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Press release from PR Newswire

Apache Reports Higher Third-Quarter Earnings Driven By 35% Increase In Onshore North America Liquids Production

Thursday, November 07, 2013

Apache Reports Higher Third-Quarter Earnings Driven By 35% Increase In Onshore North America Liquids Production

08:00 EST Thursday, November 07, 2013

- GAAP earnings of $0.75 per share/$300 million; adjusted earnings* of $2.32 per share/$932 million
- $2.0 billion of cash flow from operations; $2.7 billion before changes in working capital*
- $700 million in shares repurchased to date under stock buyback program

HOUSTON, Nov. 7, 2013 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) today announced third-quarter 2013 earnings of $300 million or $0.75 per diluted common share and adjusted earnings,* which exclude certain items that impact the comparability of results, of $932 million or $2.32 per share. For the same period in the prior year, Apache reported earnings of $161 million or $0.41 per diluted common share and adjusted earnings of $861 million or $2.16 per share. Net cash provided by operating activities came to approximately $2 billion, with cash from operations before changes in operating assets and liabilities* totaling $2.7 billion, up from $2.4 billion in the year-ago period.

"The strength of our financial performance this quarter is a testament to the effectiveness of our strategy to rebalance our portfolio and drive returns by achieving the right mix of predictable production growth from our North American onshore assets combined with the substantial free cash flow generation from our international operations," said G. Steven Farris, chairman and chief executive officer at Apache. "Apache's focused drilling program in North America is yielding significant production growth. Our Permian and Central regions are the main drivers of this higher production, adding nearly 13,000 barrels per day of oil and natural gas liquids from the second quarter. These two regions represented 35 percent of the company's total worldwide liquids production, up from 27 percent a year ago, contributing 149,000 barrels per day during the third quarter. Going forward, our international regions will be the primary source of excess cash flow to fund our next growth cycle.

"We also made significant progress rebalancing our portfolio to provide more predictable and consistent growth. During the quarter we closed on transactions in the Gulf of Mexico Shelf and Canada, and announced a significant partnership with Sinopec in Egypt, which we expect to close by the end of this year," Farris said. "As previously announced, sale proceeds are being used to reduce our debt and buyback shares. We've already repurchased nearly 8 million shares of Apache common stock, and we're on track to pay down $2 billion in debt by yearend."

Production and operating highlights

Highlights from the third quarter and more recent drilling include:

  • Total worldwide net daily production of oil, natural gas, and natural gas liquids (NGLs) averaged 784,000 barrels of oil equivalent (boe) per day, with liquids production comprising 54 percent of the total.
  • The Permian Region achieved record production of 132,000 boe per day, up 7 percent from the preceding period and up 18 percent from a year ago. In the region's Barnhart area, six rigs were active throughout the quarter drilling 20 Middle and Upper Wolfcamp Shale laterals. Apache holds 345,000 net acres prospective for Wolfcamp Shale development with 971 identified locations. During October, the region achieved a milestone with half of its operated rigs drilling horizontal wells.
  • Apache's Central Region increased production to 95,000 boe per day, up 4 percent from the preceding quarter and 31 percent from the third quarter of 2012. Liquids production increased to 49,000 barrels per day, up 94 percent from the same period in the prior year, and now comprises 52 percent of the region's production. Drilling is concentrated in the stacked pays of the Anadarko Basin targeting formations such as the Granite Wash and Tonkawa, where Apache has identified thousands of locations on its prolific acreage position.
  • In its international regions, Apache commenced production from the Macedon development in Western Australia. This includes four offshore production wells, transmission lines and an onshore processing plant. Apache holds a 28.57 percent working interest in Macedon, with gross sales ramped up to 212 million cubic feet (MMcf) per day. In the North Sea, a second development well commenced production from the Tonto field, testing at an initial 24-hour rate of 8,300 barrels of oil per day. Apache holds a 100 percent working interest in Tonto.

Apache's third-quarter 2013 operations supplement includes drilling, production and other updates for each of its regions, and can be accessed at www.apachecorp.com/financialdata.

Oil and gas prices

Apache's mix of hydrocarbon production during the third quarter 2013 included approximately 46 percent crude oil and 9 percent natural gas liquids (NGLs). Due to the premium prices received for crude oil and NGLs, these products contributed 84 percent of the company's revenue during the period.

