Apache Reports Higher Third-Quarter Earnings Driven By 35% Increase In Onshore North America Liquids Production

- GAAP earnings of $0.75 per share/$300 million; adjusted earnings* of $2.32 per share/$932 million

- $2.0 billion of cash flow from operations; $2.7 billion before changes in working capital*

- $700 million in shares repurchased to date under stock buyback program

News provided by

Nov 07, 2013, 08:00 ET

HOUSTON, Nov. 7, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) today announced third-quarter 2013 earnings of $300 million or $0.75 per diluted common share and adjusted earnings,* which exclude certain items that impact the comparability of results, of $932 million or $2.32 per share. For the same period in the prior year, Apache reported earnings of $161 million or $0.41 per diluted common share and adjusted earnings of $861 million or $2.16 per share. Net cash provided by operating activities came to approximately $2 billion, with cash from operations before changes in operating assets and liabilities* totaling $2.7 billion, up from $2.4 billion in the year-ago period.

"The strength of our financial performance this quarter is a testament to the effectiveness of our strategy to rebalance our portfolio and drive returns by achieving the right mix of predictable production growth from our North American onshore assets combined with the substantial free cash flow generation from our international operations," said G. Steven Farris, chairman and chief executive officer at Apache. "Apache's focused drilling program in North America is yielding significant production growth. Our Permian and Central regions are the main drivers of this higher production, adding nearly 13,000 barrels per day of oil and natural gas liquids from the second quarter. These two regions represented 35 percent of the company's total worldwide liquids production, up from 27 percent a year ago, contributing 149,000 barrels per day during the third quarter. Going forward, our international regions will be the primary source of excess cash flow to fund our next growth cycle.

"We also made significant progress rebalancing our portfolio to provide more predictable and consistent growth. During the quarter we closed on transactions in the Gulf of Mexico Shelf and Canada, and announced a significant partnership with Sinopec in Egypt, which we expect to close by the end of this year," Farris said. "As previously announced, sale proceeds are being used to reduce our debt and buyback shares. We've already repurchased nearly 8 million shares of Apache common stock, and we're on track to pay down $2 billion in debt by yearend."

Production and operating highlights

Highlights from the third quarter and more recent drilling include:

Total worldwide net daily production of oil, natural gas, and natural gas liquids (NGLs) averaged 784,000 barrels of oil equivalent (boe) per day, with liquids production comprising 54 percent of the total.
The Permian Region achieved record production of 132,000 boe per day, up 7 percent from the preceding period and up 18 percent from a year ago. In the region's Barnhart area, six rigs were active throughout the quarter drilling 20 Middle and Upper Wolfcamp Shale laterals. Apache holds 345,000 net acres prospective for Wolfcamp Shale development with 971 identified locations. During October, the region achieved a milestone with half of its operated rigs drilling horizontal wells.
Apache's Central Region increased production to 95,000 boe per day, up 4 percent from the preceding quarter and 31 percent from the third quarter of 2012. Liquids production increased to 49,000 barrels per day, up 94 percent from the same period in the prior year, and now comprises 52 percent of the region's production. Drilling is concentrated in the stacked pays of the Anadarko Basin targeting formations such as the Granite Wash and Tonkawa, where Apache has identified thousands of locations on its prolific acreage position.
In its international regions, Apache commenced production from the Macedon development in Western Australia. This includes four offshore production wells, transmission lines and an onshore processing plant. Apache holds a 28.57 percent working interest in Macedon, with gross sales ramped up to 212 million cubic feet (MMcf) per day. In the North Sea, a second development well commenced production from the Tonto field, testing at an initial 24-hour rate of 8,300 barrels of oil per day. Apache holds a 100 percent working interest in Tonto.

Apache's third-quarter 2013 operations supplement includes drilling, production and other updates for each of its regions, and can be accessed at www.apachecorp.com/financialdata.

Oil and gas prices

Apache's mix of hydrocarbon production during the third quarter 2013 included approximately 46 percent crude oil and 9 percent natural gas liquids (NGLs). Due to the premium prices received for crude oil and NGLs, these products contributed 84 percent of the company's revenue during the period.

Worldwide, Apache received an average price of $107.50 per barrel of oil during the third quarter, compared with $102.62 per barrel in the same period the prior year. Apache received an average price of $3.49 per thousand cubic feet (Mcf) of natural gas, compared with $3.76 per Mcf in the prior-year period.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom, Australia and Argentina. Apache posts announcements, operational updates, investor information and press releases on its website, www.apachecorp.com.

* Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below. For supplemental financial and operational data and non-GAAP information, please go to http://www.apachecorp.com/financialdata.

Conference call

Apache will conduct a conference call to discuss its results and review its portfolio at 1 p.m. Central time on Thursday, Nov. 7. The call will be webcast on Apache's website, www.apachecorp.com. A replay of the webcast will be archived on Apache's website and available for delayed playback by telephone for one week beginning at approximately 4 p.m. Central time on Nov. 7. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84102630.

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" 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 drilling plans and production expectations, asset sales and monetizations and share repurchases. The transaction with Sinopec is subject to customary closing conditions and may not be completed for the amount expected, in the anticipated time frame, or at all. 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 2012 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.

Website: www.apachecorp.com

APACHE CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(In millions, except per share data)



		For the Quarter		For the Nine Months
		Ended September 30,		Ended September 30,
		2013	2012	2013	2012

REVENUES AND OTHER:
	Oil revenues	$ 3,538	$ 3,220	$ 9,989	$ 9,824
	Gas revenues	692	788	2,196	2,339
	NGL revenues	179	133	489	391
	Oil and gas production revenues	4,409	4,141	12,674	12,554
	Derivative instrument gains (losses), net	(422)	-	(275)	-
	Other	32	38	79	133
		4,019	4,179	12,478	12,687

COSTS AND EXPENSES:
	Depreciation, depletion and amortization
	Oil and gas property and equipment
	Recurring	1,330	1,206	3,906	3,535
	Additional	743	729	808	1,898
	Other assets	99	94	297	268
	Asset retirement obligation accretion	66	60	196	172
	Lease operating expenses	819	801	2,419	2,178
	Gathering and transportation	83	86	237	235
	Taxes other than income	185	167	610	627
	General and administrative	127	124	376	384
	Merger, acquisitions & transition	-	7	-	29
	Financing costs, net	51	40	155	125
		3,503	3,314	9,004	9,451

INCOME BEFORE INCOME TAXES		516	865	3,474	3,236
	Current income tax provision	410	544	1,191	1,729
	Deferred income tax provision (benefit)	(200)	141	225	174

NET INCOME		306	180	2,058	1,333
	Preferred stock dividends	6	19	44	57

INCOME ATTRIBUTABLE TO COMMON STOCK		$ 300	$ 161	$ 2,014	$ 1,276

NET INCOME PER COMMON SHARE:
	Basic	$ 0.75	$ 0.41	$ 5.11	$ 3.29
	Diluted	$ 0.75	$ 0.41	$ 5.06	$ 3.27

WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
	Basic	399	391	394	388
	Diluted	401	393	407	390

DIVIDENDS DECLARED PER COMMON SHARE		$ 0.20	$ 0.17	$ 0.60	$ 0.51

APACHE CORPORATION
SUMMARY OF CAPITAL COSTS INCURRED
(In millions)


				For the Quarter		For the Nine Months
				Ended September 30,		Ended September 30,
				2013	2012	2013	2012
CAPITAL EXPENDITURES (1):
	Exploration & Development Costs
		United States		$ 1,489	$ 1,422	$ 4,171	$ 3,608
		Canada		155	164	502	459
			North America	1,644	1,586	4,673	4,067
		Egypt		263	299	813	809
		Australia		284	265	911	518
		North Sea		217	283	647	703
		Argentina		60	65	145	222
		New Ventures - International		3	51	28	84
			International	827	963	2,544	2,336
			Worldwide Exploration & Development Costs	$ 2,471	$ 2,549	$ 7,217	$ 6,403

	Gathering, Transmission and Processing Facilities
		United States		$ 70	$ 13	$ 120	$ 57
		Canada		55	52	111	138
		Egypt		23	(22)	57	15
		Australia		201	89	534	338
		Argentina		3	3	7	12
			Total Gathering, Transmission and Processing	$ 352	$ 135	$ 829	$ 560

	Capitalized Interest			$ 93	$ 90	$ 276	$ 241

	Capital Expenditures, excluding Acquisitions			$ 2,916	$ 2,774	$ 8,322	$ 7,204

	Acquisitions			$ 8	$ 59	$ 318	$ 3,421

	(1) Accrual basis

APACHE CORPORATION
SUMMARY BALANCE SHEET INFORMATION
(In millions)

