8-K
APACHE CORP false 0000006769 0000006769 2020-07-29 2020-07-29

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 29, 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   Nasdaq Global Select Market

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

Emerging growth company  

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

 

 

 


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

 

Item 2.02.

Results of Operations and Financial Condition.

On July 29, 2020, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended June 30, 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 July 29, 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: July 30, 2020     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 Second-Quarter 2020

Financial and Operational Results

Key Takeaways

 

   

Announced major discovery at Kwaskwasi today, third consecutive discovery in Block 58 offshore Suriname;

 

   

Submitted appraisal plan for first discovery, Maka, in May; announced second discovery, Sapakara, in April;

 

   

Posted second-quarter reported production of 435,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 394,000 BOE per day;

 

   

Delivered upstream capital investment below guidance; tracking toward the low end of full-year 2020 guidance range of $1.0 to $1.2 billion;

 

   

Focused capital investments on higher-return international opportunities;

 

   

Achieved annualized cost savings target of more than $300 million, approximately $225 million of which will be realized in 2020; and

 

   

Implemented operational protocols and work-from-home-processes, successfully mitigating the impact of COVID-19 on Apache’s operations, employees and communities.

HOUSTON, July 29, 2020 – Apache Corporation (Nasdaq: APA) today announced its financial and operational results for the second-quarter 2020.

Apache reported a loss of $386 million or $1.02 per diluted common share during the second-quarter 2020. When adjusted for certain items that impact the comparability of results, Apache reported a second-quarter loss of $281 million, or $0.74 per share. Net cash provided by operating activities in the second quarter was $84 million, and adjusted EBITDAX was $235 million.

“Our exploration program offshore Suriname continues to deliver exciting results. Earlier today, we announced a major discovery at Kwaskwasi-1, our best well yet and third consecutive success in Block 58,” said John J. Christmann IV, Apache’s chief executive officer and president.

Following completion of operations at Kwaskwasi-1, a fourth exploration prospect, Keskesi East-1, will be drilled approximately 10 kilometers (6 miles) southeast of the Sapakara discovery well.

“Our continued success in Suriname, along with the steps we’ve taken to streamline our organization and further strengthen our financial position, prepare us well for the long term. Apache has achieved more than $300 million of combined, annualized LOE and overhead savings – doubling our original target – and delivered on our activity and capital reduction goal. These actions have lowered our free cash flow breakeven oil price to around $30 per barrel for the second half of 2020,” he continued.

 

LOGO


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 2 of 5

 

2020 capital budget and outlook

Apache delivered second-quarter upstream capital investment of $216 million and is tracking toward the lower end of its annual capital guidance range of $1.0 to $1.2 billion dollars. The company guided to third-quarter capital investment of approximately $190 million.

Second-quarter operational summary

Second-quarter reported production was 435,000 BOE per day, and adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 394,000 BOE per day.

Following a thorough operational and economic evaluation of all producing wells, Apache chose to curtail approximately 28,000 BOE per day during the second quarter to minimize the negative cash flow impacts of lower oil and NGL prices. The company shut-in an additional 7,000 BOE per day due to unscheduled pipeline downtime at Alpine High. As prices rebounded over the past several months, the company has now returned its curtailed volumes in the North Sea and Alpine High to production, along with a portion of curtailed oil volumes elsewhere in the Permian Basin.

Closing Remarks

“Our objectives remain unchanged despite the extreme market volatility in 2020. We will budget conservatively and return free cash flow to investors, initially in the form of debt reduction; maintain a balanced and diversified portfolio; and prioritize investment for long-term returns over production growth. We will also continue to advance our exploration program and follow-on appraisal activity in Block 58 offshore Suriname and maintain our capacity to generate material free cash flow in Egypt and the North Sea,” concluded Christmann.


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 3 of 5

 

Conference call

Apache will host a conference call to discuss its second-quarter 2020 results at 10 a.m. Central time, Thursday, July 30. 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 July 30. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 6166527. 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.

