February 07, 2008 at 08:45 AM EST
Apache's 12-Percent Production Growth, Higher Oil and Gas Prices Propel Record 2007 Earnings of $2.8 Billion or $8.39 per Share
Fourth-quarter net income tops $1 billion

HOUSTON, Feb. 7 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE:APA) today reported record 2007 earnings of $2.8 billion, or $8.39 per diluted common share, driven by record production and higher oil and natural gas prices. Apache earned $2.5 billion or $7.64 per share in 2006. Excluding the non-cash impact of foreign currency fluctuations and tax rate changes on deferred tax balances, Apache's 2007 adjusted earnings* were $8.65 per share or 25 percent above 2006 adjusted earnings.

In the fourth quarter, Apache's net income doubled to $1.07 billion, or $3.19 per share, from $519 million, or $1.56 per share, in the prior-year period. Apache's fourth-quarter adjusted earnings were $2.92 per share, up from $1.40 per share in the prior-year period.

"Apache had a record year in 2007 by virtually all financial and operational yardsticks," said G. Steven Farris, president and chief executive officer. "In addition to record earnings, Apache achieved these record results:

    --  Cash from operations before changes in operating assets and
        liabilities* totaled $6.2 billion in 2007, up 22 percent from 2006.
        Fourth-quarter cash from operations totaled $1.9 billion, up
        50 percent from the year-earlier period.
    --  Production averaged 561,239 barrels of oil equivalent (boe) per day
        during 2007 -- a 12-percent increase and the 28th annual increase in
        the last 29 years. Fourth-quarter production averaged 574,646 boe per
        day, up 8 percent from the prior-year period.
    --  Proved reserves totaled 2.45 billion boe, up 6 percent from 2006 and
        the 22nd consecutive annual increase. Apache replaced 167 percent of
        its 2007 production, including 140 percent from drilling activity.

"With exploration success at the Julimar complex in Australia, discoveries in Egypt, and encouraging results at the Ootla shale play in northern British Columbia, we built tremendous momentum that set the stage for 2008," Farris said.

"We have the largest portfolio of quality exploration prospects in the 53-year history of the company, with significant exploration drilling programs planned in our 'ACE' core growth areas of Australia, Canada and Egypt. We also have six major development projects that are expected to add production of more than 100,000 boe per day by 2011," he said.

Recent developments in international gas markets are expected to contribute to Apache's future results. Natural gas prices for new contracts in Australia have climbed from less than $2 per thousand cubic feet (Mcf) to $7 or higher in the past year as demand has grown from the domestic mining industry and the liquefied natural gas export market. Apache's Reindeer and Julimar discoveries will be coming to market in this new environment.

In Argentina, Apache's fourth-quarter natural gas price of $1.60 per Mcf was the highest quarterly realization since Apache began operations in the country and a 72-percent increase from the third quarter.

Apache added 343 million boe of reserves from all sources in 2007. The company spent $5.25 billion on exploration and development and acquisitions, excluding asset retirement obligations and capitalized interest.

Apache will redirect capital spending in Canada as a result of Alberta's recently announced changes in royalty rates. Activity in Alberta will be limited and refocused on shallow gas opportunities which were not affected by the royalty changes, and activity will increase at the Ootla shale play in British Columbia. Medium-depth gas and oil drilling activities in Alberta will be reduced.

Although liquid hydrocarbons represented about 47 percent of Apache's 2007 production, liquids provided 65 percent of revenues because global oil prices outpaced natural gas prices. Apache received $68.84 per barrel of oil in 2007, up from $59.92 per barrel in 2006, and $5.34 per Mcf of gas compared with $5.17 per Mcf in the prior year. In the fourth quarter, Apache received $83 per barrel of oil and $5.65 per Mcf of gas.

Apache Corporation discovers and produces oil and gas in the United States, Canada, the United Kingdom sector of the North Sea, Egypt, Australia and Argentina.

*Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below.

NOTE: Apache will conduct a conference call to discuss its fourth-quarter and full-year 2007 results at 11 a.m. Central Time on Thursday, Feb. 7. 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 3 p.m. on Feb. 7. To access the telephone playback, dial (719) 457-0820 and provide Apache's confirmation code, 4030561.

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 Web site. 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 Year
                                  Ended December 31,       Ended December 31,
                                 2007          2006       2007           2006

    REVENUES AND OTHER:
      Oil and gas production
       revenues              $2,996,290   $1,966,013   $9,961,982   $8,074,253
      Gain on China
       divestiture                    -            -            -      173,545
      Other                      17,374          665       15,876       40,981
                              3,013,664    1,966,678    9,977,858    8,288,779

    COSTS AND EXPENSES:
      Depreciation,
       depletion and
       amortization             624,975      514,802    2,347,791    1,816,359
      Asset retirement
       obligation accretion      23,804       24,663       96,438       88,931
      Lease operating costs     470,442      396,574    1,705,999    1,362,374
      Gathering and
       transportation costs      31,150       27,594      118,034      104,322
      Severance and other
       taxes                    188,497      121,458      541,982      553,978
      General and
       administrative            75,000       59,690      275,065      211,334
      Financing costs, net       54,149       45,578      219,937      141,886
                              1,468,017    1,190,359    5,305,246    4,279,184

    INCOME BEFORE INCOME
     TAXES                    1,545,647      776,319    4,672,612    4,009,595
      Provision for income
       taxes                    473,124      255,478    1,860,254    1,457,144

    NET INCOME                1,072,523      520,841    2,812,358    2,552,451
      Preferred stock
       dividends                  1,420        1,420        5,680        5,680

