August 04, 2011 at 08:15 AM EDT
Apache Reports Record Quarterly Production of 749,000 Boe/d
Quarterly earnings exceed $1.2 billion or $3.17 per diluted share; cash flow tops $2.6 billion

HOUSTON, Aug. 4, 2011 /PRNewswire/ -- Apache Corporation (NYSE, Nasdaq: APA) reported production of 749,000 barrels of oil equivalent (boe) per day and earnings of $1.2 billion, or $3.17 per diluted share, for the three-month period ending June 30, 2011. These compare with production of 647,000 boe per day and net income of $860 million, or $2.53 per diluted share, for the same period in the prior year.

"Apache had an outstanding quarter with record production in oil, gas, and natural gas liquids," said G. Steven Farris, chairman and chief executive officer. "This reflects the scale and balance of our portfolio, which comes from diversity across geographic regions, gas and liquids production, and a constant focus on rate of return. We're realizing additional value from last year's acquisitions and pursuing opportunities for future growth at both our legacy assets and in new areas."

The combination of higher oil prices and record production levels resulted in record quarterly revenues for second quarter 2011. Oil and gas revenues were $4.4 billion, a 47 percent increase from revenues of $3.0 billion for the same period last year.  Cash from operations before changes in operating assets and liabilities* also were a quarterly record at $2.6 billion, up 44 percent from the prior year's $1.8 billion. Excluding certain items that management believes affect the comparability of operating results, Apache reported adjusted earnings* of $1.3 billion in second quarter 2011 compared with $834 million in the year-earlier period. On a per-share basis, adjusted earnings were $3.22 in the second quarter compared with $2.46 per diluted share in the prior-year period.

Liquid hydrocarbons represented 49 percent of production and 78 percent of revenues. Apache benefited from higher oil prices for its international production indexed to Dated Brent benchmarks, as well as sweet crudes from the Gulf of Mexico, which continue to receive a meaningful premium per barrel compared with production benchmarked to West Texas Intermediate prices.

On the operational and commercial front, the company has achieved several recent milestones. These include:

  • Successful bidder on nearly 515,000 acres in onshore and offshore state leases at Alaska's Cook Inlet. The company now has approximately 800,000 acres of prospective land in the region, and a seismic survey for the area is planned over the next 12-18 months.
  • Signing of a long-term sales and purchase agreement with Tokyo Electric Power (TEPCO) for liquefied natural gas (LNG) from the Wheatstone LNG project in Western Australia. The Wheatstone partners (Apache, Chevron and a subsidiary of Kuwait Foreign Petroleum Co.) will supply TEPCO with 3.1 million metric tons per annum when the facility comes online, which will be determined at project sanction forecasted for later this year. Apache's expected net share of LNG sales to TEPCO is equivalent to approximately 58 million cubic feet of natural gas per day.
  • Unitization of portions from four leases at the Lucius deepwater oil and gas discovery in the Gulf of Mexico, where Apache and its partners also signed an agreement that allows for joint venture processing of gas from a nearby third-party discovery.  
  • Agreement to a 50-50 partnership to build additional gas processing infrastructure in the Permian Basin. A new gas processing plant will remove constraints to higher production at the Deadwood field, where Apache is currently running nearly half of its 24 rigs in the region.
  • Commencement of production from Apache's most prolific development well in the Forties field (North Sea), which came online in excess of 12,500 barrels of oil per day. A second development well also completed in June came online at a daily rate of nearly 8,800 barrels of oil.
  • Drilling of five new field discoveries in the Faghur basin of Egypt's Western Desert. In aggregate the wells tested at rates exceeding 12,000 barrels of oil per day and 19 million cubic feet of natural gas.

"Our regional business model is central to our value creation," Farris said. "It provides us with many ways to win -- we're not dependent on any single market or play. This results in more predictable, profitable long-term growth."

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. From time to time, Apache posts announcements, operational updates and investor information, and copies of all press releases on its Web site, www.apachecorp.com.

