UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2013
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-13546
APACHE OFFSHORE INVESTMENT PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware | 41-1464066 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400
(Address of principal executive offices)
Registrants telephone number, including area code: (713) 296-6000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Number of registrants units outstanding as of March 31, 2013. |
1,022 |
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CONSOLIDATED INCOME
(Unaudited)
For the Three Months Ended March 31, |
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2013 | 2012 | |||||||
REVENUES: |
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Oil and gas sales |
$ | 1,021,490 | $ | 1,394,766 | ||||
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1,021,490 | 1,394,766 | |||||||
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EXPENSES: |
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Depreciation, depletion and amortization |
213,373 | 277,621 | ||||||
Asset retirement obligation accretion |
31,718 | 29,860 | ||||||
Lease operating expenses |
364,507 | 337,798 | ||||||
Gathering and transportation costs |
30,318 | 59,689 | ||||||
Administrative |
98,000 | 99,250 | ||||||
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737,916 | 804,218 | |||||||
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NET INCOME |
$ | 283,574 | $ | 590,548 | ||||
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NET INCOME ALLOCATED TO: |
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Managing Partner |
$ | 95,749 | $ | 168,246 | ||||
Investing Partners |
187,825 | 422,302 | ||||||
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$ | 283,574 | $ | 590,548 | |||||
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NET INCOME PER INVESTING PARTNER UNIT |
$ | 184 | $ | 413 | ||||
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WEIGHTED AVERAGE INVESTING PARTNER UNITS OUTSTANDING |
1,021.5 | 1,021.5 | ||||||
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The accompanying notes to consolidated financial statements
are an integral part of this statement.
1
APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
For the Three Months Ended March 31, |
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2013 | 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 283,574 | $ | 590,548 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation, depletion and amortization |
213,373 | 277,621 | ||||||
Asset retirement obligation accretion |
31,718 | 29,860 | ||||||
Changes in operating assets and liabilities: |
||||||||
(Increase) decrease in accrued receivables |
15,098 | 154,188 | ||||||
Increase (decrease) in receivable from/payable to Apache Corporation |
(107,644 | ) | (98,921 | ) | ||||
Increase (decrease) in accrued operating expenses |
(5,328 | ) | (282,045 | ) | ||||
Increase (decrease) in deferred credits and other |
(153,504 | ) | | |||||
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Net cash provided by operating activities |
277,287 | 671,251 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Additions to oil and gas properties |
(337 | ) | (33,182 | ) | ||||
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Net cash used in investing activities |
(337 | ) | (33,182 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Distributions to Managing Partner |
(94,530 | ) | (226,202 | ) | ||||
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Net cash used in financing activities |
(94,530 | ) | (226,202 | ) | ||||
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
182,420 | 411,867 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |
3,118,789 | 1,404,394 | ||||||
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CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 3,301,209 | $ | 1,816,261 | ||||
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The accompanying notes to consolidated financial statements
are an integral part of this statement.
2
APACHE OFFSHORE INVESTMENT PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31, 2013 |
December 31, 2012 |
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ASSETS | ||||||||
CURRENT ASSETS: |
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Cash and cash equivalents |
$ | 3,301,209 | $ | 3,118,789 | ||||
Accrued revenues receivable |
103,749 | 118,847 | ||||||
Receivable from Apache Corporation |
32,623 | | ||||||
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3,437,581 | 3,237,636 | |||||||
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OIL AND GAS PROPERTIES, on the basis of full cost accounting: |
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Proved properties |
194,606,348 | 194,451,931 | ||||||
Less Accumulated depreciation, depletion and amortization |
(185,685,331 | ) | (185,471,958 | ) | ||||
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8,921,017 | 8,979,973 | |||||||
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$ | 12,358,598 | $ | 12,217,609 | |||||
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LIABILITIES AND PARTNERS CAPITAL | ||||||||
CURRENT LIABILITIES: |
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Payable to Apache Corporation |
$ | | $ | 75,021 | ||||
Accrued operating expenses |
119,029 | 124,357 | ||||||
Accrued development costs |
63,744 | 35,978 | ||||||
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182,773 | 235,356 | |||||||
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ASSET RETIREMENT OBLIGATION |
2,166,335 | 2,161,807 | ||||||
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PARTNERS CAPITAL: |
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Managing Partner |
444,024 | 442,805 | ||||||
Investing Partners (1,021.5 units outstanding) |
9,565,466 | 9,377,641 | ||||||
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10,009,490 | 9,820,446 | |||||||
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$ | 12,358,598 | $ | 12,217,609 | |||||
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The accompanying notes to consolidated financial statements
are an integral part of this statement.