    INCOME ATTRIBUTABLE TO
     COMMON STOCK            $1,071,103     $519,421   $2,806,678   $2,546,771

    NET INCOME PER COMMON
     SHARE:
      Basic                       $3.22        $1.57        $8.45        $7.72
      Diluted                     $3.19        $1.56        $8.39        $7.64

    WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING         333,049      330,417      332,192      330,083



                              APACHE CORPORATION
                            FINANCIAL INFORMATION
                                (In thousands)

                                  For the Quarter          For the Year
                                 Ended December 31,      Ended December 31,
                                 2007        2006       2007           2006
    COSTS INCURRED: (1)
      North America
       exploration and
       development            $653,768     $783,784   $2,683,070    $2,866,942
      International
       exploration and
       development            601,543       319,902    2,027,167     1,104,456
                           $1,255,311    $1,103,686   $4,710,237    $3,971,398

      Oil and gas property
       acquisitions        $        -       $58,690   $1,050,018    $2,473,081

        (1)  Includes noncash asset retirement costs and capitalized interest
             as follows:
               Capitalized
                interest      $15,400       $15,118      $69,457       $61,301
               Asset
                retirement
                costs        $284,171       $14,904     $439,368      $390,612



                                                December 31,      December 31,
                                                    2007              2006

    BALANCE SHEET DATA:
      Cash and Cash Equivalents                   $125,823          $140,524
      Other Current Assets                       2,626,428         2,349,747
      Property and Equipment, net               25,231,593        21,346,252
      Goodwill                                     189,252           189,252
      Other Assets                                 461,555           282,400
      Total Assets                             $28,634,651       $24,308,175

      Current Liabilities                       $2,665,016        $3,811,612
      Long-Term Debt                             4,011,605         2,019,831
      Deferred Credits and Other
       Noncurrent Liabilities                    6,580,051         5,285,679
      Shareholders' Equity                      15,377,979        13,191,053
      Total Liabilities and Shareholders'
       Equity                                  $28,634,651       $24,308,175

      Common shares outstanding at end of
       period                                      332,927           330,737



                              APACHE CORPORATION
                            FINANCIAL INFORMATION



                                   For the Quarter            For the Year
                                  Ended December 31,       Ended December 31,
                                   2007        2006         2007        2006
    FINANCIAL DATA
     (In thousands, except
     per share data):

      Revenues and other      $3,013,664   $1,966,678  $9,977,858   $8,288,779

      Income Attributable to
       Common Stock           $1,071,103     $519,421  $2,806,678   $2,546,771

      Basic Net Income Per
       Common Share                $3.22        $1.57       $8.45        $7.72

      Diluted Net Income Per
       Common Share                $3.19        $1.56       $8.39        $7.64

      Weighted Average
       Common Shares
       Outstanding               333,049      330,417     332,192      330,083

      Diluted Shares
       Outstanding               335,780      332,881     334,596      333,211


    PRODUCTION AND PRICING DATA:

      OIL VOLUME - Barrels
       per day
      United States               99,953       74,413      90,759       66,832
      Canada                      18,511       19,504      18,756       20,715
      Egypt                       62,266       58,988      60,735       56,570
      Australia                   12,207       11,140      13,778       11,892
      North Sea                   56,777       59,060      53,632       58,544
      Argentina                   11,957       10,491      11,440        6,857
      China                            -            -           -        3,167
          Total                  261,671      233,596     249,100      224,577

      AVERAGE OIL PRICE PER
       BARREL
      United States               $78.78       $51.27      $66.48       $54.22
      Canada                       82.02        52.21       68.29        59.90
      Egypt                        89.77        57.81       72.51        63.60
      Australia                   102.35        57.19       79.79        68.25
      North Sea                    86.67        58.25       70.93        63.04
      Argentina                    47.32        39.24       45.99        42.79
      China                            -            -           -        62.73
        Total                      83.00        54.51       68.84        59.92

      NATURAL GAS VOLUME -
       Mcf per day
      United States              772,789      707,281     769,596      666,965
      Canada                     393,847      391,170     388,211      404,325
      Egypt                      243,226      230,968     240,777      217,601
      Australia                  193,998      200,883     194,928      186,119
      North Sea                    2,175        2,079       1,933        2,061
      Argentina                  193,128      188,310     200,903      111,994
        Total                  1,799,163    1,720,691   1,796,348    1,589,065

      AVERAGE NATURAL GAS
       PRICE PER MCF
      United States                $7.29        $6.32       $7.04        $6.54
      Canada                        6.42         5.68        6.30         6.09
      Egypt                         5.13         4.19        4.60         4.42
      Australia                     2.07         1.66        1.89         1.65
      North Sea                    20.66        10.19       15.03        10.64
      Argentina                     1.60         1.05        1.17         0.97
        Total                       5.65         4.77        5.34         5.17

      NGL VOLUME - Barrels
       per day
      United States                7,778        7,681       7,702        7,985
      Canada                       2,383        2,239       2,246        2,187
      Argentina                    2,953        2,676       2,800        1,537
        Total                     13,114       12,596      12,748       11,709

      AVERAGE NGL PRICE PER
       BARREL
      United States               $55.79       $34.83      $45.24       $38.54
      Canada                       50.14        31.31       40.55        35.40
      Argentina                    45.25        31.96       37.78        36.64
        Total                      52.39        33.59       42.78        37.70



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

    NON-GAAP FINANCIAL MEASURES:

    R

Source: Apache Corporation

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