Additional information

Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX, and upstream capital investment (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, adjusted EBITDAX, and upstream capital investment are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 4 of 5

 

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,” “prospects,” “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, 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


APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 5 of 5

 

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

APA-F


APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

     For the Quarter     For the Six Months  
     Ended June 30,     Ended June 30,  
     2020     2019     2020     2019  

REVENUES AND OTHER:

        

Oil, natural gas, and natural gas liquids production revenues

        

Oil revenues

   $ 513     $ 1,397     $ 1,545     $ 2,707  

Natural gas revenues

     130       118       253       354  

Natural gas liquids revenues

     54       83       135       191  
  

 

 

   

 

 

   

 

 

   

 

 

 
     697       1,598       1,933       3,252  

Purchased oil and gas sales

     55       18       163       42  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     752       1,616       2,096       3,294  

Derivative instrument losses, net

     (175     (8     (278     (38

Gain on divestitures, net

     —         17       25       20  

Other, net

     19       (7     32       (1
  

 

 

   

 

 

   

 

 

   

 

 

 
     596       1,618       1,875       3,275  
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Lease operating expenses

     264       389       599       754  

Gathering, processing and transmission

     72       76       143       164  

Purchased oil and gas costs

     46       15       132       37  

Taxes other than income

     23       46       56       97  

Exploration

     72       95       129       164  

General and administrative

     94       102       162       225  

Transaction, reorganization and separation

     10       6       37       10  

Depreciation, depletion and amortization:

        

Oil and gas property and equipment

     387       562       918       1,169  

Other assets

     31       40       66       79  

Asset retirement obligation accretion

     27       26       54       53  

Impairments

     20       240       4,492       240  

Financing costs, net

     (34     173       69       270  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,012       1,770       6,857       3,262  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     (416     (152     (4,982     13  

Current income tax provision (benefit)

     (27     187       62       373  

Deferred income tax benefit

     (11     (23     (44     (42
  

 

 

   

 

 

   

 

 

   

 

 

 

NET LOSS INCLUDING NONCONTROLLING INTERESTS

     (378     (316     (5,000     (318

Net income (loss) attributable to noncontrolling interest - Egypt

     (11     43       (162     87  

Net loss attributable to noncontrolling interest - Altus

     —         (3     (9     (2

Net income attributable to Altus Preferred Unit limited partners

     19       4       37       4  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET LOSS ATTRIBUTABLE TO COMMON STOCK

   $ (386   $ (360   $ (4,866   $ (407
  

 

 

   

 

 

   

 

 

   

 

 

 

NET LOSS PER COMMON SHARE:

        

Basic

   $ (1.02   $ (0.96   $ (12.88   $ (1.08

Diluted

   $ (1.02   $ (0.96   $ (12.88   $ (1.08

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

        

Basic

     378       377       378       376  

Diluted

     378       377       378       376  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.025     $ 0.250     $ 0.050     $ 0.500  

 

Page 1


APACHE CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change     For the Six Months Ended  
     June 30,
2020
     March 31,
2020
     June 30,
2019
     2Q20 to
1Q20
    2Q20 to
2Q19
    June 30,
2020
     June 30,
2019
 

OIL VOLUME - Barrels per day

                  

United States

     94,471        101,614        103,010        -7     -8     98,042        105,878  

Egypt (1, 2)

     79,839        73,178        83,761        9     -5     76,509        87,667  

North Sea

     47,016        55,262        50,055        -15     -6     51,139        52,279  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     126,855        128,440        133,816        -1     -5     127,648        139,946  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     221,326        230,054        236,826        -4     -7     225,690        245,824  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

United States

     518,156        597,842        594,238        -13     -13     557,999        668,858  

Egypt (1, 2)

     279,561        254,579        277,552        10     1     267,070        296,425  

North Sea

     52,612        67,278        50,121        -22     5     59,945        53,488  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     332,173        321,857        327,673        3     1     327,015        349,913  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     850,329        919,699        921,911        -8     -8     885,014        1,018,771  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

United States

     69,759        81,381        61,974        -14     13     75,570        60,428  

Egypt (1, 2)

     909        918        898        -1     1     914        1,023  

North Sea

     1,733        2,135        1,673        -19     4     1,934        1,748  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     2,642        3,053        2,571        -13     3     2,848        2,771  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     72,401        84,434        64,545        -14     12     78,418        63,199  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

