8-K
false 0000006769 0000006769 2019-10-30 2019-10-30 0000006769 us-gaap:CommonStockMember exch:XNYS 2019-10-30 2019-10-30 0000006769 us-gaap:CommonStockMember exch:XCHI 2019-10-30 2019-10-30 0000006769 us-gaap:CommonStockMember exch:XNGS 2019-10-30 2019-10-30 0000006769 apa:A7.75NotesDue2029Member 2019-10-30 2019-10-30

 

 

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): October 30, 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 October 30, 2019, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended September 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 October 30, 2019.

         
 

104

   

Cover Page Interactive Data File (formatted as Inline XBRL).


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: October 31, 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 THIRD-QUARTER 2019

FINANCIAL AND OPERATIONAL RESULTS

 

   

Reported third-quarter production of 451,000 barrels of oil equivalent (BOE) per day. Adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 391,000 BOE per day, exceeding upper-end guidance of 383,000 BOE per day;

 

   

Achieved U.S. production of 266,000 BOE per day, which exceeds upper-end guidance of 260,000 BOE per day; international adjusted production was 125,000 BOE per day, slightly ahead of guidance;

 

   

Invested $590 million in upstream capital; remain on track for $2.4 billion for the year;

 

   

Nearing first production from two new high-volume North Sea wells;

 

   

Drilling first well in Block 58 offshore Suriname; expected to reach total depth in November; and

 

   

Announced organizational initiatives targeting operational efficiencies and annual cost savings of at least $150 million.

HOUSTON, Oct. 30, 2019 – Apache Corporation (NYSE, Nasdaq: APA) today announced its financial and operational results for the third quarter of 2019.

Apache reported a quarterly loss of $170 million or $0.45 per diluted common share for the third 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 reported a third-quarter loss of $108 million or $0.29 per share. Adjusted earnings were generally in line with expectations except for the impact of increased depreciation, depletion and amortization costs. This was primarily associated with a reduction in Alpine High reserves due to deteriorating natural gas liquids (NGL) and gas prices. Upstream oil and gas capital investment was $590 million in the third quarter. Net cash provided by operating activities in the quarter was $635 million and adjusted EBITDAX was $905 million.

“During the third quarter, adjusted production exceeded guidance while capital expenditures remained on pace with our full-year guidance of $2.4 billion,” said Apache CEO and President John Christmann. “In September, we began drilling the first of three committed wells in Block 58 offshore Suriname. We are also nearing first production from two wells in the North Sea, which should establish strong production momentum as we enter 2020.”


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 2 of 7

 

Third-Quarter Operational Summary

Highlights from the company’s principal areas include:

Permian – Production averaged 254,000 BOE per day during the quarter and Apache operated an average of 10 rigs and drilled and completed 47 gross-operated wells. In the Permian Basin, our oil production in the second half of the year has been modestly impacted by some unplanned downtime events and completion schedule delays. As a result, the company is now projecting fourth-quarter Permian oil volumes of approximately 100,000 barrels per day.

 

   

Midland Basin – During the quarter, the company averaged three rigs and placed 22 wells on production. Good results from a Lower Cline test well in the Azalea Field will lead to further evaluation and potential expansion of Apache’s core development inventory.

 

   

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

Production at Alpine High averaged 76,000 BOE per day for the quarter and the company averaged five rigs and one frac crew and placed 15 wells on production. Volumes previously deferred due to low Waha prices were returned to production during August and September.

As a result of continued weakness in gas and NGL pricing, the company has reduced Alpine High drilling activity to two rigs and has chosen to defer some fourth-quarter completions into 2020. These changes, combined with a reduced production outlook for a recent multiwell pad, has resulted in a 5% decrease in fourth-quarter Alpine High production guidance.


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 3 of 7

 

Egypt – Apache averaged seven rigs during the quarter and drilled and completed 14 gross-operated wells. Adjusted production in Egypt, which excludes noncontrolling interest and the impact of tax barrels, averaged 72,000 BOE per day, up slightly from the second quarter. The company drilled multiple successful exploration wells during the quarter that have positive implications for future development inventory.

