Apache’s 2005 Earnings Climb 56 Percent to $7.84 Per Share

HOUSTON, Feb. 2 /PRNewswire-FirstCall/ — Apache Corporation today reported 2005 earnings rose 56 percent to a record $7.84 per diluted common share, or $2.6 billion, fueled by record-high oil and natural gas prices. Apache earned $5.03 per share, or $1.7 billion, in 2004.

In the fourth quarter, Apache earned $787 million, or $2.35 per share, up 55 percent from the prior-year period, a record, despite the continuing impact of Hurricanes Katrina and Rita on Gulf of Mexico operations.

"Overall, we are pleased with Apache’s performance in 2005," said G. Steven Farris, president, chief executive officer and chief operating officer. "Despite losing approximately 5 percent of our production to hurricanes, we were able to increase worldwide production by 1.4 percent. We replaced 216 percent of our 2005 production, adding 352 million barrels of oil equivalent (boe) — 98 percent through the drill bit, with single-digit finding costs. Our year-end reserves increased 9.3 percent to a record 2.1 billion boe — the 20th consecutive annual increase."

Apache spent $3.4 billion on acquisitions and exploration and development capital in 2005, excluding a $547 million non-cash accrual for future asset retirement obligations.

"We are positive about the outlook for the year ahead," Farris said. "We started 2006 by completing our $269 million acquisition of Permian Basin assets from Amerada Hess and agreeing to purchase Pioneer’s assets in Argentina for $675 million. At year-end, we had restored 85 percent of our gross operated gas production and 67 of gross operated oil production in the Gulf Coast Region.

"We see potential for production growth in every one of our core areas," Farris said. "We anticipate 2006 production will grow 6 percent to 10 percent above 2005 levels, excluding the Pioneer transaction in Argentina.

"Our Gulf Coast Region has been a key core area for Apache," Farris said. "It had the highest gross margin of any of our regions in 2005 and generates exceptional rates of return on capital invested. It continues to be an integral part of our overall portfolio."

In 2005, Apache drilled 2,383 wells with a 91 percent success rate, Farris said. "Barring a major political or economic event, such as the counterproductive adoption of a windfall profits tax, we should be more active in 2006."

Apache is planning wildcat wells in the North Sea outside the Forties Field, the Exmouth Basin in Australia, Northeast British Columbia in Canada and the Western Desert of Egypt, as well as possible wells targeting deep gas formations on Apache’s acreage in the Gulf of Mexico, Farris said.

Apache’s liquid hydrocarbon production increased 1 percent to 243,900 barrels per day during 2005 and natural gas production rose 2 percent, to 1.26 billion cubic feet (Bcf) per day, marking the 26th time that Apache has increased production in the last 27 years.

Apache’s fourth-quarter worldwide production was below prior-year levels as a result of hurricane-related shut-ins, which peaked during the period. Apache’s liquids production averaged 227,100 barrels per day during the quarter, 10 percent below the prior-year period, and 1.23 Bcf of gas per day, 1 percent below the year-earlier quarter.

Cash from operations before changes in operating assets and liabilities totaled $4.7 billion, up 39 percent from 2004. In the fourth quarter, cash from operations totaled $1.4 billion, up from $1.1 billion in the year-earlier period. (Cash from operations before changes in operating assets and liabilities is a non-GAAP measure; see reconciliation below.)

Apache’s fourth-quarter financial results included $79 million in claims for business interruption insurance for production lost because of the hurricanes. Apache incurred $12 million of storm-related expenses including insurance premiums and additional lease operating expenses.

At year-end, Apache’s debt was 17 percent of total capitalization.

Apache was established in 1954 committed to profitable growth for the benefit of our shareholders; the same goal motivates our people today.

NOTE: Apache will webcast its conference call live at 1 p.m. Central Time on Feb. 2, 2006, from its Web site, http://www.apachecorp.com/ . The replay will be available on the Web site or by dialing (719) 457-0820 and using pass code 853853. The telephone replay will be available for one week beginning at approximately 5 p.m. on Feb. 2.

This news release contains certain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production, operating costs, exploration and acquisition activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions and uncertainties. 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.

