UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2014March 31, 2015
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-4300
APACHE CORPORATION
(exact name of registrant as specified in its charter)
Delaware | ||
(State or other jurisdiction of incorporation or organization) | 41-0747868 (I.R.S. Employer Identification Number) |
One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400
(Address of principal executive offices)
Registrant’s Telephone Number, Including Area Code: (713) 296-6000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Number of shares of registrant’s common stock outstanding as of October 31, 2014 376,482,179
Number of shares of registrant’s common stock outstanding as of April 30, 2015 | 377,094,714 |
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | For The Quarter Ended March 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
(In millions, except per common share data) | (In millions, except per share data) | |||||||||||||||||||||||
REVENUES AND OTHER: | ||||||||||||||||||||||||
Oil and gas production revenues | ||||||||||||||||||||||||
Oil and gas production revenues: | ||||||||||||||||||||||||
Oil revenues | $ | 2,753 | $ | 3,468 | $ | 8,518 | $ | 9,790 | $ | 1,362 | $ | 2,815 | ||||||||||||
Gas revenues | 538 | 645 | 1,773 | 2,048 | 387 | 646 | ||||||||||||||||||
Natural gas liquids revenues | 177 | 175 | 532 | 473 | 57 | 186 | ||||||||||||||||||
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3,468 | 4,288 | 10,823 | 12,311 | 1,806 | 3,647 | |||||||||||||||||||
Derivative instrument gains (losses), net | 273 | (422 | ) | 79 | (275 | ) | ||||||||||||||||||
Other | (1 | ) | 34 | (3 | ) | 78 | 12 | 28 | ||||||||||||||||
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3,740 | 3,900 | 10,899 | 12,114 | 1,818 | 3,675 | |||||||||||||||||||
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OPERATING EXPENSES: | ||||||||||||||||||||||||
Depreciation, depletion, and amortization: | ||||||||||||||||||||||||
Oil and gas property and equipment | ||||||||||||||||||||||||
Recurring | 1,173 | 1,272 | 3,437 | 3,740 | 1,089 | 1,109 | ||||||||||||||||||
Additional | 1,562 | 627 | 1,765 | 627 | 7,220 | — | ||||||||||||||||||
Other assets | 100 | 96 | 296 | 290 | 98 | 97 | ||||||||||||||||||
Asset retirement obligation accretion | 46 | 65 | 135 | 192 | 44 | 44 | ||||||||||||||||||
Lease operating expenses | 652 | 772 | 1,862 | 2,275 | 538 | 597 | ||||||||||||||||||
Gathering and transportation | 67 | 81 | 203 | 231 | 56 | 70 | ||||||||||||||||||
Taxes other than income | 170 | 176 | 532 | 574 | 84 | 181 | ||||||||||||||||||
General and administrative | 112 | 120 | 309 | 359 | 79 | 103 | ||||||||||||||||||
Acquisition, divestiture, and separation costs | 34 | — | 66 | — | 54 | 18 | ||||||||||||||||||
Financing costs, net | 41 | 50 | 103 | 157 | 46 | 27 | ||||||||||||||||||
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3,957 | 3,259 | 8,708 | 8,445 | 9,308 | 2,246 | |||||||||||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (217 | ) | 641 | 2,191 | 3,669 | (7,490 | ) | 1,429 | ||||||||||||||||
Current income tax provision | 297 | 409 | 1,038 | 1,190 | 44 | 416 | ||||||||||||||||||
Deferred income tax provision (benefit) | 727 | (203 | ) | 930 | 229 | (2,898 | ) | 162 | ||||||||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST | (1,241 | ) | 435 | 223 | 2,250 | (4,636 | ) | 851 | ||||||||||||||||
Net loss from discontinued operations, net of tax | — | (129 | ) | (517 | ) | (192 | ) | |||||||||||||||||
Net income (loss) from discontinued operations, net of tax | — | (517 | ) | |||||||||||||||||||||
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NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | (1,241 | ) | 306 | (294 | ) | 2,058 | (4,636 | ) | 334 | |||||||||||||||
Preferred stock dividends | — | 6 | — | 44 | ||||||||||||||||||||
Net income attributable to noncontrolling interest | 89 | — | 295 | — | 15 | 98 | ||||||||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | (1,330 | ) | $ | 300 | $ | (589 | ) | $ | 2,014 | $ | (4,651 | ) | $ | 236 | |||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS: | ||||||||||||||||||||||||
Net income (loss) from continuing operations attributable to common shareholders | $ | (1,330 | ) | $ | 429 | $ | (72 | ) | $ | 2,206 | $ | (4,651 | ) | $ | 753 | |||||||||
Net loss from discontinued operations | — | (129 | ) | (517 | ) | (192 | ) | |||||||||||||||||
Net income (loss) from discontinued operations | — | (517 | ) | |||||||||||||||||||||
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Net income (loss) attributable to common shareholders | $ | (1,330 | ) | $ | 300 | $ | (589 | ) | $ | 2,014 | $ | (4,651 | ) | $ | 236 | |||||||||
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NET INCOME (LOSS) PER COMMON SHARE: | ||||||||||||||||||||||||
BASIC NET INCOME (LOSS) PER COMMON SHARE: | ||||||||||||||||||||||||
Basic net income (loss) from continuing operations per share | $ | (3.50 | ) | $ | 1.08 | $ | (0.19 | ) | $ | 5.59 | $ | (12.34 | ) | $ | 1.92 | |||||||||
Basic net loss from discontinued operations per share | — | (0.33 | ) | (1.33 | ) | (0.48 | ) | |||||||||||||||||
Basic net income (loss) from discontinued operations per share | — | (1.32 | ) | |||||||||||||||||||||
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Basic net income (loss) per share | $ | (3.50 | ) | $ | 0.75 | $ | (1.52 | ) | $ | 5.11 | $ | (12.34 | ) | $ | 0.60 | |||||||||
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DILUTED NET INCOME (LOSS) PER COMMON SHARE: | ||||||||||||||||||||||||
Diluted net income (loss) from continuing operations per share | $ | (3.50 | ) | $ | 1.07 | $ | (0.19 | ) | $ | 5.53 | $ | (12.34 | ) | $ | 1.90 | |||||||||
Diluted net loss from discontinued operations per share | — | (0.32 | ) | (1.33 | ) | (0.47 | ) | |||||||||||||||||
Diluted net income (loss) from discontinued operations per share | — | (1.30 | ) | |||||||||||||||||||||
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Diluted net income (loss) per share | $ | (3.50 | ) | $ | 0.75 | $ | (1.52 | ) | $ | 5.06 | $ | (12.34 | ) | $ | 0.60 | |||||||||
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WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||
Basic | 381 | 399 | 387 | 394 | 377 | 394 | ||||||||||||||||||
Diluted | 381 | 401 | 387 | 407 | 377 | 396 | ||||||||||||||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.25 | $ | 0.20 | $ | 0.75 | $ | 0.60 | $ | 0.25 | $ | 0.25 |
The accompanying notes to consolidated financial statements
are an integral part of this statement.
1
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
(Unaudited)
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | For The Quarter Ended March 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | $ | (1,241 | ) | $ | 306 | $ | (294 | ) | $ | 2,058 | $ | (4,636 | ) | $ | 334 | |||||||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||||||||||
Commodity cash flow hedge activity, net of tax: | ||||||||||||||||||||||||
Reclassification of loss on settled derivative instruments | — | (1 | ) | — | 13 | |||||||||||||||||||
Change in fair value of derivative instruments | — | (5 | ) | (1 | ) | (6 | ) | — | (1 | ) | ||||||||||||||
Derivative hedge ineffectiveness reclassified into earnings | — | 1 | — | 1 | ||||||||||||||||||||
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— | (5 | ) | (1 | ) | 8 | — | (1 | ) | ||||||||||||||||
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COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | (1,241 | ) | 301 | (295 | ) | 2,066 | (4,636 | ) | 333 | |||||||||||||||
Preferred stock dividends | — | 6 | — | 44 | ||||||||||||||||||||
Comprehensive income attributable to noncontrolling interest | 89 | — | 295 | — | 15 | 98 | ||||||||||||||||||
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COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | (1,330 | ) | $ | 295 | $ | (590 | ) | $ | 2,022 | $ | (4,651 | ) | $ | 235 | |||||||||
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The accompanying notes to consolidated financial statements
are an integral part of this statement.
2
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30, | For The Quarter Ended March 31, | |||||||||||||||
2014 | 2013 | 2015 | 2014 | |||||||||||||
(In millions) | (In millions) | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income (loss) including noncontrolling interest | $ | (294 | ) | $ | 2,058 | $ | (4,636 | ) | $ | 334 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Loss from discontinued operations | 517 | 192 | — | 517 | ||||||||||||
Depreciation, depletion, and amortization | 5,498 | 4,657 | 8,407 | 1,206 | ||||||||||||
Asset retirement obligation accretion | 135 | 192 | 44 | 44 | ||||||||||||
Provision for deferred income taxes | 930 | 229 | ||||||||||||||
Provision for (benefit from) deferred income taxes | (2,898 | ) | 162 | |||||||||||||
Other | (263 | ) | 190 | (17 | ) | (41 | ) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Receivables | 572 | (49 | ) | 257 | 389 | |||||||||||
Inventories | 78 | (41 | ) | 48 | 85 | |||||||||||
Drilling advances | (84 | ) | 123 | (85 | ) | 37 | ||||||||||
Deferred charges and other | (244 | ) | (205 | ) | (102 | ) | (74 | ) | ||||||||
Accounts payable | (303 | ) | 183 | (199 | ) | (170 | ) | |||||||||
Accrued expenses | (117 | ) | (369 | ) | (199 | ) | (286 | ) | ||||||||
Deferred credits and noncurrent liabilities | 21 | 40 | 30 | 8 | ||||||||||||
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NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES | 6,446 | 7,200 | 650 | 2,211 | ||||||||||||
NET CASH PROVIDED BY DISCONTINUED OPERATIONS | 82 | 158 | — | 82 | ||||||||||||
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NET CASH PROVIDED BY OPERATING ACTIVITIES | 6,528 | 7,358 | 650 | 2,293 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
Additions to oil and gas property | (7,131 | ) | (7,186 | ) | (1,768 | ) | (2,318 | ) | ||||||||
Leasehold and property acquisitions | (92 | ) | (44 | ) | ||||||||||||
Additions to gas gathering, transmission, and processing facilities | (1,035 | ) | (852 | ) | (223 | ) | (344 | ) | ||||||||
Proceeds from divestiture of Gulf of Mexico Shelf properties | — | 3,594 | ||||||||||||||
Proceeds from sale of Deepwater Gulf of Mexico assets | 1,367 | — | ||||||||||||||
Restricted cash related to divestitures | (545 | ) | — | |||||||||||||
Proceeds from Kitimat LNG transaction, net | — | 396 | ||||||||||||||
Proceeds from sale of other oil and gas properties | 390 | 199 | ||||||||||||||
Leasehold and property acquisitions | (655 | ) | (313 | ) | ||||||||||||
Other, net | (80 | ) | (12 | ) | (35 | ) | 9 | |||||||||
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NET CASH USED IN CONTINUING INVESTING ACTIVITIES | (7,689 | ) | (4,174 | ) | (2,118 | ) | (2,697 | ) | ||||||||
NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS | 748 | (160 | ) | |||||||||||||
NET CASH PROVIDED BY DISCONTINUED OPERATIONS | — | 748 | ||||||||||||||
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NET CASH USED IN INVESTING ACTIVITIES | (6,941 | ) | (4,334 | ) | (2,118 | ) | (1,949 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
Commercial paper and bank credit facilities, net | 1,246 | (539 | ) | 1,028 | (2 | ) | ||||||||||
Payments on fixed rate debt | — | (900 | ) | |||||||||||||
Distributions to noncontrolling interest | (124 | ) | — | (21 | ) | — | ||||||||||
Dividends paid | (271 | ) | (280 | ) | (94 | ) | (79 | ) | ||||||||
Treasury stock activity, net | (1,830 | ) | (249 | ) | — | (484 | ) | |||||||||
Other | 38 | 38 | 15 | — | ||||||||||||
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NET CASH USED IN CONTINUING FINANCING ACTIVITIES | (941 | ) | (1,930 | ) | ||||||||||||
NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES | 928 | (565 | ) | |||||||||||||
NET CASH USED IN DISCONTINUED OPERATIONS | (42 | ) | (3 | ) | — | (42 | ) | |||||||||
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NET CASH USED IN FINANCING ACTIVITIES | (983 | ) | (1,933 | ) | ||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,396 | ) | 1,091 | |||||||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 928 | (607 | ) | |||||||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (540 | ) | (263 | ) | ||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 1,906 | 160 | 769 | 1,906 | ||||||||||||
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CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 510 | $ | 1,251 | $ | 229 | $ | 1,643 | ||||||||
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SUPPLEMENTARY CASH FLOW DATA: | ||||||||||||||||
Interest paid, net of capitalized interest | $ | 143 | $ | 185 | $ | 89 | $ | 70 | ||||||||
Income taxes paid, net of refunds | 1,134 | 1,344 | 142 | 491 |
The accompanying notes to consolidated financial statements
are an integral part of this statement.
3
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, | December 31, | |||||||||||||||
2014 | 2013 | March 31, 2015 | December 31, 2014 | |||||||||||||
(In millions) | (In millions) | |||||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||
Cash and cash equivalents | $ | 510 | $ | 1,906 | $ | 229 | $ | 769 | ||||||||
Short-term restricted cash | 74 | — | ||||||||||||||
Receivables, net of allowance | 2,287 | 2,952 | 1,767 | 2,024 | ||||||||||||
Inventories | 713 | 891 | 666 | 708 | ||||||||||||
Drilling advances | 434 | 371 | 468 | 388 | ||||||||||||
Assets held for sale | 1,804 | 1,628 | ||||||||||||||
Deferred tax asset | 769 | 769 | ||||||||||||||
Prepaid assets and other | 408 | 246 | 203 | 129 | ||||||||||||
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4,426 | 6,366 | 5,906 | 6,415 | |||||||||||||
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PROPERTY AND EQUIPMENT: | ||||||||||||||||
Oil and gas, on the basis of full-cost accounting: | ||||||||||||||||
Proved properties | 86,963 | 83,390 | 91,634 | 89,852 | ||||||||||||
Unproved properties and properties under development, not being amortized | 7,928 | 8,363 | 6,753 | 7,014 | ||||||||||||
Gathering, transmission and processing facilities | 7,874 | 6,995 | 5,472 | 5,440 | ||||||||||||
Other | 1,107 | 1,071 | 1,161 | 1,152 | ||||||||||||
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103,872 | 99,819 | 105,020 | 103,458 | |||||||||||||
Less: Accumulated depreciation, depletion, and amortization | (50,837 | ) | (47,398 | ) | ||||||||||||
Less: Accumulated depreciation, depletion and amortization | (63,790 | ) | (55,382 | ) | ||||||||||||
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53,035 | 52,421 | 41,230 | 48,076 | |||||||||||||
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OTHER ASSETS: | ||||||||||||||||
Long-term restricted cash | 471 | — | ||||||||||||||
Goodwill | 1,369 | 1,369 | 87 | 87 | ||||||||||||
Deferred charges and other | 1,689 | 1,481 | 1,427 | 1,374 | ||||||||||||
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$ | 60,990 | $ | 61,637 | $ | 48,650 | $ | 55,952 | |||||||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||
Accounts payable | $ | 1,316 | $ | 1,616 | $ | 1,010 | $ | 1,210 | ||||||||
Current debt | 20 | 53 | 2,598 | — | ||||||||||||
Current asset retirement obligation | 177 | 121 | 47 | 37 | ||||||||||||
Derivative instruments | — | 299 | ||||||||||||||
Other current liabilities | 2,794 | 2,611 | 1,838 | 2,417 | ||||||||||||
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4,307 | 4,700 | 5,493 | 3,664 | |||||||||||||
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LONG-TERM DEBT | 10,902 | 9,672 | 9,675 | 11,245 | ||||||||||||
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DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES: | ||||||||||||||||
Income taxes | 9,298 | 8,364 | 6,611 | 9,499 | ||||||||||||
Asset retirement obligation | 3,096 | 3,101 | 3,094 | 3,048 | ||||||||||||
Other | 401 | 407 | 372 | 359 | ||||||||||||
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12,795 | 11,872 | 10,077 | 12,906 | |||||||||||||
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COMMITMENTS AND CONTINGENCIES (Note 8) | ||||||||||||||||
COMMITMENTS AND CONTINGENCIES (Note 7) | ||||||||||||||||
EQUITY: | ||||||||||||||||
Common stock, $0.625 par, 860,000,000 shares authorized, 409,671,364 and 408,041,088 shares issued, respectively | 256 | 255 | ||||||||||||||
Common stock, $0.625 par, 860,000,000 shares authorized, 410,110,362 and 409,706,347 shares issued, respectively | 256 | 256 | ||||||||||||||
Paid-in capital | 12,379 | 12,251 | 12,456 | 12,438 | ||||||||||||
Retained earnings | 21,156 | 22,032 | 11,504 | 16,249 | ||||||||||||
Treasury stock, at cost, 32,853,183 and 12,268,180 shares, respectively | (2,857 | ) | (1,027 | ) | ||||||||||||
Treasury stock, at cost, 33,192,567 and 33,201,455 shares, respectively | (2,889 | ) | (2,890 | ) | ||||||||||||
Accumulated other comprehensive loss | (116 | ) | (115 | ) | (116 | ) | (116 | ) | ||||||||
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APACHE SHAREHOLDERS’ EQUITY | 30,818 | 33,396 | 21,211 | 25,937 | ||||||||||||
Noncontrolling interest | 2,168 | 1,997 | 2,194 | 2,200 | ||||||||||||
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TOTAL EQUITY | 32,986 | 35,393 | 23,405 | 28,137 | ||||||||||||
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$ | 60,990 | $ | 61,637 | $ | 48,650 | $ | 55,952 | |||||||||
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The accompanying notes to consolidated financial statements
are an integral part of this statement.
4
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
(Unaudited)
Series D Preferred Stock | Common Stock | Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | APACHE SHAREHOLDERS’ EQUITY | Non Controlling Interest | TOTAL EQUITY | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2012 | $ | 1,227 | $ | 245 | $ | 9,859 | $ | 20,161 | $ | (30 | ) | $ | (131 | ) | $ | 31,331 | $ | — | $ | 31,331 | ||||||||||||||||
Net income | — | — | — | 2,058 | — | — | 2,058 | — | 2,058 | |||||||||||||||||||||||||||
Commodity hedges, net of tax | — | — | — | — | — | 8 | 8 | — | 8 | |||||||||||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||||||||||
Preferred | — | — | — | (44 | ) | — | — | (44 | ) | — | (44 | ) | ||||||||||||||||||||||||
Common ($0.60 per share) | — | — | — | (237 | ) | — | — | (237 | ) | — | (237 | ) | ||||||||||||||||||||||||
Common shares issued | — | 9 | 1,218 | — | — | — | 1,227 | — | 1,227 | |||||||||||||||||||||||||||
Common stock activity, net | — | 1 | (12 | ) | — | — | — | (11 | ) | — | (11 | ) | ||||||||||||||||||||||||
Treasury stock activity, net | — | — | (1 | ) | — | (250 | ) | — | (251 | ) | — | (251 | ) | |||||||||||||||||||||||
Conversion of Series D preferred stock | (1,227 | ) | — | — | — | — | — | (1,227 | ) | — | (1,227 | ) | ||||||||||||||||||||||||
Compensation expense | — | — | 135 | — | — | — | 135 | — | 135 | |||||||||||||||||||||||||||
Other | — | — | (8 | ) | — | — | — | (8 | ) | — | (8 | ) | ||||||||||||||||||||||||
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BALANCE AT SEPTEMBER 30, 2013 | $ | — | $ | 255 | $ | 11,191 | $ | 21,938 | $ | (280 | ) | $ | (123 | ) | $ | 32,981 | $ | — | $ | 32,981 | ||||||||||||||||
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BALANCE AT DECEMBER 31, 2013 | $ | — | $ | 255 | $ | 12,251 | $ | 22,032 | $ | (1,027 | ) | $ | (115 | ) | $ | 33,396 | $ | 1,997 | $ | 35,393 | ||||||||||||||||
Net income (loss) | — | — | — | (589 | ) | — | — | (589 | ) | 295 | (294 | ) | ||||||||||||||||||||||||
Distributions to noncontrolling interest | — | — | — | — | — | — | — | (124 | ) | (124 | ) | |||||||||||||||||||||||||
Commodity hedges, net of tax | — | — | — | — | — | (1 | ) | (1 | ) | — | (1 | ) | ||||||||||||||||||||||||
Dividends: | ||||||||||||||||||||||||||||||||||||
Common ($0.75 per share) | — | — | — | (287 | ) | — | — | (287 | ) | — | (287 | ) | ||||||||||||||||||||||||
Common stock activity, net | — | 1 | (12 | ) | — | — | — | (11 | ) | — | (11 | ) | ||||||||||||||||||||||||
Treasury stock activity, net | — | — | (1 | ) | — | (1,830 | ) | — | (1,831 | ) | — | (1,831 | ) | |||||||||||||||||||||||
Compensation expense | — | — | 145 | — | — | — | 145 | — | 145 | |||||||||||||||||||||||||||
Other | — | — | (4 | ) | — | — | — | (4 | ) | — | (4 | ) | ||||||||||||||||||||||||
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BALANCE AT SEPTEMBER 30, 2014 | $ | — | $ | 256 | $ | 12,379 | $ | 21,156 | $ | (2,857 | ) | $ | (116 | ) | $ | 30,818 | $ | 2,168 | $ | 32,986 | ||||||||||||||||
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Common Stock | Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | APACHE SHAREHOLDERS’ EQUITY | Non Controlling Interest | TOTAL EQUITY | |||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2013 | $ | 255 | $ | 12,251 | $ | 22,032 | $ | (1,027 | ) | $ | (115 | ) | $ | 33,396 | $ | 1,997 | $ | 35,393 | ||||||||||||||
Net income | — | — | 236 | — | — | 236 | 98 | 334 | ||||||||||||||||||||||||
Commodity hedges, net of tax | — | — | — | — | (1 | ) | (1 | ) | — | (1 | ) | |||||||||||||||||||||
Common dividends ($0.25 per share) | — | — | (98 | ) | — | — | (98 | ) | — | (98 | ) | |||||||||||||||||||||
Common stock activity, net | — | 33 | — | — | — | 33 | — | 33 | ||||||||||||||||||||||||
Treasury stock activity, net | — | — | — | (484 | ) | — | (484 | ) | — | (484 | ) | |||||||||||||||||||||
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BALANCE AT MARCH 31, 2014 | $ | 255 | $ | 12,284 | $ | 22,170 | $ | (1,511 | ) | $ | (116 | ) | $ | 33,082 | $ | 2,095 | $ | 35,177 | ||||||||||||||
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BALANCE AT DECEMBER 31, 2014 | $ | 256 | $ | 12,438 | $ | 16,249 | $ | (2,890 | ) | $ | (116 | ) | $ | 25,937 | $ | 2,200 | $ | 28,137 | ||||||||||||||
Net income (loss) | — | — | (4,651 | ) | — | — | (4,651 | ) | 15 | (4,636 | ) | |||||||||||||||||||||
Distributions to noncontrolling interest | — | — | — | — | — | — | (21 | ) | (21 | ) | ||||||||||||||||||||||
Common dividends ($0.25 per share) | — | — | (94 | ) | — | — | (94 | ) | — | (94 | ) | |||||||||||||||||||||
Common stock activity, net | — | 18 | — | — | — | 18 | — | 18 | ||||||||||||||||||||||||
Treasury stock activity, net | — | — | — | 1 | — | �� | 1 | — | 1 | |||||||||||||||||||||||
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BALANCE AT MARCH 31, 2015 | $ | 256 | $ | 12,456 | $ | 11,504 | $ | (2,889 | ) | $ | (116 | ) | $ | 21,211 | $ | 2,194 | $ | 23,405 | ||||||||||||||
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The accompanying notes to consolidated financial statements
are an integral part of this statement.
