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Record Production Fuels Apache's Second-Quarter Results

Date : 07/30/2009 @ 8:45AM
Source : PR Newswire (US)
Stock : (APA)
Quote : 101.32  0.05 (0.05%) @ 4:00AM
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Record Production Fuels Apache's Second-Quarter Results

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HOUSTON, July 30 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE:APA) ( NASDAQ: APA) today reported record worldwide oil and natural gas production of 587,400 barrels of oil equivalent (boe) per day in the second quarter, up 7.1 percent from the first quarter and 6.5 percent from the prior-year period. Apache reported net income of $443 million, or $1.31 per diluted common share, compared with $1.4 billion, or $4.28 per share, in the prior-year period. Second-quarter cash from operations before changes in operating assets and liabilities* totaled $1.26 billion, compared with $2.3 billion in the prior-year period. Apache's second-quarter adjusted earnings,* which exclude certain items that impact the comparability of operating results, totaled $474 million, or $1.41 per share, compared to adjusted earnings of $1.44 billion, or $4.28 per share, in the prior-year period. "The strength of Apache's geological and geographical diversity, along with our balanced product mix, fueled our second-quarter results," said G. Steven Farris, chairman and chief executive officer. "Initial production from development projects in the Gulf of Mexico and the Western Desert of Egypt, combined with rebounding oil prices, more than offset the continuing deterioration of North American natural gas prices during the quarter," he said. "With continued drilling successes in Egypt, the Gulf and the North Sea, Apache has strong momentum going into the second half of the year." Oil production comprised 48 percent of Apache's worldwide output, but 72 percent of oil and gas revenues. The company's oil and gas revenue per boe increased 19 percent from the first quarter. Apache received an average of $58.15 per barrel of oil, up 37 percent from the first quarter, and $3.48 per thousand cubic feet of gas, down 9 percent from the first quarter. Prices for both commodities were substantially below year-earlier levels. "Our regions' focus on driving down lifting costs has resulted in lower costs on a boe basis for two quarters in a row, including a 6-percent decline from the first quarter to the second," Farris said. Recent drilling and operational highlights included: -- The Falcon-1x discovery in Egypt's Matruh Concession tested 4,400 barrels per day from the Lower Cretaceous Alam El Buieb formation, with production expected to commence in the third quarter. The well also tested an aggregate of 46 million cubic feet of gas (MMcf) and 2,368 barrels of condensate per day from two other zones that will not be produced until additional processing and transportation capacity is developed. -- The Hydra-5x, an appraisal well in Egypt's Shushan Concession, tested 21 MMcf and 3,744 barrels of condensate per day from the Jurassic Upper Safa formation. The Hydra field is expected to be developed after completion of a gas sales agreement with the Egyptian General Petroleum Corp. -- Three new horizontal wells in the Horn River shale gas play in northeast British Columbia had initial gross production rates of about 16 MMcf per day each, strengthening estimates that individual wells in the play potentially can recover about 10 billion cubic feet (Bcf) of natural gas. Apache and EnCana each have a 50-percent interest in a joint venture that holds approximately 425,000 acres at Horn River. -- In the North Sea, the Forties Charlie 6-3 well commenced production at a rate of 10,500 barrels per day. The well is the seventh development well brought on production at Forties in 2009; its initial production rate is the field's highest since 1994. -- In Egypt, Apache ramped up production through two new processing trains at the Salam gas plant and is expected to reach gross production capacity of 200 MMcf and 10,000 barrels of condensate per day during the third quarter. -- The deepwater Geauxpher Field at Garden Banks Block 462 - in water 2,700 feet deep about 150 miles off the Louisiana coast in the Gulf of Mexico - came on line May 15 and produced a total of 4.3 Bcf by June 30. The field is currently producing 105 MMcf per day from two wells. Apache has a 40-percent interest in the field. "Apache's strong financial position - with debt at 25 percent of capitalization and $772 million of cash on the balance sheet - provides many avenues for continued growth, either through our deep inventory of drilling prospects or through acquisitions," Farris 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. *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 second-quarter results at 1 p.m. Central time on Thursday, July 30. 