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Apache Reports Strong First-quarter Results As Record Production Leverages Higher Oil Prices

HOUSTON, May 3, 2012 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported record worldwide production in the first-quarter of 2012 as the company benefitted from higher prices for oil and natural gas liquids and its balanced approach helped it weather the continuing deterioration of North  American natural gas prices. Daily production increased 7 percent over the same period the prior year, adjusted for dispositions.

Worldwide production was 769,000 barrels of oil equivalent (boe) per day, compared with 732,000 boe per day the same period the year before. Last year's total included 11,000 boe per day from certain assets in Canada and East Texas that were sold in the second half of 2011.

U.S. liquids production reached 148,000 barrels per day, representing an 11 percent increase over first-quarter 2011 results, as global liquids production rose 6 percent over the same period.

Apache reported earnings of $778 million, or $2.00 per diluted share, for the three-month period ending March 31, 2012, reflecting the impact of a $390-million non-cash, after-tax reduction in the carrying value of its oil and gas properties in Canada stemming from lower North American natural gas prices. For the same period last year, Apache reported earnings of $1.1 billion, or $2.86 per diluted share.

Apache's adjusted earnings*, which exclude the write-down and certain other items that impact the comparability of operating results, totaled $1.2 billion or $3.00 per diluted common share compared to adjusted earnings of $1.1 billion or $2.90 per share in the prior-year period.

Apache reported record revenues of $4.5 billion in the first quarter. Cash from operations before changes in operating assets and liabilities* rose 18 percent to $2.6 billion.

 "Apache is off to a strong start with first-quarter daily production growth of 7 percent, adjusted for 2011 asset sales," said G. Steven Farris, chairman and chief executive officer. "We expect overall production to continue to grow on the strength of an active worldwide drilling program, including accelerated activity on the 312,000 newly acquired acres in the Anadarko Basin."

Operational highlights:

  • Apache has increased onshore U.S. drilling activity from 36 rigs operating at the beginning of the year to 56 currently, a rise of 56 percent.
  • Permian Basin production rose to 99,000 boe per day in the current quarter as a result of increased drilling and recompletion activity in liquids-rich plays, representing an 18 percent rise from the first quarter of 2011. Apache currently operates 31 rigs in the region, including six horizontals.
  • With the recently completed acquisition of Cordillera Energy Partners III, Apache more than doubled its position in the Anadarko wash play to nearly 550,000 acres. The company has increased its exposure to the horizontal Granite Wash, Tonkawa, Cleveland and Marmaton gas condensate and oil plays. Rig count has increased from six at the beginning of the year to the current total of 22 of which 21 are horizontal. 

Apache's diverse portfolio of worldwide assets enabled the company to post strong financial results despite low North American natural gas prices. Liquid hydrocarbons represented 50 percent of production but contributed 82 percent of revenues due to the wide gap between crude oil and natural gas prices.

Apache's results also reflect the benefit of higher prices realized on Dated Brent crude produced in the company's Australia, North Sea and Egypt regions, and on sweet crude from the Gulf of Mexico region. Apache received these premium prices on approximately 75 percent of its crude oil production. Worldwide, the overall average price received was $111.22 per barrel during the period, up from $97.83 in the first quarter of 2011.

While North American natural gas price realizations fell 22 percent over the prior-year period, Apache's international regions, which represent 38 percent of its total gas volumes, saw prices rise 17 percent to $4.02 per Mcf. The worldwide average price received this quarter for natural gas was $3.82 per Mcf, compared with $4.32 per Mcf in the same quarter the previous year.

Apache confirmed its projected 2012 production growth forecast of 7 percent to 13 percent from full-year 2011 production levels, after adjusting for 2011 divestitures.

NOTE: Apache will conduct a conference call to discuss its first-quarter 2012 results at 1 p.m. Central time on Thursday, May 3. 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 May 3. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 42313544.

*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.

 

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 drilling plans and production expectations. 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 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

     

Ended March 31,

     

2012

 

2011

           

REVENUES AND OTHER:

     
 

Oil and gas production revenues

$                    4,457

 

$                    3,878

 

Other 

 

79

 

47

     

4,536

 

3,925

           

COSTS AND EXPENSES:

     
 

Depreciation, depletion and amortization

     
 

    Recurring

1,219

 

936

 

    Additional

521

 

-

 

Asset retirement obligation accretion

55

 

37

 

Lease operating expenses

673

 

623

 

Gathering and transportation 

77

 

76

 

Taxes other than income

257

 

164

 

General and administrative

128

 

112

 

Merger, acquisitions & transition

6

 

5

 

Financing costs, net

40

 

45

     

2,976

 

1,998

           

INCOME BEFORE INCOME TAXES

1,560

 

1,927

 

Current income tax provision 

725

 

643

 

