Apache Reports Higher Third-Quarter Earnings Driven By 35% Increase In Onshore North America Liquids Production - GAAP earnings of $0.75 per share/$300 million; adjusted earnings* of $2.32 per share/$932 million

- $2.0 billion of cash flow from operations; $2.7 billion before changes in working capital*

- $700 million in shares repurchased to date under stock buyback program

HOUSTON, Nov. 7, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) today announced third-quarter 2013 earnings of $300 million or $0.75 per diluted common share and adjusted earnings,* which exclude certain items that impact the comparability of results, of $932 million or $2.32 per share. For the same period in the prior year, Apache reported earnings of $161 million or $0.41 per diluted common share and adjusted earnings of $861 million or $2.16 per share. Net cash provided by operating activities came to approximately $2 billion, with cash from operations before changes in operating assets and liabilities* totaling $2.7 billion, up from $2.4 billion in the year-ago period.

"The strength of our financial performance this quarter is a testament to the effectiveness of our strategy to rebalance our portfolio and drive returns by achieving the right mix of predictable production growth from our North American onshore assets combined with the substantial free cash flow generation from our international operations," said G. Steven Farris, chairman and chief executive officer at Apache. "Apache's focused drilling program in North America is yielding significant production growth. Our Permian and Central regions are the main drivers of this higher production, adding nearly 13,000 barrels per day of oil and natural gas liquids from the second quarter. These two regions represented 35 percent of the company's total worldwide liquids production, up from 27 percent a year ago, contributing 149,000 barrels per day during the third quarter. Going forward, our international regions will be the primary source of excess cash flow to fund our next growth cycle.

"We also made significant progress rebalancing our portfolio to provide more predictable and consistent growth. During the quarter we closed on transactions in the Gulf of Mexico Shelf and Canada, and announced a significant partnership with Sinopec in Egypt, which we expect to close by the end of this year," Farris said. "As previously announced, sale proceeds are being used to reduce our debt and buyback shares. We've already repurchased nearly 8 million shares of Apache common stock, and we're on track to pay down $2 billion in debt by yearend."

Production and operating highlights

Highlights from the third quarter and more recent drilling include:

  • Total worldwide net daily production of oil, natural gas, and natural gas liquids (NGLs) averaged 784,000 barrels of oil equivalent (boe) per day, with liquids production comprising 54 percent of the total.
  • The Permian Region achieved record production of 132,000 boe per day, up 7 percent from the preceding period and up 18 percent from a year ago. In the region's Barnhart area, six rigs were active throughout the quarter drilling 20 Middle and Upper Wolfcamp Shale laterals. Apache holds 345,000 net acres prospective for Wolfcamp Shale development with 971 identified locations. During October, the region achieved a milestone with half of its operated rigs drilling horizontal wells.
  • Apache's Central Region increased production to 95,000 boe per day, up 4 percent from the preceding quarter and 31 percent from the third quarter of 2012. Liquids production increased to 49,000 barrels per day, up 94 percent from the same period in the prior year, and now comprises 52 percent of the region's production. Drilling is concentrated in the stacked pays of the Anadarko Basin targeting formations such as the Granite Wash and Tonkawa, where Apache has identified thousands of locations on its prolific acreage position.
  • In its international regions, Apache commenced production from the Macedon development in Western Australia. This includes four offshore production wells, transmission lines and an onshore processing plant. Apache holds a 28.57 percent working interest in Macedon, with gross sales ramped up to 212 million cubic feet (MMcf) per day. In the North Sea, a second development well commenced production from the Tonto field, testing at an initial 24-hour rate of 8,300 barrels of oil per day. Apache holds a 100 percent working interest in Tonto.

Apache's third-quarter 2013 operations supplement includes drilling, production and other updates for each of its regions, and can be accessed at www.apachecorp.com/financialdata.

Oil and gas prices

Apache's mix of hydrocarbon production during the third quarter 2013 included approximately 46 percent crude oil and 9 percent natural gas liquids (NGLs). Due to the premium prices received for crude oil and NGLs, these products contributed 84 percent of the company's revenue during the period.