                             APACHE CORPORATION                           FINANCIAL INFORMATION                   (In thousands, except per share data)                                For the Quarter            For the Year                              Ended December 31,        Ended December 31,                               2005         2004        2005        2004    REVENUES AND OTHER:   Oil and gas production    revenues                $2,004,363   $1,493,723  $7,457,291   $5,308,017   Other                        97,310       41,180     126,953       24,560                             2,101,673    1,534,903   7,584,244    5,332,577    OPERATING EXPENSES:   Depreciation, depletion    and amortization           360,099      326,667   1,415,682    1,222,152   Asset retirement    obligation accretion        13,704       13,337      53,720       46,060   Lease operating costs       271,879      247,991   1,040,475      864,378   Gathering and    transportation costs        26,731       21,563     100,260       82,261   Severance and other    taxes                      144,085       16,057     453,258       93,748   General and    administrative              45,812       49,373     198,272      173,194   China litigation    provision                      ---          ---         ---       71,216     Total operating      expenses                 862,310      674,988   3,261,667    2,553,009    OPERATING INCOME          1,239,363      859,915   4,322,577    2,779,568    FINANCING COSTS:   Interest expense             41,829       45,595     175,419      168,090   Amortization of deferred    loan costs                     522          657       3,748        2,471   Capitalized interest        (14,335)     (11,797)    (56,988)     (50,748)   Interest income              (1,853)      (1,533)     (5,856)      (3,328)     Net financing costs        26,163       32,922     116,323      116,485     INCOME BEFORE INCOME    TAXES                    1,213,200      826,993   4,206,254    2,663,083   Provision for income    taxes                      424,978      317,248   1,582,524      993,012    INCOME BEFORE CHANGE IN    ACCOUNTING PRINCIPLE       788,222      509,745   2,623,730    1,670,071   Cumulative effect of    change in accounting    principle, net of tax          ---       (1,317)        ---       (1,317)    NET INCOME                  788,222      508,428   2,623,730    1,668,754   Preferred stock    dividends                    1,420        1,420       5,680        5,680    INCOME ATTRIBUTABLE TO    COMMON STOCK              $786,802     $507,008  $2,618,050   $1,663,074    INCOME ATTRIBUTABLE TO    COMMON STOCK   BEFORE CHANGE IN    ACCOUNTING PRINCIPLE      $786,802     $508,325  $2,618,050   $1,664,391    BASIC NET INCOME PER    COMMON SHARE   Before change in    accounting principle         $2.39        $1.55       $7.96        $5.10   After change in    accounting principle         $2.39        $1.55       $7.96        $5.10    DILUTED NET INCOME PER    COMMON SHARE   Before change in    accounting principle         $2.35        $1.53       $7.84        $5.04   After change in    accounting principle         $2.35        $1.52       $7.84        $5.03    WEIGHTED AVERAGE COMMON    SHARES OUTSTANDING         329,859      327,203     328,929      326,046                                APACHE CORPORATION                           FINANCIAL INFORMATION                               (In thousands)                              For the Quarter              For the Year                            Ended December 31,         Ended December 31,                           2005          2004        2005            2004     COSTS INCURRED:     North America      exploration and      development        $602,807      $447,096    $2,260,136      $1,511,968     International      exploration and      development         233,531       277,859     1,107,696         829,153                         $836,338      $724,955    $3,367,832      $2,341,121      Oil and gas property      acquisitions         $3,402      $573,019       $39,228      $1,063,851      Capitalized interest $14,335       $11,797       $56,988         $50,748      Asset retirement      costs              $469,963       $56,927      $546,669        $193,953                         December 31,   December 31,                         2005           2004    BALANCE SHEET DATA:     Current Assets    $2,162,077    $1,348,782     Property and      Equipment, net   16,791,340    13,860,359     Goodwill             189,252       189,252     Other Assets         129,127       104,087     Total Assets     $19,271,796   $15,502,480      Current      Liabilities      $2,186,564    $1,282,891     Long-Term Debt     2,191,954     2,588,390     Deferred Credits      and Other      Noncurrent      Liabilities        4,352,063    3,426,778     Shareholders'      Equity            10,541,215    8,204,421     Total Liabilities      and Shareholders'      Equity           $19,271,796  $15,502,480      Common shares      outstanding at end      of period            330,121      327,458     