North Sea – Apache averaged three rigs during the quarter and produced 54,000 BOE per day, which reflects an anticipated decrease related to seasonal platform maintenance. The company expects to bring its first well at Storr online in November and its second well at Garten online around year-end. The Garten well encountered approximately 1,200 feet of pay, which significantly exceeded the company’s pre-drill estimates.

Suriname – Apache is currently drilling the Maka Central #1 well and expects to reach total depth in November at approximately 6,325 meters as measured from the deck of the drillship. The well is designed to test multiple targets and is located roughly seven miles from the Suriname / Guyana maritime border. Apache also exercised its option to drill two additional wells in Suriname Block 58 with the Noble Sam Croft drillship.

Organizational and Cost Saving Initiatives

“Apache has historically employed a decentralized, region-focused approach to operations. In recent years, we have centralized certain key activities, and today we see an opportunity to capture greater efficiencies by taking further steps in that direction,” continued Christmann. “To accomplish this, we have initiated a comprehensive redesign of our organizational structure and operations that will position us to be competitive for the long term. This process, which began in late summer, should be largely completed by the end of the first quarter 2020. We are targeting at least $150 million of combined annual savings and look forward to updating you on our progress in the future.”


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 4 of 7

 

Closing

“Our primary objectives are to deliver competitive, risk-adjusted returns with a long-term moderate pace of growth and improve our free cash flow yield to levels consistent with other mature industrial sectors. As we look to 2020, based on current strip prices, we anticipate our upstream capital budget will be 10% to 20% below this year’s program of $2.4 billion. This will enable us to generate organic free cash flow that covers the current dividend and puts us on pace to fund a multiyear debt reduction program, while also delivering modest year-over-year oil production growth. We look forward to sharing the details of our 2020 capital plan in February,” concluded Christmann.

Conference call

Apache will host a conference call to discuss its third-quarter 2019 results at 10 a.m. Central time, Thursday, Oct. 31. 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 8089562. 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.


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 5 of 7

 

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.

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,” “continues,” “could,” “estimates,” “expects,” “guidance,” “may,” “might,” “outlook,” “possible,” “potential,” “projects,” “should,” “would,” “will,” and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. 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


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 6 of 7

 

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 and in our quarterly reports on Form 10-Q 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 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.


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2019 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 7 of 7

 

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     For the Nine Months Ended  
     September 30,     September 30,  
     2019     2018     2019     2018  

REVENUES AND OTHER:

        

Oil and gas production revenues

        

Oil revenues

   $ 1,207     $ 1,555     $ 3,914     $ 4,524  

Natural gas revenues

     136       241       490       675  

Natural gas liquids revenues

     95       180       286       446  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,438       1,976       4,690       5,645  

Derivative instrument losses, net

     (2     (23     (40     (46

Gain on divestitures

     —         1       20       10  

Other

     41       29       45       50  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,477       1,983       4,715       5,659  
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Lease operating expenses

     350       382       1,104       1,087  

Gathering, processing and transmission

     66       92       230       260  

Taxes other than income

     44       58       141       162  

Exploration

     56       99       220       251  

General and administrative

     98       99       323       330  

Transaction, reorganization and separation

     7       8       17       20  

Depreciation, depletion and amortization:

        

Oil and gas property and equipment

     667       575       1,836       1,666  

Other assets

     44       35       123       105  

Asset retirement obligation accretion

     27       27       80       81  

Impairments

     9       10       249       10  

Financing costs, net

     95       192       365       385  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,463       1,577       4,688       4,357  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME BEFORE INCOME TAXES

     14       406       27       1,302  

Current income tax provision

     141       262       514       709  

Deferred income tax provision (benefit)

     (10     (17     (52     (43
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

     (117     161       (435     636  

Net income attributable to noncontrolling interest - Egypt

     38       80       125       215  

Net loss attributable to noncontrolling interest - Altus

     (3     —         (5     —    

Net income attributable to Altus Preferred Unit limited partners

     18       —         22       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $ (170   $ 81     $ (577   $ 421  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) PER COMMON SHARE:

        

Basic

   $ (0.45   $ 0.21     $ (1.53   $ 1.10  

Diluted

   $ (0.45   $ 0.21     $ (1.53   $ 1.09  

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

        

Basic

     377       383       377       383  

Diluted

     377       385       377       385  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.25     $ 0.25     $ 0.75     $ 0.75  