5
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These financial statements have been prepared by Apache Corporation (Apache or the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Apache’s CurrentAnnual Report on Form 8-K dated July 17, 201410-K for the fiscal year ended December 31, 2013,2014, which contains a summary of the Company’s significant accounting policies and other disclosures.
The Company’s financial statements for prior periods include reclassifications that were made to conform to the current-period presentation. In March 2014, Apache completed the sale of all of its operations in Argentina. Results of operations and cash flows for Argentina operations are reflected as discontinued operations in the Company’s financial statements for all periods presented. For more information regarding this divestiture, please refer to Note 2–Acquisitions and Divestitures.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As of September 30, 2014,March 31, 2015, Apache’s significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies to the consolidated financial statements contained in Apache’s CurrentAnnual Report on Form 8-K dated July 17, 201410-K for the fiscal year ended December 31, 2013, other than the change in income taxes noted below and in Note 7—Income Taxes.2014.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the fair value determination of acquired assets and liabilities and assets held for sale, the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom, assessing asset retirement obligations, and the estimate of income taxes. Actual results could differ from those estimates.
Restricted Cash
The Company classifies cash balances as restricted cash when cash is restricted as to withdrawal or usage. As of September 30, 2014, the Company had $545 million of proceeds from the sale of deepwater Gulf of Mexico properties held by a qualified intermediary and available for use in a like-kind exchange under Section 1031 of the U.S. Internal Revenue Code. As of the date of this filing, the Company has utilized or plans to utilize $471 million of the cash held by the qualified intermediary in the acquisition of like-kind property, and as such, this amount is classified as long-term restricted cash on Apache’s consolidated balance sheet as of September 30, 2014. The remaining $74 million of restricted cash was returned to Apache in October and, as such, is classified as short-term restricted cash on Apache’s consolidated balance sheet as of September 30, 2014. For more information regarding the sale of the deepwater Gulf of Mexico properties, please refer to Note 2—Acquisitions and Divestitures.
Oil and Gas Property
The Company follows the full-cost method of accounting for its oil and gas property. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, including salaries, benefits and other internal costs directly identified with these activities, and oil and gas property acquisitions are capitalized. The net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for designated cash flow hedges. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. For a discussion of the calculation of estimated future net cash flows, please refer to Note 14—Supplemental Oil and Gas Disclosures to the consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as “Additional depreciation, depletion and amortization” (DD&A) in the accompanying statement of consolidated operations. Such limitations are imposed separately on a country-by-country basis and are tested quarterly. For a discussion of the calculation of estimated future net cash flows, please refer to Note 14—Supplemental Oil and Gas Disclosures to the consolidated financial statements contained in Apache’s Current Report on Form 8-K dated July 17, 2014 for the fiscal year ended December 31, 2013.
6
In the thirdfirst quarter of 2014,2015, the Company recorded $1.5$5.2 billion ($996 million3.4 billion net of tax), $1.4 billion ($1.0 billion net of tax), and $17$632 million ($7316 million net of tax) in non-cash write-downs of the carrying value of the Company’s U.S., Canada, and North Sea proved oil and gas properties, respectively. In the second quarter of 2014, the Company recorded a $203 million ($77 million net of tax) non-cash write-down of the carrying value of the Company’s North Sea proved oil and gas properties.
Income Taxes
Apache records deferred tax assets and liabilities to account for the expected future tax consequences of events that have been recognized in the financial statements and tax returns. The Company routinely assesses the realizability of its deferred tax assets. If the Company concludes that it is more likely than not that some or all of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance. Numerous judgments and assumptions are inherent in the determination of future taxable income, including factors such as future operating conditions (particularly as related to prevailing oil and gas prices) and changing tax laws.6
Apache is required to assess whether the undistributed earnings of its foreign subsidiaries will be permanently reinvested. In the third quarter of 2014, Apache evaluated its permanent reinvestment position and determined that undistributed earnings from certain subsidiaries located in Apache’s Australia, Egypt, and North Sea regions will no longer be permanently reinvested. As a result of this change in position, Apache recorded a U.S. deferred income tax liability of $814 million on the undistributed earnings of subsidiaries located in these regions. Undistributed earnings of Apache’s Canadian subsidiaries remain permanently reinvested. Apache does not record U.S. deferred income taxes on foreign subsidiaries that are deemed to be permanently reinvested. When such earnings are no longer deemed permanently reinvested, Apache will recognize the appropriate U.S. current or deferred income tax liabilities. In addition, the Company recorded $249 million of U.S. deferred income tax expense on foreign earnings that were distributed to the U.S. in the third quarter of 2014.
New Pronouncements Issued But Not Yet Adopted
InOn April 2014,7, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08—Presentation2015-03, which simplifies the presentation of debt issuance costs. The new standard requires debt issuance costs to be presented as a direct deduction from the carrying value of the associated debt liability, whereas they are currently being presented as a component of “deferred charges and other” on the balance sheet. The new standard creates consistency in the way debt issuance costs and debt discounts are presented on the balance sheet and better aligns U.S. GAAP with International Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.Standards (IFRS). ASU 2014-08 modifies the criteria for disposals to qualify as discontinued operations and expands related disclosures. The guidance2015-03 is effective for annual and interim reporting periods beginning after December 15, 2014. Adoption2015. The Company will apply the change retrospectively and does not expect the adoption of this amendment will notto have a material effectimpact on ourits consolidated financial position or results of operations.statements.
In May 2014, the FASB and the International Accounting Standards Board (IASB) issued a joint revenue recognition standard, ASU 2014-09. The new standard removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The guidance requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016.2016, pending a one-year deferral currently under consideration. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Company is currently evaluating the level of effort needed to implement the standard, the impact of adopting this standard on its consolidated financial statements, and whether to use the full retrospective approach or the modified retrospective approach.
In August 2014, the FASB issued ASU No. 2014-15, which requires management of public and private companies to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable) and, if so, to disclose that fact. Management will be required to make this evaluation for both annual and interim reporting periods, if applicable. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The Company does not expect the adoption of this amendment to have a material impact on its consolidated financial statements.
2. ACQUISITIONS AND DIVESTITURES
2015 Activity
LNG Projects Divestiture
In April 2015, Apache completed the previously disclosed sale of its interest in two LNG projects, Wheatstone LNG in Australia and Kitimat LNG in Canada, along with the associated upstream oil and gas assets, to Woodside Petroleum Limited (Woodside). Total proceeds for the sale were $3.7 billion, which includes reimbursement of Apache’s net expenditure in the Wheatstone and Kitimat LNG projects, changes in working capital and other contractual adjustments between the effective date, July 1, 2014, and closing.
As a result of the sale of these projects, the LNG facilities on Apache’s consolidated balance sheet and Apache’s investment in Pacific Trail Pipelines Limited Partnership qualify as held for sale as of March 31, 2015. A summary of the associated assets and liabilities classified as held for sale on our consolidated balance sheet as of March 31, 2015, and December 31, 2014, is detailed below:
March 31, 2015 | December 31, 2014 | |||||||||||||||||||||||
Canada | Australia | Total | Canada | Australia | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets | $ | 15 | $ | — | $ | 15 | $ | 30 | $ | — | $ | 30 | ||||||||||||
GTP assets | 229 | 1,459 | 1,688 | 200 | 1,297 | 1,497 | ||||||||||||||||||
Other long-term assets | 101 | — | 101 | 101 | — | 101 | ||||||||||||||||||
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Assets held for sale(1) | $ | 345 | $ | 1,459 | $ | 1,804 | $ | 331 | $ | 1,297 | $ | 1,628 | ||||||||||||
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LIABILITIES | ||||||||||||||||||||||||
Current liabilities | $ | 1 | $ | — | $ | 1 | $ | 12 | $ | — | $ | 12 | ||||||||||||
Other long-term liabilities | 6 | — | 6 | 7 | — | 7 | ||||||||||||||||||
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Liabilities held for sale(1) | $ | 7 | $ | — | $ | 7 | $ | 19 | $ | — | $ | 19 | ||||||||||||
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(1) | Assets held for sale are classified as current assets in the Consolidated Balance Sheet. Liabilities held for sale are recorded in “Other current liabilities” in the Consolidated Balance Sheet. |
7
In connection with classifying these assets to held for sale, a separate impairment analysis was performed for each long-lived asset within the disposal group. The analysis was based on the estimated fair value of the assets in the disposal group, which was equivalent to the allocated purchase price associated with the transaction. The transaction’s purchase price was allocated based on the fair value of each asset in the disposal group. Each asset’s fair value was determined using a combination of the income approach, specifically discounted cash flows, and the cost approach. The income approach considered management views on current operating measures as well as assumptions pertaining to market forces in the oil and gas industry, such as future production, future commodity prices, and costs. These assumptions were applied to develop future cash flow projections that were then discounted to estimate fair value, using a discount rate believed to be consistent with those used by principal market participants. The cost approach reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost) and is typically used to measure the fair value of tangible assets that are used in combination with other assets. Apache has classified these non-recurring fair value measurements as Level 3 in the fair value hierarchy.
In the fourth quarter of 2014, Apache recognized an impairment loss on held for sale assets totaling $1.0 billion ($753 million net of tax). As the sale and purchase agreements provide for Apache’s net expenditures incurred in connection with these projects subsequent to the effective date to be reimbursed by Woodside, the Company has recorded no further loss during the first quarter of 2015.
The upstream oil and natural gas properties associated with this sale are not presented as held for sale pursuant to the rules governing full-cost accounting for oil and gas properties. Approximately $1.4 billion and $500 million of the sale proceeds have been allocated to the Australia and Canada upstream assets, respectively. Proceeds from the disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless a significant portion (greater than 25 percent) of the Company’s reserve quantities in a particular country are sold, in which case a gain or loss is recognized in income. Upon closing the transaction in the second quarter of 2015, a loss of approximately $900 million ($600 million net of tax) will be recognized for the sale of the Australian upstream assets that represented approximately 50 percent of the region’s total reserves. Reserves divested in Canada were not a significant portion of the region total.
Australia Divestiture
On April 8, 2015, Apache Corporation announced an agreement to sell its Australian subsidiary Apache Energy Limited (AEL) to a consortium of private equity funds managed by Macquarie Capital Group Limited and Brookfield Asset Management Inc. for cash consideration of $2.1 billion. The Company estimates a loss of approximately $1 billion upon closing the transaction. The ultimate amount of loss will be determined by date of completion, impact of customary post-closing adjustments and finalization of various estimates. The transaction is expected to close mid-year 2015 and is subject to necessary government and regulatory approvals. The effective date of the sale is October 1, 2014.
Upon closing, Apache will have exited essentially all of the Company’s Australian operations. The associated results of operations for Australia and the loss on disposals will be classified as discontinued operations for all periods presented in subsequent SEC filings.
Leasehold Acquisitions
During the first quarter of 2015, Apache completed $92 million of leasehold acquisitions primarily in our North America onshore regions.
2014 Activity
Anadarko Basin and Southern Louisiana Divestitures
In December 2014, Apache completed the sale of certain Anadarko basin and non-core southern Louisiana oil and gas assets for approximately $1.3 billion in two separate transactions. In the Anadarko basin, Apache sold approximately 115,000 net acres in Wheeler County, Texas, and western Oklahoma. In southern Louisiana, Apache sold its working interest in approximately 90,000 net acres. The effective date of both of these transactions was October 1, 2014.
Gulf of Mexico Deepwater Divestiture
On June 30, 2014, Apache completed the sale of non-operated interests in the Lucius and Heidelberg development projects and 11 primary termprimary-term deepwater exploration blocks in the Gulf of Mexico for $1.4 billion. The effective date of the transaction was May 1, 2014. Apache’s net book value of oil and gas properties was reduced by $850 million of proved property costs and $518 million of unproved property costs as a result of the transaction.
7
Canada Divestiture
On April 30, 2014, Apache completed the sale of primarily dryproducing oil and gas producing hydrocarbon assets in the Deep Basin area of western Alberta and British Columbia, Canada, for $374 million. The assets compriseApache sold primarily dry-gas producing properties comprising 328,400 net acres in the Ojay, Noel, and Wapiti areas. In the Wapiti area, Apache retained 100 percent of its working interest in horizons below the Cretaceous, in the Wapiti area, including rights to the liquids-rich Montney and other deeper horizons. The effective date of the transaction was January 1, 2014.
8
Argentina Divestiture
On March 12, 2014, Apache’s subsidiaries completed the sale of all of the Company’s operations in Argentina to YPF Sociedad Anónima for cash consideration of $800 million (subject to customary closing adjustments) plus the assumption of $52 million of bank debt as of June 30, 2013. The results of operations during 2014 related to Argentina have been classified as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q. The carrying amounts of the major classes of assets and liabilities associated with the disposition were as follows:
December 31, | ||||
2013 | ||||
(In millions) | ||||
ASSETS | ||||
Current assets | $ | 150 | ||
Net property and equipment | 1,416 | |||
Other assets | 12 | |||
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Total assets | $ | 1,578 | ||
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LIABILITIES | ||||
Current debt | $ | 51 | ||
Other current liabilities | 95 | |||
Asset retirement obligations | 91 | |||
Other long-term liabilities | 21 | |||
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Total liabilities | $ | 258 | ||
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Sales and other operating revenues and the loss from discontinued operations related to the Argentina disposition were as follows:
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues and other from discontinued operations | $ | — | $ | 118 | $ | 87 | $ | 364 | ||||||||
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Loss from Argentina divestiture | — | — | (539 | ) | — | |||||||||||
Loss from operations in Argentina | — | (129 | ) | (1 | ) | (192 | ) | |||||||||
Income tax benefit | — | — | 23 | — | ||||||||||||
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Loss from discontinued operations, net of tax | $ | — | $ | (129 | ) | $ | (517 | ) | $ | (192 | ) | |||||
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2013 Activity
For the Quarter Ended March 31, | ||||||||
2015 | 2014 | |||||||
(In millions) | ||||||||
Revenues and other from discontinued operations | $ | — | $ | 87 | ||||
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Loss from Argentina divestiture | — | (539 | ) | |||||
Loss from operations in Argentina | — | (1 | ) | |||||
Income tax benefit | — | 23 | ||||||
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Loss from discontinued operations, net of tax | $ | — | $ | (517 | ) | |||
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Egypt PartnershipLeasehold Acquisitions
On November 14, 2013,During the first quarter of 2014, Apache completed the sale of a one-third minority participation in its Egypt oil and gas business to a subsidiary of Sinopec International Petroleum Exploration and Production Corporation (Sinopec). Apache received cash consideration of $2.95 billion after customary closing adjustments. Apache continues to operate its Egypt upstream oil and gas business. Apache recorded
8
$1.9 billion of the proceeds as a noncontrolling interest, which is reflected as a separate component of equity in the Company’s consolidated balance sheet. This represents one-third of Apache’s net book value of its Egypt holdings at the time of the transaction. The remaining proceeds were recorded as additional paid-in capital. Included in “Net income including noncontrolling interest” for the quarter ended September 30, 2014, is net income attributable to Sinopec’s interest totaling $89 million. For the first nine months of 2014, net income attributable to Sinopec’s interest totaled $295$44 million of which the Company has distributed $124 million to Sinopec.
Gulf of Mexico Shelf Divestiture
On September 30, 2013, Apache completed the sale of its Gulf of Mexico Shelf operations and properties to Fieldwood Energy LLC (Fieldwood), an affiliate of Riverstone Holdings. Under the terms of the agreement, Apache received cash consideration of $3.7 billion, and Fieldwood assumed $1.5 billion of discounted asset abandonment liabilities. Additionally, Apache retained 50 percent of its ownership interestleasehold acquisitions primarily in all exploration blocks and in horizons below production in developed blocks.
Canada LNG Project
In February 2013, Apache completed a transaction with Chevron Canada Limited (Chevron Canada) under which each company became a 50-percent owner of the Kitimat LNG plant, the Pacific Trail Pipelines Limited Partnership (PTP), and 644,000 gross undeveloped acres in the Horn River and Liard basins. Chevron Canada will operate the LNG plant and pipeline while Apache Canada will continue to operate the upstream assets. Apache’s net proceeds from the transaction were $396 million after post-closing adjustments, and no gain or loss was recorded.our North America onshore regions.
3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Objectives and Strategies
The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production. Apache manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production. The Company utilizes various types of derivative financial instruments, including swaps and options, to manage fluctuations in cash flows resulting from changes in commodity prices.
Counterparty Risk
The use of derivative instruments exposes the Company to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. To reduce the concentration of exposure to any individual counterparty, Apache utilizes a diversified group of investment-grade rated counterparties, primarily financial institutions, for its derivative transactions. As of September 30, 2014, Apache had derivative positions with 14 counterparties. The Company monitors counterparty creditworthiness on an ongoing basis; however, it cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, the Company may be limited in its ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, Apache may not realize the benefit of some of its derivative instruments resulting from lower commodity prices.
The Company executes commodity derivative transactions under master agreements that have netting provisions that provide for offsetting payables against receivables. In general, if a party to a derivative transaction incurs a material deterioration in its credit ratings, as defined in the applicable agreement, the other party has the right to demand the posting of collateral, demand a transfer, or terminate the arrangement. The Company’s net derivative asset position at September 30, 2014, represents the aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net asset position. The Company has not provided any collateral to any of its counterparties as of September 30, 2014.
9
Derivative Instruments
As of September 30, 2014, Apache had the following commodity derivative positions:
Fixed-Price Swaps | ||||||||||||||||
Production | MMBtu | Weighted Average | ||||||||||||||
Period | Commodity | Settlement Index | Mbbls | (in 000’s) | Fixed Price | |||||||||||
2014 | Crude Oil | NYMEX WTI | 5,750 | — | $ | 90.83 | ||||||||||
2014 | Crude Oil | Dated Brent | 5,750 | — | 100.05 | |||||||||||
2014 | Natural Gas | Various(1) | — | 16,235 | 4.37 |
Apache has currently elected not to designate any of its qualifying natural gas and oil derivatives as cash flow hedges. Changes in the fair value of these derivatives for the current period are recorded in the Company’s statement of consolidated operations.
Fair Value Measurements
Apache’s commodity derivative instruments consist of variable-to-fixed price commodity swaps. The fair values of the Company’s derivatives are not actively quoted in the open market. The Company uses a market approach to estimate the fair values of its derivative instruments, utilizing commodity futures price strips for the underlying commodities provided by a reputable third party.
The following table presents the Company’s derivative assets and liabilities measured at fair value on a recurring basis:
Fair Value Measurements Using | ||||||||||||||||||||||||
Quoted | ||||||||||||||||||||||||
Price in | Significant | Significant | ||||||||||||||||||||||
Active | Other | Unobservable | Total | |||||||||||||||||||||
Markets | Inputs | Inputs | Fair | Carrying | ||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Value | Netting(1) | Amount | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
September 30, 2014 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Commodity Derivative Instruments | $ | — | $ | 41 | $ | — | $ | 41 | $ | — | $ | 41 | ||||||||||||
Liabilities: | ||||||||||||||||||||||||
Commodity Derivative Instruments | — | — | — | — | — | — | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Commodity Derivative Instruments | $ | — | $ | 3 | $ | — | $ | 3 | $ | (2 | ) | $ | 1 | |||||||||||
Liabilities: | ||||||||||||||||||||||||
Commodity Derivative Instruments | — | 301 | — | 301 | (2 | ) | 299 |
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Derivative Assets and Liabilities Recorded in the Consolidated Balance Sheet
All derivative instruments are reflected as either assets or liabilities at fair value in the consolidated balance sheet. These fair values are recorded by netting asset and liability positions where counterparty master netting arrangements contain provisions for net settlement. The carrying value of the Company’s derivative assets and liabilities and their locations on the consolidated balance sheet are as follows:
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
(In millions) | ||||||||
Current Assets: Prepaid assets and other | $ | 41 | $ | 1 | ||||
Current Liabilities: Derivative instruments | $ | — | $ | 299 |
Derivative Activity Recorded in the Statement of Consolidated Operations
The following table summarizes the effect of derivative instruments on the Company’s statement of consolidated operations:
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||
Gain (Loss) on Derivatives | September 30, | September 30, | ||||||||||||||||
Recognized in Income | 2014 | 2013 | 2014 | 2013 | ||||||||||||||
(In millions) | ||||||||||||||||||
Gain (loss) on cash flow hedges reclassified from accumulated other comprehensive loss | Oil and Gas Production Revenues | $ | — | $ | 2 | $ | — | $ | (18 | ) | ||||||||
Loss for ineffectiveness on cash flow hedges | Revenues and other: Other | $ | — | $ | (1 | ) | $ | — | $ | (1 | ) | |||||||
Derivatives not designated as cash flow hedges: | ||||||||||||||||||
Realized loss | $ | (41 | ) | $ | (91 | ) | $ | (262 | ) | $ | (138 | ) | ||||||
Unrealized gain (loss) | 314 | (331 | ) | 341 | (137 | ) | ||||||||||||
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Gain (loss) on derivatives not designated as cash flow hedges | Derivative instrument gains (losses), net | $ | 273 | $ | (422 | ) | $ | 79 | $ | (275 | ) |
Unrealized gains and losses for derivative activity recorded in the statement of consolidated operations is reflected in the statement of consolidated cash flows as a component of “Other” in “Adjustments to reconcile net income to net cash provided by operating activities.”
