8-K
false 0000006769 false 0000006769 2020-05-06 2020-05-06 0000006769 apa:A7.75NotesDue2029Member 2020-05-06 2020-05-06 0000006769 exch:XNYS us-gaap:CommonStockMember 2020-05-06 2020-05-06 0000006769 exch:XCHI us-gaap:CommonStockMember 2020-05-06 2020-05-06 0000006769 exch:XNGS us-gaap:CommonStockMember 2020-05-06 2020-05-06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 6, 2020

 

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 May 6, 2020, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended March 31, 2020. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d)    Exhibits.

Exhibit
No.

   

Description

         
 

  99.1

   

Press Release of Apache Corporation dated May 6, 2020.

         
 

104

   

Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

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

 

 

 

APACHE CORPORATION

             

Date: May 7, 2020

 

 

 

/s/ Rebecca A. Hoyt

 

 

 

Rebecca A. Hoyt

 

 

 

Senior Vice President,

 

 

 

Chief Accounting Officer,

 

 

 

    and Controller

 

 

 

(Principal Accounting Officer)

EX-99.1

Exhibit 99.1

 

LOGO     NEWS RELEASE

Apache Corporation Announces First-Quarter 2020

Financial and Operational Results

Key Takeaways

 

   

Responded quickly and decisively to COVID-19 global pandemic by closing offices and implementing work-from-home-processes and stringent operational protocols in the field to protect Apache employees and communities;

 

   

Revised 2020 upstream capital budget following oil price collapse to approximately $1.1 billion; down nearly 55% from 2019;

 

   

Reduced the company’s quarterly dividend by 90% and outlined plans to use the $340 million of cash retained annually from the dividend reduction to further strengthen the company’s financial position;

 

   

Highlighted the company’s ample liquidity through its $4 billion revolver and ability to manage bonds maturing between February 2021 and January 2023;

 

   

Increased estimated cost savings associated with the previously announced organizational redesign; annual cost reduction target doubled to more than $300 million;

 

   

Announced two significant oil discoveries at Maka Central-1 and Sapakara West-1 in Block 58 offshore Suriname; and

 

   

Delivered first-quarter reported production of 468,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 423,000 BOE per day.

HOUSTON, May 6, 2020 – Apache Corporation (NYSE, Nasdaq: APA) today announced its financial and operational results for the first-quarter 2020.

Apache reported a loss of $4.5 billion or $11.86 per diluted common share during the first-quarter 2020. When adjusted for certain items that impact the comparability of results, primarily noncash impairments related to the company’s legacy vertical developments in the Permian Basin, Apache reported a first-quarter loss of $51 million, or $0.13 per share. Net cash provided by operating activities in the first quarter was $502 million, and adjusted EBITDAX was $764 million.

“The global economy and the energy industry have been deeply impacted by the COVID-19 pandemic. As we navigate this crisis, Apache’s priorities are protecting the health and safety of our employees and the communities in which we operate and preserving the inherent value and optionality of our diverse asset base for the long-term,” said John J. Christmann IV, Apache’s chief executive officer and president.

 

LOGO


APACHE CORPORATION ANNOUNCES FIRST QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 2 of 7

 

Christmann continued, “We have taken several decisive actions to preserve Apache’s financial and operational strength during this difficult time, including reducing our planned 2020 capital program, reducing our dividend, initiating a hedge position to protect from further near-term downside oil price exposure and increasing the cost-saving measures of the organizational redesign that we began last year. We also conducted a thorough economic and operational evaluation of all producing wells across the company to inform the methodical and targeted approach we are taking to production curtailments and shut-ins in this price environment. I am confident these comprehensive steps will enable us to minimize the cash flow impacts of this distressed and volatile price environment.