3
APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Apache Offshore Investment Partnership, a Delaware general partnership (the Investment Partnership), was formed on October 31, 1983, consisting of Apache Corporation, a Delaware corporation (Apache or the Managing Partner), as Managing Partner and public investors (the Investing Partners). The Investment Partnership invested its entire capital in Apache Offshore Petroleum Limited Partnership, a Delaware limited partnership (the Operating Partnership). The primary business of the Investment Partnership is to serve as the sole limited partner of the Operating Partnership. The accompanying financial statements include the accounts of both the Investment Partnership and the Operating Partnership. The term Partnership, as used herein, refers to the Investment Partnership or the Operating Partnership, as the case may be.
These financial statements have been prepared by the Partnership, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal, recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Partnerships Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and which contains a summary of the Partnerships significant accounting policies and other disclosures.
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
As of March 31, 2013, the Partnerships significant accounting policies are consistent with those discussed in Note 2 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserves and related present value estimates of future net cash flow therefrom and asset retirement obligations. Actual results could differ from those estimates.
2. | RECEIVABLE FROM / PAYABLE TO APACHE CORPORATION |
The receivable from/payable to Apache represents the net result of the Investing Partners revenue and expenditure transactions in the current month. Generally, cash in this amount will be paid by Apache to the Partnership or transferred to Apache in the month after the Partnerships transactions are processed and the net results of operations are determined.
3. | RIGHT OF PRESENTMENT |
As provided in the Partnership Agreement, as amended (the Amended Partnership Agreement), a first right of presentment valuation was computed during the first quarter of 2013. The per-unit value was determined to be $15,412 based on the valuation date of December 31, 2012. The Partnership will not repurchase any Investing Partner Units (Units) during the first half of 2013 as a result of the Partnerships limited amount of cash available for discretionary purposes.
The Partnership is not in a position to predict how many Units will be presented for repurchase during the remainder of 2013 and cannot, at this time, determine if the Partnership will have sufficient funds available to repurchase any Units. The Partnership has no obligation to purchase any Units presented to the extent it determines that it has insufficient funds for such purchases.
4
4. | ASSET RETIREMENT OBLIGATIONS |
The following table describes the changes to the Partnerships asset retirement obligation liability for the first three months of 2013:
Asset retirement obligation at December 31, 2012 |
$ | 2,161,807 | ||
Accretion expense |
31,718 | |||
Liabilities settled |
(181,270 | ) | ||
Revisions in estimated liabilities |
154,080 | |||
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Asset retirement obligation at March 31, 2013 |
$ | 2,166,335 | ||
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5. | FAIR VALUE MEASUREMENTS |
Certain assets and liabilities are reported at fair value on a recurring basis in the Partnerships consolidated balance sheet. The following methods and assumptions were used to estimate the fair values:
Cash, Cash Equivalents, Accounts Receivable and Accounts Payable
As of March 31, 2013, and December 31, 2012, the carrying amounts approximate fair value because of the short-term nature or maturity of these instruments.
The Partnership did not use derivative financial instruments or otherwise engage in hedging activities during the three months ended March 31, 2013, and 2012.
5
ITEM 2 | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This discussion relates to Apache Offshore Investment Partnership (the Partnership) and should be read in conjunction with the Partnerships consolidated financial statements as of March 31, 2013, and the period then ended, and accompanying notes included under Part I, Item 1, of this Quarterly Report on Form 10-Q, as well as its consolidated financial statements as of December 31, 2012, and the year then ended, and the related Managements Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Partnerships Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
The Partnerships business is participation in oil and gas exploration, development and production activities on federal lease tracts in the Gulf of Mexico, offshore Louisiana and Texas.