Worldwide, Apache received an average price of $107.50 per barrel of oil during the third quarter, compared with $102.62 per barrel in the same period the prior year. Apache received an average price of $3.49 per thousand cubic feet (Mcf) of natural gas, compared with $3.76 per Mcf in the prior-year period.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom, Australia and Argentina. Apache posts announcements, operational updates, investor information and press releases on its website, www.apachecorp.com.

* 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/financialdata.

Conference call

Apache will conduct a conference call to discuss its results and review its portfolio at 1 p.m. Central time on Thursday, Nov. 7. The call will be webcast on Apache's website, www.apachecorp.com. A replay of the webcast will be archived on Apache's website and available for delayed playback by telephone for one week beginning at approximately 4 p.m. Central time on Nov. 7. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84102630.

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. The transaction with Sinopec is subject to customary closing conditions and may not be completed for the amount expected, in the anticipated time frame, or at all. 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.

Website:    www.apachecorp.com

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,

2013

2012

2013

2012

REVENUES AND OTHER:

   Oil revenues

$ 3,538

$ 3,220

$ 9,989

$ 9,824

   Gas revenues

692

788

2,196

2,339

   NGL revenues

179

133

489

391

Oil and gas production revenues

4,409

4,141

12,674

12,554

Derivative instrument gains (losses), net

(422)

-

(275)

-

Other 

32

38

79

133

4,019

4,179

12,478

12,687

COSTS AND EXPENSES:

  Depreciation, depletion and amortization

   Oil and gas property and equipment

      Recurring

1,330

1,206

3,906

3,535

      Additional

743

729

808

1,898

  Other assets

99

94

297

268

Asset retirement obligation accretion

66

60

196

172

Lease operating expenses

819

801

2,419

2,178

Gathering and transportation 

83

86

237

235

Taxes other than income

185

167

610

627

General and administrative

127

124

376

384

Merger, acquisitions & transition

-

7

-

29

Financing costs, net

51

40

155

125

3,503

3,314

9,004

9,451

INCOME BEFORE INCOME TAXES

516

865

3,474

3,236

Current income tax provision 

410

544

1,191

1,729

Deferred income tax provision (benefit)

(200)

141

225

174

NET INCOME 

306

180

2,058

1,333

Preferred stock dividends

6

19

44

57

INCOME ATTRIBUTABLE TO COMMON STOCK

$    300

$    161

$ 2,014

$ 1,276

NET INCOME PER COMMON SHARE:

Basic

$   0.75

$   0.41

$   5.11

$   3.29

Diluted 

$   0.75

$   0.41

$   5.06

$   3.27

WEIGHTED-AVERAGE NUMBER OF COMMON 

   SHARES OUTSTANDING:

Basic

399

391

394

388

Diluted

401

393

407

390

DIVIDENDS DECLARED PER COMMON SHARE

$   0.20

$   0.17

$   0.60

$   0.51

 

APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)

For the Quarter 

For the Nine Months 

Ended September 30,

Ended September 30,

2013

2012

2013

2012

CAPITAL EXPENDITURES (1):

Exploration & Development Costs

United States

$   1,489

$     1,422

$ 4,171

$ 3,608

Canada

155

164

502

459

North America

1,644

1,586

4,673

4,067

Egypt

263

299

813

809

Australia

284

265

911

518

North Sea

217

283

647

703

Argentina

60

65

145

222

New Ventures - International

3

51

28

84

International

827

963

2,544

2,336

 Worldwide Exploration & Development Costs

$   2,471

$    2,549

$ 7,217

$ 6,403

Gathering, Transmission and Processing Facilities

United States

$        70

$         13

$    120

$       57

Canada

55

52

111

138

Egypt

23

(22)

57

15

Australia

201

89

534

338

Argentina

3

3

7

12

Total Gathering, Transmission and Processing

$      352

$      135

$    829

$    560

Capitalized Interest

$        93

$        90

$    276

$    241

Capital Expenditures, excluding Acquisitions

$   2,916

$   2,774

$ 8,322

$ 7,204

Acquisitions

$          8

$        59

$    318

$ 3,421

(1) Accrual basis

APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)