“Apache remains committed to our long-term objectives, which, despite the current environment, haven’t changed. We will budget conservatively and direct free cash flow, on a priority basis, to debt reduction; maintain a balanced and diversified portfolio; and prioritize investment for long-term returns over production growth. We will also maintain our capacity to generate material free cash flow in Egypt and the North Sea. And, lastly, we will advance the exploration program and follow-on appraisal activity in Block 58 offshore Suriname.”

COVID-19 response

Apache is prioritizing the health and safety of its employees and communities where it operates. The company responded quickly to the COVID-19 pandemic by closing many of its offices and implementing work-from-home-processes and stringent operational protocols in the field with minimal business interruption. For example, the company has introduced temperature screenings throughout its operations, expanded assessment of all contractor companies and vendors coming onsite to locations, and increased cleaning measures in the field and in office locations. Apache has developed a thorough and phased re-entry plan for the eventual reopening of its closed offices and will follow the guidance of local governments before implementing its re-entry plans. To assist the communities where Apache operates, the company has contributed to the COVID-19 response with donations of personal protective equipment (PPE) to hospitals and first responders and financial and in-kind contributions to food banks and women’s shelters. Read more about Apache’ response to the global pandemic on the company website at www.apachecorp.com/covid-19-our-response.aspx.


APACHE CORPORATION ANNOUNCES FIRST QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 3 of 7

 

2020 capital budget and outlook

Following the rapid drop in oil prices in early March, Apache announced a plan to reduce activity in Egypt and the North Sea and to eliminate all U.S. drilling and completion activity. This resulted in a $650 million decrease in planned upstream investment, compared to the company’s initial budget announced in late February. Approximately 60% of the revised 2020 investment will be in international assets, compared to approximately 45% in the previous budget.

Liquidity update

Apache has a strong liquidity position, supported by a $4.0 billion revolving credit facility that matures in March of 2024. The facility has commitments from 18 banks, 17 of which are rated A or better, is not subject to borrowing base redeterminations, has no covenants that are triggered by credit ratings, and includes a $2 billion committed sublimit for letters of credit.

In April, Apache posted letters of credit (LCs) under the LC sublimit aggregating approximately $800 million related to asset retirement obligations in the U.K. North Sea. These postings utilize a portion of that facility.

In addition to the company’s ample liquidity, Apache also maintains a very manageable bond maturity profile. In the event the company is unable to generate free cash flow to retire or refinance its bond maturities over the next three years, the revolver could be used to pay them down.

First-quarter operational summary

First-quarter reported production was 468,000 BOE per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 423,000 BOE per day.


APACHE CORPORATION ANNOUNCES FIRST QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 4 of 7

 

During the first quarter, Apache operated an average of 21 rigs and drilled and completed 44 gross-operated wells worldwide. Highlights from Apache’s principal areas include:

 

   

United States – Operated an average of seven rigs, drilled and completed 24 gross-operated wells, all of which were in the Permian, and reported production of 283,000 BOE per day.

Permian Basin production averaged 273,000 BOE per day, including oil production of 97,000 BOE per day. Following the significant drop in oil prices in early March, Apache decided to reduce its rig count to zero in the Permian. The company is down to one rig in the Delaware Basin, which is currently finishing its last well. After which, the company will have approximately 70 drilled and uncompleted (DUC) wells in the unconventional Midland and Delaware Basins, 15 of which are in Alpine High.

 

   

Midland Basin – Averaged four rigs and placed 12 wells on production, all on multi-well pads. Substantially completed drilling the company’s first 3-mile lateral pad, achieving significant cost savings. Completion of these five wells has been deferred due to the current price environment.

 

   

Delaware Basin – Averaged three rigs and placed 11 wells on production. Alpine High production averaged 94,000 BOE per day with a 39% liquids mix.

 

   

International – Operated an average of 14 rigs, drilled and completed 20 gross-operated wells and reported production of 185,000 BOE per day.

 

   

Egypt – Averaged 11 rigs, drilled and completed 16 gross-operated wells and reported production of 116,000 BOE per day, or 72,000 BOE per day on an adjusted basis. Achieved a 94% drilling success rate, including four successful exploration tests.

