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Press release from PR Newswire

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

Thursday, November 01, 2012

Apache's Drilling Program, New Takeaway Capacity Fuel Record Third-Quarter Production In Permian And Central Regions08:00 EDT Thursday, November 01, 2012HOUSTON, 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 callApache 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 ApacheApache 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 statementsThis 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 CORPORATIONSTATEMENT OF CONSOLIDATED OPERATIONS(In millions, except per share data)For the Quarter For the Nine Months Ended September 30,Ended September 30,2012201120122011REVENUES AND OTHER:Oil and gas production revenues$ 4,141$ 4,282$ 12,554$ 12,515Other 3846133764,1794,32812,68712,591COSTS AND EXPENSES:Depreciation, depletion and amortization    Recurring1,3001,0453,8032,984    Additional729201,89846Asset retirement obligation accretion6039172114Lease operating expenses8016612,1781,946Gathering and transportation 8672235221Taxes other than income167244627663General and administrative124112384327Merger, acquisitions & transition742915Financing costs, net40371251233,3142,2349,4516,439INCOME BEFORE INCOME TAXES8652,0943,2366,152Current income tax provision 5444731,7291,692Deferred income tax provision1416191741,065NET INCOME 1801,0021,3333,395Preferred stock dividends19195757INCOME ATTRIBUTABLE TO COMMON STOCK$    161$    983$   1,276$   3,338NET INCOME PER COMMON SHARE:Basic$   0.41$   2.56$      3.29$      8.70Diluted $   0.41$   2.50$      3.27$      8.49WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:Basic391384388384Diluted393400390400DIVIDENDS DECLARED PER COMMON SHARE$   0.17$   0.15$      0.51$      0.45 APACHE CORPORATIONSUMMARY OF CAPITAL COSTS INCURRED(In millions)For the Quarter For the Nine Months Ended September 30,Ended September 30,2012201120122011CAPITAL EXPENDITURES (1):Exploration & Development CostsUnited States$             1,422$               688$ 3,608$ 1,976Canada164175459609North America1,5868634,0672,585Egypt299197809674Australia265127518445North Sea283197703618Argentina6587222245Other International51228449International9636302,3362,031Worldwide Exploration & Development Costs$             2,549$            1,493$ 6,403$ 4,616Gathering, Transmission and Processing FacilitiesUnited States$                   13$                    9$       57$         9Canada5229138113Egypt(22)201574Australia89136338255Argentina33127Total Gathering, Transmission and Processing$                 135$               197$    560$    458Capitalized Interest$                   90$                  70$    241$    193Capital Expenditures, excluding Acquisitions$             2,774$            1,760$ 7,204$ 5,267Acquisitions$                   59$               398$ 3,421$    493(1) Accrual basis APACHE CORPORATIONSUMMARY BALANCE SHEET INFORMATION(In millions)September 30,December 31,20122011Cash and Cash Equivalents$                 318$               295Other Current Assets 4,7264,508Property and Equipment, net51,16445,448Goodwill1,1141,114Other Assets1,488686Total Assets$           58,810$          52,051Short-Term Debt$                 964$               431Other Current Liabilities4,4264,532Long-Term Debt10,6706,785Deferred Credits and Other Noncurrent Liabilities12,03611,310Shareholders' Equity30,71428,993Total Liabilities and Shareholders' Equity$           58,810$          52,051Common shares outstanding at end of period391384 APACHE CORPORATIONPRODUCTION INFORMATIONFor the Quarter For the Nine Months Ended September 30,Ended September 30,2012201120122011  OIL VOLUME - Barrels per dayCentral17,0037,87311,8436,608Permian60,82251,41058,57349,849GOM Deepwater6,9826,1556,3425,859GOM Shelf38,57345,05742,24245,442GC Onshore9,6219,8589,8849,377United States133,001120,353128,884117,135Canada15,07513,02715,31114,040North America148,076133,380144,195131,175Egypt97,546103,28998,648103,913Australia28,19139,40029,69038,248North Sea57,29657,83863,05854,097Argentina9,8859,4619,7019,577International192,918209,988201,097205,835Total 340,994343,368345,292337,010  NATURAL GAS VOLUME - Mcf per dayCentral281,945221,193227,903220,094Permian180,610181,070179,648171,309GOM Deepwater41,26743,59645,33353,557GOM