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 1, 2019

 

 

APACHE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-4300   41-0747868

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which  registered

Common Stock, $0.625 par value   APA   New York Stock Exchange, Chicago Stock Exchange and NASDAQ Global Select Market
7.75% Notes Due 2029     New York Stock Exchange

 

 

 


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 1, 2019, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended March 31, 2019. 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 1, 2019.


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 2, 2019     By:  

/s/ Rebecca A. Hoyt

      Rebecca A. Hoyt
     

Senior Vice President, Chief Accounting Officer, and Controller (Principal Accounting Officer)

EX-99.1

Exhibit 99.1

 

LOGO   NEWS RELEASE

APACHE CORPORATION ANNOUNCES FIRST-QUARTER 2019

FINANCIAL AND OPERATIONAL RESULTS

 

 

Reported first-quarter production of 503,000 barrels of oil equivalent (BOE) per day. Adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 437,000 BOE per day, up 19 percent over first-quarter 2018;

 

 

Achieved U.S. production of 292,000 BOE per day, exceeding guidance by 5,000 BOE per day, and reached record Permian Basin production of 248,000 BOE per day;

 

 

Achieved International reported production of 211,000 BOE per day; adjusted production of 145,000 BOE per day exceeding guidance by 7,000 BOE per day;

 

 

Invested $597 million in upstream capital program and remain on track for $2.4 billion for the year;

 

 

Secured sales agreements for approximately $300 million of noncore assets; progressing additional sales; and

 

 

Reiterating 2019 production guidance of 6 to 10 percent from fourth-quarter 2018 to fourth-quarter 2019 on an unchanged annual upstream capital program of $2.4 billion.

HOUSTON, May 1, 2019 – Apache Corporation (NYSE, Nasdaq: APA) today announced its financial and operational results for the first quarter of 2019.

Apache reported a quarterly loss of $47 million or $0.12 per diluted common share for the first quarter of 2019. These results include a number of items outside of core earnings that are typically excluded by the investment community in their published earnings estimates. When adjusted for items that impact the comparability of results, Apache’s first-quarter earnings were $38 million or $0.10 per share. Net cash provided by operating activities in the quarter was $598 million. Adjusted EBITDAX was $1.1 billion.

“Apache had an excellent first quarter with strong execution, well performance and delivery against our production and capital guidance. We exceeded both our U.S. and international production guidance on a lower than expected capital budget.

“In the Permian Basin, we grew 5 percent quarter over quarter and maintained oil production near fourth-quarter levels, despite placing one of our two completion crews on a frac holiday for the entire first quarter. At Alpine High, where we also had a relatively low number of completions, production was up significantly from the fourth quarter and was in-line with our guidance of 70,000 BOE per day.

 

 

LOGO


APACHE CORPORATION ANNOUNCES FIRST-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

– PAGE 2 of 7

 

“International production grew 6 percent compared to the fourth quarter and benefited from high facilities uptime across our operations, strong early production rates from two new wells in the North Sea, and a continuation of good results from our revamped waterflood program in the Forties Field,” said John J. Christmann IV, Apache’s chief executive officer and president.

First-quarter operational summary

Highlights from the company’s three principal areas include:

 

 

United States – U.S. production averaged 292,000 BOE per day. The company averaged 16 rigs and drilled and completed 39 gross-operated wells.

First-quarter production in the Permian Basin averaged 248,000 BOE per day, a record for the region, and an increase of 36 percent year over year. The company averaged 14 rigs and drilled and completed 39 gross-operated wells.

 

     

Midland Basin – During the quarter, the company drilled and completed 18 gross-operated wells and maintained production despite significantly fewer wells placed online compared to the previous quarter.

 

     

Delaware Basin – Apache’s activity in the Delaware Basin currently includes operations in Alpine High, Dixieland, and Pecos Bend in Reeves County and the slope play in southeast New Mexico.

At Alpine High, production in the first quarter averaged 70,000 BOE per day, a 165-percent increase over the first quarter of 2018. During the quarter, the company drilled and completed 17 gross-operated wells. The company continues to make significant progress on drilling and completion costs in the play and has delivered a


APACHE CORPORATION ANNOUNCES FIRST-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

– PAGE 3 of 7

 

20 percent and 32 percent reduction, respectively, from 2017 averages for the quarter. Further improvements are expected as Alpine High moves further into development and optimization mode. As previously announced, Apache initiated the deferral of certain natural gas production volumes near the end of the quarter in response to severe Waha Hub gas price weakness. These deferrals had a small impact on first-quarter volumes.

