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): July 31, 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)

  

(IRS 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))

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   APA/29   New York Stock Exchange

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.  ☐

 

 

 


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 July 31, 2019, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended June 30, 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 July 31, 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: August 1, 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     LOGO

APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2019

FINANCIAL AND OPERATIONAL RESULTS

 

 

Reported second-quarter production of 455,000 barrels of oil equivalent (BOE) per day. Adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 396,000 BOE per day, exceeding guidance of 392,000 BOE per day;

 

 

Achieved U.S. production of 264,000 BOE per day, which was reduced by approximately 4,000 BOE per day as a result of asset sales during the quarter; International adjusted production was 132,000 BOE per day, in-line with guidance;

 

 

Invested $589 million in upstream capital, 13 percent below capital guidance midpoint, remain on track for $2.4 billion for the year;

 

 

Commissioned first cryogenic processing facility at Alpine High in partnership with Altus Midstream during the quarter and second facility in July, both of which were on budget and schedule; and

 

 

Closed on the sale of midcontinent assets in two separate transactions in May and July, comprising approximately $560 million of cash proceeds, after customary closing adjustments. $150 million of proceeds were used to retire debt in early July.

HOUSTON, July 31, 2019 – Apache Corporation (NYSE, Nasdaq: APA) today announced its financial and operational results for the second quarter of 2019.

Apache reported a quarterly loss of $360 million or $0.96 per diluted common share for the second 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 second-quarter earnings were $41 million or $0.11 per share. Net cash provided by operating activities in the quarter was $856 million. Adjusted EBITDAX was $994 million.

“Apache has demonstrated capital discipline, refined our portfolio with the sale of the midcontinent assets, utilized asset sale proceeds to reduce debt, and successfully commissioned our first cryogenic processing facilities at Alpine High. We also delivered strong cash flow as our leverage to WTI and Brent oil prices offset the impact of very weak natural gas and natural gas liquids prices,” said John J. Christmann IV, Apache’s chief executive officer and president.

 

LOGO


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 2 of 7

 

“We responded quickly to weak Waha and El Paso Permian gas prices and deferred production at Alpine High. While total Permian production volumes were strong, oil volumes trailed guidance due to timing delays bringing wells online during the quarter. We will catch up in the second half of 2019 and exit the year with oil production on plan and with strong momentum heading into 2020.

“We have balanced our quarterly investment pace, and through June 30, have invested slightly less than half of our 2019 upstream capital budget. For the full year, we anticipate spending at or below our $2.4 billion budget,” continued Christmann.

Second-quarter operational summary

Highlights from the company’s three principal areas include:

 

 

Permian – Production averaged 226,000 BOE per day during the quarter. Apache operated an average of 12 rigs and drilled and completed 54 gross-operated wells.

 

     

Midland Basin – During the quarter, the company averaged four rigs and placed 20 wells on production. A 30-day delay in the commissioning of a new electric-powered frac fleet delayed production from nine wells during the quarter.

 

     

Delaware Basin – Outside of Alpine High in the Delaware Basin, Apache averaged three rigs and placed nine wells on production during the quarter.

At Alpine High, the company averaged five rigs and two frac crews and placed 26 wells on production. Approximately half of these wells came online late in the quarter and were still in the early clean-up phase as of June 30.

Production at Alpine High during the quarter was 49,000 BOE per day. As previously announced, Apache initiated the deferral of certain natural gas production volumes


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 3 of 7

 

near the end of the first quarter in response to severe Waha Hub gas price weakness. The impact of these deferrals during the second quarter was approximately 22,000 BOE per day. In the third quarter, the company is continuing to defer a similar amount of lean and rich-gas volumes in response to ongoing price weakness until the GCX pipeline comes online.

Apache continues to deliver cost reductions in the play with average drilling and completion costs per foot down 26 percent and 41 percent, respectively, from 2017 through the end of the second quarter.

 

 

Egypt – Apache averaged seven rigs during the quarter and drilled and completed 11 gross-operated wells. Adjusted production in Egypt, which excludes noncontrolling interest and the impact of tax barrels, averaged 72,000 BOE per day. During the quarter, the company made a discovery in the Lower Bahariya on a new concession area and has identified numerous additional low-cost, short-cycle drilling locations in the immediate vicinity.

