UNITED STATES
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): August 3, 2017
APACHE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 1-4300 | 41-0747868 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
2000 Post Oak Boulevard
Suite 100
Houston, Texas 77056-4400
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (713) 296-6000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.
Item 2.02. | Results of Operations and Financial Condition. |
On August 3, 2017, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended June 30, 2017. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit No. |
Description | |
99.1 | Press Release of Apache Corporation dated August 3, 2017. |
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 hereunto duly authorized.
APACHE CORPORATION | ||||||
Date: August 3, 2017 | /s/ Rebecca A. Hoyt | |||||
Rebecca A. Hoyt | ||||||
Senior Vice President, | ||||||
Chief Accounting Officer, and Controller | ||||||
(Principal Accounting Officer) |
INDEX TO EXHIBITS
Exhibit |
Description | |
99.1 | Press Release of Apache Corporation dated August 3, 2017. |
Exhibit 99.1
![]() |
NEWS RELEASE |
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017
FINANCIAL AND OPERATIONAL RESULTS
| Delivered second-quarter production of 460,000 barrels of oil equivalent (Boe) per day and adjusted production of 388,000 Boe per day, which excludes Egypt noncontrolling interest and tax barrels; |
| Announced the strategic exit from Canada, which streamlines the portfolio, increases leverage to the Permian and positively impacts financial metrics; revised 2017 guidance accordingly; |
| Completed first appraisal wells in the oil window of the Wolfcamp formation at Alpine High, providing further confirmation of an oil play and supporting hundreds of additional drilling locations; and |
| Demonstrated strong cost discipline despite inflationary pressures; capital and lease operating expenses (LOE) tracking at or below guidance for the full year. |
HOUSTON, Aug. 3, 2017 Apache Corporation (NYSE: APA) (Nasdaq: APA) today announced its financial and operational results for the second quarter of 2017.
Apache reported earnings of $572 million or $1.50 per diluted common share for the second quarter of 2017. These results include a number of items outside of core earnings that are typically excluded by the investment community in their published earnings estimates. When adjusted for these and certain additional items that impact the comparability of results, Apaches second-quarter results were a loss of $79 million or $0.21 per share. Adjusted earnings include the effect of dry-hole costs of $0.08 per share, after tax.
Net cash provided by operating activities was $751 million, compared to $455 million in the first quarter of 2017, and adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (adjusted EBITDAX) was $850 million, compared to $999 million in the first quarter of 2017.
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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John J. Christmann IV, Apaches chief executive officer and president said, Our second-quarter results and operational achievements continue to demonstrate the effectiveness of our underlying strategy. As anticipated, our total daily production bottomed out in the second quarter, and we have shifted to a growth trajectory. We expect continued production volume increases at Alpine High and in the Midland Basin, as well as from our international regions during the second half of 2017. We are successfully managing service cost pressure, LOE and general and administrative (G&A) costs across the company.
Today, through the combination of expected cash flow from operations and proceeds from recent asset sales, we have the ability to fund our 2017 capital expenditures and dividend program without utilizing our balance sheet. Our $3.1 billion capital program remains unchanged, and relative to year-end 2016, we expect to end 2017 with more cash, less debt and significantly higher production levels in the Permian Basin, said Christmann.
Portfolio update
Apache expects to complete its previously announced exit from Canada in August. In addition to the total $713 million sales price, the Canadian exit will result in several important financial benefits including a reduction of approximately $800 million in asset retirement obligations from the balance sheet and positive implications for G&A, average cash margins per Boe, earnings per share, free cash flow and corporate-level returns on capital employed.
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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Financial position and liquidity
Oil and gas capital investment was $738 million during the quarter, with two-thirds focused on the Permian Basin. The company ended the quarter with $1.7 billion of cash, up from $1.5 billion at the end of the first quarter of 2017. Apaches net debt position was $6.8 billion, a decrease of $144 million from the previous quarter.
