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Apache’s Second-Quarter Net Income Surges to $1.4 Billion or $4.28 Per Share

July 31, 2008

HOUSTON, July 31 /PRNewswire-FirstCall/ — Apache Corporation today reported that high crude oil and natural gas prices fueled record quarterly net income of $1.4 billion or $4.28 per diluted common share, a 128-percent increase from $632 million or $1.89 per share in the prior-year period.

Second-quarter cash from operations before changes in operating assets and liabilities* totaled $2.3 billion, compared with $1.5 billion in the prior-year period, and surpassed the record of $1.9 billion set in the fourth quarter of 2007.

Second-quarter production declined 3.6 percent from the prior-year period and 1 percent from the first quarter to 551,600 barrels of oil equivalent (boe) per day. The decline is primarily the result of an explosion that disrupted operations at the gas processing and transportation hub at Varanus Island in Australia as well as a strike at a refinery in Scotland that shut in production from all of the fields on the Forties Pipeline System, including Apache’s Forties Field.

“The second quarter was highlighted by record financial results, continued exploration success, and sustained progress in delivering our pipeline of development projects,” said G. Steven Farris, Apache’s president and chief executive officer. “Despite the challenges we faced during the quarter, we remain positive about the long-term outlook. Driven by successful drilling programs and seven development projects that are expected to add 135,000 boe per day to worldwide net production over the next four years, we are confident Apache is entering a period of accelerating production growth in 2009-2012.”

   Drilling highlights included:   --  The Geauxpher discovery in the deepwater Gulf of Mexico has estimated       proved and probable reserves of 100 billion cubic feet. Apache has a       40 percent working interest in the field;   --  The Heqet-2 well in Egypt tested 2,100 barrels per day from a depth of       more than 14,000 feet;   --  The Umbarka-174 well in Egypt tested 4,300 barrels per day;   --  In Canada, two Ootla shale wells drilled by Apache's partner EnCana       added further support to the current estimated potential of 9-16       trillion cubic feet net to Apache, and   --  Five wells drilled in the Forties Field in the North Sea during the       first half of 2008 averaged an aggregate of 8,900 barrels per day in       the second quarter. Apache has a 97 percent working interest in the       Forties Field.    

In Egypt, Apache expects to commence production through the Salam gas plant expansion in October. The gas plant project — one element of Apache’s development pipeline — is forecasted to contribute additional net production of 100 million cubic feet (MMcf) of gas and 5,000 barrels of condensate per day by the end of the year.

“At Varanus Island, we will resume partial gas sales over the next few days,” Farris said. “The initial rate is expected to be 110 MMcf per day; later in August, we expect production to increase to 220 MMcf per day.

“We want to assure the citizens of Western Australia that Apache understands the hardship that they have experienced and that fully restoring production is our highest priority,” Farris said.

“We are confident that Apache will overcome the temporary setbacks in Australia and the North Sea and will register its 29th annual production increase in the last 30 years,” Farris said.

During the second quarter, Apache received an average of $110.32 per barrel of oil — up 72 percent from the prior-year period — and $8.09 per thousand cubic feet (Mcf) of gas, up 47 percent.

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. Please see reconciliations    below.   

NOTE: Apache will conduct a conference call to discuss its first-quarter results at 1 p.m. Central time on July 31, 2008. 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 July 31. To access the telephone playback, dial (719) 457-0820 and provide Apache’s confirmation code, 5011412.

