October 25, 2007 at 08:30 AM EDT
Apache Earns $612 Million or $1.83 Per Share in Third Quarter
Strong oil prices fuel record cash flow and revenue

HOUSTON, Oct. 25 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE:APA) (NASDAQ:APA) today reported that record oil and gas production revenues fueled record cash flow and third-quarter earnings of $612 million, or $1.83 per diluted common share. Excluding a non-cash charge of 34 cents per share -- primarily related to the impact of foreign currency fluctuations on deferred tax balances -- Apache's adjusted earnings* were $2.17 per share.

Apache's third-quarter adjusted earnings were 23 percent above third-quarter 2006 adjusted earnings of $1.77 per share. Before adjustments, Apache earned $646 million or $1.94 per share in the prior-year period.

Cash from operations before changes in operating assets and liabilities totaled a record $1.6 billion, up 25 percent from the year-earlier period.* Oil and gas revenues increased 21 percent to $2.5 billion in the third quarter.

"Apache's strong third-quarter results demonstrated the value of our uniquely balanced portfolio," said G. Steven Farris, president and chief executive officer. "With world oil prices strengthening and North American gas prices declining from the second quarter to the third, Apache's liquid hydrocarbon production -- about half of our volumes -- accounted for two-thirds of our revenue."

Apache received $70.43 per barrel of oil in the third quarter, up 10 percent from the prior-year period and the second quarter; and $4.99 per thousand cubic feet of gas, up 3 percent from the year-earlier period and a 9 percent drop from the second quarter.

Apache's production totaled 561,412 barrels of oil equivalent (boe) per day during the third quarter, up 9 percent from the prior-year period and down slightly from the second quarter of 2007. Excluding the impact of previously announced maintenance turn-arounds in the North Sea, Apache's production was in line with its record in the second quarter of 2007. Liquid hydrocarbon production totaled 263,965 barrels per day while natural gas production averaged 1.78 billion cubic feet per day.

"We remain on track to achieve the top end of our targeted range of 9-12 percent production growth in 2007," Farris said. "We expect a strong finish to the year in every financial and operational aspect.

"Apache's evolving high-impact exploration portfolio in our core growth areas of Australia, Canada and Egypt resulted in two natural gas discoveries in Australia and a gas/condensate discovery in Egypt," he said. "In Canada, we continued to add acreage to our British Columbia shale resource play, where we now control about 400,000 gross (200,000 net) acres. We plan to test the economic viability of this play in earnest during our winter drilling campaign.

"With six development projects under way that we expect will add 108,000 boe per day over the next three years, Apache has a resource base that is capable of delivering strong growth through the end of the decade," Farris said.

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.

* Adjusted earnings and cash from operations before changes in operating

assets and liabilities are non-GAAP measures; see reconciliations below.

NOTE: Apache will conduct a conference call to discuss its third-quarter results at 1 p.m. Central time on Thursday, Oct. 25. The call will be webcast from Apache's Web site, http://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 5 p.m. on Oct. 25. To access the telephone playback, dial (719) 457-0820 and provide Apache's confirmation code, 8842910.

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 Nine Months
                               Ended September 30,      Ended September 30,
                                2007        2006         2007        2006

    REVENUES AND OTHER:
      Oil and gas production
       revenues              $2,498,594   $2,072,815  $6,965,692   $6,108,240
      Gain on China
       divestiture                    -      173,545           -      173,545
      Other                         592       15,121      (1,498)      40,316
                              2,499,186    2,261,481   6,964,194    6,322,101

    OPERATING EXPENSES:
      Depreciation,
       depletion and
       amortization             600,796      487,542   1,722,816    1,301,557
      Asset retirement
       obligation accretion      24,436       22,762      72,634       64,268
      Lease operating costs     424,232      361,784   1,235,557      965,800
      Gathering and
       transportation costs      28,674       24,815      86,884       76,728
      Severance and other taxes 125,198      117,704     353,485      432,520
      General and
       administrative            61,405       53,781     200,065      151,644
      Financing costs:
          Interest expense       82,939       61,074     230,487      154,073
          Amortization of
           deferred loan costs      875          501       2,421        1,530
          Capitalized
           interest             (18,880)     (16,108)    (56,554)     (46,183)
          Interest income        (4,567)      (3,481)    (10,566)     (13,112)
                              1,325,108    1,110,374   3,837,229    3,088,825

    INCOME BEFORE INCOME
     TAXES                    1,174,078    1,151,107   3,126,965    3,233,276
      Provision for income
       taxes                    560,730      504,043   1,387,130    1,201,666

    NET INCOME                  613,348      647,064   1,739,835    2,031,610
      Preferred stock dividends   1,420        1,420       4,260        4,260

    INCOME ATTRIBUTABLE TO
     COMMON STOCK              $611,928     $645,644  $1,735,575   $2,027,350

    NET INCOME PER COMMON SHARE:
      Basic                       $1.84        $1.96       $5.23        $6.14
      Diluted                     $1.83        $1.94       $5.19        $6.08

    WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING         332,668      329,643     331,903      329,971



                              APACHE CORPORATION
                            FINANCIAL INFORMATION
                                (In thousands)

                                 For the Quarter        For the Nine Months
                               Ended September 30,      Ended September 30,
                                2007         2006       2007          2006

    COSTS INCURRED: (1)
      North America
       exploration and
       development           $647,266      $825,450  $2,029,302    $2,083,158
      International
       exploration and
       development            491,381       309,230   1,425,624       784,554
                           $1,138,647    $1,134,680  $3,454,926    $2,867,712

      Oil and gas property
       acquisitions           $17,025      $520,358  $1,050,019    $2,414,391