 

   

North Sea – Averaged two rigs and drilled and completed four gross operated wells during the quarter. Production of 69,000 BOE per day was up 9% from the fourth quarter, driven by the high-volume Garten-2 well, which was placed on production in late January.

 

   

Suriname – On Jan. 7, Apache (50% interest) and its partner Total S.A. (50% interest) announced a significant oil discovery offshore Suriname in Block 58 at Maka Central-1. On April 2, the partners


APACHE CORPORATION ANNOUNCES FIRST QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 5 of 7

 

 

announced a second significant oil discovery in Block 58 at Sapakara West-1, and in the second half of April, commenced drilling on a third exploration well, Kwaskwasi-1, which is located approximately 10 kilometers (6 miles) northwest of Sapakara West-1. Following Kwaskwasi-1, a fourth exploration prospect, Keskesi East-1, will be drilled approximately 10 kilometers (6 miles) southeast of the Sapakara discovery well.

“While the 2020 outlook for the global economy and the oil and gas industry, specifically, is uncertain,

we have made great strides in this environment to reduce our cost structure, protect our balance sheet, and manage our operations to preserve cash flow. Our teams have done an exceptional job implementing our organization redesign, responding to the recent changes in activity levels and operational protocols, and are delivering very good results in both our exploration and development programs. When market conditions improve, I am confident we will successfully leverage Apache’s diversified portfolio to differentiate our long-term value proposition for shareholders,” concluded Christmann.

Conference call

Apache will host a conference call to discuss its first-quarter 2020 results at 10 a.m. Central time, Thursday, May 7. 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. The conference call will also be available for playback by telephone for one week beginning at approximately 4 p.m. Central time May 7. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 8586364. Sign up for email alerts to be reminded of the webcast at investor.apachecorp.com/alerts/email-alerts-subscription.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom and exploration activities offshore Suriname. Apache posts announcements, operational updates, investor information and all press releases on its website, www.apachecorp.com.


APACHE CORPORATION ANNOUNCES FIRST QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 6 of 7

 

Additional information

Additional information follows, including reconciliations of adjusted earnings and adjusted EBITDAX (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. Apache’s quarterly supplement is available at www.apachecorp.com/financialdata.

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 and adjusted EBITDAX 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,” “possibly,” “potential,” “projects,” “should,” “will,” “would,” 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,


APACHE CORPORATION ANNOUNCES FIRST QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 7 of 7

 

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 2019 Form 10-K and in our quarterly reports on Form 10-Q filed, with the Securities and Exchange Commission (“SEC”) for a discussion of risk factors that affect our business. Any forward-looking statement made by Apache 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. Apache undertakes 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 United States Securities and Exchange Commission 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 news 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, 2019 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 March 31,  
         2020             2019      

REVENUES AND OTHER:

    

Oil, natural gas, and natural gas liquids production revenues

    

Oil revenues

   $ 1,032     $ 1,310  

Natural gas revenues

     123       236  

Natural gas liquids revenues

     81       108  
  

 

 

   

 

 

 
     1,236       1,654  

Purchased oil and gas sales

     108       24  
  

 

 

   

 

 

 

Total revenues

     1,344       1,678  

Derivative instrument losses, net

     (103     (30

Gain on divestitures, net

     25       3  

Other, net

     13       6  
  

 

 

   

 

 

 
     1,279       1,657  
  

 

 

   

 

 

 

OPERATING EXPENSES:

    

Lease operating expenses

     335       365  

Gathering, processing and transmission

     71       88  

Purchased oil and gas costs

     86       22  

Taxes other than income

     33       51  

Exploration

     57       69  

General and administrative

     68       123  

Transaction, reorganization and separation

     27       4  

Depreciation, depletion and amortization:

    

Oil and gas property and equipment

     531       607  

Other assets

     35       39  

Asset retirement obligation accretion

     27       27  

Impairments

     4,472       -  

Financing costs, net

     103       97  
  

 