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 Year                             Ended December 31,         Ended December 31,                             2005         2004           2005       2004     Net cash provided      by operating      activities          $1,172,174     $910,981    $4,332,270   $3,231,519     Changes in      operating assets      and liabilities        179,882      173,773       412,063      193,835     Cash from      operations before      changes in      operating      assets and      liabilities         $1,352,056   $1,084,754    $4,744,333   $3,425,354                                APACHE CORPORATION                           FINANCIAL INFORMATION                                For the Quarter            For the Year                              Ended December 31,       Ended December 31,                               2005        2004         2005        2004   FINANCIAL DATA (In    thousands, except per    share data):    Revenues and other       $2,101,673   $1,534,903  $7,584,244   $5,332,577    Income Attributable to    Common Stock              $786,802     $507,008  $2,618,050   $1,663,074    Basic Net Income Per    Common Share:     Before change in      accounting      principle                  $2.39        $1.55       $7.96        $5.10     After change in      accounting      principle                  $2.39        $1.55       $7.96        $5.10    Diluted Net Income Per    Common Share:      Before change in       accounting       principle                 $2.35        $1.53       $7.84        $5.04      After change in       accounting       principle                 $2.35        $1.52       $7.84        $5.03    Weighted Average Common    Shares Outstanding         329,859      327,203     328,929      326,046    Diluted Shares    Outstanding                334,307      332,878     333,749      330,477     PRODUCTION AND PRICING DATA:    OIL VOLUME - Barrels per day      United States             49,677       70,144      66,268       67,872      Canada                    23,310       24,993      22,499       25,305      Egypt                     58,202       53,603      55,141       52,183      Australia                 15,544       22,593      15,379       25,174      North Sea                 67,036       61,680      65,488       52,836      China                      4,892        8,960       8,132        7,583      Argentina                  1,424          638       1,163          566        Total                  220,085      242,611     234,070      231,519    AVERAGE OIL PRICE PER BARREL      United States             $49.03       $44.03      $47.97       $38.75      Canada                     55.70        44.14       53.05        38.57      Egypt                      54.80        41.78       53.69        37.35      Australia                  56.31        45.36       57.61        41.96      North Sea                  54.91        26.29       53.00        24.22      China                      54.82        33.16       44.24        32.88      Argentina                  38.82        31.89       37.54        32.89        Total                    53.63        38.72       51.66        35.24    NATURAL GAS VOLUME - Mcf per day      United States            513,695      636,559     597,481      646,619      Canada                   386,827      340,590     371,917      326,965      Egypt                    197,972      143,777     165,710      137,737      Australia                130,823      116,681     123,295      118,108      North Sea                  2,360        2,172       2,306        1,871      Argentina                  3,030        3,282       3,114        3,808        Total                1,234,707    1,243,061   1,263,823    1,235,108    AVERAGE NATURAL GAS PRICE PER MCF      United States              $9.07        $5.82       $7.22        $5.45      Canada                     10.12         5.84        7.29         5.30      Egypt                       4.41         4.19        4.59         4.35      Australia                   1.68         1.69        1.72         1.65      North Sea                  13.60         7.87        9.17         5.53      Argentina                   1.11         0.77        1.14         0.65        Total                     7.86         5.24        6.35         4.91    NGL VOLUME - Barrels per day      United States              4,655        8,416       7,553        8,268      Canada                     2,378        2,359       2,235        2,588        Total                    7,033       10,775       9,788       10,856    AVERAGE NGL PRICE PER BARREL      United States             $39.75       $30.76      $32.44       $26.66      Canada                     40.56        29.62       31.07        24.44        Total                    40.02        30.51       32.13        26.13                                APACHE CORPORATION                       OIL & GAS RESERVE INFORMATION                    For the Year Ended December 31, 2005     OIL                                  U.S.       