Apache's Drilling Program, New Takeaway Capacity Fuel Record Third-Quarter Production In Permian And Central Regions

HOUSTON, Nov. 1, 2012 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) said today that higher rig counts and new infrastructure contributed to record production from Permian and Anadarko Basin operations.

For the three-month period ending Sept. 30, 2012, Apache reported production of 771,000 barrels of oil equivalent per day, up approximately 18,300 boepd, or 2.4 percent, from the same period in the prior year. Deferred production impacted third-quarter 2012 volumes by an estimated 25,000 boepd.

Apache's third-quarter 2012 earnings totaled $161 million, or 41 cents per diluted common share, reflecting the impact of a $539 million non-cash, after-tax write-down in the carrying value of its properties in Canada resulting from lower natural gas prices. For the same period last year, Apache reported earnings of $983 million, or $2.50 per diluted share.

Apache's adjusted earnings,* which exclude the write-down and certain other items that impact the comparability of operating results, totaled $861 million, or $2.16 per diluted common share, in the third quarter as the impact of higher production was offset in part by lower prices for natural gas and natural gas liquids. In the prior-year period, Apache reported adjusted earnings of $1.16 billion, or $2.95 per share. Cash from operations before changes in operating assets and liabilities* totaled $2.42 billion in the third quarter, down from $2.69 billion in the prior-year period.

"We are continuing to add drilling rigs and accelerate activity in the Permian and Anadarko basins. Today, we are running 56 rigs in these regions with plans to expand throughout next year. All are drilling oil and liquids-rich targets and more than half are drilling horizontal wells. Production in these two regions increased 30 percent from a year ago, accounting for nearly a quarter of Apache's overall production compared with less than a fifth in third-quarter 2011. We expect this growth trajectory to continue well into the future," said G. Steven Farris, chairman and chief executive officer.

Apache's production from the Permian Basin and Central regions totaled 183,961 boepd for third quarter 2012, which includes a full three-month's contribution from Cordillera assets acquired earlier in the year. For the same period in 2011, the two regions produced 141,020 boepd.

"Another contributor to our growth was securing additional takeaway capacity, which we've done with new infrastructure projects," Farris said. "Our joint-venture gas plant at the Deadwood Field in West Texas became fully operational during the third quarter, processing more than 50 million cubic feet per day. We also installed a nine-mile pipeline in our Bivins Ranch area in the Texas Panhandle. The line is currently transporting 3.3 MMcf of associated gas per day and will enable us to continue to develop the area well beyond its present rate of 5,000 barrels of oil per day. Both projects can be expanded with production growth. We continue to pursue marketing arrangements aggressively to move our production and enhance margins.

"We're committed to growth through the drill bit across our portfolio, and Apache has nearly 100 rigs operating worldwide right now. With drilling activity and production on the rise, we look forward to concluding 2012 with our strongest quarter of the year," he said.

The company's balanced portfolio of North American and international assets, as well as oil and gas producing properties, helped to stabilize the effects of volatile prices in the commodity markets. Worldwide, Apache received an average of $102.62 per barrel of oil, a slight increase from $101.71 per barrel in the prior-year period. Apache benefitted from higher price realizations 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 premium prices to the WTI index on approximately 70 percent of crude oil production.

Apache's international regions saw natural gas price realizations increase on average 13 percent from the prior-year period to $4.21 per thousand cubic feet (Mcf). North American natural gas price realizations fell 27 percent from the same period a year ago to $3.51 per Mcf. International gas production represented 36 percent of Apache's total gas volumes.

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

Apache to webcast conference call

Apache Corporation will discuss its third-quarter 2012 results at 1 p.m. Central time on Thursday, Nov. 1. 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 4 p.m. on Nov. 1. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 42313953.

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.

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 infrastructure projects, drilling plans and future production growth. 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 2011 Form 10-K and other public filings 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 


For the Nine Months 



Ended September 30,


Ended September 30,



2012


2011


2012


2011










REVENUES AND OTHER:









Oil and gas production revenues

$ 4,141


$ 4,282


$ 12,554


$ 12,515


Other 

38


46


133


76



4,179


4,328


12,687


12,591










COSTS AND EXPENSES:









Depreciation, depletion and amortization









    Recurring

1,300


1,045


3,803


2,984


    Additional

729


20


1,898


46


Asset retirement obligation accretion

60


39


172


114


Lease operating expenses

801


661


2,178


1,946


Gathering and transportation 

86


72


235


221


Taxes other than income

167


244


627


663


General and administrative

124


112


384


327


Merger, acquisitions & transition

7


4


29


15


Financing costs, net

40


37


125


123



3,314


2,234


9,451


6,439










INCOME BEFORE INCOME TAXES

865


2,094


3,236


6,152


Current income tax provision 

544


473


1,729


1,692


Deferred income tax provision

141


619


174


1,065










NET INCOME 

180


1,002


1,333


3,395


Preferred stock dividends

19


19


57


57










INCOME ATTRIBUTABLE TO COMMON STOCK

$    161


$    983


$   1,276


$   3,338










NET INCOME PER COMMON SHARE:









Basic

$   0.41


$   2.56


$      3.29


$      8.70


Diluted 

$   0.41


$   2.50


$      3.27


$      8.49










WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
















Basic

391


384


388


384


Diluted

393


400


390


400










DIVIDENDS DECLARED PER COMMON SHARE

$   0.17


$   0.15


$      0.51


$      0.45

 

APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)






























For the Quarter 


For the Nine Months 






Ended September 30,


Ended September 30,






2012


2011


2012


2011

CAPITAL EXPENDITURES (1):










Exploration & Development Costs











United States


$             1,422


$               688


$ 3,608


$ 1,976



Canada


164


175


459


609




North America


1,586


863


4,067


2,585



Egypt


299


197


809


674



Australia


265


127


518


445



North Sea


283


197


703


618



Argentina


65


87


222


245



Other International


51


22


84


49




International


963


630


2,336


2,031




Worldwide Exploration & Development Costs


$             2,549


$            1,493


$ 6,403


$ 4,616














Gathering, Transmission and Processing Facilities











United States


$                   13


$                    9


$       57


$         9



Canada


52


29


138


113



Egypt


(22)


20


15


74



Australia


89


136


338


255



Argentina


3


3


12


7




Total Gathering, Transmission and Processing


$                 135


$               197


$    560


$    458














Capitalized Interest


$                   90


$                  70


$    241


$    193














Capital Expenditures, excluding Acquisitions


$             2,774


$            1,760


$ 7,204


$ 5,267














Acquisitions


$                   59


$               398


$ 3,421


$    493














(1) Accrual basis

 

APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)














September 30,


December 31,






2012


2011










Cash and Cash Equivalents


$                 318


$               295


Other Current Assets 


4,726


4,508


Property and Equipment, net


51,164


45,448


Goodwill


1,114


1,114


Other Assets


1,488


686


Total Assets


$           58,810


$          52,051










Short-Term Debt


$                 964


$               431


Other Current Liabilities


4,426


4,532


Long-Term Debt


10,670


6,785


Deferred Credits and Other Noncurrent Liabilities


12,036


11,310


Shareholders' Equity


30,714


28,993


Total Liabilities and Shareholders' Equity


$           58,810


$          52,051










Common shares outstanding at end of period


391


384

 

APACHE CORPORATION

PRODUCTION INFORMATION




















For the Quarter 


For the Nine Months 







Ended September 30,


Ended September 30,







2012


2011


2012


2011














  OIL VOLUME - Barrels per day










Central


17,003


7,873


11,843


6,608


Permian


60,822


51,410


58,573


49,849


GOM Deepwater


6,982


6,155


6,342


5,859


GOM Shelf


38,573


45,057


42,242


45,442


GC Onshore


9,621


9,858


9,884


9,377



United States


133,001


120,353


128,884


117,135


Canada


15,075


13,027


15,311


14,040



North America


148,076


133,380


144,195


131,175


Egypt


97,546


103,289


98,648


103,913


Australia


28,191


39,400


29,690


38,248


North Sea


57,296


57,838


63,058


54,097


Argentina


9,885


9,461


9,701


9,577



International


192,918


209,988


201,097


205,835




Total 


340,994


343,368


345,292


337,010














  NATURAL GAS VOLUME - Mcf per day









Central


281,945


221,193


227,903


220,094


Permian


180,610


181,070


179,648


171,309


GOM Deepwater


41,267


43,596


45,333


53,557


GOM Shelf


266,415


331,251


299,897


343,200


GC Onshore


93,196


80,883


89,078


77,314



United States


863,433


857,993


841,859


865,474


Canada


604,442


619,897


617,530


633,031



North America


1,467,875


1,477,890


1,459,389


1,498,505


Egypt


329,793


376,259


354,856


368,898


Australia


215,317


187,852


217,053


183,470


North Sea


54,478


2,497


62,061


2,257


Argentina


213,745


223,929


216,399


209,206



International


813,333


790,537


850,369


763,831




Total 


2,281,208


2,268,427


2,309,758


2,262,336














  NGL VOLUME - Barrels per day










Central


8,305


1,961


5,271


1,156


Permian


20,739


12,733


16,613


11,645


GOM Deepwater


1,483


726


1,073


760


GOM Shelf


6,663


4,560


5,345


5,559


GC Onshore


1,886


1,939


2,083


1,881



United States


39,076


21,919


30,385


21,001


Canada


6,036


6,120


6,063


6,220



North America


45,112


28,039


36,448


27,221


Egypt


-


(4)