Derivative Activity in Accumulated Other Comprehensive Loss
A reconciliation of the components of accumulated other comprehensive loss in the statement of consolidated changes in equity related to Apache’s cash flow hedges is presented in the table below. The Company has no derivatives designated as cash flow hedges as of September 30, 2014.
For the Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Before | After | Before | After | |||||||||||||
tax | tax | tax | tax | |||||||||||||
(In millions) | ||||||||||||||||
Unrealized gain (loss) on derivatives at beginning of period | $ | 1 | $ | 1 | $ | (10 | ) | $ | (6 | ) | ||||||
Realized amounts reclassified into earnings | — | — | 18 | 13 | ||||||||||||
Net change in derivative fair value | (1 | ) | (1 | ) | (7 | ) | (6 | ) | ||||||||
Ineffectiveness reclassified into earnings | — | — | 1 | 1 | ||||||||||||
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Unrealized gain on derivatives at end of period | $ | — | $ | — | $ | 2 | $ | 2 | ||||||||
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4. OTHER CURRENT LIABILITIES
The following table provides detail of our other current liabilities:
September 30, | December 31, | |||||||||||||||
2014 | 2013 | March 31, 2015 | December 31, 2014 | |||||||||||||
(In millions) | (In millions) | |||||||||||||||
Accrued operating expenses | $ | 127 | $ | 190 | $ | 137 | $ | 163 | ||||||||
Accrued exploration and development | 1,723 | 1,582 | 1,194 | 1,606 | ||||||||||||
Accrued compensation and benefits | 217 | 242 | 127 | 204 | ||||||||||||
Accrued interest | 119 | 161 | 118 | 160 | ||||||||||||
Accrued income taxes | 297 | 248 | 27 | 54 | ||||||||||||
Accrued U.K. Petroleum Revenue Tax | 47 | 9 | ||||||||||||||
Other | 264 | 179 | 235 | 230 | ||||||||||||
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Total Other current liabilities | $ | 2,794 | $ | 2,611 | $ | 1,838 | $ | 2,417 | ||||||||
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5.4. ASSET RETIREMENT OBLIGATION
The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the nine-monththree-month period ended September 30, 2014:March 31, 2015:
(In millions) | (In millions) | |||||||
Asset retirement obligation at December 31, 2013 | $ | 3,222 | ||||||
Asset retirement obligation at December 31, 2014 | $ | 3,085 | ||||||
Liabilities incurred | 86 | 41 | ||||||
Liabilities divested | (91 | ) | ||||||
Liabilities settled | (79 | ) | (58 | ) | ||||
Accretion expense | 135 | 44 | ||||||
Revisions in estimated liabilities | 29 | |||||||
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Asset retirement obligation at September 30, 2014 | 3,273 | |||||||
Asset retirement obligation at March 31, 2015 | 3,141 | |||||||
Less current portion | (177 | ) | (47 | ) | ||||
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Asset retirement obligation, long-term | $ | 3,096 | $ | 3,094 | ||||
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5. DEBT AND FINANCING COSTS
The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt:
September 30, 2014 | December 31, 2013 | March 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||||||
Carrying | Fair | Carrying | Fair | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||||||||
Amount | Value | Amount | Value | (In millions) | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Uncommitted credit lines | $ | 20 | $ | 20 | $ | 53 | $ | 53 | ||||||||||||||||||||||||
Commercial paper | 1,228 | 1,228 | — | — | ||||||||||||||||||||||||||||
Uncommitted bank lines | $ | 21 | $ | 21 | $ | — | $ | — | ||||||||||||||||||||||||
Commercial paper and committed bank facilities | 2,577 | 2,577 | 1,570 | 1,570 | ||||||||||||||||||||||||||||
Notes and debentures | 9,674 | 10,463 | 9,672 | 10,247 | 9,675 | 10,658 | 9,675 | 9,944 | ||||||||||||||||||||||||
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Total Debt | $ | 10,922 | $ | 11,711 | $ | 9,725 | $ | 10,300 | $ | 12,273 | $ | 13,256 | $ | 11,245 | $ | 11,514 | ||||||||||||||||
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The Company’s debt is recorded at the carrying amount, net of unamortized discount, on its consolidated balance sheet. The carrying amount of the Company’s commercial paper, committed bank facilities and uncommitted credit facilitiesbank lines, and overdraft lines approximates fair value because the interest rates are variable and reflective of market rates. Apache uses a market approach to determine the fair value of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).
As of September 30, 2014,March 31, 2015, the Company had unsecured committed revolving credit facilities totaling $3.3$5.3 billion, of which $2.0 billion matures in December 2015, $1.0 billion matures in August 2016, and $2.3 billion matures in June 2018 pursuant to a one-year extension approved in May 2014 under the terms of the $2.32018. Apache has $2.0 billion, facilities. The facilities consist of a $1.7 billion, facility and $1.0 billion facility for the U.S., facilities, a $300 million Australian facility, for Australia, and a $300 million facility for Canada.Canadian facility. As of September 30, 2014,March 31, 2015, aggregate available borrowing capacity under the Company’s credit facilities was $2.1$2.7 billion. The Company’s committed creditbank facilities are used to support Apache’s commercial paper program.
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The Company has available a $3.0$5.0 billion commercial paper program, which generally enablesallows Apache to borrow funds for up to 270 days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under our committed credit facilities. As of September 30, 2014,March 31, 2015, the Company had $1.2$2.6 billion outstanding in commercial paper. There was no outstanding commercial paper as of December 31, 2013.
As of September 30, 2014, the Company had $20 million of current debt outstanding borrowed on uncommitted creditunder commercial paper, committed bank facilities, and overdraft lines, compareduncommitted bank lines. This amount was classified as current on Apache’s consolidated balance sheet based on an intent to repay the obligations with $53 million asthe proceeds from the LNG project divestitures. All current debt was repaid in April 2015 upon closing of December 31, 2013.those divestitures.
Financing Costs, Net
The following table presents the components of Apache’s financing costs, net:
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | For the Quarter Ended March 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Interest expense | $ | 126 | $ | 142 | $ | 374 | $ | 429 | $ | 128 | $ | 124 | ||||||||||||
Amortization of deferred loan costs | 2 | 2 | 5 | 6 | 2 | 2 | ||||||||||||||||||
Capitalized interest | (85 | ) | (91 | ) | (270 | ) | (268 | ) | (80 | ) | (95 | ) | ||||||||||||
Interest income | (2 | ) | (3 | ) | (6 | ) | (10 | ) | (4 | ) | (4 | ) | ||||||||||||
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Financing costs, net | $ | 41 | $ | 50 | $ | 103 | $ | 157 | $ | 46 | $ | 27 | ||||||||||||
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6. INCOME TAXES
In the third quarter of 2014, Apache evaluated its permanent reinvestment position and determined that undistributed earnings from certain foreign subsidiaries located in Apache’s Australia, Egypt, and North Sea regions will no longer be permanently reinvested. As a result of this change in position, the Company recorded $814 million of U.S. deferred income tax expense on undistributed earnings that were previously considered permanently reinvested. In addition, the Company recorded $249 million of U.S. deferred income tax expense on foreign earnings that were distributed to the U.S. in the third quarter of 2014.
The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. Accordingly, in the thirdfirst quarter of 2014,2015, the Company recorded $814 million of U.S. deferred income tax expense on foreign earnings no longer deemed to be permanently reinvested as well as the income tax effect of the $1.5$7.2 billion and $17 million non-cash write-downs of its U.S., Canada, and North Sea proved oil and gas properties, respectively, offset by an increase in the Canadian valuation allowance, as discrete itemsitems.
On March 26, 2015, U.K. Finance Bill 2015 received Royal Assent. Under the enacted legislation, the corporate income tax rate on North Sea oil and gas profits was reduced from 62 percent to 50 percent effective January 1, 2015. As a result of the enacted legislation in the thirdfirst quarter of 2014. In the second quarter of 2014,2015, the Company recorded a deferred tax benefit of $619 million related to the remeasurement of the Company’s December 31, 2014 U.K. deferred income tax impact of a $203 million non-cash write-down of its North Sea proved oil and gas properties as a discrete item. In the third quarter of 2013, the Company recorded the income tax impact of a $552 million non-cash write-down and a $75 million non-cash impairment on its U.S. and Kenyan oil and gas properties, respectively, as discrete items.liability.
Apache and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various state and foreign jurisdictions. The Company’s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority. In October 2014, the Internal Revenue Service concluded its audit of the 2011 and 2012 tax years. The Company is under audit in various states and in most of the Company’s foreign jurisdictions as part of its normal course of business.
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8.7. COMMITMENTS AND CONTINGENCIES
Legal Matters
Apache is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. As of September 30, 2014,March 31, 2015, the Company has an accrued liability of approximately $21$23 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. Apache’s estimates are based on information known about the matters and its experience in contesting, litigating, and settling similar matters. Although actual amounts could differ from management’s estimate, none of the actions are believed by management to involve future amounts that would be material to Apache’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that Apache believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and a range of potential exposure, unless an estimate cannot be made at this time. It is management’s opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.
For additional information on each of the Legal Matters described below, please see Note 8—Commitments and Contingencies to the consolidated financial statements contained in Apache’s CurrentAnnual Report on Form 8-K dated July 17, 201410-K for the fiscal year ended December 31, 2013.2014.
Argentine Environmental Claims and Argentina Tariff
The Asociación de Superficiarios de la Patagonia (ASSUPA) filed lawsuits against Company subsidiaries in Argentina courts relating to various environmental and remediation claims concerning certain geographic areas of Argentina, including in 2003 the Neuquén basin and in 2012 the Austral basin. In addition, effective December 1, 2011, Enargas, an autonomous entity that functions under the Argentine Ministry of Economy, created a tariff charge on all fuel gas used by oil and gas producers in field operations, which is likewise the subject of legal proceedings in Argentina.
On March 12, 2014, the Company and its subsidiaries completed the sale of all of the Company’s subsidiaries’ operations and properties in Argentina to YPF Sociedad Anonima (YPF). As part of that sale, YPF assumed responsibility for all of the past, present, and future litigation in Argentina involving Company subsidiaries, including the ASSUPA and Enargas matters, except that Company subsidiaries have agreed to indemnify YPF for certain environmental, tax, and royalty obligations capped at an aggregate of $100 million. The indemnity is subject to specific agreed conditions precedent, thresholds, contingencies, limitations, claim deadlines, loss sharing, and other terms and conditions. On April 11, 2014, YPF provided its first notice of claims pursuant to the indemnity. Company subsidiaries have not paid any amounts under the indemnity, but will continue to review and consider claims presented by YPF. Further, Company subsidiaries retain the right to enforce certain Argentina-related indemnification obligations against Pioneer Natural Resources Company (Pioneer) in an amount up to $67.5 million pursuant to the terms and conditions of stock purchase agreements entered in 2006 between Company subsidiaries and certain subsidiaries of Pioneer. No other material change in the status of thesethe YPF Sociedad Anonima and Pioneer Natural Resources Company indemnities matters has occurred since the filing of Apache’s CurrentAnnual Report on Form 8-K dated July 17, 201410-K for its 20132014 fiscal year.
Louisiana Restoration
NumerousAs more fully described in Apache’s Annual Report on Form 10-K for its 2014 fiscal year, numerous surface owners have filed claims or sent demand letters to various oil and gas companies, including Apache, claiming that, under either expressed or implied lease terms or Louisiana law, they are liable for damage measured by the cost of restoration of leased premises to their original condition as well as damages for contamination and cleanup.
In a case captionedHeloise, LLC, et al.State of Louisiana and the Cameron Parish School Board v. BP America Production Company,Apache Corporation et al., CaseDocket No. 12011310-18672, in the 38th Judicial District Court, for the Parish of Lafourche, plaintiff landownersCameron, State of Louisiana, plaintiffs allege that defendants’ oil and gas operationsexploration and production activities contaminated theirplaintiffs’ property, primarily with chlorides.and claim an unspecified amount of damages. Apache, a defendant in the case, acquired its interest in the oil and gas operations on plaintiffs’ property from the former operator, Amoco Production Company, when the Company purchased the stock of Amoco’s subsidiary, MW Petroleum Corporation, in 1991. BP America Production Company (BP America), as Amoco’s successor in interest, and Apache dispute whether and to what extent they might owe each other indemnity in the case. Plaintiffs’ expert opined that the cost of remediating plaintiffs’ 825 acres exceeds $200 million. Prior to trial, Apache and BP America each settled with plaintiff. The amount paid by Apache in settlement is not material and does not have a material effect on the Company’s financial position, results of operations, or liquidity. Further, as part of the overall settlement, each of Apache and BP America released and waived its indemnity claim against the other arising out of this litigation. The lawsuit is concluded.
With respect toBoard of Commissioners of the Southeast Louisiana Flood Protection Authority – East v. Tennessee Gas Pipeline Company et al., Civil Action no. 13-5410, in the United States District Court for the Eastern District of Louisiana, the federal court has retained jurisdiction over the matter after denying plaintiff’s motion to remand on June 27, 2014. Further, the Louisiana state government has passed a new law (SB 469) clarifying that only entities authorized under the Coastal Zone Management Act may bring litigation to assert claims arising out of the permitted activities. Plaintiff is not one of those authorized entities. Thedefendant Davis Oil Company, and other defendants seek dismissal ofsubsequently sold the interest to defendant Wagner Oil Company (Wagner). Apache claims indemnity from Wagner. The case including pursuantis set for trial in November 2015. While an adverse judgment against Apache might be possible, Apache intends to SB 469.vigorously oppose the claims.
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No other material change in the status of these matters has occurred since the filing of Apache’s CurrentAnnual Report on Form 8-K dated July 17, 201410-K for its 20132014 fiscal year.
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Australia Gas Pipeline Force Majeure
In 2008, Company subsidiaries reported a pipeline explosion that interrupted deliveries of natural gas in Australia to customers under various long-term contracts.
In The civil lawsuits concerning the case captionedAlcoapipeline explosion, all of Australia Limited v. Apache Energy Limited, Apache Northwest Pty Ltd, Tap (Harriet) Pty Ltd, and Kufpec Australia Pty Ltd, Civ. 1481 of 2011,which were filed in the Supreme Court of Western Australia, have been resolved fully and dismissed on June 20, 2012, the Supreme Court struck out Alcoa’s claimconfidential terms, including for an exchange of consideration that the liquidated damages provisions under two long-term contracts are unenforceable as a penalty and also struck out Alcoa’s claim for damages for breach of statutory duty. On September 17, 2013, the Western Australia Court of Appeal dismissed the Company subsidiaries’ appeal concerning Alcoa’s remaining tort claim for economic loss. On October 15, 2013, the Company subsidiaries applied to the High Court of Australia for special leave to appeal. On April 11, 2014, the High Court refused special leave to appeal. However, on October 8, 2014, the High Court decided a separate case on point captionedBrookfield Multiplex Ltd v. Owners Corporation Strata Plan 61288 & Anor, [2014] HCA 36. The High Court’s holding in theBrookfield case strongly favors the Company subsidiaries’ defenses to Alcoa’s remaining tort claim for economic loss. All of the Company subsidiaries’ defenses remain intact for further proceedings at the trial court level, including the defenses that were the subject of the special leave application and that have now been considered separately by the High Court in theBrookfield case. Further, in January 2014, an Alcoa affiliate pleaded guilty inUnited States of America v. Alcoa World Alumina LLC, Criminal No. 14-7, in the United States District Court for the Western District of Pennsylvania, to a charge under the Foreign Corrupt Practices Act (FCPA) anti-bribery provisions, 15 U.S.C. Section 78dd-2 and 18 U.S.C. Section 2. This matter overlaps with Alcoa’s claims against Company subsidiaries in that both cases concern alumina produced from Alcoa’s alumina refineries in Western Australia during the period of the gas supply disruption in 2008-2009. In the circumstances of the admitted, agreed, and stipulated facts set forth in the Alcoa affiliate’s Plea Agreement, which is a public document, Company subsidiaries will defend against Alcoa’s claims on the basis that Alcoa is barred by law from recovering economic losses.
In the week prior to expiration of the applicable six-year limitations period on June 3, 2014, the following civil lawsuits were filed in connection with the Varanus Island pipeline explosion (the Incident), and the amounts specified do not include plaintiffs’ alleged interest and costs:
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With respect to the claims in which the plaintiffs have not specified an amount of alleged damages in their court filings, the exposure related to such claims is not material or,to Apache. The lawsuits are described in Apache’s Annual Report on Form 10-K dated February 27, 2015 for its 2014 fiscal year. On April 10, 2015, the court dismissed the lawsuits filed by plaintiffs Alcoa (Civ. 1481 of 2011), Barrick (Civ. 2656 of 2013), EDL LNG (Civ. 1751 of 2014), and Yara (Civ. 1742 of 2014). On April 9, 2015, plaintiffs Harvey (Civ. 1749 of 2014), Iluka (Civ. 1748 of 2014), Newmont (Civ. 1727 of 2014), and Wesfarmers (Civ. 1740 of 2014) discontinued their lawsuits, which were never served on the Apache defendants. All matters relating to the Australia gas pipeline force majeure are concluded.
Apollo Exploration Lawsuit
In a second amended petition filed on February 27, 2015 in a case captionedApollo Exploration, LLC, Cogent Exploration, Ltd. Co. & SellmoCo, LLC v. Apache Corporation, Cause No. CV50538 in the case385th Judicial District Court, Midland County, Texas, plaintiffs allege damages in excess ofWesfarmers,not currently determinable but not expected $1.1 billion relating to be material. Insurance statistics maintained bycertain purchase and sale agreements, mineral leases, and areas of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. Apache believes the Insurance Council of Australia show that the total insured loss resulting from the gas supply disruption was $230 million AUD.
The applicable six-year limitations period has expired. In six years none of the above-referenced plaintiffs presented a claim to Apache or its subsidiaries prior to filing suit and instead, each allowed the same plaintiff law firm to file suit in Western Australia at the latest possible moment. The Apache defendants do not believe that any of theplaintiffs’ claims havelack merit and will vigorously pursue their defenses against such claims. The plaintiffs seek relief primarily in tort, in circumvention of their own positive arrangements regarding risk allocation and in contravention of the High Court’s decision in theBrookfieldcase. In respect of the pending claims filed prior to expiration of the limitations period, contractual liquidated damages under the long-term contracts with such provisions, and under which an Apache subsidiary is a gas supplier, would not be expected to exceed $20 million AUD exclusive of interest. This is a reduction from previous estimates. In addition, Company subsidiaries have received confirmation of liability insurance coverage from both the primary insurer and the excess insurers.
No other material change in the status of these matters has occurred since the filing of Apache’s Current Report on Form 8-K dated July 17, 2014 for its 2013 fiscal year.
Breton Lawsuit
On October 29, 2012, plaintiffs filed an amended complaint inBreton Energy, L.L.C. et al. v. Mariner Energy Resources, Inc., et al., Case 4:11-cv-03561, in the United States District Court for the Southern District of Texas, Houston Division, seeking compensation from defendants for allegedly depriving plaintiffs of rights to hydrocarbons in a reservoir described by plaintiffs as a common reservoir in West Cameron Blocks 171 and 172 offshore Louisiana in the Gulf of Mexico. Plaintiffs assert claims for waste and drainage. On May 28, 2013, the United States District Court for the Southern District of Texas dismissed the plaintiffs’ claims and entered judgment in favor of the defendants. Plaintiffs appealed. On August 12, 2014, the United States Court of Appeals for the Fifth Circuit affirmed the District Court as to the claims for waste against all defendants except International Paper and also affirmed the District Court as to the claims for drainage against all defendants. The Company’s subsidiary, Mariner Energy Resources, Inc. (now known as Apache Shelf, Inc.), was dismissed from the case but is obligated to indemnify the remaining defendant, International Paper, against the sole remaining claim. Prior to trial, which was to commence on November 3, 2014, plaintiffs settled their remaining claim in an amount that is not material and does not have a material effect on the Company’s financial position, results of operations, or liquidity. The lawsuit is concluded.oppose them.
Escheat Audits
TheThere has been no material change with respect to the review of the books and records of the Company and its subsidiaries and related entities by the State of Delaware, Department of Finance, Division of Revenue (Unclaimed Property), has notified numerous companies, including Apache Corporation, that the State intends to examine its books and records and those of its subsidiaries and related entities to determine compliance with the Delaware Escheat Laws. The review is ongoing, and no material change in the status of this matter has occurredLaws, since the filing of Apache’s CurrentAnnual Report on Form 8-K dated July 17, 201410-K for its 20132014 fiscal year.
