Apache Corporation
APACHE CORP (Form: 8-K, Received: 11/02/2017 11:13:42)

 

 

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): November 2, 2017

 

 

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)

 

(I.R.S. 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))

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 November 2, 2017, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended September 30, 2017. 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 November 2, 2017.


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: November 2, 2017     /s/ Rebecca A. Hoyt
    Rebecca A. Hoyt
    Senior Vice President,
    Chief Accounting Officer, and Controller
    (Principal Accounting Officer)

Exhibit 99.1

 

LOGO    NEWS RELEASE

APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017

FINANCIAL AND OPERATIONAL RESULTS

 

    Delivered third-quarter production of 448,000 barrels of oil equivalent (BOE) per day and adjusted production of 354,000 BOE per day, which excludes Canadian volumes, Egypt noncontrolling interest and tax barrels;

 

    Returned United States’ production to a growth trajectory and grew net production in the North Sea and gross production in Egypt;

 

    Achieved strong oil production in the Midland and Delaware basins and expect continued strong performance in the fourth quarter;

 

    Completed the strategic exit from Canada, which streamlines the portfolio and increases leverage to the Permian; and

 

    On track to achieve fourth-quarter production targets and end the year with less debt and considerably more cash than the start of 2017.

HOUSTON, Nov. 2, 2017 – Apache Corporation (NYSE: APA) (Nasdaq: APA) today announced its financial and operational results for the third quarter of 2017.

Apache reported earnings of $63 million or $0.16 per diluted common share for the third quarter of 2017. These results include a number of items outside of core earnings that are typically excluded by the investment community in their published earnings estimates. When adjusted for these and certain additional items that impact the comparability of results, Apache’s third-quarter earnings were $14 million or $0.04 per share. Adjusted earnings include the effect of dry-hole costs of $0.06 per share, after tax. Cash flow from operations in the quarter was $554 million. Before working capital changes, Apache generated $655 million in cash flow. Adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (adjusted EBITDAX) was $821 million.


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 2 of 8

 

John J. Christmann IV, Apache’s chief executive officer and president, said, “During the third quarter, Apache delivered strong operational results and made great progress in our ongoing portfolio transition. In the United States, we returned our production to a growth trajectory and advanced our development program at Alpine High bringing new wells online, ramping up production, and further progressing our build out of infrastructure in the area.

“Across the Permian Basin, we are benefiting from the testing and optimization initiatives we put in place during 2016 and are delivering excellent results from our multiwell pad drilling programs in the Midland and Delaware basins. We anticipate continued capital efficiency gains in both of these focus areas.

“With our recent Canadian divestment, our portfolio is now increasingly weighted to our Permian assets including Alpine High, which offers a unique combination of high returns and tremendous scale. This portfolio rotation is a key step in transforming Apache’s long-term return on capital employed,” Christmann said.

Financial position and liquidity

Oil and gas capital investment was $843 million during the quarter, with more than two-thirds focused on the Permian Basin. Apache’s net debt position at quarter end was $6.6 billion, a decrease of $175 million from the previous quarter.


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 3 of 8

 

Third-quarter operational summary

During the third quarter, Apache averaged 36 operated rigs worldwide, with 17 in the Permian, four in other North America areas, 12 in Egypt, and three in the North Sea. Highlights from Apache’s three principal areas include:

 

    North America – North American production was 231,000 BOE per day. Apache averaged 21 rigs and drilled and completed 41 gross-operated wells. In North America, third-quarter 2017 adjusted production, which excludes Canada, averaged 207,000 BOE per day, up 7 percent from the second quarter.

 

    Permian Basin – With the success of the Midland Basin drilling program and the continued production ramp at Alpine High, third-quarter production in the Permian Basin averaged 161,000 BOE per day, an 11 percent increase over the second quarter. Oil growth increased 8 percent quarter to quarter to 78,000 barrels of oil per day.