Second-quarter operational summary
During the second quarter, Apache operated an average of 35 rigs and drilled and completed 66 gross-operated wells worldwide. Highlights from Apaches three principal areas include:
| North America During the quarter, North American production was 244,000 Boe per day, and Apache averaged 18 rigs and drilled and completed 36 gross-operated wells. |
| Permian Basin Production averaged 146,000 Boe per day, and Apache operated an average of 17 rigs during the quarter. |
| Delaware Basin: |
| At Alpine High, the company averaged six rigs and announced two new parasequence well results in the oil window of the Wolfcamp, the first of which had a 4,500 foot lateral and recorded a 30-day average rate in excess of 1,000 Boe per day. Early results from mapping and testing these zones give the company confidence, at a minimum, in hundreds of additional drilling locations, with a considerable amount of acreage and numerous landing zones still to be tested. |
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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| The company connected to market the first segment of its natural gas trunk line and achieved first production in early May, exceeding its June 30 target of 50 million cubic feet (MMcf) per day of processed gas. Currently, net sales gas exceeds 60 MMcf per day, which is expected to increase to more than 100 MMcf per day by the end of September. |
| Midland Basin: |
| Apache averaged six rigs and focused primarily on multi-well pad drilling in the Wolfcamp and Spraberry formations. During the quarter, the company brought online the nine-well Schrock 34 pad in Glasscock County with very strong results. |
| North Sea Apache reported average production of 55,000 Boe per day and averaged four rigs during the quarter. At Callater, the company completed its facility tieback ahead of schedule and is currently flowing back the 18x discovery well and a subsequent well at a combined, facilities-constrained rate of 19,000 Boe per day, of which approximately 70 percent is oil and natural gas liquids. |
| Egypt On a net basis, excluding minority interest and tax barrels, Egypt production was 89,000 Boe per day. Apache averaged 13 rigs and drilled and completed 25 gross-operated wells during the quarter including two high-rate exploration wells in the Matruh Basin, which de-risked additional exploration prospects in the area. Apache expects to sign agreements soon for two new concessions, which will increase the companys footprint in the Western Desert by 40 percent. |
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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2017 outlook and plan update
To reflect the impact of the companys exit from Canada, Apache has updated its 2017 production guidance to account for divested volumes. Guidance for certain expenses, including gathering and transportation costs and G&A expenses, has also been reduced. With regards to capital, Apaches $3.1 billion 2017 budget is not impacted by the Canada exit since most of the capital allocated to Canada this year will have been spent by the time all transactions have closed. Further details on financial and operational guidance can be found in the Second-Quarter 2017 Financial and Operational Supplement.
As we look to 2018, we are well prepared to manage a capital program commensurate with the prevailing price environment without stressing the balance sheet or diluting our shareholders. We are keenly focused on returns and have great confidence in the economics of our long-term investments and opportunity set. We have structured our business to adapt and thrive in a lower-for-longer price environment. Our focus on costs, maintaining a strong balance sheet and streamlining our business have positioned us to deliver returns-focused organic growth for many years to come, said Christmann.
Conference call
Apache will host a conference call to discuss its second-quarter 2017 results at 1 p.m. Central time, Thursday, Aug. 3. The conference call will be webcast from Apaches website at
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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www.apachecorp.com and investor.apachecorp.com, and the webcast replay will be archived there as well. A replay of the conference call will be available for seven days following the call. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 48382280. Sign up for email alerts to be reminded of the webcast at investor.apachecorp.com/alerts.cfm.
Additional Information
Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX and net debt (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. Apaches quarterly supplement is available at www.apachecorp.com/financialdata.
About Apache
Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt and the United Kingdom. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com, and on its Media and Investor Center mobile application, which is available for free download from the Apple App Store and the Googles Play store.
NonGAAP financial measures
Apaches financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP information. It is managements intent to provide non-GAAP financial information to enhance understanding of our consolidated financial
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
PAGE 7 of 9
information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX and net debt are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.
Forward-looking statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as anticipates, intends, plans, seeks, believes, estimates, expects, guidance, outlook, and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations and objectives for Apaches operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See Risk Factors in our 2016 Form 10-K filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made by us in this news release speaks only as of the date on which it is
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
PAGE 8 of 9
made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.
Cautionary note to investors
The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SECs definitions for such terms. Apache may use certain terms in this earnings release, such as resources, potential resources, resource potential, estimated net reserves, recoverable reserves, and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apaches Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SECs website at www.sec.gov.
APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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Contacts
Investor: (281) 302-2286 Gary Clark
Media: (713) 296-7276 Castlen Kennedy
Website: www.apachecorp.com
-end-
APACHE CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions, except per share data)
For the Quarter | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
REVENUES AND OTHER: |
||||||||||||||||
Oil and gas production revenues |
||||||||||||||||
Oil revenues |
$ | 1,050 | $ | 1,118 | $ | 2,222 | $ | 1,940 | ||||||||
Gas revenues |
233 | 209 | 488 | 432 | ||||||||||||
Natural gas liquids revenues |
63 | 59 | 148 | 101 | ||||||||||||
|
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|
|
|
|
|
|
|||||||||
1,346 | 1,386 | 2,858 | 2,473 | |||||||||||||
Other |
59 | (21 | ) | 84 | (24 | ) | ||||||||||
Gain (loss) on divestiture |
(21 | ) | 17 | 320 | 16 | |||||||||||
|
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|||||||||
1,384 | 1,382 | 3,262 | 2,465 | |||||||||||||
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|
|||||||||
OPERATING EXPENSES: |
||||||||||||||||
Lease operating expenses |
372 | 359 | 708 | 737 | ||||||||||||
Gathering and transportation |
48 | 52 | 105 | 104 | ||||||||||||
Taxes other than income |
29 | 65 | 71 | 76 | ||||||||||||
Exploration |
108 | 91 | 200 | 186 | ||||||||||||
General and administrative |
106 | 103 | 209 | 196 | ||||||||||||
Transaction, reorganization and separation |
4 | 9 | (6 | ) | 24 | |||||||||||
Depreciation, depletion and amortization: |
||||||||||||||||
Oil and gas property and equipment |
536 | 629 | 1,074 | 1,265 | ||||||||||||
Other assets |
36 | 40 | 74 | 82 | ||||||||||||
Asset retirement obligation accretion |
37 | 38 | 73 | 76 | ||||||||||||
Impairments |
| 173 | 8 | 173 | ||||||||||||
Financing costs, net |
99 | 104 | 199 | 209 | ||||||||||||
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1,375 | 1,663 | 2,715 | 3,128 | |||||||||||||
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NET INCOME (LOSS) BEFORE INCOME TAXES |
9 | (281 | ) | 547 | (663 | ) | ||||||||||
Current income tax provision (benefit) |
126 | 144 | 314 | 134 | ||||||||||||
Deferred income tax provision (benefit) |
(730 | ) | (225 | ) | (647 | ) | (226 | ) | ||||||||
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|||||||||
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST |
613 | (200 | ) | 880 | (571 | ) | ||||||||||
Net income attributable to noncontrolling interest |
41 | 44 | 95 | 45 | ||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK |
$ | 572 | $ | (244 | ) | $ | 785 | $ | (616 | ) | ||||||
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NET INCOME (LOSS) PER COMMON SHARE: |
||||||||||||||||
Basic |
$ | 1.50 | $ | (0.65 | ) | $ | 2.06 | $ | (1.63 | ) | ||||||
Diluted |
$ | 1.50 | $ | (0.65 | ) | $ | 2.05 | $ | (1.63 | ) | ||||||
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: |
||||||||||||||||
Basic |
381 | 379 | 380 | 379 | ||||||||||||
Diluted |
383 | 379 | 383 | 379 | ||||||||||||
DIVIDENDS DECLARED PER COMMON SHARE |
$ | 0.25 | $ | 0.25 | $ | 0.50 | $ | 0.50 |
Page 1
APACHE CORPORATION
PRODUCTION INFORMATION
For the Quarter Ended | % Change | For the Six Months Ended | ||||||||||||||||||||||||||
June 30, 2017 |
March 31, 2017 |
June 30, 2016 |
2Q17 to 1Q17 |
2Q17 to 2Q16 |
June 30, 2017 |
June 30, 2016 |
||||||||||||||||||||||
OIL VOLUME - Barrels per day |
||||||||||||||||||||||||||||
Permian |
71,891 | 75,210 | 86,430 | -4 | % | -17 | % | 73,541 | 89,854 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
10,197 | 11,142 | 15,959 | -8 | % | -36 | % | 10,667 | 17,187 | |||||||||||||||||||
Gulf of Mexico |
3,983 | 4,376 | 4,352 | -9 | % | -8 | % | 4,178 | 4,259 | |||||||||||||||||||
Canada |
11,638 | 11,655 | 12,917 | 0 | % | -10 | % | 11,647 | 13,690 | |||||||||||||||||||
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North America |
97,709 | 102,383 | 119,658 | -5 | % | -18 | % | 100,033 | 124,990 | |||||||||||||||||||
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Egypt (1, 2) |
96,961 | 101,718 | 106,223 | -5 | % | -9 | % | 99,327 | 102,241 | |||||||||||||||||||
North Sea |
48,091 | 49,784 | 59,124 | -3 | % | -19 | % | 48,933 | 58,043 | |||||||||||||||||||
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International (1) |
145,052 | 151,502 | 165,347 | -4 | % | -12 | % | 148,260 | 160,284 | |||||||||||||||||||
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Total (1) |
242,761 | 253,885 | 285,005 | -4 | % | -15 | % | 248,293 | 285,274 | |||||||||||||||||||
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NATURAL GAS VOLUME - Mcf per day |
||||||||||||||||||||||||||||
Permian |