Worldwide, Apache received an average price of $107.50 per barrel of oil during the third quarter, compared with $102.62 per barrel in the same period the prior year. Apache received an average price of $3.49 per thousand cubic feet (Mcf) of natural gas, compared with $3.76 per Mcf in the prior-year period.

About Apache

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

* 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/financialdata.

Conference call

Apache will conduct a conference call to discuss its results and review its portfolio at 1 p.m. Central time on Thursday, Nov. 7. The call will be webcast on Apache's website, www.apachecorp.com. A replay of the webcast will be archived on Apache's website and available for delayed playback by telephone for one week beginning at approximately 4 p.m. Central time on Nov. 7. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84102630.

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. The transaction with Sinopec is subject to customary closing conditions and may not be completed for the amount expected, in the anticipated time frame, or at all. 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.

Website:    www.apachecorp.com

APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(In millions, except per share data)


































For the Quarter 


For the Nine Months 




Ended September 30,


Ended September 30,




2013


2012


2013


2012











REVENUES AND OTHER:









   Oil revenues

$ 3,538


$ 3,220


$ 9,989


$ 9,824


   Gas revenues

692


788


2,196


2,339


   NGL revenues

179


133


489


391


Oil and gas production revenues

4,409


4,141


12,674


12,554


Derivative instrument gains (losses), net

(422)


-


(275)


-


Other 


32


38


79


133




4,019


4,179


12,478


12,687











COSTS AND EXPENSES:









  Depreciation, depletion and amortization









   Oil and gas property and equipment









      Recurring

1,330


1,206


3,906


3,535


      Additional

743


729


808


1,898


  Other assets

99


94


297


268


Asset retirement obligation accretion

66


60


196


172


Lease operating expenses

819


801


2,419


2,178


Gathering and transportation 

83


86


237


235


Taxes other than income

185


167


610


627


General and administrative

127


124


376


384


Merger, acquisitions & transition

-


7


-


29


Financing costs, net

51


40


155


125




3,503


3,314


9,004


9,451











INCOME BEFORE INCOME TAXES

516


865


3,474


3,236


Current income tax provision 

410


544


1,191


1,729


Deferred income tax provision (benefit)

(200)


141


225


174











NET INCOME 


306


180


2,058


1,333


Preferred stock dividends

6


19


44


57











INCOME ATTRIBUTABLE TO COMMON STOCK

$    300


$    161


$ 2,014


$ 1,276











NET INCOME PER COMMON SHARE:









Basic


$   0.75


$   0.41


$   5.11


$   3.29


Diluted 


$   0.75


$   0.41


$   5.06


$   3.27











WEIGHTED-AVERAGE NUMBER OF COMMON 








   SHARES OUTSTANDING:









Basic


399


391


394


388


Diluted


401


393


407


390











DIVIDENDS DECLARED PER COMMON SHARE

$   0.20


$   0.17


$   0.60


$   0.51

 



APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)






























For the Quarter 


For the Nine Months 






Ended September 30,


Ended September 30,






2013


2012


2013


2012

CAPITAL EXPENDITURES (1):










Exploration & Development Costs











United States


$   1,489


$     1,422


$ 4,171


$ 3,608



Canada


155


164


502


459




North America


1,644


1,586


4,673


4,067



Egypt


263


299


813


809



Australia


284


265


911


518



North Sea


217


283


647


703



Argentina


60


65


145


222



New Ventures - International


3


51


28


84




International


827


963


2,544


2,336




 Worldwide Exploration & Development Costs


$   2,471


$    2,549


$ 7,217


$ 6,403














Gathering, Transmission and Processing Facilities











United States


$        70


$         13


$    120


$       57



Canada


55


52


111


138



Egypt


23


(22)


57


15



Australia


201


89


534


338



Argentina


3


3


7


12




Total Gathering, Transmission and Processing


$      352


$      135


$    829


$    560














Capitalized Interest


$        93


$        90


$    276


$    241














Capital Expenditures, excluding Acquisitions


$   2,916


$   2,774


$ 8,322


$ 7,204














Acquisitions


$          8


$        59


$    318


$ 3,421














(1) Accrual basis





























APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)