September 30,

December 31,

2013

2012

Cash and Cash Equivalents

$ 1,251

$ 160

Other Current Assets

4,765

4,802

Property and Equipment, net

51,462

53,280

Goodwill

1,369

1,289

Other Assets

1,392

1,206

   Total Assets

$ 60,239

$ 60,737

Short-Term Debt

$ 57

$ 990

Other Current Liabilities

4,466

4,546

Long-Term Debt

10,868

11,355

Deferred Credits and Other Noncurrent Liabilities

11,867

12,515

Shareholders' Equity

32,981

31,331

   Total Liabilities and Shareholders' Equity

$ 60,239

$ 60,737

Common shares outstanding at end of period

404

392

 

APACHE CORPORATION

PRODUCTION INFORMATION

For the Quarter

For the Nine Months

Ended September 30,

Ended September 30,

2013

2012

2013

2012

OIL VOLUME - Barrels per day

Central

25,659

17,003

22,730

11,843

Permian

73,910

60,822

70,229

58,573

GOM Deepwater

7,564

6,982

7,675

6,342

GOM Shelf

45,431

38,573

45,599

42,242

GC Onshore

11,126

9,621

10,570

9,884

United States

163,690

133,001

156,803

128,884

Canada

18,573

15,075

18,112

15,311

North America

182,263

148,076

174,915

144,195

Egypt

89,294

97,546

89,530

98,648

Australia

18,787

28,191

20,195

29,690

North Sea

57,861

57,296

63,291

63,058

Argentina

9,560

9,885

9,408

9,701

International

175,502

192,918

182,424

201,097

Total

357,765

340,994

357,339

345,292

NATURAL GAS VOLUME - Mcf per day

Central

274,061

281,945

275,520

227,903

Permian

190,192

180,610

188,803

179,648

GOM Deepwater

11,804

41,267

22,562

45,333

GOM Shelf

243,477

266,415

253,360

299,897

GC Onshore

110,889

93,196

107,928

89,078

United States

830,423

863,433

848,173

841,859

Canada

529,402

604,442

523,163

617,530

North America

1,359,825

1,467,875

1,371,336

1,459,389

Egypt

350,504

329,793

357,747

354,856

Australia

212,141

215,317

212,845

217,053

North Sea

46,971

54,478

50,108

62,061

Argentina

185,962

213,745

186,241

216,399

International

795,578

813,333

806,941

850,369

Total

2,155,403

2,281,208

2,178,277

2,309,758

NGL VOLUME - Barrels per day

Central

23,437

8,305

22,006

5,271

Permian

26,057

20,739

23,131

16,613

GOM Deepwater

566

1,483

871

1,073

GOM Shelf

5,234

6,663

6,288

5,345

GC Onshore

2,216

1,886

2,343

2,083

United States

57,510

39,076

54,639

30,385

Canada

7,012

6,036

6,788

6,063

North America

64,522

45,112

61,427

36,448

North Sea

1,097

1,470

1,263

1,797

Argentina

1,713

3,006

2,254

3,022

International

2,810

4,476

3,517

4,819

Total

67,332

49,588

64,944

41,267

BOE per day

Central

94,773

72,298

90,657

55,097

Permian

131,665

111,663

124,826

105,127

GOM Deepwater

10,098

15,343

12,306

14,971

GOM Shelf

91,245

89,639

94,114

97,570

GC Onshore

31,823

27,039

30,901

26,813

United States

359,604

315,982

352,804

299,578

Canada

113,819

121,851

112,095

124,296

North America

473,423

437,833

464,899

423,874

Egypt

147,711

152,512

149,154

157,791

Australia

54,144

64,078

55,669

65,866

North Sea

66,787

67,845

72,905

75,198

Argentina

42,266

48,515

42,702

48,790

International

310,908

332,950

320,430

347,645

Total

784,331

770,783

785,329

771,519

 

APACHE CORPORATION

PRICE INFORMATION

For the Quarter 

For the Nine Months 

Ended September 30,

Ended September 30,

2013

2012

2013

2012

  AVERAGE OIL PRICE PER BARREL

Central

$ 101.90

$ 85.54

$ 93.71

$ 88.82

Permian

104.52

87.49

93.53

90.71

GOM Deepwater

108.07

102.46

107.91

106.10

GOM Shelf

110.40

104.97

109.60

109.67

GC Onshore

110.06

104.02

109.08

108.76

United States (1)

