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

HOUSTON /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) said Nov. 1 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

News Provided by Acquire Media

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