 

 

North Sea – Apache averaged three rigs during the quarter and produced 60,000 BOE per day. During the second quarter, the company completed a farm-out agreement in a portion of the Beryl area to enable the continuation of tertiary exploration while preserving capital.

Asset sales and use of proceeds

In May and July, Apache closed the sale of noncore assets in two previously disclosed transactions, comprising approximately $560 million of net proceeds. The asset sales reflect the company’s exit from the Western Anadarko Basin and the SCOOP/STACK play. A portion of the proceeds from these asset sales was used to retire $150 million of debt that matured in early July.


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 4 of 7

 

Capital and production outlook

Upstream oil and gas investment was $589 million in the second quarter. Apache is reiterating its full-year capital investment guidance of $2.4 billion.

Apache is revising its production guidance for the second half of 2019 in the Permian Basin to reflect the delays experienced in the Midland/Delaware Basins, as well as continuing gas production deferrals at Alpine High in response to ongoing weak Waha gas prices.

For Permian Basin oil, Apache expects third-quarter production to be 94,000 to 98,000 BOE per day and fourth-quarter production to be 100,000 to 105,000 BOE per day.

At Alpine High, Apache expects third-quarter production to be between 70,000 to 75,000 BOE per day, which includes the impact of planned production deferrals. Fourth-quarter Alpine High production guidance of greater than 100,000 BOE per day is unchanged from prior guidance. This assumes that all deferred gas production is returned to sales by the beginning of October in conjunction with the GCX pipeline startup.

Internationally, the company expects third and fourth quarter volumes will be in-line with prior guidance. Details on additional financial and operational guidance can be found in the Second-Quarter 2019 Financial and Operational Supplement at www.apachecorp.com/financialdata.

“Our objectives for the second half of 2019 include managing capital investment to a level at or below our full-year budget of $2.4 billion, increasing Permian Basin oil well completions and oil production, continuing to drive capital and operating efficiencies into our business, and enhancing our opportunity set through high-impact exploration initiatives in Suriname and the Lower 48,” concluded Christmann.

Conference call

Apache will host a conference call to discuss its second-quarter 2019 results at 10 a.m. Central time, Thursday, Aug. 1. The conference call will be webcast from Apache’s website at www.apachecorp.com


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 5 of 7

 

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 7693326 . Sign up for email alerts to be reminded of the webcast at investor.apachecorp.com/alerts/email-alerts-subscription.

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.

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 SECOND-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


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 7 of 7

 

other factors, and are therefore not indicative of expected future resource recovery and should not be 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

-end-


APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

     For the Quarter
Ended June 30,
    For the Six Months
Ended June 30,
 
     2019     2018     2019     2018  

REVENUES AND OTHER:

        

Oil and gas production revenues

        

Oil revenues

   $ 1,397     $ 1,576     $ 2,707     $ 2,969  

Natural gas revenues

     118       212       354       434  

Natural gas liquids revenues

     83       148       191       266  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,598       1,936       3,252       3,669  

Derivative instrument gain (loss)

     (8     (25     (38     (23

Gain (loss) on divestiture

     17       2       20       9  

Other

     (4     16       4       21  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,603       1,929       3,238       3,676  
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Lease operating expenses

     389       356       754       705  

Gathering, processing and transmission

     76       82       164       168  

Taxes other than income

     46       49       97       104  

Exploration

     95       76       164       152  

General and administrative

     102       117       225       231  

Transaction, reorganization and separation

     6       12       10       12  

Depreciation, depletion and amortization:

        

Oil and gas property and equipment

     562       573       1,169       1,091  

Other assets

     40       35       79       70  

Asset retirement obligation accretion

     26       27       53       54  

Impairments

     240       —         240       —    

Financing costs, net

     173       94       270       193  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,755       1,421       3,225       2,780  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME BEFORE INCOME TAXES

     (152     508       13       896  

Current income tax provision

     187       249       373       447  

Deferred income tax provision (benefit)

     (23     (10     (42     (26
  

 

 

   

 

 

   

 

 

   

 

 

 

INCOME INCLUDING NONCONTROLLING INTEREST

     (316     269       (318     475  

Net income attributable to noncontrolling interest - Egypt

     43       74       87       135  

Net loss attributable to noncontrolling interest - Altus

     (3     —         (2     —    

Net income attributable to Altus Preferred Unit limited partners

     4       —         4       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON STOCK