 

    Delaware Basin – At Alpine High, average production was 13,300 BOE per day. In addition to several high-rate wells in the wet gas and dry gas portions of the play, Apache achieved positive results from three parasequence oil tests in the Wolfcamp and the Third Bone Springs formations providing additional confirmation of the oil play at Alpine High.

 

    Midland Basin – Apache is focused on multiwell pad drilling development in its core areas of the Midland Basin. The company completed two pads in the Wildfire field in Midland County containing 13 wells with mile-and-a-half laterals. The average 30-day peak initial-production rate of these wells exceeded 1,000 BOE per day, consisting of 80 to 85 percent oil.


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 4 of 8

 

At the Powell field in Upton County, Apache brought the CC 4045 pad online, which contains six wells with two-mile laterals. These wells have been online for about four weeks and are trending toward an average 30-day peak initial-production rate of 1,300 BOE per day, consisting of 80 percent oil.

 

    North Sea – Apache averaged three rigs during the quarter. Production increased 9 percent from the second quarter to 60,000 BOE per day. Net production from the Callater Field is currently averaging approximately 14,000 BOE per day from two wells. A third well, the CB-1, was recently drilled into a new fault block and found more than 260-feet of net pay and will be placed on production later this month.

 

    Egypt – Apache averaged 12 rigs during the quarter. Gross production in Egypt increased slightly from the second quarter to 339,000 BOE per day. Adjusted production in Egypt, which excludes minority interest and the impact of tax barrels, decreased slightly from the second-quarter 2017 to 87,000 BOE per day. The decrease in adjusted production reflects the terms of Apache’s production sharing contracts in Egypt, which generally provide for fewer cost-recovery barrels to the contactor as the price of Brent-indexed crude oil increases. During the quarter, terms were finalized on two new concessions in the Western Desert covering 1.6 million acres.


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 5 of 8

 

2017 outlook and plan update

Apache provided updated fourth-quarter production guidance on its webcast update in October, which remains unchanged. Capital guidance for 2017 of $3.1 billion remains on track for the full year. Further details on other financial and operational guidance items can be found in the Third-Quarter 2017 Financial and Operational Supplement.

“We continue to benefit from our cost structure focus, with both LOE per BOE and G&A costs remaining low as a result of the significant rationalization efforts over the last two years. Our capital investment is in line with our target for 2017, and we are actively working our 2018 and 2019 plans. We are closely monitoring commodity prices as we prioritize next year’s activity and identify areas where the capital program could be pared back if necessary. We look forwarding to providing details of our 2018 plan along with a view into 2019 on our fourth-quarter results call in February,” Christmann concluded.

Conference call

Apache will host a conference call to discuss its third-quarter 2017 results at 1 p.m. Central time, Thursday, Nov. 2. 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. A replay of the conference call will be available for seven days following the call. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 48384429. Sign up for email alerts to be reminded of the webcast at investor.apachecorp.com/alerts.cfm .


APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 6 of 8

 

Additional Information

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

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com , and on its Media and Investor Center mobile application, which is available for free download from the Apple App Store and the Google’s Play store .

Non-GAAP financial measures

Apache’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP 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 net debt 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 THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 7 of 8

 

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,” “guidance,” “outlook,” 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 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 2016 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 ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 8 of 8

 

Cautionary note to investors

The United States Securities and Exchange Commission (“SEC”) 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 earnings 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, 2016, 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        Castlen Kennedy

Website: www.apachecorp.com

-end-


APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

     For the Quarter
Ended September 30,
    For the Nine Months
Ended September 30,
 
     2017     2016     2017     2016  

REVENUES AND OTHER:

        

Oil and gas production revenues

        

Oil revenues

   $ 1,070     $ 1,117     $ 3,292     $ 3,057  

Gas revenues

     238       263       726       695  

Natural gas liquids revenues

     81       59       229       160  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,389       1,439       4,247       3,912  