Outside of Alpine High in the Delaware Basin, four new wells were placed online during the quarter.

 

 

Egypt – Apache averaged 10 rigs during the quarter and drilled and completed 23 gross-operated wells with an 83-percent success rate. Adjusted production in Egypt, which excludes noncontrolling interest and the impact of tax barrels, averaged 79,000 BOE per day. As a result of recently awarded concessions and the company’s ongoing broadband seismic acquisition program, Apache has added several hundred new leads and prospects in the region.

 

 

North Sea – Apache averaged 3 rigs during the quarter and produced 66,000 BOE per day, the highest quarterly production in two years. Strong production levels were the result of a full quarter of production from Garten, a new development well at Callater and strong uptime on producing facilities for the quarter.

Capital and production outlook

Upstream oil and gas investment was $597 million in the first quarter, and the company reiterates its annual capital investment guidance of approximately $2.4 billion for the year.

The company is reiterating its previously stated production guidance of 6 to 10 percent growth from fourth-quarter 2018 to fourth-quarter 2019, including 12 to 16 percent growth in the U.S. and 5 percent growth in Permian oil.


APACHE CORPORATION ANNOUNCES FIRST-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

– PAGE 4 of 7

 

Details on additional financial and operational guidance can be found in the First-Quarter 2019 Financial and Operational Supplement at www.apachecorp.com/financialdata.

“We previously stated Apache’s commitment to returning at least 50 percent of our incremental cash generation from all sources to investors, before increasing our planned activity set. In keeping with this commitment, our 2019 planned capital activity and budget remains unchanged, and we will begin returning incremental cash to investors in the coming months. This is of course in addition to our current regular dividend.

“In summary, 2019 is progressing very well. Overall production was strong in the first quarter, and we are demonstrating excellent capital discipline and cost control. The North Sea and Egypt continue to deliver robust free cash flow with their leverage to premium Brent crude prices and higher natural gas and NGL netbacks. In the Permian, we are poised to deliver attractive oil growth and a substantial cash flow uplift at Alpine High in the second half of the year. We will also be advancing our differential exploration initiatives, most notably in Suriname.

“Our strategy remains the same – we will fund an activity level and investment program capable of delivering long-term returns and sustainable growth while living within cash flow at reasonable oil prices and returning capital to investors,” concluded Christmann.

Conference call

Apache will host a conference call to discuss its first-quarter 2019 results at 10 a.m. Central time, Thursday, May 2. The conference call will be webcast from Apache’s website at www.apachecorp.com and investor.apachecorp.com, and the webcast replay will be archived there as well. A replay of the conference call will be available for seven days following the call. The number for the replay is (855) 859-2056 or (404) 537-3406 for international calls. The conference access code is 2197977. Sign up for email alerts to be reminded of the webcast at http://investor.apachecorp.com/alerts/email-alerts-subscription.


APACHE CORPORATION ANNOUNCES FIRST-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

– PAGE 5 of 7

 

Additional information

Additional information follows, including reconciliations of adjusted earnings, cash flow from operations before changes in operating assets and liabilities, adjusted EBITDAX, upstream capital investment and net debt (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. Apache’s quarterly supplement is available at www.apachecorp.com/financialdata.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com, and on its Media and Investor Center mobile app.

Non-GAAP financial measures

Apache’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, cash flow from operations before changes in operating assets and liabilities, upstream capital investment, adjusted EBITDAX and net debt are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.


APACHE CORPORATION ANNOUNCES FIRST-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

– PAGE 6 of 7

 

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,” “guidance,” “outlook,” “projects,” “will,” 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 capital plans, drilling plans, production expectations, asset sales, and monetizations. 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 2018 Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) 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.

Cautionary note to investors

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC’s definitions for such terms. Apache may use certain terms in this release, such as “resources,” “potential resources,” “resource potential,” “estimated net reserves,” “recoverable reserves,” and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be


APACHE CORPORATION ANNOUNCES FIRST-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

– PAGE 7 of 7

 

relied upon. Investors are urged to consider carefully the disclosure in Apache’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.