 

   

 

 

 
     5,845       1,492  
  

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     (4,566     165  

Current income tax provision

     89       186  

Deferred income tax benefit

     (33     (19
  

 

 

   

 

 

 

NET LOSS INCLUDING NONCONTROLLING INTERESTS

     (4,622     (2

Net income (loss) attributable to noncontrolling interest - Egypt

     (151     44  

Net income (loss) attributable to noncontrolling interest - Altus

     (9     1  

Net income attributable to Altus Preferred Unit limited partners

     18       —    
  

 

 

   

 

 

 

NET LOSS ATTRIBUTABLE TO COMMON STOCK

   $ (4,480   $ (47
  

 

 

   

 

 

 

NET LOSS PER COMMON SHARE:

    

Basic

   $ (11.86   $ (0.12

Diluted

   $ (11.86   $ (0.12

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

    

Basic

     378       376  

Diluted

     378       376  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.025     $ 0.25  

 

Page 1


APACHE CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change  
     March 31,      December 31,      March 31,      1Q20 to     1Q20 to  
     2020      2019      2019      4Q19     1Q19  

OIL VOLUME - Barrels per day

             

Permian

     96,919        103,275        97,625        -6     -1

MidContinent/Gulf Coast

     2,272        2,500        8,699        -9     -74

Gulf of Mexico

     2,423        2,655        2,454        -9     -1
  

 

 

    

 

 

    

 

 

      

United States

     101,614        108,430        108,778        -6     -7
  

 

 

    

 

 

    

 

 

      

Egypt (1, 2)

     73,178        79,119        91,616        -8     -20

North Sea

     55,262        50,226        54,528        10     1
  

 

 

    

 

 

    

 

 

      

International (1)

     128,440        129,345        146,144        -1     -12
  

 

 

    

 

 

    

 

 

      

Total (1)

     230,054        237,775        254,922        -3     -10
  

 

 

    

 

 

    

 

 

      

NATURAL GAS VOLUME - Mcf per day

             

Permian

     576,395        635,159        618,238        -9     -7

MidContinent/Gulf Coast

     12,357        12,001        116,272        3     -89

Gulf of Mexico

     9,090        11,235        9,797        -19     -7
  

 

 

    

 

 

    

 

 

      

United States

     597,842        658,395        744,307        -9     -20
  

 

 

    

 

 

    

 

 

      

Egypt (1, 2)

     254,579        275,811        315,508        -8     -19

North Sea

     67,278        63,681        56,892        6     18
  

 

 

    

 

 

    

 

 

      

International (1)

     321,857        339,492        372,400        -5     -14
  

 

 

    

 

 

    

 

 

      

Total (1)

     919,699        997,887        1,116,707        -8     -18
  

 

 

    

 

 

    

 

 

      

NGL VOLUME - Barrels per day

             

Permian

     80,106        78,908        47,274        2     69

MidContinent/Gulf Coast

     1,039        1,211        11,552        -14     -91

Gulf of Mexico

     236        286        38        -17     521
  

 

 

    

 

 

    

 

 

      

United States

     81,381        80,405        58,864        1     38
  

 

 

    

 

 

    

 

 

      

Egypt (1, 2)

     918        788        1,150        16     -20

North Sea

     2,135        1,920        1,823        11     17
  

 

 

    

 

 

    

 

 

      

International (1)

     3,053        2,708        2,973        13     3
  

 

 

    

 

 

    

 

 

      

Total

     84,434        83,113        61,837        2     37
  

 

 

    

 

 

    

 

 

      

BOE per day

             

Permian

     273,091        288,043        247,939        -5     10

MidContinent/Gulf Coast

     5,370        5,711        39,630        -6     -86

Gulf of Mexico

     4,175        4,813        4,124        -13     1
  

 

 

    

 

 

    

 

 

      

