Apache Production Surges 25% in First Quarter to 732,000 boe Per Day

Apache Production Surges 25% in First Quarter to 732,000 boe Per Day

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Quarterly earnings top $1.1 billion or $2.86 per diluted share; cash flow exceeds $2.2 billion

Apr 28, 2011, 08:15 ET

HOUSTON, April 28, 2011 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported production of 732,000 barrels of oil equivalent (boe) per day and earnings of $1.1 billion, or $2.86 per diluted share, for the three-month period ending March 31, 2011. These compare with production of 586,000 boe per day and net income of $705 million, or $2.08 per diluted share, for the same period in the prior year.

"Apache is beginning the year with a solid, strong performance," said G. Steven Farris, chairman and chief executive officer. "Despite a number of challenges, our diversified portfolio of assets delivered exceptional earnings and operating results. Liquids production increased 57,000 barrels to 358,000 barrels per day, which enabled Apache to achieve stand-out earnings and cash flow as a leading beneficiary of rising oil prices."

Higher oil prices and production from new wells drilled during the quarter and assets acquired during 2010 combined to increase revenues to $3.9 billion, up from $2.7 billion last year. Cash from operations before changes in operating assets and liabilities* increased 43 percent from the prior year to $2.2 billion. Excluding certain items that management believes affect the comparability of operating results, Apache reported adjusted earnings* of $1.1 billion in first quarter 2011 compared with $712 million in the year-earlier period. On a per-share basis, adjusted earnings were $2.90 in the first quarter compared with $2.10 per diluted share in the prior-year period.

Liquid hydrocarbons represented 49 percent of production and 77 percent of revenues. Approximately 60 percent of the company's oil production came from operations outside North America and received in excess of a $10 premium per barrel compared with domestic production benchmarked to West Texas Intermediate prices.

On the operational front, the company achieved several milestones. These include:

Apache's most prolific development well in the Forties field (North Sea), which came online at approximately 11,800 barrels of oil per day.
In the Permian Basin, Apache is operating 24 rigs, up nearly five-fold from a year ago. Targeting primarily oil objectives, Apache drilled 110 wells including 15 horizontals during the first quarter.
Since drilling the first-ever horizontal Hogshooter well last year, Apache has drilled six wells into this oil-rich segment of the Anadarko basin's Granite Wash formation. To date, every well has tested in excess of 1,000 barrels of oil and 2 million cubic feet of gas per day.
The company's first operated deepwater production in the Gulf of Mexico with start-up at the Balboa field.
Offshore Australia, Apache's Zola discovery well encountered 410 feet of net gas pay.
In Egypt, Apache operated 22 rigs during the quarter, drilling 33 wells, including the company's first wells in the Tayim development lease in West Kalabsha producing from deeper Paleozoic pay. Apache's production remained online throughout the quarter, increasing sequentially from the previous three months.

"We continue to strengthen our land position, both in North America and internationally. Our LNG initiatives, Kitimat in Canada and Wheatstone in Australia, are steadily progressing toward project sanction with their respective joint venture partnerships," Farris said.

"Apache's opportunity set has never been more robust. We have a deep backlog of exploitation opportunities across our portfolio. In addition to our legacy plays in core areas, we have other potentially large-scale, long-life assets such as deepwater, LNG, and unconventional plays that can provide lasting, long-term value to our shareholders."

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, operational updates and investor information, and copies of all press releases on its Web site, www.apachecorp.com.

*Cash from operations before changes in operating assets and liabilities and adjusted earnings are non-GAAP measures. Please see reconciliations below. For supplemental and non-GAAP information, please go to http://www.apachecorp.com/financialinfo.

NOTE: Apache will conduct a conference call to discuss its first-quarter 2011 results at 1 p.m. Central time on Thursday, April 28. The call will be webcast from Apache's Web site, 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 April 28. To access the telephone playback, dial 800-642-1687 or 706-645-9291 for international calls and provide Apache's confirmation code, 21269081.

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. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," and similar references to future periods. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties. These risks include, but are not limited to the volatility of oil and natural gas prices, uncertainties inherent in estimating oil and natural gas reserves, drilling risks, and other risks, uncertainties and factors discussed in our most recently filed Annual Report on Form 10-K/A, 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. Unless legally required, Apache assumes no duty to update these statements as of any future date.