Derivative instrument gains (losses), net

     (110     —         (69     —    

Gain on divestiture

     296       5       616       21  

Other

     —         (6     43       (30
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,575       1,438       4,837       3,903  
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Lease operating expenses

     358       382       1,066       1,119  

Gathering and transportation

     39       51       144       155  

Taxes other than income

     46       9       117       85  

Exploration

     231       161       431       347  

General and administrative

     98       102       307       298  

Transaction, reorganization and separation

     20       12       14       36  

Depreciation, depletion and amortization:

        

Oil and gas property and equipment

     524       610       1,598       1,875  

Other assets

     35       38       109       120  

Asset retirement obligation accretion

     30       40       103       116  

Impairments

     —         836       8       1,009  

Financing costs, net

     101       102       300       311  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,482       2,343       4,197       5,471  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     93       (905     640       (1,568

Current income tax provision (benefit)

     99       150       413       284  

Deferred income tax provision (benefit)

     (111     (529     (758     (755
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

     105       (526     985       (1,097

Income (Loss) from discontinued operations, net of tax

     —         (33     —         (33
  

 

 

   

 

 

   

 

 

   

 

 

 

INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

     105       (559     985       (1,130

Net income attributable to noncontrolling interest

     42       48       137       93  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $ 63     $ (607   $ 848     $ (1,223
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

        

Net income (loss) from continuing operations attributable to common shareholders

   $ 63     $ (574   $ 848     $ (1,190

Net income (loss) from discontinued operations

     —         (33     —         (33
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common shareholders

   $ 63     $ (607   $ 848     $ (1,223
  

 

 

   

 

 

   

 

 

   

 

 

 

BASIC NET INCOME (LOSS) PER COMMON SHARE:

        

Basic net income (loss) from continuing operations per share

   $ 0.16     $ (1.51   $ 2.23     $ (3.14

Basic net income (loss) from discontinued operations per share

     —         (0.09     —         (0.08
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic net income (loss) per share

   $ 0.16     $ (1.60   $ 2.23     $ (3.22
  

 

 

   

 

 

   

 

 

   

 

 

 

DILUTED NET INCOME (LOSS) PER COMMON SHARE:

        

Diluted net income (loss) from continuing operations per share

   $ 0.16     $ (1.51   $ 2.22     $ (3.14

Diluted net income (loss) from discontinued operations per share

     —         (0.09     —         (0.08
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted net income (loss) per share

   $ 0.16     $ (1.60   $ 2.22     $ (3.22
  

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

        

Basic

     381       380       381       379  

Diluted

     383       380       383       379  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.25     $ 0.25     $ 0.75     $ 0.75  

 

Page 1


APACHE CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change     For the Nine Months Ended  
     September 30,
2017
     June 30,
2017
     September 30,
2016
     3Q17 to
2Q17
    3Q17 to
3Q16
    September 30,
2017
     September 30,
2016
 

OIL VOLUME—Barrels per day

                  

Permian

     77,701        71,891        79,751        8     -3     74,943        86,462  

MidContinent/Gulf Coast Region

     9,670        10,197        13,727        -5     -30     10,331        16,025  

Gulf of Mexico

     3,512        3,983        4,791        -12     -27     3,954        4,437  

Canada

     3,441        11,638        12,619        -70     -73     8,881        13,331  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     94,324        97,709        110,888        -3     -15     98,109        120,255  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     93,749        96,961        110,809        -3     -15     97,447        105,118  

North Sea

     49,945        48,091        49,192        4     2     49,274        55,071  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     143,694        145,052        160,001        -1     -10     146,721        160,189  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     238,018        242,761        270,889        -2     -12     244,830        280,444  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME—Mcf per day

                  

Permian

     278,308        237,455        237,313        17     17     247,991        240,253  

MidContinent/Gulf Coast Region

     115,982        114,534        141,273        1     -18     117,978        148,336  