United States

     282,636        298,567        291,693        -5     -3
  

 

 

    

 

 

    

 

 

      

Egypt (1, 2)

     116,525        125,875        145,351        -7     -20

North Sea

     68,610        62,760        65,833        9     4
  

 

 

    

 

 

    

 

 

      

International (1)

     185,135        188,635        211,184        -2     -12
  

 

 

    

 

 

    

 

 

      

Total (1)

     467,771        487,202        502,877        -4     -7
  

 

 

    

 

 

    

 

 

      

Total excluding noncontrolling interests

     428,588        445,209        454,371        -4     -6
  

 

 

    

 

 

    

 

 

      

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

   

       

Oil (b/d)

     24,598        26,384        30,554       

Gas (Mcf/d)

     85,672        92,075        105,412       

NGL (b/d)

     306        263        383       

(2)  Egypt Gross Production - BOE per day

     294,644        300,136        332,003        -2     -11

 

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  
     March 31,      December 31,      March 31,      1Q20 to     1Q20 to  
     2020      2019      2019      4Q19     1Q19  

OIL VOLUME - Barrels per day

             

Permian

     96,919        103,275        97,625        -6     -1

MidContinent/Gulf Coast

     2,272        2,500        8,699        -9     -74

Gulf of Mexico

     2,423        2,655        2,454        -9     -1
  

 

 

    

 

 

    

 

 

      

United States

     101,614        108,430        108,778        -6     -7
  

 

 

    

 

 

    

 

 

      

Egypt

     44,491        42,120        48,323        6     -8

North Sea

     55,262        50,226        54,528        10     1
  

 

 

    

 

 

    

 

 

      

International

     99,753        92,346        102,851        8     -3
  

 

 

    

 

 

    

 

 

      

Total

     201,367        200,776        211,629        0     -5
  

 

 

    

 

 

    

 

 

      

NATURAL GAS VOLUME - Mcf per day

             

Permian

     576,395        635,159        618,238        -9     -7

MidContinent/Gulf Coast

     12,357        12,001        116,272        3     -89

Gulf of Mexico

     9,090        11,235        9,797        -19     -7
  

 

 

    

 

 

    

 

 

      

United States

     597,842        658,395        744,307        -9     -20
  

 

 

    

 

 

    

 

 

      

Egypt

     161,536        159,242        181,118        1     -11

North Sea

     67,278        63,681        56,892        6     18
  

 

 

    

 

 

    

 

 

      

International

     228,814        222,923        238,010        3     -4
  

 

 

    

 

 

    

 

 

      

Total

     826,656        881,318        982,317        -6     -16
  

 

 

    

 

 

    

 

 

      

NGL VOLUME - Barrels per day

             

Permian

     80,106        78,908        47,274        2     69

MidContinent/Gulf Coast

     1,039        1,211        11,552        -14     -91

Gulf of Mexico

     236        286        38        -17     521
  

 

 

    

 

 

    

 

 

      

United States

     81,381        80,405        58,864        1     38
  

 

 

    

 

 

    

 

 

      

Egypt

     611        474        678        29     -10

North Sea

     2,135        1,920        1,823        11     17
  

 

 

    

 

 

    

 

 

      

International

     2,746        2,394        2,501        15     10
  

 

 

    

 

 

    

 

 

      

Total

     84,127        82,799        61,365        2     37
  

 

 

    

 

 

    

 

 

      

BOE per day

             

Permian

     273,091        288,043        247,939        -5     10

MidContinent/Gulf Coast

     5,370        5,711        39,630        -6     -86

Gulf of Mexico

     4,175        4,813        4,124        -13     1
  

 

 

    

 

 

    

 

 

      

United States

     282,636        298,567        291,693        -5     -3
  

 

 

    

 

 

    

 

 

      

Egypt

     72,025        69,134        79,187        4     -9

North Sea

     68,610        62,760        65,833        9     4
  

 

 

    

 

 

    

 

 

      