Results of Operations
Net Income and Revenue
The Partnership reported net income of $283,574 for the first quarter of 2013, down from $590,548 in the first quarter of 2012. Net income per Investing Partner Unit decreased to $184 per Unit in the first quarter of 2013, down from $413 per Unit in the first quarter of 2012. Lower oil and gas production and higher operating expenses in 2013 contributed to the decrease in earnings and net income per Investing Partner Unit from 2012. The lower production reflected natural depletion impacting all of the Partnerships properties.
Total revenues decreased 27 percent from the first quarter of 2012 to the first quarter of 2013 on lower oil and gas volumes in the first quarter of 2013.
The Partnerships oil, gas and natural gas liquids (NGL) production volume and price information is summarized in the following table (gas volumes are presented in thousand cubic feet (Mcf) per day):
For the Three Months Ended March 31, |
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2013 | 2012 | Increase (Decrease) |
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Gas volume Mcf per day |
1,026 | 1,394 | (26 | )% | ||||||||
Average gas price per Mcf |
$ | 3.55 | $ | 2.67 | 33 | % | ||||||
Oil volume barrels per day |
65 | 94 | (31 | )% | ||||||||
Average oil price per barrel |
$ | 112.22 | $ | 113.70 | (1 | )% | ||||||
NGL volume barrels per day |
12 | 19 | (37 | )% | ||||||||
Average NGL price per barrel |
$ | 33.59 | $ | 47.43 | (29 | )% |
Oil and Gas Sales
Natural gas sales totaled $328,142 in the first quarter of 2013, decreasing $10,592 or 3 percent from the same period in 2012. Natural gas volumes on a per day basis declined 26 percent from the first quarter of 2012, decreasing sales by $122,408. The decline in the Partnerships production from 2012 was largely attributable to natural depletion. The Partnerships average realized natural gas price for the quarter increased $0.88 per Mcf, or 33 percent, from the first quarter of 2012, increasing sales by $111,816 from a year ago and largely offsetting the decline in gas production.
The Partnerships crude oil sales for the first quarter of 2013 totaled $655,841 compared to $974,924 of crude oil sales in the first quarter of 2012. Primarily as a result of natural depletion at South Timbalier 295, crude oil volumes on a per day basis fell from 94 barrels per day in 2012 to 65 barrels per day in 2013, reducing sales by $306,460. The Partnerships average realized price in the first quarter of 2013 decreased $1.48 per barrel, or 1 percent, from the first quarter of 2012.
6
During the first quarter of 2013, the Partnership sold 12 barrels per day of natural gas liquids, down from 19 barrels per day during the first quarter of 2012. The decrease reflected a reduction in processed volumes at South Timbalier 295 from 2012. The lower average realized NGL price for the first quarter of 2013 reflected declining product prices with an abundant supply of NGL products in the United States.
Since the Partnership does not anticipate acquiring additional acreage or conducting exploratory drilling on leases in which it currently holds an interest, declines in oil and gas production can be expected in future periods as a result of natural depletion. Also, given the small number of producing wells owned by the Partnership and exposure to inclement weather in the Gulf of Mexico, the Partnerships production during the remainder of 2013 and beyond may be subject to more volatility than those companies with a larger or more diversified property portfolio.
Operating Expenses
The Partnerships depreciation, depletion and amortization (DD&A) rate, expressed as a percentage of oil and gas sales, was approximately 21 percent during the first quarter of 2013 and 20 percent during first quarter of 2012. The dollar amount of DD&A expense for first the quarter of 2013 decreased from the comparable periods a year ago as a result of lower oil and gas sales in 2013. The Partnership recognized $31,718 in asset retirement obligation accretion for the first quarter of 2013 compared to $29,860 for the first quarter of 2012. The increase in accretion expense from a year ago reflected the increase in the Partnerships asset retirement obligation liability in 2012.
Lease operating expenses (LOE) for the first quarter of 2013 of $364,507 increased 8 percent from the first quarter of 2012 on higher repair costs. LOE for the quarter included repairs on platforms at South Timbalier 295 and Ship Shoal 258/259, and a re-staging of a compressor at Ship Shoal 258/259 to increase production.