105.82

93.38

99.35

96.53

Canada

97.58

82.92

89.33

85.96

North America (1)

104.98

92.32

98.31

95.41

Egypt(1)

112.61

113.72

107.73

112.02

Australia(1)

116.21

116.79

109.40

116.39

North Sea(1)

109.33

108.44

107.61

108.60

Argentina

79.77

73.44

77.66

76.36

International (1)

110.13

110.54

106.32

109.87

Total(1)

107.50

102.62

102.40

103.83

  AVERAGE NATURAL GAS PRICE PER MCF

Central

$      3.61

$   3.24

$   3.75

$   3.04

Permian

3.66

3.07

3.76

3.20

GOM Deepwater

3.35

3.18

3.29

2.82

GOM Shelf

3.71

2.90

3.82

2.86

GC Onshore

3.67

2.95

3.83

2.70

United States (1)

3.75

3.63

3.86

3.63

Canada (1)

2.87

3.33

3.20

3.23

North America (1)

3.41

3.51

3.61

3.46

Egypt

3.01

4.04

2.98

3.86

Australia

3.98

4.76

4.54

4.45

North Sea

10.29

8.65

10.37

8.67

Argentina

2.76

2.78

2.91

2.84

International

3.64

4.21

3.84

4.10

Total (1)

3.49

3.76

3.69

3.70

  AVERAGE NGL PRICE PER BARREL

Central

$   25.61

$ 24.28

$ 24.51

$ 27.74

Permian

29.93

27.95

27.25

34.31

GOM Deepwater

31.68

30.24

32.50

33.40

GOM Shelf

30.52

31.10

28.66

33.71

GC Onshore

30.06

37.42

30.80

41.28

United States

28.25

28.25

26.55

33.51

Canada

28.77

31.01

28.49

35.02

North America

28.30

28.62

26.76

33.76

North Sea

69.77

65.45

70.51

73.60

Argentina

22.19

16.25

25.11

21.15

International

40.77

32.41

41.41

40.71

Total

28.82

28.96

27.56

34.57

(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:

?

ŸManagement uses adjusted earnings to evaluate the company's operational trends and performance relative to other oil and gas producing companies.

?

ŸManagement 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.  

?

ŸThe 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,

2013

2012

2013

2012

Income Attributable to Common Stock (GAAP)

$ 300

$ 161

$ 2,014

$ 1,276

Adjustments:

Oil & gas property write-downs, net of tax

478

539

520

1,409

Commodity derivative mark-to-market, net of tax

213

-

88

-

Deferred tax adjustments

(31)

-

15

-

U.K. decommissioning tax rate adjustment

-

118

-

118

Merger, acquisitions & transition, net of tax

-

4

-

17

Unrealized foreign currency fluctuation impact on deferred tax expense

(28)

39

(98)

40

Adjusted Earnings (Non-GAAP)

$ 932

$ 861

$ 2,539

$ 2,860

Net Income per Common Share - Diluted (GAAP)

$ 0.75

$ 0.41

$ 5.06

$ 3.27

Adjustments:

Oil & gas property write-downs, net of tax

1.18

1.33

1.28

3.49

Commodity derivative mark-to-market, net of tax

0.53

-

0.22

-

Deferred tax adjustments

(0.07)

-

0.03

-

U.K. decommissioning tax rate adjustment

-

0.30

-

0.30

Merger, acquisitions & transition, net of tax

-

0.02

-

0.05

Unrealized foreign currency fluctuation impact on deferred tax expense

(0.07)

0.10

(0.24)

0.11

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$ 2.32

$ 2.16

$ 6.35

$ 7.22

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,

2013

2012

2013

2012

Net cash provided by operating activities

$ 1,978

$ 1,623

$ 7,358

$ 6,422

Changes in operating assets and liabilities

743

793

319

1,020

Cash from operations before changes in

operating assets and liabilities

$ 2,721

$ 2,416

$ 7,677

$ 7,442

APA-F

SOURCE Apache Corporation

For further information: Media, Patrick Cassidy, (713) 296-6100, or Bill Mintz, (713) 296-7276, or Bob Dye, (713) 296-6662, or Investors, Brady Parish, Castlen Kennedy, Christopher Cortez, or Alicia Reis, (281) 302-2286

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