International

     140,635        131,894        145,020        7     -3
  

 

 

    

 

 

    

 

 

      

Total

     423,271        430,461        436,713        -2     -3
  

 

 

    

 

 

    

 

 

      

 

Page 3


APACHE CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended  
     March 31,
2020
     December 31,
2019
     March 31,
2019
 

AVERAGE OIL PRICE PER BARREL

        

Permian

   $ 46.27      $ 56.25      $ 50.30  

MidContinent/Gulf Coast

     46.99        56.97        53.45  

Gulf of Mexico

     47.38        56.47        58.27  

United States

     46.32        56.26        50.70  

Egypt

     49.97        63.11        62.35  

North Sea

     49.66        64.07        64.15  

International

     49.83        63.48        63.00  

Total

     48.31        60.19        57.70  

AVERAGE NATURAL GAS PRICE PER MCF

        

Permian

   $ 0.66      $ 1.47      $ 1.61  

MidContinent/Gulf Coast

     1.83        2.30        2.94  

Gulf of Mexico

     2.10        2.43        3.69  

United States

     0.70        1.50        1.83  

Egypt

     2.83        2.86        2.85  

North Sea

     3.17        4.30        6.24  

International

     2.90        3.13        3.36  

Total

     1.47        2.05        2.34  

AVERAGE NGL PRICE PER BARREL

        

Permian

   $ 9.44      $ 14.93      $ 18.73  

MidContinent/Gulf Coast

     11.73        16.60        17.38  

Gulf of Mexico

     16.51        21.39        17.62  

United States

     9.59        15.00        18.47  

Egypt

     31.70        36.47        37.66  

North Sea

     36.53        44.22        40.60  

International

     35.08        41.97        39.47  

Total

     10.51        15.88        19.49  

 

Page 4


APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

 

     For the Quarter  
     Ended March 31,  
     2020     2019  

Unproved leasehold impairments

   $ 19     $ 23  

Dry hole expense

     24       10  

Geological and geophysical expense

     3       19  

Exploration overhead and other

     11       17  
  

 

 

   

 

 

 
   $ 57     $ 69  
  

 

 

   

 

 

 
SUMMARY CASH FLOW INFORMATION  
     For the Quarter  
     Ended March 31,  
     2020     2019  

Net cash provided by operating activities

   $ 502     $ 598  
  

 

 

   

 

 

 

Additions to upstream oil and gas property

     (512     (744

Additions to Altus gathering, processing, and transmission facilities

     (19     (119

Altus equity method interests

     (83     (118

Proceeds from sale of oil and gas properties

     126       9  

Other, net

     (21     34  
  

 

 

   

 

 

 

Net cash used in investing activities

   $ (509   $ (938
  

 

 

   

 

 

 

Apache credit facility and commercial paper borrowings

     250       159  

Altus credit facility borrowings

     72       -  

Distributions to noncontrolling interest - Egypt

     (32     (107

Dividends paid

     (94     (94

Other

     (8     (5
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

   $ 188     $ (47
  

 

 

   

 

 

 
SUMMARY BALANCE SHEET INFORMATION  
     March 31,     December 31,  
     2020     2019  

Cash and cash equivalents

   $ 428     $ 247  

Other current assets

     1,480       1,714  

Property and equipment, net

     9,586       14,158  

Other assets

     1,897       1,988  
  

 

 

   

 

 

 

Total assets

   $ 13,391     $ 18,107  
  

 

 

   

 

 

 

Current debt - Apache *

   $ 544     $ 1  

Current debt - Altus

     -       10  

Current liabilities

     1,481       1,844  

Long-term debt - Apache *

     7,868       8,159  

Long-term debt - Altus

     468       396  

Deferred credits and other noncurrent liabilities

     2,685       2,677  

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     573       555  

Apache shareholders’ equity (deficit)

     (1,246     3,255  

Noncontrolling interest - Egypt

     954       1,137  

Noncontrolling interest - Altus

     64       73  
  

 

