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