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Press release from PR Newswire

Apache Achieves Record Fourth Quarter And 2012 Production; Fourth Quarter Production Averaged 800,000 BOEPD

Thursday, February 14, 2013

Apache Achieves Record Fourth Quarter And 2012 Production; Fourth Quarter Production Averaged 800,000 BOEPD08:00 EST Thursday, February 14, 2013HOUSTON, Feb. 14, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) today reported record overall production for its fourth consecutive year, as well as record oil and liquids production. Average daily production during 2012 increased to 779,000 barrels of oil equivalent (boe) per day, up 5.4 percent compared with the prior year's production, adjusted for dispositions. Oil and gas revenues were a record $16.9 billion, up from $16.8 billion in the prior year.These results contributed to full-year 2012 earnings of $1.9 billion or $4.92 per diluted common share, compared with $4.5 billion or $11.47 per share in 2011. Excluding certain items that management believes affect the comparability of operating results, such as the impact of a ceiling test write-down due primarily to substantially weaker Canadian natural gas prices, Apache reported adjusted earnings* of $3.8 billion or $9.48 per share, compared with $4.7 billion or $11.83 per share in 2011. Cash from operations before changes in operating assets and liabilities* was $10.2 billion, sustaining the record level achieved the prior year even with lower average North American natural gas prices. "Having deepened and strengthened our global portfolio of growth projects since 2010, we are accelerating our operational momentum," said G. Steven Farris, chairman and chief executive officer. "Apache exited 2012 producing in excess of 800,000 boe per day, driven primarily by our North American oil production, which increased 12 percent during the year. "We have an extensive pipeline of opportunities that will fuel our profitable growth for years to come. This includes more than 67,000 technically evaluated drilling locations in the onshore U.S. It also includes a robust group of world-class development projects throughout our global portfolio, including Wheatstone and Kitimat, our two liquefied natural gas projects with products indexed to crude oil prices." Apache has become the leading oil and gas driller in the Permian Basin, operating more rigs than any industry competitor. Apache also is among the most active oil and gas companies in the Central Region's Anadarko Basin, as the company accelerates development of its horizontal drilling play inventory. Year-over-year production from these two regions increased 18 and 37 percent, respectively.Earlier this month, a company subsidiary completed a transaction with Chevron Canada Ltd. to jointly build and operate the Kitimat LNG project, enhancing our efforts to move this project to sanction and monetize natural gas resources we discovered in the Horn River and Liard basins of northern British Columbia. The incremental resources targeted for monetization through Kitimat have the potential to triple Apache's total proved reserves. In fourth-quarter 2012 earnings totaled $649 million or $1.64 per diluted share, compared with $1.17 billion or $2.98 per share in the prior-year period. Adjusted earnings for the period were $907 million, or $2.27 per share, compared with $1.2 billion, or $2.94 per share in the same period for 2011. Production reached a new quarterly milestone, averaging 800,000 boe per day, and cash from operations totaled $2.77 billion, compared with $2.66 billion in the same period of the prior year. Apache's oil and natural gas liquids production was 51 percent of total volume in 2012 and contributed 81 percent of revenues reflecting the wide gap between global crude oil and North American natural gas prices. During 2012 the company added 372 MMboe of reserves, or 131 percent of production, through