Effective January 1, 2010, the United States Securities and Exchange Commission (SEC) now permits oil and gas companies, in their filings with the SEC, to disclose not only "proved" reserves, but also "probable" reserves as well as "possible" reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this release that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC's latest reserve reporting guidelines. Investors are urged to consider closely the disclosure in Apache's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2010, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary).

APA-F

APACHE CORPORATION
FINANCIAL INFORMATION
(In millions, except per share data)

		For the Quarter
		Ended March 31,
		2011	2010

REVENUES AND OTHER:
	Oil and gas production revenues	$ 3,878	$ 2,693
	Other	47	(20)
		3,925	2,673

COSTS AND EXPENSES:
	Depreciation, depletion and amortization	936	639
	Asset retirement obligation accretion	37	24
	Lease operating expenses	623	440
	Gathering and transportation	76	40
	Taxes other than income	164	177
	General and administrative	112	87
	Merger, acquisitions and transition	5	-
	Financing costs, net	45	59
		1,998	1,466

INCOME BEFORE INCOME TAXES		1,927	1,207
	Current income tax provision	643	343
	Deferred income tax provision	150	159

NET INCOME		1,134	705
	Preferred stock dividends	19	-

INCOME ATTRIBUTABLE TO COMMON STOCK		$ 1,115	$ 705

NET INCOME PER COMMON SHARE:
	Basic	$ 2.91	$ 2.09
	Diluted	$ 2.86	$ 2.08

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		383	337

DILUTED SHARES OUTSTANDING		397	339

APACHE CORPORATION
FINANCIAL INFORMATION
(In millions)

				For the Quarter
				Ended March 31,
				2011	2010
CAPITAL EXPENDITURES (1):
	Exploration & Development Costs
		United States		$ 615	$ 297
		Canada		266	203
			North America	881	500
		Egypt		193	166
		Australia		162	165
		North Sea		210	94
		Argentina		69	37
		Chile		-	10
			International	634	472
			Worldwide Exploration & Development Costs	$ 1,515	$ 972

	Gathering, Transmission and Processing Facilities
		Canada		$ 42	$ 33
		Egypt		29	24
		Australia		51	56
		Argentina		-	1
			Total Gathering, Transmission and Processing	$ 122	$ 114

	Capitalized Interest			$ 60	$ 17

	Capital Expenditures, excluding acquisitions			$ 1,697	$ 1,103

	Acquisitions			$ 11	$ 5

(1) Accrual basis

		March 31,	December 31,
		2011	2010

BALANCE SHEET DATA:
	Cash and Cash Equivalents	$ 356	$ 134
	Other Current Assets	3,645	3,346
	Property and Equipment, net	39,046	38,151
	Goodwill	1,032	1,032
	Other Assets	787	762
	Total Assets	$ 44,866	$ 43,425

	Short-Term Debt	$ 30	$ 46
	Other Current Liabilities	3,926	3,478
	Long-Term Debt	8,130	8,095
	Deferred Credits and Other Noncurrent Liabilities	7,582	7,429
	Shareholders' Equity	25,198	24,377
	Total Liabilities and Shareholders' Equity	$ 44,866	$ 43,425

	Common shares outstanding at end of period	383	382

APACHE CORPORATION
FINANCIAL INFORMATION

				For the Quarter
				Ended March 31,
				2011	2010

PRODUCTION DATA:
OIL VOLUME - Barrels per day
	Central			5,046	2,371
	Permian			48,280	35,875
	GOM Deepwater			5,322	2,202
	GOM Shelf			46,558	43,664
	GC Onshore			8,517	4,643
		United States		113,723	88,755
	Canada			14,704	14,330
		North America		128,427	103,085
	Egypt			108,876	90,746
	Australia			34,720	27,090
	North Sea			46,968	57,847
	Argentina			9,617	9,921
		International		200,181	185,604
			Total	328,608	288,689