September 30,


December 31,





2013


2012









Cash and Cash Equivalents

$ 1,251


$ 160


Other Current Assets

4,765


4,802


Property and Equipment, net

51,462


53,280


Goodwill

1,369


1,289


Other Assets

1,392


1,206


   Total Assets

$ 60,239


$ 60,737









Short-Term Debt

$ 57


$ 990


Other Current Liabilities

4,466


4,546


Long-Term Debt

10,868


11,355


Deferred Credits and Other Noncurrent Liabilities

11,867


12,515


Shareholders' Equity

32,981


31,331


   Total Liabilities and Shareholders' Equity

$ 60,239


$ 60,737









Common shares outstanding at end of period

404


392

 

APACHE CORPORATION

PRODUCTION INFORMATION





















For the Quarter


For the Nine Months



Ended September 30,


Ended September 30,



2013


2012


2013


2012










OIL VOLUME - Barrels per day










Central


25,659


17,003


22,730


11,843


Permian


73,910


60,822


70,229


58,573


GOM Deepwater


7,564


6,982


7,675


6,342


GOM Shelf


45,431


38,573


45,599


42,242


GC Onshore


11,126


9,621


10,570


9,884



United States


163,690


133,001


156,803


128,884


Canada


18,573


15,075


18,112


15,311



North America


182,263


148,076


174,915


144,195


Egypt


89,294


97,546


89,530


98,648


Australia


18,787


28,191


20,195


29,690


North Sea


57,861


57,296


63,291


63,058


Argentina


9,560


9,885


9,408


9,701



International


175,502


192,918


182,424


201,097




Total


357,765


340,994


357,339


345,292










NATURAL GAS VOLUME - Mcf per day










Central


274,061


281,945


275,520


227,903


Permian


190,192


180,610


188,803


179,648


GOM Deepwater


11,804


41,267


22,562


45,333


GOM Shelf


243,477


266,415


253,360


299,897


GC Onshore


110,889


93,196


107,928


89,078



United States


830,423


863,433


848,173


841,859


Canada


529,402


604,442


523,163


617,530



North America


1,359,825


1,467,875


1,371,336


1,459,389


Egypt


350,504


329,793


357,747


354,856


Australia


212,141


215,317


212,845


217,053


North Sea


46,971


54,478


50,108


62,061


Argentina


185,962


213,745


186,241


216,399



International


795,578


813,333


806,941


850,369




Total


2,155,403


2,281,208


2,178,277


2,309,758










NGL VOLUME - Barrels per day










Central


23,437


8,305


22,006


5,271


Permian


26,057


20,739


23,131


16,613


GOM Deepwater


566


1,483


871


1,073


GOM Shelf


5,234


6,663


6,288


5,345


GC Onshore


2,216


1,886


2,343


2,083



United States


57,510


39,076


54,639


30,385


Canada


7,012


6,036


6,788


6,063



North America


64,522


45,112


61,427


36,448


North Sea


1,097


1,470


1,263


1,797


Argentina


1,713


3,006


2,254


3,022



International


2,810


4,476


3,517


4,819




Total


67,332


49,588


64,944


41,267










BOE per day










Central


94,773


72,298


90,657


55,097


Permian


131,665


111,663


124,826


105,127


GOM Deepwater


10,098


15,343


12,306


14,971


GOM Shelf


91,245


89,639


94,114


97,570


GC Onshore


31,823


27,039


30,901


26,813



United States


359,604


315,982


352,804


299,578


Canada


113,819


121,851


112,095


124,296



North America


473,423


437,833


464,899


423,874


Egypt


147,711


152,512


149,154


157,791


Australia


54,144


64,078


55,669


65,866


North Sea


66,787


67,845


72,905


75,198


Argentina


42,266


48,515


42,702


48,790



International


310,908


332,950


320,430


347,645




Total


784,331


770,783


785,329


771,519

 

APACHE CORPORATION

PRICE INFORMATION





















For the Quarter 


For the Nine Months 



Ended September 30,


Ended September 30,



2013


2012


2013


2012










  AVERAGE OIL PRICE PER BARREL










Central



$ 101.90


$ 85.54


$ 93.71


$ 88.82


Permian



104.52


87.49


93.53


90.71


GOM Deepwater


108.07


102.46


107.91


106.10


GOM Shelf


110.40


104.97


109.60


109.67


GC Onshore


110.06


104.02


109.08


108.76



United States (1)


