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Apache Reports Strong First-quarter Results As Record Production Leverages Higher Oil Prices

HOUSTON, May 3, 2012 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported record worldwide production in the first-quarter of 2012 as the company benefitted from higher prices for oil and natural gas liquids and its balanced approach helped it weather the continuing deterioration of North  American natural gas prices. Daily production increased 7 percent over the same period the prior year, adjusted for dispositions.

Worldwide production was 769,000 barrels of oil equivalent (boe) per day, compared with 732,000 boe per day the same period the year before. Last year's total included 11,000 boe per day from certain assets in Canada and East Texas that were sold in the second half of 2011.

U.S. liquids production reached 148,000 barrels per day, representing an 11 percent increase over first-quarter 2011 results, as global liquids production rose 6 percent over the same period.

Apache reported earnings of $778 million, or $2.00 per diluted share, for the three-month period ending March 31, 2012, reflecting the impact of a $390-million non-cash, after-tax reduction in the carrying value of its oil and gas properties in Canada stemming from lower North American natural gas prices. For the same period last year, Apache reported earnings of $1.1 billion, or $2.86 per diluted share.

Apache's adjusted earnings*, which exclude the write-down and certain other items that impact the comparability of operating results, totaled $1.2 billion or $3.00 per diluted common share compared to adjusted earnings of $1.1 billion or $2.90 per share in the prior-year period.

Apache reported record revenues of $4.5 billion in the first quarter. Cash from operations before changes in operating assets and liabilities* rose 18 percent to $2.6 billion.

 "Apache is off to a strong start with first-quarter daily production growth of 7 percent, adjusted for 2011 asset sales," said G. Steven Farris, chairman and chief executive officer. "We expect overall production to continue to grow on the strength of an active worldwide drilling program, including accelerated activity on the 312,000 newly acquired acres in the Anadarko Basin."

Operational highlights:

  • Apache has increased onshore U.S. drilling activity from 36 rigs operating at the beginning of the year to 56 currently, a rise of 56 percent.
  • Permian Basin production rose to 99,000 boe per day in the current quarter as a result of increased drilling and recompletion activity in liquids-rich plays, representing an 18 percent rise from the first quarter of 2011. Apache currently operates 31 rigs in the region, including six horizontals.
  • With the recently completed acquisition of Cordillera Energy Partners III, Apache more than doubled its position in the Anadarko wash play to nearly 550,000 acres. The company has increased its exposure to the horizontal Granite Wash, Tonkawa, Cleveland and Marmaton gas condensate and oil plays. Rig count has increased from six at the beginning of the year to the current total of 22 of which 21 are horizontal. 

Apache's diverse portfolio of worldwide assets enabled the company to post strong financial results despite low North American natural gas prices. Liquid hydrocarbons represented 50 percent of production but contributed 82 percent of revenues due to the wide gap between crude oil and natural gas prices.

Apache's results also reflect the benefit of higher prices realized on Dated Brent crude produced in the company's Australia, North Sea and Egypt regions, and on sweet crude from the Gulf of Mexico region. Apache received these premium prices on approximately 75 percent of its crude oil production. Worldwide, the overall average price received was $111.22 per barrel during the period, up from $97.83 in the first quarter of 2011.

While North American natural gas price realizations fell 22 percent over the prior-year period, Apache's international regions, which represent 38 percent of its total gas volumes, saw prices rise 17 percent to $4.02 per Mcf. The worldwide average price received this quarter for natural gas was $3.82 per Mcf, compared with $4.32 per Mcf in the same quarter the previous year.

Apache confirmed its projected 2012 production growth forecast of 7 percent to 13 percent from full-year 2011 production levels, after adjusting for 2011 divestitures.

NOTE: Apache will conduct a conference call to discuss its first-quarter 2012 results at 1 p.m. Central time on Thursday, May 3. The conference call will be webcast from Apache's website, www.apachecorp.com. The webcast replay 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 May 3. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 42313544.