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Burrup-Related Gas Supply Lawsuits
On October 11, 2013, aIn the lawsuit captionedPankaj Oswal v. Apache Corporation, No. WAD 389/2013, in the Federal Court of Australia, District of Western Australia, General Division, on the eve of a trial that was filed in whichto commence on February 9, 2015, plaintiff asserts claims againstdecided to discontinue his claim. On March 18, 2015, the Company undercourt entered an order dismissing the Australian Trade Practices Act.case. The case has been set for a preliminary hearing commencing December 8, 2014. The Company does not believe the lawsuit has merit and will vigorously defend against it. No other material changeis concluded in the status of this matter has occurred since the filing of Apache’s Current Report on Form 8-K dated July 17, 2014 for its 2013 fiscal year.Company’s favor.
In the casecases captionedRadhika Oswal v. Australia and New Zealand Banking Group Limited(ANZ) et al., No. SCI 2011 4653 in the Supreme Court of Victoria, plaintiff filed an application seeking to amend her statement of claim in order to add parties as defendants to the proceedings, including the Company and certain of its subsidiaries. Similarly, in a companion case captionedPankaj Oswal v. Australia and New Zealand Banking Group Limited(ANZ) et al., No. SCI 2012 01995, in the Supreme Court of Victoria, plaintiff also filed an application seeking to amend his statementthe cross-vesting of claim in order to add parties as defendants to thecertain related proceedings including(in which neither the Company and certain of its subsidiaries. This was the second attempt by the plaintiffs to amend their pleadings, with their first attempt having been unsuccessful. While reserving all rights, including all defenses to the plaintiffs’ proposed amended pleadings, the Company andnor its subsidiaries did not objectare parties) has caused the court to the plaintiffs’ revised applications to amend their pleadings, which is a procedural matter. The court granted plaintiffs’ applications and entered aconsider new scheduling order with respect to the filing of all amended pleadings. On July 23, 2014, the Apache defendants filed their responsive pleadings, which include substantial counterclaims against the Oswals by a Company subsidiary.orders. The Company and its subsidiaries do not believe the plaintiffs’ claims havelack merit and will vigorously defend againstoppose them. Trial is set to commence August 3, 2015. No other material change in the status of these mattersthis matter has occurred since the filing of Apache’s CurrentAnnual Report onForm 8-K dated July 17, 201410-K for its 20132014 fiscal year.
Concerning the action filed by Tap (Harriet) Pty Ltd (Tap) against Burrup Fertilisers Pty Ltd et al., Civ. 2329 of 2009, in the Supreme Court of Western Australia, the remaining parties have settled and the lawsuit has been discontinued by consent. The lawsuit is concluded.
Environmental Matters
As of September 30, 2014,March 31, 2015, the Company had an undiscounted reserve for environmental remediation of approximately $86$63 million. The Company is not aware of any environmental claims existing as of September 30, 2014,March 31, 2015 that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity. There can be no assurance, however, that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered on the Company’s properties.
On May 25, 2011, a panel of the Bureau of Ocean Energy Management (BOEMRE, as it was then known) published a report dated May 23, 2011, and titled “OCS G-2580, Vermilion Block 380 Platform A, Incidents of Noncompliance.” The report concerned the BOEMRE’s investigation of a fire on the Vermilion 380 A platform located in the Gulf of Mexico. At the time of the incident, Mariner operated the platform. On December 27, 2011, the Bureau of Safety and Environmental Enforcement (BSEE, successor to BOEMRE) issued several Incidents of Non-Compliance, which may provide the basis for the assessment of civil penalties against Mariner. The Company’s subsidiary, Apache Deepwater LLC, which is the successor by merger to Mariner effective November 10, 2010, has been presented with a BSEE notice of proposed civil penalty assessment in an amount that is not material and that will not have a material effect on the Company’s financial position, results of operations, or liquidity.
No other material change in the status of these matters has occurred since the filing of Apache’s CurrentAnnual Report on Form 8-K dated July 17, 201410-K for its 20132014 fiscal year.
1712
9.8. CAPITAL STOCK
Net Income (Loss) per Common Share
A reconciliation of the components of basic and diluted net income (loss) per common share for the quarters ended March 31, 2015 and nine-month periods ended September 30, 2014 and 2013 is presented in the table below.
For the Quarter Ended September 30, | For the Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||
Loss | Shares | Per Share | Income (Loss) | Shares | Per Share | Income | Shares | Per Share | Income | Shares | Per Share | |||||||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | (In millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | (1,330 | ) | 381 | $ | (3.50 | ) | $ | 429 | 399 | $ | 1.08 | $ | (4,651 | ) | 377 | $ | (12.34 | ) | $ | 753 | 394 | $ | 1.92 | ||||||||||||||||||||||||
Loss from discontinued operations | — | 381 | — | (129 | ) | 399 | (0.33 | ) | — | 377 | — | (517 | ) | 394 | (1.32 | ) | ||||||||||||||||||||||||||||||||
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Income (loss) attributable to common stock | $ | (1,330 | ) | 381 | $ | (3.50 | ) | $ | 300 | 399 | $ | 0.75 | $ | (4,651 | ) | 377 | $ | (12.34 | ) | $ | 236 | 394 | $ | 0.60 | ||||||||||||||||||||||||
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Effect of Dilutive Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock options and other | — | — | — | 2 | $ | — | — | $ | — | 2 | ||||||||||||||||||||||||||||||||||||||
Diluted: | ||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | (1,330 | ) | 381 | $ | (3.50 | ) | $ | 429 | 401 | $ | 1.07 | $ | (4,651 | ) | 377 | $ | (12.34 | ) | $ | 753 | 396 | $ | 1.90 | ||||||||||||||||||||||||
Loss from discontinued operations | — | 381 | — | (129 | ) | 401 | (0.32 | ) | — | 377 | — | (517 | ) | 396 | (1.30 | ) | ||||||||||||||||||||||||||||||||
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Income (loss) attributable to common stock | $ | (1,330 | ) | 381 | $ | (3.50 | ) | $ | 300 | 401 | $ | 0.75 | $ | (4,651 | ) | 377 | $ | (12.34 | ) | $ | 236 | 396 | $ | 0.60 | ||||||||||||||||||||||||
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For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||||||||||||||||||||||||
Loss | Shares | Per Share | Income (Loss) | Shares | Per Share | |||||||||||||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | (72 | ) | 387 | $ | (0.19 | ) | $ | 2,206 | 394 | $ | 5.59 | ||||||||||||||||||||||||||||||||||||
Loss from discontinued operations | (517 | ) | 387 | (1.33 | ) | (192 | ) | 394 | (0.48 | ) | ||||||||||||||||||||||||||||||||||||||
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Income (loss) attributable to common stock | $ | (589 | ) | 387 | $ | (1.52 | ) | $ | 2,014 | 394 | $ | 5.11 | ||||||||||||||||||||||||||||||||||||
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Effect of Dilutive Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Mandatory Convertible Preferred Stock | — | — | 44 | 11 | ||||||||||||||||||||||||||||||||||||||||||||
Stock options and other | — | — | — | 2 | ||||||||||||||||||||||||||||||||||||||||||||
Diluted: | ||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | (72 | ) | 387 | $ | (0.19 | ) | $ | 2,250 | 407 | $ | 5.53 | ||||||||||||||||||||||||||||||||||||
Loss from discontinued operations | (517 | ) | 387 | (1.33 | ) | (192 | ) | 407 | (0.47 | ) | ||||||||||||||||||||||||||||||||||||||
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Income (loss) attributable to common stock | $ | (589 | ) | 387 | $ | (1.52 | ) | $ | 2,058 | 407 | $ | 5.06 | ||||||||||||||||||||||||||||||||||||
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The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling 4.79.1 million and 5.45.8 million for the quarters ending September 30,March 31, 2015 and 2014, and 2013, respectively, and 5.5 million and 6.0 million for the nine months ended September 30, 2014 and 2013, respectively. For the quarter ended September 30, 2013, 4.8 million shares related to the assumed conversion of the Mandatory Convertible Preferred Stock were also anti-dilutive.
Common and Preferred Stock Dividends
For the quarters ended September 30,March 31, 2015 and 2014, and 2013, Apache paid $95$94 million and $78$79 million, respectively, in dividends on its common stock. For the nine months ended September 30, 2014 and 2013, Apache paid $271 million and $223 million, respectively.
18
In the first nine months of 2013, the Company also paid $57 million in dividends on its Series D Preferred Stock, which was converted to common stock in August 2013.
Stock Repurchase Program
Apache’s Board of Directors has authorized the purchase of up to 40 million shares of the Company’s common stock. Shares may be purchased either in the open market or through privately held negotiated transactions. The Company initiated the buyback program on June 10, 2013, and through September 30,December 31, 2014, hashad repurchased a total of 31.832.2 million shares at an average price of $88.90 per share. For the nine-month period ended September 30, 2014, the Company repurchased a total of 20.6 million shares at an average price of $88.92$88.96 per share. The Company has not purchased any additional shares during 2015, and is not obligated to acquire any specific number of shares.
1913
10.9. BUSINESS SEGMENT INFORMATION
Apache is engaged in a single line of business. Both domestically and internationally, the Company explores for, develops, and produces natural gas, crude oil and natural gas liquids. At September 30, 2014,March 31, 2015, the Company had production in five countries: the United States, Canada, Egypt, Australia, and the United Kingdom (U.K.) North Sea. Apache also pursues exploration interests in other countries that may, over time, result in reportable discoveries and development opportunities. Financial information for each country is presented below:
United | Other | United States | Canada | Egypt (1) | Australia | North Sea | Other International | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
States | Canada | Egypt(2) | Australia | North Sea | International | Total | (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Quarter Ended September 30, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Quarter Ended March 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues | $ | 1,481 | $ | 268 | $ | 910 | $ | 287 | $ | 522 | $ | — | $ | 3,468 | $ | 660 | $ | 133 | $ | 532 | $ | 168 | $ | 313 | $ | — | $ | 1,806 | ||||||||||||||||||||||||||||
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Operating Income (Loss)(1) | $ | (988 | ) | $ | 11 | $ | 481 | $ | 70 | $ | 124 | $ | — | $ | (302 | ) | ||||||||||||||||||||||||||||||||||||||||
Operating Income (Loss)(2) | $ | (5,320 | ) | $ | (1,430 | ) | $ | 102 | $ | (12 | ) | $ | (663 | ) | $ | — | $ | (7,323 | ) | |||||||||||||||||||||||||||||||||||||
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Other Income (Expense): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instrument gains (losses), net | 273 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | (1 | ) | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | (112 | ) | (79 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition, divestiture, and separation costs | (34 | ) | (54 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing costs, net | (41 | ) | (46 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss From Continuing Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Loss Before Income Taxes | $ | (217 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Before Income Taxes | $ | (7,490 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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For the Nine Months Ended September 30, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | 21,577 | $ | 5,288 | $ | 7,247 | $ | 9,044 | $ | 5,376 | $ | 118 | $ | 48,650 | ||||||||||||||||||||||||||||||||||||||||||
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For the Quarter Ended March 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues | $ | 4,515 | $ | 879 | $ | 2,849 | $ | 780 | $ | 1,800 | $ | — | $ | 10,823 | $ | 1,505 | $ | 318 | $ | 950 | $ | 256 | $ | 618 | $ | — | $ | 3,647 | ||||||||||||||||||||||||||||
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Operating Income(1) | $ | 354 | $ | 131 | $ | 1,601 | $ | 239 | $ | 268 | $ | — | $ | 2,593 | ||||||||||||||||||||||||||||||||||||||||||
Operating Income(2) | $ | 663 | $ | 71 | $ | 536 | $ | 96 | $ | 183 | $ | — | $ | 1,549 | ||||||||||||||||||||||||||||||||||||||||||
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Other Income (Expense): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instrument gains (losses), net | 79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | (3 | ) | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | (309 | ) | (103 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition, divestiture, and separation costs | (66 | ) | (18 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing costs, net | (103 | ) | (27 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income From Continuing Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Before Income Taxes | $ | 2,191 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before Income Taxes | $ | 1,429 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total Assets | $ | 30,613 | $ | 7,100 | $ | 7,246 | $ | 9,148 | $ | 6,824 | $ | 59 | $ | 60,990 | $ | 30,618 | $ | 7,102 | $ | 7,350 | $ | 8,403 | $ | 7,599 | $ | 49 | $ | 61,121 | ||||||||||||||||||||||||||||
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For the Quarter Ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues(3) | $ | 2,029 | $ | 325 | $ | 1,022 | $ | 279 | $ | 633 | $ | — | $ | 4,288 | ||||||||||||||||||||||||||||||||||||||||||
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Operating Income (Loss)(1)(3) | $ | 310 | $ | 4 | $ | 658 | $ | 117 | $ | 186 | $ | (76 | ) | $ | 1,199 | |||||||||||||||||||||||||||||||||||||||||
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Other Income (Expense): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instrument gains (losses), net | (422 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | (120 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing costs, net | (50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Before Income Taxes(3) | $ | 641 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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For the Nine Months Ended September 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues(3) | $ | 5,543 | $ | 952 | $ | 2,924 | $ | 867 | $ | 2,025 | $ | — | $ | 12,311 | ||||||||||||||||||||||||||||||||||||||||||
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Operating Income (Loss)(1)(3) | $ | 1,607 | $ | 17 | $ | 1,827 | $ | 373 | $ | 634 | $ | (76 | ) | $ | 4,382 | |||||||||||||||||||||||||||||||||||||||||
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Other Income (Expense): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instrument gains (losses), net | (275 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | (359 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing costs, net | (157 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Before Income Taxes(3) | $ | 3,669 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Total Assets(3) | $ | 29,503 | $ | 7,083 | $ | 7,142 | $ | 7,567 | $ | 7,292 | $ | 54 | $ | 58,641 | ||||||||||||||||||||||||||||||||||||||||||
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(1) | Includes a noncontrolling interest in Egypt. |
(2) | Operating Income (Loss) consists of oil and gas production revenues less depreciation, depletion and amortization, asset retirement obligation accretion, lease operating expenses, gathering and transportation costs, and taxes other than income. |
2014
11.10. SUPPLEMENTAL GUARANTOR INFORMATION
In December 1999, Apache Finance Canada issued approximately $300 million of publicly-traded notes due in 2029. The notes are fully and unconditionally guaranteed by Apache. The following condensed consolidating financial statements are provided as an alternative to filing separate financial statements.
Apache Finance Canada is 100 percent owned by Apache Corporation. As such, these condensed consolidating financial statements should be read in conjunction with Apache’s consolidated financial statements and the notes thereto, of which this note is an integral part.
2115
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended September 30, 2014March 31, 2015
All Other | ||||||||||||||||||||||||||||||||||||||||
Apache | Subsidiaries | |||||||||||||||||||||||||||||||||||||||
Apache | Finance | of Apache | Reclassifications | |||||||||||||||||||||||||||||||||||||
Apache Corporation | Apache Finance Canada | All Other Subsidiaries of Apache Corporation | Reclassifications & Eliminations | Consolidated | Corporation | Canada | Corporation | & Eliminations | Consolidated | |||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||
REVENUES AND OTHER: | ||||||||||||||||||||||||||||||||||||||||
Oil and gas production revenues | $ | 882 | $ | — | $ | 2,586 | $ | — | $ | 3,468 | $ | 365 | $ | — | $ | 1,441 | $ | — | $ | 1,806 | ||||||||||||||||||||
Equity in net income (loss) of affiliates | 491 | 5 | 1 | (497 | ) | — | (1,085 | ) | (654 | ) | 1 | 1,738 | — | |||||||||||||||||||||||||||
Derivative instrument gains (losses), net | 320 | — | (47 | ) | — | 273 | ||||||||||||||||||||||||||||||||||
Other | (34 | ) | 14 | 17 | 2 | (1 | ) | (40 | ) | 14 | 38 | — | 12 | |||||||||||||||||||||||||||
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1,659 | 19 | 2,557 | (495 | ) | 3,740 | (760 | ) | (640 | ) | 1,480 | 1,738 | 1,818 | ||||||||||||||||||||||||||||
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OPERATING EXPENSES: | ||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion, and amortization | 1,914 | — | 921 | — | 2,835 | |||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 5,499 | — | 2,908 | — | 8,407 | |||||||||||||||||||||||||||||||||||
Asset retirement obligation accretion | 8 | — | 38 | — | 46 | 4 | — | 40 | — | 44 | ||||||||||||||||||||||||||||||
Lease operating expenses | 137 | — | 515 | — | 652 | 124 | — | 414 | — | 538 | ||||||||||||||||||||||||||||||
Gathering and transportation | 15 | — | 52 | — | 67 | 9 | — | 47 | — | 56 | ||||||||||||||||||||||||||||||
Taxes other than income | 67 | — | 103 | — | 170 | 34 | — | 50 | — | 84 | ||||||||||||||||||||||||||||||
General and administrative | 89 | — | 21 | 2 | 112 | 64 | — | 15 | — | 79 | ||||||||||||||||||||||||||||||
Acquisition, divestiture, and separation costs | 34 | — | — | — | 34 | 54 | — | — | — | 54 | ||||||||||||||||||||||||||||||
Financing costs, net | 45 | 11 | (15 | ) | — | 41 | 52 | 10 | (16 | ) | — | 46 | ||||||||||||||||||||||||||||
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2,309 | 11 | 1,635 | 2 | 3,957 | 5,840 | 10 | 3,458 | — | 9,308 | |||||||||||||||||||||||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (650 | ) | 8 | 922 | (497 | ) | (217 | ) | (6,600 | ) | (650 | ) | (1,978 | ) | 1,738 | (7,490 | ) | |||||||||||||||||||||||
Provision (benefit) for income taxes | 678 | 2 | 344 | — | 1,024 | (1,949 | ) | 3 | (908 | ) | — | (2,854 | ) | |||||||||||||||||||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST | (1,328 | ) | 6 | 578 | (497 | ) | (1,241 | ) | (4,651 | ) | (653 | ) | (1,070 | ) | 1,738 | (4,636 | ) | |||||||||||||||||||||||
Net loss from discontinued operations, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Net income (loss) from discontinued operations, net of tax | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
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NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | (1,328 | ) | 6 | 578 | (497 | ) | (1,241 | ) | (4,651 | ) | (653 | ) | (1,070 | ) | 1,738 | (4,636 | ) | |||||||||||||||||||||||
Net income attributable to noncontrolling interest | — | — | 89 | — | 89 | — | — | 15 | — | 15 | ||||||||||||||||||||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | (1,328 | ) | $ | 6 | $ | 489 | $ | (497 | ) | $ | (1,330 | ) | $ | (4,651 | ) | $ | (653 | ) | $ | (1,085 | ) | $ | 1,738 | $ | (4,651 | ) | |||||||||||||
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| |||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK(1) | $ | (1,328 | ) | $ | 6 | $ | 489 | $ | (497 | ) | $ | (1,330 | ) | $ | (4,651 | ) | $ | (653 | ) | $ | (1,085 | ) | $ | 1,738 | $ | (4,651 | ) | |||||||||||||
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(1) | Comprehensive income (loss) activity is recorded on the Apache Corporation entity and consists of derivative instrument reclassifications and changes in fair value as reflected on our Statement of Consolidated Comprehensive Income. |
2216
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended September 30, 2013March 31, 2014
All Other | ||||||||||||||||||||||||||||||||||||||||
Apache | Subsidiaries | |||||||||||||||||||||||||||||||||||||||
Apache | Finance | of Apache | Reclassifications | |||||||||||||||||||||||||||||||||||||
Apache Corporation | Apache Finance Canada | All Other Subsidiaries of Apache Corporation | Reclassifications & Eliminations | Consolidated | Corporation | Canada | Corporation | & Eliminations | Consolidated | |||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||