   $ (360   $ 195     $ (407   $ 340  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME PER COMMON SHARE:

        

Basic

   $ (0.96   $ 0.51     $ (1.08   $ 0.89  

Diluted

   $ (0.96   $ 0.51     $ (1.08   $ 0.88  

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

        

Basic

     377       382       376       382  

Diluted

     377       385       376       384  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.25     $ 0.25     $ 0.50     $ 0.50  

 

Page 1


APACHE CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change     For the Six Months Ended  
     June 30,
2019
     March 31,
2019
     June 30,
2018
     2Q19 to
1Q19
    2Q19 to
2Q18
    June 30,
2019
     June 30,
2018
 

OIL VOLUME - Barrels per day

                  

Permian

     92,176        97,625        89,928        -6     2     94,886        87,711  

MidContinent/Gulf Coast

     7,574        8,699        11,492        -13     -34     8,133        10,996  

Gulf of Mexico

     3,260        2,454        3,743        33     -13     2,859        3,763  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     103,010        108,778        105,163        -5     -2     105,878        102,470  

Egypt (1, 2)

     83,761        91,616        96,185        -9     -13     87,667        95,730  

North Sea

     50,055        54,528        46,150        -8     8     52,279        46,249  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     133,816        146,144        142,335        -8     -6     139,946        141,979  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     236,826        254,922        247,498        -7     -4     245,824        244,449  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

Permian

     492,199        618,238        403,267        -20     22     554,870        380,416  

MidContinent/Gulf Coast

     90,555        116,272        135,629        -22     -33     103,343        128,378  

Gulf of Mexico

     11,484        9,797        8,881        17     29     10,645        9,530  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     594,238        744,307        547,777        -20     8     668,858        518,324  

Egypt (1, 2)

     277,552        315,508        340,991        -12     -19     296,425        342,438  

North Sea

     50,121        56,892        43,297        -12     16     53,488        42,174  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     327,673        372,400        384,288        -12     -15     349,913        384,612  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     921,911        1,116,707        932,065        -17     -1     1,018,771        902,936  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

Permian

     52,108        47,274        44,693        10     17     49,705        41,341  

MidContinent/Gulf Coast

     9,505        11,552        14,050        -18     -32     10,523        13,563  

Gulf of Mexico

     361        38        293        850     23     200        278  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     61,974        58,864        59,036        5     5     60,428        55,182  

Egypt (1, 2)

     898        1,150        1,127        -22     -20     1,023        1,033  

North Sea

     1,673        1,823        1,104        -8     52     1,748        1,135  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     2,571        2,973        2,231        -14     15     2,771        2,168  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     64,545        61,837        61,267        4     5     63,199        57,350  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

Permian

     226,318        247,939        201,832        -9     12     237,069        192,455  

MidContinent/Gulf Coast

     32,171        39,630        48,147        -19     -33     35,880        45,955  

Gulf of Mexico

     5,535        4,124        5,516        34     0     4,833        5,629  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     264,024        291,693        255,495        -9     3     277,782        244,039  

Egypt (1, 2)

     130,917        145,351        154,144        -10     -15     138,094        153,836  

North Sea

     60,082        65,833        54,470        -9     10     62,942        54,413  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     190,999        211,184        208,614        -10     -8     201,036        208,249  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     455,023        502,877        464,109        -10     -2     478,818        452,288  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total excluding noncontrolling interests

     411,345        454,371        412,693        -9     0     432,740        400,960  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

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

 

   

Oil (b/d)

     27,939        30,554        32,066            29,239        31,921  

Gas (Mcf/d)

     92,639        105,412        113,846            98,990        114,377  

NGL (b/d)

     299        383        376            341        344  

(2) Egypt Gross Production - BOE per day

     321,937        332,003        341,636        -3     -6     326,943        335,882  

 

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) noncontrolling interest in Egypt and 2) 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             For the Six Months Ended          
     June 30,
2019
     March 31,
2019
     June 30,
2018
     2Q19 to
1Q19
    2Q19 to
2Q18
    June 30,
2019
     June 30,
2018
 

OIL VOLUME - Barrels per day

                  

