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Apache's Third-Quarter Earnings Increase 74 Percent as Production Rises 10 Percent

HOUSTON, Nov. 4, 2010 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE, Nasdaq: APA) today reported net income of $765 million, up 74 percent from $441 million in the prior-year period. Apache earned $2.12 per diluted common share in the third quarter compared with $1.30 per share in the year-earlier quarter.

Worldwide production increased 10 percent from the year-earlier quarter to 667,460 barrels of oil equivalent (boe) per day.

Cash from operations before changes in operating assets and liabilities* totaled $2 billion in the third quarter, up from $1.3 billion in the prior-year period.  Apache's third-quarter adjusted earnings,* which exclude certain items that impact the comparability of operating results, totaled $791 million or $2.19 per share, up from $534 million or $1.58 per share in the year-earlier period.

Third-quarter production averaged 358,475 barrels of liquid hydrocarbons and 1.85 billion cubic feet of natural gas per day, both up 3 percent from the second quarter of 2010. Apache's operations outside North America accounted for 54 percent of worldwide production. Liquids sales — crude oil and natural gas liquids — were 54 percent of worldwide production and 78 percent of revenue. Including the impact of hedging activities, Apache realized an average of $74.14 per barrel of oil, down slightly from the second quarter, and $4.01 per thousand cubic feet (Mcf) of natural gas, unchanged from the second quarter.

"Apache's portfolio balance again contributed to strong operational and financial results in the third quarter," said G. Steven Farris, chairman and chief executive officer. "In Australia, the Pyrenees and Van Gogh developments of Apache's Exmouth Basin oil discoveries continued to make significant contributions. We also had higher production in the Permian Basin and Gulf of Mexico as a result of recent acquisitions that will continue to fuel Apache's growth.

"Apache's focus is on integrating operations and building additional value from the assets acquired this year in the Gulf of Mexico, Permian Basin and western Canada as well as our previously announced acquisition in Egypt, which we expect will close during the fourth quarter," Farris said. "We also are continuing our high-impact exploration programs in Australia and Egypt.

"In December, after the acquisition activity is expected to be completed, we forecast production to exceed 775,000 boe per day, or 35 percent above the December 2009 level," Farris said.

Apache's third-quarter results include production from Gulf Shelf assets acquired from Devon Energy Corp. in the second quarter as well as the partial-quarter impact of the acquisition of BP's oil and gas operations, acreage and infrastructure in the Permian Basin of West Texas and New Mexico on Aug. 10.

Apache's subsidiary, Apache Canada Ltd., completed its acquisition of substantially all of BP's upstream natural gas business in western Alberta and British Columbia on Oct. 8.

Apache also expects to close the previously announced merger with Mariner Energy upon approval of Mariner's shareholders at a special meeting scheduled Nov. 10. Mariner is an independent producer with operations in the Gulf of Mexico, the Gulf Coast and the Permian Basin.  

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom North Sea, Australia and Argentina.

Apache posts announcements, updates and investor information, in addition to all press releases, on its website, www.apachecorp.com.

*Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below. For supplemental and non-GAAP information, please go to www.apachecorp.com/financialinfo.

NOTE: Apache will conduct a conference call to discuss its third-quarter results at 1 p.m. Central time on Thursday, Nov. 4. The third-quarter conference call will be webcast from Apache's website, http://www.apachecorp.com. The webcast replay and podcast will be archived on Apache's website. The conference call will be available for delayed playback by telephone for one week beginning at approximately 4 p.m. on Nov. 4. To access the telephone playback, dial (800) 642-1687 (please note new playback number) and provide Apache's confirmation code, 19776911.

Forward-Looking Statements

This news release contains certain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, recent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K available on our website, http://www.apachecorp.com/, and in our other public filings and press releases. There is no assurance that Apache's expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements. We assume no duty to update these statements as of any future date. However, readers should review carefully reports and documents that Apache files periodically with the Securities and Exchange Commission.

APA-F

APACHE CORPORATION

FINANCIAL INFORMATION

(In thousands, except per share data)






























For the Quarter


For the Nine Months



Ended September 30,


Ended September 30,



2010


2009


2010


2009










REVENUES AND OTHER:









Oil and gas production revenues

$ 3,046,445


$ 2,325,705


$ 8,708,835


$ 6,003,663


Other

(33,786)


6,726


(51,015)


55,971



3,012,659


2,332,431


8,657,820


6,059,634










COSTS AND EXPENSES:









Depreciation, depletion and amortization









   Recurring

786,237


625,898


2,154,486


1,779,874


   Additional

-


-


-


2,818,161


Asset retirement obligation accretion

24,783


26,053


73,545


79,274


Lease operating expenses

506,556


445,535


1,392,751


1,248,297


Gathering and transportation

42,840


36,232


126,243


103,050


Taxes other than income

158,627


183,931


522,398


387,211


General and administrative

96,908


82,492


275,887


258,443


Financing costs, net

59,350


61,684


174,374


181,426



1,675,301


1,461,825


4,719,684


6,855,736










INCOME (LOSS) BEFORE INCOME TAXES

1,337,358


870,606


3,938,136


(796,102)