discoveries and extensions and 73 MMboe through acquisitions for a reserve replacement rate of 156 percent, excluding revisions. Low prices throughout the year for Canadian natural gas resulted in a ceiling test write-down and were the primary driver of negative revisions totaling 299 MMboe. Apache ended the year with proved reserves of 2.9 billion boe, after producing 285 MMboe. The company invested $9.0 billion on exploration and development during the year.Apache to webcast conference callApache Corporation will discuss its fiscal 2012 and fourth-quarter results at 1 p.m. Central time on Thursday, Feb. 14. 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 Feb. 14. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84095210. 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 growth plans, expectations, and objectives for Apache's operations including statements about our drilling plans, planned wells, and Wheatstone and Kitimat LNG projects.  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 our subsequent filings 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.Cautionary Note to InvestorsThe United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. Apache uses certain terms in this release, such as "resources," and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC.  Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2011, and amendments thereto, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov.*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 CORPORATIONSTATEMENT OF CONSOLIDATED OPERATIONS(In millions, except per share data)For the Quarter For the YearEnded December 31,Ended December 31,2012201120122011REVENUES AND OTHER:Oil and gas production revenues$ 4,393$ 4,295$ 16,947$ 16,810Other (2)2131784,3914,29717,07816,888COSTS AND EXPENSES:Depreciation, depletion and amortization    Recurring1,3801,1115,1834,095    Additional28631,926109Asset retirement obligation accretion6040232154Lease operating expenses7906592,9682,605Gathering and transportation 6875303296Taxes other than income235236862899General and administrative147132531459Merger, acquisitions & transition253120Financing costs, net40351651582,7502,35612,2018,795INCOME BEFORE INCOME TAXES1,6411,9414,8778,093Current income tax provision 5065712,2352,263Deferred income tax provision4671816411,246NET INCOME 6681,1892,0014,584Preferred stock dividends19197676INCOME ATTRIBUTABLE TO COMMON STOCK$     649$ 1,170$   1,925$   4,508NET INCOME PER COMMON SHARE:Basic$    1.66$    3.05$      4.95$   11.75Diluted $    1.64$    2.98$      4.92$   11.47WEIGHTED-AVERAGE NUMBER OF COMMON    SHARES OUTSTANDING:Basic391384389384Diluted407400391400DIVIDENDS DECLARED PER COMMON SHARE$    0.17$    0.15$      0.68$      0.60 APACHE CORPORATIONSUMMARY OF CAPITAL COSTS INCURRED(In millions)For the Quarter For the YearEnded December 31,Ended December 31,2012201120122011CAPITAL EXPENDITURES:Exploration & Development CostsUnited States$                 1,543$                    792$               5,151$                     2,768Canada131208590817North America1,6741,0005,7413,585Egypt2652221,074896Australia355131873576North Sea183205886823Argentina67101289346New Ventures - International14129861International8846713,2202,702Worldwide Exploration & Development Costs$                 2,558$                 1,671$               8,961$                     6,287Gathering, Transmission and Processing FacilitiesUnited States$                      18$                      18$                     75$                           27Canada3435172148Egypt183733111Australia10390441345Argentina451612North Sea1-1-Total Gathering, Transmission and Processing$                    178$                    185$                   738$                         643Capitalized Interest$                      93$                      70$                   334$                         263Capital Expenditures, excluding