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