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Apache Reports Higher Third-Quarter Earnings Driven By 35% Increase In Onshore North America Liquids Production

- GAAP earnings of $0.75 per share/$300 million; adjusted earnings* of $2.32 per share/$932 million
- $2.0 billion of cash flow from operations; $2.7 billion before changes in working capital*
- $700 million in shares repurchased to date under stock buyback program

HOUSTON, Nov. 7, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) today announced third-quarter 2013 earnings of $300 million or $0.75 per diluted common share and adjusted earnings,* which exclude certain items that impact the comparability of results, of $932 million or $2.32 per share. For the same period in the prior year, Apache reported earnings of $161 million or $0.41 per diluted common share and adjusted earnings of $861 million or $2.16 per share. Net cash provided by operating activities came to approximately $2 billion, with cash from operations before changes in operating assets and liabilities* totaling $2.7 billion, up from $2.4 billion in the year-ago period.

"The strength of our financial performance this quarter is a testament to the effectiveness of our strategy to rebalance our portfolio and drive returns by achieving the right mix of predictable production growth from our North American onshore assets combined with the substantial free cash flow generation from our international operations," said G. Steven Farris, chairman and chief executive officer at Apache. "Apache's focused drilling program in North America is yielding significant production growth. Our Permian and Central regions are the main drivers of this higher production, adding nearly 13,000 barrels per day of oil and natural gas liquids from the second quarter. These two regions represented 35 percent of the company's total worldwide liquids production, up from 27 percent a year ago, contributing 149,000 barrels per day during the third quarter. Going forward, our international regions will be the primary source of excess cash flow to fund our next growth cycle.

"We also made significant progress rebalancing our portfolio to provide more predictable and consistent growth. During the quarter we closed on transactions in the Gulf of Mexico Shelf and Canada, and announced a significant partnership with Sinopec in Egypt, which we expect to close by the end of this year," Farris said. "As previously announced, sale proceeds are being used to reduce our debt and buyback shares. We've already repurchased nearly 8 million shares of Apache common stock, and we're on track to pay down $2 billion in debt by yearend."

Production and operating highlights

Highlights from the third quarter and more recent drilling include:

  • Total worldwide net daily production of oil, natural gas, and natural gas liquids (NGLs) averaged 784,000 barrels of oil equivalent (boe) per day, with liquids production comprising 54 percent of the total.
  • The Permian Region achieved record production of 132,000 boe per day, up 7 percent from the preceding period and up 18 percent from a year ago. In the region's Barnhart area, six rigs were active throughout the quarter drilling 20 Middle and Upper Wolfcamp Shale laterals. Apache holds 345,000 net acres prospective for Wolfcamp Shale development with 971 identified locations. During October, the region achieved a milestone with half of its operated rigs drilling horizontal wells.
  • Apache's Central Region increased production to 95,000 boe per day, up 4 percent from the preceding quarter and 31 percent from the third quarter of 2012. Liquids production increased to 49,000 barrels per day, up 94 percent from the same period in the prior year, and now comprises 52 percent of the region's production. Drilling is concentrated in the stacked pays of the Anadarko Basin targeting formations such as the Granite Wash and Tonkawa, where Apache has identified thousands of locations on its prolific acreage position.
  • In its international regions, Apache commenced production from the Macedon development in Western Australia. This includes four offshore production wells, transmission lines and an onshore processing plant. Apache holds a 28.57 percent working interest in Macedon, with gross sales ramped up to 212 million cubic feet (MMcf) per day. In the North Sea, a second development well commenced production from the Tonto field, testing at an initial 24-hour rate of 8,300 barrels of oil per day. Apache holds a 100 percent working interest in Tonto.

Apache's third-quarter 2013 operations supplement includes drilling, production and other updates for each of its regions, and can be accessed at www.apachecorp.com/financialdata.

Oil and gas prices

Apache's mix of hydrocarbon production during the third quarter 2013 included approximately 46 percent crude oil and 9 percent natural gas liquids (NGLs). Due to the premium prices received for crude oil and NGLs, these products contributed 84 percent of the company's revenue during the period.