Shelf266,415331,251299,897343,200GC Onshore93,19680,88389,07877,314United States863,433857,993841,859865,474Canada604,442619,897617,530633,031North America1,467,8751,477,8901,459,3891,498,505Egypt329,793376,259354,856368,898Australia215,317187,852217,053183,470North Sea54,4782,49762,0612,257Argentina213,745223,929216,399209,206International813,333790,537850,369763,831Total 2,281,2082,268,4272,309,7582,262,336  NGL VOLUME - Barrels per dayCentral8,3051,9615,2711,156Permian20,73912,73316,61311,645GOM Deepwater1,4837261,073760GOM Shelf6,6634,5605,3455,559GC Onshore1,8861,9392,0831,881United States39,07621,91930,38521,001Canada6,0366,1206,0636,220North America45,11228,03936,44827,221Egypt-(4)-66North Sea1,470141,7975Argentina3,0063,0083,0223,024International4,4763,0184,8193,095Total49,58831,05741,26730,316  BOE per dayCentral72,29846,69955,09744,446Permian111,66394,321105,12790,045GOM Deepwater15,34314,14814,97115,545GOM Shelf89,639104,82597,570108,201GC Onshore27,03925,27826,81324,144United States315,982285,271299,578282,381Canada121,851122,463124,296125,765North America437,833407,734423,874408,146Egypt152,512165,995157,791165,461Australia64,07870,70865,86668,826North Sea67,84558,26975,19854,478Argentina48,51549,79048,79047,471International332,950344,762347,645336,236Total 770,783752,496771,519744,382 APACHE CORPORATIONPRICE INFORMATIONFor the Quarter For the Nine Months Ended September 30,Ended September 30,2012201120122011  AVERAGE OIL PRICE PER BARRELCentral$ 85.54$ 84.55$ 88.82$ 90.09Permian87.4986.6790.7191.19GOM Deepwater102.46104.05106.10104.50GOM Shelf104.97106.64109.67106.53GC Onshore104.02102.69108.76103.53United States (1)93.3893.8696.5394.05Canada82.9288.3485.9692.77North America (1)92.3293.3295.4193.91Egypt(1)113.72110.96112.02111.02Australia(1)116.79113.40116.39111.78North Sea(1)108.44101.85108.60103.90Argentina73.4469.2776.3665.08International (1)110.54107.03109.87107.15Total(1)102.62101.71103.83102.00  AVERAGE NATURAL GAS PRICE PER MCFCentral$   3.24$   4.67$   3.04$   4.60Permian3.075.353.205.21GOM Deepwater3.184.032.824.23GOM Shelf2.904.622.864.60GC Onshore2.954.602.704.63United States (1)3.635.063.635.02Canada (1)3.334.493.234.58North America (1)3.514.823.464.83Egypt4.044.603.864.61Australia4.762.884.452.71North Sea8.6521.438.6722.87Argentina2.782.742.842.57International4.213.714.103.65Total (1)3.764.443.704.43  AVERAGE NGL PRICE PER BARRELCentral$ 24.28$ 51.55$ 27.74$ 52.79Permian27.9553.8434.3151.00GOM Deepwater30.2454.9533.4048.41GOM Shelf31.1053.4433.7148.17GC Onshore37.4262.5741.2859.62United States28.2554.3633.5151.03Canada31.0146.9335.0244.47North America28.6252.7433.7649.53Egypt---66.37North Sea65.4565.4573.6065.45Argentina16.2526.4521.1528.20International32.4126.6240.7129.06Total28.9650.2034.5747.44(1)  Prices reflect the impact of financial derivative hedging activities.  APACHE CORPORATIONNON-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 30,2012201120122011Income Attributable to Common Stock (GAAP)$    161$    983$ 1,276$ 3,338Adjustments:Canada proved property write-down, net of tax539-1,409-U.K. decommissioning tax rate adjustment118-118-Unrealized foreign currency fluctuation impact on deferred tax expense  39(99)40(68)Merger, acquisitions & transition, net of tax42179U.K. tax rate increase-274-218Adjusted Earnings  (Non-GAAP)$    861$ 1,160$ 2,860$ 3,497Net Income per Common Share - Diluted (GAAP)$   0.41$   2.50$   3.27$   8.49Adjustments:Canada proved property write-down, net of tax1.33-3.49-U.K. decommissioning tax rate adjustment0.30-0.30-Unrealized foreign currency fluctuation impact on deferred tax expense  0.10(0.25)0.11(0.17)Merger, acquisitions & transition, net of tax0.020.010.050.02U.K. tax rate increase-0.69-0.55Adjusted Earnings Per Share - Diluted (Non-GAAP)$   2.16$   2.95$   7.22$   8.89Reconciliation 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 30,2012201120122011Net cash provided by operating activities$ 1,623$ 2,447$ 6,422$ 7,171Changes in operating assets and liabilities7932411,020399Cash from operations before changes inoperating assets and liabilities$ 2,416$ 2,688$ 7,442$ 7,570 APA-F SOURCE Apache CorporationFor further information: Media: Patrick Cassidy, +1-713-296-6100, or John Roper, +1-281-302-2646, or Bill Mintz +1-713-296-7276; or Investors: Brady Parish, +1-713-296-6472, or Castlen Kennedy, +1-713-296-7189