Current income tax provision

206,709


262,430


888,834


483,171


Deferred income tax provision (benefit)

352,384


166,160


705,833


(409,069)










NET INCOME (LOSS)

778,265


442,016


2,343,469


(870,204)


Preferred stock dividends

13,276


1,420


13,276


4,260










INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

$    764,989


$    440,596


$ 2,330,193


$  (874,464)










NET INCOME (LOSS) PER COMMON SHARE:









Basic

$          2.14


$          1.31


$          6.78


$        (2.61)


Diluted

$          2.12


$          1.30


$          6.72


$        (2.61)










WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

356,718


336,159


343,826


335,637










DILUTED SHARES OUTSTANDING

367,439


337,872


348,784


335,637



APACHE CORPORATION

FINANCIAL INFORMATION

(In thousands)



























For the Quarter


For the Nine Months





Ended September 30,


Ended September 30,





2010


2009


2010


2009

CAPITAL EXPENDITURES (1):









Exploration & Development Costs










United States

$          422,001


$        178,890


$ 1,039,479


$    747,691



Canada

227,489


102,476


592,593


312,791




North America

649,490


281,366


1,632,072


1,060,482



Egypt

205,054


146,282


509,947


534,893



Australia

105,604


135,798


401,023


420,960



North Sea

207,459


77,160


437,325


293,451



Argentina

72,551


26,596


166,412


108,892



Chile

5,659


196


20,034


4,145




International

596,327


386,032


1,534,741


1,362,341




Worldwide Exploration & Development Costs

$       1,245,817


$        667,398


$ 3,166,813


$ 2,422,823













Gathering, Transmission and Processing Facilities










Canada

$            34,769


$          13,094


$    107,167


$      69,235



Egypt

20,540


14,527


110,369


109,607



Australia

12,806


10,841


102,269


23,213



Argentina

673


599


2,036


1,729




Total Gathering, Transmission and Processing

$            68,788


$          39,061


$    321,841


$    203,784













Capitalized Interest

$            29,007


$          14,344


$      64,359


$      45,325













Capital Expenditures, excluding acquisitions

$       1,343,612


$        720,803


$ 3,553,013


$ 2,671,932













Acquisitions

$       2,516,902


$          15,123


$ 3,550,296


$    258,343













(1)  Accrual basis














September 30,


December 31,





2010


2009








BALANCE SHEET DATA:





Cash and Cash Equivalents

$       1,211,439


$     2,048,117


Other Current Assets

3,039,021


2,537,732


Property and Equipment, net

28,346,116


22,900,615


Goodwill

189,252


189,252


Deposit Related to Acquisition of BP Properties

3,500,000


-


Other Assets

642,521


510,027


Total Assets

$     36,928,349


$   28,185,743









Short-Term Debt

$          135,369


$        117,326


Other Current Liabilities

2,391,361


2,275,232


Long-Term Debt

6,380,579


4,950,390


Deferred Credits and Other Noncurrent Liabilities

6,075,658


5,064,174


Shareholders' Equity

21,945,382


15,778,621


Total Liabilities and Shareholders' Equity

$     36,928,349


$   28,185,743









Common shares outstanding at end of period

364,425


336,437



APACHE CORPORATION

FINANCIAL INFORMATION



























For the Quarter


For the Nine Months





Ended September 30,


Ended September 30,





2010


2009


2010


2009












PRODUCTION DATA:








