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Press release from PR Newswire

Apache Reports First-Quarter Results, $4 Billion Asset Sales Goal, Program To Repurchase Up To 30 Million Shares

Thursday, May 09, 2013

Apache Reports First-Quarter Results, $4 Billion Asset Sales Goal, Program To Repurchase Up To 30 Million Shares

08:00 EDT Thursday, May 09, 2013

First-quarter production growth driven by 45% increase in North American onshore liquids

HOUSTON, May 9, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported first-quarter earnings of $698 million, or $1.76 per diluted common share, and adjusted earnings*, which exclude certain items that impact the comparability of operating results, of $806 million or $2.02 per share. During the first quarter, worldwide production increased to 781,819 barrels of oil equivalent (boe) per day driven by a 45 percent increase in North American onshore liquid hydrocarbons output compared with the year-earlier period; earnings declined as a result of lower commodity prices. Cash from operations before changes in operating assets and liabilities* totaled $2.4 billion.

Apache also announced a plan to divest $4 billion in assets by year-end 2013. The company intends to use initial proceeds of $2 billion to reduce debt and enhance financial flexibility.  Additional proceeds are intended to be used to repurchase approximately $2 billion of Apache common shares under a 30-million-share repurchase program authorized by the Board of Directors.

G. Steven Farris, Apache's chairman and chief executive officer, said,  "We are showing strong results from the strategic shift that we outlined in 2012, with production from onshore North American liquids plays of 165,000 barrels per day in the first quarter.  We expect our onshore drilling programs will continue to contribute significantly to meeting our production targets."

Farris added, "This rationalization of our asset base flows naturally from more than $16 billion of acquisitions over the last three years. Our goal is to ensure that Apache's portfolio has the right mix of assets to generate attractive rates of return, drive production growth, and create shareholder value.

"In this vein, our Board and management team conducted a strategic portfolio review to identify assets that no longer fit our growth profile," Farris said.  "Based on this review, we have a process well under way to divest non-core assets while retaining those that drive long-term growth and generate cash from operations. We are also pursuing other monetizations including joint venture partnerships.

"Proceeds from this program will enable us to reduce debt and repurchase up to 30 million shares or approximately 7.5 percent of shares outstanding," Farris said.  "We believe that as a result of this process, we will become an even stronger company with a focused portfolio of high-growth, high-return assets."

Agreements pertaining to asset sales and monetizations are subject to market conditions including commodity prices. Apache's annual production guidance will not be adjusted until it enters into definitive agreements with potential acquirers or joint venture partners.

The timing and actual number of shares repurchased will depend on a variety of factors including the stock price, corporate and regulatory requirements and other market and economic conditions. Repurchased shares would be available for general corporate purposes.

First-quarter results

In the prior-year period, Apache reported earnings of $778 million or $2.00 per share, adjusted earnings of $1.2 billion or $3.00 per share, and cash from operations before changes in operating assets and liabilities of $2.6 billion. 

First-quarter 2013 worldwide production of 781,819 boe per day compared with 769,296 boe per day in the prior-year period and 800,005 boe per day in the fourth quarter of 2012. As previously disclosed, first-quarter 2013 worldwide production was negatively impacted by interruptions associated with cyclones in Australia and third-party gas plant downtime in Canada.

Apache currently is the second most-active U.S. onshore driller with 42 rigs in operation in the Permian Basin and 28 rigs active in the Anadarko Basin. The Permian and Central regions averaged 205,650 boe per day ? 26 percent of Apache's worldwide output ? and spent 40 percent of the company's first-quarter drilling capital.

Growth in onshore liquids output was offset by the deferred production of 4,100 boe per day in Canada and 3,500 boe per day in Australia, lower North American gas production because of reduced dry gas drilling activity and natural field declines in other international regions.

The company had previously incorporated production deferrals and declines into its production guidance, and remains on track to achieve its full-year guidance of 3 to 5 percent production growth. This production guidance has not been adjusted for any variances associated with future divestitures.

Operational highlights

  • Production in the Anadarko Basin ? Apache's Central Region ? increased 129 percent from the year-earlier period to 86,215 boe per day, largely a result of successful drilling in the Tonkawa, Granite Wash and other liquids-rich formations.
  • Permian Basin production rose to 119,435 boe per day, up 20 percent from the prior-year period, as a result of increased drilling and recompletion activity in oil and liquids-rich plays, including the Wolfcamp Shale, the Cline Shale and Yeso.
  • The Tonto oil field in the United Kingdom sector of the North Sea commenced production on April 24, 2013. Tonto-1, the first producing well, came on stream at an initial rate of 10,346 barrels of oil per day through a tie-back to the Forties Bravo production platform.
  • Three discoveries in three basins in Egypt ? Alamein, Faghur and Matruh ? highlighted the company's diverse potential for new oil and gas developments across its concessions.