REVENUES AND OTHER: | ||||||||||||||||||||||||||||||||||||||||
Oil and gas production revenues | $ | 1,374 | $ | — | $ | 2,914 | $ | — | $ | 4,288 | $ | 892 | $ | — | $ | 2,755 | $ | — | $ | 3,647 | ||||||||||||||||||||
Equity in net income (loss) of affiliates | 619 | (4 | ) | 3 | (618 | ) | — | 253 | 29 | (6 | ) | (276 | ) | — | ||||||||||||||||||||||||||
Derivative instrument gains (losses), net | (422 | ) | — | — | — | (422 | ) | |||||||||||||||||||||||||||||||||
Other | 2 | 16 | 17 | (1 | ) | 34 | (23 | ) | 14 | 38 | (1 | ) | 28 | |||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
1,573 | 12 | 2,934 | (619 | ) | 3,900 | 1,122 | 43 | 2,787 | (277 | ) | 3,675 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion, and amortization | 1,041 | — | 954 | — | 1,995 | |||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization | 328 | — | 878 | — | 1,206 | |||||||||||||||||||||||||||||||||||
Asset retirement obligation accretion | 20 | — | 45 | — | 65 | 7 | — | 37 | — | 44 | ||||||||||||||||||||||||||||||
Lease operating expenses | 254 | — | 518 | — | 772 | 128 | — | 469 | — | 597 | ||||||||||||||||||||||||||||||
Gathering and transportation | 18 | — | 63 | — | 81 | 14 | — | 56 | — | 70 | ||||||||||||||||||||||||||||||
Taxes other than income | 62 | — | 114 | — | 176 | 79 | — | 102 | — | 181 | ||||||||||||||||||||||||||||||
General and administrative | 103 | — | 18 | (1 | ) | 120 | 91 | — | 13 | (1 | ) | 103 | ||||||||||||||||||||||||||||
Acquisition, divestiture, and separation costs | 18 | — | — | — | 18 | |||||||||||||||||||||||||||||||||||
Financing costs, net | 36 | 14 | — | — | 50 | 32 | 10 | (15 | ) | — | 27 | |||||||||||||||||||||||||||||
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1,534 | 14 | 1,712 | (1 | ) | 3,259 | 697 | 10 | 1,540 | (1 | ) | 2,246 | |||||||||||||||||||||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 39 | (2 | ) | 1,222 | (618 | ) | 641 | 425 | 33 | 1,247 | (276 | ) | 1,429 | |||||||||||||||||||||||||||
Provision (benefit) for income taxes | (267 | ) | (1 | ) | 474 | — | 206 | |||||||||||||||||||||||||||||||||
Provision for income taxes | 62 | 10 | 506 | — | 578 | |||||||||||||||||||||||||||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST | 306 | (1 | ) | 748 | (618 | ) | 435 | 363 | 23 | 741 | (276 | ) | 851 | |||||||||||||||||||||||||||
Net loss from discontinued operations, net of tax | — | — | (129 | ) | — | (129 | ) | (127 | ) | — | (390 | ) | — | (517 | ) | |||||||||||||||||||||||||
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NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | 306 | (1 | ) | 619 | (618 | ) | 306 | 236 | 23 | 351 | (276 | ) | 334 | |||||||||||||||||||||||||||
Preferred stock dividends | 6 | — | — | — | 6 | |||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interest | — | — | 98 | — | 98 | |||||||||||||||||||||||||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | 300 | $ | (1 | ) | $ | 619 | $ | (618 | ) | $ | 300 | $ | 236 | $ | 23 | $ | 253 | $ | (276 | ) | $ | 236 | |||||||||||||||||
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COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK(1) | $ | 295 | $ | (1 | ) | $ | 619 | $ | (618 | ) | $ | 295 | $ | 235 | $ | 23 | $ | 253 | $ | (276 | ) | $ | 235 | |||||||||||||||||
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(1) | Comprehensive income (loss) activity is recorded on the Apache Corporation entity and consists of derivative instrument reclassifications and changes in fair value as reflected on our Statement of Consolidated Comprehensive Income. |
23
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2014
Apache Corporation | Apache Finance Canada | All Other Subsidiaries of Apache Corporation | Reclassifications & Eliminations | Consolidated | ||||||||||||||||
(In millions) | ||||||||||||||||||||
REVENUES AND OTHER: | ||||||||||||||||||||
Oil and gas production revenues | $ | 2,669 | $ | — | $ | 8,154 | $ | — | $ | 10,823 | ||||||||||
Equity in net income (loss) of affiliates | 1,233 | 58 | 6 | (1,297 | ) | — | ||||||||||||||
Derivative instrument gains (losses), net | 175 | — | (96 | ) | — | 79 | ||||||||||||||
Other | (106 | ) | 41 | 57 | 5 | (3 | ) | |||||||||||||
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3,971 | 99 | 8,121 | (1,292 | ) | 10,899 | |||||||||||||||
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| |||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||
Depreciation, depletion, and amortization | 2,598 | — | 2,900 | — | 5,498 | |||||||||||||||
Asset retirement obligation accretion | 23 | — | 112 | — | 135 | |||||||||||||||
Lease operating expenses | 386 | — | 1,476 | — | 1,862 | |||||||||||||||
Gathering and transportation | 43 | — | 160 | — | 203 | |||||||||||||||
Taxes other than income | 193 | — | 339 | — | 532 | |||||||||||||||
General and administrative | 276 | — | 28 | 5 | 309 | |||||||||||||||
Acquisition, divestiture, and separation costs | 66 | — | — | — | 66 | |||||||||||||||
Financing costs, net | 118 | 31 | (46 | ) | — | 103 | ||||||||||||||
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| |||||||||||
3,703 | 31 | 4,969 | 5 | 8,708 | ||||||||||||||||
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| |||||||||||
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 268 | 68 | 3,152 | (1,297 | ) | 2,191 | ||||||||||||||
Provision for income taxes | 730 | 4 | 1,234 | — | 1,968 | |||||||||||||||
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NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST | (462 | ) | 64 | 1,918 | (1,297 | ) | 223 | |||||||||||||
Net loss from discontinued operations, net of tax | (127 | ) | — | (390 | ) | — | (517 | ) | ||||||||||||
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| |||||||||||
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | (589 | ) | 64 | 1,528 | (1,297 | ) | (294 | ) | ||||||||||||
Net income attributable to noncontrolling interest | — | — | 295 | — | 295 | |||||||||||||||
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| |||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | (589 | ) | $ | 64 | $ | 1,233 | $ | (1,297 | ) | $ | (589 | ) | |||||||
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COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK(1) | $ | (590 | ) | $ | 64 | $ | 1,233 | $ | (1,297 | ) | $ | (590 | ) | |||||||
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24
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2013
Apache Corporation | Apache Finance Canada | All Other Subsidiaries of Apache Corporation | Reclassifications & Eliminations | Consolidated | ||||||||||||||||
(In millions) | ||||||||||||||||||||
REVENUES AND OTHER: | ||||||||||||||||||||
Oil and gas production revenues | $ | 3,775 | $ | — | $ | 8,536 | $ | — | $ | 12,311 | ||||||||||
Equity in net income (loss) of affiliates | 1,947 | (21 | ) | 8 | (1,934 | ) | — | |||||||||||||
Derivative instrument gains (losses), net | (275 | ) | — | — | — | (275 | ) | |||||||||||||
Other | 3 | 46 | 33 | (4 | ) | 78 | ||||||||||||||
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5,450 | 25 | 8,577 | (1,938 | ) | 12,114 | |||||||||||||||
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|
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| |||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||
Depreciation, depletion, and amortization | 1,912 | — | 2,745 | — | 4,657 | |||||||||||||||
Asset retirement obligation accretion | 60 | — | 132 | — | 192 | |||||||||||||||
Lease operating expenses | 802 | — | 1,473 | — | 2,275 | |||||||||||||||
Gathering and transportation | 49 | — | 182 | — | 231 | |||||||||||||||
Taxes other than income | 163 | — | 411 | — | 574 | |||||||||||||||
General and administrative | 305 | — | 58 | (4 | ) | 359 | ||||||||||||||
Financing costs, net | 104 | 42 | 11 | — | 157 | |||||||||||||||
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3,395 | 42 | 5,012 | (4 | ) | 8,445 | |||||||||||||||
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| |||||||||||
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 2,055 | (17 | ) | 3,565 | (1,934 | ) | 3,669 | |||||||||||||
Provision (benefit) for income taxes | (3 | ) | (4 | ) | 1,426 | — | 1,419 | |||||||||||||
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| |||||||||||
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST | 2,058 | (13 | ) | 2,139 | (1,934 | ) | 2,250 | |||||||||||||
Net loss from discontinued operations, net of tax | — | — | (192 | ) | — | (192 | ) | |||||||||||||
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| |||||||||||
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST | 2,058 | (13 | ) | 1,947 | (1,934 | ) | 2,058 | |||||||||||||
Preferred stock dividends | 44 | — | — | — | 44 | |||||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $ | 2,014 | $ | (13 | ) | $ | 1,947 | $ | (1,934 | ) | $ | 2,014 | ||||||||
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COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK(1) | $ | 2,022 | $ | (13 | ) | $ | 1,947 | $ | (1,934 | ) | $ | 2,022 | ||||||||
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2517
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine MonthsQuarter Ended September 30, 2014March 31, 2015
All Other | ||||||||||||||||||||||||||||||||||||||||
Apache | Subsidiaries | |||||||||||||||||||||||||||||||||||||||
All Other | Apache | Finance | of Apache | Reclassifications | ||||||||||||||||||||||||||||||||||||
Apache Corporation | Apache Finance Canada | Subsidiaries of Apache Corporation | Reclassifications & Eliminations | Consolidated | Corporation | Canada | Corporation | & Eliminations | Consolidated | |||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||
CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES | $ | 3,574 | $ | (37 | ) | $ | 2,909 | $ | — | $ | 6,446 | $ | (396 | ) | $ | (3 | ) | $ | 1,049 | $ | — | $ | 650 | |||||||||||||||||
CASH PROVIDED BY DISCONTINUED OPERATIONS | — | — | 82 | — | 82 | — | — | — | — | — | ||||||||||||||||||||||||||||||
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CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 3,574 | (37 | ) | 2,991 | — | 6,528 | (396 | ) | (3 | ) | 1,049 | — | 650 | |||||||||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||
Additions to oil and gas property | (5,425 | ) | — | (1,706 | ) | — | (7,131 | ) | (771 | ) | — | (997 | ) | — | (1,768 | ) | ||||||||||||||||||||||||
Additions to gas gathering, transmission, and processing facilities | (21 | ) | — | (1,014 | ) | — | (1,035 | ) | ||||||||||||||||||||||||||||||||
Proceeds from sale of Deepwater Gulf of Mexico assets | 1,367 | — | — | — | 1,367 | |||||||||||||||||||||||||||||||||||
Restricted cash related to divestitures | (545 | ) | — | — | — | (545 | ) | |||||||||||||||||||||||||||||||||
Proceeds from sale of other oil and gas properties | 35 | — | 355 | — | 390 | |||||||||||||||||||||||||||||||||||
Leasehold and property acquisitions | (503 | ) | — | (152 | ) | — | (655 | ) | ||||||||||||||||||||||||||||||||
Leasehold and property acquisition | (92 | ) | — | — | — | (92 | ) | |||||||||||||||||||||||||||||||||
Additions to gas gathering, transmission and processing facilities | (22 | ) | — | (201 | ) | — | (223 | ) | ||||||||||||||||||||||||||||||||
Investment in subsidiaries, net | 2,303 | — | — | (2,303 | ) | — | 105 | — | — | (105 | ) | — | ||||||||||||||||||||||||||||
Other | (67 | ) | — | (13 | ) | — | (80 | ) | (18 | ) | — | (17 | ) | — | (35 | ) | ||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
NET CASH USED IN CONTINUING INVESTING ACTIVITIES | (2,856 | ) | — | (2,530 | ) | (2,303 | ) | (7,689 | ) | |||||||||||||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) CONTINUING INVESTING ACTIVITIES | (798 | ) | — | (1,215 | ) | (105 | ) | (2,118 | ) | |||||||||||||||||||||||||||||||
NET CASH PROVIDED BY DISCONTINUED OPERATIONS | — | — | 748 | — | 748 | — | — | — | — | — | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
NET CASH USED IN INVESTING ACTIVITIES | (2,856 | ) | — | (1,782 | ) | (2,303 | ) | (6,941 | ) | |||||||||||||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (798 | ) | — | (1,215 | ) | (105 | ) | (2,118 | ) | |||||||||||||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||
Commercial paper and bank credit facilities, net | 1,248 | — | (2 | ) | — | 1,246 | 1,028 | — | — | — | 1,028 | |||||||||||||||||||||||||||||
Intercompany borrowings | — | 10 | (2,322 | ) | 2,312 | — | — | (1 | ) | (104 | ) | 105 | — | |||||||||||||||||||||||||||
Distributions to noncontrolling interest | — | — | (124 | ) | — | (124 | ) | — | — | (21 | ) | — | (21 | ) | ||||||||||||||||||||||||||
Dividends paid | (271 | ) | — | — | — | (271 | ) | (94 | ) | — | — | — | (94 | ) | ||||||||||||||||||||||||||
Treasury stock activity, net | (1,830 | ) | — | — | — | (1,830 | ) | |||||||||||||||||||||||||||||||||
Common stock activity | — | 4 | (4 | ) | — | — | ||||||||||||||||||||||||||||||||||
Other | — | 24 | 23 | (9 | ) | 38 | 2 | — | 13 | — | 15 | |||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES | (853 | ) | 34 | (2,425 | ) | 2,303 | (941 | ) | 936 | 3 | (116 | ) | 105 | 928 | ||||||||||||||||||||||||||
NET CASH USED IN DISCONTINUED OPERATIONS | — | — | (42 | ) | — | (42 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (853 | ) | 34 | (2,467 | ) | 2,303 | (983 | ) | 936 | 3 | (116 | ) | 105 | 928 | ||||||||||||||||||||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (135 | ) | (3 | ) | (1,258 | ) | — | (1,396 | ) | (258 | ) | — | (282 | ) | — | (540 | ) | |||||||||||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 155 | 3 | 1,748 | — | 1,906 | 267 | — | 502 | — | 769 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 20 | $ | — | $ | 490 | $ | — | $ | 510 | $ | 9 | $ | — | $ | 220 | $ | — | $ | 229 | ||||||||||||||||||||
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2618
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine MonthsQuarter Ended September 30, 2013March 31, 2014
All Other | ||||||||||||||||||||
Apache | Subsidiaries | |||||||||||||||||||
Apache | Finance | of Apache | Reclassifications | |||||||||||||||||
Corporation | Canada | Corporation | & Eliminations | Consolidated | ||||||||||||||||
(In millions) | ||||||||||||||||||||
CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES | $ | 1,434 | $ | (89 | ) | $ | 5,855 | $ | — | $ | 7,200 | |||||||||
CASH PROVIDED BY DISCONTINUED OPERATIONS | — | — | 158 | — | 158 | |||||||||||||||
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| |||||||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 1,434 | (89 | ) | 6,013 | — | 7,358 | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Additions to oil and gas property | (2,798 | ) | — | (4,388 | ) | — | (7,186 | ) | ||||||||||||
Additions to gas gathering, transmission, and processing facilities | (85 | ) | — | (767 | ) | — | (852 | ) | ||||||||||||
Proceeds from divestiture of Shelf | 3,594 | — | — | — | 3,594 | |||||||||||||||
Proceeds from Kitimat LNG transaction, net | — | — | 396 | — | 396 | |||||||||||||||
Proceeds from the sale of other oil and gas properties | — | — | 199 | — | 199 | |||||||||||||||
Leasehold and property acquisitions | (158 | ) | — | (155 | ) | — | (313 | ) | ||||||||||||
Investment in subsidiaries, net | 596 | — | — | (596 | ) | — | ||||||||||||||
Other | (41 | ) | — | 29 | — | (12 | ) | |||||||||||||
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| |||||||||||
NET CASH PROVIDED BY (USED IN) CONTINUING INVESTING ACTIVITIES | 1,108 | — | (4,686 | ) | (596 | ) | (4,174 | ) | ||||||||||||
NET CASH USED IN DISCONTINUED OPERATIONS | — | — | (160 | ) | — | (160 | ) | |||||||||||||
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| |||||||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 1,108 | — | (4,846 | ) | (596 | ) | (4,334 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Commercial paper and bank credit facilities, net | (502 | ) | — | (37 | ) | — | (539 | ) | ||||||||||||
Intercompany borrowings | — | 1 | (585 | ) | 584 | — | ||||||||||||||
Payments on fixed rate debt | (900 | ) | — | — | — | (900 | ) | |||||||||||||
Dividends paid | (280 | ) | — | — | — | (280 | ) | |||||||||||||
Treasury stock activity, net | (249 | ) | — | — | — | (249 | ) | |||||||||||||
Other | 17 | 88 | (79 | ) | 12 | 38 | ||||||||||||||
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|
|
|
|
|
|
| |||||||||||
NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES | (1,914 | ) | 89 | (701 | ) | 596 | (1,930 | ) | ||||||||||||
NET CASH USED IN DISCONTINUED OPERATIONS | — | — | (3 | ) | — | (3 | ) | |||||||||||||
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|
|
|
|
|
|
| |||||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (1,914 | ) | 89 | (704 | ) | 596 | (1,933 | ) | ||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 628 | — | 463 | — | 1,091 | |||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | — | — | 160 | — | 160 | |||||||||||||||
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| |||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 628 | $ | — | $ | 623 | $ | — | $ | 1,251 | ||||||||||
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All Other | ||||||||||||||||||||
Apache | Subsidiaries | |||||||||||||||||||
Apache | Finance | of Apache | Reclassifications | |||||||||||||||||
Corporation | Canada | Corporation | & Eliminations | Consolidated | ||||||||||||||||
(In millions) | ||||||||||||||||||||
CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES | $ | (186 | ) | $ | (15 | ) | $ | 2,412 | $ | — | $ | 2,211 | ||||||||
CASH PROVIDED BY DISCONTINUED OPERATIONS | — | — | 82 | — | 82 | |||||||||||||||
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| |||||||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | (186 | ) | (15 | ) | 2,494 | — | 2,293 | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
Additions to oil and gas property | (704 | ) | — | (1,614 | ) | — | (2,318 | ) | ||||||||||||
Leasehold and property acquisitions | (36 | ) | — | (8 | ) | — | (44 | ) | ||||||||||||
Additions to gas gathering, transmission and processing facilities | (19 | ) | — | (325 | ) | — | (344 | ) | ||||||||||||
Investment in subsidiaries, net | 1,320 | — | — | (1,320 | ) | — | ||||||||||||||
Other | (7 | ) | — | 16 | — | 9 | ||||||||||||||
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|
|
|
|
|
|
| |||||||||||
NET CASH PROVIDED BY (USED IN) CONTINUING INVESTING ACTIVITIES | 554 | — | (1,931 | ) | (1,320 | ) | (2,697 | ) | ||||||||||||
NET CASH PROVIDED BY DISCONTINUED OPERATIONS | — | — | 748 | — | 748 | |||||||||||||||
|
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|
|
|
|
|
|
| |||||||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 554 | — | (1,183 | ) | (1,320 | ) | (1,949 | ) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
Commercial paper and bank credit facilities, net | 42 | — | (44 | ) | — | (2 | ) | |||||||||||||
Intercompany borrowings | — | 10 | (1,329 | ) | 1,319 | — | ||||||||||||||
Dividends paid | (79 | ) | — | — | — | (79 | ) | |||||||||||||
Payments on fixed rate debt | (484 | ) | — | — | — | (484 | ) | |||||||||||||
Other common stock activity, net | — | 5 | (6 | ) | 1 | — | ||||||||||||||
|
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|
|
|
|
|
|
|
| |||||||||||
NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES | (521 | ) | 15 | (1,379 | ) | 1,320 | (565 | ) | ||||||||||||
NET CASH USED IN DISCONTINUED OPERATIONS | — | — | (42 | ) | — | (42 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (521 | ) | 15 | (1,421 | ) | 1,320 | (607 | ) | ||||||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (153 | ) | — | (110 | ) | — | (263 | ) | ||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 155 | 3 | 1,748 | — | 1,906 | |||||||||||||||
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|
|
|
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|
| |||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 2 | $ | 3 | $ | 1,638 | $ | — | $ | 1,643 | ||||||||||
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2719
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2014March 31, 2015
All Other | All Other | |||||||||||||||||||||||||||||||||||||||
Apache | Subsidiaries | Apache | Subsidiaries | |||||||||||||||||||||||||||||||||||||
Apache | Finance | of Apache | Reclassifications | Apache | Finance | of Apache | Reclassifications | |||||||||||||||||||||||||||||||||
Corporation | Canada | Corporation | & Eliminations | Consolidated | Corporation | Canada | Corporation | & Eliminations | Consolidated | |||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 20 | $ | — | $ | 490 | $ | — | $ | 510 | $ | 9 | $ | — | $ | 220 | $ | — | $ | 229 | ||||||||||||||||||||
Short-term restricted cash | 74 | — | — | — | 74 | |||||||||||||||||||||||||||||||||||
Receivables, net of allowance | 836 | — | 1,451 | — | 2,287 | 512 | — | 1,255 | — | 1,767 | ||||||||||||||||||||||||||||||
Inventories | 31 | — | 682 | — | 713 | 53 | — | 613 | — | 666 | ||||||||||||||||||||||||||||||
Drilling advances | 25 | 1 | 408 | — | 434 | 20 | — | 448 | — | 468 | ||||||||||||||||||||||||||||||
Derivative instruments | 41 | — | — | — | 41 | |||||||||||||||||||||||||||||||||||
Assets held for sale | — | — | 1,804 | — | 1,804 | |||||||||||||||||||||||||||||||||||
Deferred tax asset | 612 | — | 157 | — | 769 | |||||||||||||||||||||||||||||||||||
Prepaid assets and other | 91 | — | 276 | — | 367 | 114 | — | 89 | — | 203 | ||||||||||||||||||||||||||||||
Intercompany receivable | 6,442 | — | — | (6,442 | ) | — | 5,250 | — | — | (5,250 | ) | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
7,560 | 1 | 3,307 | (6,442 | ) | 4,426 | 6,570 | — | 4,586 | (5,250 | ) | 5,906 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET | 17,039 | — | 35,996 | — | 53,035 | 9,127 | — | 32,103 | — | 41,230 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
