HOUSTON, Oct. 30 /PRNewswire-FirstCall/ -- Apache Corporation
(NYSE, Nasdaq: APA) today reported that strong crude oil and natural gas
prices fueled third-quarter net income of $1.2 billion or $3.52 per diluted
common share, up 94 percent from $612 million or $1.83 per share in the
prior-year period.
Third-quarter cash from operations -- prior to changes in operating assets
and liabilities* -- totaled $2.1 billion, compared with $1.6 billion in the
prior-year period.
Third-quarter production declined 9 percent from the prior-year period and
7 percent from the second quarter to 510,672 barrels of oil equivalent (boe)
per day. The decline was the result of two hurricanes that curtailed
production in the Gulf of Mexico and onshore Louisiana and continued shut-ins
following the June 3 explosion at the gas processing and transportation hub at
Varanus Island in Australia. Most of the curtailed production in the Gulf and
Australia is expected to be restored by year end, setting the stage for
renewed growth in 2009.
"We faced several challenges on the production side during the third
quarter; we also had strong earnings, continued progress on our pipeline of
development projects, and drilling success in several areas," said G. Steven
Farris, Apache's president and chief executive officer.
Three developments are expected to impact Apache's 2009 production: Two
new gas processing trains are expected to commence operations in Egypt by year
end, boosting net production by approximately 100 million cubic feet (MMcf) of
gas and 5,000 barrels of condensate per day; the Van Gogh field in Australia
is expected to contribute a net 20,000 barrels of oil per day beginning in
mid-2009; and the Geauxpher field in the Gulf of Mexico is expected to
commence production during the first quarter at a net rate of approximately
50 MMcf of gas per day.
Apache had notable drilling results in Egypt, where the company drilled
four discoveries; at its emerging Ootla shale play in Canada; and in the North
Sea, where nine new wells fueled a 25-percent increase in third-quarter
production compared with the prior-year period.
"Apache continues to show operational progress, in spite of the recent
turmoil in the commodity and equity markets and the global economic slowdown,"
Farris said. "Although we have an abundant inventory of drillable prospects
across 36 million acres, Apache intends to continue to live within our means.
Our major development projects are critical to Apache's future growth - and we
intend to fund them -- but we will adjust other capital spending to a level
that does not exceed operating cash flow."
During the third quarter, Apache received an average of $101.04 per barrel
of oil and $7.43 per thousand cubic feet of gas. Oil and gas prices were up
43 percent and 49 percent, respectively, above year-earlier levels, but both
were 8 percent below second-quarter prices.
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.
*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 third-quarter
results at 1 p.m. Central time on Oct. 30, 2008. The 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
3 p.m. on Oct. 30. To access the telephone playback, dial (719) 457-0820 and
provide Apache's confirmation code, 4705013.
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 2007 Form
10-K and on our Web site. 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 For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
REVENUES AND OTHER:
Oil and gas
production revenues $3,368,882 $2,498,594 $10,450,949 $6,965,692
Other (3,998) 6,364 1,867 14,685
3,364,884 2,504,958 10,452,816 6,980,377
COSTS AND EXPENSES:
Depreciation,
depletion and
amortization 600,887 600,796 1,849,044 1,722,816
Asset retirement
obligation accretion 24,970 24,436 77,146 72,634
Lease operating
expenses 488,166 409,528 1,389,542 1,198,302
Gathering and
transportation 42,375 34,887 123,118 100,585
Taxes other than
income 304,280 139,461 845,406 393,222
General and
administrative 57,561 61,405 218,856 200,065
Financing costs, net 33,291 60,367 116,594 165,788
1,551,530 1,330,880 4,619,706 3,853,412
INCOME BEFORE INCOME
TAXES 1,813,354 1,174,078 5,833,110 3,126,965
Current income tax
provision 305,735 200,878 1,495,641 684,458
Deferred income tax
provision 316,794 359,852 679,902 702,672
NET INCOME 1,190,825 613,348 3,657,567 1,739,835
Preferred stock
dividends 1,420 1,420 4,260 4,260
INCOME ATTRIBUTABLE TO
COMMON STOCK $1,189,405 $611,928 $3,653,307 $1,735,575
NET INCOME PER COMMON
SHARE:
Basic $3.55 $1.84 $10.93 $5.23
Diluted $3.52 $1.83 $10.84 $5.19
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 334,825 332,668 334,145 331,903
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
COSTS INCURRED: (1)
North America
exploration and
development $960,624 $647,266 $2,505,259 $2,029,302
International
exploration and
development 641,028 491,381 1,932,257 1,425,624
$1,601,652 $1,138,647 $4,437,516 $3,454,926
Oil and gas property
acquisitions $4,863 $17,025 $155,658 $1,050,019
(1) Includes noncash
asset retirement
costs and capitalized
interest as follows:
Capitalized
interest $18,674 $16,383 $53,730 $54,057
Asset retirement
costs $178,866 $28,369 $350,372 $155,197
September 30, December 31,
2008 2007
BALANCE SHEET DATA:
Cash and Cash Equivalents $1,644,604 $125,823
Other Current Assets 2,527,688 2,626,428
Property and Equipment, net 28,118,818 25,231,593
