HOUSTON, April 30 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE, Nasdaq: APA) today reported that oil and gas production increased 6 percent from the fourth quarter to the first, even as lower commodity prices had a substantial impact on financial results.
After a $1.98 billion non-cash, after-tax reduction in the carrying value of its oil and gas properties stemming from deterioration of North American natural gas prices during the first quarter, Apache recorded a net loss of $1.76 billion or $5.25 per diluted common share compared to net income of $1.02 billion or $3.03 per share in the year-earlier period.
Apache's first-quarter adjusted earnings,* which exclude the write-down and certain other items that impact the comparability of operating results, totaled $218 million or 65 cents per share compared to adjusted earnings of $1 billion or $2.99 per share in the prior-year period.
"With additional oil and gas flowing in Egypt and continued recovery of volumes in Australia and the Gulf of Mexico, Apache got off to a strong start in the first quarter, and we expect this momentum will continue as we ramp up production in Egypt and the Gulf," said G. Steven Farris, Apache's chairman and chief executive officer. "A 35-percent deterioration in North American natural gas prices during the quarter necessitated the non-cash ceiling test write-down for the period."
"With nearly $4 billion in available cash and credit and debt at 25 percent of capitalization, we are in a good position to take advantage of opportunities as they emerge in today's low commodity-price environment," Farris said.
Apache today also announced an agreement to acquire nine Permian Basin oil and gas fields with current production of 3,500 barrels of oil equivalent per day from Marathon Oil Corp. for $187.4 million.
Apache produced 548,279 barrels of oil equivalent (boe) per day in the first quarter, up from 518,162 boe per day in the fourth quarter of 2008. Natural gas production rose to 1.6 billion cubic feet (Bcf) per day compared to 1.5 Bcf per day in the fourth quarter. Liquid hydrocarbon production increased to 277,547 barrels per day from 261,609 barrels per day in the fourth quarter.
Apache's equivalent production declined 2 percent from the first quarter of 2008, which was before production was curtailed by a pipeline explosion at the Varanus Island hub in Australia and two Gulf of Mexico hurricanes.
Cash from operations before changes in operating assets and liabilities* totaled $983 million, down from $1.84 billion in the year-earlier period.
"We plan to live within our annual cash flow," Farris said. "Despite significantly reduced capital, our inventory of development projects will fuel growth in 2009, even in the current price environment."
Apache's net daily gas production in Egypt increased 9 percent in the first quarter while daily oil production climbed 12 percent. Gas production was boosted by increased volumes through Shell's Obaiyed processing plant; higher oil output reflected higher condensate production from the gas flow through Obaiyed and several new wells.
The Egypt Region's drilling program yielded several new oil and gas field discoveries in the Western Desert. Start-up procedures are under way at the two new processing trains at Salam Base on the Khalda Concession. "We expect to reach our targeted net production of 100 million cubic feet (MMcf) of gas and 5,000 barrels of condensate per day from the two plants during the second quarter," Farris said.
In Australia, gas production increased 21 percent as repairs at Varanus Island neared completion. The return to pre-incident rates is expected during the second quarter.
Gulf Coast Region gas production increased 17 percent and liquids output rose 23 percent as third-party transportation and processing infrastructure was restored. The Geauxpher field at Garden Banks 462 is anticipated to commence production in May, adding net output of approximately 45 MMcf per day.
"Although we are maintaining our production growth target of 6-14 percent, we expect to come in at the lower end of the range, taking into account lower capital spending and the contractor's delay at the Van Gogh development offshore Western Australia," Farris said.
Apache anticipates second-quarter equivalent production will increase 3-5 percent from first-quarter volumes, Farris said.
"Over our 54-year history, Apache's discipline, values and contrarian spirit have enabled the company not only to live through down cycles but to emerge stronger," he said.
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. From time to time, Apache posts announcements, updates and investor information, in addition to copies of all press releases, on its Web site, www.apachecorp.com.
Full-cost ceiling test
Apache uses the full-cost method of accounting. The company is required to perform a calculation that establishes a ceiling on the carrying costs of its oil and gas properties in each country at the end of each quarter. The ceiling is the calculated present value of estimated future net cash flows from proved oil and gas reserves, using a 10-percent discount rate, plus the lower of the cost or fair value of unproved properties, net of related tax effects. The rules generally require pricing future production at oil and gas prices in effect at the end of the quarter. If the ceiling is exceeded, a non-cash write-down is required. The calculation does not allow for consideration of possible or probable reserves or expected future trends in commodity prices or drilling and service costs.
*Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below.
NOTE: Apache will conduct a conference call to discuss its results at 1 p.m. Central time on Thursday, April 30. The conference call will be webcast from Apache's Web site, http://www.apachecorp.com. The webcast replay and podcast will be archived on Apache's Web site. The conference call will be available for delayed playback by telephone for one week beginning at approximately 4 p.m. on April 30. To access the telephone playback, dial (719) 457-0820 and provide Apache's confirmation code, 7465121.
