Apache Reports Record Quarterly Production of 752,000 Boe/d

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Nov 03, 2011, 08:15 ET

HOUSTON, Nov. 3, 2011 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported production of 752,000 barrels of oil equivalent (boe) per day and earnings of $983 million, or $2.50 per diluted share, for the three-month period ending Sept. 30, 2011. These compare with production of 667,000 boe per day and net income of $765 million, or $2.12 per diluted share, for the same period in the prior year.

Excluding certain items that management believes affect the comparability of operating results, Apache reported adjusted earnings* of $1.2 billion in third quarter 2011 compared with $797 million in the year-earlier period. On a per-share basis, adjusted earnings were $2.95 in the third quarter compared with $2.20 per diluted share in the prior-year period. Oil and gas revenues for third quarter 2011 were $4.3 billion, a 41 percent increase from $3.0 billion for the same period last year. Cash from operations before changes in operating assets and liabilities* were $2.7 billion, up 35 percent from the prior year's $2.0 billion.

"Apache had a very productive quarter, both in operations and commercial activity," said G. Steven Farris, chairman and chief executive officer. "For the sixth consecutive quarter, we achieved record daily production on an equivalent basis. We've commenced development of the Balnaves oil field offshore Western Australia. We've extended the productive range of our holdings in Egypt's remote Western Desert with new producers in the Faghur Basin. We continue to drill from the extensive, multiyear inventory of drillable locations we have developed in the Permian, Central, Gulf of Mexico and Canadian regions of North America. Domestically, the recent focus has obviously been on higher-margin oil and liquids-rich opportunities. This operational flexibility is a competitive advantage of Apache's portfolio model.

"Apache made great progress commercially as well during the quarter. We announced the acquisition of ExxonMobil's Beryl and other selected fields in the U.K. sector of the North Sea, expanding our presence in this region. In Australia, the partner-operated Wheatstone Project advanced to development. This is Apache's first liquefied natural gas (LNG) project, and we expect it will enable us to monetize an estimated 2 trillion cubic feet of natural gas resource from the Brunello, Julimar, and Balnaves fields, which also are in development, at premium prices pegged to the worldwide market for LNG, creating additional value at those discoveries," Farris said.

Liquid hydrocarbons represented 50 percent of production and 78 percent of revenues. Apache benefited from higher oil prices for both its international production indexed to Dated Brent benchmarks and sweet crudes from the Gulf of Mexico, which continue to receive a meaningful premium per barrel compared with production benchmarked to West Texas Intermediate 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. 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 third-quarter 2011 results at 1 p.m. Central time on Thursday, Nov. 3. The call will be webcast from Apache's website, www.apachecorp.com. The webcast replay and podcast will be archived on Apache's website. The conference call will be available for delayed playback by telephone for one week beginning at approximately 3 p.m. on Nov. 3. To access the telephone playback, dial 800-642-1687 or 706-645-9291 for international calls and provide Apache's confirmation code, 21273208.

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. 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, risks related to development of the partner-operated Wheatstone LNG project, and other risks, uncertainties and factors discussed in Apache's 2010 Form 10-K as amended by Amendment No. 1 to our 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.

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



		For the Quarter		For the Nine Months
		Ended September 30,		Ended September 30,
		2011	2010	2011	2010

REVENUES AND OTHER:
	Oil and gas production revenues	$ 4,282	$ 3,047	$ 12,515	$ 8,709
	Other	46	(34)	76	(51)
		4,328	3,013	12,591	8,658

COSTS AND EXPENSES:
	Depreciation, depletion and amortization	1,065	787	3,030	2,155
	Asset retirement obligation accretion	39	25	114	74
	Lease operating expenses	661	507	1,946	1,393
	Gathering and transportation	72	43	221	126
	Taxes other than income	244	158	663	522
	General and administrative	112	89	327	260
	Merger, acquisitions & transition	4	8	15	16
	Financing costs, net	37	59	123	174
		2,234	1,676	6,439	4,720

INCOME BEFORE INCOME TAXES		2,094	1,337	6,152	3,938
	Current income tax provision	473	207	1,692	889
	Deferred income tax provision	619	352	1,065	706

NET INCOME		1,002	778	3,395	2,343
	Preferred stock dividends	19	13	57	13

INCOME ATTRIBUTABLE TO COMMON STOCK		$ 983	$ 765	$ 3,338	$ 2,330

NET INCOME PER COMMON SHARE:
	Basic	$ 2.56	$ 2.14	$ 8.70	$ 6.78
	Diluted	$ 2.50	$ 2.12	$ 8.49	$ 6.72

WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
	Basic	384	357	384	344
	Diluted	400	367	400	349

DIVIDENDS DECLARED PER COMMON SHARE		$ 0.15	$ 0.15	$ 0.45	$ 0.45

APACHE CORPORATION
FINANCIAL INFORMATION
(In millions)


