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Apache's Drilling Program, New Takeaway Capacity Fuel Record Third-Quarter Production In Permian And Central Regions

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HOUSTON, Nov. 1, 2012 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) said today that higher rig counts and new infrastructure contributed to record production from Permian and Anadarko Basin operations.

For the three-month period ending Sept. 30, 2012, Apache reported production of 771,000 barrels of oil equivalent per day, up approximately 18,300 boepd, or 2.4 percent, from the same period in the prior year. Deferred production impacted third-quarter 2012 volumes by an estimated 25,000 boepd.

Apache's third-quarter 2012 earnings totaled $161 million, or 41 cents per diluted common share, reflecting the impact of a $539 million non-cash, after-tax write-down in the carrying value of its properties in Canada resulting from lower natural gas prices. For the same period last year, Apache reported earnings of $983 million, or $2.50 per diluted share.

Apache's adjusted earnings,* which exclude the write-down and certain other items that impact the comparability of operating results, totaled $861 million, or $2.16 per diluted common share, in the third quarter as the impact of higher production was offset in part by lower prices for natural gas and natural gas liquids. In the prior-year period, Apache reported adjusted earnings of $1.16 billion, or $2.95 per share. Cash from operations before changes in operating assets and liabilities* totaled $2.42 billion in the third quarter, down from $2.69 billion in the prior-year period.

"We are continuing to add drilling rigs and accelerate activity in the Permian and Anadarko basins. Today, we are running 56 rigs in these regions with plans to expand throughout next year. All are drilling oil and liquids-rich targets and more than half are drilling horizontal wells. Production in these two regions increased 30 percent from a year ago, accounting for nearly a quarter of Apache's overall production compared with less than a fifth in third-quarter 2011. We expect this growth trajectory to continue well into the future," said G. Steven Farris, chairman and chief executive officer.

Apache's production from the Permian Basin and Central regions totaled 183,961 boepd for third quarter 2012, which includes a full three-month's contribution from Cordillera assets acquired earlier in the year. For the same period in 2011, the two regions produced 141,020 boepd.

"Another contributor to our growth was securing additional takeaway capacity, which we've done with new infrastructure projects," Farris said. "Our joint-venture gas plant at the Deadwood Field in West Texas became fully operational during the third quarter, processing more than 50 million cubic feet per day. We also installed a nine-mile pipeline in our Bivins Ranch area in the Texas Panhandle. The line is currently transporting 3.3 MMcf of associated gas per day and will enable us to continue to develop the area well beyond its present rate of 5,000 barrels of oil per day. Both projects can be expanded with production growth. We continue to pursue marketing arrangements aggressively to move our production and enhance margins.

"We're committed to growth through the drill bit across our portfolio, and Apache has nearly 100 rigs operating worldwide right now. With drilling activity and production on the rise, we look forward to concluding 2012 with our strongest quarter of the year," he said.

The company's balanced portfolio of North American and international assets, as well as oil and gas producing properties, helped to stabilize the effects of volatile prices in the commodity markets. Worldwide, Apache received an average of $102.62 per barrel of oil, a slight increase from $101.71 per barrel in the prior-year period. Apache benefitted from higher price realizations on Dated Brent crude produced in the company's Australia, North Sea and Egypt regions, and on sweet crude from the Gulf of Mexico regions. Apache received premium prices to the WTI index on approximately 70 percent of crude oil production.

Apache's international regions saw natural gas price realizations increase on average 13 percent from the prior-year period to $4.21 per thousand cubic feet (Mcf). North American natural gas price realizations fell 27 percent from the same period a year ago to $3.51 per Mcf. International gas production represented 36 percent of Apache's total gas volumes.

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

Apache to webcast conference call

Apache Corporation will discuss its third-quarter 2012 results at 1 p.m. Central time on Thursday, Nov. 1. The conference call will be webcast from Apache's website www.apachecorp.com. The webcast replay will be archived on Apache's website. The conference call will be available for delayed playback by telephone for one week beginning at approximately 4 p.m. on Nov. 1. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 42313953.

About Apache

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. Apache posts announcements, operational updates, investor information and copies of all press releases on its website www.apachecorp.com.

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 infrastructure projects, drilling plans and future production growth. 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 2011 Form 10-K and other public filings 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.

 

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,





2012



2011



2012



2011



















REVENUES AND OTHER:

















Oil and gas production revenues

$ 4,141



$ 4,282



$ 12,554



$ 12,515



Other 

38



46



133



76





4,179



4,328



12,687



12,591



















COSTS AND EXPENSES:

















Depreciation, depletion and amortization

















    Recurring

1,300



1,045



3,803



2,984



    Additional

729



20



1,898



46



Asset retirement obligation accretion

60



39



172



114



Lease operating expenses

801



661



2,178



1,946



Gathering and transportation 

86



72



235



221



Taxes other than income

167



244



627



663



General and administrative

124



112



384



327



Merger, acquisitions & transition

7



4



29



15



Financing costs, net

40



37



125



123





3,314



2,234



9,451



6,439



















INCOME BEFORE INCOME TAXES

865



2,094



3,236



6,152



Current income tax provision 

544



473



1,729



1,692



Deferred income tax provision

141



619



174



1,065



















NET INCOME 

180



1,002



1,333



3,395



Preferred stock dividends

19



19



57



57



















INCOME ATTRIBUTABLE TO COMMON STOCK

$    161



$    983



$   1,276



$   3,338



















NET INCOME PER COMMON SHARE:

