 OIL VOLUME - Barrels per day









Gulf Coast

54,683


51,440


52,009


50,778


Central

3,767


2,189


3,027


2,224


Permian

39,374


34,584


37,033


34,833



United States

97,824


88,213


92,069


87,835


Canada

13,868


14,595


14,252


15,586



North America

111,692


102,808


106,321


103,421


Egypt


99,818


93,550


96,387


90,848


Australia

56,876


10,849


48,324


9,732


North Sea

58,764


67,288


58,254


62,515


Argentina

9,645


11,026


9,812


11,799



International

225,103


182,713


212,777


174,894




Total

336,795


285,521


319,098


278,315












 NATURAL GAS VOLUME - Mcf per day









Gulf Coast

402,777


401,094


388,760


359,787


Central

216,189


198,700


204,446


204,002


Permian

117,557


99,268


101,440


94,718



United States

736,523


699,062


694,646


658,507


Canada

334,945


371,516


329,443


367,562



North America

1,071,468


1,070,578


1,024,089


1,026,069


Egypt


380,598


372,312


377,051


355,824


Australia

197,090


225,349


202,473


176,457


North Sea

2,372


2,983


2,483


2,771


Argentina

202,381


183,504


180,219


189,303



International

782,441


784,148


762,226


724,355




Total

1,853,909


1,854,726


1,786,315


1,750,424












 NGL VOLUME - Barrels per day









Gulf Coast

6,481


5,045


5,433


4,096


Central

592


385


529


315


Permian

9,426


1,589


5,814


1,401



United States

16,499


7,019


11,776


5,812


Canada

2,134


2,166


1,956


2,110



North America

18,633


9,185


13,732


7,922


Argentina

3,047


3,291


3,151


3,174




Total

21,680


12,476


16,883


11,096












 BOE per day









Gulf Coast

128,293


123,334


122,235


114,838


Central

40,390


35,690


37,631


36,539


Permian

68,393


52,718


59,753


52,020



United States

237,076


211,742


219,619


203,397


Canada

71,827


78,680


71,115


78,957



North America

308,903


290,422


290,734


282,354


Egypt


163,251


155,602


159,228


150,152


Australia

89,724


48,408


82,070


39,142


North Sea

59,159


67,785


58,668


62,977


Argentina

46,423


44,901


43,000


46,523



International

358,557


316,696


342,966


298,794




Total

667,460


607,118


633,700


581,148



APACHE CORPORATION

FINANCIAL INFORMATION



























For the Quarter


For the Nine Months





Ended September 30,


Ended September 30,





2010


2009


2010


2009












PRICING DATA:








 AVERAGE OIL PRICE PER BARREL









Gulf Coast

$ 75.79


$ 66.70


$ 76.53


$ 55.07


Central

72.43


64.11


73.73


51.97


Permian

72.47


60.37


73.78


49.05



United States (1)

73.67


64.57


74.05


54.89


Canada

69.01


63.79


71.76


51.95



North America (1)

73.09


64.46


73.74


54.45


Egypt


75.91


65.64


76.15


56.67


Australia

74.80


73.70


74.66


58.74


North Sea

75.25


65.76


76.13


56.68


Argentina

57.31


48.53


56.84


47.29



International

74.66


65.13


74.91


56.15




Total (1)

74.14


64.89


74.52


55.52












 AVERAGE NATURAL GAS PRICE PER MCF









Gulf Coast

$   4.67


$   3.59


$   4.93


$   4.03


Central

4.41


3.28


4.76


3.34


Permian

4.64


4.56


5.49


4.16



United States (1)

5.10


3.99


5.41


4.13


Canada (1)

4.42


3.61


4.72


4.04



North America (1)

4.89


3.86


5.19


4.10


Egypt


3.57


3.86


3.55


3.78


Australia

2.20


2.04


2.21


1.85


North Sea

16.54


14.89


17.35


11.66


Argentina

1.79


1.89


1.93


1.92



International

2.80


2.92


2.86


2.85




Total (1)

4.01


3.46


4.19


3.58












 AVERAGE NGL PRICE PER BARREL









Gulf Coast

$ 32.81


$ 33.95


$ 42.64


$ 29.49


Central

48.38


28.43


45.90


25.36


Permian

34.11


31.96


36.31


27.85



United States

34.11


33.20


39.66


28.87


Canada

34.18


24.22


36.58


23.03



North America

34.12


31.08


39.22


27.32


Argentina

26.39


15.44


28.98


16.13




Total

33.03


26.96


37.31


24.12
























(1)  Prices reflect the impact of financial derivative hedging activities.



APACHE CORPORATION

FINANCIAL INFORMATION

(In thousands, except per share data)











NON-GAAP FINANCIAL MEASURES:











Reconciliation of income attributable to common stock to adjusted earnings:

The press release discusses Apache's adjusted earnings.  Adjusted earnings exclude certain items that management believes affect the comparability of operating results and are meaningful for the following reasons:











  • Management uses adjusted earnings to evaluate the company's operational trends and performance relative to other oil and gas producing companies.










  • Management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends.  










  • The reconciling items below are the types of items management believes are frequently excluded by analysts when evaluating the operating trends and comparability of the company's results.























For the Quarter


For the Nine Months




Ended September 30,


Ended September 30,




2010


2009


2010


2009











Income (Loss) Attributable to Common Stock (GAAP)

$    764,989


$    440,596


$ 2,330,193


$  (874,464)











Adjustments:









Foreign currency fluctuation impact on deferred tax expense  

26,272


93,089


1,345


116,172


Additional depletion, net of tax

-


-


-


1,981,398

Adjusted  Earnings  (Non-GAAP)

$    791,261


$    533,685


$ 2,331,538


$ 1,223,106











Adjusted Earnings Per Share (Non-GAAP)








   Basic


$          2.22


$          1.59


$          6.78


$          3.64

   Diluted


$          2.19


$          1.58


$          6.72


$          3.62











Average Number of Common Shares








   Basic


356,718


336,159


343,826


335,637

   Diluted


367,439


337,872


348,784


337,417































Reconciliation of net cash provided by operating activities to cash from operations before changes in operating assets and liabilities:

The press release discusses Apache's cash from operations before changes in operating assets and liabilities.  It is presented because management believes the information is useful for investors because it is used internally 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 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.























The following table reconciles net cash provided by operating activities to cash from operations before changes in operating assets and liabilities.














For the Quarter


For the Nine Months




Ended September 30,


Ended September 30,




2010


2009


2010


2009

Net cash provided by operating activities

$ 1,714,753


$ 1,312,742


$ 4,800,194


$ 2,679,471

Changes in operating assets and liabilities

269,905


(16,822)


587,067


859,092

Cash from operations before changes in








operating assets and liabilities

$ 1,984,658


$ 1,295,920


$ 5,387,261


$ 3,538,563



SOURCE Apache Corporation

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