Contacts

 

Investor:   (281) 302-2286   Gary Clark
Media:   (713) 296-7276   Phil West
Website:   www.apachecorp.com

APA-F

-end-


APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

     For the Quarter
Ended March 31,
 
     2019     2018  

REVENUES AND OTHER:

    

Oil and gas production revenues

    

Oil revenues

   $ 1,310     $ 1,393  

Natural gas revenues

     236       222  

Natural gas liquids revenues

     108       118  
  

 

 

   

 

 

 
     1,654       1,733  

Derivative instrument gain (loss)

     (30     2  

Gain (loss) on divestiture

     3       7  

Other

     8       5  
  

 

 

   

 

 

 
     1,635       1,747  
  

 

 

   

 

 

 

OPERATING EXPENSES:

    

Lease operating expenses

     365       349  

Gathering, processing and transmission

     88       86  

Taxes other than income

     51       55  

Exploration

     69       76  

General and administrative

     123       114  

Transaction, reorganization and separation

     4       —    

Depreciation, depletion and amortization:

    

Oil and gas property and equipment

     607       518  

Other assets

     39       35  

Asset retirement obligation accretion

     27       27  

Financing costs, net

     97       99  
  

 

 

   

 

 

 
     1,470       1,359  
  

 

 

   

 

 

 

NET INCOME BEFORE INCOME TAXES

     165       388  

Current income tax provision

     186       198  

Deferred income tax provision (benefit)

     (19     (16
  

 

 

   

 

 

 

INCOME INCLUDING NONCONTROLLING INTEREST

     (2     206  

Net income attributable to noncontrolling interest – Egypt

     44       61  

Net income attributable to noncontrolling interest – Altus

     1       —    
  

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON STOCK

   $ (47   $ 145  
  

 

 

   

 

 

 

NET INCOME PER COMMON SHARE:

    

Basic

   $ (0.12   $ 0.38  

Diluted

   $ (0.12   $ 0.38  

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

    

Basic

     376       382  

Diluted

     376       384  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.25     $ 0.25  

 

Page 1


APACHE CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change  
     March 31,
2019
     December 31,
2018
     March 31,
2018
     1Q19 to
4Q18
    1Q19 to
1Q18
 

OIL VOLUME – Barrels per day

             

Permian

     97,625        98,560        85,469        -1     14

MidContinent/Gulf Coast

     8,699        9,697        10,494        -10     -17

Gulf of Mexico

     2,454        2,391        3,784        3     -35
  

 

 

    

 

 

    

 

 

      

United States

     108,778        110,648        99,747        -2     9

Egypt (1, 2)

     91,616        86,103        95,270        6     -4

North Sea

     54,528        52,519        46,348        4     18
  

 

 

    

 

 

    

 

 

      

International (1)

     146,144        138,622        141,618        5     3
  

 

 

    

 

 

    

 

 

      

Total (1)

     254,922        249,270        241,365        2     6
  

 

 

    

 

 

    

 

 

      

NATURAL GAS VOLUME – Mcf per day

             

Permian

     618,238        553,945        357,311        12     73

MidContinent/Gulf Coast

     116,272        120,720        121,046        -4     -4

Gulf of Mexico

     9,797        7,477        10,187        31     -4
  

 

 

    

 

 

    

 

 

      

United States

     744,307        682,142        488,544        9     52

Egypt (1, 2)

     315,508        291,196        343,901        8     -8

North Sea

     56,892        55,955        41,039        2     39
  

 

 

    

 

 

    

 

 

      

International (1)

     372,400        347,151        384,940        7     -3
  

 

 

    

 

 

    

 

 

      

Total (1)

     1,116,707        1,029,293        873,484        8     28
  

 

 

    

 

 

    

 

 

      

NGL VOLUME – Barrels per day

             

Permian

     47,274        45,053        37,950        5     25

MidContinent/Gulf Coast

     11,552        13,676        13,072        -16     -12

Gulf of Mexico

     38        397        262        -90     -85
  

 

 

    

 

 

    

 

 

      

United States

     58,864        59,126        51,284        0     15

Egypt (1, 2)

     1,150        877        937        31     23

North Sea

     1,823        1,476        1,168        24     56
  

 

 

    

 

 

    

 

 

      

International (1)

     2,973        2,353        2,105        26     41
  

 

 

    

 

 

    

 

 

      

Total

     61,837        61,479        53,389        1     16
  

 

 

    

 

 

    

 

 

      

BOE per day

             

Permian

     247,939        235,936        182,972        5     36

MidContinent/Gulf Coast

     39,630        43,493        43,740        -9     -9

Gulf of Mexico

     4,124        4,035        5,744        2     -28
  

 

 

    

 

 

    

 

 

      