 

Page 1


APACHE CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change     For the Nine Months Ended  
     September 30,      June 30,      September 30,      3Q19 to     3Q19 to     September 30,      September 30,  
     2019      2019      2018      2Q19     3Q18     2019      2018  

OIL VOLUME - Barrels per day

                  

Permian

     94,873        92,176        90,434        3     5     94,882        88,629  

MidContinent/Gulf Coast

     2,635        7,574        10,067        -65     -74     6,280        10,683  

Gulf of Mexico

     2,537        3,260        3,037        -22     -16     2,750        3,518  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     100,045        103,010        103,538        -3     -3     103,912        102,830  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     84,114        83,761        97,129        0     -13     86,470        96,201  

North Sea

     44,281        50,055        42,769        -12     4     49,584        45,076  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     128,395        133,816        139,898        -4     -8     136,054        141,277  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     228,440        236,826        243,436        -4     -6     239,966        244,107  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

Permian

     539,132        492,199        516,930        10     4     549,566        426,421  

MidContinent/Gulf Coast

     14,779        90,555        124,572        -84     -88     73,497        127,095  

Gulf of Mexico

     9,251        11,484        10,280        -19     -10     10,176        9,783  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     563,162        594,238        651,782        -5     -14     633,239        563,299  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     275,569        277,552        331,681        -1     -17     289,397        338,813  

North Sea

     47,875        50,121        41,455        -4     15     51,596        41,932  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     323,444        327,673        373,136        -1     -13     340,993        380,745  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     886,606        921,911        1,024,918        -4     -13     974,232        944,044  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

Permian

     69,703        52,108        45,671        34     53     56,444        42,800  

MidContinent/Gulf Coast

     1,959        9,505        14,311        -79     -86     7,637        13,815  

Gulf of Mexico

     343        361        257        -5     33     248        271  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     72,005        61,974        60,239        16     20     64,329        56,886  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     891        898        753        -1     18     979        939  

North Sea

     1,540        1,673        1,008        -8     53     1,678        1,092  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     2,431        2,571        1,761        -5     38     2,657        2,031  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     74,436        64,545        62,000        15     20     66,986        58,917  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

Permian

     254,432        226,318        222,259        12     14     242,920        202,499  

MidContinent/Gulf Coast

     7,057        32,171        45,140        -78     -84     26,166        45,680  

Gulf of Mexico

     4,421        5,535        5,007        -20     -12     4,695        5,420  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     265,910        264,024        272,406        1     -2     273,781        253,599  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     130,934        130,917        153,163        0     -15     135,681        153,609  

North Sea

     53,800        60,082        50,686        -10     6     59,861        53,157  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     184,734        190,999        203,849        -3     -9     195,542        206,766  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     450,644        455,023        476,255        -1     -5     469,323        460,365  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total excluding noncontrolling interests

     406,926        411,345        425,156        -1     -4     424,040        409,114  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

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

   

Oil (b/d)

     28,052        27,939        32,385            28,839        32,077  

Gas (Mcf/d)

     92,212        92,639        110,777            96,706        113,164  

NGL (b/d)

     297        299        251            326        313  

(2)  Egypt Gross Production - BOE per day

     301,296        321,937        337,738        -6     -11     318,300        336,506  

 

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 Nine Months Ended  
     September 30,      June 30,      September 30,      3Q19 to     3Q19 to     September 30,      September 30,  
     2019      2019      2018      2Q19     3Q18     2019      2018  

OIL VOLUME - Barrels per day

                  

Permian

     94,873        92,176        90,434        3     5     94,882        88,629  

MidContinent/Gulf Coast

     2,635        7,574        10,067        -65     -74     6,280        10,683  

Gulf of Mexico

     2,537        3,260        3,037        -22     -16     2,750        3,518  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     100,045        103,010        103,538        -3     -3     103,912        102,830  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     44,461        44,261        47,260        0     -6     45,668        47,694  

North Sea

     44,281        50,055        42,769        -12     4     49,584        45,076  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     88,742        94,316        90,029        -6     -1     95,252        92,770  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     188,787        197,326        193,567        -4     -2     199,164        195,600  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