Permian

     92,176        97,625        89,928        -6     2     94,886        87,711  

MidContinent/Gulf Coast

     7,574        8,699        11,492        -13     -34     8,133        10,996  

Gulf of Mexico

     3,260        2,454        3,743        33     -13     2,859        3,763  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     103,010        108,778        105,163        -5     -2     105,878        102,470  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     44,261        48,323        47,837        -8     -7     46,281        47,915  

North Sea

     50,055        54,528        46,151        -8     8     52,279        46,249  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     94,316        102,851        93,988        -8     0     98,560        94,164  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     197,326        211,629        199,151        -7     -1     204,438        196,634  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

Permian

     492,199        618,238        403,267        -20     22     554,870        380,416  

MidContinent/Gulf Coast

     90,555        116,272        135,629        -22     -33     103,343        128,378  

Gulf of Mexico

     11,484        9,797        8,881        17     29     10,645        9,530  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     594,238        744,307        547,777        -20     8     668,858        518,324  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     160,306        181,118        188,012        -11     -15     170,655        188,991  

North Sea

     50,121        56,892        43,296        -12     16     53,488        42,174  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     210,427        238,010        231,308        -12     -9     224,143        231,165  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     804,665        982,317        779,085        -18     3     893,001        749,489  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

Permian

     52,108        47,274        44,693        10     17     49,705        41,341  

MidContinent/Gulf Coast

     9,505        11,552        14,050        -18     -32     10,523        13,563  

Gulf of Mexico

     361        38        293        850     23     200        278  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     61,974        58,864        59,036        5     5     60,428        55,182  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     531        678        596        -22     -11     604        546  

North Sea

     1,673        1,823        1,104        -8     52     1,748        1,135  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     2,204        2,501        1,700        -12     30     2,352        1,681  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     64,178        61,365        60,736        5     6     62,780        56,863  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

Permian

     226,318        247,939        201,832        -9     12     237,069        192,455  

MidContinent/Gulf Coast

     32,171        39,630        48,147        -19     -33     35,880        45,955  

Gulf of Mexico

     5,535        4,124        5,516        34     0     4,833        5,629  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     264,024        291,693        255,495        -9     3     277,782        244,039  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     71,510        79,187        79,769        -10     -10     75,327        79,960  

North Sea

     60,082        65,833        54,470        -9     10     62,942        54,413  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     131,592        145,020        134,239        -9     -2     138,269        134,373  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     395,616        436,713        389,734        -9     2     416,051        378,412  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

Page 3


APACHE CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended      For the Six Months Ended  
     June 30,
2019
     March 31,
2019
     June 30,
2018
     June 30,
2019
     June 30,
2018
 

AVERAGE OIL PRICE PER BARREL

              

Permian

   $ 56.79      $ 50.30      $ 62.69      $ 53.47      $ 62.12  

MidContinent/Gulf Coast

     59.90        53.45        65.98        56.47        64.18  

Gulf of Mexico

     63.60        58.27        67.76        61.33        68.50  

United States

     57.25        50.70        63.27        53.90        62.54  

Egypt

     68.60        62.35        74.14        65.36        70.26  

North Sea

     68.43        64.15        73.05        66.35        69.58  

International

     68.54        63.00        73.78        65.73        70.04  

Total

     63.71        57.70        69.35        60.65        66.90  

AVERAGE NATURAL GAS PRICE PER MCF

              

Permian

   $ .26      $ 1.61      $ 1.85      $ 1.01      $ 2.11  

MidContinent/Gulf Coast

     1.98        2.94        2.21        2.52        2.43  

Gulf of Mexico

     2.62        3.69        2.95        3.11        3.32  

United States

     0.55        1.83        1.94        1.26        2.20  

Egypt

     2.80        2.85        2.85        2.82        2.85  

North Sea

     3.99        6.24        6.82        5.18        6.71  

International

     2.98        3.36        3.29        3.18        3.27  

Total

     1.41        2.34        2.50        1.92        2.65  

AVERAGE NGL PRICE PER BARREL

              

Permian

   $ 13.12      $ 18.73      $ 26.97      $ 15.92      $ 25.90  

MidContinent/Gulf Coast

     14.72        17.38        22.90        16.18        22.53  

Gulf of Mexico

     20.47        17.62        32.52        20.21        31.52  

United States

     13.57        18.47        26.03        15.96        25.10  

Egypt

     32.90        37.66        40.80        35.56        38.72  

North Sea

     33.67        40.60        44.71        37.27        43.75  

International

     33.40        39.47        42.73        36.64        41.35  

Total

     14.37        19.49        26.64        16.87        25.72  

 