Canada        Egypt    Australia   Balance - Dec 31, 2004       458,477      158,261       77,984     54,312       Extensions                27,055       16,531       37,431      2,623       Purchases                  2,020        1,874          ---        ---       Revisions                  4,039        2,591       (4,396)       ---       Production               (26,945)      (9,028)     (20,126)    (5,613)       Sales                     (3,078)         (32)         ---        ---   Balance - Dec 31, 2005       461,568      170,197       90,893     51,322                                 North Sea    Other Int'l    Total   Balance - Dec 31, 2004       174,188        8,818      932,040       Extensions                44,977        1,307      129,924       Purchases                    ---          ---        3,894       Revisions                      1          (65)       2,170       Production               (23,904)      (3,392)     (89,008)       Sales                        ---          ---       (3,110)   Balance - Dec 31, 2005       195,262        6,668      975,910       GAS                                 U.S.       Canada        Egypt     Australia   Balance - Dec 31, 2004     2,405,580    1,984,371      934,492    694,318       Extensions               388,844      526,876      241,420    175,502       Purchases                 17,792        5,749          ---        ---       Revisions                 23,470      (13,717)     (35,071)       ---       Production              (218,080)    (135,749)     (60,484)   (45,003)       Sales                    (51,419)        (938)         ---        ---   Balance - Dec 31, 2005     2,566,187    2,366,592    1,080,357    824,817                                 North Sea   Other Int'l    Total   Balance - Dec 31, 2004         6,804        2,364    6,027,929       Extensions                 1,441        1,350    1,335,433       Purchases                    ---          ---       23,541       Revisions                     72           17      (25,229)       Production                  (842)      (1,137)    (461,295)       Sales                        ---          ---      (52,357)   Balance - Dec 31, 2005         7,475        2,594    6,848,022      TOTAL BOE                                  U.S.       Canada        Egypt    Australia   Balance - Dec 31, 2004       859,407      488,990      233,733    170,032       Extensions                91,862      104,344       77,668     31,873       Purchases                  4,985        2,832          ---        ---       Revisions                  7,951          305      (10,241)       ---       Production               (63,292)     (31,653)     (30,207)   (13,114)       Sales                    (11,648)        (188)         ---        ---   Balance - Dec 31, 2005       889,266      564,629      270,953    188,792    Net Change (Growth)           29,859       75,639       37,220     18,760    2005 BOE Percentages           42.0%        26.7%        12.8%       8.9%                                 North Sea    Other Int'l    Total   Balance - Dec 31, 2004       175,322        9,212    1,936,695       Extensions                45,217        1,532      352,496       Purchases                    ---          ---        7,818       Revisions                     13          (62)      (2,035)       Production               (24,044)      (3,582)    (165,890)       Sales                        ---          ---      (11,836)   Balance - Dec 31, 2005       196,508        7,100    2,117,248    Net Change (Growth)           21,186       (2,112)     180,553    2005 BOE Percentages            9.3%         0.3%       100.0%                                APACHE CORPORATION                               COSTS INCURRED                    For the Year Ended December 31, 2005    Reserve Additions (BOE's)                     Central   Gulf Coast     U.S.      Canada      Egypt    Extensions        72,071     19,791      91,862     104,344     77,668   Revisions          7,821        130       7,951         305    (10,241)   Purchases          2,101      2,884       4,985       2,832        ---   Total Adds        81,993     22,805     104,798     107,481     67,427                     Australia   North Sea  Other Int'l   Total    Extensions        31,873     45,217       1,532     352,496   Revisions            ---         13         (62)     (2,035)   Purchases            ---        ---         ---       7,818   Total Adds        31,873     45,230       1,470     358,279      Costs Incurred                     Central  Gulf Coast     U.S.      Canada       Egypt    Exploration &    Development     365,995    706,045   1,072,040   1,188,096    352,324   Acquisitions      12,660        808      13,468      24,252        ---   Total            378,655    706,853   1,085,508   1,212,348    352,324                     Australia  North Sea  Other Int'l    Total    Exploration &    Development     217,816    489,072      48,484   3,367,832   Acquisitions         ---        ---       1,508      39,228   Total            217,816    489,072      49,992   3,407,060  

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