				For the Quarter		For the Nine Months
				Ended September 30,		Ended September 30,
				2011	2010	2011	2010
CAPITAL EXPENDITURES (1):
	Exploration & Development Costs
		United States		$ 688	$ 421	$ 1,976	$ 1,039
		Canada		175	228	609	593
			North America	863	649	2,585	1,632
		Egypt		197	205	674	510
		Australia		127	106	445	401
		North Sea		197	207	618	437
		Argentina		87	73	245	167
		Chile		-	6	1	20
		Other International		22	-	48	-
			International	630	597	2,031	1,535
			Worldwide Exploration & Development Costs	$ 1,493	$ 1,246	$ 4,616	$ 3,167

	Gathering, Transmission and Processing Facilities
		United States		$ 9	$ -	$ 9	$ -
		Canada		29	35	113	107
		Egypt		20	21	74	111
		Australia		136	12	255	102
		Argentina		3	1	7	2
			Total Gathering, Transmission and Processing	$ 197	$ 69	$ 458	$ 322

	Capitalized Interest			$ 70	$ 29	$ 193	$ 64

	Capital Expenditures, excluding acquisitions			$ 1,760	$ 1,344	$ 5,267	$ 3,553

	Acquisitions			$ 398	$ 2,517	$ 493	$ 3,550

	(1) Accrual basis

				September 30,	December 31,
				2011	2010

BALANCE SHEET DATA:
	Cash and Cash Equivalents			$ 586	$ 134
	Other Current Assets			3,990	3,346
	Property and Equipment, net			41,136	38,151
	Goodwill			1,032	1,032
	Other Assets			738	762
	Total Assets			$ 47,482	$ 43,425

	Short-Term Debt			$ 417	$ 46
	Other Current Liabilities			3,607	3,478
	Long-Term Debt			6,785	8,095
	Deferred Credits and Other Noncurrent Liabilities			8,770	7,429
	Shareholders' Equity			27,903	24,377
	Total Liabilities and Shareholders' Equity			$ 47,482	$ 43,425

	Common shares outstanding at end of period			384	382

APACHE CORPORATION
FINANCIAL INFORMATION


				For the Quarter		For the Nine Months
				Ended September 30,		Ended September 30,
				2011	2010	2011	2010

PRODUCTION DATA:
OIL VOLUME - Barrels per day
	Central			7,873	3,767	6,608	3,027
	Permian			51,410	39,374	49,849	37,033
	GOM Deepwater			6,155	1,782	5,859	1,968
	GOM Shelf			45,115	44,771	45,483	44,186
	GC Onshore			9,800	8,130	9,336	5,855
		United States		120,353	97,824	117,135	92,069
	Canada			13,027	13,868	14,040	14,252
		North America		133,380	111,692	131,175	106,321
	Egypt			103,289	99,818	103,913	96,387
	Australia			39,400	56,876	38,248	48,324
	North Sea			57,838	58,764	54,097	58,254
	Argentina			9,461	9,645	9,577	9,812
		International		209,988	225,103	205,835	212,777
			Total	343,368	336,795	337,010	319,098

NATURAL GAS VOLUME - Mcf per day
	Central			221,193	216,189	220,094	204,446
	Permian			181,070	117,557	171,309	101,440
	GOM Deepwater			43,596	19,804	53,557	25,836
	GOM Shelf			331,292	330,439	343,214	308,460
	GC Onshore			80,842	52,534	77,300	54,464
		United States		857,993	736,523	865,474	694,646
	Canada			619,897	334,945	633,031	329,443
		North America		1,477,890	1,071,468	1,498,505	1,024,089
	Egypt			376,259	380,598	368,898	377,051
	Australia			187,852	197,090	183,470	202,473
	North Sea			2,497	2,372	2,257	2,483
	Argentina			223,929	202,381	209,206	180,219
		International		790,537	782,441	763,831	762,226
			Total	2,268,427	1,853,909	2,262,336	1,786,315

NGL VOLUME - Barrels per day
	Central			1,961	592	1,156	529
	Permian			12,733	9,426	11,645	5,814
	GOM Deepwater			726	369	760	475
	GOM Shelf			4,560	5,079	5,559	3,902
	GC Onshore			1,939	1,033	1,881	1,056
		United States		21,919	16,499	21,001	11,776
	Canada			6,120	2,134	6,220	1,956
		North America		28,039	18,633	27,221	13,732
	Egypt			(4)	-	66	-
	North Sea			14	-	5	-
	Argentina			3,008	3,047	3,024	3,151
		International		3,018	3,047	3,095	3,151
			Total	31,057	21,680	30,316	16,883