Page 4


APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY OF DERIVATIVE INSTRUMENT GAINS (LOSSES), NET

 

     For the Quarter
Ended June 30,
    For the Six Months
Ended June 30,
 
     2019     2018     2019     2018  

Derivative settlements - realized gain/(loss)

   $ 13     $ (75   $ 28     $ (117

Amortization of call and put premium

     —         (5     —         (10
  

 

 

   

 

 

   

 

 

   

 

 

 

Realized gain/(loss)

     13       (80     28       (127

Unrealized mark-to-market gain/(loss)

     (21     55       (66     104  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (8   $ (25   $ (38   $ (23
  

 

 

   

 

 

   

 

 

   

 

 

 

SUMMARY EXPLORATION EXPENSE INFORMATION

 

     For the Quarter
Ended June 30,
     For the Six Months
Ended June 30,
 
     2019      2018      2019      2018  

Unproved leasehold impairments

   $ 39      $ 21      $ 62      $ 37  

Dry hole expense

     18        16        28        36  

Geological and geophysical expense

     18        17        38        35  

Exploration overhead and other

     20        22        36        44  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 95      $ 76      $ 164      $ 152  
  

 

 

    

 

 

    

 

 

    

 

 

 

SUMMARY CASH FLOW INFORMATION

 

     For the Quarter
Ended June 30,
    For the Six Months
Ended June 30,
 
     2019     2018     2019     2018  

Net cash provided by operating activities

   $ 856     $ 1,113     $ 1,454     $ 1,728  
  

 

 

   

 

 

   

 

 

   

 

 

 

Additions to oil and gas property

     (676     (861     (1,420     (1,610

Additions to Altus gathering, processing, and transmission facilities

     (127     (156     (246     (284

Altus equity method interests

     (320     —         (438     —    

Proceeds from sale of oil and gas properties

     238       4       247       13  

Other, net

     (9     (11     25       (33
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

   $ (894   $ (1,024   $ (1,832   $ (1,914
  

 

 

   

 

 

   

 

 

   

 

 

 

Debt borrowings and payments, net

     (170     —         (11     (150

Distributions to noncontrolling interest - Egypt

     (57     (86     (164     (155

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     611       —         611       —    

Dividends paid

     (94     (96     (188     (191

Other

     (30     (12     (35     (14
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

   $ 260     $ (194   $ 213     $ (510
  

 

 

   

 

 

   

 

 

   

 

 

 

SUMMARY BALANCE SHEET INFORMATION

 

     June 30,
2019
     December 31,
2018
 

Cash and cash equivalents

   $ 549      $ 714  

Other current assets

     2,242        1,973  

Property and equipment, net

     17,756        18,421  

Other assets

     1,259        474  
  

 

 

    

 

 

 

Total assets

   $ 21,806      $ 21,582  
  

 

 

    

 

 

 

Current debt

   $ 175      $ 151  

Current liabilities

     2,087        2,050  

Long-term debt

     8,157        8,093  

Deferred credits and other noncurrent liabilities

     2,712        2,476  

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     521        —    

Apache shareholders' equity

     6,551        7,130  

Noncontrolling interest - Egypt

     1,198        1,275  

Noncontrolling interest - Altus

     405        407  
  

 

 

    

 

 

 

Total Liabilities, redeemable noncontrolling interest, and equity

   $ 21,806      $ 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     For the Six Months Ended  
     June 30,     March 31,     June 30,     June 30,  
     2019     2019     2018     2019     2018  

Net cash provided by operating activities

   $ 856     $ 598     $ 1,113     $ 1,454     $ 1,728  

Adjustments:

          

Exploration siesmic and administration costs

     38       36       39       74       79  

Current income tax provision

     187       186       249       373       447  

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

     (13     (9     (43     (22     (82

Changes in operating assets and liabilities

     (178     138       (196     (40     (22

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

     98       97       94       195       193  

Transaction, reorganization & separation costs

     6       4       12       10       12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 994     $ 1,050     $ 1,268     $ 2,044     $ 2,355  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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
June 30, 2019
    For the Quarter Ended
June 30, 2018
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Income including noncontrolling interest (GAAP)