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 2007 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 Six Months                                 Ended June 30,           Ended June 30,                               2008         2007        2008         2007   REVENUES AND OTHER:     Oil and gas production      revenues              $3,904,118   $2,444,031  $7,082,067   $4,467,098     Other                      (3,927)      28,513       5,865        8,321                             3,900,191    2,472,544   7,087,932    4,475,419    COSTS AND EXPENSES:     Depreciation, depletion      and amortization         627,668      591,107   1,248,157    1,122,020     Asset retirement      obligation accretion      25,679       24,134      52,176       48,198     Lease operating expenses  446,738      406,667     901,376      788,774     Gathering and      transportation            39,767       34,435      80,743       65,698     Taxes other than income   298,548      143,791     541,126      253,761     General and administrative 78,872       70,798     161,295      138,660     Financing costs, net       39,050       63,358      83,303      105,421                             1,556,322    1,334,290   3,068,176    2,522,532    INCOME BEFORE INCOME    TAXES                    2,343,869    1,138,254   4,019,756    1,952,887     Current income tax      provision                702,106      297,058   1,189,906      483,580     Deferred income tax      provision                196,534      207,658     363,108      342,820    NET INCOME                1,445,229      633,538   2,466,742    1,126,487     Preferred stock dividends   1,420        1,420       2,840        2,840    INCOME ATTRIBUTABLE TO    COMMON STOCK            $1,443,809     $632,118  $2,463,902   $1,123,647    NET INCOME PER COMMON SHARE:     Basic                       $4.32        $1.91       $7.38        $3.39     Diluted                     $4.28        $1.89       $7.32        $3.37    WEIGHTED AVERAGE COMMON    SHARES OUTSTANDING         334,208      331,812     333,801      331,514                                APACHE CORPORATION                           FINANCIAL INFORMATION                               (In thousands)                                  For the Quarter        For the Six Months                                  Ended June 30,          Ended June 30,                                2008         2007       2008         2007   COSTS INCURRED: (1)     North America      exploration and      development             $801,279     $641,261  $1,544,635   $1,382,036     International      exploration and      development              682,766      507,874   1,291,229      934,243                            $1,484,045   $1,149,135  $2,835,864   $2,316,279      Oil and gas property      acquisitions            $142,848       $6,098    $150,795   $1,032,994      (1) Includes noncash asset retirement costs and capitalized interest as         follows:          Capitalized interest  $17,878      $15,898     $35,056      $37,674         Asset retirement          costs                $86,434      $52,007    $171,506     $126,828                                                   June 30,         December 31,                                                  2008               2007    BALANCE SHEET DATA:      Cash and Cash Equivalents                $1,008,442          $125,823      Other Current Assets                      3,147,904         2,626,428      Property and Equipment, net              26,934,253        25,231,593      Restricted Cash                              94,357                 -      Goodwill                                    189,252           189,252      Other Assets                                502,951           461,555      Total Assets                            $31,877,159       $28,634,651       Current Liabilities                      $4,124,303        $2,665,016      Long-Term Debt                            3,912,136         4,011,605      Deferred Credits and Other       Noncurrent Liabilities                   7,326,251         6,580,051      Shareholders' Equity                     16,514,469        15,377,979      Total Liabilities and       Shareholders' Equity                   $31,877,159       $28,634,651       Common shares outstanding at end       of period                                  334,451           332,927                                  APACHE CORPORATION                             FINANCIAL INFORMATION                                 For the Quarter         For the Six Months                                 Ended June 30,           Ended June 30,                               2008         2007        2008         2007   FINANCIAL DATA    (In thousands, except     per share data):      Revenues and other     $3,900,191   $2,472,544  $7,087,932   $4,475,419      Income Attributable to      Common Stock          $1,443,809     $632,118  $2,463,902   $1,123,647      Basic Net Income Per      Common Share               $4.32        $1.91       $7.38        $3.39      Diluted Net Income Per      Common Share               $4.28        $1.89       $7.32        $3.37      Weighted Average Common      Shares Outstanding       334,208      331,812     333,801      331,514      Diluted Shares      Outstanding              337,676      333,906     336,802      333,595    PRODUCTION AND PRICING DATA:     OIL VOLUME - Barrels per day     United States             100,049       91,060     100,364       82,901     Canada                     17,746       19,036      17,547       19,034     Egypt                      64,886       59,890      63,718       60,129     Australia                   8,367       16,071       8,894       14,117     North Sea                  56,570       55,209      57,670       54,445     Argentina                  12,067       11,282      12,146       11,041       Total                   259,685      252,548     260,339      241,667    AVERAGE OIL PRICE PER BARREL     United States              $97.64       $60.08      $90.59       $58.21     Canada                     119.16        63.75      106.33        58.71     Egypt                      126.20        68.65      112.28        62.65     Australia                  133.79        74.96      116.78        71.54     North Sea                  121.10        66.59      108.23        61.57     Argentina                   50.12        45.78       47.61        43.26       Total                    110.32        64.12       99.76        60.21    NATURAL GAS VOLUME - Mcf per day     United States             758,524      801,778     751,269      770,974     Canada                    357,828      389,218     359,289      386,136     Egypt                     233,793      234,466     238,385      238,951     Australia                 129,531      196,249     160,355      195,608     North Sea                   2,507        1,944       2,556        1,917     Argentina                 197,284      216,187     181,209      207,263       Total                 1,679,467    1,839,842   1,693,063    1,800,849    AVERAGE NATURAL GAS PRICE PER MCF     United States              $10.62        $7.29       $9.50        $7.13     Canada                       9.63         6.79        8.59         6.62     Egypt                        6.26         4.48        5.72         4.26     Australia                    2.17         1.79        2.14         1.78     North Sea                   21.90        13.39       19.05        10.90     Argentina                    1.39         1.02        1.60         1.08       Total                      8.09         5.51        7.25         5.37    NGL VOLUME - Barrels per day     United States               7,231        8,060       7,236        7,631     Canada                      1,868        2,113       2,052        2,172     Argentina                   2,905        2,816       2,812        2,726       Total                    12,004       12,989      12,100       12,529    AVERAGE NGL PRICE PER BARREL     United States              $65.27       $42.10      $61.32       $38.78     Canada                      59.26        39.28       56.05        35.29     Argentina                   32.31        36.06       39.98        33.68       Total                     56.36        40.33       55.46        37.06                                APACHE CORPORATION                           FINANCIAL INFORMATION                   (In thousands, 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 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       For the Six Months                                   Ended June 30,         Ended June 30,                                 2008        2007        2008        2007    Income Attributable to    Common Stock (GAAP)       $1,443,809    $632,118  $2,463,902  $1,123,647    Adjustments:     Foreign currency      fluctuation impact on      deferred tax expense           281      68,256     (12,079)     70,652     Impact of Canadian Federal      tax rate reductions              -     (17,685)          -     (17,074)    Adjusted  Earnings    (Non-GAAP)                $1,444,090    $682,689  $2,451,823  $1,177,225    Adjusted Earnings Per Share (Non-GAAP)       Basic                       $4.32       $2.06       $7.35       $3.55       Diluted                     $4.28       $2.04       $7.28       $3.53    Average Number of Common Shares       Basic                     334,208     331,812     333,801     331,514       Diluted                   337,676     333,906     336,802     333,595     

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,                                 2008        2007        2008        2007   Net cash provided by    operating activities      $1,929,509  $1,386,446  $3,737,913  $2,450,005   Changes in operating    assets and liabilities       390,240      80,575     426,520     209,476   Cash from operations    before changes in    operating assets and    liabilities               $2,319,749  $1,467,021  $4,164,433  $2,659,481  

APA-F

Apache Corporation

CONTACT: Bill Mintz, +1-713-296-7276, or Investors, Robert Dye,+1-713-296-6662, or David Higgins, +1-713-296-6690, all of Apache Corporation

Web site: http://www.apachecorp.com/




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