		September 30,	December 31,
		2013	2012

	Cash and Cash Equivalents	$ 1,251	$ 160
	Other Current Assets	4,765	4,802
	Property and Equipment, net	51,462	53,280
	Goodwill	1,369	1,289
	Other Assets	1,392	1,206
	Total Assets	$ 60,239	$ 60,737

	Short-Term Debt	$ 57	$ 990
	Other Current Liabilities	4,466	4,546
	Long-Term Debt	10,868	11,355
	Deferred Credits and Other Noncurrent Liabilities	11,867	12,515
	Shareholders' Equity	32,981	31,331
	Total Liabilities and Shareholders' Equity	$ 60,239	$ 60,737

	Common shares outstanding at end of period	404	392

APACHE CORPORATION
PRODUCTION INFORMATION


				For the Quarter		For the Nine Months
				Ended September 30,		Ended September 30,
				2013	2012	2013	2012

OIL VOLUME - Barrels per day
	Central			25,659	17,003	22,730	11,843
	Permian			73,910	60,822	70,229	58,573
	GOM Deepwater			7,564	6,982	7,675	6,342
	GOM Shelf			45,431	38,573	45,599	42,242
	GC Onshore			11,126	9,621	10,570	9,884
		United States		163,690	133,001	156,803	128,884
	Canada			18,573	15,075	18,112	15,311
		North America		182,263	148,076	174,915	144,195
	Egypt			89,294	97,546	89,530	98,648
	Australia			18,787	28,191	20,195	29,690
	North Sea			57,861	57,296	63,291	63,058
	Argentina			9,560	9,885	9,408	9,701
		International		175,502	192,918	182,424	201,097
			Total	357,765	340,994	357,339	345,292

NATURAL GAS VOLUME - Mcf per day
	Central			274,061	281,945	275,520	227,903
	Permian			190,192	180,610	188,803	179,648
	GOM Deepwater			11,804	41,267	22,562	45,333
	GOM Shelf			243,477	266,415	253,360	299,897
	GC Onshore			110,889	93,196	107,928	89,078
		United States		830,423	863,433	848,173	841,859
	Canada			529,402	604,442	523,163	617,530
		North America		1,359,825	1,467,875	1,371,336	1,459,389
	Egypt			350,504	329,793	357,747	354,856
	Australia			212,141	215,317	212,845	217,053
	North Sea			46,971	54,478	50,108	62,061
	Argentina			185,962	213,745	186,241	216,399
		International		795,578	813,333	806,941	850,369
			Total	2,155,403	2,281,208	2,178,277	2,309,758

NGL VOLUME - Barrels per day
	Central			23,437	8,305	22,006	5,271
	Permian			26,057	20,739	23,131	16,613
	GOM Deepwater			566	1,483	871	1,073
	GOM Shelf			5,234	6,663	6,288	5,345
	GC Onshore			2,216	1,886	2,343	2,083
		United States		57,510	39,076	54,639	30,385
	Canada			7,012	6,036	6,788	6,063
		North America		64,522	45,112	61,427	36,448
	North Sea			1,097	1,470	1,263	1,797
	Argentina			1,713	3,006	2,254	3,022
		International		2,810	4,476	3,517	4,819
			Total	67,332	49,588	64,944	41,267

BOE per day
	Central			94,773	72,298	90,657	55,097
	Permian			131,665	111,663	124,826	105,127
	GOM Deepwater			10,098	15,343	12,306	14,971
	GOM Shelf			91,245	89,639	94,114	97,570
	GC Onshore			31,823	27,039	30,901	26,813
		United States		359,604	315,982	352,804	299,578
	Canada			113,819	121,851	112,095	124,296
		North America		473,423	437,833	464,899	423,874
	Egypt			147,711	152,512	149,154	157,791
	Australia			54,144	64,078	55,669	65,866
	North Sea			66,787	67,845	72,905	75,198
	Argentina			42,266	48,515	42,702	48,790
		International		310,908	332,950	320,430	347,645
			Total	784,331	770,783	785,329	771,519

APACHE CORPORATION
PRICE INFORMATION


				For the Quarter		For the Nine Months
				Ended September 30,		Ended September 30,
				2013	2012	2013	2012