237,455 | 227,654 | 242,019 | 4 | % | -2 | % | 232,582 | 241,740 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
114,534 | 123,501 | 148,841 | -7 | % | -23 | % | 118,993 | 151,906 | |||||||||||||||||||
Gulf of Mexico |
12,063 | 15,769 | 17,266 | -24 | % | -30 | % | 13,906 | 15,297 | |||||||||||||||||||
Canada |
205,408 | 215,617 | 246,830 | -5 | % | -17 | % | 210,484 | 256,635 | |||||||||||||||||||
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North America |
569,460 | 582,541 | 654,956 | -2 | % | -13 | % | 575,965 | 665,578 | |||||||||||||||||||
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Egypt (1, 2) |
383,296 | 407,194 | 408,013 | -6 | % | -6 | % | 395,179 | 402,806 | |||||||||||||||||||
North Sea |
34,348 | 43,928 | 60,318 | -22 | % | -43 | % | 39,111 | 65,556 | |||||||||||||||||||
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International (1) |
417,644 | 451,122 | 468,331 | -7 | % | -11 | % | 434,290 | 468,362 | |||||||||||||||||||
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|
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Total (1) |
987,104 | 1,033,663 | 1,123,287 | -5 | % | -12 | % | 1,010,255 | 1,133,940 | |||||||||||||||||||
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NGL VOLUME - Barrels per day |
||||||||||||||||||||||||||||
Permian |
34,067 | 34,382 | 38,688 | -1 | % | -12 | % | 34,223 | 38,104 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
12,636 | 13,185 | 16,619 | -4 | % | -24 | % | 12,909 | 17,214 | |||||||||||||||||||
Gulf of Mexico |
326 | 432 | 325 | -25 | % | 0 | % | 379 | 348 | |||||||||||||||||||
Canada |
4,365 | 4,821 | 5,092 | -9 | % | -14 | % | 4,592 | 5,797 | |||||||||||||||||||
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North America |
51,394 | 52,820 | 60,724 | -3 | % | -15 | % | 52,103 | 61,463 | |||||||||||||||||||
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Egypt (1, 2) |
880 | 955 | 950 | -8 | % | -7 | % | 917 | 1,119 | |||||||||||||||||||
North Sea |
741 | 1,172 | 1,563 | -37 | % | -53 | % | 955 | 1,486 | |||||||||||||||||||
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International (1) |
1,621 | 2,127 | 2,513 | -24 | % | -35 | % | 1,872 | 2,605 | |||||||||||||||||||
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|
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|
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Total |
53,015 | 54,947 | 63,237 | -4 | % | -16 | % | 53,975 | 64,068 | |||||||||||||||||||
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BOE per day |
||||||||||||||||||||||||||||
Permian |
145,533 | 147,534 | 165,455 | -1 | % | -12 | % | 146,528 | 168,248 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
41,923 | 44,910 | 57,384 | -7 | % | -27 | % | 43,408 | 59,719 | |||||||||||||||||||
Gulf of Mexico |
6,319 | 7,437 | 7,554 | -15 | % | -16 | % | 6,875 | 7,156 | |||||||||||||||||||
Canada |
50,238 | 52,412 | 59,148 | -4 | % | -15 | % | 51,319 | 62,260 | |||||||||||||||||||
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North America |
244,013 | 252,293 | 289,541 | -3 | % | -16 | % | 248,130 | 297,383 | |||||||||||||||||||
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Egypt (1, 2) |
161,724 | 170,539 | 175,175 | -5 | % | -8 | % | 166,107 | 170,494 | |||||||||||||||||||
North Sea |
54,556 | 58,278 | 70,740 | -6 | % | -23 | % | 56,407 | 70,455 | |||||||||||||||||||
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International (1) |
216,280 | 228,817 | 245,915 | -5 | % | -12 | % | 222,514 | 240,949 | |||||||||||||||||||
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Total (1) |
460,293 | 481,110 | 535,456 | -4 | % | -14 | % | 470,644 | 538,332 | |||||||||||||||||||
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Total excluding noncontrolling interests |
405,989 | 424,259 | 477,110 | -4 | % | -15 | % | 415,073 | 481,564 | |||||||||||||||||||
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(1) Includes net production volumes attributed to our noncontrolling partner in Egypt below: |
| |||||||||||||||||||||||||||
Oil (b/d) |
32,562 | 33,910 | 35,357 | 33,232 | 34,017 | |||||||||||||||||||||||
Gas (Mcf/d) |
128,696 | 135,736 | 136,029 | 132,197 | 134,266 | |||||||||||||||||||||||
NGL (b/d) |
293 | 318 | 317 | 306 | 373 | |||||||||||||||||||||||
(2) Egypt Gross Production - BOE per day |
334,496 | 328,141 | 349,689 | 2 | % | -4 | % | 331,336 | 351,344 |
Page 2
APACHE CORPORATION
ADJUSTED PRODUCTION INFORMATION
Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) divested assets, 2) noncontrolling interest in Egypt, and 3) Egypt tax barrels. Management uses adjusted production to evaluate the companys operational trends and performance and believes it is useful to investors and other third parties.