*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 http://www.apachecorp.com/financialinfo.

About Apache
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, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com.

Forward-looking statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations, and objectives for Apache's operations including statements about our drilling plans and production expectations. 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 2011 Form 10-K filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development, or otherwise, except as may be required by law.

 

 

APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(In millions, except per share data)










For the Quarter




Ended March 31,




2012


2011







REVENUES AND OTHER:





Oil and gas production revenues

$                    4,457


$                    3,878


Other 


79


47




4,536


3,925







COSTS AND EXPENSES:





Depreciation, depletion and amortization





    Recurring

1,219


936


    Additional

521


-


Asset retirement obligation accretion

55


37


Lease operating expenses

673


623


Gathering and transportation 

77


76


Taxes other than income

257


164


General and administrative

128


112


Merger, acquisitions & transition

6


5


Financing costs, net

40


45




2,976


1,998







INCOME BEFORE INCOME TAXES

1,560


1,927


Current income tax provision 

725


643


Deferred income tax provision

38


150







NET INCOME 


797


1,134


Preferred stock dividends

19


19







INCOME ATTRIBUTABLE TO COMMON STOCK

$                       778


$                    1,115







NET INCOME PER COMMON SHARE:





Basic


$                      2.02


$                      2.91


Diluted 


$                      2.00


$                      2.86







WEIGHTED-AVERAGE NUMBER OF COMMON 




   SHARES OUTSTANDING:





Basic


385


383


Diluted


399


397







DIVIDENDS DECLARED PER COMMON SHARE

$                      0.17


$                      0.15



APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)














For the Quarter






Ended March 31,






2012


2011

CAPITAL EXPENDITURES (1):






Exploration & Development Costs







United States


$                       794


$                       615



Canada


198


266




North America


992


881



Egypt


250


193



Australia


78


162



North Sea


196


210



Argentina


84


69



Other International


21


-




International


629


634




Worldwide Exploration & Development Costs


$                    1,621


$                    1,515










Gathering, Transmission and Processing Facilities







United States


$                         12


$                             -



Canada


44


42



Egypt


17


29



Australia


172


51



Argentina


4


-




Total Gathering, Transmission and Processing


$                       249


$                       122










Capitalized Interest


$                         66


$                         60










Capital Expenditures, excluding Acquisitions


$                    1,936


$                    1,697










Acquisitions


$                         60


$                         11










(1) Accrual basis













APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)