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

NOTE: Apache will conduct a conference call to discuss its second-quarter 2011 results at 1 p.m. Central time on Thursday, August 4. The call will be webcast from Apache's Web site, www.apachecorp.com. The webcast replay and podcast will be archived on Apache's Web site. The conference call will be available for delayed playback by telephone for one week beginning at approximately 3 p.m. on August 4. To access the telephone playback, dial 800-642-1687 or 706-645-9291 for international calls and provide Apache's confirmation code, 21273208.

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. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties. These risks include, but are not limited to the volatility of oil and natural gas prices, uncertainties inherent in estimating oil and natural gas reserves, drilling risks, and other risks, uncertainties and factors discussed in Apache's 2010 Form 10-K as amended by Amendment No. 1 to our annual report on Form 10-K/A, on our Web site and in our other public filings and press releases. There is no assurance that Apache's expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements. Unless legally required, Apache assumes no duty to update these statements as of any future date.

APACHE CORPORATION

FINANCIAL INFORMATION

(In millions, except per share data)






























For the Quarter


For the Six Months



Ended June 30,


Ended June 30,



2011


2010


2011


2010










REVENUES AND OTHER:









Oil and gas production revenues

$         4,355


$    2,969


$     8,233


$        5,662


Other

(17)


3


30


(17)



4,338


2,972


8,263


5,645










COSTS AND EXPENSES:









Depreciation, depletion and amortization

1,029


729


1,965


1,368


Asset retirement obligation accretion

38


25


75


49


Lease operating expenses

662


446


1,285


886


Gathering and transportation

73


43


149


83


Taxes other than income

255


187


419


364


General and administrative

103


84


215


171


Merger, acquisitions & transition

6


8


11


8


Financing costs, net

41


56


86


115



2,207


1,578


4,205


3,044










INCOME BEFORE INCOME TAXES

2,131


1,394


4,058


2,601


Current income tax provision

576


339


1,219


682


Deferred income tax provision

296


195


446


354










NET INCOME

1,259


860


2,393


1,565


Preferred stock dividends

19


-


38


-










INCOME ATTRIBUTABLE TO COMMON STOCK

$         1,240


$       860


$     2,355


$        1,565










NET INCOME PER COMMON SHARE:









Basic

$           3.23


$      2.55


$       6.14


$          4.64


Diluted

$           3.17


$      2.53


$       6.03


$          4.61










WEIGHTED-AVERAGE NUMBER OF COMMON








  SHARES OUTSTANDING:









Basic

384


338


383


337


Diluted

397


339


397


339










DIVIDENDS DECLARED PER COMMON SHARE

$           0.15


$      0.15


$       0.30


$          0.30



APACHE CORPORATION

FINANCIAL INFORMATION

(In millions)






























For the Quarter


For the Six Months






Ended June 30,


Ended June 30,






2011


2010


2011


2010

CAPITAL EXPENDITURES (1):










Exploration & Development Costs











United States


$          673


$               321


$          1,288


$           618



Canada


168


162


434


365




North America


841


483


1,722


983



Egypt


284


139


477


305



Australia


156


130


318


295



North Sea


211


136


421


230



Argentina


89


57


158


94



Chile


1


4


1


14



Other International


26


-


26


-




International


767


466


1,401


938




Worldwide Exploration & Development Costs


$       1,608


$               949


$          3,123


$        1,921














Gathering, Transmission and Processing Facilities











Canada


$            42


$                 39


$               84


$             72



Egypt


25


66


54


90



Australia


68


34


119


90



Argentina


4


-


4


1




Total Gathering, Transmission and Processing


$          139


$               139


$             261


$           253














Capitalized Interest


$            63


$                 18


$             123


$             35














Capital Expenditures, excluding acquisitions


$       1,810


$            1,106


$          3,507


$        2,209














Acquisitions


$            84


$            1,028


$               95


$        1,033














(1) Accrual basis


























June 30,


December 31,










2011


2010

















BALANCE SHEET DATA:










Cash and Cash Equivalents


$       1,107


$               134






Other Current Assets


3,793


3,346






Property and Equipment, net


39,838


38,151






Goodwill


1,032


1,032






Other Assets


759


762






Total Assets


$     46,529


$          43,425


















Short-Term Debt


$          448


$                 46






Other Current Liabilities


4,036


3,478






Long-Term Debt


7,404


8,095






Deferred Credits and Other Noncurrent Liabilities


7,974


7,429






Shareholders' Equity


26,667


24,377






Total Liabilities and Shareholders' Equity


$     46,529


$          43,425


















Common shares outstanding at end of period


384


382







APACHE CORPORATION

FINANCIAL INFORMATION






























For the Quarter


For the Six Months






Ended June 30,


Ended June 30,






2011


2010


2011


2010













PRODUCTION DATA:









 OIL VOLUME - Barrels per day










Central 


        6,873


        2,929


        5,965


        2,652


Permian 


      49,823


      35,812


      49,055


      35,843


GOM Deepwater


        6,090


        1,925


        5,708


        2,063


GOM Shelf


      44,792


      44,109


      45,670


      43,887


GC Onshore


        9,679


        4,754


        9,101


        4,699



United States


    117,257


      89,529


    115,499


      89,144


Canada 


      14,408


      14,561


      14,555


      14,447



North America


    131,665


    104,090


    130,054


    103,591


Egypt 


      99,634


      98,495


    104,230


      94,642


Australia


      40,573


      60,680


      37,663


      43,978


North Sea


      57,364


      58,141


      52,195


      57,995


Argentina


        9,656


        9,874


        9,636


        9,897



International


    207,227


    227,190


    203,724


    206,512




Total


    338,892


    331,280


    333,778


    310,103













 NATURAL GAS VOLUME - Mcf per day










Central 


    223,415


    206,386


    219,535


    198,478


Permian 


    173,609


      85,950


    166,348


      93,247


GOM Deepwater


      56,673


      25,588


      58,620


      28,902


GOM Shelf


    349,697


    300,572


    349,273


    297,289


GC Onshore


      76,889


      56,390


      75,500


      55,445



United States


    880,283


    674,886


    869,276


    673,361


Canada 


    636,718


    339,611


    639,707


    326,646



North America


 1,517,001


 1,014,497


 1,508,983


 1,000,007


Egypt 


    358,870


    388,367


    365,157


    375,249


Australia


    179,582


    203,147


    181,243


    205,209


North Sea


        2,367


        2,516


        2,135


        2,540


Argentina


    215,203


    183,028


    201,722


    168,953



International


    756,022


    777,058


    750,257


    751,951




Total


 2,273,023


 1,791,555


 2,259,240


 1,751,958













 NGL VOLUME - Barrels per day










Central 


           707


           500


           747


           496


Permian 


      12,824


        6,475


      11,092


        3,977


GOM Deepwater


           430


           410


           777


           529


GOM Shelf


        5,731


        3,417


        6,067


        3,304


GC Onshore


        2,111


        1,076


        1,851


        1,068



United States


      21,803


      11,878


      20,534


        9,374


Canada 


        5,998


        1,996


        6,270


        1,866



North America


      27,801


      13,874


      26,804


      11,240


Egypt 


           (24)


                -


           101


                -


Argentina


        3,014


        3,118


        3,035


        3,204



International


        2,990


        3,118


        3,136


        3,204




Total


      30,791


      16,992


      29,940


      14,444













 BOE per day










Central 


      44,816


      37,827


      43,301


      36,228


Permian 


      91,582


      56,612


      87,872


      55,362


GOM Deepwater


      15,965


        6,600


      16,255


        7,409


GOM Shelf


    108,806


      97,622


    109,949


      96,739


GC Onshore


      24,604


      15,228


      23,536


      15,008



United States


    285,773


    213,889


    280,913


    210,746


Canada 


    126,526


      73,159


    127,443


      70,753



North America


    412,299


    287,048


    408,356


    281,499


Egypt 


    159,422


    163,223


    165,190


    157,184


Australia


      70,503


      94,538


      67,870


      78,179


North Sea


      57,758


      58,560


      52,551


      58,418


Argentina


      48,537


      43,497


      46,291


      41,260



International


    336,220


    359,818


    331,902


    335,041




Total


    748,519


    646,866


    740,258


    616,540



APACHE CORPORATION

FINANCIAL INFORMATION

































For the Quarter


For the Six Months







Ended June 30,


Ended June 30,







2011


2010


2011


2010














PRICING DATA:









 AVERAGE OIL PRICE PER BARREL










Central 


$ 97.06


$ 74.20


$     93.81


$         74.66


Permian 


98.28


73.95


93.60


74.50


GOM Deepwater


110.91


76.35


104.74


76.33


GOM Shelf 


114.29


76.91


106.46


76.89


GC Onshore


109.56


77.51


104.06


77.70



United States (1)


98.41


74.20


94.15


74.26


Canada



102.42


70.87


94.78


73.10



North America (1)


98.85


73.73


94.22


74.10


Egypt (1) 


115.26


76.08


111.05


76.27


Australia (1)


115.18


74.42


110.92


74.58


North Sea (2)


108.44


78.78


105.06


76.58


Argentina 


65.58


55.41


62.99


56.60



International (1, 2)


111.04


75.43


107.22


75.05




Total (1, 2)


106.31


74.89


102.15


74.74














 AVERAGE NATURAL GAS PRICE PER MCF










Central 


$   4.70


$   4.23


$       4.56


$           4.95


Permian 


5.25


4.76


5.13


6.03


GOM Deepwater


4.53


3.97


4.31


4.65


GOM Shelf 


4.65


4.49


4.59


5.12


GC Onshore


4.76


4.43


4.64


5.04



United States (1)


5.05


5.11


4.99


5.58


Canada (1)


4.71


4.51


4.63


4.88



North America (1)


4.91


4.91


4.84


5.35


Egypt 


4.79


3.51


4.61


3.54


Australia



2.74


2.22


2.62


2.22


North Sea



26.41


17.15


23.72


17.73


Argentina



2.74


1.88


2.48


2.01



International


3.79


2.83


3.61


2.88




Total (1)


4.54


4.01


4.43


4.29














 AVERAGE NGL PRICE PER BARREL










Central 


$ 61.18


$ 38.87


$     54.45


$         44.40


Permian 


52.09


37.73


49.34


38.96


GOM Deepwater


65.10


35.37


45.31


46.86


GOM Shelf 


50.31


42.77


46.16


48.22


GC Onshore


59.69


52.43


58.05


53.62



United States


52.91


40.48


49.22


44.63


Canada



46.63


35.76


43.25


37.97



North America


51.56


39.80


47.82


43.52


Egypt 


43.53


-


65.73


-


Argentina 


27.64


25.68


29.08


30.23



International


27.51


25.68


30.26


30.23




Total


49.22


37.21


45.98


40.58



























 (1)  Prices reflect the impact of financial derivative hedging activities.    

 (2)  Prices reflect the impact of the North Sea fixed-price oil sales contract.  



APACHE CORPORATION

FINANCIAL INFORMATION

(In millions, except per share data)











NON-GAAP FINANCIAL MEASURES:











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 Six Months




Ended June 30,


Ended June 30,




2011


2010


2011


2010











Income Attributable to Common Stock (GAAP)

$ 1,240


$    860


$ 2,355


$ 1,565











Adjustments:









Foreign currency fluctuation impact on deferred tax expense  

19


(31)


31


(25)


Merger, acquisitions & transition, net of tax

3


5


7


5

Adjusted Earnings  (Non-GAAP)

$ 1,262


$    834


$ 2,393


$ 1,545











Net Income per Common Share - Diluted (GAAP)

$   3.17


$   2.53


$   6.03


$   4.61











Adjustments:









Foreign currency fluctuation impact on deferred tax expense  

0.04


(0.09)


0.07


(0.07)


Merger, acquisitions & transition, net of tax

0.01


0.02


0.02


0.02

Adjusted Earnings Per Share - Diluted (Non-GAAP)

$   3.22


$   2.46


$   6.12


$   4.56











































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 Six Months




Ended June 30,


Ended June 30,




2011


2010


2011


2010

Net cash provided by operating activities

$ 2,745


$ 1,931


$ 4,724


$ 3,085

Changes in operating assets and liabilities

(106)


(97)


158


318

Cash from operations before changes in









operating assets and liabilities

$ 2,639


$ 1,834


$ 4,882


$ 3,403



APA-F

SOURCE Apache Corporation

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