105.82


93.38


99.35


96.53


Canada



97.58


82.92


89.33


85.96



North America (1)


104.98


92.32


98.31


95.41


Egypt(1)



112.61


113.72


107.73


112.02


Australia(1)


116.21


116.79


109.40


116.39


North Sea(1)


109.33


108.44


107.61


108.60


Argentina



79.77


73.44


77.66


76.36



International (1)


110.13


110.54


106.32


109.87




Total(1)


107.50


102.62


102.40


103.83














  AVERAGE NATURAL GAS PRICE PER MCF










Central



$      3.61


$   3.24


$   3.75


$   3.04


Permian



3.66


3.07


3.76


3.20


GOM Deepwater


3.35


3.18


3.29


2.82


GOM Shelf


3.71


2.90


3.82


2.86


GC Onshore


3.67


2.95


3.83


2.70



United States (1)


3.75


3.63


3.86


3.63


Canada (1)


2.87


3.33


3.20


3.23



North America (1)


3.41


3.51


3.61


3.46


Egypt




3.01


4.04


2.98


3.86


Australia



3.98


4.76


4.54


4.45


North Sea


10.29


8.65


10.37


8.67


Argentina



2.76


2.78


2.91


2.84



International


3.64


4.21


3.84


4.10




Total (1)


3.49


3.76


3.69


3.70














  AVERAGE NGL PRICE PER BARREL










Central



$   25.61


$ 24.28


$ 24.51


$ 27.74


Permian



29.93


27.95


27.25


34.31


GOM Deepwater


31.68


30.24


32.50


33.40


GOM Shelf


30.52


31.10


28.66


33.71


GC Onshore


30.06


37.42


30.80


41.28



United States


28.25


28.25


26.55


33.51


Canada



28.77


31.01


28.49


35.02



North America


28.30


28.62


26.76


33.76


North Sea


69.77


65.45


70.51


73.60


Argentina



22.19


16.25


25.11


21.15



International


40.77


32.41


41.41


40.71




Total


28.82


28.96


27.56


34.57




























(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:


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


ŸManagement 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.  


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








For the Quarter


For the Nine Months


Ended September 30,


Ended September 30,


2013


2012


2013


2012









Income Attributable to Common Stock (GAAP)

$ 300


$ 161


$ 2,014


$ 1,276









Adjustments:









Oil & gas property write-downs, net of tax

478


539


520


1,409


Commodity derivative mark-to-market, net of tax

213


-


88


-


Deferred tax adjustments

(31)


-


15


-


U.K. decommissioning tax rate adjustment

-


118


-


118


Merger, acquisitions & transition, net of tax

-


4


-


17


Unrealized foreign currency fluctuation impact on deferred tax expense

(28)


39


(98)


40

Adjusted Earnings (Non-GAAP)

$ 932


$ 861


$ 2,539


$ 2,860









Net Income per Common Share - Diluted (GAAP)

$ 0.75


$ 0.41


$ 5.06


$ 3.27









Adjustments:









Oil & gas property write-downs, net of tax

1.18


1.33


1.28


3.49


Commodity derivative mark-to-market, net of tax

0.53


-


0.22


-


Deferred tax adjustments

(0.07)


-


0.03


-


U.K. decommissioning tax rate adjustment

-


0.30


-


0.30


Merger, acquisitions & transition, net of tax

-


0.02


-


0.05


Unrealized foreign currency fluctuation impact on deferred tax expense

(0.07)


0.10


(0.24)


0.11

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$ 2.32


$ 2.16


$ 6.35


$ 7.22



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

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


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







For the Quarter


For the Nine Months


Ended September 30,


Ended September 30,


2013


2012


2013


2012

Net cash provided by operating activities

$ 1,978


$ 1,623


$ 7,358


$ 6,422

Changes in operating assets and liabilities

743


793


319


1,020

Cash from operations before changes in









operating assets and liabilities

$ 2,721


$ 2,416


$ 7,677


$ 7,442










APA-F

SOURCE Apache Corporation



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