March 31,


December 31,






2012


2011










Cash and Cash Equivalents


$                       245


$                       295


Other Current Assets 


4,709


4,508


Property and Equipment, net


45,829


45,448


Goodwill


1,114


1,114


Other Assets


1,340


686


Total Assets


$                 53,237


$                 52,051










Short-Term Debt


$                       429


$                       431


Other Current Liabilities


4,269


4,532


Long-Term Debt


7,444


6,785


Deferred Credits and Other Noncurrent Liabilities


11,380


11,310


Shareholders' Equity


29,715


28,993


Total Liabilities and Shareholders' Equity


$                 53,237


$                 52,051










Common shares outstanding at end of period


384


384



APACHE CORPORATION

PRODUCTION INFORMATION
















For the Quarter







Ended March 31,







2012


2011










  OIL VOLUME - Barrels per day






Central


6,466


5,046


Permian


56,481


48,280


GOM Deepwater


5,801


5,322


GOM Shelf


46,732


46,558


GC Onshore


10,448


8,517



United States


125,928


113,723


Canada



15,582


14,704



North America


141,510


128,427


Egypt




99,490


108,876


Australia



30,398


34,720


North Sea


65,946


46,968


Argentina



9,632


9,617



International


205,466


200,181




Total 


346,976


328,608










  NATURAL GAS VOLUME - Mcf per day






Central


166,452


215,612


Permian


180,253


159,005


GOM Deepwater


46,996


60,589


GOM Shelf


332,140


348,845


GC Onshore


91,652


74,095



United States


817,493


858,146


Canada


636,227


642,729



North America


1,453,720


1,500,875


Egypt


376,067


371,514


Australia


224,337


182,922


North Sea


67,066


1,901


Argentina


211,193


188,092



International


878,663


744,429




Total 


2,332,383


2,245,304










  NGL VOLUME - Barrels per day






Central


3,512


787


Permian


12,650


9,341


GOM Deepwater


256


1,129


GOM Shelf


3,594


6,407


GC Onshore


2,305


1,588



United States


22,317


19,252


Canada


6,312


6,545



North America


28,629


25,797


Egypt


-


228


North Sea


1,966


-


Argentina


2,994


3,055



International


4,960


3,283




Total


33,589


29,080










  BOE per day






Central


37,719


41,768


Permian


99,173


84,121


GOM Deepwater


13,890


16,549


GOM Shelf


105,683


111,106


GC Onshore


28,028


22,455



United States


284,493


275,999


Canada


127,932


128,370



North America


412,425


404,369


Egypt


162,168


171,023


Australia


67,788


65,207


North Sea


79,090


47,285


Argentina


47,825


44,021



International


356,871


327,536




Total 


769,296


731,905



APACHE CORPORATION

PRICE INFORMATION
















For the Quarter







Ended March 31,







2012


2011










  AVERAGE OIL PRICE PER BARREL






Central


$           98.82


$           89.33


Permian


98.36


88.72


GOM Deepwater


110.83


97.61


GOM Shelf


114.04


98.84


GC Onshore


113.36


97.73



United States (1)


102.08


89.72


Canada


92.47


87.21



North America (1)


101.02


89.43


Egypt(1)


123.55


107.14


Australia(1)


122.95


105.89


North Sea(1)


113.19


100.89


Argentina


83.03


60.36



International (1)


118.24


103.21




Total(1)


111.22


97.83










  AVERAGE NATURAL GAS PRICE PER MCF






Central


$             3.09


$             4.42


Permian


3.72


4.99


GOM Deepwater


2.98


4.10


GOM Shelf


3.17


4.53


GC Onshore


2.82


4.51



United States (1)


3.93


4.94


Canada (1)


3.41


4.54



North America (1)


3.70


4.77


Egypt


3.79


4.44


Australia


4.18


2.50


North Sea


7.97


20.34


Argentina


2.98


2.18



International


4.02


3.43




Total (1)


3.82


4.32










  AVERAGE NGL PRICE PER BARREL






Central


$           37.50


$           48.34


Permian


44.78


45.52


GOM Deepwater


38.51


37.69


GOM Shelf


42.93


42.41


GC Onshore


47.12


55.85



United States


43.51


44.99


Canada


41.63


40.12



North America


43.09


43.76


Egypt


-


63.35


North Sea


84.11


-


Argentina


26.20


30.51



International


49.16


32.79




Total


43.99


42.52




















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



APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)











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.











Ÿ*

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.  











Ÿ*

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








Ended March 31,








2012


2011















Income Attributable to Common Stock (GAAP)

$              778


$           1,115















Adjustments:









Canada proved property write-down, net of tax

390


-






Unrealized foreign currency fluctuation impact on deferred tax expense  

7


12






Merger, acquisitions & transition, net of tax

3


4





Adjusted Earnings  (Non-GAAP)

$           1,178


$           1,131















Net Income per Common Share - Diluted (GAAP)

$             2.00


$             2.86















Adjustments:









Canada proved property write-down, net of tax

0.97


-






Unrealized foreign currency fluctuation impact on deferred tax expense  

0.02


0.03






Merger, acquisitions & transition, net of tax

0.01


0.01





Adjusted Earnings Per Share - Diluted (Non-GAAP)

$             3.00


$             2.90













































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








Ended March 31,








2012


2011





Net cash provided by operating activities

$           2,007


$           1,979





Changes in operating assets and liabilities

641


264





Cash from operations before changes in









operating assets and liabilities

$           2,648


$           2,243





APA-F

 

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