Apache Reports First-Quarter Results, $4 Billion Asset Sales Goal, Program To Repurchase Up To 30 Million Shares First-quarter production growth driven by 45% increase in North American onshore liquids

HOUSTON, May 9, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported first-quarter earnings of $698 million, or $1.76 per diluted common share, and adjusted earnings*, which exclude certain items that impact the comparability of operating results, of $806 million or $2.02 per share. During the first quarter, worldwide production increased to 781,819 barrels of oil equivalent (boe) per day driven by a 45 percent increase in North American onshore liquid hydrocarbons output compared with the year-earlier period; earnings declined as a result of lower commodity prices. Cash from operations before changes in operating assets and liabilities* totaled $2.4 billion.

Apache also announced a plan to divest $4 billion in assets by year-end 2013. The company intends to use initial proceeds of $2 billion to reduce debt and enhance financial flexibility.  Additional proceeds are intended to be used to repurchase approximately $2 billion of Apache common shares under a 30-million-share repurchase program authorized by the Board of Directors.

G. Steven Farris, Apache's chairman and chief executive officer, said,  "We are showing strong results from the strategic shift that we outlined in 2012, with production from onshore North American liquids plays of 165,000 barrels per day in the first quarter.  We expect our onshore drilling programs will continue to contribute significantly to meeting our production targets."

Farris added, "This rationalization of our asset base flows naturally from more than $16 billion of acquisitions over the last three years. Our goal is to ensure that Apache's portfolio has the right mix of assets to generate attractive rates of return, drive production growth, and create shareholder value.

"In this vein, our Board and management team conducted a strategic portfolio review to identify assets that no longer fit our growth profile," Farris said.  "Based on this review, we have a process well under way to divest non-core assets while retaining those that drive long-term growth and generate cash from operations. We are also pursuing other monetizations including joint venture partnerships.

"Proceeds from this program will enable us to reduce debt and repurchase up to 30 million shares or approximately 7.5 percent of shares outstanding," Farris said.  "We believe that as a result of this process, we will become an even stronger company with a focused portfolio of high-growth, high-return assets."

Agreements pertaining to asset sales and monetizations are subject to market conditions including commodity prices. Apache's annual production guidance will not be adjusted until it enters into definitive agreements with potential acquirers or joint venture partners.

The timing and actual number of shares repurchased will depend on a variety of factors including the stock price, corporate and regulatory requirements and other market and economic conditions. Repurchased shares would be available for general corporate purposes.

First-quarter results

In the prior-year period, Apache reported earnings of $778 million or $2.00 per share, adjusted earnings of $1.2 billion or $3.00 per share, and cash from operations before changes in operating assets and liabilities of $2.6 billion

First-quarter 2013 worldwide production of 781,819 boe per day compared with 769,296 boe per day in the prior-year period and 800,005 boe per day in the fourth quarter of 2012. As previously disclosed, first-quarter 2013 worldwide production was negatively impacted by interruptions associated with cyclones in Australia and third-party gas plant downtime in Canada.

Apache currently is the second most-active U.S. onshore driller with 42 rigs in operation in the Permian Basin and 28 rigs active in the Anadarko Basin. The Permian and Central regions averaged 205,650 boe per day – 26 percent of Apache's worldwide output – and spent 40 percent of the company's first-quarter drilling capital.

Growth in onshore liquids output was offset by the deferred production of 4,100 boe per day in Canada and 3,500 boe per day in Australia, lower North American gas production because of reduced dry gas drilling activity and natural field declines in other international regions.

The company had previously incorporated production deferrals and declines into its production guidance, and remains on track to achieve its full-year guidance of 3 to 5 percent production growth. This production guidance has not been adjusted for any variances associated with future divestitures.

Operational highlights

  • Production in the Anadarko Basin – Apache's Central Region – increased 129 percent from the year-earlier period to 86,215 boe per day, largely a result of successful drilling in the Tonkawa, Granite Wash and other liquids-rich formations.
  • Permian Basin production rose to 119,435 boe per day, up 20 percent from the prior-year period, as a result of increased drilling and recompletion activity in oil and liquids-rich plays, including the Wolfcamp Shale, the Cline Shale and Yeso.
  • The Tonto oil field in the United Kingdom sector of the North Sea commenced production on April 24, 2013. Tonto-1, the first producing well, came on stream at an initial rate of 10,346 barrels of oil per day through a tie-back to the Forties Bravo production platform.
  • Three discoveries in three basins in Egypt – Alamein, Faghur and Matruh – highlighted the company's diverse potential for new oil and gas developments across its concessions.

Oil and gas prices

Liquid hydrocarbons represented 53 percent of first-quarter production but contributed 82 percent of revenues because of the premium prices received for crude oil versus natural gas.

Worldwide, Apache received an average price of $101.72 per barrel of oil during the first quarter, down from $111.22 per barrel during the prior-year period. Apache's oil realizations reflect higher prices relative to the West Texas Intermediate benchmark realized on Dated Brent crude produced in the company's Australia, North Sea and Egypt regions, and on sweet crude from the Gulf of Mexico regions. Apache received these premium prices on approximately 68 percent of its crude oil production.