Deferred income tax provision

38

 

150

           

NET INCOME 

 

797

 

1,134

 

Preferred stock dividends

19

 

19

           

INCOME ATTRIBUTABLE TO COMMON STOCK

$                       778

 

$                    1,115

           

NET INCOME PER COMMON SHARE:

     
 

Basic

 

$                      2.02

 

$                      2.91

 

Diluted 

 

$                      2.00

 

$                      2.86

           

WEIGHTED-AVERAGE NUMBER OF COMMON 

     

   SHARES OUTSTANDING:

     
 

Basic

 

385

 

383

 

Diluted

 

399

 

397

           

DIVIDENDS DECLARED PER COMMON SHARE

$                      0.17

 

$                      0.15

 
 

APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)

               
         

For the Quarter

         

Ended March 31,

         

2012

 

2011

CAPITAL EXPENDITURES (1):

       
 

Exploration & Development Costs

       
   

United States

 

$                       794

 

$                       615

   

Canada

 

198

 

266

     

North America

 

992

 

881

   

Egypt

 

250

 

193

   

Australia

 

78

 

162

   

North Sea

 

196

 

210

   

Argentina

 

84

 

69

   

Other International

 

21

 

-

     

International

 

629

 

634

     

Worldwide Exploration & Development Costs

 

$                    1,621

 

$                    1,515

               
 

Gathering, Transmission and Processing Facilities

       
   

United States

 

$                         12

 

$                             -

   

Canada

 

44

 

42

   

Egypt

 

17

 

29

   

Australia

 

172

 

51

   

Argentina

 

4

 

-

     

Total Gathering, Transmission and Processing

 

$                       249

 

$                       122

               
 

Capitalized Interest

 

$                         66

 

$                         60

               
 

Capital Expenditures, excluding Acquisitions

 

$                    1,936

 

$                    1,697

               
 

Acquisitions

 

$                         60

 

$                         11

               
 

(1) Accrual basis

       
               

APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)

               
         

March 31,

 

December 31,

         

2012

 

2011

               
 

Cash and Cash Equivalents

 

$                       245

 

$                       295

 

Other Current Assets 

 

4,709

 

4,508

 

Property and Equipment, net

 

45,829

 

45,448

 

Goodwill

 

1,114

 

1,114

 

Other Assets

 

1,340

 

686

 

Total Assets

 

$                 53,237

 

$                 52,051

               
 

Short-Term Debt

 

$                       429

 

$                       431

 

Other Current Liabilities

 

4,269

 

4,532

 

Long-Term Debt

 

7,444

 

6,785

 

Deferred Credits and Other Noncurrent Liabilities

 

11,380

 

11,310

 

Shareholders' Equity

 

29,715

 

28,993

 

Total Liabilities and Shareholders' Equity

 

$                 53,237

 

$                 52,051

               
 

Common shares outstanding at end of period

 

384

 

384

 
 

APACHE CORPORATION

PRODUCTION INFORMATION

                 
           

For the Quarter

           

Ended March 31,

           

2012

 

2011

                 

  OIL VOLUME - Barrels per day

       
 

Central

 

6,466

 

5,046

 

Permian

 

56,481

 

48,280

 

GOM Deepwater

 

5,801

 

5,322

 

GOM Shelf

 

46,732

 

46,558

 

GC Onshore

 

10,448

 

8,517

   

United States

 

125,928

 

113,723

 

Canada

   

15,582

 

14,704

   

North America

 

141,510

 

128,427

 

Egypt

     

99,490

 

108,876

 

Australia

   

30,398

 

34,720

 

North Sea

 

65,946

 

46,968

 

Argentina

   

9,632

 

9,617

   

International

 

205,466

 

200,181

     

Total 

 

346,976

 

328,608

                 

  NATURAL GAS VOLUME - Mcf per day

       
 

Central

 

166,452

 

215,612

 

Permian

 

180,253

 

159,005

 

GOM Deepwater

 

46,996

 

60,589

 

GOM Shelf

 

332,140

 

348,845

 

GC Onshore

 

91,652

 

74,095

   

United States

 

817,493

 

858,146

 

Canada

 

636,227

 

642,729

   

North America

 

1,453,720

 

1,500,875

 

Egypt

 

376,067

 

371,514

 

Australia

 

224,337

 

182,922

 

North Sea

 

67,066

 

1,901

 

Argentina

 

211,193

 

188,092

   

International

 

878,663

 

744,429

     

Total 

 

2,332,383

 

2,245,304

                 

  NGL VOLUME - Barrels per day

       
 

Central

 

3,512

 

787

 

Permian

 

12,650

 

9,341

 

GOM Deepwater

 

256

 

1,129

 

GOM Shelf

 

3,594

 

6,407

 

GC Onshore

 

2,305

 