 

   

 

 

 

Total Liabilities and equity

   $ 13,391     $ 18,107  
  

 

 

   

 

 

 

Common shares outstanding at end of period

     377       377  

 

*

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  
     March 31,      December 31,      March 31,  
     2020      2019      2019  

Net cash provided by operating activities

   $ 502      $ 778      $ 598  

Adjustments:

        

Exploration expense other than dry hole expense and unproved leasehold impairments

     14        16        36  

Current income tax provision

     89        146        186  

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

     8        (19      (9

Changes in operating assets and liabilities

     21        42        138  

Financing costs, net

     103        97        97  

Transaction, reorganization & separation costs

     27        33        4  
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 764      $ 1,093      $ 1,050  
  

 

 

    

 

 

    

 

 

 

Reconciliation of Income attributable to common stock to Adjusted earnings

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

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

 

     For the Quarter Ended
March 31, 2020
    For the Quarter Ended
March 31, 2019
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Income (loss) including noncontrolling interests (GAAP)

   $ (4,566   $ (56   $ (4,622   $ (12.23   $ 165     $ (167   $ (2   $ (0.01

Income (loss) attributable to noncontrolling interests

     (144     (16     (160     (0.42     85       (40     45       0.11  

Loss attributable to Altus preferred unit limited partner

     18       —         18       0.05       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common stock

     (4,440     (40     (4,480     (11.86     80       (127     (47     (0.12

Adjustments:*

                

Asset impairments

     4,491       (838     3,653       9.67       23       (5     18       0.04  

Noncontrolling interest & tax barrel impact on Egypt adjustments

     (163     (7     (170     (0.45     —         —         —         —    

Valuation allowance and other tax adjustments

     —         868       868       2.30       —         31       31       0.08  

Unrealized derivative instrument losses, net

     103       (21     82       0.22       45       (10     35       0.10  

Noncontrolling interest impact on Altus preferred units embedded derivative

     (13     3       (10     (0.03     —         —         —         —    

Transaction, reorganization & separation costs

     27       (6     21       0.05       4       (1     3       0.01  

Contract termination charges

     3       (1     2       0.01       —         —         —         —    

Gain on divestitures, net

     (25     8       (17     (0.04     (3     1       (2     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ (17   $ (34   $ (51   $ (0.13   $ 149     $ (111   $ 38     $ 0.10  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

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 Costs incurred to Upstream capital investment

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

 

     For the Quarter  
     Ended March 31,  
     2020      2019  

Costs incurred in oil and gas property:

     

Acquisitions

     

Proved

   $ 6      $ —    

Unproved

     1        19  

Exploration and development

     490        655  
  

 

 

    

 

 

 

Total Costs incurred in oil and gas property

   $ 497      $ 674  
  

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

     

Total Costs incurred in oil and gas property

   $ 497      $ 674  

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

     8        10  

Capitalized interest

     -        (8

Exploration seismic and administration costs

     (14      (36

Less noncontrolling interest - Egypt

     (49      (43
  

 

 

    

 

 

 

Total Upstream capital investment

   $ 442      $ 597  
  

 

 

    

 

 

 

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

Cash flows from operations before changes in operating assets and liabilities is a non-GAAP financial measure. Apache uses it internally and provides the information because management believes it is useful for investors and widely accepted by those following the oil and gas industry as a financial indicator of a company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt. It is also used by research analysts to value and compare oil and gas exploration and production companies and is frequently included in published research when providing investment recommendations. Cash flows from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities.

 

     For the Quarter Ended  
     March 31,      December 31,      March 31,  
     2020      2019      2019  

Net cash provided by operating activities

   $ 502      $ 778      $ 598  

Changes in operating assets and liabilities

     21        42        138  
  

 

 

    

 

 

    

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 523      $ 820      $ 736  
  

 

 

    

 

 

    

 

 

 

 

Page 7