Basic

$   0.41



$   2.56



$      3.29



$      8.70



Diluted 

$   0.41



$   2.50



$      3.27



$      8.49



















WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:































Basic

391



384



388



384



Diluted

393



400



390



400



















DIVIDENDS DECLARED PER COMMON SHARE

$   0.17



$   0.15



$      0.51



$      0.45

 

APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)



























































For the Quarter 



For the Nine Months 











Ended September 30,



Ended September 30,











2012



2011



2012



2011

CAPITAL EXPENDITURES (1):



















Exploration & Development Costs





















United States



$             1,422



$               688



$ 3,608



$ 1,976





Canada



164



175



459



609







North America



1,586



863



4,067



2,585





Egypt



299



197



809



674





Australia



265



127



518



445





North Sea



283



197



703



618





Argentina



65



87



222



245





Other International



51



22



84



49







International



963



630



2,336



2,031







Worldwide Exploration & Development Costs



$             2,549



$            1,493



$ 6,403



$ 4,616



























Gathering, Transmission and Processing Facilities





















United States



$                   13



$                    9



$       57



$         9





Canada



52



29



138



113





Egypt



(22)



20



15



74





Australia



89



136



338



255





Argentina



3



3



12



7







Total Gathering, Transmission and Processing



$                 135



$               197



$    560



$    458



























Capitalized Interest



$                   90



$                  70



$    241



$    193



























Capital Expenditures, excluding Acquisitions



$             2,774



$            1,760



$ 7,204



$ 5,267



























Acquisitions



$                   59



$               398



$ 3,421



$    493



























(1) Accrual basis

 

APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)



























September 30,



December 31,











2012



2011



















Cash and Cash Equivalents



$                 318



$               295



Other Current Assets 



4,726



4,508



Property and Equipment, net



51,164



45,448



Goodwill



1,114



1,114



Other Assets



1,488



686



Total Assets



$           58,810



$          52,051



















Short-Term Debt



$                 964



$               431



Other Current Liabilities



4,426



4,532



Long-Term Debt



10,670



6,785



Deferred Credits and Other Noncurrent Liabilities



12,036



11,310



Shareholders' Equity



30,714



28,993



Total Liabilities and Shareholders' Equity



$           58,810



$          52,051



















Common shares outstanding at end of period



391



384

 

APACHE CORPORATION

PRODUCTION INFORMATION







































For the Quarter 



For the Nine Months 













Ended September 30,



Ended September 30,













2012



2011



2012



2011



























  OIL VOLUME - Barrels per day



















Central



17,003



7,873



11,843



6,608



Permian



60,822



51,410



58,573



49,849



GOM Deepwater



6,982



6,155



6,342



5,859



GOM Shelf



38,573



45,057



42,242



45,442



GC Onshore



9,621



9,858



9,884



9,377





United States



133,001



120,353



128,884



117,135



Canada



15,075



13,027



15,311



14,040





North America



148,076



133,380



144,195



131,175



Egypt



97,546



103,289



98,648



103,913



Australia



28,191



39,400



29,690



38,248



North Sea



57,296



57,838



63,058



54,097



Argentina



9,885



9,461



9,701



9,577





International



192,918



209,988



201,097



205,835







Total 



340,994



343,368



345,292



337,010



























  NATURAL GAS VOLUME - Mcf per day

















Central



281,945



221,193



227,903



220,094



Permian



180,610



181,070



179,648



171,309



GOM Deepwater



41,267



43,596



45,333



53,557



GOM Shelf



266,415



331,251



299,897



343,200



GC Onshore



93,196



80,883



89,078



77,314





United States



863,433



857,993



841,859



865,474



Canada



604,442



619,897



617,530



633,031





North America



1,467,875



1,477,890



1,459,389



1,498,505



Egypt



329,793



376,259



354,856



368,898



Australia



215,317



187,852



217,053



183,470



North Sea



54,478



2,497



62,061



2,257



Argentina



213,745



223,929



216,399



209,206





International



813,333



790,537



850,369



763,831







Total 



2,281,208



2,268,427



2,309,758



2,262,336



























  NGL VOLUME - Barrels per day



















Central



8,305



1,961



5,271



1,156



Permian



20,739



12,733



16,613



11,645



GOM Deepwater



1,483



726



1,073



760



GOM Shelf



6,663



4,560



5,345



5,559



GC Onshore



1,886



1,939



2,083



1,881





United States



39,076



21,919



30,385



21,001



Canada



6,036



6,120



6,063



6,220





North America



45,112



28,039



36,448



27,221



Egypt



-



(4)