In the first quarter of 2013, gathering and transportation costs for the delivery of oil and gas decreased 49 percent from the same period in 2012 on lower gas volumes. Administrative expense for 2013 decreased one percent for the three-month period ended March 31 compared to the same period in 2012.
Capital Resources and Liquidity
The Partnerships primary capital resource is net cash provided by operating activities, which totaled $0.3 million for the first three months of 2013 compared to $0.7 million during the first three months of 2012. The decline reflected lower oil and gas production and higher operating expenses which negatively impacted the Partnerships earnings in 2013.
At March 31, 2013, the Partnership had approximately $3.3 million in cash and cash equivalents, up from approximately $3.1 million at December 31, 2012. The Partnerships goal is to maintain cash and cash equivalents at least sufficient to cover the undiscounted value of its future asset retirement obligation (ARO) liability. The Partnership also plans to reserve funds for recompletion work planned for the second half of 2013 and anticipated repairs which may disrupt the Partnerships production.
The Partnerships future financial condition, results of operations and cash from operating activities will largely depend upon prices received for its oil and natural gas production. A substantial portion of the Partnerships production is sold under market-sensitive contracts. Prices for oil and natural gas are subject to fluctuations in response to changes in supply, market uncertainty and a variety of factors beyond the Partnerships control. These factors include worldwide political instability (especially in the Middle East), the foreign supply of oil and natural gas, the price of foreign imports, the level of consumer demand, and the price and availability of alternative fuels.
The Partnerships oil and gas reserves and production will also significantly impact future results of operations and cash from operating activities. The Partnerships production is subject to fluctuations in response to remaining quantities of oil and gas reserves, weather, pipeline capacity, consumer demand, mechanical performance and workover, recompletion and drilling activities. Declines in oil and gas production can be expected in future years as a result of normal depletion and the non-participation in acquisition or exploration activities by the Partnership. Based on production estimates from independent engineers and current market conditions, the Partnership forecasts it will be able to meet its liquidity needs for routine operations in the foreseeable future. The Partnership will reduce capital expenditures and distributions to partners as cash from operating activities declines.
7
In the event that future short-term operating cash requirements are greater than the Partnerships financial resources, the Partnership may seek short-term, interest-bearing advances from the Managing Partner as needed. The Managing Partner, however, is not obligated to make loans to the Partnership.
On an ongoing basis, the Partnership reviews the possible sale of lower value properties prior to incurring associated dismantlement and abandonment costs.
Capital Commitments
The Partnerships primary needs for cash are for operating expenses, drilling and recompletion expenditures, future dismantlement and abandonment costs, distributions to Investing Partners, and the purchase of Units offered by Investing Partners under the right of presentment. To the extent there is discretion, the Partnership allocates available capital to investment in the Partnerships properties so as to maximize production and resultant cash flow. The Partnership had no outstanding debt or lease commitments at March 31, 2013. The Partnership did not have any contractual obligations as of March 31, 2013, other than the liability for dismantlement and abandonment costs of its oil and gas properties. The Partnership has recorded a separate liability for the present value of this asset retirement obligation as discussed in the notes to the financial statements included in the Partnerships latest annual report on Form 10-K.
During the first three months of 2013 the Partnership had only diminutive outlays for capital expenditures as it did not commence any new drilling or recompletion projects during the period. The Partnership spent approximately $0.2 million on abandonment cost at South Timbalier 295 during the first quarter of 2013. Based on information supplied by the operators of the properties, the Partnership anticipates capital expenditures of less than $0.2 million for the remainder of 2013 as no new drilling projects are currently planned for 2013. Capital estimates may change based on realized prices, changes by the operator to the development plan, pipeline construction or modifications, or changes in government regulations.
Because of declining oil and gas production and the need to replenish cash reserves for future asset retirement obligations, no distributions were made to Investing Partners during the first three months of 2013. The Partnership also made no distribution to Investing Partners during the first three months of 2012 as a result of the large amount of capital expenditures funded by the Partnership during 2011 and the loss of revenue in 2011 from the shut-in of South Timbalier 295.
