Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 3, 2012

 

 

APACHE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

2000 Post Oak Boulevard

Suite 100

Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (713) 296-6000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

Item 2.02. Results of Operations and Financial Condition.

On May 3, 2012, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended March 31, 2012. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.    Description
99.1    Press Release of Apache Corporation dated May 3, 2012.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  APACHE CORPORATION
Date: May 3, 2012   /s/ Thomas P. Chambers
      Thomas P. Chambers
      (Principal Financial Officer)


INDEX TO EXHIBITS

 

Exhibit No.

  

Description

99.1    Press Release of Apache Corporation dated May 3, 2012.
Press Release of Apache Corporation dated May 3, 2012

Exhibit 99.1

CONTACTS:

 

Media:   

Bill Mintz

John Roper

  

(713) 296-7276

(281) 302-2646

Investors:   

Patrick Cassidy

Castlen Kennedy

  

(713) 296-6100

(713) 296-7189

Website: www.apachecorp.com

APACHE REPORTS STRONG FIRST-QUARTER RESULTS

AS RECORD PRODUCTION LEVERAGES HIGHER OIL PRICES

Houston, May 3, 2012 – 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.

 

   

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,
 
     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