Apache received an average of $3.72 per thousand cubic feet (Mcf) of natural gas, down from $3.82 per Mcf in the prior-year period. The average price received for Apache's international gas production – $3.99 per Mcf – exceeded the average price received for company's North American gas production for the fifth consecutive quarter. Approximately 37 percent of Apache's gas output is produced outside North America.

*Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below. For supplemental financial and operational data and non-GAAP information, please go to http://www.apachecorp.com/financialinfo.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom North Sea, Australia and Argentina. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com.

Conference call

Apache will conduct a conference call to discuss its results and its portfolio review at 9 a.m. Central time on Thursday, May 9. The conference call will be webcast from Apache's website, www.apachecorp.com. The webcast replay will be archived on Apache's website. The conference call will be available for delayed playback by telephone for one week beginning at approximately noon on May 9. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84101004.

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" and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations, and objectives for Apache's operations, including statements about our drilling plans and production expectations, asset sales and monetizations and share repurchases. 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 2012 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 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.

 

APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(In millions, except per share data)






















For the Quarter




Ended March 31,




2013


2012







REVENUES AND OTHER:





  Oil revenues

$ 3,255


$ 3,512


  Gas revenues

735


811


  NGL revenues

156


134


Oil and gas production revenues

4,146


4,457


Other 


(70)


79




4,076


4,536







COSTS AND EXPENSES:





Depreciation, depletion and amortization





  Oil and gas property and equipment





     Recurring

1,265


1,135


     Additional

65


521


  Other assets

105


84


Asset retirement obligation accretion

65


55


Lease operating expenses

771


673


Gathering and transportation 

74


77


Taxes other than income

242


257


General and administrative

116


128


Merger, acquisitions & transition

-


6


Financing costs, net

53


40




2,756


2,976







INCOME BEFORE INCOME TAXES

1,320


1,560


Current income tax provision 

497


725


Deferred income tax provision

106


38







NET INCOME 


717


797


Preferred stock dividends

19


19







INCOME ATTRIBUTABLE TO COMMON STOCK

$    698


$    778







NET INCOME PER COMMON SHARE:





Basic


$   1.78


$   2.02


Diluted 


$   1.76


$   2.00







WEIGHTED-AVERAGE NUMBER OF COMMON 




   SHARES OUTSTANDING:





Basic


392


385


Diluted


408


399







DIVIDENDS DECLARED PER COMMON SHARE

$   0.20


$   0.17

 

APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)






















For the Quarter






Ended March 31,






2013


2012

CAPITAL EXPENDITURES (1):






Exploration & Development Costs







United States


$     1,269


$                794



Canada


258


198




North America


1,527


992



Egypt


262


250



Australia


225


78



North Sea


177


196



Argentina


33


84



New Ventures - International


5


21




International


702


629




Worldwide Exploration & Development Costs


$     2,229


$             1,621










Gathering, Transmission and Processing Facilities







United States


$          18


$                  12



Canada


30


44



Egypt


19


17



Australia


180


172



Argentina


2


4




Total Gathering, Transmission and Processing


$        249


$                249










Capitalized Interest


$          93


$                  66










Capital Expenditures, excluding Acquisitions


$     2,571


$             1,936










Acquisitions


$        310


$                  60










(1) Accrual basis













APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)














March 31,


December 31,






2013


2012










Cash and Cash Equivalents


$        248


$               160


Other Current Assets 


4,600


4,802


Property and Equipment, net


54,289


53,280


Goodwill


1,369


1,289


Other Assets


1,286


1,206


Total Assets


$   61,792


$          60,737










Short-Term Debt


$        994


$               990


Other Current Liabilities


4,568


4,546


Long-Term Debt


11,485


11,355


Deferred Credits and Other Noncurrent Liabilities


12,758


12,515


Shareholders' Equity


31,987


31,331


Total Liabilities and Shareholders' Equity


$   61,792


$          60,737










Common shares outstanding at end of period


392


392

 