Gulf of Mexico

     10,196        12,063        16,476        -15     -38     12,656        15,693  

Canada

     107,524        205,408        233,635        -48     -54     175,787        248,912  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     512,010        569,460        628,697        -10     -19     554,412        653,194  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     378,426        383,296        405,863        -1     -7     389,533        403,832  

North Sea

     50,057        34,348        69,509        46     -28     42,800        66,884  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     428,483        417,644        475,372        3     -10     432,333        470,716  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     940,493        987,104        1,104,069        -5     -15     986,745        1,123,910  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME—Barrels per day

                  

Permian

     36,737        34,067        39,929        8     -8     35,070        38,716  

MidContinent/Gulf Coast Region

     12,137        12,636        15,838        -4     -23     12,649        16,752  

Gulf of Mexico

     275        326        588        -16     -53     344        429  

Canada

     2,183        4,365        6,039        -50     -64     3,780        5,879  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     51,332        51,394        62,394        0     -18     51,843        61,776  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     916        880        1,124        4     -19     917        1,120  

North Sea

     1,219        741        1,697        65     -28     1,044        1,557  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     2,135        1,621        2,821        32     -24     1,961        2,677  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     53,467        53,015        65,215        1     -18     53,804        64,453  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

Permian

     160,823        145,533        159,232        11     1     151,346        165,221  

MidContinent/Gulf Coast Region

     41,138        41,923        53,111        -2     -23     42,643        57,500  

Gulf of Mexico

     5,486        6,319        8,125        -13     -32     6,407        7,481  

Canada

     23,544        50,238        57,597        -53     -59     41,959        60,695  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     230,991        244,013        278,065        -5     -17     242,355        290,897  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt (1, 2)

     157,737        161,724        179,575        -2     -12     163,286        173,544  

North Sea

     59,507        54,556        62,475        9     -5     57,451        67,775  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     217,244        216,280        242,050        0     -10     220,737        241,319  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     448,235        460,293        520,115        -3     -14     463,092        532,216  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total excluding noncontrolling interests

     395,578        405,989        460,363        -3     -14     408,502        474,447  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

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

        

Oil (b/d)

     31,275        32,562        36,839            32,573        34,964  

Gas (Mcf/d)

     126,459        128,696        135,233            130,263        134,591  

NGL (b/d)

     305        293        374            306        373  

(2)        Egypt Gross Production—BOE per day

     339,069        334,496        350,366        1     -3     333,942        351,015  

 

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) divested assets, 2) noncontrolling interest in Egypt, and 3) 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 Nine Months Ended  
     September 30,
2017
     June 30,
2017
     September 30,
2016
     3Q17 to
2Q17
    3Q17 to
3Q16
    September 30,
2017
     September 30,
2016
 

OIL VOLUME—Barrels per day

                  

Permian

     77,701        71,891        79,177        8     -2     74,796        85,845  

MidContinent/Gulf Coast Region

     9,670        10,197        13,727        -5     -30     10,331        16,025  

Gulf of Mexico

     3,512        3,983        4,791        -12     -27     3,954        4,437  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     90,883        86,071        97,695        6     -7     89,081        106,307  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     49,992        51,776        57,476        -3     -13     51,134        58,439  

North Sea

     49,945        48,091        49,192        4     2     49,274        55,071  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     99,937        99,867        106,668        0     -6     100,408        113,510  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     190,820        185,938        204,363        3     -7     189,489        219,817  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME—Mcf per day

                  

Permian

     278,308        237,455        233,503        17     19     247,335        237,135  

MidContinent/Gulf Coast Region

     115,982        114,534        141,273        1     -18     117,978        148,336  

Gulf of Mexico

     10,196        12,063        16,476        -15     -38     12,656        15,693  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     404,486        364,052        391,252        11     3     377,969        401,164  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     216,990        220,061        236,740        -1     -8     218,061        248,094  

North Sea

     50,057        34,348        69,509        46     -28     42,800        66,884  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     267,047        254,409        306,249        5     -13     260,861        314,978  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     671,533        618,461        697,501        9     -4     638,830        716,142  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME—Barrels per day