Restricted Cash 13,844 -
Goodwill 189,252 189,252
Other Assets 498,226 461,555
Total Assets $32,992,432 $28,634,651
Current Liabilities $2,916,306 $2,665,016
Long-Term Debt 3,917,327 4,011,605
Deferred Credits and Other Noncurrent
Liabilities 7,395,693 6,580,051
Shareholders' Equity 18,763,106 15,377,979
Total Liabilities and Shareholders' Equity $32,992,432 $28,634,651
Common shares outstanding at end of period 334,670 332,927
APACHE CORPORATION
FINANCIAL INFORMATION
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
FINANCIAL DATA (In
thousands, except per
share data):
Revenues and other $3,364,884 $2,504,958 $10,452,816 $6,980,377
Income Attributable
to Common Stock $1,189,405 $611,928 $3,653,307 $1,735,575
Basic Net Income Per
Common Share $3.55 $1.84 $10.93 $5.23
Diluted Net Income
Per Common Share $3.52 $1.83 $10.84 $5.19
Weighted Average
Common Shares
Outstanding 334,825 332,668 334,145 331,903
Diluted Shares
Outstanding 337,894 335,117 337,151 334,086
PRODUCTION AND PRICING DATA:
OIL VOLUME - Barrels
per day
United States 80,284 97,025 93,622 87,660
Canada 16,655 18,451 17,247 18,838
Egypt 64,803 60,395 64,082 60,219
Australia 7,083 14,685 8,286 14,308
North Sea 60,856 48,888 58,740 52,572
Argentina 12,729 11,708 12,342 11,266
Total 242,410 251,152 254,319 244,863
AVERAGE OIL PRICE PER
BARREL
United States $93.69 $67.70 $91.48 $61.75
Canada 111.81 73.95 108.10 63.74
Egypt 105.60 74.04 110.01 66.50
Australia 99.66 76.65 111.86 73.30
North Sea 113.56 73.18 110.08 65.21
Argentina 50.95 49.70 48.76 45.52
Total 101.04 70.43 100.17 63.74
NATURAL GAS VOLUME -
Mcf per day
United States 635,891 763,693 712,529 768,520
Canada 349,000 386,659 355,834 386,312
Egypt 287,231 241,919 254,786 239,951
Australia 54,726 194,520 124,888 195,242
North Sea 2,697 1,721 2,604 1,851
Argentina 217,091 196,168 193,257 203,524
Total 1,546,636 1,784,680 1,643,898 1,795,400
AVERAGE NATURAL GAS
PRICE PER MCF
United States $9.96 $6.59 $9.64 $6.95
Canada 8.70 5.54 8.63 6.25
Egypt 5.62 4.72 5.68 4.42
Australia 2.36 1.93 2.18 1.83
North Sea 27.17 16.98 21.88 12.80
Argentina 1.41 0.93 1.53 1.03
Total 7.43 4.99 7.30 5.24
NGL VOLUME - Barrels
per day
United States 5,450 7,766 6,636 7,677
Canada 2,034 2,253 2,046 2,199
Argentina 3,005 2,794 2,877 2,749
Total 10,489 12,813 11,559 12,625
AVERAGE NGL PRICE
PER BARREL
United States $72.82 $47.18 $64.49 $41.64
Canada 63.77 40.39 58.62 37.05
Argentina 36.63 37.74 38.81 35.07
Total 60.70 43.92 57.06 39.41
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
excludes certain items that management believes affect the comparability of
operating results. The following provides the reasons adjusted earnings is a
meaningful measure:
-- Management uses adjusted earnings to evaluate the company's operational
trends and performance relative to other oil and gas producing companies.
-- Management believes this presentation may be useful to investors who
follow the practice of some industry analysts who adjust reported company
earnings for items that may obscure underlying fundamentals and trends.
-- The reconciling items below are the types of items management believes
are frequently excluded by analysts when evaluating the operating trends and
comparability of the company's results.
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
Income Attributable to
Common Stock (GAAP) $1,189,405 $611,928 $3,653,307 $1,735,575
Adjustments:
Foreign currency
fluctuation impact on
deferred tax expense (113,169) 115,180 (125,248) 185,832
Impact of Canadian
Federal tax rate
reductions - - - (17,074)
Adjusted Earnings
(Non-GAAP) $1,076,236 $727,108 $3,528,059 $1,904,333
Adjusted Earnings Per
Share (Non-GAAP)
Basic $3.21 $2.19 $10.56 $5.74
Diluted $3.19 $2.17 $10.46 $5.70
Average Number of Common
Shares
Basic 334,825 332,668 334,145 331,903
Diluted 337,894 335,117 337,151 334,086
Reconciliation of net cash provided by operating activities to cash from
operations before changes in operating assets and liabilities:
The press release discusses Apache's cash from operations before changes
in operating assets and liabilities. It is presented because management
believes the information is useful for investors because it is used internally
and widely accepted by those following the oil and gas industry as a financial
indicator of a company's ability to generate cash to internally fund
exploration and development activities, fund dividend programs, and service
debt. It is also used by research analysts to value and compare oil and gas
exploration and production companies, and is frequently included in published
research when providing investment recommendations. Cash from operations
before changes in operating assets and liabilities, therefore, is an
additional measure of liquidity, but is not a measure of financial performance
under GAAP and should not be considered as an alternative to cash flows from
operating, investing, or financing activities.
The following table reconciles net cash provided by operating activities
to cash from operations before changes in operating assets and liabilities.
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
Net cash provided by
operating activities $2,290,654 $1,427,467 $6,028,567 $3,877,472
Changes in operating
assets and liabilities (167,073) 190,511 259,447 399,987
Cash from operations
before changes in
operating assets and
liabilities $2,123,581 $1,617,978 $6,288,014 $4,277,459
APA-F