United States

     291,693        283,464        232,456        3     25

Egypt (1, 2)

     145,351        135,513        153,524        7     -5

North Sea

     65,833        63,321        54,356        4     21
  

 

 

    

 

 

    

 

 

      

International (1)

     211,184        198,834        207,880        6     2
  

 

 

    

 

 

    

 

 

      

Total (1)

     502,877        482,298        440,336        4     14
  

 

 

    

 

 

    

 

 

      

Total excluding noncontrolling interests

     454,371        437,030        389,098        4     17
  

 

 

    

 

 

    

 

 

      

(1) Includes net production volumes attributed to our noncontrolling partner in Egypt below:

 

Oil (b/d)

     30,554        28,756        31,774       

Gas (Mcf/d)

     105,412        97,317        114,913       

NGL (b/d)

     383        292        312       

(2) Egypt Gross Production – BOE per day

     332,003        334,992        330,063        -1     1

 

Page 2


APACHE CORPORATION

ADJUSTED PRODUCTION INFORMATION

Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) divested assets, 2) noncontrolling interest in Egypt, and 3) Egypt tax barrels. Management uses adjusted production to evaluate the company's operational trends and performance and believes it is useful to investors and other third parties.

 

     For the Quarter Ended      % Change  
     March 31,
2019
     December 31,
2018
     March 31,
2018
     1Q19 to
4Q18
    1Q19 to
1Q18
 

OIL VOLUME – Barrels per day

             

Permian

     97,625        98,560        85,469        -1     14

MidContinent/Gulf Coast

     8,699        9,697        10,494        -10     -17

Gulf of Mexico

     2,454        2,391        3,784        3     -35
  

 

 

    

 

 

    

 

 

      

United States

     108,778        110,648        99,747        -2     9
  

 

 

    

 

 

    

 

 

      

Egypt

     48,323        46,077        47,993        5     1

North Sea

     54,528        52,519        46,348        4     18
  

 

 

    

 

 

    

 

 

      

International

     102,851        98,596        94,341        4     9
  

 

 

    

 

 

    

 

 

      

Total

     211,629        209,244        194,088        1     9
  

 

 

    

 

 

    

 

 

      

NATURAL GAS VOLUME – Mcf per day

             

Permian

     618,238        553,945        357,311        12     73

MidContinent/Gulf Coast

     116,272        120,720        121,046        -4     -4

Gulf of Mexico

     9,797        7,477        10,187        31     -4
  

 

 

    

 

 

    

 

 

      

United States

     744,307        682,142        488,544        9     52
  

 

 

    

 

 

    

 

 

      

Egypt

     181,118        166,109        189,982        9     -5

North Sea

     56,892        55,955        41,039        2     39
  

 

 

    

 

 

    

 

 

      

International

     238,010        222,064        231,021        7     3
  

 

 

    

 

 

    

 

 

      

Total

     982,317        904,206        719,565        9     37
  

 

 

    

 

 

    

 

 

      

NGL VOLUME – Barrels per day

             

Permian

     47,274        45,053        37,950        5     25

MidContinent/Gulf Coast

     11,552        13,676        13,072        -16     -12

Gulf of Mexico

     38        397        262        -90     -85
  

 

 

    

 

 

    

 

 

      

United States

     58,864        59,126        51,284        0     15
  

 

 

    

 

 

    

 

 

      

Egypt

     678        527        495        29     37

North Sea

     1,823        1,476        1,168        24     56
  

 

 

    

 

 

    

 

 

      

International

     2,501        2,003        1,663        25     50
  

 

 

    

 

 

    

 

 

      

Total

     61,365        61,129        52,947        0     16
  

 

 

    

 

 

    

 

 

      

BOE per day

             

Permian

     247,939        235,936        182,972        5     36

MidContinent/Gulf Coast

     39,630        43,493        43,740        -9     -9

Gulf of Mexico

     4,124        4,035        5,744        2     -28
  

 

 

    

 

 

    

 

 

      

United States

     291,693        283,464        232,456        3     25
  

 

 

    

 

 

    

 

 

      

Egypt

     79,187        74,289        80,153        7     -1

North Sea

     65,833        63,321        54,356        4     21
  

 

 

    

 

 

    

 

 

      

International

     145,020        137,610        134,509        5     8
  

 

 

    

 

 

    

 

 

      

Total

     436,713        421,074        366,965        4     19
  

 

 

    

 

 

    

 

 

      

 