Permian

     539,132        492,199        516,930        10     4     549,566        426,421  

MidContinent/Gulf Coast

     14,779        90,555        124,572        -84     -88     73,497        127,095  

Gulf of Mexico

     9,251        11,484        10,280        -19     -10     10,176        9,783  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     563,162        594,238        651,782        -5     -14     633,239        563,299  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     160,263        160,306        179,539        0     -11     167,153        185,806  

North Sea

     47,875        50,121        41,455        -4     15     51,596        41,932  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     208,138        210,427        220,994        -1     -6     218,749        227,738  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     771,300        804,665        872,776        -4     -12     851,988        791,037  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

Permian

     69,703        52,108        45,671        34     53     56,444        42,800  

MidContinent/Gulf Coast

     1,959        9,505        14,311        -79     -86     7,637        13,815  

Gulf of Mexico

     343        361        257        -5     33     248        271  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     72,005        61,974        60,239        16     20     64,329        56,886  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     518        531        402        -2     29     575        498  

North Sea

     1,540        1,673        1,008        -8     53     1,678        1,092  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     2,058        2,204        1,410        -7     46     2,253        1,590  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     74,063        64,178        61,649        15     20     66,582        58,476  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

Permian

     254,432        226,318        222,259        12     14     242,920        202,499  

MidContinent/Gulf Coast

     7,057        32,171        45,140        -78     -84     26,166        45,680  

Gulf of Mexico

     4,421        5,535        5,007        -20     -12     4,695        5,420  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

United States

     265,910        264,024        272,406        1     -2     273,781        253,599  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     71,690        71,510        77,585        0     -8     74,102        79,159  

North Sea

     53,800        60,082        50,686        -10     6     59,861        53,157  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     125,490        131,592        128,271        -5     -2     133,963        132,316  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     391,400        395,616        400,677        -1     -2     407,744        385,915  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

Page 3


APACHE CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended      For the Nine Months Ended  
     September 30,      June 30,      September 30,      September 30,      September 30,  
     2019      2019      2018      2019      2018  

AVERAGE OIL PRICE PER BARREL

              

Permian

   $ 54.51      $ 56.79      $ 60.07      $ 53.82      $ 61.41  

MidContinent/Gulf Coast

     58.38        59.90        69.38        56.74        65.83  

Gulf of Mexico

     58.38        63.60        70.87        60.41        69.19  

United States

     54.70        57.25        61.20        54.16        62.08  

Egypt

     61.10        68.60        74.92        63.96        71.85  

North Sea

     63.12        68.43        75.01        65.45        71.32  

International

     61.75        68.54        74.95        64.50        71.68  

Total

     58.60        63.71        69.12        60.00        67.65  

AVERAGE NATURAL GAS PRICE PER MCF

              

Permian

   $ .91      $ .26      $ 1.98      $ .97      $ 2.06  

MidContinent/Gulf Coast

     2.03        1.98        2.45        2.48        2.44  

Gulf of Mexico

     2.39        2.62        2.87        2.89        3.16  

United States

     0.97        0.55        2.09        1.17        2.15  

Egypt

     2.81        2.80        2.85        2.82        2.85  

North Sea

     3.20        3.99        7.78        4.56        7.07  

International

     2.87        2.98        3.40        3.08        3.31  

Total

     1.66        1.41        2.56        1.84        2.62  

AVERAGE NGL PRICE PER BARREL

              

Permian

   $ 13.24      $ 13.12      $ 32.38      $ 14.77      $ 28.24  

MidContinent/Gulf Coast

     14.35        14.72        25.89        16.02        23.70  

Gulf of Mexico

     16.11        20.47        34.48        18.30        32.47  

United States

     13.26        13.57        30.84        14.93        27.15  

Egypt

     27.76        32.90        45.92        33.17        40.67  

North Sea

     26.63        33.67        54.73        33.98        47.16  

International

     27.05        33.40        50.96        33.68        44.16  

Total

     13.71        14.37        31.42        15.68        27.74  

 

Page 4


APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

 

SUMMARY OF DERIVATIVE INSTRUMENT GAINS (LOSSES), NET

 

     For the Quarter Ended     For the Nine Months Ended  
     September 30,     September 30,  
     2019     2018     2019     2018  