OTHER ASSETS: | ||||||||||||||||||||||||||||||||||||||||
Intercompany receivable | — | — | 740 | (740 | ) | — | — | — | 713 | (713 | ) | — | ||||||||||||||||||||||||||||
Equity in affiliates | 25,975 | 1,205 | 440 | (27,620 | ) | — | 24,707 | 213 | 437 | (25,357 | ) | — | ||||||||||||||||||||||||||||
Long-term restricted cash | 471 | — | — | — | 471 | |||||||||||||||||||||||||||||||||||
Goodwill, net | 173 | — | 1,196 | — | 1,369 | |||||||||||||||||||||||||||||||||||
Goodwill | — | — | 87 | — | 87 | |||||||||||||||||||||||||||||||||||
Deferred charges and other | 221 | 1,004 | 1,464 | (1,000 | ) | 1,689 | 173 | 1,001 | 1,253 | (1,000 | ) | 1,427 | ||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 51,439 | $ | 2,210 | $ | 43,143 | $ | (35,802 | ) | $ | 60,990 | $ | 40,577 | $ | 1,214 | $ | 39,179 | $ | (32,320 | ) | $ | 48,650 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||||||||||||||||||
Accounts payable | $ | 736 | $ | 12 | $ | 568 | $ | — | $ | 1,316 | $ | 564 | $ | 9 | $ | 437 | $ | — | $ | 1,010 | ||||||||||||||||||||
Current debt | 20 | — | — | — | 20 | 2,598 | — | — | — | 2,598 | ||||||||||||||||||||||||||||||
Asset retirement obligation | 115 | — | 62 | — | 177 | 28 | — | 19 | — | 47 | ||||||||||||||||||||||||||||||
Other current liabilities | 1,300 | 5 | 1,489 | — | 2,794 | 663 | 7 | 1,168 | — | 1,838 | ||||||||||||||||||||||||||||||
Intercompany payable | — | — | 6,442 | (6,442 | ) | — | — | — | 5,250 | (5,250 | ) | — | ||||||||||||||||||||||||||||
|
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|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
2,171 | 17 | 8,561 | (6,442 | ) | 4,307 | 3,853 | 16 | 6,874 | (5,250 | ) | 5,493 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
LONG-TERM DEBT | 10,604 | 298 | — | — | 10,902 | 9,377 | 298 | — | — | 9,675 | ||||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES: | ||||||||||||||||||||||||||||||||||||||||
DEFERRED CREDITS AND OTHER | ||||||||||||||||||||||||||||||||||||||||
NONCURRENT LIABILITIES: | ||||||||||||||||||||||||||||||||||||||||
Intercompany payable | 740 | — | — | (740 | ) | — | 713 | — | — | (713 | ) | — | ||||||||||||||||||||||||||||
Income taxes | 4,258 | — | 5,040 | — | 9,298 | 3,220 | — | 3,391 | — | 6,611 | ||||||||||||||||||||||||||||||
Asset retirement obligation | 466 | — | 2,630 | — | 3,096 | 216 | — | 2,878 | — | 3,094 | ||||||||||||||||||||||||||||||
Other | 2,382 | 250 | (1,231 | ) | (1,000 | ) | 401 | 1,987 | 250 | (865 | ) | (1,000 | ) | 372 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
7,846 | 250 | 6,439 | (1,740 | ) | 12,795 | 6,136 | 250 | 5,404 | (1,713 | ) | 10,077 | |||||||||||||||||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES APACHE SHAREHOLDERS’ EQUITY | 30,818 | 1,645 | 25,975 | (27,620 | ) | 30,818 | ||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||||||||||||||||||||
APACHE SHAREHOLDERS’ EQUITY | 21,211 | 650 | 24,707 | (25,357 | ) | 21,211 | ||||||||||||||||||||||||||||||||||
Noncontrolling interest | — | — | 2,168 | — | 2,168 | — | — | 2,194 | — | 2,194 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
TOTAL EQUITY | 30,818 | 1,645 | 28,143 | (27,620 | ) | 32,986 | 21,211 | 650 | 26,901 | (25,357 | ) | 23,405 | ||||||||||||||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 51,439 | $ | 2,210 | $ | 43,143 | $ | (35,802 | ) | $ | 60,990 | $ | 40,577 | $ | 1,214 | $ | 39,179 | $ | (32,320 | ) | $ | 48,650 | |||||||||||||||||||
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|
2820
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 20132014
All Other | All Other | |||||||||||||||||||||||||||||||||||||||
Apache | Subsidiaries | Apache | Subsidiaries | |||||||||||||||||||||||||||||||||||||
Apache | Finance | of Apache | Reclassifications | Apache | Finance | of Apache | Reclassifications | |||||||||||||||||||||||||||||||||
Corporation | Canada | Corporation | & Eliminations | Consolidated | Corporation | Canada | Corporation | & Eliminations | Consolidated | |||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 155 | $ | 3 | $ | 1,748 | $ | — | $ | 1,906 | $ | 267 | $ | — | $ | 502 | $ | — | $ | 769 | ||||||||||||||||||||
Receivables, net of allowance | 1,043 | — | 1,909 | — | 2,952 | 837 | — | 1,187 | — | 2,024 | ||||||||||||||||||||||||||||||
Inventories | 48 | — | 843 | — | 891 | 24 | — | 684 | — | 708 | ||||||||||||||||||||||||||||||
Drilling advances | 49 | — | 322 | — | 371 | 34 | 1 | 353 | — | 388 | ||||||||||||||||||||||||||||||
Derivative instruments | 1 | — | — | — | 1 | |||||||||||||||||||||||||||||||||||
Assets held for sale | — | — | 1,628 | — | 1,628 | |||||||||||||||||||||||||||||||||||
Deferred tax asset | 612 | — | 157 | — | 769 | |||||||||||||||||||||||||||||||||||
Prepaid assets and other | 99 | — | 146 | — | 245 | 32 | — | 97 | — | 129 | ||||||||||||||||||||||||||||||
Intercompany receivable | 5,357 | — | — | (5,357 | ) | — | 4,939 | — | — | (4,939 | ) | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
6,752 | 3 | 4,968 | (5,357 | ) | 6,366 | 6,745 | 1 | 4,608 | (4,939 | ) | 6,415 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET | 16,092 | — | 36,329 | — | 52,421 | 13,940 | — | 34,136 | — | 48,076 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
OTHER ASSETS: | ||||||||||||||||||||||||||||||||||||||||
Intercompany receivable | 1,572 | — | — | (1,572 | ) | — | — | — | 608 | (608 | ) | — | ||||||||||||||||||||||||||||
Equity in affiliates | 24,743 | 1,155 | 449 | (26,347 | ) | — | 25,791 | 869 | 444 | (27,104 | ) | — | ||||||||||||||||||||||||||||
Goodwill, net | 173 | — | 1,196 | — | 1,369 | |||||||||||||||||||||||||||||||||||
Goodwill | — | — | 87 | — | 87 | |||||||||||||||||||||||||||||||||||
Deferred charges and other | 166 | 1,006 | 1,309 | (1,000 | ) | 1,481 | 175 | 1,002 | 1,197 | (1,000 | ) | 1,374 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 49,498 | $ | 2,164 | $ | 44,251 | $ | (34,276 | ) | $ | 61,637 | $ | 46,651 | $ | 1,872 | $ | 41,080 | $ | (33,651 | ) | $ | 55,952 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||||||||||||||||||
Accounts payable | $ | 956 | $ | 2 | $ | 658 | $ | — | $ | 1,616 | $ | 748 | $ | 10 | $ | 452 | $ | — | $ | 1,210 | ||||||||||||||||||||
Current debt | — | — | 53 | — | 53 | |||||||||||||||||||||||||||||||||||
Asset retirement obligation | 115 | — | 6 | — | 121 | 28 | — | 9 | — | 37 | ||||||||||||||||||||||||||||||
Derivative instruments | 299 | — | — | — | 299 | |||||||||||||||||||||||||||||||||||
Other current liabilities | 896 | 10 | 1,705 | — | 2,611 | 1,014 | 1 | 1,402 | — | 2,417 | ||||||||||||||||||||||||||||||
Intercompany payable | — | — | 5,357 | (5,357 | ) | — | — | — | 4,939 | (4,939 | ) | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
2,266 | 12 | 7,779 | (5,357 | ) | 4,700 | 1,790 | 11 | 6,802 | (4,939 | ) | 3,664 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
LONG-TERM DEBT | 9,374 | 298 | — | — | 9,672 | 10,947 | 298 | — | — | 11,245 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES: | ||||||||||||||||||||||||||||||||||||||||
DEFERRED CREDITS AND OTHER | ||||||||||||||||||||||||||||||||||||||||
NONCURRENT LIABILITIES: | ||||||||||||||||||||||||||||||||||||||||
Intercompany payable | — | — | 1,572 | (1,572 | ) | — | 608 | — | — | (608 | ) | — | ||||||||||||||||||||||||||||
Income taxes | 3,586 | — | 4,778 | — | 8,364 | 5,076 | — | 4,423 | — | 9,499 | ||||||||||||||||||||||||||||||
Asset retirement obligation | 430 | — | 2,671 | — | 3,101 | 211 | — | 2,837 | — | 3,048 | ||||||||||||||||||||||||||||||
Other | 446 | 250 | 711 | (1,000 | ) | 407 | 2,082 | 250 | (973 | ) | (1,000 | ) | 359 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
4,462 | 250 | 9,732 | (2,572 | ) | 11,872 | 7,977 | 250 | 6,287 | (1,608 | ) | 12,906 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES APACHE SHAREHOLDERS’ EQUITY | 33,396 | 1,604 | 24,743 | (26,347 | ) | 33,396 | ||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||||||||||||||||||||
APACHE SHAREHOLDERS’ EQUITY | 25,937 | 1,313 | 25,791 | (27,104 | ) | 25,937 | ||||||||||||||||||||||||||||||||||
Noncontrolling interest | — | — | 1,997 | — | 1,997 | — | — | 2,200 | — | 2,200 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
TOTAL EQUITY | 33,396 | 1,604 | 26,740 | (26,347 | ) | 35,393 | 25,937 | 1,313 | 27,991 | (27,104 | ) | 28,137 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
$ | 49,498 | $ | 2,164 | $ | 44,251 | $ | (34,276 | ) | $ | 61,637 | $ | 46,651 | $ | 1,872 | $ | 41,080 | $ | (33,651 | ) | $ | 55,952 | |||||||||||||||||||
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2921
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Apache Corporation, a Delaware corporation formed in 1954, is an independent energy company that explores for, develops and produces natural gas, crude oil, and natural gas liquids. The Company has exploration and production interests in five countries: the United States (U.S.), Canada, Egypt, Australia, and the United Kingdom (U.K.) North Sea. Apache also pursues exploration interests in other countries that may over time result in reportable discoveries and development opportunities.
This discussion relates to Apache Corporation and its consolidated subsidiaries and should be read in conjunction with our consolidated financial statements and accompanying notes included under Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q, as well as our consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our CurrentAnnual Report on Form 8-K dated July 17, 201410-K for our 20132014 fiscal year.
Strategic Overview
The Company’s foundation for future growth is driven by our significant producing asset base and large undeveloped acreage positions. This allows for growth through sustainable lower-risk drilling opportunities, balanced by higher-risk, higher-reward exploration. We closely monitor drilling and acquisition cost trends in each of our core areas relative to product prices and, when appropriate, adjust our capital budgets accordingly and allocate funds to projects based on expected value. We do this through a disciplined and focused process that includes analyzing current economic conditions, projected rate of return on internally generated drilling inventories, and opportunities for tactical acquisitions or leasehold purchases that add substantial drilling prospects or, occasionally, provide access to new core areas that could enhance our portfolio.
Over the last five years, Apache has greatly enlarged and enhancedincreasingly focused on its North American onshore resource base, which webase. Recent drilling successes and acquisitions of acreage positions across North America have built a robust drilling inventory for our Permian, Gulf Coast, and other onshore regions. We believe that this area is capable of driving our growth and performance over the next several years. As part of this strategy, we also conducted a company-wide review of our portfolio and our operations in an effort to best position Apache for the foreseeable future. Duringlong-term benefit of our shareholders. This review has resulted in several key divestitures during the last 18eighteen months we have further increasedincluding the focus onrecently completed sale of our North American Onshore business by divesting $10 billionKitimat and Wheatstone LNG projects and the announcement of properties. In North America, we completed the sale of substantially all of our Gulf of Mexico Shelf region assets, certain non-producingoperations in Australia, which is expected to close in mid-2015. The Company believes the resulting portfolio, which includes a significant onshore North America resource base coupled with Brent-linked, free cash flow generating assets in the deepwater GulfNorth Sea and Egypt, provides flexibility in capital allocation and a platform for sustainable growth in a volatile commodity price environment.
The decline in the prices of Mexico,oil and non-strategic, primarily dry-gas, assetsnatural gas at the end of 2014 and during the first quarter of 2015 was dramatic; however, we believe this environment will provide future growth opportunities for companies that have moved aggressively in Canada. Internationally,response to the price drop. As we sold a one-third noncontrolling interest incannot predict the length or depth of this commodity price correction, or the timing and extent of any potential rebound, we moved quickly and decisively regarding certain matters within our Egypt operationscontrol: the timing and alllevels of capital spending and our assets in Argentina. In addition, we intend to completely exit the Wheatstone and Kitimat LNG projects, and, in light of our expanding opportunity setcost structure. We are currently operating only 15 rigs onshore in North American Onshore,America, but we are evaluatingprepared to ramp-up activity when we believe service costs are aligned with the current commodity price environment. We closely monitor commodity prices, service cost levels, regulatory impacts, and numerous other industry factors and routinely adjust our international assetsbudgets in response to changing market conditions and exploring multiple opportunities, including the potential separation of some or all of them through the capital markets.
In addition, in June 2013 we launched a share repurchase program. Through September 30, 2014, we have repurchased a total of 31.8 million of the 40 million shares authorized by our Board of Directors. Under the program, we are not obligated to acquire any specific number of shares.operating cash flow forecasts.
Financial Highlights
22
Third Quarter Operational Developments
Average daily production inOur internally generated exploration and drilling opportunities provide the third quarterfoundation for our growth. Highlights of 2014 totaled 637 thousand barrels of oil equivalent (Mboe), a decrease of 105 Mboe from the comparative 2013 quarter. The prior-year quarter includes volumes from properties in the Gulf of Mexico Shelfour 2015 drilling successes and Canada that have since been divested.other operational developments are discussed below.
North America
30
International
3123
Results of Operations
Oil and Gas Revenues
Oil and gas production revenues for the thirdfirst quarter of 20142015 totaled $3.5$1.8 billion, a $820 million50 percent decrease from the comparative 20132014 quarter. The table below presents revenues by region and each region’s percent contribution to revenues for the first quarter of 2015 and 2014, and 2013.respectively.
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | For the Quarter Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | % | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
Value | Contribution | Value | Contribution | Value | Contribution | Value | Contribution | $ Value | % Contribution | $ Value | % Contribution | |||||||||||||||||||||||||||||||||||||
($ in millions) | ($ in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Total Oil Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 1,121 | 41 | % | $ | 1,594 | 46 | % | $ | 3,358 | 40 | % | $ | 4,253 | 43 | % | $ | 510 | 38 | % | $ | 1,092 | 39 | % | ||||||||||||||||||||||||
Canada | 140 | 5 | % | 167 | 5 | % | 434 | 5 | % | 442 | 5 | % | 60 | 4 | % | 140 | 5 | % | ||||||||||||||||||||||||||||||
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North America | 1,261 | 46 | % | 1,761 | 51 | % | 3,792 | 45 | % | 4,695 | 48 | % | 570 | 42 | % | 1,232 | 44 | % | ||||||||||||||||||||||||||||||
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Egypt(1) | 805 | 29 | % | 925 | 26 | % | 2,536 | 30 | % | 2,633 | 27 | % | 433 | 32 | % | 846 | 30 | % | ||||||||||||||||||||||||||||||
Australia | 200 | 7 | % | 201 | 6 | % | 523 | 6 | % | 603 | 6 | % | 81 | 6 | % | 170 | 6 | % | ||||||||||||||||||||||||||||||
North Sea | 487 | 18 | % | 581 | 17 | % | 1,667 | 19 | % | 1,859 | 19 | % | 278 | 20 | % | 567 | 20 | % | ||||||||||||||||||||||||||||||
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International(1) | 1,492 | 54 | % | 1,707 | 49 | % | 4,726 | 55 | % | 5,095 | 52 | % | 792 | 58 | % | 1,583 | 56 | % | ||||||||||||||||||||||||||||||
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Total(1)(2) | $ | 2,753 | 100 | % | $ | 3,468 | 100 | % | $ | 8,518 | 100 | % | $ | 9,790 | 100 | % | ||||||||||||||||||||||||||||||||
Total(1) | $ | 1,362 | 100 | % | $ | 2,815 | 100 | % | ||||||||||||||||||||||||||||||||||||||||
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Total Gas Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 210 | 39 | % | $ | 286 | 44 | % | $ | 721 | 41 | % | $ | 894 | 44 | % | $ | 103 | 27 | % | $ | 266 | 41 | % | ||||||||||||||||||||||||
Canada | 112 | 21 | % | 139 | 22 | % | 382 | 21 | % | 457 | 22 | % | 67 | 17 | % | 148 | 23 | % | ||||||||||||||||||||||||||||||
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North America | 322 | 60 | % | 425 | 66 | % | 1,103 | 62 | % | 1,351 | 66 | % | 170 | 44 | % | 414 | 64 | % | ||||||||||||||||||||||||||||||
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Egypt(1) | 101 | 19 | % | 97 | 15 | % | 303 | 17 | % | 291 | 14 | % | 96 | 25 | % | 103 | 16 | % | ||||||||||||||||||||||||||||||
Australia | 87 | 16 | % | 78 | 12 | % | 257 | 15 | % | 264 | 13 | % | 87 | 22 | % | 86 | 13 | % | ||||||||||||||||||||||||||||||
North Sea | 28 | 5 | % | 45 | 7 | % | 110 | 6 | % | 142 | 7 | % | 34 | 9 | % | 43 | 7 | % | ||||||||||||||||||||||||||||||
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International(1) | 216 | 40 | % | 220 | 34 | % | 670 | 38 | % | 697 | 34 | % | 217 | 56 | % | 232 | 36 | % | ||||||||||||||||||||||||||||||
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Total(1)(3) | $ | 538 | 100 | % | $ | 645 | 100 | % | $ | 1,773 | 100 | % | $ | 2,048 | 100 | % | ||||||||||||||||||||||||||||||||
Total(1) | $ | 387 | 100 | % | $ | 646 | 100 | % | ||||||||||||||||||||||||||||||||||||||||
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Natural Gas Liquids (NGL) | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||
Total Natural Gas Liquids (NGL) Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 150 | 85 | % | $ | 149 | 85 | % | $ | 436 | 82 | % | $ | 396 | 84 | % | $ | 47 | 82 | % | $ | 147 | 79 | % | ||||||||||||||||||||||||
Canada | 16 | 9 | % | 19 | 11 | % | 63 | 12 | % | 53 | 11 | % | 6 | 11 | % | 30 | 16 | % | ||||||||||||||||||||||||||||||
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North America | 166 | 94 | % | 168 | 96 | % | 499 | 94 | % | 449 | 95 | % | 53 | 93 | % | 177 | 95 | % | ||||||||||||||||||||||||||||||
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Egypt(1) | 4 | 2 | % | — | 0 | % | 10 | 2 | % | — | 0 | % | 3 | 5 | % | 1 | 1 | % | ||||||||||||||||||||||||||||||
North Sea | 7 | 4 | % | 7 | 4 | % | 23 | 4 | % | 24 | 5 | % | 1 | 2 | % | 8 | 4 | % | ||||||||||||||||||||||||||||||
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International(1) | 11 | 6 | % | 7 | 4 | % | 33 | 6 | % | 24 | 5 | % | 4 | 7 | % | 9 | 5 | % | ||||||||||||||||||||||||||||||
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Total(1) | $ | 177 | 100 | % | $ | 175 | 100 | % | $ | 532 | 100 | % | $ | 473 | 100 | % | $ | 57 | 100 | % | $ | 186 | 100 | % | ||||||||||||||||||||||||
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Total Oil and Gas Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 1,481 | 42 | % | $ | 2,029 | 47 | % | $ | 4,515 | 42 | % | $ | 5,543 | 45 | % | $ | 660 | 37 | % | $ | 1,505 | 41 | % | ||||||||||||||||||||||||
Canada | 268 | 8 | % | 325 | 8 | % | 879 | 8 | % | 952 | 8 | % | 133 | 7 | % | 318 | 9 | % | ||||||||||||||||||||||||||||||
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North America | 1,749 | 50 | % | 2,354 | 55 | % | 5,394 | 50 | % | 6,495 | 53 | % | 793 | 44 | % | 1,823 | 50 | % | ||||||||||||||||||||||||||||||
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Egypt(1) | 910 | 27 | % | 1,022 | 24 | % | 2,849 | 26 | % | 2,924 | 24 | % | 532 | 29 | % | 950 | 26 | % | ||||||||||||||||||||||||||||||
Australia | 287 | 8 | % | 279 | 6 | % | 780 | 7 | % | 867 | 7 | % | 168 | 9 | % | 256 | 7 | % | ||||||||||||||||||||||||||||||
North Sea | 522 | 15 | % | 633 | 15 | % | 1,800 | 17 | % | 2,025 | 16 | % | 313 | 18 | % | 618 | 17 | % | ||||||||||||||||||||||||||||||
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International(1) | 1,719 | 50 | % | 1,934 | 45 | % | 5,429 | 50 | % | 5,816 | 47 | % | 1,013 | 56 | % | 1,824 | 50 | % | ||||||||||||||||||||||||||||||
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Total(1) | $ | 3,468 | 100 | % | $ | 4,288 | 100 | % | $ | 10,823 | 100 | % | $ | 12,311 | 100 | % | $ | 1,806 | 100 | % | $ | 3,647 | 100 | % | ||||||||||||||||||||||||
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Discontinued Operations - Argentina | ||||||||||||||||||||||||||||||||||||||||||||||||
Oil Revenues | $ | — | $ | 71 | $ | 45 | $ | 200 | ||||||||||||||||||||||||||||||||||||||||
Gas Revenues | — | 47 | 39 | 148 | ||||||||||||||||||||||||||||||||||||||||||||
NGL Revenues | — | 4 | 3 | 16 | ||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations – Argentina | ||||||||||||||||||||||||||||||||||||||||||||||||
Oil Revenue | $ | — | $ | 45 | ||||||||||||||||||||||||||||||||||||||||||||
Gas Revenue | — | 39 | ||||||||||||||||||||||||||||||||||||||||||||||
NGL Revenue | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||
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Total | $ | — | $ | 122 | $ | 87 | $ | 364 | $ | — | $ | 87 | ||||||||||||||||||||||||||||||||||||
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(1) Includes revenues attributable to a noncontrolling interest in Egypt.
3224
Production
The table below presents third-quarterfirst quarter 2015 and year-to-date 2014 and 2013 production and the relative increase or decrease from the prior period.