        (1) Includes noncash
         asset retirement
         costs and capitalized
         interest as follows:
          Capitalized
           interest           $16,383       $16,108     $54,057       $46,183
          Asset retirement
           costs              $28,369      $231,022    $155,197      $375,708



                                               September 30,      December 31,
                                                    2007              2006

    BALANCE SHEET DATA:
      Cash and Cash Equivalents                   $111,422          $140,524
      Other Current Assets                       2,442,570         2,349,747
      Property and Equipment, net               24,455,188        21,346,252
      Goodwill                                     189,252           189,252
      Other Assets                                 452,486           282,400
      Total Assets                             $27,650,918       $24,308,175

      Current Liabilities                       $2,926,777        $3,811,612
      Long-Term Debt                             4,011,378         2,019,831
      Deferred Credits and Other
       Noncurrent Liabilities                    6,039,969         5,285,679
      Shareholders' Equity                      14,672,794        13,191,053
      Total Liabilities and Shareholders'
       Equity                                  $27,650,918       $24,308,175

      Common shares outstanding at end of
       period                                      332,647           330,737



                              APACHE CORPORATION
                            FINANCIAL INFORMATION

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

      Revenues and other     $2,499,186   $2,261,481  $6,964,194   $6,322,101

      Income Attributable to
       Common Stock            $611,928     $645,644  $1,735,575   $2,027,350

      Basic Net Income Per
       Common Share               $1.84        $1.96       $5.23        $6.14

      Diluted Net Income Per
       Common Share               $1.83        $1.94       $5.19        $6.08

      Weighted Average
       Common Shares
       Outstanding              332,668      329,643     331,903      329,971

      Diluted Shares
       Outstanding              335,117      332,855     334,086      333,402


    PRODUCTION AND PRICING DATA:

      OIL VOLUME - Barrels
       per day
        United States            97,025       67,996      87,660       64,277
        Canada                   18,451       20,509      18,838       21,123
        Egypt                    60,395       54,634      60,219       55,756
        Australia                14,685       12,249      14,308       12,146
        North Sea                48,888       49,375      52,572       58,370
        Argentina                11,708        8,960      11,266        5,632
        China                       -          2,745         -          4,234
          Total                 251,152      216,468     244,863      221,538

      AVERAGE OIL PRICE PER
       BARREL
        United States            $67.70       $58.39      $61.75       $55.38
        Canada                    73.95        66.09       63.74        62.30
        Egypt                     74.04        66.88       66.50        65.66
        Australia                 76.65        73.80       73.30        71.67
        North Sea                 73.18        67.04       65.21        64.68
        Argentina                 49.70        46.41       45.52        45.03
        China                       -          62.53         -          62.73
          Total                   70.43        63.66       63.74        61.85

      NATURAL GAS VOLUME -
       Mcf per day
        United States           763,693      719,324     768,520      653,379
        Canada                  386,659      422,397     386,312      408,758
        Egypt                   241,919      207,686     239,951      213,097
        Australia               194,520      204,465     195,242      181,143
        North Sea                 1,721        1,738       1,851        2,055
        Argentina               196,168      151,122     203,524       86,275
          Total               1,784,680    1,706,732   1,795,400    1,544,707

      AVERAGE NATURAL GAS
       PRICE PER MCF
        United States             $6.59        $6.27       $6.95        $6.62
        Canada                     5.54         5.38        6.25         6.22
        Egypt                      4.72         4.63        4.42         4.50
        Australia                  1.93         1.70        1.83         1.65
        North Sea                 16.98        13.20       12.80        10.79
        Argentina                  0.93         0.89        1.03         0.91
          Total                    4.99         4.83        5.24         5.32

      NGL VOLUME - Barrels
       per day
        United States             7,766        7,896       7,677        8,088
        Canada                    2,253        2,104       2,199        2,169
        Argentina                 2,794        2,083       2,749        1,154
          Total                  12,813       12,083      12,625       11,411

      AVERAGE NGL PRICE PER
       BARREL
        United States            $47.18       $42.19      $41.64       $39.73
        Canada                    40.39        38.66       37.05        36.83
        Argentina                 37.74        42.15       35.07        40.31
          Total                   43.92        41.57       39.41        39.23



                              APACHE CORPORATION
                            FINANCIAL INFORMATION
                                (In thousands)

    NON-GAAP FINANCIAL MEASURES:

Reconciliation of income attributable to common stock to adjusted earnings:

The press release discusses Apache's adjusted earnings. Adjusted earnings excludes certain items that management believes affect the comparability of operating results. The following provides the reasons adjusted earnings is a meaningful measure:

    -- 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
                                                      Ended September 30,
                                                    2007               2006
    Income Attributable to Common Stock (GAAP)    $611,928           $645,644

    Adjustments:
      Foreign currency fluctuation
       impact on deferred tax expense              113,882             23,610
      Impact of increased tax rates in
       the United Kingdom                                -             92,362
      Gain on China divestiture                          -           (173,545)

    Adjusted  Earnings  (Non-GAAP)                $725,810           $588,071

    Adjusted Earnings Per Share (Non-GAAP)
      Basic                                          $2.18              $1.78
      Diluted                                        $2.17              $1.77

    Average Number of Common  Shares
      Basic                                        332,668            329,643
      Diluted                                      335,117            332,855


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 September 30,
                                                    2007               2006
      Net cash provided by operating
       activities                                $1,427,467         $1,173,704
      Changes in operating assets and
       liabilities                                  190,511            122,865
      Cash from operations before changes
       in operating assets and liabilities       $1,617,978         $1,296,569

APA-F

Source: Apache Corporation

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