Acquisitions$                 2,829$                 1,926$             10,033$                     7,193Acquisitions$                    122$                 2,696$               3,543$                     3,189APACHE CORPORATIONSUMMARY BALANCE SHEET INFORMATION(In millions)December 31,December 31,20122011Cash and Cash Equivalents$                    160$                    295Other Current Assets 4,8024,508Property and Equipment, net53,28045,448Goodwill1,2891,114Other Assets1,206686Total Assets$              60,737$              52,051Short-Term Debt$                    990$                    431Other Current Liabilities4,5464,532Long-Term Debt11,3556,785Deferred Credits and Other Noncurrent Liabilities12,51511,310Shareholders' Equity31,33128,993Total Liabilities and Shareholders' Equity$              60,737$              52,051Common shares outstanding at end of period392384 APACHE CORPORATIONPRODUCTION INFORMATIONFor the Quarter For the YearEnded December 31,Ended December 31,2012201120122011  OIL VOLUME - Barrels per dayCentral21,0267,32314,1516,788Permian65,10454,38160,21550,991GOM Deepwater8,3556,5076,8486,022GOM Shelf44,75247,78042,87346,031GC Onshore10,48910,18910,0369,583United States149,726126,180134,123119,415Canada17,37714,88215,83014,252North America167,103141,062149,953133,667Egypt103,056103,90899,756103,912Australia26,48338,16928,88438,228North Sea65,58355,85963,69254,541Argentina9,8599,6559,7419,597International204,981207,591202,073206,278Total 372,084348,653352,026339,945  NATURAL GAS VOLUME - Mcf per dayCentral287,956193,722242,998213,447Permian184,781178,766180,938173,188GOM Deepwater48,17748,14446,04852,193GOM Shelf265,918335,434291,356341,242GC Onshore103,722106,50592,75984,672United States890,554862,571854,099864,742Canada550,495631,122600,680632,550North America1,441,0491,493,6931,454,7791,497,292Egypt350,406355,091353,738365,418Australia204,961189,852214,013185,079North Sea43,7452,36657,4572,284Argentina204,724221,523213,464212,311International803,836768,832838,672765,092Total 2,244,8852,262,5252,293,4512,262,384  NGL VOLUME - Barrels per dayCentral10,2315,5666,5182,268Permian21,99712,25617,96611,799GOM Deepwater1,5195821,185715GOM Shelf6,9084,4465,7385,278GC Onshore2,2292,5562,1202,051United States42,88425,40633,52722,111Canada6,8375,1836,2585,958North America49,72130,58939,78528,069Egypt---49North Sea1,085-1,6184Argentina2,9672,9973,0083,018International4,0522,9974,6263,071Total53,77333,58644,41131,140  BOE per dayCentral79,25045,17661,16944,630Permian117,89896,431108,33891,655GOM Deepwater17,90315,11415,70815,436GOM Shelf95,980108,13297,170108,183GC Onshore30,00530,49527,61525,746United States341,036295,348310,000285,650Canada115,963125,252122,201125,636North America456,999420,600432,201411,286Egypt161,458163,090158,713164,864Australia60,64369,81264,55269,074North Sea73,95956,25374,88754,925Argentina46,94649,57248,32648,000International343,006338,727346,478336,863Total 800,005759,327778,679748,149 APACHE CORPORATIONPRICE INFORMATIONFor the Quarter For the YearEnded December 31,Ended December 31,2012201120122011  AVERAGE OIL PRICE PER BARRELCentral$ 82.55$  89.36$  86.48$  89.89Permian81.4089.9988.1890.87GOM Deepwater103.06112.77105.17106.75GOM Shelf105.27115.70108.52108.92GC Onshore105.21112.66107.83105.98United States (1)91.0199.5494.9895.51Canada82.0894.3884.8993.19North America (1)90.0898.9993.9195.27Egypt(1)107.80106.65110.92109.92Australia(1)111.34109.53115.22111.22North Sea(1)106.17104.64107.97104.09Argentina74.5376.6775.8968.02International (1)106.14105.24108.92106.67Total(1)98.93102.71102.53102.19  AVERAGE NATURAL GAS PRICE PER MCFCentral$    3.79$    3.92$    3.26$    4.44Permian3.755.053.345.17GOM Deepwater3.483.482.994.06GOM Shelf3.513.863.014.42GC Onshore3.473.732.924.34United States (1)4.054.593.744.91Canada (1)4.034.153.424.47North America (1)4.044.403.614.72Egypt4.024.823.904.66Australia4.882.644.552.69North