United States

     250,589        282,636        264,024        -11     -5     266,612        277,782  

Egypt (1, 2)

     127,342        116,525        130,917        9     -3     121,934        138,094  

North Sea

     57,517        68,610        60,082        -16     -4     63,064        62,942  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     184,859        185,135        190,999        0     -3     184,998        201,036  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     435,448        467,771        455,023        -7     -4     451,610        478,818  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total excluding noncontrolling interests

     393,098        428,588        411,345        -8     -4     410,844        432,740  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

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

   

Oil (b/d)

     26,609        24,598        27,939            25,604        29,239  

Gas (Mcf/d)

     92,625        85,672        92,639            89,148        98,990  

NGL (b/d)

     303        306        299            304        341  

BOE per day

     42,350        39,183        43,678        8     -3     40,766        46,078  

(2)  Egypt Gross Production

   

Oil (b/d)

     171,897        183,627        198,534            177,762        201,245  

Gas (Mcf/d)

     642,003        655,410        729,378            648,706        742,474  

NGL (b/d)

     1,649        1,782        1,840            1,715        1,952  

BOE per day

     280,547        294,644        321,937        -5     -13     287,595        326,943  

 

Page 2


APACHE CORPORATION

ADJUSTED PRODUCTION INFORMATION

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

 

     For the Quarter Ended      % Change     For the Six Months Ended  
     June 30,
2020
     March 31,
2020
     June 30,
2019
     2Q20 to
1Q20
    2Q20 to
2Q19
    June 30,
2020
     June 30,
2019
 

OIL VOLUME - Barrels per day

                  

United States

     94,471        101,614        103,010        -7     -8     98,042        105,878  

Egypt

     54,469        44,491        44,261        22     23     49,480        46,281  

North Sea

     47,016        55,262        50,055        -15     -6     51,139        52,279  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     101,485        99,753        94,316        2     8     100,619        98,560  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     195,956        201,367        197,326        -3     -1     198,661        204,438  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

United States

     518,156        597,842        594,238        -13     -13     557,999        668,858  

Egypt

     186,387        161,536        160,306        15     16     173,962        170,655  

North Sea

     52,612        67,278        50,121        -22     5     59,945        53,488  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     238,999        228,814        210,427        4     14     233,907        224,143  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     757,155        826,656        804,665        -8     -6     791,906        893,001  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

United States

     69,759        81,381        61,974        -14     13     75,570        60,428  

Egypt

     607        611        531        -1     14     609        604  

North Sea

     1,733        2,135        1,673        -19     4     1,934        1,748  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     2,340        2,746        2,204        -15     6     2,543        2,352  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     72,099        84,127        64,178        -14     12     78,113        62,780  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

United States

     250,589        282,636        264,024        -11     -5     266,612        277,782  

Egypt

     86,140        72,025        71,510        20     20     79,083        75,327  

North Sea

     57,517        68,610        60,082        -16     -4     63,064        62,942  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     143,657        140,635        131,592        2     9     142,147        138,269  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     394,246        423,271        395,616        -7     0     408,759        416,051  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

Page 3


APACHE CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended      For the Six Months Ended  
     June 30,
2020
     March 31,
2020
     June 30,
2019
     June 30,
2020
     June 30,
2019
 

AVERAGE OIL PRICE PER BARREL

              

United States

   $ 23.02      $ 46.32      $ 57.25      $ 35.09      $ 53.90  

Egypt

     25.80        49.97        68.60        37.36        65.36  

North Sea

     31.55        49.66        68.43        41.94        66.35  

International

     27.86        49.83        68.54        39.22        65.73  

Total

     25.77        48.31        63.71        37.44        60.65  

AVERAGE NATURAL GAS PRICE PER MCF

              

United States

   $ 1.13      $ 0.70      $ 0.55      $ 0.90      $ 1.26  

Egypt

     2.73        2.83        2.80        2.78        2.82  

North Sea

     1.43        3.17        3.99        2.41        5.18  

International

     2.53        2.90        2.98        2.71        3.18  

Total

     1.68        1.47        1.41        1.57        1.92  

AVERAGE NGL PRICE PER BARREL

              

