July 26, 2007 at 08:00 AM EDT
Apache Earns $632 Million or $1.89 per Share in Second Quarter as Production and Cash From Operations Achieve Record Levels

HOUSTON, July 26 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE:APA) (NASDAQ:APA) today reported second-quarter earnings of $632 million or $1.89 per diluted common share on record production and strong commodity prices. In the year-earlier period, Apache earned $722 million or $2.17 per share. Excluding a non-recurring benefit of $132 million, or 39 cents per share, for a reduction in Canadian tax rates, Apache earned $590 million or $1.78 per share in the prior period.

Production totaled 572,000 barrels of oil equivalent (boe) per day, up 14 percent from the year-earlier period and 7 percent from the first quarter of 2007, driven by successful drilling in the United States, Australia and Argentina and an acquisition of producing properties in the Permian Basin.

Worldwide liquid hydrocarbon production increased to 265,537 barrels per day, up 11 percent from the prior-year period. Gas production averaged 1.8 billion cubic feet per day, up 18 percent from the year-earlier quarter.

Cash from operations before changes in operating assets and liabilities totaled a record $1.5 billion, up from $1.3 billion in the year-earlier period. (This is a non-GAAP measure; see reconciliation below.)

"Apache's record second-quarter production was fueled by growth across our portfolio," said G. Steven Farris, Apache's president and chief executive officer. "With our strong first-half performance, we are well on our way to achieving growth at the top of our expected range of 9-12 percent in 2007."

Apache continued to benefit from a positive oil price environment, especially in overseas markets. Worldwide, Apache received $64.12 per barrel, level with the prior-year period and up 15 percent from the first quarter. Apache received $66.75 per barrel produced by the company's overseas operations compared with $60.72 per barrel in North America.

Apache received $5.51 per thousand cubic feet (Mcf) of natural gas, up from $4.97 per Mcf in the prior-year period and $5.22 per Mcf in the first quarter.

"In Apache's core growth areas of Australia, Canada and Egypt, we have matured a number of high potential exploration plays, many of which are being drilled this year," Farris said. "We are also developing six projects that are expected to add production of 108,000 boe per day by 2010."

In Australia, Apache announced a successful appraisal of the Julimar discovery. "The Julimar East-1 encountered 224 feet of net pay in six different zones, bolstering our belief that the recoverable reserves in the Julimar complex exceed 1 trillion cubic feet (Tcf) of gas," he said.

Apache also announced plans to proceed with the Van Gogh and Pyrenees offshore developments; together, the two fields are expected to add net production of 40,000 barrels per day in 2009. The Van Gogh project's first horizontal development well, the Theo 3-H, tested at a rate of 9,694 barrels per day from the main top-Barrow field pay.

In Egypt, Apache is on track to achieve its goal of doubling production by 2010 through exploration, waterflood projects and additional developments at the Qasr field on the Khalda concession.

Apache is a large oil and gas independent with operations in the United States, Canada, the United Kingdom sector of the North Sea, Egypt, Australia and Argentina.

WEBCAST NOTE: Apache will webcast a conference call to discuss its second-quarter results at 1 p.m. Central Time, Thursday, July 26, from Apache's Web site, http://www.apachecorp.com. The conference call will be available for delayed playback by telephone for one week beginning at approximately 5 p.m. on July 26. To access the telephone playback, dial (719) 457-0820 and provide Apache's confirmation code, 2456611. The conference call will be archived on Apache's Web site.

This news release contains certain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our 2006 Form 10-K and on our website. 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. We assume no duty to update these statements as of any future date.




                              APACHE CORPORATION
                            FINANCIAL INFORMATION
                    (In thousands, except per share data)

                                 For the Quarter         For the Six Months
                                  Ended June 30,            Ended June 30,
                                2007         2006         2007         2006

    REVENUES AND OTHER:
     Oil and gas
      production revenues   $2,444,031   $2,085,127   $4,467,098   $4,035,425
     Other                      23,636      (23,609)      (2,090)      25,195
                             2,467,667    2,061,518    4,465,008    4,060,620

    OPERATING EXPENSES:
     Depreciation, depletion
      and amortization         591,107      441,438    1,122,020      814,015
     Asset retirement
      obligation accretion      24,134       20,861       48,198       41,506
     Lease operating costs     418,816      312,402      811,325      604,016
     Gathering and
      transportation costs      30,185       25,809       58,210       51,913
     Severance and other taxes 131,015      168,402      228,287      314,816
     General and administrative 70,798       52,191      138,660       97,863
     Financing costs:
       Interest expense         81,816       50,136      147,548       92,999
       Amortization of
        deferred loan costs        852          521        1,546        1,029
       Capitalized interest    (15,898)     (15,882)     (37,674)     (30,075)
       Interest income          (3,412)      (3,267)      (5,999)      (9,631)
                             1,329,413    1,052,611    2,512,121    1,978,451

    INCOME BEFORE
     INCOME TAXES            1,138,254    1,008,907    1,952,887    2,082,169
      Provision for
       income taxes            504,716      285,282      826,400      697,623

    NET INCOME                 633,538      723,625    1,126,487    1,384,546
      Preferred stock dividends  1,420        1,420        2,840        2,840

    INCOME ATTRIBUTABLE
      TO COMMON STOCK         $632,118     $722,205   $1,123,647   $1,381,706

    NET INCOME PER
     COMMON SHARE:
      Basic                      $1.91        $2.19        $3.39        $4.19
      Diluted                    $1.89        $2.17        $3.37        $4.14

