Apache Production Surges 25% in First Quarter to 732,000 boe Per Day

Quarterly earnings top $1.1 billion or $2.86 per diluted share; cash flow exceeds $2.2 billion

News provided by

Apache Corporation

Apr 28, 2011, 08:15 ET

HOUSTON, April 28, 2011 /PRNewswire/ -- Apache Corporation (NYSE,Nasdaq: APA) reported production of 732,000 barrels of oil equivalent (boe) per day and earnings of $1.1 billion, or $2.86 per diluted share, for the three-month period ending March 31, 2011. These compare with production of 586,000 boe per day and net income of $705 million, or $2.08 per diluted share, for the same period in the prior year.

"Apache is beginning the year with a solid, strong performance," said G. Steven Farris, chairman and chief executive officer. "Despite a number of challenges, our diversified portfolio of assets delivered exceptional earnings and operating results. Liquids production increased 57,000 barrels to 358,000 barrels per day, which enabled Apache to achieve stand-out earnings and cash flow as a leading beneficiary of rising oil prices."

Higher oil prices and production from new wells drilled during the quarter and assets acquired during 2010 combined to increase revenues to $3.9 billion, up from $2.7 billion last year. Cash from operations before changes in operating assets and liabilities* increased 43 percent from the prior year to $2.2 billion. Excluding certain items that management believes affect the comparability of operating results, Apache reported adjusted earnings* of $1.1 billion in first quarter 2011 compared with $712 million in the year-earlier period. On a per-share basis, adjusted earnings were $2.90 in the first quarter compared with $2.10 per diluted share in the prior-year period.

Liquid hydrocarbons represented 49 percent of production and 77 percent of revenues. Approximately 60 percent of the company's oil production came from operations outside North America and received in excess of a $10 premium per barrel compared with domestic production benchmarked to West Texas Intermediate prices.

On the operational front, the company achieved several milestones. These include:

  • Apache's most prolific development well in the Forties field (North Sea), which came online at approximately 11,800 barrels of oil per day.
  • In the Permian Basin, Apache is operating 24 rigs, up nearly five-fold from a year ago. Targeting primarily oil objectives, Apache drilled 110 wells including 15 horizontals during the first quarter.
  • Since drilling the first-ever horizontal Hogshooter well last year, Apache has drilled six wells into this oil-rich segment of the Anadarko basin's Granite Wash formation. To date, every well has tested in excess of 1,000 barrels of oil and 2 million cubic feet of gas per day.  
  • The company's first operated deepwater production in the Gulf of Mexico with start-up at the Balboa field.
  • Offshore Australia, Apache's Zola discovery well encountered 410 feet of net gas pay.
  • In Egypt, Apache operated 22 rigs during the quarter, drilling 33 wells, including the company's first wells in the Tayim development lease in West Kalabsha producing from deeper Paleozoic pay. Apache's production remained online throughout the quarter, increasing sequentially from the previous three months.

"We continue to strengthen our land position, both in North America and internationally. Our LNG initiatives, Kitimat in Canada and Wheatstone in Australia, are steadily progressing toward project sanction with their respective joint venture partnerships," Farris said.

"Apache's opportunity set has never been more robust. We have a deep backlog of exploitation opportunities across our portfolio. In addition to our legacy plays in core areas, we have other potentially large-scale, long-life assets such as deepwater, LNG, and unconventional plays that can provide lasting, long-term value to our shareholders."

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. From time to time, Apache posts announcements, operational updates and investor information, and copies of all press releases on its Web site, www.apachecorp.com.

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

NOTE: Apache will conduct a conference call to discuss its first-quarter 2011 results at 1 p.m. Central time on Thursday, April 28. The call will be webcast from Apache's Web site, www.apachecorp.com. The webcast replay and podcast will be archived on Apache's Web site. The conference call will be available for delayed playback by telephone for one week beginning at approximately 3 p.m. on April 28. To access the telephone playback, dial 800-642-1687 or 706-645-9291 for international calls and provide Apache's confirmation code, 21269081.