Oil and gas prices

Liquid hydrocarbons represented 53 percent of first-quarter production but contributed 82 percent of revenues because of the premium prices received for crude oil versus natural gas.

Worldwide, Apache received an average price of $101.72 per barrel of oil during the first quarter, down from $111.22 per barrel during the prior-year period. Apache's oil realizations reflect higher prices relative to the West Texas Intermediate benchmark realized 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 these premium prices on approximately 68 percent of its crude oil production.

Apache received an average of $3.72 per thousand cubic feet (Mcf) of natural gas, down from $3.82 per Mcf in the prior-year period. The average price received for Apache's international gas production ? $3.99 per Mcf ? exceeded the average price received for company's North American gas production for the fifth consecutive quarter. Approximately 37 percent of Apache's gas output is produced outside North America.

*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/financialinfo.

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.

Conference call

Apache will conduct a conference call to discuss its results and its portfolio review at 9 a.m. Central time on Thursday, May 9. 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 noon on May 9. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84101004.

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. 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.

 

APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(In millions, except per share data)

For the Quarter

Ended March 31,

2013

2012

REVENUES AND OTHER:

  Oil revenues

$ 3,255

$ 3,512

  Gas revenues

735

811

  NGL revenues

156

134

Oil and gas production revenues

4,146

4,457

Other 

(70)

79

4,076

4,536

COSTS AND EXPENSES:

Depreciation, depletion and amortization

  Oil and gas property and equipment

     Recurring

1,265

1,135

     Additional

65

521

  Other assets

105

84

Asset retirement obligation accretion

65

55

Lease operating expenses

771

673

Gathering and transportation 

74

77

Taxes other than income

242

257

General and administrative

116

128

Merger, acquisitions & transition

-

6

Financing costs, net

53

40

2,756

2,976

INCOME BEFORE INCOME TAXES

1,320

1,560

Current income tax provision 

497

725

Deferred income tax provision

106

38

NET INCOME 

717

797

Preferred stock dividends

19

19

INCOME ATTRIBUTABLE TO COMMON STOCK

$    698

$    778

NET INCOME PER COMMON SHARE:

Basic

$   1.78

$   2.02

Diluted 

$   1.76

$   2.00

WEIGHTED-AVERAGE NUMBER OF COMMON 

   SHARES OUTSTANDING:

Basic

392

385

Diluted

408

399

DIVIDENDS DECLARED PER COMMON SHARE

$   0.20

$   0.17

 

APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)

For the Quarter

Ended March 31,

2013

2012

CAPITAL EXPENDITURES (1):

Exploration & Development Costs

United States

$     1,269

$                794

Canada

258

198

North America

1,527

992

Egypt

262

250

Australia

225

78

North Sea

177

196

Argentina

33

84

New Ventures - International

5

21

International

702

629

Worldwide Exploration & Development Costs

$     2,229

$             1,621

Gathering, Transmission and Processing Facilities

United States

$          18

$                  12

Canada

30

44

Egypt

19

17

Australia

180

172

Argentina

2

4

Total Gathering, Transmission and Processing

$        249

$                249

Capitalized Interest

$          93

$                  66

Capital Expenditures, excluding Acquisitions

$     2,571

$             1,936

Acquisitions

$        310

$                  60

(1) Accrual basis

APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)

March 31,

December 31,

2013

2012

Cash and Cash Equivalents

$        248

$               160

Other Current Assets 

4,600

4,802

Property and Equipment, net

54,289

53,280

Goodwill

1,369

1,289

Other Assets

1,286

1,206

Total Assets

$   61,792

$          60,737

Short-Term Debt

$        994

$               990

Other Current Liabilities

4,568

4,546

Long-Term Debt

11,485

11,355

Deferred Credits and Other Noncurrent Liabilities

12,758

12,515

Shareholders' Equity

31,987

31,331

Total Liabilities and Shareholders' Equity

$   61,792

$          60,737

Common shares outstanding at end of period

392

392

 