For the Quarter Ended | % Change | For the Six Months Ended | ||||||||||||||||||||||||||
June 30, 2017 |
March 31, 2017 |
June 30, 2016 |
2Q17 to 1Q17 |
2Q17 to 2Q16 |
June 30, 2017 |
June 30, 2016 |
||||||||||||||||||||||
OIL VOLUME - Barrels per day |
||||||||||||||||||||||||||||
Permian |
71,891 | 74,766 | 85,989 | -4 | % | -16 | % | 73,320 | 89,215 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
10,197 | 11,142 | 15,959 | -8 | % | -36 | % | 10,667 | 17,187 | |||||||||||||||||||
Gulf of Mexico |
3,983 | 4,376 | 4,352 | -9 | % | -8 | % | 4,178 | 4,259 | |||||||||||||||||||
Canada |
11,638 | 11,637 | 12,864 | 0 | % | -10 | % | 11,638 | 13,581 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
97,709 | 101,921 | 119,164 | -4 | % | -18 | % | 99,803 | 124,242 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
51,776 | 51,651 | 57,955 | 0 | % | -11 | % | 51,714 | 58,925 | |||||||||||||||||||
North Sea |
48,091 | 49,784 | 59,124 | -3 | % | -19 | % | 48,933 | 58,043 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
99,867 | 101,435 | 117,079 | -2 | % | -15 | % | 100,647 | 116,968 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
197,576 | 203,356 | 236,243 | -3 | % | -16 | % | 200,450 | 241,210 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NATURAL GAS VOLUME - Mcf per day |
||||||||||||||||||||||||||||
Permian |
237,455 | 225,663 | 240,000 | 5 | % | -1 | % | 231,592 | 238,971 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
114,534 | 123,501 | 148,841 | -7 | % | -23 | % | 118,993 | 151,906 | |||||||||||||||||||
Gulf of Mexico |
12,063 | 15,769 | 17,266 | -24 | % | -30 | % | 13,906 | 15,297 | |||||||||||||||||||
Canada |
205,408 | 215,553 | 242,666 | -5 | % | -15 | % | 210,452 | 252,991 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
569,460 | 580,486 | 648,773 | -2 | % | -12 | % | 574,943 | 659,165 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
220,061 | 217,133 | 251,983 | 1 | % | -13 | % | 218,605 | 253,834 | |||||||||||||||||||
North Sea |
34,348 | 43,928 | 60,318 | -22 | % | -43 | % | 39,111 | 65,556 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
254,409 | 261,061 | 312,301 | -3 | % | -19 | % | 257,716 | 319,390 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
823,869 | 841,547 | 961,074 | -2 | % | -14 | % | 832,659 | 978,555 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NGL VOLUME - Barrels per day |
||||||||||||||||||||||||||||
Permian |
34,067 | 34,073 | 38,265 | 0 | % | -11 | % | 34,069 | 37,518 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
12,636 | 13,185 | 16,619 | -4 | % | -24 | % | 12,909 | 17,214 | |||||||||||||||||||
Gulf of Mexico |
326 | 432 | 325 | -25 | % | 0 | % | 379 | 348 | |||||||||||||||||||
Canada |
4,365 | 4,805 | 4,980 | -9 | % | -12 | % | 4,584 | 5,650 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
51,394 | 52,495 | 60,189 | -2 | % | -15 | % | 51,941 | 60,730 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
540 | 511 | 610 | 6 | % | -11 | % | 526 | 734 | |||||||||||||||||||
North Sea |
741 | 1,172 | 1,563 | -37 | % | -53 | % | 955 | 1,486 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
1,281 | 1,683 | 2,173 | -24 | % | -41 | % | 1,481 | 2,220 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
52,675 | 54,178 | 62,362 | -3 | % | -16 | % | 53,422 | 62,950 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BOE per day |
||||||||||||||||||||||||||||
Permian |
145,533 | 146,448 | 164,254 | -1 | % | -11 | % | 145,988 | 166,561 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
41,923 | 44,910 | 57,384 | -7 | % | -27 | % | 43,408 | 59,719 | |||||||||||||||||||
Gulf of Mexico |
6,319 | 7,437 | 7,554 | -15 | % | -16 | % | 6,875 | 7,156 | |||||||||||||||||||
Canada |
50,238 | 52,368 | 58,288 | -4 | % | -14 | % | 51,297 | 61,396 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
244,013 | 251,163 | 287,480 | -3 | % | -15 | % | 247,568 | 294,832 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
88,993 | 88,351 | 100,562 | 1 | % | -12 | % | 88,674 | 101,965 | |||||||||||||||||||
North Sea |
54,556 | 58,278 | 70,740 | -6 | % | -23 | % | 56,407 | 70,455 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
143,549 | 146,629 | 171,302 | -2 | % | -16 | % | 145,081 | 172,420 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
387,562 | 397,792 | 458,782 | -3 | % | -16 | % | 392,649 | 467,252 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Page 3
APACHE CORPORATION