APACHE CORPORATION

PRODUCTION INFORMATION

























For the Quarter







Ended March 31,







2013


2012










  OIL VOLUME - Barrels per day






Central



20,526


6,483


Permian



67,900


56,481


GOM Deepwater


7,235


5,801


GOM Shelf


43,625


46,585


GC Onshore


9,977


10,578



United States


149,263


125,928


Canada



17,176


15,582



North America


166,439


141,510


Egypt




91,315


99,490


Australia



20,001


30,398


North Sea


68,462


65,946


Argentina



9,297


9,632



International


189,075


205,466




Total 


355,514


346,976










  NATURAL GAS VOLUME - Mcf per day






Central



277,025


165,863


Permian



185,713


180,253


GOM Deepwater


31,136


46,996


GOM Shelf


254,405


332,140


GC Onshore


105,412


92,241



United States


853,691


817,493


Canada



519,175


636,227



North America


1,372,866


1,453,720


Egypt




365,612


376,067


Australia



214,395


224,337


North Sea


55,032


67,066


Argentina



188,259


211,193



International


823,298


878,663




Total 


2,196,164


2,332,383










  NGL VOLUME - Barrels per day






Central



19,517


3,513


Permian



20,583


12,650


GOM Deepwater


887


256


GOM Shelf


5,999


3,594


GC Onshore


2,313


2,304



United States


49,299


22,317


Canada



6,663


6,312



North America


55,962


28,629


North Sea


1,494


1,966


Argentina



2,822


2,994



International


4,316


4,960




Total


60,278


33,589










  BOE per day






Central



86,215


37,640


Permian



119,435


99,173


GOM Deepwater


13,311


13,890


GOM Shelf


92,024


105,535


GC Onshore


29,859


28,255



United States


340,844


284,493


Canada



110,368


127,932



North America


451,212


412,425


Egypt




152,250


162,168


Australia



55,734


67,788


North Sea


79,128


79,090


Argentina



43,495


47,825



International


330,607


356,871




Total 


781,819


769,296

 

APACHE CORPORATION


PRICE INFORMATION




























For the Quarter








Ended March 31,








2013


2012












  AVERAGE OIL PRICE PER BARREL







Central



$ 88.15


$ 98.79



Permian



82.78


98.36



GOM Deepwater


110.47


110.83



GOM Shelf


111.67


114.04



GC Onshore


111.03


113.41




United States (1)


94.45


102.08



Canada



82.33


92.47




North America (1)


93.20


101.02



Egypt




110.99


123.55



Australia(1)


112.35


122.95



North Sea(1)


110.53


113.19



Argentina



75.36


83.03




International (1)


109.22


118.24





Total(1)


101.72


111.22












  AVERAGE NATURAL GAS PRICE PER MCF







Central



$   3.73


$   3.10



Permian



3.77


3.72



GOM Deepwater


3.40


2.98



GOM Shelf


3.54


3.17



GC Onshore


3.55


2.80




United States (1)


3.75


3.93



Canada (1)


3.23


3.41




North America (1)


3.56


3.70



Egypt




2.95


3.79



Australia



4.94


4.18



North Sea


10.00


7.97



Argentina



3.18


2.98




International


3.99


4.02





Total (1)


3.72


3.82












  AVERAGE NGL PRICE PER BARREL







Central



$ 26.54


$ 37.48



Permian



25.71


44.78



GOM Deepwater


34.68


38.51



GOM Shelf


28.87


42.93



GC Onshore


33.69


47.16




United States


26.96


43.51



Canada



32.15


41.63




North America


27.58


43.09



North Sea


71.16


84.11



Argentina



30.28


26.20




International


44.43


49.16





Total


28.78


43.99























(1)  Prices reflect the impact of financial derivative hedging activities. 

 





APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)













Reconciliation of income attributable to common stock to adjusted earnings:



The press release discusses Apache's adjusted earnings.  Adjusted earnings exclude certain items that management believes affect the comparability of operating results and are meaningful for the following reasons:







Ÿ

Management uses adjusted earnings to evaluate the company's operational trends and performance relative to other oil and gas producing companies.







Ÿ

Management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends.  







Ÿ

The reconciling items below are the types of items management believes are frequently excluded by analysts when evaluating the operating trends and comparability of the company's results.
















For the Quarter




Ended March 31,




2013


2012







Income Attributable to Common Stock (GAAP)

$     698


$     778







Adjustments:




     Oil & gas property write-downs, net of tax

42


390

     Deferred tax adjustments

39


-

     Commodity derivative mark-to-market, net of tax

31


-

     Unrealized foreign currency fluctuation impact on deferred tax expense  

(4)


7

     Merger, acquisitions & transition, net of tax

-


3

     Adjusted Earnings  (Non-GAAP)

$     806


$  1,178







Net Income per Common Share - Diluted (GAAP)

$    1.76


$    2.00







Adjustments:




     Oil & gas property write-downs, net of tax

0.10


0.97

     Deferred tax adjustments

0.10


-

     Commodity derivative mark-to-market, net of tax

0.07


-

     Unrealized foreign currency fluctuation impact on deferred tax expense  

(0.01)


0.02

     Merger, acquisitions & transition, net of tax

-


0.01

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$    2.02


$    3.00

























Reconciliation of net cash provided by operating activities to cash from operations before changes in operating assets and liabilities:

The press release discusses Apache's cash from operations before changes in operating assets and liabilities.  It is presented because management believes the information is useful for investors because it is used internally and widely accepted by those following the oil and gas industry as a financial indicator of a company's ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt.  It is also used by research analysts to value and compare oil and gas exploration and production companies, and is frequently included in published research when providing investment recommendations.  Cash from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity, but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities.


The following table reconciles net cash provided by operating activities to cash from operations before changes in operating assets and liabilities.










For the Quarter




Ended March 31,




2013


2012

Net cash provided by operating activities

$ 2,621


$ 2,007

Changes in operating assets and liabilities

(263)


641

Cash from operations before changes in





operating assets and liabilities

$ 2,358

$ 2,648

 

APA-F

SOURCE Apache Corporation



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