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, on our Web site 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.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
For the Quarter
Ended March 31,
---- --------------- ----
2009 2008
---- ----
REVENUES AND OTHER:
Oil and gas production revenues $1,603,614 $3,177,949
Other 30,211 9,792
------ -----
1,633,825 3,187,741
--------- ---------
COSTS AND EXPENSES:
Depreciation, depletion and amortization
Recurring 580,617 620,489
Additional 2,818,161 -
Asset retirement obligation
accretion 26,738 26,497
Lease operating expenses 397,489 454,638
Gathering and transportation 33,339 40,976
Taxes other than income 87,339 242,578
General and administrative 85,046 82,423
Financing costs, net 58,587 44,253
------ ------
4,087,316 1,511,854
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (2,453,491) 1,675,887
Current income tax provision 2,494 487,800
Deferred income tax provision
(benefit) (699,045) 166,574
-------- -------
NET INCOME (LOSS) (1,756,940) 1,021,513
Preferred stock dividends 1,420 1,420
----- -----
INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCK $(1,758,360) $1,020,093
=========== ==========
NET INCOME (LOSS) PER COMMON SHARE:
Basic $(5.25) $3.06
====== =====
Diluted $(5.25) $3.03
====== =====
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 335,104 333,393
======= =======
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
For the Quarter
Ended March 31,
---- --------------- ----
2009 2008
---- ----
COSTS INCURRED: (1)
North America exploration
and development $505,316 $743,356
International exploration
and development 486,782 608,463
------- -------
$992,098 $1,351,819
======== ==========
Oil and gas property acquisitions $60,025 $7,947
======= ======
(1) Includes noncash asset retirement costs and
capitalized interest as follows:
Capitalized interest $16,009 $17,178
Asset retirement costs $59,605 $85,072
March 31, December 31,
2009 2008
---- ----
BALANCE SHEET DATA:
Cash and Cash Equivalents $589,693 $1,181,450
Short-term Investments 789,140 791,999
Other Current Assets 2,423,763 2,477,525
Property and Equipment, net 21,732,262 23,958,517
Restricted Cash - 13,880
Goodwill 189,252 189,252
Other Assets 568,694 573,862
------- -------
Total Assets $26,292,804 $29,186,485
=========== ===========
Current Liabilities $2,036,383 $2,615,228
Long-Term Debt 4,894,318 4,808,975
Deferred Credits and Other
Noncurrent Liabilities 4,620,953 5,253,561
Shareholders' Equity 14,741,150 16,508,721
---------- ----------
Total Liabilities and
Shareholders' Equity $26,292,804 $29,186,485
=========== ===========
Common shares outstanding at end
of period 335,186 334,710
APACHE CORPORATION
FINANCIAL INFORMATION
For the Quarter
Ended March 31,
---- --------------- ----
2009 2008
---- ----
FINANCIAL DATA (In thousands,
except per share data):
Revenues and other $1,633,825 $3,187,741
========== ==========
Income (Loss) Attributable to
Common Stock $(1,758,360) $1,020,093
=========== ==========
Basic Net Income (Loss) Per Common
Share $(5.25) $3.06
====== =====
Diluted Net Income (Loss) Per Common
Share $(5.25) $3.03
====== =====
Weighted Average Common Shares
Outstanding 335,104 333,393
======= =======
Diluted Shares Outstanding 335,104 336,549
======= =======
PRODUCTION AND PRICING DATA:
OIL VOLUME - Barrels per day
United States 86,745 100,679
Canada 16,349 17,347
Egypt 83,525 62,551
Australia 7,836 9,420
North Sea 60,494 58,771
Argentina 12,438 12,225
------ ------
Total 267,387 260,993
======= =======
AVERAGE OIL PRICE PER BARREL
United States $42.67 $83.58
Canada 37.98 93.21
Egypt 42.21 97.85
Australia 31.81 101.67
North Sea 44.26 95.83
Argentina 47.26 45.13
Total 42.49 89.25
NATURAL GAS VOLUME - Mcf per day
United States 612,678 744,014
Canada 357,215 360,750
Egypt 317,823 242,977
Australia 142,039 191,180
North Sea 2,681 2,605
Argentina 191,955 165,133
------- -------
Total 1,624,391 1,706,659
========= =========
AVERAGE NATURAL GAS PRICE PER MCF
United States $4.57 $8.36
Canada 4.67 7.56
Egypt 3.60 5.20
Australia 1.60 2.12
North Sea 7.40 16.31
Argentina 1.98 1.84
Total 3.84 6.42
NGL VOLUME - Barrels per day
United States 4,910 7,240
Canada 2,112 2,235
Argentina 3,138 2,720
----- -----
Total 10,160 12,195
====== ======
AVERAGE NGL PRICE PER BARREL
United States $24.26 $57.37
Canada 20.60 53.35
Argentina 17.11 48.18
Total 21.29 54.58
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
Ended March 31,
---------------
2009 2008
---- ----
Income (Loss)
Attributable to Common Stock (GAAP) $(1,758,360) $1,020,093
Adjustments:
Foreign currency fluctuation impact
on deferred tax expense (4,814) (12,360)
Additional depletion, net of tax 1,981,398 -
--------- --
Adjusted Earnings (Non-GAAP) $218,224 $1,007,733
======== ==========
Adjusted Earnings Per Share (Non-GAAP)
Basic $0.65 $3.02
===== =====
Diluted $0.65 $2.99
===== =====
Average Number of Common Shares
Basic 335,104 333,393
======= =======
Diluted 336,994 336,549
======= =======
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,
2009 2008
---- ----
Net cash provided
by operating
activities $543,216 $1,808,404
Changes in
operating assets
and liabilities 439,843 36,280
------- ------
Cash from operations before changes in
operating assets
and liabilities $983,059 $1,844,684
======== ==========
APA-F