This news release contains certain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," and similar references to future periods. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties. These risks include, but are not limited to the volatility of oil and natural gas prices, uncertainties inherent in estimating oil and natural gas reserves, drilling risks, and other risks, uncertainties and factors discussed in our most recently filed Annual Report on Form 10-K/A, on our Web site and in our other public filings and press releases. There is no assurance that Apache's expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements. Unless legally required, Apache assumes no duty to update these statements as of any future date.

Effective January 1, 2010, the United States Securities and Exchange Commission (SEC) now permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves, but also "probable" reserves as well as "possible" reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this release that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in Apache's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2010, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary).

APA-F

APACHE CORPORATION

FINANCIAL INFORMATION

(In millions, except per share data)







For the Quarter



Ended March 31,


2011

2010






REVENUES AND OTHER:



Oil and gas production revenues

$ 3,878

$ 2,693

Other

47

(20)


3,925

2,673





COSTS AND EXPENSES:



Depreciation, depletion and amortization

936

639

Asset retirement obligation accretion

37

24

Lease operating expenses

623

440

Gathering and transportation

76

40

Taxes other than income

164

177

General and administrative

112

87

Merger, acquisitions and transition

5

-

Financing costs, net

45

59


1,998

1,466





INCOME BEFORE INCOME TAXES

1,927

1,207

Current income tax provision

643

343

Deferred income tax provision

150

159





NET INCOME

1,134

705

Preferred stock dividends

19

-





INCOME ATTRIBUTABLE TO COMMON STOCK

$ 1,115

$    705





NET INCOME PER COMMON SHARE:



Basic

$   2.91

$   2.09

Diluted

$   2.86

$   2.08





WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

383

337





DILUTED SHARES OUTSTANDING

397

339

APACHE CORPORATION

FINANCIAL INFORMATION

(In millions)











For the Quarter





Ended March 31,




2011

2010

CAPITAL EXPENDITURES (1):



Exploration & Development Costs




United States

$        615

$               297


Canada

266

203



North America

881

500


Egypt

193

166


Australia

162

165


North Sea

210

94


Argentina

69

37


Chile

-

10



International

634

472



Worldwide Exploration & Development Costs

$     1,515

$               972








Gathering, Transmission and Processing Facilities




Canada

$          42

$                 33


Egypt

29

24


Australia

51

56


Argentina

-

1



Total Gathering, Transmission and Processing

$        122

$               114








Capitalized Interest

$          60

$                 17








Capital Expenditures, excluding acquisitions

$     1,697

$            1,103








Acquisitions

$          11

$                   5







(1) Accrual basis




March 31,

December 31,




2011

2010







BALANCE SHEET DATA:



Cash and Cash Equivalents

$        356

$               134

Other Current Assets

3,645

3,346

Property and Equipment, net

39,046

38,151

Goodwill

1,032

1,032

Other Assets

787

762

Total Assets

$   44,866

$          43,425








Short-Term Debt

$          30

$                 46

Other Current Liabilities

3,926

3,478

Long-Term Debt

8,130

8,095

Deferred Credits and Other Noncurrent Liabilities

7,582

7,429

Shareholders' Equity

25,198

24,377

Total Liabilities and Shareholders' Equity

$   44,866

$          43,425








Common shares outstanding at end of period

383

382

APACHE CORPORATION

FINANCIAL INFORMATION











For the Quarter





Ended March 31,




2011

2010








PRODUCTION DATA:


  OIL VOLUME - Barrels per day



Central

5,046

2,371

Permian

48,280

35,875

GOM Deepwater

5,322

2,202

GOM Shelf

46,558

43,664

GC Onshore

8,517

4,643


United States

113,723

88,755

Canada

14,704

14,330


North America

128,427

103,085

Egypt

108,876

90,746

Australia

34,720

27,090

North Sea

46,968

57,847

Argentina

9,617

9,921


International

200,181

185,604



Total

328,608

288,689







  NATURAL GAS VOLUME - Mcf per day



Central

215,612

190,481

Permian

159,005

100,626

GOM Deepwater

60,589

32,253

GOM Shelf

348,845

293,969

GC Onshore

74,095

54,490


United States

858,146

671,819

Canada

642,729

313,537


North America

1,500,875

985,356

Egypt

371,514

361,986

Australia

182,922

207,294

North Sea

1,901

2,563

Argentina

188,092

154,723


International

744,429

726,566



Total

2,245,304

1,711,922







  NGL VOLUME - Barrels per day



Central

787

493

Permian

9,341

1,452

GOM Deepwater

1,129

649

GOM Shelf

6,407

3,189

GC Onshore

1,588

1,060


United States

19,252

6,843

Canada

6,545

1,734


North America

25,797

8,577

Egypt

228

-

Argentina

3,055

3,291


International

3,283

3,291



Total

29,080

11,868







  BOE per day



Central

41,768

34,610

Permian

84,121

54,098

GOM Deepwater

16,549

8,226

GOM Shelf

111,106

95,848

GC Onshore

22,455

14,785


United States

275,999

207,567

Canada

128,370

68,320


North America

404,369

275,887

Egypt

171,023

151,077

Australia

65,207

61,639

North Sea

47,285

58,275

Argentina

44,021

38,999


International

327,536

309,990



Total

731,905

585,877

APACHE CORPORATION

FINANCIAL INFORMATION











For the Quarter





Ended March 31,




2011

2010








PRICING DATA:


  AVERAGE OIL PRICE PER BARREL



Central

$            89.33

$            75.24

Permian

88.72

75.06

GOM Deepwater

97.61

76.30

GOM Shelf

98.84

76.87

GC Onshore

97.73

77.90


United States (1)

89.72

74.33

Canada

87.21

75.39


North America (1)

89.43

74.47

Egypt (1)

107.14

76.49

Australia (1)

105.89

74.94

North Sea (2)

100.89

74.34

Argentina

60.36

57.81


International (1, 2)

103.21

74.60



Total (1, 2)

97.83

74.55







  AVERAGE NATURAL GAS PRICE PER MCF



Central

$              4.42

$              5.73

Permian

4.99

7.12

GOM Deepwater

4.10

5.19

GOM Shelf

4.53

5.78

GC Onshore

4.51

5.69


United States (1)

4.94

6.06

Canada (1)

4.54

5.29


North America (1)

4.77

5.82

Egypt

4.44

3.57

Australia

2.50

2.22

North Sea

20.34

18.31

Argentina

2.18

2.17


International

3.43

2.94



Total (1)

4.32

4.60







  AVERAGE NGL PRICE PER BARREL



Central

$            48.34

$            50.06

Permian

45.52

44.50

GOM Deepwater

37.69

54.21

GOM Shelf

42.41

54.14

GC Onshore

55.85

54.83


United States

44.99

51.91

Canada

40.12

40.54


North America

43.76

49.61

Egypt

63.35

-

Argentina

30.51

34.60


International

32.79

34.60



Total

42.52

45.45







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

(2)  Prices reflect the impact of the North Sea fixed-price oil sales contract.

APACHE CORPORATION

FINANCIAL INFORMATION

(In millions, except per share data)






NON-GAAP FINANCIAL MEASURES:






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




Ended March 31,



2011

2010







Income Attributable to Common Stock (GAAP)

$ 1,115

$    705






Adjustments:



Foreign currency fluctuation impact on deferred tax expense  

12

7

Merger, acquisitions and transition costs, net of tax

4

-

Adjusted Earnings  (Non-GAAP)

$ 1,131

$    712






Net Income per Common Share - Diluted (GAAP)

$   2.86

$   2.08






Adjustments:



Foreign currency fluctuation impact on deferred tax expense  

0.03

0.02

Merger, acquisitions and transition costs, net of tax

0.01

-

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$   2.90

$   2.10

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,



2011


2010

Net cash provided by operating activities

$ 1,979

$ 1,154

Changes in operating assets and liabilities

264

415

Cash from operations before changes in



operating assets and liabilities

$ 2,243

$ 1,569

SOURCE Apache Corporation