BOE per day
	Central			46,699	40,390	44,446	37,631
	Permian			94,321	68,393	90,045	59,753
	GOM Deepwater			14,148	5,451	15,545	6,749
	GOM Shelf			104,890	104,924	108,244	99,498
	GC Onshore			25,213	17,918	24,101	15,988
		United States		285,271	237,076	282,381	219,619
	Canada			122,463	71,827	125,765	71,115
		North America		407,734	308,903	408,146	290,734
	Egypt			165,995	163,251	165,461	159,228
	Australia			70,708	89,724	68,826	82,070
	North Sea			58,269	59,159	54,478	58,668
	Argentina			49,790	46,423	47,471	43,000
		International		344,762	358,557	336,236	342,966
			Total	752,496	667,460	744,382	633,700

APACHE CORPORATION
FINANCIAL INFORMATION


				For the Quarter		For the Nine Months
				Ended September 30,		Ended September 30,
				2011	2010	2011	2010

PRICING DATA:
AVERAGE OIL PRICE PER BARREL
	Central			$ 84.55	$ 72.43	$ 90.09	$ 73.73
	Permian			86.67	72.47	91.19	73.78
	GOM Deepwater			104.05	76.77	104.50	76.46
	GOM Shelf			106.64	75.72	106.52	76.49
	GC Onshore			102.66	75.95	103.56	76.88
		United States (1)		93.86	73.67	94.05	74.05
	Canada			88.34	69.01	92.77	71.76
		North America (1)		93.32	73.09	93.91	73.74
	Egypt (1)			110.96	75.91	111.02	76.15
	Australia (1)			113.40	74.80	111.78	74.66
	North Sea (2)			101.85	75.25	103.90	76.13
	Argentina			69.27	57.31	65.08	56.84
		International (1, 2)		107.03	74.66	107.15	74.91
			Total (1, 2)	101.71	74.14	102.00	74.52

AVERAGE NATURAL GAS PRICE PER MCF
	Central			$ 4.67	$ 4.41	$ 4.60	$ 4.76
	Permian			5.35	4.64	5.21	5.49
	GOM Deepwater			4.03	4.29	4.23	4.55
	GOM Shelf			4.62	4.69	4.60	4.96
	GC Onshore			4.60	4.71	4.63	4.94
		United States (1)		5.06	5.10	5.02	5.41
	Canada (1)			4.49	4.42	4.58	4.72
		North America (1)		4.82	4.89	4.83	5.19
	Egypt			4.60	3.57	4.61	3.55
	Australia			2.88	2.20	2.71	2.21
	North Sea			21.43	16.54	22.87	17.35
	Argentina			2.74	1.79	2.57	1.93
		International		3.71	2.80	3.65	2.86
			Total (1)	4.44	4.01	4.43	4.19

AVERAGE NGL PRICE PER BARREL
	Central			$ 51.55	$ 48.38	$ 52.79	$ 45.90
	Permian			53.84	34.11	51.00	36.31
	GOM Deepwater			54.95	40.93	48.41	45.31
	GOM Shelf			53.44	25.84	48.17	38.41
	GC Onshore			62.57	64.16	59.62	57.09
		United States		54.36	34.11	51.03	39.66
	Canada			46.93	34.18	44.47	36.58
		North America		52.74	34.12	49.53	39.22
	Egypt			33.62	-	66.37	-
	North Sea			65.45	-	65.45	-
	Argentina			26.45	26.39	28.20	28.98
		International		26.62	26.39	29.06	28.98
			Total	50.20	33.03	47.44	37.31


	(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			For the Nine Months
		Ended September 30,			Ended September 30,
		2011		2010	2011	2010

Income Attributable to Common Stock (GAAP)		$ 983		$ 765	$ 3,338	$ 2,330

Adjustments:
	U.K. tax rate increase	274		-	218	-
	Foreign currency fluctuation impact on deferred tax expense	(99)		27	(68)	2
	Merger, acquisitions & transition, net of tax	2		5	9	10
Adjusted Earnings (Non-GAAP)		$ 1,160		$ 797	$ 3,497	$ 2,342

Net Income per Common Share - Diluted (GAAP)		$ 2.50		$ 2.12	$ 8.49	$ 6.72

Adjustments:
	U.K. tax rate increase	0.69		-	0.55	-
	Foreign currency fluctuation impact on deferred tax expense	(0.25)		0.07	(0.17)	-
	Merger, acquisitions & transition, net of tax	0.01		0.01	0.02	0.03
Adjusted Earnings Per Share - Diluted (Non-GAAP)		$ 2.95		$ 2.20	$ 8.89	$ 6.75




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,
			2011	2010	2011	2010
Net cash provided by operating activities			$ 2,447	$ 1,715	$ 7,171	$ 4,800
Changes in operating assets and liabilities			241	269	399	587
Cash from operations before changes in operating assets and liabilities			$ 2,688	$ 1,984	$ 7,570	$ 5,387

APA-F

SOURCE Apache Corporation

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