Derivative settlements - realized gain/(loss)

   $ (16   $ 7     $ 12     $ (110

Amortization of call and put premium

     —         (14     —         (24
  

 

 

   

 

 

   

 

 

   

 

 

 

Realized gain/(loss)

     (16     (7     12       (134

Unrealized mark-to-market gain/(loss)

     14       (16     (52     88  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ (2   $ (23   $ (40   $ (46
  

 

 

   

 

 

   

 

 

   

 

 

 
SUMMARY EXPLORATION EXPENSE INFORMATION

 

     For the Quarter     For the Nine Months Ended  
     September 30,     September 30,  
     2019     2018     2019     2018  

Unproved leasehold impairments

   $ 12     $ 39     $ 74     $ 76  

Dry hole expense

     5       21       33       57  

Geological and geophysical expense

     18       6       56       41  

Exploration overhead and other

     21       33       57       77  
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 56     $ 99     $ 220     $ 251  
  

 

 

   

 

 

   

 

 

   

 

 

 
SUMMARY CASH FLOW INFORMATION

 

     For the Quarter     For the Nine Months Ended  
     September 30,     September 30,  
     2019     2018     2019     2018  

Net cash provided by operating activities

   $ 635     $ 1,006     $ 2,089     $ 2,734  
  

 

 

   

 

 

   

 

 

   

 

 

 

Additions to upstream oil and gas property

     (634     (814     (2,054     (2,424

Additions to Altus gathering, processing, and transmission facilities

     (48     (128     (294     (412

Altus equity method interests

     (570     —         (1,008     —    

Proceeds from sale of oil and gas properties

     343       38       590       51  

Other, net

     (42     (22     (17     (55
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

   $ (951   $ (926   $ (2,783   $ (2,840
  

 

 

   

 

 

   

 

 

   

 

 

 

Debt borrowings and payments, net

     85       (228     74       (378

Distributions to noncontrolling interest - Egypt

     (71     (101     (235     (256

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     —         —         611       —    

Dividends paid

     (94     (96     (282     (287

Other

     10       (34     (25     (48
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

   $ (70   $ (459   $ 143     $ (969
  

 

 

   

 

 

   

 

 

   

 

 

 
SUMMARY BALANCE SHEET INFORMATION

 

     September 30,     December 31,        
     2019     2018  

Cash and cash equivalents

   $ 163     $ 714  

Other current assets

     1,808       1,973  

Property and equipment, net

     17,655       18,421  

Other assets

     1,779       474  
  

 

 

   

 

 

 

Total assets

   $ 21,405     $ 21,582  
  

 

 

   

 

 

 

Current debt - Apache *

   $ 1     $ 151  

Current debt - Altus

     18       —    

Current liabilities

     1,902       2,050  

Long-term debt - Apache *

     8,158       8,093  

Long-term debt - Altus

     235       —    

Deferred credits and other noncurrent liabilities

     2,684       2,476  

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     539       —    

Apache shareholders’ equity

     6,301       7,130  

Noncontrolling interest - Egypt

     1,165       1,275  

Noncontrolling interest - Altus

     402       407  
  

 

 

   

 

 

 

Total Liabilities, redeemable noncontrolling interest, and equity

   $ 21,405     $ 21,582  
  

 

 

   

 

 

 

Common shares outstanding at end of period

     376       375  

 

*

Excludes Altus

 

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 Nine Months Ended  
     September 30,     June 30,     September 30,     September 30,  
     2019     2019     2018     2019     2018  

Net cash provided by operating activities

   $ 635     $ 856     $ 1,006     $ 2,089     $ 2,734  

Adjustments:

          

Exploration seismic and administration costs

     39       38       39       113       118  

Current income tax provision

     141       187       262       514       709  

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

     (13     (13     (14     (35     (96

Changes in operating assets and liabilities

     1       (178     (32     (39     (54

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

     95       98       98       290       291  

Transaction, reorganization & separation costs

     7       6       8       17       20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 905     $ 994     $ 1,367     $ 2,949     $ 3,722  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

Income including noncontrolling interest (GAAP)