                  

Permian

     36,737        34,067        39,041        8     -6     34,968        38,029  

MidContinent/Gulf Coast Region

     12,137        12,636        15,838        -4     -23     12,649        16,752  

Gulf of Mexico

     275        326        588        -16     -53     344        429  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     49,149        47,029        55,467        5     -11     47,961        55,210  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     534        540        631        -1     -15     529        700  

North Sea

     1,219        741        1,697        65     -28     1,044        1,557  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     1,753        1,281        2,328        37     -25     1,573        2,257  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     50,902        48,310        57,795        5     -12     49,534        57,467  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

Permian

     160,823        145,533        157,134        11     2     150,988        163,396  

MidContinent/Gulf Coast Region

     41,138        41,923        53,111        -2     -23     42,643        57,500  

Gulf of Mexico

     5,486        6,319        8,125        -13     -32     6,407        7,481  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

North America

     207,447        193,775        218,370        7     -5     200,038        228,377  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Egypt

     86,691        88,993        97,564        -3     -11     88,006        100,488  

North Sea

     59,507        54,556        62,475        9     -5     57,451        67,775  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     146,198        143,549        160,039        2     -9     145,457        168,263  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     353,645        337,324        378,409        5     -7     345,495        396,640  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

Page 3


APACHE CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended      For the Nine Months Ended  
     September 30,
2017
     June 30,
2017
     September 30,
2016
     September 30,
2017
     September 30,
2016
 

AVERAGE OIL PRICE PER BARREL

              

Permian

   $ 45.68      $ 45.09      $ 41.85      $ 46.64      $ 37.63  

MidContinent/Gulf Coast Region

     45.99        46.19        41.98        47.21        36.96  

Gulf of Mexico

     46.50        45.85        41.63        47.24        37.75  

Canada

     42.23        44.52        40.17        45.25        36.04  

North America

     45.56        45.10        41.65        46.42        37.36  

Egypt

     51.23        47.98        46.54        50.78        41.97  

North Sea

     53.11        48.21        45.47        51.35        41.28  

International

     51.87        48.06        46.20        50.97        41.74  

Total

     49.34        46.89        44.35        49.15        39.86  

AVERAGE NATURAL GAS PRICE PER MCF

              

Permian

   $ 2.56      $ 2.50      $ 2.60      $ 2.54      $ 2.03  

MidContinent/Gulf Coast Region

     2.78        2.88        2.79        2.93        2.05  

Gulf of Mexico

     2.97        3.03        3.08        3.04        2.42  

Canada

     1.90        2.14        1.71        2.17        1.47  

North America

     2.47        2.39        2.31        2.45        1.80  

Egypt

     2.81        2.73        2.75        2.77        2.69  

North Sea

     5.27        4.54        4.14        5.27        4.12  

International

     3.10        2.88        2.96        3.02        2.89  

Total

     2.75        2.60        2.59        2.70        2.26  

AVERAGE NGL PRICE PER BARREL

              

Permian

   $ 16.68      $ 13.08      $ 10.42      $ 15.47      $ 9.08  

MidContinent/Gulf Coast Region

     12.92        10.03        7.38        12.65        7.67  

Gulf of Mexico

     19.64        13.10        12.93        18.46        8.49  

Canada

     15.80        15.99        6.10        16.39        6.61  

North America

     15.77        12.58        9.25        14.87        8.46  

Egypt

     36.47        31.11        28.12        35.98        27.54  

North Sea

     26.92        22.92        24.45        30.51        21.82  

International

     31.02        27.37        25.91        33.07        24.21  

Total

     16.38        13.03        9.97        15.53        9.11  

 

Page 4


APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

 

SUMMARY OF DERIVATIVE INSTRUMENT GAINS (LOSSES), NET

(Unaudited)

(In millions)

 

 

 