The amount of future distributions will be dependent on actual and expected production levels, realized and anticipated oil and gas prices, expected drilling and recompletion expenditures, and prudent cash reserves for future dismantlement and abandonment costs that will be incurred after the Partnerships reserves are depleted. The Partnerships goal is to maintain cash and cash equivalents in the Partnership at least sufficient to cover the undiscounted value of its future asset retirement obligations. During the second and third quarters of 2013, the Partnership will review available cash balances and the factors noted above to determine whether there are sufficient funds to make a distribution to Investing Partners during the second half 2013.
As provided in the Amended Partnership Agreement, a first right of presentment valuation was computed during the first quarter of 2013. The per-unit value was determined to be $15,412 based on the valuation date of December 31, 2012. The Partnership did not repurchase any Investing Partner Units (Units) during the first quarter of 2013 as a result of the Partnerships limited amount of cash available for discretionary purposes. The Partnership is not in a position to predict how many Units will be presented for repurchase during the remainder of 2013 and cannot, at this time, determine if the Partnership will have sufficient funds available to repurchase any units. Pursuant to the Amended Partnership Agreement, the Partnership has no obligation to repurchase any Units presented to the extent it determines that it has insufficient funds for such purchases.
8
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity Risk
The Partnerships major market risk exposure is in the pricing applicable to its oil and gas production. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot prices applicable to its natural gas production. Prices received for oil and gas production continue to be volatile and unpredictable. The Partnership has not used derivative financial instruments or otherwise engaged in hedging activities during 2012 or the first three months of 2013.
The information set forth under Commodity Risk in Item 7A of the Partnerships Form 10-K for the year ended December 31, 2012, is incorporated by reference. Information about market risks for the current quarter is not materially different.
Forward-Looking Statements and Risk
This report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on our examination of historical operating trends, the information that was used to prepare our estimate of proved reserves as of December 31, 2012, and other data in our possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as may, will, expect, intend, project, estimate, anticipate, believe, or continue or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, our assumptions about:
| the market prices of oil, natural gas, NGLs and other products or services; |
| the supply and demand for oil, natural gas, NGLs and other products or services; |
| production and reserve levels; |
| drilling risks; |
| economic and competitive conditions; |
| the availability of capital resources; |
| capital expenditure and other contractual obligations; |
| weather conditions; |
| inflation rates; |
| the availability of goods and services; |
| legislative or regulatory changes; |
| terrorism or cyber attacks; |
| occurrence of property acquisitions or divestitures; |
| the securities or capital markets and related risks such as general credit, liquidity, market and interest-rate risks; and |
| other factors disclosed under Items 1 and 2 Business and Properties Estimated Proved Reserves and Future Net Cash Flows, Item 1A Risk Factors, Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations, Item 7A Quantitative and Qualitative Disclosures About Market Risk, and elsewhere in our most recently filed Form 10-K. |
9
All subsequent written and oral forward-looking statements attributable to the Partnership, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. We assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise.
ITEM 4 CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
G. Steven Farris, the Managing Partners Chairman and Chief Executive Officer (in his capacity as principal executive officer), and Thomas P. Chambers, the Managing Partners Executive Vice President and Chief Financial Officer (in his capacity as principal financial officer), evaluated the effectiveness of the Partnerships disclosure controls and procedures as of March 31, 2013, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Partnerships disclosure controls and procedures were effective, providing effective means to ensure that the information it is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified under the Commissions rules and forms and communicated to our management, including the Managing Partners principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting during the period covered by this quarterly report on Form 10-Q that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
None.
ITEM 1A. | RISK FACTORS |
During the quarter ended March 31, 2013, there were no material changes from the risk factors as previously disclosed in the Partnerships Form 10-K for the year ended December 31, 2012.
ITEM 2. | UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS |
None.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
ITEM 4. | MINE SAFETY DISCLOSURES |
None.
ITEM 5. | OTHER INFORMATION |
None.