   $ 14     $ (131   $ (117   $ (0.31   $ 406     $ (245   $ 161     $ 0.42  

Income attributable to noncontrolling interest

     70       (35     35       0.09       147       (67     80       0.21  

Loss attributable to Altus preferred unit limited partner

     18       —         18       0.05       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     (74     (96     (170     (0.45     259       (178     81       0.21  

Adjustments:*

                

Asset impairments

     21       (5     16       0.04       49       (13     36       0.10  

Valuation allowance and other tax adjustments

     —         53       53       0.14       —         24       24       0.06  

Loss on extinguishment of debt

     —         —         —         —         94       (19     75       0.19  

Unrealized derivative instrument (gain)/loss

     (14     2       (12     (0.03     16       (3     13       0.03  

Transaction, reorganization & separation costs

     7       (2     5       0.01       8       (1     7       0.02  

Modification of stock comp plans

     —         —         —         —         11       (2     9       0.02  

(Gain)/loss on divestitures

     —         —         —         —         (1     —         (1     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ (60   $ (48   $ (108   $ (0.29   $ 436     $ (192   $ 244     $ 0.63  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     For the Nine Months Ended     For the Nine Months Ended  
     September 30, 2019     September 30, 2018  
     Before     Tax     After     Diluted     Before     Tax     After     Diluted  
     Tax     Impact     Tax     EPS     Tax     Impact     Tax     EPS  

Income including noncontrolling interest (GAAP)

   $ 27     $ (462   $ (435   $ (1.15   $ 1,302     $ (666   $ 636     $ 1.65  

Income attributable to noncontrolling interest

     235       (115     120       0.32       393       (178     215       0.56  

Loss attributable to Altus preferred unit limited partner

     22       —         22       0.06       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     (230     (347     (577     (1.53     909       (488     421       1.09  

Adjustments:*

                

Asset impairments

     323       (69     254       0.66       86       (20     66       0.18  

Valuation allowance and other tax adjustments

     —         198       198       0.53       —         30       30       0.08  

Loss on extinguishment of debt

     75       (16     59       0.16       94       (19     75       0.19  

Unrealized derivative instrument (gain)/loss

     52       (12     40       0.11       (88     19       (69     (0.18

Transaction, reorganization & separation costs

     17       (4     13       0.03       20       (4     16       0.04  

Modification of stock comp plans

     —         —         —         —         39       (9     30       0.07  

(Gain)/loss on divestitures

     (20     4       (16     (0.04     (10     1       (9     (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Earnings (Non-GAAP)

   $ 217     $ (246   $ (29   $ (0.08   $ 1,050     $ (490   $ 560     $ 1.45  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

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.

 

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

Current debt

   $ 19      $ 175      $ 339      $ 151      $ 151  

Long-term debt

     8,393        8,157        8,094        8,093        8,092  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total debt

     8,412        8,332        8,433        8,244        8,243  

Cash and cash equivalents

     163        549        327        714        593  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net debt

   $ 8,249      $ 7,783      $ 8,106      $ 7,530      $ 7,650  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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      For the Nine Months Ended  
     September 30,      September 30,  
     2019      2018      2019      2018  

Costs incurred in oil and gas property:

           

Acquisitions

           

Proved

   $ 4      $ —        $ 7      $ 5  

Unproved

     5        48        43        81  

Exploration and development

     637        872        1,931        2,461  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Costs incurred in oil and gas property

   $ 646      $ 920      $ 1,981      $ 2,547  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

           

Total Costs incurred in oil and gas property

   $ 646      $ 920      $ 1,981      $ 2,547  

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

     24        3        43        21  

Capitalized interest

     (8      (8      (24      (28

Exploration seismic and administration costs

     (39      (39      (113      (118

Less noncontrolling interest - Egypt

     (33      (44      (111      (151
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Upstream capital investment

   $ 590      $ 832      $ 1,776      $ 2,271  
  

 

 

    

 

 

    

 

 

    

 

 

 

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 Nine Months Ended  
     September 30,      June 30,     September 30,     September 30,  
     2019      2019     2018     2019     2018  

Net cash provided by operating activities

   $ 635      $ 856     $ 1,006     $ 2,089     $ 2,734  

Changes in operating assets and liabilities

     1        (178     (32     (39     (54
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 636      $ 678     $ 974     $ 2,050     $ 2,680  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 7