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

Nov 01, 2012, 08:00 ET from Apache Corporation

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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