     For the Quarter
Ended September 30,
     For the Nine Months Ended
Ended September 30,
 
     2017      2016      2017      2016  

Derivative settlements—realized gain

   $ 23      $ —        $ 23      $ —    

Amortization of put premium—realized (loss)

     (50      —          (50      —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Realized (loss)

     (27      —          (27      —    

Unrealized mark-to-market (loss)

     (83      —          (42      —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ (110    $ —        $ (69    $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

SUMMARY EXPLORATION EXPENSE INFORMATION

(Unaudited)

(In millions)

 

 

 

     For the Quarter
Ended September 30,
     For the Nine Months Ended
Ended September 30,
 
     2017      2016      2017      2016  

Unproved leasehold impairments

   $ 160      $ 114      $ 214      $ 222  

Dry hole expense

     38        7        136        38  

Geological and geophysical expense

     12        21        24        30  

Exploration overhead and other

     21        19        57        57  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 231      $ 161      $ 431      $ 347  
  

 

 

    

 

 

    

 

 

    

 

 

 

SUMMARY CASH FLOW INFORMATION

(Unaudited)

(In millions)

 

 

 

     For the Quarter
Ended September 30,
     For the Nine Months Ended
Ended September 30,
 
     2017      2016      2017      2016  

Net cash provided by operating activities

   $ 554      $ 651      $ 1,760      $ 1,634  

Net cash used in investing activities

     (94      (396      (623      (1,362

Net cash used in financing activities

     (185      (226      (572      (509

SUMMARY BALANCE SHEET INFORMATION

(Unaudited)

(In millions)

 

     September 30,
2017
     December 31,
2016
 

Cash and cash equivalents

   $ 1,846      $ 1,377  

Restricted cash

     96        —    

Other current assets

     1,827        1,864  

Property and equipment, net

     17,655        18,867  

Other assets

     411        411  
  

 

 

    

 

 

 

Total assets

   $ 21,835      $ 22,519  
  

 

 

    

 

 

 

Current Debt

   $ 550      $ —    

Current liabilities

     1,915        1,843  

Long-term debt

     7,933        8,544  

Deferred credits and other noncurrent liabilities

     3,060        4,453  

Apache shareholders’ equity

     7,011        6,238  

Noncontrolling interest

     1,366        1,441  
  

 

 

    

 

 

 

Total Liabilities and shareholders’ equity

   $ 21,835      $ 22,519  
  

 

 

    

 

 

 

Common shares outstanding at end of period

     381        379  

 

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 Nine Months Ended  
     September 30,     June 30,     September 30,     September 30,  
     2017     2017     2016     2017     2016  

Net cash provided by operating activities

   $ 554     $ 751     $ 651     $ 1,760     $ 1,634  

Adjustments:

          

Exploration expense other than dry hole expense and unproved leasehold impairments

     33       23       40       81       87  

Current income tax provision

     99       126       150       413       284  

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

     (87     (5     (35     (167     (126

Changes in operating assets and liabilities

     101       (148     (31     228       (1

Financing costs, net

     101       99       102       300       311  

Transaction, reorganization & separation costs

     20       4       12       14       36  

Contract termination charges

     —         —         7       —         10  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 821     $ 850     $ 896     $ 2,629     $ 2,235  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of income (loss) 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     For the Quarter Ended  
     September 30, 2017     September 30, 2016  
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Income (loss) attributable to common stock (GAAP)

   $ 51     $ 12     $ 63       0.16     $ (986   $ 379     $ (607     (1.60

Adjustments: *

                