PRICE INFORMATION
For the Quarter Ended | For the Six Months Ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
AVERAGE OIL PRICE PER BARREL |
||||||||||||||||||||
Permian |
$ | 45.09 | $ | 49.16 | $ | 41.82 | $ | 47.16 | $ | 35.74 | ||||||||||
MidContinent/Gulf Coast Region |
46.19 | 49.25 | 42.17 | 47.78 | 34.93 | |||||||||||||||
Gulf of Mexico |
45.85 | 49.14 | 41.14 | 47.56 | 35.54 | |||||||||||||||
Canada |
44.52 | 46.89 | 39.39 | 45.70 | 34.11 | |||||||||||||||
North America |
45.10 | 48.51 | 41.45 | 46.84 | 35.34 | |||||||||||||||
Egypt |
47.98 | 53.06 | 45.42 | 50.57 | 34.97 | |||||||||||||||
North Sea |
48.21 | 52.89 | 45.56 | 50.51 | 39.64 | |||||||||||||||
International |
48.06 | 53.00 | 45.47 | 50.55 | 39.53 | |||||||||||||||
Total |
46.89 | 51.20 | 43.14 | 49.06 | 37.37 | |||||||||||||||
AVERAGE NATURAL GAS PRICE PER MCF |
||||||||||||||||||||
Permian |
$ | 2.50 | $ | 2.56 | $ | 1.72 | $ | 2.53 | $ | 1.74 | ||||||||||
MidContinent/Gulf Coast Region |
2.88 | 3.13 | 1.71 | 3.01 | 1.70 | |||||||||||||||
Gulf of Mexico |
3.03 | 3.11 | 2.04 | 3.07 | 2.06 | |||||||||||||||
Canada |
2.14 | 2.33 | 1.01 | 2.24 | 1.36 | |||||||||||||||
North America |
2.39 | 2.48 | 1.44 | 2.44 | 1.55 | |||||||||||||||
Egypt |
2.73 | 2.78 | 2.72 | 2.75 | 2.65 | |||||||||||||||
North Sea |
4.54 | 5.85 | 3.95 | 5.27 | 4.11 | |||||||||||||||
International |
2.88 | 3.07 | 2.88 | 2.98 | 2.86 | |||||||||||||||
Total |
2.60 | 2.74 | 2.04 | 2.67 | 2.09 | |||||||||||||||
AVERAGE NGL PRICE PER BARREL |
||||||||||||||||||||
Permian |
$ | 13.08 | $ | 16.53 | $ | 10.00 | $ | 14.81 | $ | 8.37 | ||||||||||
MidContinent/Gulf Coast Region |
10.03 | 14.94 | 9.32 | 12.52 | 7.80 | |||||||||||||||
Gulf of Mexico |
13.10 | 21.78 | NM | 18.02 | 4.69 | |||||||||||||||
Canada |
15.99 | 17.03 | 8.54 | 16.53 | 6.88 | |||||||||||||||
North America |
12.58 | 16.22 | 9.64 | 14.42 | 8.05 | |||||||||||||||
Egypt |
31.11 | 40.05 | 27.68 | 35.74 | 27.24 | |||||||||||||||
North Sea |
22.92 | 39.19 | 22.25 | 32.85 | 20.29 | |||||||||||||||
International |
27.37 | 39.58 | 24.30 | 34.26 | 23.28 | |||||||||||||||
Total |
13.03 | 17.13 | 10.22 | 15.10 | 8.67 |
Page 4
APACHE CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
SUMMARY EXPLORATION EXPENSE INFORMATION
(Unaudited)
(In millions)
For the Quarter Ended June 30, |
For the Six Months Ended Ended June 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Unproved leasehold impairments |
$ | 39 | $ | 66 | $ | 54 | $ | 108 | ||||||||
Dry hole expense |
46 | 2 | 98 | 31 | ||||||||||||
Geological and geophysical expense |
6 | 4 | 12 | 9 | ||||||||||||
Exploration overhead and other |
17 | 19 | 36 | 38 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 108 | $ | 91 | $ | 200 | $ | 186 | |||||||||
|
|
|
|
|
|
|
|
SUMMARY CASH FLOW INFORMATION
(Unaudited)
(In millions)
For the Quarter Ended June 30, |
For the Six Months Ended Ended June 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net cash provided by operating activities |
$ | 751 | $ | 744 | $ | 1,206 | $ | 983 | ||||||||
Net cash used in investing activities |
(436 | ) | (411 | ) | (529 | ) | (966 | ) | ||||||||
Net cash used in financing activities |
(169 | ) | (136 | ) | (387 | ) | (283 | ) |
SUMMARY BALANCE SHEET INFORMATION
(Unaudited)
(In millions)
June 30, | December 31, | |||||||
2017 | 2016 | |||||||
Cash and cash equivalents |
$ | 1,667 | $ | 1,377 | ||||
Assets held for sale |
1,231 | | ||||||
Other current assets |
1,749 | 1,864 | ||||||
Property and equipment, net |
17,551 | 18,867 | ||||||
Other assets |
404 | 411 | ||||||
|
|
|
|
|||||
Total assets |
$ | 22,602 | $ | 22,519 | ||||
|
|
|
|
|||||
Current liabilities |
$ | 1,934 | $ | 1,843 | ||||
Liabilities held for sale |
939 | | ||||||
Long-term debt |
8,329 | 8,544 | ||||||
Deferred credits and other noncurrent liabilities |
3,135 | 4,453 | ||||||
Apache shareholders equity |
6,899 | 6,238 | ||||||
Noncontrolling interest |
1,366 | 1,441 | ||||||
|
|
|
|
|||||
Total Liabilities and shareholders equity |
$ | 22,602 | $ | 22,519 | ||||
|
|
|
|
|||||
Common shares outstanding at end of period |
381 | 379 |
Page 5
APACHE CORPORATION
NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
Reconciliation of net cash provided by operating activities to adjusted EBITDAX
Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a companys ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Companys on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.