AVERAGE OIL PRICE PER BARREL
	Central			$ 101.90	$ 85.54	$ 93.71	$ 88.82
	Permian			104.52	87.49	93.53	90.71
	GOM Deepwater			108.07	102.46	107.91	106.10
	GOM Shelf			110.40	104.97	109.60	109.67
	GC Onshore			110.06	104.02	109.08	108.76
		United States ⁽¹⁾		105.82	93.38	99.35	96.53
	Canada			97.58	82.92	89.33	85.96
		North America ⁽¹⁾		104.98	92.32	98.31	95.41
	Egypt⁽¹⁾			112.61	113.72	107.73	112.02
	Australia⁽¹⁾			116.21	116.79	109.40	116.39
	North Sea⁽¹⁾			109.33	108.44	107.61	108.60
	Argentina			79.77	73.44	77.66	76.36
		International ⁽¹⁾		110.13	110.54	106.32	109.87
			Total⁽¹⁾	107.50	102.62	102.40	103.83

AVERAGE NATURAL GAS PRICE PER MCF
	Central			$ 3.61	$ 3.24	$ 3.75	$ 3.04
	Permian			3.66	3.07	3.76	3.20
	GOM Deepwater			3.35	3.18	3.29	2.82
	GOM Shelf			3.71	2.90	3.82	2.86
	GC Onshore			3.67	2.95	3.83	2.70
		United States ⁽¹⁾		3.75	3.63	3.86	3.63
	Canada ⁽¹⁾			2.87	3.33	3.20	3.23
		North America ⁽¹⁾		3.41	3.51	3.61	3.46
	Egypt			3.01	4.04	2.98	3.86
	Australia			3.98	4.76	4.54	4.45
	North Sea			10.29	8.65	10.37	8.67
	Argentina			2.76	2.78	2.91	2.84
		International		3.64	4.21	3.84	4.10
			Total ⁽¹⁾	3.49	3.76	3.69	3.70

AVERAGE NGL PRICE PER BARREL
	Central			$ 25.61	$ 24.28	$ 24.51	$ 27.74
	Permian			29.93	27.95	27.25	34.31
	GOM Deepwater			31.68	30.24	32.50	33.40
	GOM Shelf			30.52	31.10	28.66	33.71
	GC Onshore			30.06	37.42	30.80	41.28
		United States		28.25	28.25	26.55	33.51
	Canada			28.77	31.01	28.49	35.02
		North America		28.30	28.62	26.76	33.76
	North Sea			69.77	65.45	70.51	73.60
	Argentina			22.19	16.25	25.11	21.15
		International		40.77	32.41	41.41	40.71
			Total	28.82	28.96	27.56	34.57


	⁽¹⁾Prices reflect the impact of financial derivative hedging activities.

APACHE CORPORATION
NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)


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 Nine Months
		Ended September 30,		Ended September 30,
		2013	2012	2013	2012

Income Attributable to Common Stock (GAAP)		$ 300	$ 161	$ 2,014	$ 1,276

Adjustments:
	Oil & gas property write-downs, net of tax	478	539	520	1,409
	Commodity derivative mark-to-market, net of tax	213	-	88	-
	Deferred tax adjustments	(31)	-	15	-
	U.K. decommissioning tax rate adjustment	-	118	-	118
	Merger, acquisitions & transition, net of tax	-	4	-	17
	Unrealized foreign currency fluctuation impact on deferred tax expense	(28)	39	(98)	40
Adjusted Earnings (Non-GAAP)		$ 932	$ 861	$ 2,539	$ 2,860

Net Income per Common Share - Diluted (GAAP)		$ 0.75	$ 0.41	$ 5.06	$ 3.27

Adjustments:
	Oil & gas property write-downs, net of tax	1.18	1.33	1.28	3.49
	Commodity derivative mark-to-market, net of tax	0.53	-	0.22	-
	Deferred tax adjustments	(0.07)	-	0.03	-
	U.K. decommissioning tax rate adjustment	-	0.30	-	0.30
	Merger, acquisitions & transition, net of tax	-	0.02	-	0.05
	Unrealized foreign currency fluctuation impact on deferred tax expense	(0.07)	0.10	(0.24)	0.11
Adjusted Earnings Per Share - Diluted (Non-GAAP)		$ 2.32	$ 2.16	$ 6.35	$ 7.22


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,
		2013	2012	2013	2012
Net cash provided by operating activities		$ 1,978	$ 1,623	$ 7,358	$ 6,422
Changes in operating assets and liabilities		743	793	319	1,020
Cash from operations before changes in
	operating assets and liabilities	$ 2,721	$ 2,416	$ 7,677	$ 7,442

APA-F

SOURCE Apache Corporation

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Apache Reports Higher Third-Quarter Earnings Driven By 35% Increase In Onshore North America Liquids Production

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