Apache Reports Record Quarterly Production of 749,000 Boe/d

Quarterly earnings exceed $1.2 billion or $3.17 per diluted share; cash flow tops $2.6 billion

Aug 04, 2011, 08:15 ET from Apache Corporation

HOUSTON, Aug. 4, 2011 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported production of 749,000 barrels of oil equivalent (boe) per day and earnings of $1.2 billion, or $3.17 per diluted share, for the three-month period ending June 30, 2011. These compare with production of 647,000 boe per day and net income of $860 million, or $2.53 per diluted share, for the same period in the prior year.

"Apache had an outstanding quarter with record production in oil, gas, and natural gas liquids," said G. Steven Farris, chairman and chief executive officer. "This reflects the scale and balance of our portfolio, which comes from diversity across geographic regions, gas and liquids production, and a constant focus on rate of return. We're realizing additional value from last year's acquisitions and pursuing opportunities for future growth at both our legacy assets and in new areas."

The combination of higher oil prices and record production levels resulted in record quarterly revenues for second quarter 2011. Oil and gas revenues were $4.4 billion, a 47 percent increase from revenues of $3.0 billion for the same period last year.  Cash from operations before changes in operating assets and liabilities* also were a quarterly record at $2.6 billion, up 44 percent from the prior year's $1.8 billion. Excluding certain items that management believes affect the comparability of operating results, Apache reported adjusted earnings* of $1.3 billion in second quarter 2011 compared with $834 million in the year-earlier period. On a per-share basis, adjusted earnings were $3.22 in the second quarter compared with $2.46 per diluted share in the prior-year period.

Liquid hydrocarbons represented 49 percent of production and 78 percent of revenues. Apache benefited from higher oil prices for its international production indexed to Dated Brent benchmarks, as well as sweet crudes from the Gulf of Mexico, which continue to receive a meaningful premium per barrel compared with production benchmarked to West Texas Intermediate prices.

On the operational and commercial front, the company has achieved several recent milestones. These include:

  • Successful bidder on nearly 515,000 acres in onshore and offshore state leases at Alaska's Cook Inlet. The company now has approximately 800,000 acres of prospective land in the region, and a seismic survey for the area is planned over the next 12-18 months.
  • Signing of a long-term sales and purchase agreement with Tokyo Electric Power (TEPCO) for liquefied natural gas (LNG) from the Wheatstone LNG project in Western Australia. The Wheatstone partners (Apache, Chevron and a subsidiary of Kuwait Foreign Petroleum Co.) will supply TEPCO with 3.1 million metric tons per annum when the facility comes online, which will be determined at project sanction forecasted for later this year. Apache's expected net share of LNG sales to TEPCO is equivalent to approximately 58 million cubic feet of natural gas per day.
  • Unitization of portions from four leases at the Lucius deepwater oil and gas discovery in the Gulf of Mexico, where Apache and its partners also signed an agreement that allows for joint venture processing of gas from a nearby third-party discovery.  
  • Agreement to a 50-50 partnership to build additional gas processing infrastructure in the Permian Basin. A new gas processing plant will remove constraints to higher production at the Deadwood field, where Apache is currently running nearly half of its 24 rigs in the region.
  • Commencement of production from Apache's most prolific development well in the Forties field (North Sea), which came online in excess of 12,500 barrels of oil per day. A second development well also completed in June came online at a daily rate of nearly 8,800 barrels of oil.
  • Drilling of five new field discoveries in the Faghur basin of Egypt's Western Desert. In aggregate the wells tested at rates exceeding 12,000 barrels of oil per day and 19 million cubic feet of natural gas.

"Our regional business model is central to our value creation," Farris said. "It provides us with many ways to win -- we're not dependent on any single market or play. This results in more predictable, profitable long-term growth."

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 second-quarter 2011 results at 1 p.m. Central time on Thursday, August 4. 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 August 4. To access the telephone playback, dial 800-642-1687 or 706-645-9291 for international calls and provide Apache's confirmation code, 21273208.

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. 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 Apache's 2010 Form 10-K as amended by Amendment No. 1 to our 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.

APACHE CORPORATION

FINANCIAL INFORMATION

(In millions, except per share data)

For the Quarter

For the Six Months

Ended June 30,

Ended June 30,

2011

2010

2011

2010

REVENUES AND OTHER:

Oil and gas production revenues

$         4,355

$    2,969

$     8,233

$        5,662

Other

(17)

3

30

(17)

4,338

2,972

8,263

5,645

COSTS AND EXPENSES:

Depreciation, depletion and amortization

1,029

729

1,965

1,368

Asset retirement obligation accretion

38

25

75

49

Lease operating expenses

662

446

1,285

886

Gathering and transportation

73

43

149

83

Taxes other than income

255

187

419

364

General and administrative

103

84

215

171

Merger, acquisitions & transition

6

8

11

8

Financing costs, net

41

56

86

115

2,207

1,578

4,205

3,044

INCOME BEFORE INCOME TAXES

2,131

1,394

4,058

2,601

Current income tax provision

576

339

1,219

682

Deferred income tax provision

296

195

446

354

NET INCOME

1,259

860

2,393

1,565

Preferred stock dividends

19

-

38

-

INCOME ATTRIBUTABLE TO COMMON STOCK

$         1,240

$       860

$     2,355

$        1,565

NET INCOME PER COMMON SHARE:

Basic

$           3.23

$      2.55

$       6.14

$          4.64

Diluted

$           3.17

$      2.53

$       6.03

$          4.61

WEIGHTED-AVERAGE NUMBER OF COMMON

  SHARES OUTSTANDING:

Basic

384

338

383

337

Diluted

397

339

397

339

DIVIDENDS DECLARED PER COMMON SHARE

$           0.15

$      0.15

$       0.30

$          0.30

APACHE CORPORATION

FINANCIAL INFORMATION

(In millions)

For the Quarter

For the Six Months

Ended June 30,

Ended June 30,

2011

2010

2011

2010

CAPITAL EXPENDITURES (1):

Exploration & Development Costs

United States

$          673

$               321

$          1,288

$           618

Canada

168

162

434

365

North America

841

483

1,722

983

Egypt

284

139

477

305

Australia

156

130

318

295

North Sea

211

136

421

230

Argentina

89

57

158

94

Chile

1

4

1

14

Other International

26

-

26

-

International

767

466

1,401

938

Worldwide Exploration & Development Costs

$       1,608

$               949

$          3,123

$        1,921

Gathering, Transmission and Processing Facilities

Canada

$            42

$                 39

$               84

$             72

Egypt

25

66

54

90

Australia

68

34

119

90

Argentina

4

-

4

1

Total Gathering, Transmission and Processing

$          139

$               139

$             261

$           253

Capitalized Interest

$            63

$                 18

$             123

$             35

Capital Expenditures, excluding acquisitions

$       1,810

$            1,106

$          3,507

$        2,209

Acquisitions

$            84

$            1,028

$               95

$        1,033

(1) Accrual basis

June 30,

December 31,

2011

2010

BALANCE SHEET DATA:

Cash and Cash Equivalents

$       1,107

$               134

Other Current Assets

3,793

3,346

Property and Equipment, net

39,838

38,151

Goodwill

1,032

1,032

Other Assets

759

762

Total Assets

$     46,529

$          43,425

Short-Term Debt

$          448

$                 46

Other Current Liabilities

4,036

3,478

Long-Term Debt

7,404

8,095

Deferred Credits and Other Noncurrent Liabilities

7,974

7,429

Shareholders' Equity

26,667

24,377

Total Liabilities and Shareholders' Equity

$     46,529

$          43,425

Common shares outstanding at end of period

384

382

APACHE CORPORATION

FINANCIAL INFORMATION

For the Quarter

For the Six Months

Ended June 30,

Ended June 30,

2011

2010

2011

2010

PRODUCTION DATA:

 OIL VOLUME - Barrels per day

Central 

        6,873

        2,929

        5,965

        2,652

Permian 

      49,823

      35,812

      49,055

      35,843

GOM Deepwater

        6,090

        1,925

        5,708

        2,063

GOM Shelf

      44,792

      44,109

      45,670

      43,887

GC Onshore

        9,679

        4,754

        9,101

        4,699

United States

    117,257

      89,529

    115,499

      89,144

Canada 

      14,408

      14,561

      14,555

      14,447

North America

    131,665

    104,090

    130,054

    103,591

Egypt 

      99,634

      98,495

    104,230

      94,642

Australia

      40,573

      60,680

      37,663

      43,978

North Sea

      57,364

      58,141

      52,195

      57,995

Argentina

        9,656

        9,874

        9,636

        9,897

International

    207,227

    227,190

    203,724

    206,512

Total

    338,892

    331,280

    333,778

    310,103

 NATURAL GAS VOLUME - Mcf per day

Central 

    223,415

    206,386

    219,535

    198,478

Permian 

    173,609

      85,950

    166,348

      93,247

GOM Deepwater

      56,673

      25,588

      58,620

      28,902

GOM Shelf

    349,697

    300,572

    349,273

    297,289

GC Onshore

      76,889

      56,390

      75,500

      55,445

United States

    880,283

    674,886

    869,276

    673,361

Canada 

    636,718

    339,611

    639,707

    326,646

North America

 1,517,001

 1,014,497

 1,508,983

 1,000,007

Egypt 

    358,870

    388,367

    365,157

    375,249

Australia

    179,582

    203,147

    181,243

    205,209

North Sea

        2,367

        2,516

        2,135

        2,540

Argentina

    215,203

    183,028

    201,722

    168,953

International

    756,022

    777,058

    750,257

    751,951

Total

 2,273,023

 1,791,555

 2,259,240

 1,751,958

 NGL VOLUME - Barrels per day

Central 

           707

           500

           747

           496

Permian 

      12,824

        6,475

      11,092

        3,977

GOM Deepwater

           430

           410

           777

           529

GOM Shelf

        5,731

        3,417

        6,067

        3,304

GC Onshore

        2,111

        1,076

        1,851

        1,068

United States

      21,803

      11,878

      20,534

        9,374

Canada 

        5,998

        1,996

        6,270

        1,866

North America

      27,801

      13,874

      26,804

      11,240

Egypt 

           (24)