10
ITEM 6. | EXHIBITS |
a. | Exhibits |
*3.1 |
Partnership Agreement of Apache Offshore Investment Partnership (incorporated by reference to Exhibit (3)(i) to Form 10 filed by Partnership with the Commission on April 30, 1985, Commission File No. 0-13546). | |
*3.2 |
Amendment No. 1, dated February 11, 1994, to the Partnership Agreement of Apache Offshore Investment Partnership (incorporated by reference to Exhibit 3.3 to Partnerships Annual Report on Form 10-K for the year ended December 31, 1993, Commission File No. 0-13546). | |
*3.3 |
Limited Partnership Agreement of Apache Offshore Petroleum Limited Partnership (incorporated by reference to Exhibit (3)(ii) to Form 10 filed by Partnership with the Commission on April 30, 1985, Commission File No. 0-13546). | |
**31.1 |
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer | |
**31.2 |
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer | |
**32.1 |
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer | |
***101.INS |
XBRL Instance Document. | |
***101.SCH |
XBRL Taxonomy Schema Document. | |
***101.CAL |
XBRL Calculation Linkbase Document. | |
***101.LAB |
XBRL Label Linkbase Document. | |
***101.PRE |
XBRL Presentation Linkbase Document. |
* | Incorporated by reference herein. |
** | Filed herewith. |
*** | Furnished herewith. |
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
APACHE OFFSHORE INVESTMENT PARTNERSHIP | ||||||
By: Apache Corporation, Managing Partner | ||||||
Dated: | May 9, 2013 | /s/ Thomas P. Chambers | ||||
Thomas P. Chambers | ||||||
Executive Vice President and Chief Financial Officer | ||||||
(principal financial officer) of Apache Corporation, | ||||||
Managing Partner | ||||||
Dated: | May 9, 2013 | /s/ Rebecca A. Hoyt | ||||
Rebecca A. Hoyt | ||||||
Vice President, Chief Accounting Officer and Controller | ||||||
(principal accounting officer) of Apache Corporation, | ||||||
Managing Partner |
12
Exhibit 31.1
CERTIFICATIONS
I, G. Steven Farris, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Apache Offshore Investment Partnership; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information ; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ G. Steven Farris |
G. Steven Farris |
Chairman and Chief Executive Officer (principal executive officer) of Apache Corporation, Managing Partner |
Date: May 9, 2013
Exhibit 31.2
CERTIFICATIONS
I, Thomas P. Chambers, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Apache Offshore Investment Partnership; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Thomas P. Chambers |
Thomas P. Chambers |
Executive Vice President and Chief Financial Officer (principal financial officer) of Apache Corporation, Managing Partner |
Date: May 9, 2013
Exhibit 32.1
APACHE OFFSHORE INVESTMENT PARTNERSHIP
by Apache Corporation, Managing Partner
Certification of Principal Executive Officer
and Principal Financial Officer
I, G. Steven Farris, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Offshore Investment Partnership for the quarterly period ending March 31, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Offshore Investment Partnership.
/s/ G. Steven Farris | ||
By: | G. Steven Farris | |
Title: | Chairman and Chief Executive Officer (principal executive officer) of Apache Corporation, Managing Partner | |
Date: | May 9, 2013 |
I, Thomas P. Chambers, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Offshore Investment Partnership for the quarterly period ending March 31, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Offshore Investment Partnership.