Page 3


APACHE CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended  
     March 31,
2019
     December 31,
2018
     March 31,
2018
 

AVERAGE OIL PRICE PER BARREL

        

Permian

   $ 50.30      $ 50.98      $ 61.50  

MidContinent/Gulf Coast

     53.45        58.73        62.18  

Gulf of Mexico

     58.27        61.48        69.24  

United States

     50.70        51.85        61.76  

Egypt

     62.35        64.27        66.30  

North Sea

     64.15        62.68        65.87  

International

     63.00        63.69        66.16  

Total

     57.70        58.37        64.34  

AVERAGE NATURAL GAS PRICE PER MCF

        

Permian

   $ 1.61      $ 1.71      $ 2.40  

MidContinent/Gulf Coast

     2.94        3.32        2.68  

Gulf of Mexico

     3.69        3.70        3.64  

United States

     1.83        2.03        2.49  

Egypt

     2.85        2.83        2.85  

North Sea

     6.24        7.91        6.60  

International

     3.36        3.65        3.25  

Total

     2.34        2.57        2.82  

AVERAGE NGL PRICE PER BARREL

        

Permian

   $ 18.73      $ 24.29      $ 24.64  

MidContinent/Gulf Coast

     17.38        22.17        22.13  

Gulf of Mexico

     17.62        24.47        30.39  

United States

     18.47        23.81        24.02  

Egypt

     37.66        34.43        36.19  

North Sea

     40.60        42.94        42.82  

International

     39.47        39.77        39.87  

Total

     19.49        24.42        24.65  

 

Page 4


APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY OF DERIVATIVE INSTRUMENT GAINS (LOSSES), NET

 

     For the Quarter
Ended March 31,
 
     2019     2018  

Derivative settlements – realized gain/(loss)

   $ 15     $ (42

Amortization of call and put premium

     —         (5
  

 

 

   

 

 

 

Realized gain/(loss)

     15       (47

Unrealized mark-to-market gain/(loss)

     (45     49  
  

 

 

   

 

 

 
   $ (30   $ 2  
  

 

 

   

 

 

 

SUMMARY EXPLORATION EXPENSE INFORMATION

 

 
     For the Quarter
Ended March 31,
 
     2019     2018  

Unproved leasehold impairments

   $ 23     $ 16  

Dry hole expense

     10       20  

Geological and geophysical expense

     19       18  

Exploration overhead and other

     17       22  
  

 

 

   

 

 

 
   $ 69     $ 76  
  

 

 

   

 

 

 

SUMMARY CASH FLOW INFORMATION

 

 
     For the Quarter
Ended March 31,
 
     2019     2018  

Net cash provided by operating activities

   $ 598     $ 615  
  

 

 

   

 

 

 

Additions to oil and gas property

     (744     (749

Additions to Altus gathering, processing, and transmission facilities

     (119     (128

Altus equity method interests

     (118     —    

Other, net

     43       (13
  

 

 

   

 

 

 

Net cash used in investing activities

   $ (938   $ (890
  

 

 

   

 

 

 

Debt borrowings and payments, net

     159       (150

Distributions to noncontrolling interest – Egypt

     (107     (69

Dividends paid

     (94     (95

Other

     (5     (2
  

 

 

   

 

 

 

Net cash used in financing activities

   $ (47   $ (316
  

 

 

   

 

 

 

SUMMARY BALANCE SHEET INFORMATION

 

 
     March 31,
2019
    December 31,
2018
 

Cash and cash equivalents

   $ 327     $ 714  

Assets held for sale

     217       —    

Other current assets

     1,960       1,973  

Property and equipment, net

     18,291       18,421  

Other assets

     956       474  
  

 

 

   

 

 

 

Total assets

   $ 21,751     $ 21,582  
  

 

 

   

 

 

 

Current debt

   $ 339     $ 151  

Current liabilities

     2,035       2,050  

Long-term debt

     8,094       8,093  

Deferred credits and other noncurrent liabilities

     2,674       2,476  

Apache shareholders’ equity

     6,989       7,130  

Noncontrolling interest – Egypt

     1,212       1,275  

Noncontrolling interest – Altus

     408       407  
  

 

 

   

 

 

 

Total Liabilities and equity

   $ 21,751     $ 21,582  
  

 

 

   

 

 

 

Common shares outstanding at end of period

     376       375  

 

Page 5


APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of Net cash provided by operating activities to Adjusted EBITDAX

Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a company's ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Company’s on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.