1,588

   

United States

 

22,317

 

19,252

 

Canada

 

6,312

 

6,545

   

North America

 

28,629

 

25,797

 

Egypt

 

-

 

228

 

North Sea

 

1,966

 

-

 

Argentina

 

2,994

 

3,055

   

International

 

4,960

 

3,283

     

Total

 

33,589

 

29,080

                 

  BOE per day

       
 

Central

 

37,719

 

41,768

 

Permian

 

99,173

 

84,121

 

GOM Deepwater

 

13,890

 

16,549

 

GOM Shelf

 

105,683

 

111,106

 

GC Onshore

 

28,028

 

22,455

   

United States

 

284,493

 

275,999

 

Canada

 

127,932

 

128,370

   

North America

 

412,425

 

404,369

 

Egypt

 

162,168

 

171,023

 

Australia

 

67,788

 

65,207

 

North Sea

 

79,090

 

47,285

 

Argentina

 

47,825

 

44,021

   

International

 

356,871

 

327,536

     

Total 

 

769,296

 

731,905

 
 

APACHE CORPORATION

PRICE INFORMATION

                 
           

For the Quarter

           

Ended March 31,

           

2012

 

2011

                 

  AVERAGE OIL PRICE PER BARREL

       
 

Central

 

$           98.82

 

$           89.33

 

Permian

 

98.36

 

88.72

 

GOM Deepwater

 

110.83

 

97.61

 

GOM Shelf

 

114.04

 

98.84

 

GC Onshore

 

113.36

 

97.73

   

United States (1)

 

102.08

 

89.72

 

Canada

 

92.47

 

87.21

   

North America (1)

 

101.02

 

89.43

 

Egypt(1)

 

123.55

 

107.14

 

Australia(1)

 

122.95

 

105.89

 

North Sea(1)

 

113.19

 

100.89

 

Argentina

 

83.03

 

60.36

   

International (1)

 

118.24

 

103.21

     

Total(1)

 

111.22

 

97.83

                 

  AVERAGE NATURAL GAS PRICE PER MCF

       
 

Central

 

$             3.09

 

$             4.42

 

Permian

 

3.72

 

4.99

 

GOM Deepwater

 

2.98

 

4.10

 

GOM Shelf

 

3.17

 

4.53

 

GC Onshore

 

2.82

 

4.51

   

United States (1)

 

3.93

 

4.94

 

Canada (1)

 

3.41

 

4.54

   

North America (1)

 

3.70

 

4.77

 

Egypt

 

3.79

 

4.44

 

Australia

 

4.18

 

2.50

 

North Sea

 

7.97

 

20.34

 

Argentina

 

2.98

 

2.18

   

International

 

4.02

 

3.43

     

Total (1)

 

3.82

 

4.32

                 

  AVERAGE NGL PRICE PER BARREL

       
 

Central

 

$           37.50

 

$           48.34

 

Permian

 

44.78

 

45.52

 

GOM Deepwater

 

38.51

 

37.69

 

GOM Shelf

 

42.93

 

42.41

 

GC Onshore

 

47.12

 

55.85

   

United States

 

43.51

 

44.99

 

Canada

 

41.63

 

40.12

   

North America

 

43.09

 

43.76

 

Egypt

 

-

 

63.35

 

North Sea

 

84.11

 

-

 

Argentina

 

26.20

 

30.51

   

International

 

49.16

 

32.79

     

Total

 

43.99

 

42.52

                 
                 
 

(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.

                   

Ÿ*

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.  

                   

Ÿ*

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,

       
     

2012

 

2011

       
                   

Income Attributable to Common Stock (GAAP)

$              778

 

$           1,115

       
                   

Adjustments:

             
 

Canada proved property write-down, net of tax

390

 

-

       
 

Unrealized foreign currency fluctuation impact on deferred tax expense  

7

 

12

       
 

Merger, acquisitions & transition, net of tax

3

 

4

       

Adjusted Earnings  (Non-GAAP)

$           1,178

 

$           1,131

       
                   

Net Income per Common Share - Diluted (GAAP)

$             2.00

 

$             2.86

       
                   

Adjustments:

             
 

Canada proved property write-down, net of tax

0.97

 

-

       
 

Unrealized foreign currency fluctuation impact on deferred tax expense  

0.02

 

0.03

       
 

Merger, acquisitions & transition, net of tax

0.01

 

0.01

       

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$             3.00

 

$             2.90

       
                   
                   
                   
                   

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,

       
     

2012

 

2011

       

Net cash provided by operating activities

$           2,007

 

$           1,979

       

Changes in operating assets and liabilities

641

 

264

       

Cash from operations before changes in

             
 

operating assets and liabilities

$           2,648

 

$           2,243

       

APA-F

SOURCE Apache Corporation

 

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