/s/ Thomas P. Chambers | ||
By: | Thomas P. Chambers | |
Title: | Executive Vice President and Chief Financial Officer (principal financial officer) of Apache Corporation, Managing Partner | |
Date: | May 9, 2013 |
Asset Retirement Obligations
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligations |
The following table describes the changes to the Partnership’s asset retirement obligation liability for the first three months of 2013:
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Right of Presentment
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3 Months Ended | ||
---|---|---|---|
Mar. 31, 2013
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Equity [Abstract] | |||
Right of Presentment |
As provided in the Partnership Agreement, as amended (the Amended Partnership Agreement), a first right of presentment valuation was computed during the first quarter of 2013. The per-unit value was determined to be $15,412 based on the valuation date of December 31, 2012. The Partnership will not repurchase any Investing Partner Units (Units) during the first half of 2013 as a result of the Partnership’s limited amount of cash available for discretionary purposes. The Partnership is not in a position to predict how many Units will be presented for repurchase during the remainder of 2013 and cannot, at this time, determine if the Partnership will have sufficient funds available to repurchase any Units. The Partnership has no obligation to purchase any Units presented to the extent it determines that it has insufficient funds for such purchases. |
Statement of Consolidated Income (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
REVENUES: | ||
Oil and gas sales | $ 1,021,490 | $ 1,394,766 |
Total Revenues | 1,021,490 | 1,394,766 |
EXPENSES: | ||
Depreciation, depletion and amortization | 213,373 | 277,621 |
Asset retirement obligation accretion | 31,718 | 29,860 |
Lease operating expenses | 364,507 | 337,798 |
Gathering and transportation costs | 30,318 | 59,689 |
Administrative | 98,000 | 99,250 |
Total Expenses | 737,916 | 804,218 |
NET INCOME | 283,574 | 590,548 |
NET INCOME ALLOCATED TO: | ||
Managing Partner | 95,749 | 168,246 |
Investing Partners | 187,825 | 422,302 |
NET INCOME | $ 283,574 | $ 590,548 |
NET INCOME PER INVESTING PARTNER UNIT | 184 | 413 |
WEIGHTED AVERAGE INVESTING PARTNER UNITS OUTSTANDING | 1,021.5 | 1,021.5 |
Summary of Significant Accounting Policies
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3 Months Ended | ||
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Mar. 31, 2013
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Accounting Policies [Abstract] | |||
Summary of Significant Accounting Policies |
As of March 31, 2013, the Partnership’s significant accounting policies are consistent with those discussed in Note 2 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2012. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserves and related present value estimates of future net cash flow therefrom and asset retirement obligations. Actual results could differ from those estimates. |
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Receivable From / Payable to Apache Corporation
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3 Months Ended | ||
---|---|---|---|
Mar. 31, 2013
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Related Party Transactions [Abstract] | |||
Receivable From / Payable to Apache Corporation |
The receivable from/payable to Apache represents the net result of the Investing Partners’ revenue and expenditure transactions in the current month. Generally, cash in this amount will be paid by Apache to the Partnership or transferred to Apache in the month after the Partnership’s transactions are processed and the net results of operations are determined. |
Document and Entity Information
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3 Months Ended |
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Mar. 31, 2013
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Document Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Mar. 31, 2013 |
Document Fiscal Year Focus | 2013 |
Document Fiscal Period Focus | Q1 |
Trading Symbol | AOIP |
Entity Registrant Name | APACHE OFFSHORE INVESTMENT PARTNERSHIP |
Entity Central Index Key | 0000727538 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 1,022 |
Asset Retirement Obligations (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2013
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Changes to Partnership's Asset Retirement Obligation Liability | The following table describes the changes to the Partnership’s asset retirement obligation liability for the first three months of 2013:
|
Summary of Significant Accounting Policies (Policies)
|
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserves and related present value estimates of future net cash flow therefrom and asset retirement obligations. Actual results could differ from those estimates. |
Right of Presentment - Additional Information (Detail)
|
Dec. 31, 2012
|
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Equity [Abstract] | |
Investing partner units value per unit | 15,412 |
Asset Retirement Obligations - Changes to Partnership's Asset Retirement Obligation Liability (Detail) (USD $)
|
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Asset Retirement Obligation Disclosure [Abstract] | ||
Asset retirement obligation at December 31, 2012 | $ 2,161,807 | |
Accretion expense | 31,718 | 29,860 |
Liabilities settled | (181,270) | |
Revisions in estimated liabilities | 154,080 | |
Asset retirement obligation at March 31, 2013 | $ 2,166,335 |
Consolidated Balance Sheet (Parenthetical)
|
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Statement Of Financial Position [Abstract] | ||
Investing Partners, units outstanding | 1,021.5 | 1,021.5 |
Fair Value Measurements
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3 Months Ended | ||
---|---|---|---|
Mar. 31, 2013
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Fair Value Disclosures [Abstract] | |||
Fair Value Measurements |
Certain assets and liabilities are reported at fair value on a recurring basis in the Partnership’s consolidated balance sheet. The following methods and assumptions were used to estimate the fair values: Cash, Cash Equivalents, Accounts Receivable and Accounts Payable As of March 31, 2013, and December 31, 2012, the carrying amounts approximate fair value because of the short-term nature or maturity of these instruments. The Partnership did not use derivative financial instruments or otherwise engage in hedging activities during the three months ended March 31, 2013, and 2012. |