Sea10.1120.498.9522.25Argentina2.982.822.872.64International4.303.754.153.67Total (1)4.144.183.804.37  AVERAGE NGL PRICE PER BARRELCentral$ 27.06$  29.96$  27.48$  38.67Permian29.9539.0932.9747.88GOM Deepwater32.3458.2833.0650.44GOM Shelf28.1755.0732.0449.63GC Onshore36.6056.0840.0458.51United States29.4042.0332.1948.42Canada33.5950.1634.6345.72North America29.9843.4132.5747.85Egypt---66.36North Sea94.42-77.1165.45Argentina22.7627.0021.5527.90International41.9627.0040.9828.56Total30.8841.9533.4545.95(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:Ÿ?Management uses adjusted earnings to evaluate the company's operational trends and performance relative to other oil and gas producing companies.Ÿ?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.  Ÿ?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 YearEnded December 31,Ended December 31,2012201120122011Income Attributable to Common Stock (GAAP)$     649$ 1,170$   1,925$   4,508Adjustments:Canada and other oil & gas property write-down, net of tax18601,42760Deferred tax adjustments226(75)226(75)U.K. income tax adjustments--118218Commodity derivative mark-to-market, net of tax51-51-Merger, acquisitions & transition, net of tax241913Unrealized foreign currency fluctuation impact on deferred tax expense  (39)(5)1(73)Adjusted Earnings  (Non-GAAP)$     907$ 1,154$   3,767$   4,651Net Income per Common Share - Diluted (GAAP)$    1.64$    2.98$      4.92$   11.47Adjustments:Canada and other oil & gas property write-down, net of tax0.040.153.530.15Deferred tax adjustments0.56(0.19)0.56(0.19)U.K. income tax adjustments--0.300.55Commodity derivative mark-to-market, net of tax0.13-0.13-Merger, acquisitions & transition, net of tax-0.010.040.03Unrealized foreign currency fluctuation impact on deferred tax expense  (0.10)(0.01)-(0.18)Adjusted Earnings Per Share - Diluted (Non-GAAP)$    2.27$    2.94$      9.48$   11.83Reconciliation 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 YearEnded December 31,Ended December 31,2012201120122011Net cash provided by operating activities$ 2,082$ 2,782$   8,504$   9,953Changes in operating assets and liabilities685(118)1,705281Cash from operations before changes in operating assets and liabilities$ 2,767$ 2,664$ 10,209$ 10,234 APACHE CORPORATIONOIL & GAS RESERVES INFORMATIONFor the Year Ended December 31, 2012 OIL (Mbbl)  U.S.  Canada  Egypt  Australia  North Sea  Argentina  Total Balance - Dec 31, 2011634,014141,591128,03567,945169,40520,5871,161,577Extensions and Discoveries84,65618,93536,1886,2773461,133147,535Purchases15,942188-2762,143-18,549Revisions(7,474)(4,577)(3,678)(66)(928)671(16,052)Production(49,089)(5,792)(36,511)(10,571)(23,312)(3,565)(128,840)Sales(144)-----(144)Balance - Dec 31, 2012677,905150,345124,03463,861147,65418,8261,182,625 NGL's (Mbbl)  U.S.  Canada  Egypt  Australia  North Sea  Argentina  Total Balance - Dec 31, 2011160,03331,450--9,2627,153207,898Extensions and Discoveries71,9657,655--246-79,866Purchases2309--231-470Revisions(4,559)(2,569)--(6,329)(169)(13,626)Production(12,272)(2,291)--(592)(1,101)(16,256)Balance - Dec 31, 2012215,39734,254--2,8185,883258,352 Oil & NGL's  U.S.  Canada  Egypt  Australia  North Sea  Argentina  Total Balance - Dec 31, 2011794,047173,041128,03567,945178,66727,7401,369,475Extensions and Discoveries156,62126,59036,1886,2775921,133227,401Purchases16,172197-2762,374-19,019Revisions(12,033)(7,146)(3,678)(66)(7,257)502(29,678)Production(61,361)(8,083)(36,511)(10,571)(23,904)(4,666)(145,096)Sales(144)-----(144)Balance - Dec 31, 2012893,302184,599124,03463,861150,47224,7091,440,977 GAS (MMcf)  U.S.  Canada  Egypt  Australia  North Sea  Argentina  Total Balance - Dec 31, 20112,976,2113,547,511982,9661,569,584108,442537,5599,722,273Extensions and Discoveries365,863252,13055,967176,96916,3972,623869,949Purchases313,8852,503-1,7458,494-326,627Revisions(156,840)(1,443,989)(13,974)101-496(1,614,206)Production(312,600)(219,849)(129,468)(78,329)(21,029)(78,128)(839,403)Sales(612)(422)----(1,034)Balance - Dec 31, 20123,185,9072,137,884895,4911,670,070112,304462,5508,464,206TOTAL BOE (Mboe) U.S.  