-


66


North Sea


1,470


14


1,797


5


Argentina


3,006


3,008


3,022


3,024



International


4,476


3,018


4,819


3,095




Total


49,588


31,057


41,267


30,316














  BOE per day










Central


72,298


46,699


55,097


44,446


Permian


111,663


94,321


105,127


90,045


GOM Deepwater


15,343


14,148


14,971


15,545


GOM Shelf


89,639


104,825


97,570


108,201


GC Onshore


27,039


25,278


26,813


24,144



United States


315,982


285,271


299,578


282,381


Canada


121,851


122,463


124,296


125,765



North America


437,833


407,734


423,874


408,146


Egypt


152,512


165,995


157,791


165,461


Australia


64,078


70,708


65,866


68,826


North Sea


67,845


58,269


75,198


54,478


Argentina


48,515


49,790


48,790


47,471



International


332,950


344,762


347,645


336,236




Total 


770,783


752,496


771,519


744,382

 

APACHE CORPORATION

PRICE INFORMATION


















For the Quarter 


For the Nine Months 






Ended September 30,


Ended September 30,






2012


2011


2012


2011













  AVERAGE OIL PRICE PER BARREL










Central


$ 85.54


$ 84.55


$ 88.82


$ 90.09


Permian


87.49


86.67


90.71


91.19


GOM Deepwater


102.46


104.05


106.10


104.50


GOM Shelf


104.97


106.64


109.67


106.53


GC Onshore


104.02


102.69


108.76


103.53



United States (1)


93.38


93.86


96.53


94.05


Canada


82.92


88.34


85.96


92.77



North America (1)


92.32


93.32


95.41


93.91


Egypt(1)


113.72


110.96


112.02


111.02


Australia(1)


116.79


113.40


116.39


111.78


North Sea(1)


108.44


101.85


108.60


103.90


Argentina


73.44


69.27


76.36


65.08



International (1)


110.54


107.03


109.87


107.15




Total(1)


102.62


101.71


103.83


102.00













  AVERAGE NATURAL GAS PRICE PER MCF










Central


$   3.24


$   4.67


$   3.04


$   4.60


Permian


3.07


5.35


3.20


5.21


GOM Deepwater


3.18


4.03


2.82


4.23


GOM Shelf


2.90


4.62


2.86


4.60


GC Onshore


2.95


4.60


2.70


4.63



United States (1)


3.63


5.06


3.63


5.02


Canada (1)


3.33


4.49


3.23


4.58



North America (1)


3.51


4.82


3.46


4.83


Egypt



4.04


4.60


3.86


4.61


Australia


4.76


2.88


4.45


2.71


North Sea


8.65


21.43


8.67


22.87


Argentina


2.78


2.74


2.84


2.57



International


4.21


3.71


4.10


3.65




Total (1)


3.76


4.44


3.70


4.43













  AVERAGE NGL PRICE PER BARREL










Central


$ 24.28


$ 51.55


$ 27.74


$ 52.79


Permian


27.95


53.84


34.31


51.00


GOM Deepwater


30.24


54.95


33.40


48.41


GOM Shelf


31.10


53.44


33.71


48.17


GC Onshore


37.42


62.57


41.28


59.62



United States


28.25


54.36


33.51


51.03


Canada


31.01


46.93


35.02


44.47



North America


28.62


52.74


33.76


49.53


Egypt



-


-


-


66.37


North Sea


65.45


65.45


73.60


65.45


Argentina


16.25


26.45


21.15


28.20



International


32.41


26.62


40.71


29.06




Total


28.96


50.20


34.57


47.44



























(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:










  • Management uses adjusted earnings to evaluate the company's operational trends and performance relative to other oil and gas producing companies.
  • Management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends.  
  • The reconciling items below are the types of items management believes are frequently excluded by analysts when evaluating the operating trends and comparability of the company's results.





















For the Quarter 


For the Nine Months 



Ended September 30,


Ended September 30,



2012


2011


2012


2011










Income Attributable to Common Stock (GAAP)

$    161


$    983


$ 1,276


$ 3,338










Adjustments:









Canada proved property write-down, net of tax

539


-


1,409


-


U.K. decommissioning tax rate adjustment

118


-


118


-


Unrealized foreign currency fluctuation impact on deferred tax expense  

39


(99)


40


(68)


Merger, acquisitions & transition, net of tax

4


2


17


9


U.K. tax rate increase

-


274


-


218

Adjusted Earnings  (Non-GAAP)

$    861


$ 1,160


$ 2,860


$ 3,497










Net Income per Common Share - Diluted (GAAP)

$   0.41


$   2.50


$   3.27


$   8.49










Adjustments:









Canada proved property write-down, net of tax

1.33


-


3.49


-


U.K. decommissioning tax rate adjustment

0.30


-


0.30


-


Unrealized foreign currency fluctuation impact on deferred tax expense  

0.10


(0.25)


0.11


(0.17)


Merger, acquisitions & transition, net of tax

0.02


0.01


0.05


0.02


U.K. tax rate increase

-


0.69


-


0.55

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$   2.16


$   2.95


$   7.22


$   8.89











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,



2012


2011


2012


2011

Net cash provided by operating activities

$ 1,623


$ 2,447


$ 6,422


$ 7,171

Changes in operating assets and liabilities

793


241


1,020


399

Cash from operations before changes in









operating assets and liabilities

$ 2,416


$ 2,688


$ 7,442


$ 7,570

 

APA-F

SOURCE Apache Corporation



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