APACHE CORPORATION

PRODUCTION INFORMATION

For the Quarter

Ended March 31,

2013

2012

  OIL VOLUME - Barrels per day

Central

20,526

6,483

Permian

67,900

56,481

GOM Deepwater

7,235

5,801

GOM Shelf

43,625

46,585

GC Onshore

9,977

10,578

United States

149,263

125,928

Canada

17,176

15,582

North America

166,439

141,510

Egypt

91,315

99,490

Australia

20,001

30,398

North Sea

68,462

65,946

Argentina

9,297

9,632

International

189,075

205,466

Total 

355,514

346,976

  NATURAL GAS VOLUME - Mcf per day

Central

277,025

165,863

Permian

185,713

180,253

GOM Deepwater

31,136

46,996

GOM Shelf

254,405

332,140

GC Onshore

105,412

92,241

United States

853,691

817,493

Canada

519,175

636,227

North America

1,372,866

1,453,720

Egypt

365,612

376,067

Australia

214,395

224,337

North Sea

55,032

67,066

Argentina

188,259

211,193

International

823,298

878,663

Total 

2,196,164

2,332,383

  NGL VOLUME - Barrels per day

Central

19,517

3,513

Permian

20,583

12,650

GOM Deepwater

887

256

GOM Shelf

5,999

3,594

GC Onshore

2,313

2,304

United States

49,299

22,317

Canada

6,663

6,312

North America

55,962

28,629

North Sea

1,494

1,966

Argentina

2,822

2,994

International

4,316

4,960

Total

60,278

33,589

  BOE per day

Central

86,215

37,640

Permian

119,435

99,173

GOM Deepwater

13,311

13,890

GOM Shelf

92,024

105,535

GC Onshore

29,859

28,255

United States

340,844

284,493

Canada

110,368

127,932

North America

451,212

412,425

Egypt

152,250

162,168

Australia

55,734

67,788

North Sea

79,128

79,090

Argentina

43,495

47,825

International

330,607

356,871

Total 

781,819

769,296

 

APACHE CORPORATION

PRICE INFORMATION

For the Quarter

Ended March 31,

2013

2012

  AVERAGE OIL PRICE PER BARREL

Central

$ 88.15

$ 98.79

Permian

82.78

98.36

GOM Deepwater

110.47

110.83

GOM Shelf

111.67

114.04

GC Onshore

111.03

113.41

United States (1)

94.45

102.08

Canada

82.33

92.47

North America (1)

93.20

101.02

Egypt

110.99

123.55

Australia(1)

112.35

122.95

North Sea(1)

110.53

113.19

Argentina

75.36

83.03

International (1)

109.22

118.24

Total(1)

101.72

111.22

  AVERAGE NATURAL GAS PRICE PER MCF

Central

$   3.73

$   3.10

Permian

3.77

3.72

GOM Deepwater

3.40

2.98

GOM Shelf

3.54

3.17

GC Onshore

3.55

2.80

United States (1)

3.75

3.93

Canada (1)

3.23

3.41

North America (1)

3.56

3.70

Egypt

2.95

3.79

Australia

4.94

4.18

North Sea

10.00

7.97

Argentina

3.18

2.98

International

3.99

4.02

Total (1)

3.72

3.82

  AVERAGE NGL PRICE PER BARREL

Central

$ 26.54

$ 37.48

Permian

25.71

44.78

GOM Deepwater

34.68

38.51

GOM Shelf

28.87

42.93

GC Onshore

33.69

47.16

United States

26.96

43.51

Canada

32.15

41.63

North America

27.58

43.09

North Sea

71.16

84.11

Argentina

30.28

26.20

International

44.43

49.16

Total

28.78

43.99

(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:

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

Ended March 31,

2013

2012

Income Attributable to Common Stock (GAAP)

$     698

$     778

Adjustments:

     Oil & gas property write-downs, net of tax

42

390

     Deferred tax adjustments

39

-

     Commodity derivative mark-to-market, net of tax

31

-

     Unrealized foreign currency fluctuation impact on deferred tax expense  

(4)

7

     Merger, acquisitions & transition, net of tax

-

3

     Adjusted Earnings  (Non-GAAP)

$     806

$  1,178

Net Income per Common Share - Diluted (GAAP)

$    1.76

$    2.00

Adjustments:

     Oil & gas property write-downs, net of tax

0.10

0.97

     Deferred tax adjustments

0.10

-

     Commodity derivative mark-to-market, net of tax

0.07

-

     Unrealized foreign currency fluctuation impact on deferred tax expense  

(0.01)

0.02

     Merger, acquisitions & transition, net of tax

-

0.01

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$    2.02

$    3.00

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

Ended March 31,

2013

2012

Net cash provided by operating activities

$ 2,621

$ 2,007

Changes in operating assets and liabilities

(263)

641

Cash from operations before changes in

operating assets and liabilities

$ 2,358

$ 2,648

 

APA-F

SOURCE Apache Corporation

For further information: Media: (713) 296-7276 Bill Mintz; or (713) 296-6100 Patrick Cassidy; or (713) 296-6662 Bob Dye; or (281) 302-2646 John Roper; or Investor: (281) 302-2286, Brady Parish; or Castlen Kennedy; or Christopher Cortez; or Alicia Reis, Website: www.apachecorp.com

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