Canada  Egypt  Australia  North Sea  Argentina  Total Balance - Dec 31, 20111,290,082764,293291,863329,542196,741117,3332,989,854Extensions and Discoveries217,59868,61245,51635,7723,3251,570372,393Purchases68,486614-5673,790-73,457Revisions(38,173)(247,811)(6,007)(49)(7,257)585(298,712)Production(113,461)(44,725)(58,089)(23,626)(27,409)(17,687)(284,997)Sales(246)(70)----(316)Balance - Dec 31, 20121,424,286540,913273,283342,206169,190101,8012,851,679Proved developed reserves:Oil + NGL's (Mbbls)629,345101,691106,74629,053122,07320,8521,009,760Gas (Mboe)392,264289,109115,07399,34215,55460,843972,185Balance - Dec 31, 2012 (Mboe)1,021,609390,800221,819128,395137,62781,6951,981,945 APACHE CORPORATIONOIL & GAS RESERVES AND COSTS For the Year Ended December 31, 2012Reserve Additions (Mboe) U.S.  Canada  Egypt  Australia  North Sea  Argentina  Other  Total Extensions and Discoveries217,59868,61245,51635,7723,3251,570-372,393Purchases68,486614-5673,790--73,457Additions excluding revisions286,08469,22645,51636,3397,1151,570-445,850Revisions(38,173)(247,811)(6,007)(49)(7,257)585-(298,712)Total 247,911(178,585)39,50936,290(142)2,155-147,138Capital Cost Information (Non-GAAP) (in millions) U.S.  Canada  Egypt  Australia  North Sea  Argentina  Other  Total Exploration & Development, excluding Capitalized Interest and Asset Retirement Cost (ARC) (1)$     5,151$        590$  1,074$        873$          886$         289$     98$     8,961Acquisitions, excluding ARC - AcquiredProved1,071528459--1,167Unproved2,329---26--2,355     Total$     8,551$        595$  1,102$        877$          971$         289$     98$  12,483(1)  Includes capital spending of $1.1 billion for leasehold and $365 million for seismic.Reconciliation of Exploration and Development Costs to Exploration and Development Costs, excluding Capitalized Interest and Asset Retirement Cost, a Non-GAAP Financial MeasurePresented below is a reconciliation of exploration and development costs (GAAP) to exploration and development costs, excluding capitalized interest and asset retirement cost (Non-GAAP).  Management believes exploration and development costs, excluding capitalized interest and asset retirement cost is a more accurate reflection of the expenditures during the current year.   U.S.  Canada  Egypt  Australia  North Sea  Argentina  Other  Total Exploration & Development Costs (in millions)$     5,834$        873$  1,090$     1,064$          948$         318$     98$  10,225Less: Capitalized Interest(215)(38)(16)(12)(24)(11)-(316)Less: ARC(468)(245)-(179)(38)(18)-(948)   Total Adds$     5,151$        590$  1,074$        873$          886$         289$     98$     8,961Reconciliation of Total Acquisition Costs to Acquisitions, excluding Asset Retirement Cost - Acquired, a Non-GAAP Financial MeasurePresented below is a reconciliation of total acquisition costs (GAAP) to acquisitions, excluding asset retirement cost - acquired (Non-GAAP).  Management believes acquisitions, excluding asset retirement cost - acquired is a more accurate reflection of the costs of acquisitions during the current year.  U.S.  Canada  Egypt  Australia  North Sea  Argentina  Other  Total Total Acquisition Costs (in millions)Proved$     1,076$             5$       28$          32$          110$             -$      -$     1,251Unproved2,329---26-2,355Less: ARC - Acquired(5)--(28)(51)--(84)Acquisitions, excluding ARC - Acquired$     3,400$             5$       28$             4$            85$             -$      -$     3,522 APA-FSOURCE Apache CorporationFor further information: Media, Patrick Cassidy, +1-713-296-6100, or Bill Mintz, +1-713-296-7276, or John Roper, +1-281-302-2646, or Bob Dye, +1-713-296-6662, or Investors, Brady Parish, Castlen Kennedy, Christopher Cortez, or Alicia Reis, +1-713-302-2286