    WEIGHTED AVERAGE
     COMMON SHARES
     OUTSTANDING               331,812      329,862      331,514      330,137




                              APACHE CORPORATION
                            FINANCIAL INFORMATION
                                (In thousands)

                              For the Quarter         For the Six Months
                               Ended June 30,            Ended June 30,
                             2007        2006          2007         2006

    COSTS INCURRED: (1)
    North America
     exploration
     and development      $641,261    $544,822     $1,382,036    $1,257,708
    International
     exploration
     and development       507,874     251,009        934,243       475,324
                        $1,149,135    $795,831     $2,316,279    $1,733,032

    Oil and gas property
     acquisitions           $6,098  $1,631,387     $1,032,994    $1,894,033

     (1) Includes noncash asset retirement costs
         and capitalized interest as follows:

         Capitalized
          interest         $15,898     $15,882        $37,674       $30,075

         Asset retirement
          costs            $52,007    $133,579       $126,828      $144,686



                                                   June 30,      December 31,
                                                     2007            2006

        BALANCE SHEET DATA:
         Cash and Cash Equivalents                  $188,642       $140,524
         Other Current Assets                      2,352,017      2,349,747
         Property and Equipment, net              23,789,528     21,346,252
         Goodwill                                    189,252        189,252
         Other Assets                                412,492        282,400
         Total Assets                            $26,931,931    $24,308,175

         Current Liabilities                      $3,136,506     $3,811,612
         Long-Term Debt                            4,011,147      2,019,831
         Deferred Credits and Other
          Noncurrent Liabilities                   5,679,090      5,285,679
         Shareholders' Equity                     14,105,188     13,191,053
         Total Liabilities and
          Shareholders' Equity                   $26,931,931    $24,308,175

         Common shares outstanding
          at end of period                           332,007        330,737

NON-GAAP FINANCIAL MEASURES:

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,
                                  2007         2006        2007         2006
    Net cash provided by
     operating activities    $1,386,447   $1,182,024   $2,450,006   $2,225,308
    Changes in operating
     assets and liabilities      80,574       83,655      209,475      264,571
    Cash from operations
     before changes in
     operating assets and
     liabilities             $1,467,021   $1,265,679   $2,659,481   $2,489,879




                              APACHE CORPORATION
                            FINANCIAL INFORMATION


                                  For the Quarter          For the Six Months
                                   Ended June 30,            Ended June 30,
                                 2007        2006          2007         2006
    FINANCIAL DATA
     (In thousands, except
     per share data):

      Revenues and other    $2,467,667   $2,061,518    $4,465,008   $4,060,620

      Income Attributable
       to Common Stock        $632,118     $722,205    $1,123,647   $1,381,706

      Basic Net Income
       Per Common Share          $1.91        $2.19         $3.39        $4.19

      Diluted Net Income
       Per Common Share          $1.89        $2.17         $3.37        $4.14

      Weighted Average Common
       Shares Outstanding      331,812      329,862       331,514      330,137

      Diluted Shares
       Outstanding             333,906      332,920       333,595      333,671


    PRODUCTION AND PRICING DATA:

     OIL VOLUME -- Barrels per day
       United States            91,060       65,451        82,901       62,388
       Canada                   19,036       21,181        19,034       21,434
       Egypt                    59,890       55,370        60,129       56,326
       Australia                16,071       12,273        14,117       12,093
       North Sea                55,209       61,455        54,445       62,942
       Argentina                11,282        6,581        11,041        3,941
       China                         -        5,419             -        4,991
         Total                 252,548      227,730       241,667      224,115

     AVERAGE OIL PRICE PER BARREL
       United States            $60.08       $56.84        $58.21       $53.71
       Canada                    63.75        66.81         58.71        60.45
       Egypt                     68.65        69.33         62.65        65.06
       Australia                 74.96        74.58         71.54        70.57
       North Sea                 66.59        66.93         61.57        63.73
       Argentina                 45.78        44.22         43.26        43.43
       China                         -        66.66             -        62.78
         Total                   64.12        64.35         60.21        60.95

     NATURAL GAS VOLUME - Mcf per day
       United States           801,778      638,469       770,974      619,860
       Canada                  389,218      417,494       386,136      401,826
       Egypt                   234,466      218,788       238,951      215,847
       Australia               196,249      184,746       195,608      169,288
       North Sea                 1,944        2,163         1,917        2,216
       Argentina               216,187      102,935       207,263       53,315
         Total               1,839,842    1,564,595     1,800,849    1,462,352

     AVERAGE NATURAL GAS PRICE PER MCF
       United States             $7.29        $6.29         $7.13        $6.83
       Canada                     6.79         5.69          6.62         6.66
       Egypt                      4.48         4.46          4.26         4.44
       Australia                  1.79         1.58          1.78         1.62
       North Sea                 13.39         9.68         10.90         9.83
       Argentina                  1.02         0.92          1.08         0.93
         Total                    5.51         4.97          5.37         5.62

     NGL VOLUME - Barrels per day
       United States             8,060        8,811         7,631        8,185
       Canada                    2,113        2,226         2,172        2,202
       Argentina                 2,816        1,355         2,726          682
         Total                  12,989       12,392        12,529       11,069

     AVERAGE NGL PRICE PER BARREL
       United States            $42.10       $40.21        $38.78       $38.52
       Canada                    39.28        35.77         35.29        35.94
       Argentina                 36.06        37.44         33.68        37.44
         Total                   40.33        39.11         37.06        37.94

APA-F

Source: Apache Corporation

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