Valuation allowance and other tax adjustments

     —         (1     (1     —         —         (58     (58     (0.15

Gain on divestitures

     (296     77       (219     (0.56     (5     2       (3     —    

Asset impairments

     160       (56     104       0.27       950       (322     628       1.65  

Unrealized derivative instrument loss

     83       (29     54       0.14       —         —         —         —    

Transaction, reorganization & separation costs

     20       (7     13       0.03       12       (4     8       0.02  

Elimination of PRT liability

     —         —         —         —         (28     11       (17     (0.04

Discontinued Operations

     —         —         —         —         33       —         33       0.08  

Contract termination charges

     —         —         —         —         7       (3     4       0.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ 18     $ (4   $ 14       0.04     $ (17   $ 5     $ (12     (0.03
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     For the Nine Months Ended     For the Nine Months Ended  
     September 30, 2017     September 30, 2016  
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Income (Loss) Attributable to Common Stock (GAAP)

   $ 503     $ 345     $ 848       2.22     $ (1,694   $ 471     $ (1,223     (3.22

Adjustments: *

                

Valuation allowance and other tax adjustments

     —         (641     (641     (1.69     —         (29     (29     (0.07

Gain on divestitures

     (616     194       (422     (1.10     (21     6       (15     (0.04

Asset impairments

     222       (78     144       0.38       1,231       (436     795       2.09  

Unrealized derivative instrument loss

     42       (15     27       0.07       —         —         —         —    

Transaction, reorganization & separation costs

     14       (5     9       0.03       36       (12     24       0.06  

Loss on extinguishment of debt

     1       —         1       —         —         —         —         —    

Discontinued Operations

     —         —         —         —         33       —         33       0.08  

Contract termination charges

     —         —         —         —         10       (3     7       0.02  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Earnings (Non-GAAP)

   $ 166     $ (200   $ (34     (0.09   $ (405   $ (3   $ (408     (1.08
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* 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 Debt to Net debt

Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.

 

     September 30,
2017
     June 30,
2017
     March 31,
2017
     December 31,
2016
 

Current debt

   $ 550      $ 150      $ 150      $ —    

Long-term debt

     7,933        8,329        8,327        8,544  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total debt

     8,483        8,479        8,477        8,544  

Cash and cash equivalents

     1,846        1,667        1,521        1,377  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net debt

   $ 6,637      $ 6,812      $ 6,956      $ 7,167  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred and GTP capital investments to Oil and gas capital investment

Management believes the presentation of oil and gas capital investments is useful for investors to assess Apache’s expenditures related to our oil and gas capital activity. We define oil and gas capital investments as costs incurred for oil and gas activities and GTP activities, adjusted to exclude asset retirement obligations revisions and liabilities incurred, while including amounts paid during the period for abandonment and decommissioning expenditures. 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 oil and gas capital activity and is consistent with how we plan our capital budget.

 

     For the Quarter
Ended September 30,
     For the Nine Months Ended
Ended September 30,
 
     2017      2016      2017      2016  

Costs incurred in oil and gas property:

           

Acquisitions

           

Proved

   $ —        $ 2      $ 3      $ 43  

Unproved

     85        52        149        160  

Exploration and development

     734        408        1,980        1,308  
  

 

 

    

 

 

    

 

 

    

 

 

 
     819        462        2,132        1,511  

GTP capital investments:

           

GTP facilities

     109        31        397        31  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Costs incurred and GTP capital investments

   $ 928      $ 493      $ 2,529      $ 1,542  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred and GTP to Oil and gas capital investment

           

Asset retirement obligations incurred and revisions

   $ (1    $ (1    $ (120      (100

Asset retirement obligations settled

     10        8        32        35  

Exploration expense other than dry hole expense and unproved leasehold impairments

     (33      (40      (81      (87

Less noncontrolling interest

     (61      (28      (133      (132
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Oil and gas capital investment

   $ 843      $ 432      $ 2,227      $ 1,258  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

Cash flows from continuing 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 Nine Months Ended  
     September 30,      June 30,     September 30,     September 30,  
     2017      2017     2016     2017      2016  

Net cash provided by operating activities

   $ 554      $ 751     $ 651     $ 1,760      $ 1,634  

Changes in operating assets and liabilities

     101        (148     (31     228        (1
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 655      $ 603     $ 620     $ 1,988      $ 1,633  
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

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