 

     For the Quarter Ended  
     March 31,
2019
    December 31,
2018
    March 31,
2018
 

Net cash provided by operating activities

   $ 598     $ 1,043     $ 615  

Adjustments:

      

Exploration expense other than dry hole expense and unproved leasehold impairments

     36       34       40  

Current income tax provision

     186       185       198  

Other adjustments to reconcile net income to net cash provided by operating activities

     (9     (29     (39

Changes in operating assets and liabilities

     138       (191     174  

Financing costs, net (excluding loss on early extinguishment of debt)

     97       93       99  

Transaction, reorganization & separation costs

     4       8       —    
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 1,050     $ 1,143     $ 1,087  
  

 

 

   

 

 

   

 

 

 

Reconciliation of Income attributable to common stock to Adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Company’s operational trends and comparability of results to our peers.

Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.

 

     For the Quarter Ended
March 31, 2019
    For the Quarter Ended
March 31, 2018
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Income including noncontrolling interest (GAAP)

   $ 165     $ (167   $ (2   $ (0.01   $ 388     $ (182   $ 206     $ 0.54  

Income attributable to noncontrolling interest

     85       (40     45       0.11       112       (51     61       0.16  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     80       (127     (47     (0.12     276       (131     145       0.38  

Adjustments: *

                

Unrealized derivative instrument (gain)/loss

     45       (10     35       0.10       (49     10       (39     (0.10

Valuation allowance and other tax adjustments

     —         31       31       0.08       —         1       1       —    

Asset impairments

     23       (5     18       0.04       16       (3     13       0.03  

Transaction, reorganization & separation costs

     4       (1     3       0.01       —         —         —         —    

Modification of stock comp plans

     —         —         —         —         14       (4     10       0.02  

Gain on divestitures

     (3     1       (2     (0.01     (7     1       (6     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ 149     $ (111   $ 38     $ 0.10     $ 250     $ (126   $ 124     $ 0.32  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

 

Page 6


APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions)

Reconciliation of Debt to Net debt

Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.

 

     March 31,
2019
     December 31,
2018
     September 30,
2018
     June 30,
2018
     March 31,
2018
 

Current debt

   $ 339      $ 151      $ 151      $ 401      $ 401  

Long-term debt

     8,094        8,093        8,092        7,976        7,975  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total debt

     8,433        8,244        8,243        8,377        8,376  

Cash and cash equivalents

     327        714        593        972        1,077  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net debt

   $ 8,106      $ 7,530      $ 7,650      $ 7,405      $ 7,299  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment

Management believes the presentation of upstream capital investments is useful for investors to assess Apache's expenditures related to our upstream capital activity. We define capital investments as costs incurred for oil and gas activities, adjusted to exclude asset retirement obligation revisions and liabilities incurred, capitalized interest, and certain exploration expenses, while including amounts paid during the period for abandonment and decommissioning expenditures. Upstream capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of Apache's cash expenditures related to upstream capital activity and is consistent with how we plan our capital budget.

 

     For the Quarter
Ended March 31,
 
       2019          2018    

Costs incurred in oil and gas property:

     

Acquisitions

     

Proved

   $ —        $ 5  

Unproved

     19        7  

Exploration and development

     655        817  
  

 

 

    

 

 

 

Total Costs incurred in oil and gas property

   $ 674      $ 829  
  

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

     

Total Costs incurred in oil and gas property

   $ 674      $ 829  

Asset retirement obligations settled vs. incurred – oil and gas property

     10        6  

Capitalized interest

     (8      (11

Exploration expense other than dry hole expense and unproved leasehold impairments

     (36      (40

Less noncontrolling interest

     (43      (52
  

 

 

    

 

 

 

Total Upstream capital investment

   $ 597      $ 732  
  

 

 

    

 

 

 

Reconciliation of Net cash provided by operating activities to Cash flows from operations before changes in operating assets and liabilities

Cash flows from operations before changes in operating assets and liabilities is a non-GAAP financial measure. Apache uses it internally and provides the information because management believes it is useful for investors 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 flows 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.

 

     For the Quarter Ended  
     March 31,
2019
     December 31,
2018
    March 31,
2018
 

Net cash provided by operating activities

   $ 598      $ 1,043     $ 615  

Changes in operating assets and liabilities

     138        (191     174  
  

 

 

    

 

 

   

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 736      $ 852     $ 789  
  

 

 

    

 

 

   

 

 

 

 

Page 7