-



66



North Sea



1,470



14



1,797



5



Argentina



3,006



3,008



3,022



3,024





International



4,476



3,018



4,819



3,095







Total



49,588



31,057



41,267



30,316



























  BOE per day



















Central



72,298



46,699



55,097



44,446



Permian



111,663



94,321



105,127



90,045



GOM Deepwater



15,343



14,148



14,971



15,545



GOM Shelf



89,639



104,825



97,570



108,201



GC Onshore



27,039



25,278



26,813



24,144





United States



315,982



285,271



299,578



282,381



Canada



121,851



122,463



124,296



125,765





North America



437,833



407,734



423,874



408,146



Egypt



152,512



165,995



157,791



165,461



Australia



64,078



70,708



65,866



68,826



North Sea



67,845



58,269



75,198



54,478



Argentina



48,515



49,790



48,790



47,471





International



332,950



344,762



347,645



336,236







Total 



770,783



752,496



771,519



744,382

 

APACHE CORPORATION

PRICE INFORMATION



































For the Quarter 



For the Nine Months 











Ended September 30,



Ended September 30,











2012



2011



2012



2011

























  AVERAGE OIL PRICE PER BARREL



















Central



$ 85.54



$ 84.55



$ 88.82



$ 90.09



Permian



87.49



86.67



90.71



91.19



GOM Deepwater



102.46



104.05



106.10



104.50



GOM Shelf



104.97



106.64



109.67



106.53



GC Onshore



104.02



102.69



108.76



103.53





United States (1)



93.38



93.86



96.53



94.05



Canada



82.92



88.34



85.96



92.77





North America (1)



92.32



93.32



95.41



93.91



Egypt(1)



113.72



110.96



112.02



111.02



Australia(1)



116.79



113.40



116.39



111.78



North Sea(1)



108.44



101.85



108.60



103.90



Argentina



73.44



69.27



76.36



65.08





International (1)



110.54



107.03



109.87



107.15







Total(1)



102.62



101.71



103.83



102.00

























  AVERAGE NATURAL GAS PRICE PER MCF



















Central



$   3.24



$   4.67



$   3.04



$   4.60



Permian



3.07



5.35



3.20



5.21



GOM Deepwater



3.18



4.03



2.82



4.23



GOM Shelf



2.90



4.62



2.86



4.60



GC Onshore



2.95



4.60



2.70



4.63





United States (1)



3.63



5.06



3.63



5.02



Canada (1)



3.33



4.49



3.23



4.58





North America (1)



3.51



4.82



3.46



4.83



Egypt





4.04



4.60



3.86



4.61



Australia



4.76



2.88



4.45



2.71



North Sea



8.65



21.43



8.67



22.87



Argentina



2.78



2.74



2.84



2.57





International



4.21



3.71



4.10



3.65







Total (1)



3.76



4.44



3.70



4.43

























  AVERAGE NGL PRICE PER BARREL



















Central



$ 24.28



$ 51.55



$ 27.74



$ 52.79



Permian



27.95



53.84



34.31



51.00



GOM Deepwater



30.24



54.95



33.40



48.41



GOM Shelf



31.10



53.44



33.71



48.17



GC Onshore



37.42



62.57



41.28



59.62





United States



28.25



54.36



33.51



51.03



Canada



31.01



46.93



35.02



44.47





North America



28.62



52.74



33.76



49.53



Egypt





-



-



-



66.37



North Sea



65.45



65.45



73.60



65.45



Argentina



16.25



26.45



21.15



28.20





International



32.41



26.62



40.71



29.06







Total



28.96



50.20



34.57



47.44




















































(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,





2012



2011



2012



2011



















Income Attributable to Common Stock (GAAP)

$    161



$    983



$ 1,276



$ 3,338



















Adjustments:

















Canada proved property write-down, net of tax

539



-



1,409



-



U.K. decommissioning tax rate adjustment

118



-



118



-



Unrealized foreign currency fluctuation impact on deferred tax expense  

39



(99)



40



(68)



Merger, acquisitions & transition, net of tax

4



2



17



9



U.K. tax rate increase

-



274



-



218

Adjusted Earnings  (Non-GAAP)

$    861



$ 1,160



$ 2,860



$ 3,497



















Net Income per Common Share - Diluted (GAAP)

$   0.41



$   2.50



$   3.27



$   8.49



















Adjustments:

















Canada proved property write-down, net of tax

1.33



-



3.49



-



U.K. decommissioning tax rate adjustment

0.30



-



0.30



-



Unrealized foreign currency fluctuation impact on deferred tax expense  

0.10



(0.25)



0.11



(0.17)



Merger, acquisitions & transition, net of tax

0.02



0.01



0.05



0.02



U.K. tax rate increase

-



0.69



-



0.55

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$   2.16



$   2.95



$   7.22



$   8.89





















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,





2012



2011



2012



2011

Net cash provided by operating activities

$ 1,623



$ 2,447



$ 6,422



$ 7,171

Changes in operating assets and liabilities

793



241



1,020



399

Cash from operations before changes in

















operating assets and liabilities

$ 2,416



$ 2,688



$ 7,442



$ 7,570

 

APA-F

SOURCE Apache Corporation




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