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||
Increase | Increase | For the Quarter Ended March 31, | ||||||||||||||||||||||||||||||||||
2014 | 2013 | (Decrease) | 2014 | 2013 | (Decrease) | 2015 | Increase (Decrease) | 2014 | ||||||||||||||||||||||||||||
Oil Volume – b/d | ||||||||||||||||||||||||||||||||||||
United States | 133,613 | 163,690 | (18 | %) | 130,675 | 156,803 | (17 | %) | 126,639 | (1 | %) | 127,951 | ||||||||||||||||||||||||
Canada | 17,672 | 18,573 | (5 | %) | 17,748 | 18,112 | (2 | %) | 16,875 | (4 | %) | 17,589 | ||||||||||||||||||||||||
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North America | 151,285 | 182,263 | (17 | %) | 148,423 | 174,915 | (15 | %) | 143,514 | (1 | %) | 145,540 | ||||||||||||||||||||||||
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Egypt(1)(2) | 87,499 | 89,294 | (2 | %) | 88,076 | 89,530 | (2 | %) | 91,971 | 4 | % | 88,093 | ||||||||||||||||||||||||
Australia | 22,014 | 18,787 | 17 | % | 17,817 | 20,195 | (12 | %) | 20,905 | 24 | % | 16,825 | ||||||||||||||||||||||||
North Sea | 55,247 | 57,861 | (5 | %) | 58,636 | 63,291 | (7 | %) | 61,699 | 4 | % | 59,092 | ||||||||||||||||||||||||
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International | 164,760 | 165,942 | (1 | %) | 164,529 | 173,016 | (5 | %) | 174,575 | 6 | % | 164,010 | ||||||||||||||||||||||||
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Total | 316,045 | 348,205 | (9 | %) | 312,952 | 347,931 | (10 | %) | 318,089 | 3 | % | 309,550 | ||||||||||||||||||||||||
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Natural Gas Volume – Mcf/d | ||||||||||||||||||||||||||||||||||||
United States | 579,188 | 830,423 | (30 | %) | 589,565 | 848,173 | (30 | %) | 435,818 | (26 | %) | 592,685 | ||||||||||||||||||||||||
Canada | 300,803 | 529,402 | (43 | %) | 331,470 | 523,163 | (37 | %) | 287,556 | (24 | %) | 377,712 | ||||||||||||||||||||||||
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North America | 879,991 | 1,359,825 | (35 | %) | 921,035 | 1,371,336 | (33 | %) | 723,374 | (25 | %) | 970,397 | ||||||||||||||||||||||||
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Egypt(1)(2) | 377,838 | 350,504 | 8 | % | 374,384 | 357,747 | 5 | % | 363,989 | (4 | %) | 377,357 | ||||||||||||||||||||||||
Australia | 201,386 | 212,141 | (5 | %) | 209,163 | 212,845 | (2 | %) | 230,691 | 7 | % | 215,792 | ||||||||||||||||||||||||
North Sea | 50,647 | 46,971 | 8 | % | 50,209 | 50,108 | 0 | % | 50,445 | 12 | % | 45,071 | ||||||||||||||||||||||||
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International | 629,871 | 609,616 | 3 | % | 633,756 | 620,700 | 2 | % | 645,125 | 1 | % | 638,220 | ||||||||||||||||||||||||
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Total | 1,509,862 | 1,969,441 | (23 | %) | 1,554,791 | 1,992,036 | (22 | %) | 1,368,499 | (15 | %) | 1,608,617 | ||||||||||||||||||||||||
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NGL Volume – b/d | ||||||||||||||||||||||||||||||||||||
United States | 61,712 | 57,510 | 7 | % | 57,163 | 54,639 | 5 | % | 47,221 | (11 | %) | 53,058 | ||||||||||||||||||||||||
Canada | 5,381 | 7,012 | (23 | %) | 6,349 | 6,788 | (6 | %) | 5,853 | (25 | %) | 7,769 | ||||||||||||||||||||||||
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North America | 67,093 | 64,522 | 4 | % | 63,512 | 61,427 | 3 | % | 53,074 | (13 | %) | 60,827 | ||||||||||||||||||||||||
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Egypt(1)(2) | 726 | — | NM | 616 | — | NM | 1,031 | 342 | % | 233 | ||||||||||||||||||||||||||
North Sea | 1,294 | 1,097 | 18 | % | 1,251 | 1,263 | (1 | %) | 886 | (19 | %) | 1,091 | ||||||||||||||||||||||||
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International | 2,020 | 1,097 | 84 | % | 1,867 | 1,263 | 48 | % | 1,917 | 45 | % | 1,324 | ||||||||||||||||||||||||
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Total | 69,113 | 65,619 | 5 | % | 65,379 | 62,690 | 4 | % | 54,991 | (12 | %) | 62,151 | ||||||||||||||||||||||||
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BOE per day(3) | ||||||||||||||||||||||||||||||||||||
United States | 291,857 | 359,604 | (19 | %) | 286,099 | 352,804 | (19 | %) | 246,497 | (12 | %) | 279,790 | ||||||||||||||||||||||||
Canada | 73,187 | 113,819 | (36 | %) | 79,341 | 112,095 | (29 | %) | 70,653 | (20 | %) | 88,310 | ||||||||||||||||||||||||
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North America | 365,044 | 473,423 | (23 | %) | 365,440 | 464,899 | (21 | %) | 317,150 | (14 | %) | 368,100 | ||||||||||||||||||||||||
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Egypt(2) | 151,198 | 147,711 | 2 | % | 151,090 | 149,154 | 1 | % | 153,667 | 2 | % | 151,219 | ||||||||||||||||||||||||
Australia | 55,578 | 54,144 | 3 | % | 52,677 | 55,669 | (5 | %) | 59,353 | 12 | % | 52,790 | ||||||||||||||||||||||||
North Sea | 64,982 | 66,787 | (3 | %) | 68,255 | 72,905 | (6 | %) | 70,993 | 5 | % | 67,695 | ||||||||||||||||||||||||
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International | 271,758 | 268,642 | 1 | % | 272,022 | 277,728 | (2 | %) | 284,013 | 5 | % | 271,704 | ||||||||||||||||||||||||
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Total | 636,802 | 742,065 | (14 | %) | 637,462 | 742,627 | (14 | %) | 601,163 | (6 | %) | 639,804 | ||||||||||||||||||||||||
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Discontinued Operations – Argentina | ||||||||||||||||||||||||||||||||||||
Oil (b/d) | — | 9,560 | NM | 2,269 | 9,408 | NM | — | 6,885 | ||||||||||||||||||||||||||||
Gas (Mcf/d) | — | 185,962 | NM | 46,599 | 186,241 | NM | — | 141,352 | ||||||||||||||||||||||||||||
NGL (b/d) | — | 1,713 | NM | 424 | 2,254 | NM | — | 1,287 | ||||||||||||||||||||||||||||
BOE/d | — | 42,266 | NM | 10,461 | 42,702 | NM | — | 31,731 |
(1) | Gross oil, natural gas, and NGL production in Egypt for the |
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
Oil (b/d) | 195,165 | 193,869 | 196,938 | 195,442 | 197,785 | 198,619 | ||||||||||||||||||
Gas (Mcf/d) | 891,392 | 915,965 | 906,751 | 910,599 | 861,933 | 921,440 | ||||||||||||||||||
NGL (b/d) | 1,978 | — | 1,780 | — | 2,321 | 649 |
(2) | Includes net production volumes per day attributable to a noncontrolling interest in |
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
Oil (b/d) | 29,201 | — | 29,259 | — | 30,671 | 29,066 | ||||||||||||||||||
Gas (Mcf/d) | 127,020 | — | 124,836 | — | 121,408 | 124,799 | ||||||||||||||||||
NGL (b/d) | 242 | — | 205 | — | 343 | 78 |
(3) | The table shows production on a barrel of oil equivalent basis (boe) in which natural gas is converted to an equivalent barrel of oil based on a 6:1 energy equivalent ratio. This ratio is not reflective of the price ratio between the two products. |
NM — Not meaningful
3325
Pricing
The table below presents third-quarterfirst quarter 2015 and year-to-date 2014 and 2013 pricing and the relative increase or decrease from the prior periods.
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | Increase (Decrease) | 2014 | 2013 | Increase (Decrease) | |||||||||||||||||||
Average Oil Price—Per barrel | ||||||||||||||||||||||||
United States | $ | 91.26 | $ | 105.82 | (14 | %) | $ | 94.14 | $ | 99.35 | (5 | %) | ||||||||||||
Canada | 85.43 | 97.58 | (12 | %) | 89.45 | 89.33 | 0 | % | ||||||||||||||||
North America | 90.58 | 104.98 | (14 | %) | 93.58 | 98.31 | (5 | %) | ||||||||||||||||
Egypt | 100.06 | 112.61 | (11 | %) | 105.50 | 107.73 | (2 | %) | ||||||||||||||||
Australia | 98.82 | 116.21 | (15 | %) | 107.50 | 109.40 | (2 | %) | ||||||||||||||||
North Sea | 95.80 | 109.33 | (12 | %) | 104.13 | 107.61 | (3 | %) | ||||||||||||||||
International | 98.47 | 111.87 | (12 | %) | 105.23 | 107.88 | (2 | %) | ||||||||||||||||
Total(1) | 94.69 | 108.27 | (13 | %) | 99.71 | 103.07 | (3 | %) | ||||||||||||||||
Average Natural Gas Price—Per Mcf | ||||||||||||||||||||||||
United States | $ | 3.94 | $ | 3.75 | 5 | % | $ | 4.48 | $ | 3.86 | 16 | % | ||||||||||||
Canada | 4.04 | 2.87 | 41 | % | 4.22 | 3.20 | 32 | % | ||||||||||||||||
North America | 3.97 | 3.41 | 16 | % | 4.39 | 3.61 | 22 | % | ||||||||||||||||
Egypt | 2.91 | 3.01 | (3 | %) | 2.96 | 2.98 | (1 | %) | ||||||||||||||||
Australia | 4.70 | 3.98 | 18 | % | 4.51 | 4.54 | (1 | %) | ||||||||||||||||
North Sea | 6.10 | 10.29 | (41 | %) | 8.06 | 10.37 | (22 | %) | ||||||||||||||||
International | 3.74 | 3.91 | (4 | %) | 3.88 | 4.11 | (6 | %) | ||||||||||||||||
Total(2) | 3.88 | 3.56 | 9 | % | 4.18 | 3.77 | 11 | % | ||||||||||||||||
Average NGL Price—Per barrel | ||||||||||||||||||||||||
United States | $ | 26.39 | $ | 28.25 | (7 | %) | $ | 27.96 | $ | 26.55 | 5 | % | ||||||||||||
Canada | 33.50 | 28.77 | 16 | % | 36.40 | 28.49 | 28 | % | ||||||||||||||||
North America | 26.96 | 28.30 | (5 | %) | 28.81 | 26.76 | 8 | % | ||||||||||||||||
Egypt | 52.80 | — | NM | 56.57 | — | NM | ||||||||||||||||||
North Sea | 59.47 | 69.77 | (15 | %) | 66.18 | 70.51 | (6 | %) | ||||||||||||||||
International | 57.07 | 69.77 | (18 | %) | 63.01 | 70.51 | (11 | %) | ||||||||||||||||
Total | 27.84 | 29.00 | (4 | %) | 29.78 | 27.64 | 8 | % | ||||||||||||||||
Discontinued Operations—Argentina | ||||||||||||||||||||||||
Oil price ($/Bbl) | $ | — | $ | 79.77 | NM | $ | 72.70 | $ | 77.66 | (6 | %) | |||||||||||||
Gas price ($/Mcf) | — | 2.76 | NM | 3.04 | 2.91 | 4 | % | |||||||||||||||||
NGL price ($/Bbl) | — | 22.19 | NM | 24.57 | 25.11 | (2 | %) |
NM — Not meaningful
Third-Quarter 2014 compared to Third-Quarter 2013
For the Quarter Ended March 31, | ||||||||||||
2015 | Increase (Decrease) | 2014 | ||||||||||
Average Oil Price — Per barrel | ||||||||||||
United States | $ | 44.73 | (53 | %) | $ | 94.84 | ||||||
Canada | 39.76 | (55 | %) | 88.19 | ||||||||
North America | 44.14 | (53 | %) | 94.03 | ||||||||
Egypt | 52.29 | (51 | %) | 106.70 | ||||||||
Australia | 43.17 | (62 | %) | 112.26 | ||||||||
North Sea | 49.95 | (53 | %) | 106.60 | ||||||||
International | 50.37 | (53 | %) | 107.24 | ||||||||
Total | 47.56 | (53 | %) | 101.03 | ||||||||
Average Natural Gas Price — Per Mcf | ||||||||||||
United States | $ | 2.63 | (47 | %) | $ | 4.98 | ||||||
Canada | 2.58 | (41 | %) | 4.38 | ||||||||
North America | 2.61 | (45 | %) | 4.75 | ||||||||
Egypt | 2.92 | (3 | %) | 3.02 | ||||||||
Australia | 4.19 | (5 | %) | 4.42 | ||||||||
North Sea | 7.40 | (31 | %) | 10.69 | ||||||||
International | 3.73 | (7 | %) | 4.03 | ||||||||
Total | 3.14 | (30 | %) | 4.46 | ||||||||
Average NGL Price — Per barrel | ||||||||||||
United States | $ | 11.00 | (64 | %) | $ | 30.81 | ||||||
Canada | 11.09 | (74 | %) | 42.09 | ||||||||
North America | 11.01 | (66 | %) | 32.25 | ||||||||
Egypt | 36.29 | (44 | %) | 64.34 | ||||||||
North Sea | 24.74 | (69 | %) | 79.84 | ||||||||
International | 30.95 | (60 | %) | 77.11 | ||||||||
Total | 11.71 | (65 | %) | 33.20 | ||||||||
Discontinued Operations — Argentina | ||||||||||||
Oil price ($/Bbl) | $ | — | $ | 72.70 | ||||||||
Gas price ($/Mcf) | — | 3.04 | ||||||||||
NGL price ($/Bbl) | — | 24.57 |
Crude Oil Revenues
Crude oil revenues for the thirdfirst quarter of 20142015 totaled $2.8$1.4 billion, a $715 million$1.5 billion decrease from the comparative 20132014 quarter. A 9 percentThe $1.5 billion decrease in average daily production decreased third-quarter 2014 revenues by $280 million compared to the prior-year quarter, while 13 percentwas a result of substantially lower realized prices, decreasedslightly offset by higher production volumes which increased revenues by $435$37 million. Crude oil prices realized in the third quarter of 2014 averaged $94.69 per barrel, compared with $108.27 in the comparative prior-year quarter. Crude oil accounted for 7975 percent of oil and gas production revenues and 5053 percent of worldwide production in the thirdfirst quarter of 2014.2015.
Worldwide production decreased 32increased 8.5 thousand barrels of oil per day (Mb/d) from the thirdfirst quarter of 20132014 to 316318.1 Mb/d in the first quarter of 2015, primarily as a result of the divestiture offrom our Gulf of Mexico Shelf assets on September 30, 2013. Exclusive ofinternational operations and drilling activity in North American onshore regions offsetting recent divestitures. Excluding production from theseNorth American assets divested assets,between the periods, worldwide oil production increased 1323.8 Mb/d, primarily on drilling and recompletion activity in the U.S. Permian region, partially offset by production decreases in Canada, Egypt and the North Sea.d.
Natural Gas RevenuesGas
Natural gas revenues for the thirdfirst quarter of 20142015 totaled $538$387 million, down 17 percent$259 million from the thirdfirst quarter of 2013.2014. A 2330 percent decrease in average production reduced natural gasrealized prices decreased revenues by $164$191 million as compared to the prior-year quarter, while a 915 percent increasedecrease in average realized prices increasedproduction further reduced natural gas revenues by $57$68 million. Natural gas accounted for 1621 percent of our oil and gas production revenues and 4038 percent of our equivalent production.
34
Worldwide natural gas production was 460 million cubic feet per day (MMcf/d) lower thanduring the thirdfirst quarter of 2013,2015.
Worldwide production for the first quarter of 2015 decreased 240 MMcf/d from the comparative 2014 quarter, primarily as a result of divestitures made during 2014 and lower levels of drilling activity in the divestiture of our Gulf of Mexico Shelf assets on September 30, 2013 and certain Western Canadian assets over the last 12 months. Exclusive ofrecent low commodity price environment. Excluding production from theseNorth American assets divested assets, our worldwidebetween the periods, gas production was essentially flat.increased 36 MMcf/d.
26
NGL Revenues
NGL revenues for the thirdfirst quarter of 20142015 totaled $177$57 million, up $2down $129 million from the thirdfirst quarter of 2013.2014. A 5 percent increase in average NGL production increased NGL revenues by $9 million compared to the prior-year quarter, while a 465 percent decrease in average realized prices decreased revenues by $7$121 million compared to the prior-year quarter, while a 12 percent decrease in average production further decreased NGL revenues by $8 million. NGLs accounted for approximately 53 percent of our oil and gas production revenues and 10 percent of our equivalent production during the third quarter of 2014.
Worldwide production of NGLs increased 3.5 Mb/d to 69.1 Mb/d in the third quarter of 2014, primarily from increased drilling activity in the Permian region offset by the divestiture of our Gulf of Mexico Shelf assets on September 30, 2013. Exclusive of production from these divested assets, our worldwide NGL production increased 8.7 Mb/d.
Year-to-Date 2014 compared to Year-to-Date 2013
Crude Oil Revenues Crude oil revenues for the first nine months of 2014 totaled $8.5 billion, $1.3 billion lower than the comparative 2013 period, the result of a 10 percent decrease in worldwide production and a 3 percent decrease in average realized prices. Crude oil accounted for 79 percent of oil and gas production revenues and 49 percent of worldwide production for the first nine months of 2014. Lower production volumes reduced revenue by $952 million compared to the first nine months of 2013, and lower realized prices reduced revenues by $320 million. Crude oil prices realized in the first nine months of 2014 averaged $99.71 per barrel, compared with $103.07 in the comparative prior-year period.
Worldwide production declined 35 Mb/d to 313 Mb/d in the first nine months of this year from the same period last year, primarily as a result of the divestiture of our Gulf of Mexico Shelf assets on September 30, 2013. Exclusive of production from these divested assets, worldwide production increased 10 Mb/d, primarily a result of drilling and recompletion activity in our Permian region.
Natural Gas RevenuesGas revenues for the first nine months of 2014 totaled $1.8 billion, down 13 percent from the comparative 2013 period. A 22 percent decline in average production reduced natural gas revenues by $499 million, partially offset by an 11 percent increase in average realized prices that added $224 million to revenues. Natural gas accounted for 16 percent of our oil and gas production revenues and 41 percent of our equivalent production, compared to 17 percent and 45 percent, respectively, for the 2013 period.
Our worldwide natural gas production was 437 MMcf/d lower than the first nine months of 2013 as a result of the divestiture of our Gulf of Mexico Shelf assets on September 30, 2013 and certain Western Canadian assets over the last 12 months. Exclusive of production from these divested assets, worldwide production was essentially flat.
NGL RevenuesNGL revenues for the first nine months of 2014 totaled $532 million, up $59 million from the comparative 2013 period. A 4 percent increase in average production increased NGL revenues by $22 million as compared to the prior-year period, and an 8 percent increase in average realized prices increased revenues by $37 million. NGLs accounted for nearly 5 percent of our oil and gas production revenues and 109 percent of our equivalent production during the first nine monthsquarter of 2014.2015.
Worldwide production of NGLs increased 2.7decreased 7.2 Mb/d to 65.455.0 Mb/d in the first nine monthsquarter of 2015, primarily as a result of divestitures made during 2014 primarily fromand lower levels of drilling and recompletion activity in the Central and Permian regions. Exclusive ofrecent low commodity price environment. Excluding production from North American assets divested assets, our worldwidebetween the periods, NGL production increased 9.45.0 Mb/d.
35
Operating Expenses
The table below presents a comparison of our expenses on an absolute dollar basis and a boe basis. Our discussion may reference expenses on a boe basis, on an absolute dollar basis or both, depending on their relevance. Operating expenses include costs attributable to a noncontrolling interest in Egypt but exclude discontinued operations in Argentina.
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | For the Quarter Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||
(In millions) | (Per boe) | (In millions) | (Per boe) | (In millions) | (Per boe) | |||||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion, and amortization: | ||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation, depletion and amortization: | ||||||||||||||||||||||||||||||||||||||||||||||||
Oil and gas property and equipment | ||||||||||||||||||||||||||||||||||||||||||||||||
Recurring | $ | 1,173 | $ | 1,272 | $ | 20.03 | $ | 18.63 | $ | 3,437 | $ | 3,740 | $ | 19.75 | $ | 18.45 | $ | 1,089 | $ | 1,109 | $ | 20.13 | $ | 19.26 | ||||||||||||||||||||||||
Additional | 1,562 | 627 | 26.65 | 9.18 | 1,765 | 627 | 10.14 | 3.09 | 7,220 | — | 133.44 | — | ||||||||||||||||||||||||||||||||||||
Other assets | 100 | 96 | 1.72 | 1.41 | 296 | 290 | 1.70 | 1.43 | 98 | 97 | 1.81 | 1.68 | ||||||||||||||||||||||||||||||||||||
Asset retirement obligation accretion | 46 | 65 | 0.78 | 0.95 | 135 | 192 | 0.78 | 0.95 | 44 | 44 | 0.82 | 0.77 | ||||||||||||||||||||||||||||||||||||
Lease operating costs | 652 | 772 | 11.13 | 11.31 | 1,862 | 2,275 | 10.70 | 11.22 | 538 | 597 | 9.94 | 10.37 | ||||||||||||||||||||||||||||||||||||
Gathering and transportation costs | 67 | 81 | 1.16 | 1.19 | 203 | 231 | 1.16 | 1.13 | 56 | 70 | 1.02 | 1.19 | ||||||||||||||||||||||||||||||||||||
Taxes other than income | 170 | 176 | 2.90 | 2.56 | 532 | 574 | 3.06 | 2.83 | 84 | 181 | 1.54 | 3.15 | ||||||||||||||||||||||||||||||||||||
General and administrative expense | 112 | 120 | 1.91 | 1.78 | 309 | 359 | 1.78 | 1.77 | 79 | 103 | 1.46 | 1.79 | ||||||||||||||||||||||||||||||||||||
Acquisition, divestiture, and separation costs | 34 | — | 0.58 | — | 66 | — | 0.38 | — | 54 | 18 | 1.00 | 0.31 | ||||||||||||||||||||||||||||||||||||
Financing costs, net | 41 | 50 | 0.69 | 0.74 | 103 | 157 | 0.59 | 0.78 | 46 | 27 | 0.86 | 0.48 | ||||||||||||||||||||||||||||||||||||
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Total | $ | 3,957 | $ | 3,259 | $ | 67.55 | $ | 47.75 | $ | 8,708 | $ | 8,445 | $ | 50.04 | $ | 41.65 | $ | 9,308 | $ | 2,246 | $ | 172.02 | $ | 39.00 | ||||||||||||||||||||||||
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Recurring Depreciation, Depletion and Amortization (DD&A)The following table details the changes in recurring DD&A of oil and gas properties between the third quarterfirst quarters of 2015 and nine-month periods of 2014 and 2013:2014:
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | For the Quarter Ended March 31, | ||||||||||
(In millions) | (In millions) | (In millions) | ||||||||||
2013 DD&A | $ | 1,272 | $ | 3,740 | ||||||||
2014 DD&A | $ | 1,109 | ||||||||||
Volume change | (157 | ) | (487 | ) | (46 | ) | ||||||
DD&A rate change | 58 | 184 | ||||||||||
DD&A Rate change | 26 | |||||||||||
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2014 DD&A | $ | 1,173 | $ | 3,437 | ||||||||
2015 DD&A | $ | 1,089 | ||||||||||
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Oil and gas property recurring DD&ARecurring full-cost depletion expense of $1.2 billion in the third quarter of 2014 decreased $99$20 million compared to the prior-year quarter on an absolute dollar basis: $157$46 million from lower volumes, partially offset by $58 millionan increase on rate. Oil and gas property recurring DD&A expense of $3.4 billion in the first nine months of 2014 decreased $303 million compared to the prior-year period on an absolute dollar basis: $487$26 million from lower volumes offset by $184 million increase on rate. The Company’s oil and gas property recurring DD&Aa higher average cost rate per boe. Our full-cost depletion rate increased $1.40 and $1.30$0.87 to $20.13 per boe reflecting increased cost for exploration and development activity over the third quarter and first nine months of 2014, respectively, compared to the prior-year periods.past several years.