                -

           101

                -

Argentina

        3,014

        3,118

        3,035

        3,204

International

        2,990

        3,118

        3,136

        3,204

Total

      30,791

      16,992

      29,940

      14,444

 BOE per day

Central 

      44,816

      37,827

      43,301

      36,228

Permian 

      91,582

      56,612

      87,872

      55,362

GOM Deepwater

      15,965

        6,600

      16,255

        7,409

GOM Shelf

    108,806

      97,622

    109,949

      96,739

GC Onshore

      24,604

      15,228

      23,536

      15,008

United States

    285,773

    213,889

    280,913

    210,746

Canada 

    126,526

      73,159

    127,443

      70,753

North America

    412,299

    287,048

    408,356

    281,499

Egypt 

    159,422

    163,223

    165,190

    157,184

Australia

      70,503

      94,538

      67,870

      78,179

North Sea

      57,758

      58,560

      52,551

      58,418

Argentina

      48,537

      43,497

      46,291

      41,260

International

    336,220

    359,818

    331,902

    335,041

Total

    748,519

    646,866

    740,258

    616,540

APACHE CORPORATION

FINANCIAL INFORMATION

For the Quarter

For the Six Months

Ended June 30,

Ended June 30,

2011

2010

2011

2010

PRICING DATA:

 AVERAGE OIL PRICE PER BARREL

Central 

$ 97.06

$ 74.20

$     93.81

$         74.66

Permian 

98.28

73.95

93.60

74.50

GOM Deepwater

110.91

76.35

104.74

76.33

GOM Shelf 

114.29

76.91

106.46

76.89

GC Onshore

109.56

77.51

104.06

77.70

United States (1)

98.41

74.20

94.15

74.26

Canada

102.42

70.87

94.78

73.10

North America (1)

98.85

73.73

94.22

74.10

Egypt (1) 

115.26

76.08

111.05

76.27

Australia (1)

115.18

74.42

110.92

74.58

North Sea (2)

108.44

78.78

105.06

76.58

Argentina 

65.58

55.41

62.99

56.60

International (1, 2)

111.04

75.43

107.22

75.05

Total (1, 2)

106.31

74.89

102.15

74.74

 AVERAGE NATURAL GAS PRICE PER MCF

Central 

$   4.70

$   4.23

$       4.56

$           4.95

Permian 

5.25

4.76

5.13

6.03

GOM Deepwater

4.53

3.97

4.31

4.65

GOM Shelf 

4.65

4.49

4.59

5.12

GC Onshore

4.76

4.43

4.64

5.04

United States (1)

5.05

5.11

4.99

5.58

Canada (1)

4.71

4.51

4.63

4.88

North America (1)

4.91

4.91

4.84

5.35

Egypt 

4.79

3.51

4.61

3.54

Australia

2.74

2.22

2.62

2.22

North Sea

26.41

17.15

23.72

17.73

Argentina

2.74

1.88

2.48

2.01

International

3.79

2.83

3.61

2.88

Total (1)

4.54

4.01

4.43

4.29

 AVERAGE NGL PRICE PER BARREL

Central 

$ 61.18

$ 38.87

$     54.45

$         44.40

Permian 

52.09

37.73

49.34

38.96

GOM Deepwater

65.10

35.37

45.31

46.86

GOM Shelf 

50.31

42.77

46.16

48.22

GC Onshore

59.69

52.43

58.05

53.62

United States

52.91

40.48

49.22

44.63

Canada

46.63

35.76

43.25

37.97

North America

51.56

39.80

47.82

43.52

Egypt 

43.53

-

65.73

-

Argentina 

27.64

25.68

29.08

30.23

International

27.51

25.68

30.26

30.23

Total

49.22

37.21

45.98

40.58

 (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

For the Six Months

Ended June 30,

Ended June 30,

2011

2010

2011

2010

Income Attributable to Common Stock (GAAP)

$ 1,240

$    860

$ 2,355

$ 1,565

Adjustments:

Foreign currency fluctuation impact on deferred tax expense  

19

(31)

31

(25)

Merger, acquisitions & transition, net of tax

3

5

7

5

Adjusted Earnings  (Non-GAAP)

$ 1,262

$    834

$ 2,393

$ 1,545

Net Income per Common Share - Diluted (GAAP)

$   3.17

$   2.53

$   6.03

$   4.61

Adjustments:

Foreign currency fluctuation impact on deferred tax expense  

0.04

(0.09)

0.07

(0.07)

Merger, acquisitions & transition, net of tax

0.01

0.02

0.02

0.02

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$   3.22

$   2.46

$   6.12

$   4.56

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 Six Months

Ended June 30,

Ended June 30,

2011

2010

2011

2010

Net cash provided by operating activities

$ 2,745

$ 1,931

$ 4,724

$ 3,085

Changes in operating assets and liabilities

(106)

(97)

158

318

Cash from operations before changes in

operating assets and liabilities

$ 2,639

$ 1,834

$ 4,882

$ 3,403

APA-F

SOURCE Apache Corporation



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