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 playback by telephone for one week beginning at approximately 3 p.m. on July 30. To access the telephone playback, dial (719) 457-0820 and provide Apache's confirmation code, 4860120. 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. APA-F APACHE CORPORATION FINANCIAL INFORMATION (In thousands, except per share data) For the Quarter For the Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- REVENUES AND OTHER: Oil and gas production revenues $2,074,344 $3,904,118 $3,677,958 $7,082,067 Other 19,034 (3,927) 49,245 5,865 ------ ------ ------ ----- 2,093,378 3,900,191 3,727,203 7,087,932 --------- --------- --------- --------- COSTS AND EXPENSES: Depreciation, depletion and amortization Recurring 573,359 627,668 1,153,976 1,248,157 Additional - - 2,818,161 - Asset retirement obligation accretion 26,483 25,679 53,221 52,176 Lease operating expenses 405,273 446,738 802,762 901,376 Gathering and transportation 33,479 39,767 66,818 80,743 Taxes other than income 115,941 298,548 203,280 541,126 General and administrative 90,905 78,872 175,951 161,295 Financing costs, net 61,155 39,050 119,742 83,303 ------ ------ ------- ------ 1,306,595 1,556,322 5,393,911 3,068,176 --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES 786,783 2,343,869 (1,666,708) 4,019,756 Current income tax provision 218,247 702,106 220,741 1,189,906 Deferred income tax provision (benefit) 123,816 196,534 (575,229) 363,108 ------- ------- -------- ------- NET INCOME (LOSS) 444,720 1,445,229 (1,312,220) 2,466,742 Preferred stock dividends 1,420 1,420 2,840 2,840 ----- ----- ----- ----- INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $443,300 $1,443,809 $(1,315,060) $2,463,902 ======== ========== =========== ========== NET INCOME (LOSS) PER COMMON SHARE: Basic $1.32 $4.32 $(3.92) $7.38 ===== ===== ====== ===== Diluted $1.31 $4.28 $(3.92) $7.32 ===== ===== ====== ===== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 335,637 334,208 335,372 333,801 ======= ======= ======= ======= APACHE CORPORATION FINANCIAL INFORMATION (In thousands, except per share data) For the Quarter For the Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- FINANCIAL DATA: Revenues and other $2,093,378 $3,900,191 $3,727,203 $7,087,932 ========== ========== ========== ========== Income (Loss) Attributable to Common Stock $443,300 $1,443,809 $(1,315,060) $2,463,902 ======== ========== =========== ========== Basic Net Income (Loss) Per Common Share $1.32 $4.32 $(3.92) $7.38 ===== ===== ====== ===== Diluted Net Income (Loss) Per Common Share $1.31 $4.28 $(3.92) $7.32 ===== ===== ====== ===== Weighted Average Common Shares Outstanding 335,637 334,208 335,372 333,801 ======= ======= ======= ======= Diluted Shares Outstanding 337,365 337,676 335,372 336,802 ======= ======= ======= ======= June 30, December 31, 2009 2008 ---- ---- BALANCE SHEET DATA: Cash and Cash Equivalents $771,557 $1,181,450 Short-term Investments - 791,999 Other Current Assets 2,713,528 2,477,525 Property and Equipment, net 22,290,308 23,958,517 Restricted Cash - 13,880 Goodwill 189,252 189,252 Other Assets 437,282 573,862 ------- ------- Total Assets $26,401,927 $29,186,485 =========== =========== Current Liabilities $1,808,355 $2,520,435 Long-Term Debt 4,954,667 4,808,975 Deferred Credits and Other Noncurrent Liabilities 4,680,210 5,348,354 Shareholders' Equity 14,958,695 16,508,721 ---------- ---------- Total Liabilities and Shareholders' Equity $26,401,927 $29,186,485 =========== =========== Common shares outstanding at end of period 335,747 334,710 For the Quarter For the Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- COSTS INCURRED: (1) North America exploration and development $376,497 $801,279 $881,813 $1,544,635 International exploration and development 506,229 682,766 993,011 1,291,229 ------- ------- ------- --------- $882,726 $1,484,045 $1,874,824 $2,835,864 ======== ========== ========== ========== Oil and gas property acquisitions $188,480 $142,848 $248,505 $150,795 ======== ======== ======== ======== (1) Includes noncash asset retirement costs and capitalized interest as follows: Capitalized interest $14,972 $17,878 $30,981 $35,056 Asset retirement costs $34,098 $86,434 $93,703 $171,506 APACHE CORPORATION FINANCIAL INFORMATION For the Quarter For the Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- PRODUCTION AND PRICING DATA: OIL VOLUME - Barrels per day United States 88,530 100,049 87,642 100,364 Canada 15,833 17,746 16,090 17,547 ------ ------ ------ ------ North America 104,363 117,795 103,732 117,911 ------- ------- ------- ------- Egypt 95,359 64,886 89,475 63,718 Australia 10,478 8,367 9,164 8,894 North Sea 59,688 56,570 60,089 57,670 Argentina 11,948 12,067 12,192 12,146 ------ ------ ------ ------ International 177,473 141,890 170,920 142,428 ------- ------- ------- ------- Total 281,836 259,685 274,652 260,339 ======= ======= ======= ======= AVERAGE OIL PRICE PER BARREL United States $57.00 $97.64 $49.95 $90.59 Canada 55.17 119.16 46.49 106.33 North America 56.72 100.88 49.41 92.93 Egypt 60.30 126.20 51.90 112.28 Australia 63.01 133.79 49.74 116.78 North Sea 58.77 121.10 51.51 108.23 Argentina 46.17 50.12 46.73 47.61 International 58.99 118.14 51.28 105.41 Total 58.15 110.32 50.57 99.76 NATURAL GAS VOLUME - Mcf per day United States 662,834 758,524 637,894 751,269 Canada 373,796 357,828 365,551 359,289 ------- ------- ------- ------- North America 1,036,630 1,116,352 1,003,445 1,110,558 --------- --------- --------- --------- Egypt 376,737 233,793 347,443 238,385 Australia 161,069 129,531 151,607 160,355 North Sea 2,645 2,507 2,663 2,556 Argentina 192,542 197,284 192,250 181,209 ------- ------- ------- ------- International 732,993 563,115 693,963 582,505 ------- ------- ------- ------- Total 1,769,623 1,679,467 1,697,408 1,693,063 ========= ========= ========= ========= AVERAGE NATURAL GAS PRICE PER MCF United States $3.88 $10.62 $4.21 $9.50 Canada 3.86 9.63 4.26 8.59 North America 3.88 10.30 4.23 9.21 Egypt 3.85 6.26 3.73 5.72 Australia 1.82 2.17 1.71 2.14 North Sea 12.24 21.90 9.82 19.05 Argentina 1.89 1.39 1.94 1.60 International 2.92 3.69 2.82 3.51 Total 3.48 8.09 3.65 7.25 NGL VOLUME - Barrels per day United States 5,483 7,231 5,198 7,236 Canada 2,052 1,868 2,082 2,052 ----- ----- ----- ----- North America 7,535 9,099 7,280 9,288 Argentina 3,091 2,905 3,114 2,812 ----- ----- ----- ----- Total 10,626 12,004 10,394 12,100 ====== ====== ====== ====== AVERAGE NGL PRICE PER BARREL United States $27.36 $65.27 $25.90 $61.32 Canada 24.23 59.26 22.40 56.05 North America 26.50 64.04 24.90 60.15 Argentina 15.91 32.31 16.51 39.98 Total 23.42 56.36 22.39 55.46 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 For the Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- Income (Loss) Attributable to Common Stock (GAAP) $443,300 $1,443,809 $(1,315,060) $2,463,902 Adjustments: Foreign currency fluctuation impact on deferred tax expense 31,164 281 26,350 (12,079) Additional depletion, net of tax - - 1,981,398 - --- --- --------- --- Adjusted Earnings (Non- GAAP) $474,464 $1,444,090 $692,688 $2,451,823 ======== ========== ======== ========== Adjusted Earnings Per Share (Non-GAAP) Basic $1.41 $4.32 $2.07 $7.35 ===== ===== ===== ===== Diluted $1.41 $4.28 $2.05 $7.28 ===== ===== ===== ===== Average Number of Common Shares Basic 335,637 334,208 335,372 333,801 ======= ======= ======= ======= Diluted 337,365 337,676 337,198 336,802 ======= ======= ======= ======= 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 Six Months Ended June 30, Ended June 30, 2009 2008 2009 2008 ---- ---- ---- ---- Net cash provided by operating activities $823,513 $1,929,509 $1,366,729 $3,737,913 Changes in operating assets and liabilities 436,071 390,240 875,914 426,520 ------- ------- ------- ------- Cash from operations before changes in operating assets and liabilities $1,259,584 $2,319,749 $2,242,643 $4,164,433 ========== ========== ========== ========== DATASOURCE: Apache Corporation CONTACT: Media, Bill Mintz, +1-713-296-7276, or Robert Dye, +1-713-296-6662, or Investors, Tom Chambers, +1-713-296-6685, all of Apache Corporation Web Site: http://www.apachecorp.com/

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