   $ (152   $ (164   $ (316   $ (0.84   $ 508     $ (239   $ 269     $ 0.70  

Income attributable to noncontrolling interest

     80       (40     40       0.11       134       (60     74       0.19  

Loss attributable to Altus preferred unit limited partner

     4       —         4       0.01       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     (236     (124     (360     (0.96     374       (179     195       0.51  

Adjustments: *

                

Asset impairments

     279       (59     220       0.58       21       (4     17       0.05  

Valuation allowance and other tax adjustments

     —         114       114       0.31       —         5       5       0.01  

Loss on extinguishment of debt

     75       (16     59       0.16       —         —         —         —    

Unrealized derivative instrument (gain)/loss

     21       (4     17       0.04       (55     12       (43     (0.11

Transaction, reorganization & separation costs

     6       (1     5       0.01       12       (3     9       0.02  

Modification of stock comp plans

     —         —         —         —         14       (3     11       0.03  

(Gain)/loss on divestitures

     (17     3       (14     (0.03     (2     —         (2     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ 128     $ (87   $ 41     $ 0.11     $ 364     $ (172   $ 192     $ 0.50  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     For the Six Months Ended
June 30, 2019
    For the Six Months Ended
June 30, 2018
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Income including noncontrolling interest (GAAP)

   $ 13     $ (331   $ (318   $ (0.84   $ 896     $ (421   $ 475     $ 1.23  

Income attributable to noncontrolling interest

     165       (80     85       0.23       246       (111     135       0.35  

Loss attributable to Altus preferred unit limited partner

     4       —         4       0.01       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     (156     (251     (407     (1.08     650       (310     340       0.88  

Adjustments: *

                

Asset impairments

     302       (64     238       0.62       37       (7     30       0.08  

Valuation allowance and other tax adjustments

     —         145       145       0.39       —         6       6       0.02  

Loss on extinguishment of debt

     75       (16     59       0.16       —         —         —         —    

Unrealized derivative instrument (gain)/loss

     66       (14     52       0.14       (104     22       (82     (0.21

Transaction, reorganization & separation costs

     10       (2     8       0.02       12       (3     9       0.02  

Modification of stock comp plans

     —         —         —         —         28       (7     21       0.05  

(Gain)/loss on divestitures

     (20     4       (16     (0.04     (9     1       (8     (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Earnings (Non-GAAP)

   $ 277     $ (198   $ 79     $ 0.21     $ 614     $ (298   $ 316     $ 0.82  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

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.

 

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

Current debt

   $ 175      $ 339      $ 151      $ 151      $ 401  

Long-term debt

     8,157        8,094        8,093        8,092        7,976  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total debt

     8,332        8,433        8,244        8,243        8,377  

Cash and cash equivalents

     549        327        714        593        972  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net debt

   $ 7,783      $ 8,106      $ 7,530      $ 7,650      $ 7,405  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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 June 30,
     For the Six Months
Ended June 30,
 
     2019      2018      2019      2018  

Costs incurred in oil and gas property:

           

Acquisitions

           

Proved

   $ —        $ —        $ —        $ 5  

Unproved

     22        26        41        33  

Exploration and development

     639        772        1,294        1,589  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Costs incurred in oil and gas property

   $ 661      $ 798      $ 1,335      $ 1,627  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

           

Total Costs incurred in oil and gas property

   $ 661      $ 798      $ 1,335      $ 1,627  

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

     9        12        19        18  

Capitalized interest

     (8      (9      (16      (20

Exploration siesmic and administration costs

     (38      (39      (74      (79

Less noncontrolling interest - Egypt

     (35      (55      (78      (107
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Upstream capital investment

   $ 589      $ 707      $ 1,186      $ 1,439  
  

 

 

    

 

 

    

 

 

    

 

 

 

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     For the Six Months Ended  
     June 30,     March 31,      June 30,     June 30,  
     2019     2019      2018     2019     2018  

Net cash provided by operating activities

   $ 856     $ 598      $ 1,113     $ 1,454     $ 1,728  

Changes in operating assets and liabilities

     (178     138        (196     (40     (22
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 678     $ 736      $ 917     $ 1,414     $ 1,706  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

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