United States

   $ 7.81      $ 9.59      $ 13.57      $ 8.77      $ 15.96  

Egypt

     20.97        31.70        32.90        26.36        35.56  

North Sea

     20.35        36.53        33.67        29.29        37.27  

International

     20.57        35.08        33.40        28.35        36.64  

Total

     8.28        10.51        14.37        9.48        16.87  

 

Page 4


APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

 

     For the Quarter Ended
June 30,
     For the Six Months Ended
June 30,
 
     2020      2019      2020      2019  

Unproved leasehold impairments

   $ 31      $ 39      $ 50      $ 62  

Dry hole expense

     23        18        47        28  

Geological and geophysical expense

     4        18        7        36  

Exploration overhead and other

     14        20        25        38  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 72      $ 95      $ 129      $ 164  
  

 

 

    

 

 

    

 

 

    

 

 

 

SUMMARY CASH FLOW INFORMATION

 

     For the Quarter Ended
June 30,
    For the Six Months Ended
June 30,
 
     2020     2019     2020     2019  

Net cash provided by operating activities

   $ 84     $ 856     $ 586     $ 1,454  
  

 

 

   

 

 

   

 

 

   

 

 

 

Additions to upstream oil and gas property

     (329     (676     (841     (1,420

Additions to Altus gathering, processing, and transmission facilities

     (6     (127     (25     (246

Altus equity method interests

     (71     (320     (154     (438

Proceeds from sale of oil and gas properties

           238       126       247  

Other, net

     (2     (9     (23     25  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

   $ (408   $ (894   $ (917   $ (1,832
  

 

 

   

 

 

   

 

 

   

 

 

 

Debt borrowings and payments, net

     51       (170     301       (11

Altus credit facility borrowings

     25       —         97       —    

Distributions to noncontrolling interest - Egypt

     (8     (57     (40     (164

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     —         611       —         611  

Dividends paid

     (10     (94     (104     (188

Other

     (27     (30     (35     (35
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

   $ 31     $ 260     $ 219     $ 213  
  

 

 

   

 

 

   

 

 

   

 

 

 
SUMMARY BALANCE SHEET INFORMATION

 

     June 30,     December 31,              
     2020     2019  

Cash and cash equivalents

   $ 135     $ 247  

Other current assets

     1,523       1,714  

Property and equipment, net

     9,344       14,158  

Other assets

     1,997       1,988  
  

 

 

   

 

 

 

Total assets

   $ 12,999     $ 18,107  
  

 

 

   

 

 

 

Current debt - Apache *

   $ 294     $ 1  

Current debt - Altus

     —         10  

Current liabilities

     1,416       1,844  

Long-term debt - Apache *

     8,030       8,159  

Long-term debt - Altus

     493       396  

Deferred credits and other noncurrent liabilities

     2,810       2,677  

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     592       555  

Apache shareholders’ equity (deficit)

     (1,635     3,255  

Noncontrolling interest - Egypt

     935       1,137  

Noncontrolling interest - Altus

     64       73  
  

 

 

   

 

 

 

Total Liabilities and equity

   $ 12,999     $ 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     For the Six Months Ended  
     June 30,     March 31,      June 30,     June 30,  
     2020     2020      2019     2020     2019  

Net cash provided by operating activities

   $ 84     $ 502      $ 856     $ 586     $ 1,454  

Adjustments:

           

Exploration expense other than dry hole expense and unproved leasehold impairments

     18       14        38       32       74  

Current income tax provision (benefit)

     (27     89        187       62       373  

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

     (22     8        (13     (14     (22

Changes in operating assets and liabilities

     66       21        (178     87       (40

Financing costs, net

     106       103        98       209       195  

Transaction, reorganization & separation costs

     10       27        6       37       10  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 235     $ 764      $ 994     $ 999     $ 2,044  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Reconciliation of Income attributable to common stock to Adjusted earnings

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

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

 

     For the Quarter Ended
June 30, 2020
    For the Quarter Ended
June 30, 2019
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Net loss including noncontrolling interests (GAAP)

