
                                 
    For the Quarter     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2008     2007     2008     2007  
FINANCIAL DATA (In thousands, except per share data):
                                
Revenues and other
   $ 3,364,884     $ 2,504,958     $ 10,452,816     $ 6,980,377  
 
                        
Income Attributable to Common Stock
   $ 1,189,405     $ 611,928     $ 3,653,307     $ 1,735,575  
 
                        
Basic Net Income Per Common Share
   $ 3.55     $ 1.84     $ 10.93     $ 5.23  
 
                        
Diluted Net Income Per Common Share
   $ 3.52     $ 1.83     $ 10.84     $ 5.19  
 
                        
 
                                
Weighted Average Common Shares Outstanding
     334,825       332,668       334,145       331,903  
 
                        
Diluted Shares Outstanding
     337,894       335,117       337,151       334,086  
 
                        
 
                                
PRODUCTION AND PRICING DATA:
                                
OIL VOLUME — Barrels per day
                                
United States
     80,284       97,025       93,622       87,660  
Canada
     16,655       18,451       17,247       18,838  
Egypt
     64,803       60,395       64,082       60,219  
Australia
     7,083       14,685       8,286       14,308  
North Sea
     60,856       48,888       58,740       52,572  
Argentina
     12,729       11,708       12,342       11,266  
 
                        
Total
     242,410       251,152       254,319       244,863  
 
                        
 
                                
AVERAGE OIL PRICE PER BARREL
                                
United States
   $ 93.69     $ 67.70     $ 91.48     $ 61.75  
Canada
     111.81       73.95       108.10       63.74  
Egypt
     105.60       74.04       110.01       66.50  
Australia
     99.66       76.65       111.86       73.30  
North Sea
     113.56       73.18       110.08       65.21  
Argentina
     50.95       49.70       48.76       45.52  
Total
     101.04       70.43       100.17       63.74  
 
                                
NATURAL GAS VOLUME — Mcf per day
                                
United States
     635,891       763,693       712,529       768,520  
Canada
     349,000       386,659       355,834       386,312  
Egypt
     287,231       241,919       254,786       239,951  
Australia
     54,726       194,520       124,888       195,242  
North Sea
     2,697       1,721       2,604       1,851  
Argentina
     217,091       196,168       193,257       203,524  
 
                        
Total
     1,546,636       1,784,680       1,643,898       1,795,400  
 
                        
 
                                
AVERAGE NATURAL GAS PRICE PER MCF
                                
United States
   $ 9.96     $ 6.59     $ 9.64     $ 6.95  
Canada
     8.70       5.54       8.63       6.25  
Egypt
     5.62       4.72       5.68       4.42  
Australia
     2.36       1.93       2.18       1.83  
North Sea
     27.17       16.98       21.88       12.80  
Argentina
     1.41       0.93       1.53       1.03  
Total
     7.43       4.99       7.30       5.24  
 
                                
NGL VOLUME — Barrels per day
                                
United States
     5,450       7,766       6,636       7,677  
Canada
     2,034       2,253       2,046       2,199  
Argentina
     3,005       2,794       2,877       2,749  
 
                        
Total
     10,489       12,813       11,559       12,625  
 
                        
 
                                
AVERAGE NGL PRICE PER BARREL
                                
United States
   $ 72.82     $ 47.18     $ 64.49     $ 41.64  
Canada
     63.77       40.39       58.62       37.05  
Argentina
     36.63       37.74       38.81       35.07  
Total
     60.70       43.92       57.06       39.41  

 

 

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 excludes certain items that management believes affect the comparability of operating results. The following provides the reasons adjusted earnings is a meaningful measure:
  •   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,  
    2008     2007     2008     2007  
Income Attributable to Common Stock (GAAP)
   $ 1,189,405     $ 611,928     $ 3,653,307     $ 1,735,575  
 
                                
Adjustments:
                                
Foreign currency fluctuation impact on deferred tax expense
     (113,169 )     115,180       (125,248 )     185,832  
Impact of Canadian Federal tax rate reductions
     —       —       —       (17,074 )
 
                                
 
                        
Adjusted Earnings (Non-GAAP)
   $ 1,076,236     $ 727,108     $ 3,528,059     $ 1,904,333  
 
                        
 
                                
Adjusted Earnings Per Share (Non-GAAP)
                                
Basic
   $ 3.21     $ 2.19     $ 10.56     $ 5.74  
 
                        
Diluted
   $ 3.19     $ 2.17     $ 10.46     $ 5.70  
 
                        
 
                                
Average Number of Common Shares
                                
Basic
     334,825       332,668       334,145       331,903  
 
                        
Diluted
     337,894       335,117       337,151       334,086  
 
                        
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,  
    2008     2007     2008     2007  
Net cash provided by operating activities
   $ 2,290,654     $ 1,427,467     $ 6,028,567     $ 3,877,472  
Changes in operating assets and liabilities
     (167,073 )     190,511       259,447       399,987  
 
                        
Cash from operations before changes in operating assets and liabilities
   $ 2,123,581     $ 1,617,978     $ 6,288,014     $ 4,277,459