For the Quarter Ended | For the Six Months Ended | |||||||||||||||||||
June 30, 2017 |
March 31, 2017 |
June 30, 2016 |
June 30, | |||||||||||||||||
2017 | 2016 | |||||||||||||||||||
Net cash provided by operating activities |
$ | 751 | $ | 455 | $ | 744 | $ | 1,206 | $ | 983 | ||||||||||
Adjustments: |
||||||||||||||||||||
Exploration expense other than dry hole expense and unproved leasehold impairments |
23 | 25 | 23 | 48 | 47 | |||||||||||||||
Current income tax provision (benefit) |
126 | 188 | 144 | 314 | 134 | |||||||||||||||
Other adjustments to reconcile net loss to net cash provided by operating activities |
(5 | ) | (34 | ) | (36 | ) | (39 | ) | (91 | ) | ||||||||||
Changes in operating assets and liabilities |
(148 | ) | 275 | (202 | ) | 127 | 30 | |||||||||||||
Financing costs, net |
99 | 100 | 104 | 199 | 209 | |||||||||||||||
Transaction, reorganization & separation costs |
4 | (10 | ) | 9 | (6 | ) | 24 | |||||||||||||
Contract termination charges |
| | 1 | | 3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted EBITDAX (Non-GAAP) |
$ | 850 | $ | 999 | $ | 787 | $ | 1,849 | $ | 1,339 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Reconciliation of income (loss) attributable to common stock to adjusted earnings
Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Companys operational trends and comparability of results to our peers.
Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Companys on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Companys industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.
For the Quarter Ended June 30, 2017 |
For the Quarter Ended June 30, 2016 |
|||||||||||||||||||||||||||||||
Before | Tax | After | Diluted | Before | Tax | After | Diluted | |||||||||||||||||||||||||
Tax | Impact | Tax | EPS | Tax | Impact | Tax | EPS | |||||||||||||||||||||||||
Income (loss) attributable to common stock (GAAP) |
$ | (32 | ) | $ | 604 | $ | 572 | 1.50 | $ | (325 | ) | $ | 81 | $ | (244 | ) | (0.65 | ) | ||||||||||||||
Adjustments: * |
||||||||||||||||||||||||||||||||
Valuation allowance and other tax adjustments |
| (670 | ) | (670 | ) | (1.77 | ) | | 13 | 13 | 0.04 | |||||||||||||||||||||
(Gain) / loss on divestitures |
21 | (3 | ) | 18 | 0.05 | (17 | ) | 4 | (13 | ) | (0.03 | ) | ||||||||||||||||||||
Commodity derivative mark-to-market |
(41 | ) | 15 | (26 | ) | (0.07 | ) | | | | | |||||||||||||||||||||
Transaction, reorganization & separation costs |
4 | (2 | ) | 2 | 0.01 | 9 | (4 | ) | 5 | 0.01 | ||||||||||||||||||||||
Asset impairments |
39 | (14 | ) | 25 | 0.07 | 239 | (100 | ) | 139 | 0.37 | ||||||||||||||||||||||
Contract termination charges |
| | | | 1 | | 1 | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted earnings (Non-GAAP) |
$ | (9 | ) | $ | (70 | ) | $ | (79 | ) | (0.21 | ) | $ | (93 | ) | $ | (6 | ) | $ | (99 | ) | (0.26 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
For the Six Monhts Ended | For the Six Monhts Ended | |||||||||||||||||||||||||||||||
June 30, 2017 | June 30, 2016 | |||||||||||||||||||||||||||||||
Before | Tax | After | Diluted | Before | Tax | After | Diluted | |||||||||||||||||||||||||
Tax | Impact | Tax | EPS | Tax | Impact | Tax | EPS | |||||||||||||||||||||||||
Income (Loss) Attributable to Common Stock (GAAP) |
$ | 452 | $ | 333 | $ | 785 | 2.05 | $ | (708 | ) | $ | 92 | $ | (616 | ) | (1.63 | ) | |||||||||||||||
Adjustments: * |
||||||||||||||||||||||||||||||||
Valuation allowance and other tax adjustments |
| (639 | ) | (639 | ) | (1.68 | ) | | 30 | 30 | 0.08 | |||||||||||||||||||||
(Gain) / loss on divestitures |
(320 | ) | 116 | (204 | ) | (0.53 | ) | (16 | ) | 4 | (12 | ) | (0.03 | ) | ||||||||||||||||||
Commodity derivative mark-to-market |
(41 | ) | 15 | (26 | ) | (0.07 | ) | | | | | |||||||||||||||||||||