Worldwide, Apache received an average price of $107.50 per barrel of oil during the third quarter, compared with $102.62 per barrel in the same period the prior year. Apache received an average price of $3.49 per thousand cubic feet (Mcf) of natural gas, compared with $3.76 per Mcf in the prior-year period.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom, Australia and Argentina. Apache posts announcements, operational updates, investor information and 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 financial and operational data and non-GAAP information, please go to http://www.apachecorp.com/financialdata.

Conference call

Apache will conduct a conference call to discuss its results and review its portfolio at 1 p.m. Central time on Thursday, Nov. 7. The call will be webcast on Apache's website, www.apachecorp.com. A replay of the webcast will be archived on Apache's website and available for delayed playback by telephone for one week beginning at approximately 4 p.m. Central time on Nov. 7. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84102630.

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, asset sales and monetizations and share repurchases. The transaction with Sinopec is subject to customary closing conditions and may not be completed for the amount expected, in the anticipated time frame, or at all. 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 2012 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.

Website:    www.apachecorp.com

APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(In millions, except per share data)


































For the Quarter 


For the Nine Months 




Ended September 30,


Ended September 30,




2013


2012


2013


2012











REVENUES AND OTHER:









   Oil revenues

$ 3,538


$ 3,220


$ 9,989


$ 9,824


   Gas revenues

692


788


2,196


2,339


   NGL revenues

179


133


489


391


Oil and gas production revenues

4,409


4,141


12,674


12,554


Derivative instrument gains (losses), net

(422)


-


(275)


-


Other 


32


38


79


133




4,019


4,179


12,478


12,687











COSTS AND EXPENSES:









  Depreciation, depletion and amortization









   Oil and gas property and equipment









      Recurring

1,330


1,206


3,906


3,535


      Additional

743


729


808


1,898


  Other assets

99


94


297


268


Asset retirement obligation accretion

66


60


196


172


Lease operating expenses

819


801


2,419


2,178


Gathering and transportation 

83


86


237


235


Taxes other than income

185


167


610


627


General and administrative

127


124


376


384


Merger, acquisitions & transition

-


7


-


29


Financing costs, net

51


40


155


125




3,503


3,314


9,004


9,451











INCOME BEFORE INCOME TAXES

516


865


3,474


3,236


Current income tax provision 

410


544


1,191


1,729


Deferred income tax provision (benefit)

(200)


141


225


174











NET INCOME 


306


180


2,058


1,333


Preferred stock dividends

6


19


44


57











INCOME ATTRIBUTABLE TO COMMON STOCK

$    300


$    161


$ 2,014


$ 1,276











NET INCOME PER COMMON SHARE:









Basic


$   0.75


$   0.41


$   5.11


$   3.29


Diluted 


$   0.75


$   0.41


$   5.06


$   3.27











WEIGHTED-AVERAGE NUMBER OF COMMON 








   SHARES OUTSTANDING:









Basic


399


391


394


388


Diluted


401


393


407


390











DIVIDENDS DECLARED PER COMMON SHARE

$   0.20


$   0.17


$   0.60


$   0.51

 



APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)






























For the Quarter 


For the Nine Months 






Ended September 30,


Ended September 30,






2013


2012


2013


2012

CAPITAL EXPENDITURES (1):










Exploration & Development Costs











United States


$   1,489


$     1,422


$ 4,171


$ 3,608



Canada


155


164


502


459




North America


1,644


1,586


4,673


4,067



Egypt


263


299


813


809



Australia


284


265


911


518



North Sea


217


283


647


703



Argentina


60


65


145


222



New Ventures - International


3


51


28


84




International


827


963


2,544


2,336




 Worldwide Exploration & Development Costs


$   2,471


$    2,549


$ 7,217


$ 6,403














Gathering, Transmission and Processing Facilities











United States


$        70


$         13


$    120


$       57



Canada


55


52


111


138



Egypt


23


(22)


57


15



Australia


201


89


534


338



Argentina


3


3


7


12




Total Gathering, Transmission and Processing


$      352


$      135


$    829


$    560














Capitalized Interest


$        93


$        90


$    276


$    241














Capital Expenditures, excluding Acquisitions


$   2,916


$   2,774


$ 8,322


$ 7,204