   $ (416   $ 38     $ (378   $ (1.00   $ (152   $ (164   $ (316   $ (0.84

Income (loss) attributable to noncontrolling interests

     (17     6       (11     (0.03     80       (40     40       0.11  

Income attributable to Altus preferred unit limited partner

     19       —         19       0.05       4       —         4       0.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stock

     (418     32       (386     (1.02     (236     (124     (360     (0.96

Adjustments:*

                

Asset impairments

     51       (6     45       0.12       279       (59     220       0.58  

Noncontrolling interest & tax barrel impact on Egypt adjustments

     (7     —         (7     (0.02     —         —         —         —    

Valuation allowance and other tax adjustments

     —         64       64       0.17       —         114       114       0.31  

(Gain)/Loss on extinguishment of debt

     (140     29       (111     (0.29     75       (16     59       0.16  

Unrealized derivative instrument losses, net

     138       (30     108       0.29       21       (4     17       0.04  

Noncontrolling interest on Altus preferred units embedded derivative

     (2     1       (1     (0.01     —         —         —         —    

Transaction, reorganization & separation costs

     10       (3     7       0.02       6       (1     5       0.01  

Gain on divestitures, net

     —         —         —         —         (17     3       (14     (0.03

Contract termination charges

     —         —         —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ (368   $ 87     $ (281   $ (0.74   $ 128     $ (87   $ 41     $ 0.11  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     For the Six Months Ended
June 30, 2020
    For the Six Months Ended
June 30, 2019
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Net loss including noncontrolling interests (GAAP)

   $ (4,982   $ (18   $ (5,000   $ (13.23   $ 13     $ (331   $ (318   $ (0.84

Income (loss) attributable to noncontrolling interest

     (161     (10     (171     (0.45     165       (80     85       0.23  

Income attributable to Altus preferred unit limited partner

     37       —         37       0.10       4       —         4       0.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stock

     (4,858     (8     (4,866     (12.88     (156     (251     (407     (1.08

Adjustments:*

                

Asset impairments

     4,542       (844     3,698       9.79       302       (64     238       0.62  

Noncontrolling interest & tax barrel impact on Egypt adj

     (170     (7     (177     (0.47     —         —         —         —    

Valuation allowance and other tax adjustments

     —         932       932       2.46       —         145       145       0.39  

(Gain)/Loss on extinguishment of debt

     (140     29       (111     (0.29     75       (16     59       0.16  

Unrealized derivative instrument losses, net

     241       (51     190       0.50       66       (14     52       0.14  

Noncontrolling interest on Altus preferred units embedded derivative

     (15     4       (11     (0.03     —         —         —         —    

Transaction, reorganization & separation costs

     37       (9     28       0.07       10       (2     8       0.02  

Gain on divestitures, net

     (25     8       (17     (0.04     (20     4       (16     (0.04

Contract termination charges

     3       (1     2       0.01       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Earnings (Non-GAAP)

   $ (385   $ 53     $ (332   $ (0.88   $ 277     $ (198   $ 79     $ 0.21  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

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
June 30,
     For the Six Months Ended
June 30,
 
     2020      2019      2020      2019  

Costs incurred in oil and gas property:

           

Acquisitions

           

Proved

   $ 1      $ —        $ 7      $ —    

Unproved

     2        22        3        41  

Exploration and development

     266        639        756        1,294  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Costs incurred in oil and gas property

   $ 269      $ 661      $ 766      $ 1,335  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

           

Total Costs incurred in oil and gas property

   $ 269      $ 661      $ 766      $ 1,335  

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

     5        9        13        19  

Capitalized interest

     —          (8      —          (16

Exploration seismic and administration costs

     (18      (38      (32      (74

Less noncontrolling interest - Egypt

     (40      (35      (89      (78
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Upstream capital investment

   $ 216      $ 589      $ 658      $ 1,186  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

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

 

     For the Quarter Ended     For the Six Months Ended  
     June 30,      March 31,      June 30,     June 30,  
     2020      2020      2019     2020      2019  

Net cash provided by operating activities

   $ 84      $ 502      $ 856     $ 586      $ 1,454  

Changes in operating assets and liabilities

     66        21        (178     87        (40
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 150      $ 523      $ 678     $ 673      $ 1,414  
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

Page 7