Transaction, reorganization & separation costs |
(6 | ) | 1 | (5 | ) | (0.01 | ) | 24 | (9 | ) | 15 | 0.04 | ||||||||||||||||||||
Asset impairments |
62 | (22 | ) | 40 | 0.11 | 281 | (113 | ) | 168 | 0.44 | ||||||||||||||||||||||
Contract termination charges |
| | | | 3 | (1 | ) | 2 | 0.01 | |||||||||||||||||||||||
Loss on extinguishment of debt |
1 | | 1 | | | | | | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted Earnings (Non-GAAP) |
$ | 148 | $ | (196 | ) | $ | (48 | ) | (0.13 | ) | $ | (416 | ) | $ | 3 | $ | (413 | ) | (1.09 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* | The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides. |
Page 6
APACHE CORPORATION
NON-GAAP FINANCIAL MEASURES
(In millions)
Reconciliation of Debt to Net debt
Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Companys outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.
June 30, | March 31, | December 31, | September 30, | |||||||||||||
2017 | 2017 | 2016 | 2016 | |||||||||||||
Current debt |
$ | 150 | $ | 150 | $ | | $ | 1 | ||||||||
Long-term debt |
8,329 | 8,327 | 8,544 | 8,721 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total debt |
8,479 | 8,477 | 8,544 | 8,722 | ||||||||||||
Cash and cash equivalents |
1,667 | 1,521 | 1,377 | 1,230 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net debt |
$ | 6,812 | $ | 6,956 | $ | 7,167 | $ | 7,492 | ||||||||
|
|
|
|
|
|
|
|
Reconciliation of Costs incurred and GTP capital investments to Oil and gas capital investment
Management believes the presentation of oil and gas capital investments is useful for investors to assess Apaches expenditures related to our oil and gas capital activity. We define oil and gas capital investments as costs incurred for oil and gas activities and GTP activities, adjusted to exclude asset retirement obligations revisions and liabilities incurred, while including amounts paid during the period for abandonment and decommissioning expenditures. Capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of Apaches cash expenditures related to oil and gas capital activity and is consistent with how we plan our capital budget.
For the Quarter Ended June 30, |
For the Six Months Ended Ended June 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Costs incurred in oil and gas property: |
||||||||||||||||
Acquisitions |
||||||||||||||||
Proved |
$ | 3 | $ | 41 | $ | 3 | $ | 41 | ||||||||
Unproved |
15 | 90 | 64 | 108 | ||||||||||||
Exploration and development |
733 | 423 | 1,246 | 900 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
751 | 554 | 1,313 | 1,049 | |||||||||||||
GTP capital investments: |
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GTP facilities |
146 | | 288 | | ||||||||||||
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Total Costs incurred and GTP capital investments |
$ | 897 | $ | 554 | $ | 1,601 | $ | 1,049 | ||||||||
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Reconciliation of Costs incurred and GTP to Oil and gas capital investment |
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Asset retirement obligations incurred and revisions |
$ | (104 | ) | $ | (98 | ) | $ | (119 | ) | (99 | ) | |||||
Asset retirement obligations settled |
9 | 16 | 22 | 31 | ||||||||||||
Exploration expense other than dry hole expense and unproved leasehold impairments |
(23 | ) | (24 | ) | (48 | ) | (51 | ) | ||||||||
Less noncontrolling interest |
(41 | ) | (48 | ) | (72 | ) | (104 | ) | ||||||||
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Total Oil and gas capital investment |
$ | 738 | $ | 400 | $ | 1,384 | $ | 826 | ||||||||
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Page 7
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