NATURAL GAS VOLUME - Mcf per day
	Central			215,612	190,481
	Permian			159,005	100,626
	GOM Deepwater			60,589	32,253
	GOM Shelf			348,845	293,969
	GC Onshore			74,095	54,490
		United States		858,146	671,819
	Canada			642,729	313,537
		North America		1,500,875	985,356
	Egypt			371,514	361,986
	Australia			182,922	207,294
	North Sea			1,901	2,563
	Argentina			188,092	154,723
		International		744,429	726,566
			Total	2,245,304	1,711,922

NGL VOLUME - Barrels per day
	Central			787	493
	Permian			9,341	1,452
	GOM Deepwater			1,129	649
	GOM Shelf			6,407	3,189
	GC Onshore			1,588	1,060
		United States		19,252	6,843
	Canada			6,545	1,734
		North America		25,797	8,577
	Egypt			228	-
	Argentina			3,055	3,291
		International		3,283	3,291
			Total	29,080	11,868

BOE per day
	Central			41,768	34,610
	Permian			84,121	54,098
	GOM Deepwater			16,549	8,226
	GOM Shelf			111,106	95,848
	GC Onshore			22,455	14,785
		United States		275,999	207,567
	Canada			128,370	68,320
		North America		404,369	275,887
	Egypt			171,023	151,077
	Australia			65,207	61,639
	North Sea			47,285	58,275
	Argentina			44,021	38,999
		International		327,536	309,990
			Total	731,905	585,877

APACHE CORPORATION
FINANCIAL INFORMATION

				For the Quarter
				Ended March 31,
				2011	2010

PRICING DATA:
AVERAGE OIL PRICE PER BARREL
	Central			$ 89.33	$ 75.24
	Permian			88.72	75.06
	GOM Deepwater			97.61	76.30
	GOM Shelf			98.84	76.87
	GC Onshore			97.73	77.90
		United States (1)		89.72	74.33
	Canada			87.21	75.39
		North America (1)		89.43	74.47
	Egypt (1)			107.14	76.49
	Australia (1)			105.89	74.94
	North Sea (2)			100.89	74.34
	Argentina			60.36	57.81
		International (1, 2)		103.21	74.60
			Total (1, 2)	97.83	74.55

AVERAGE NATURAL GAS PRICE PER MCF
	Central			$ 4.42	$ 5.73
	Permian			4.99	7.12
	GOM Deepwater			4.10	5.19
	GOM Shelf			4.53	5.78
	GC Onshore			4.51	5.69
		United States (1)		4.94	6.06
	Canada (1)			4.54	5.29
		North America (1)		4.77	5.82
	Egypt			4.44	3.57
	Australia			2.50	2.22
	North Sea			20.34	18.31
	Argentina			2.18	2.17
		International		3.43	2.94
			Total (1)	4.32	4.60

AVERAGE NGL PRICE PER BARREL
	Central			$ 48.34	$ 50.06
	Permian			45.52	44.50
	GOM Deepwater			37.69	54.21
	GOM Shelf			42.41	54.14
	GC Onshore			55.85	54.83
		United States		44.99	51.91
	Canada			40.12	40.54
		North America		43.76	49.61
	Egypt			63.35	-
	Argentina			30.51	34.60
		International		32.79	34.60
			Total	42.52	45.45

(1) Prices reflect the impact of financial derivative hedging activities.
(2) Prices reflect the impact of the North Sea fixed-price oil sales contract.

APACHE CORPORATION
FINANCIAL INFORMATION
(In millions, 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,
		2011	2010

Income Attributable to Common Stock (GAAP)		$ 1,115	$ 705

Adjustments:
	Foreign currency fluctuation impact on deferred tax expense	12	7
	Merger, acquisitions and transition costs, net of tax	4	-
Adjusted Earnings (Non-GAAP)		$ 1,131	$ 712

Net Income per Common Share - Diluted (GAAP)		$ 2.86	$ 2.08

Adjustments:
	Foreign currency fluctuation impact on deferred tax expense	0.03	0.02
	Merger, acquisitions and transition costs, net of tax	0.01	-
Adjusted Earnings Per Share - Diluted (Non-GAAP)		$ 2.90	$ 2.10

		For the Quarter
		Ended March 31,
		2011	2010
Net cash provided by operating activities		$ 1,979	$ 1,154
Changes in operating assets and liabilities		264	415
Cash from operations before changes in
	operating assets and liabilities	$ 2,243	$ 1,569

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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.