Additional DD&AUnder the full-costfull cost method of accounting, the Company is required to review the carrying value of its proved oil and gas properties each quarter on a country-by-country basis. Under these rules, capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, may not exceed the present value of estimated future net cash flows from proved oil and gas reserves, net of related tax effects and discounted 10 percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. Any excess of
27
During the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as “Additional DD&A” in the statement of consolidated operations.
In the thirdfirst quarter of 2014, the Company2015, we recorded $1.5$5.2 billion ($996 million3.4 billion net of tax), $1.4 billion ($1.0 billion net of tax), and $17$632 million ($7316 million net of tax) in non-cash write-downwrite-downs of the carrying value of the Company’s U.S., Canada, and North Sea proved oil and gas properties, respectively. InIf commodity prices do not recover significantly from the second quarter of 2014,current prices, the Company recorded a $203 million ($77 million net of tax) non-cash write-downexpects further write-downs of the carrying value of the Company’s North Sea provedits oil and gas properties.properties, which may be material to the Company’s consolidated financial statements, throughout the remainder of 2015.
36
Lease Operating Expenses (LOE)LOE decreased $120$59 million, or 1610 percent, for the quarter, and $413 million, or 18 percent, for the nine-month period, on an absolute dollar basis, for the quarter ended March 31, 2015, relative to the comparable periodsperiod of 2013.2014. On a per unit basis, LOE decreased 4 percent to $9.94 per boe for the first quarter of 2015, as compared to the same prior-year period. The following table identifies changes in Apache’s LOE rate between the third quartersfirst quarter of 2015 and nine-month periods of 2014 and 2013.2014.
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
Per boe | Per boe | Per boe | ||||||||||||
2013 LOE | $ | 11.31 | 2013 LOE | $ | 11.22 | |||||||||
First-Quarter 2014 LOE | $ | 10.37 | ||||||||||||
Divestitures(1) | 0.35 | |||||||||||||
Equipment rental | 0.20 | |||||||||||||
Saltwater disposal | 0.10 | |||||||||||||
Workover costs | (0.16 | ) | ||||||||||||
Labor and overhead costs | 0.42 | Labor and overhead costs | 0.18 | (0.16 | ) | |||||||||
Saltwater disposal | 0.12 | Saltwater disposal | 0.09 | |||||||||||
Materials | 0.07 | Materials | 0.07 | |||||||||||
Divestitures(1) | (0.75 | ) | Repairs and maintenance | 0.07 | ||||||||||
Power and fuel costs | (0.32 | ) | ||||||||||||
FX impact | (0.45 | ) | ||||||||||||
Other | 0.30 | Transportation | 0.05 | 0.24 | ||||||||||
Other increased production | (0.34 | ) | Equipment rental | 0.04 | (0.23 | ) | ||||||||
Workovers | 0.04 |
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First-Quarter 2015 LOE | $ | 9.94 | ||||||||||||
Divestitures(1) | (1.16 | ) |
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Other | 0.36 | |||||||||||||
Other increased production | (0.26 | ) | ||||||||||||
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2014 LOE | $ | 11.13 | 2014 LOE | $ | 10.70 | |||||||||
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(1) | Per-unit impact of divestitures is shown net of associated production. |
Gathering and TransportationGathering and transportation costs totaled $67 million and $203$56 million in the thirdfirst quarter and first nine months of 2014, respectively,2015, down $14 million and $28 million from the thirdfirst quarter of 2014 on lower North American production. On a per-unit basis, gathering and transportation costs of $1.02 for the first nine monthsquarter of 2013, respectively.2015 were down 14 percent from the prior-year quarter. The following table presents gathering and transportation costs paid by Apache directly to third-party carriers for each of the periods presented:
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | For the Quarter Ended March 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Canada | $ | 29 | $ | 38 | $ | 93 | $ | 118 | $ | 26 | $ | 34 | ||||||||||||
U.S. | 24 | 23 | 69 | 67 | 16 | 22 | ||||||||||||||||||
Egypt | 10 | 11 | 31 | 31 | 10 | 10 | ||||||||||||||||||
North Sea | 4 | 9 | 10 | 15 | 4 | 4 | ||||||||||||||||||
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Total Gathering and transportation | $ | 67 | $ | 81 | $ | 203 | $ | 231 | $ | 56 | $ | 70 | ||||||||||||
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Taxes other than IncomeTaxes other than income totaled $170 million and $532$84 million for the thirdfirst quarter and the first nine months of 2014, respectively,2015, a decrease of $6$97 million and $42 million, respectively, from the comparative prior-year periods.period. The following table presents a comparison of these expenses:
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | For the Quarter Ended March 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Australia PRRT and U.K. PRT | $ | 61 | $ | 66 | $ | 215 | $ | 273 | $ | 24 | $ | 63 | ||||||||||||
Severance taxes | 75 | 71 | 199 | 185 | 30 | 73 | ||||||||||||||||||
Ad valorem taxes | 26 | 29 | 89 | 88 | 24 | 40 | ||||||||||||||||||
Other | 8 | 10 | 29 | 28 | 6 | 5 | ||||||||||||||||||
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Total Taxes other than income | $ | 170 | $ | 176 | $ | 532 | $ | 574 | $ | 84 | $ | 181 | ||||||||||||
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28
Australia Petroleum Resource Rent Tax (PRRT) expense is a levy assessed on the sale of hydrocarbons derived from specific developmental areas in Australia. We incurred a $45 million charge in the third quarter of 2014. Prior periods reflect no PRRT expense as sales subject to PRRT were fully offset by credits derived from exploration and development expenditures. The North Sea Petroleum Revenue Tax (PRT) is assessed on qualifying fields in the U.K. North Sea. For the first quarter of 2015, Australian PRRT and U.K. PRT for the third quarter of 2014 waswere $39 million lower than the 2013 period based on lower revenues. Severance tax expense increased $4 million as a result of higher U.S. onshore production.
37
U.K. PRT for the first nine months of 2014 was lower when compared to the 2013 period based on a decrease in production revenue. Forrevenues from qualifying fields during the first nine months of 2014, higher sales volumes increased severance taxes by $14quarter. Severance tax expense and ad valorem tax expense decreased $43 million as compared to the first nine months of 2013.and $16 million, respectively, on lower production and oil and gas prices.
General and Administrative Expenses General and administrative expenses (G&A) for the thirdfirst quarter of 20142015 decreased $8$24 million from the third quarter of 2013 on an absolute basis and increased $0.13 per boe on a per-unit basis. For the first nine months of 2014 G&A decreased $50 million on an absolute basis from the comparable 2013 period and increased $0.01 per boe on a per-unit basis. Expense for the nine-month 2014 period includeson lower incentive and stock-based compensation costs following a $25 million benefit from nonrecurring third party cost reimbursements.headcount reduction in January 2015, as well as other lower corporate costs and foreign exchange benefits.
Acquisition, Divestiture, and Separation CostsDuring the third quarter of 2014, the Company recognized $34 million in acquisition,Acquisition, divestiture, and separation costs for the first quarter of 2015 totaled $54 million, a $36 million increase as compared to the prior-year quarter, primarily driven by separation payments and other costs related to acquisitionan overall headcount reduction of approximately 5 percent, as well as the retirement of our former Chairman and divestiture activity. ForChief Executive Officer during the nine-month 2014 period, the Company recognized $66 million in acquisition,quarter. Acquisition, divestiture, and separation costs.costs for the period also include costs related to recent divestiture and leasehold acquisition activity.
Financing Costs, NetFinancing costs incurred during the period comprised the following:
For the Quarter Ended September 30, | For the Nine Months Ended September 30, | For the Quarter Ended March 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2015 | 2014 | |||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
Interest expense | $ | 126 | $ | 142 | $ | 374 | $ | 429 | $ | 128 | $ | 124 | ||||||||||||
Amortization of deferred loan costs | 2 | 2 | 5 | 6 | 2 | 2 | ||||||||||||||||||
Capitalized interest | (85 | ) | (91 | ) | (270 | ) | (268 | ) | (80 | ) | (95 | ) | ||||||||||||
Interest income | (2 | ) | (3 | ) | (6 | ) | (10 | ) | (4 | ) | (4 | ) | ||||||||||||
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Financing costs, net | $ | 41 | $ | 50 | $ | 103 | $ | 157 | $ | 46 | $ | 27 | ||||||||||||
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Net financing costs were down $9 million and $54increased $19 million in the thirdfirst quarter and first nine months of 2014, respectively,2015 compared to the same 2013 periods. The $162014 period primarily from a $15 million decrease in capitalized interest as a result of divestitures made throughout 2014 and $55a $4 million decreasesincrease in interest expense in the third quarter and first nine months of 2014, respectively, were a result of lower average debt balances.during 2015.
Provision for Income TaxesIn the third quarter of 2014, Apache evaluated its permanent reinvestment position and determined that undistributed earnings from certain foreign subsidiaries located in Apache’s Australia, Egypt, and North Sea regions will no longer be permanently reinvested. As a result of this change in position, the Company recorded $814 million of U.S. deferred income tax expense on the undistributed earnings that were previously considered permanently reinvested. In addition, the Company recorded $249 million of U.S. deferred income tax expense on foreign earnings that were distributed to the U.S. in the third quarter of 2014.
The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. Accordingly,
On March 26, 2015, U.K. Finance Bill 2015 received Royal Assent. Under the enacted legislation, the corporate income tax rate on North Sea oil and gas profits was reduced from 62 percent to 50 percent effective January 1, 2015. As a result of the enacted legislation in the thirdfirst quarter of 2014,2015, the Company recorded $814a discrete deferred tax benefit of $619 million related to the remeasurement of U.S.the Company’s December 31, 2014 U.K. deferred income tax expense on foreign earnings no longer deemed to be permanently reinvested as well as theliability.
The 2015 first-quarter income tax effectbenefit was $2.9 billion, representing an effective income tax rate of 38 percent for the $1.5quarter compared to 40 percent during the 2014 period. The 2015 effective rates reflect the tax benefit from the $7.2 billion and $17 million non-cash write-downs of itsour U.S., Canada, and North Sea proved oil and gas properties, respectively, as discrete itemsthe tax benefit related to the change in the third quarter of 2014. In the second quarter of 2014, the Company recorded theU.K. income tax impact of a $203 million non-cash write-down of its North Sea proved oilrate from 62 percent to 50 percent, and gas properties as a discrete item. In the third quarter of 2013,Canadian valuation allowance. The 2014 effective rate reflects the Company recorded the incomeCanadian valuation allowance and deferred tax impact of a $552 million non-cash write-down and a $75 million non-cash impairment on its U.S. and Kenyan oil and gas properties, respectively, as discrete items.expense related to mark-to-market commodity derivatives. Excluding these items, the first-quarter 2015 and certain other tax adjustments, the third quarter 2014 and 2013effective rates would have been 44 percent28 and 41 percent, respectively.
Capital Resources and Liquidity
Operating cash flows are the Company’s primary source of liquidity. We may also elect to utilize available committed borrowing capacity, access to both debt and equity capital markets, or proceeds from the sale of nonstrategic assets for all other liquidity and capital resource needs. As a majority of our capital investment activity is discretionary, we routinely adjust our capital budget on a quarterly basis in response to changing market conditions and operating cash flow forecasts.
Apache’s operating cash flows, both in the short-term and the long-term, are impacted by highly volatile oil and natural gas prices. Significant deterioration in commodity prices negatively impacts our revenues, earnings and cash flows, and potentially our liquidity if spending does not trend downward as well. Sales volumes and costs also impact cash flows; however, these historically have not been as volatile and have less impact than commodity prices in the short-term.
29
Apache’s long-term operating cash flows are dependent on reserve replacement and the level of costs required for ongoing operations. Cash investments are required to fund activity necessary to offset the inherent declines in production and proved crude oil and natural gas reserves. Future success in maintaining and growing reserves and production is highly dependent on the success of our drilling program and our ability to add reserves at reasonable costs.
38
We believe the liquidity and capital resource alternatives available to Apache, combined with internally generatedproactive measures to adjust our capital budget to reflect lower oil prices and anticipated operating cash flows, will be adequate to fund short-term and long-term operations, including our capital spending program, repayment of debt maturities, and any amount that may ultimately be paid in connection with commitments and contingencies.
For additional information, please see Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and Part I, Items 1 and 2, “Business and Properties,” and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for our 20132014 fiscal year.
Sources and Uses of Cash
The following table presents the sources and uses of our cash and cash equivalents and the sources of our restricted cash for the periods presented.
For the Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
(In millions) | ||||||||
Sources of Cash and Cash Equivalents: | ||||||||
Net cash provided by continuing operating activities | $ | 6,446 | $ | 7,200 | ||||
Proceeds from the sale of Argentina | 786 | — | ||||||
Net cash provided by Argentina operations | 2 | — | ||||||
Proceeds from sale of Deepwater Gulf of Mexico assets | 1,367 | — | ||||||
Proceeds from divestiture of Gulf of Mexico Shelf properties | — | 3,594 | ||||||
Proceeds from Kitimat LNG transaction, net | — | 396 | ||||||
Proceeds from sale of other oil and gas properties | 390 | 199 | ||||||
Net commercial paper and bank loan borrowings | 1,246 | — | ||||||
Other | — | 26 | ||||||
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10,237 | 11,415 | |||||||
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Uses of Cash and Cash Equivalents: | ||||||||
Capital expenditures for exploration and development (E&D) activity | $ | 7,131 | $ | 7,186 | ||||
Capital expenditures for gas gathering, transmission, and processing facilities | 1,035 | 852 | ||||||
Net cash used by Argentina operations | — | 5 | ||||||
Leasehold and property acquisitions | 655 | 313 | ||||||
Restricted cash from sale of Deepwater Gulf of Mexico assets | 545 | — | ||||||
Payments on fixed rate debt | — | 900 | ||||||
Net commercial paper and bank loan repayments | — | 539 | ||||||
Dividends | 271 | 280 | ||||||
Treasury stock activity, net | 1,830 | 249 | ||||||
Distributions to noncontrolling interest | 124 | — | ||||||
Other | 42 | — | ||||||
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11,633 | 10,324 | |||||||
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Increase (decrease) in cash and cash equivalents | $ | (1,396 | ) | $ | 1,091 | |||
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Sources of Restricted Cash: | ||||||||
Short-term restricted cash from sale of Deepwater Gulf of Mexico assets | 74 | — | ||||||
Long-term restricted cash from sale of Deepwater Gulf of Mexico assets | 471 | — | ||||||
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Increase in restricted cash | $ | 545 | $ | — | ||||
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For the Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(In millions) | ||||||||
Sources of Cash and Cash Equivalents: | ||||||||
Net cash provided by continuing operating activities | $ | 650 | $ | 2,211 | ||||
Commercial paper and bank loan borrowings, net | 1,028 | — | ||||||
Net cash provided by Argentina discontinued operations | — | 788 | ||||||
Other | 15 | 9 | ||||||
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1,693 | 3,008 | |||||||
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Uses of Cash and Cash Equivalents: | ||||||||
Capital expenditures(1) | $ | 1,991 | $ | 2,706 | ||||
Leasehold and property acquisitions | 92 | 44 | ||||||
Dividends paid | 94 | 79 | ||||||
Treasury stock activity, net | — | 484 | ||||||
Other | 56 | 2 | ||||||
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| |||||
2,233 | 3,315 | |||||||
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| |||||
Increase (decrease) in cash and cash equivalents | $ | (540 | ) | $ | (307 | ) | ||
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(1) | The table presents capital expenditures on a cash basis; therefore, the amounts may differ from those discussed elsewhere in this document, which include accruals. |
Net Cash Provided by Continuing Operating ActivitiesOperating cash flows are our primary source of capital and liquidity and are impacted, both in the short-term and the long-term, by volatile oil and natural gas prices. The factors that determine operating cash flow are largely the same as those that affect net earnings, with the exception of non-cash expenses such as DD&A, asset retirement obligation (ARO) accretion, and deferred income tax expense, which affect earnings but do not affect cash flows.
Net cash provided by continuing operating activities for the first ninethree months of 20142015 totaled $6.4 billion,$650 million, a decrease of $754 million$1.6 billion from the first ninethree months of 2013.2014. The decrease is primarily reflectsa result of the impactloss from operations from low oil prices and lower production during the first quarter of 2013 divestitures2015 and comparative changes in working capital during the periods.capital.
39
For a detailed discussion of commodity prices, production, and expenses, refer to the “Results of Operations” of this Item 2. For additional detail on the changes in operating assets and liabilities and the non-cash expenses that do not impact net cash provided by operating activities, please see the statement of consolidated cash flows in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q.
ProceedsCommercial paper and bank loan borrowings During the first quarter of 2015, Apache’s net borrowings on committed bank facilities, uncommitted bank lines, and commercial paper totaled $1.0 billion. Outstanding debt under these programs totaled $2.6 billion as of March 31, 2015, and was classified as current on Apache’s consolidated balance sheet based on an intent to repay the obligations with proceeds from the SaleLNG project divestitures. All current debt was repaid in April 2015 upon closing of ArgentinaIn March 2014, we completed the previously disclosed sale of our Argentina operations and properties to YPF Sociedad Anònima for cash consideration of $800 million (subject to customary closing adjustments) plus the assumption of $52 million of bank debts as of June those divestitures.
30 2013. The results of operations related to Argentina have been classified as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q.
Capital ExpendituresDuring Worldwide E&D expenditures for the first ninethree months of 2014, capital spending for E&D activities2015 totaled $7.1$1.8 billion, compared to $7.2$2.3 billion infor the prior year period.first three months of 2014. Apache’s E&D capital spending was primarily focused on our North American onshore assets. With the focused reduction of drilling rigs and activity occurring during the first quarter of 2015, we expect capital expenditures to be significantly reduced for the remainder of the year. In the PermianNorth America onshore region, we averaged 42Apache operated an average of 32 drilling rigs during the quarter. Our recent drilling successes in the Permian have led the region to increase the numberfirst quarter of horizontal drilling rigs being utilized, and now two-thirds of our rigs are drilling horizontal wells that, given their nature, are more costly than vertical wells. In our Gulf Coast region, we are increasing activity on our Eagle Ford acreage in Texas and have nearly tripled E&D spending over the 2013 nine-month period.2015.
Apache also completed leasehold and property acquisitions totaling $655$92 million and $44 million during the first nine monthsquarters of 2015 and 2014, compared with $313 million in the 2013 period.respectively. Our 20142015 acquisition investments focusedcontinue to focus on adding new leasehold positions to our North American onshore portfolio.
Apache’s investment in gas gathering, transmission, and processing (GTP) facilities totaled $1.0 billion$223 million during the first nine monthsquarter of 20142015 compared to $852$344 million in the prior yearcomparative prior-year period. Apache’s 2014 GTP capital expenditures were primarily for the Wheatstone and Kitimat LNG facilities.
Dividends For the nine-monththree-month periods ended September 30,March 31, 2015 and 2014, and 2013, the Company paid $271$94 million and $223$79 million, respectively, in dividends on its common stock. In the first nine months of 2013, the Company also paid $57 million in dividends on its Series D Preferred Stock, which was converted to common stock in August 2013.
Shares Repurchased Apache’s Board of Directors has authorized the purchase of up to 40 million shares of the Company’s common stock. Shares may be purchased either in the open market or through privately held negotiated transactions. The Company initiated the buyback program on June 10, 2013, and through September 30, 2014 has repurchased a total of 31.8 million shares at an average price of $88.90 per share. For the nine-month period ended September 30, 2014, the Company repurchased a total of 20.6 million shares at an average price of $88.92 per share. The Company is not obligated to acquire any specific number of shares.
Restricted CashThe Company classifies cash balances as restricted cash when cash is restricted as to withdrawal or usage. As of September 30, 2014, the Company had $545 million of proceeds from the sale of deepwater Gulf of Mexico properties held by a qualified intermediary and available for use in a like-kind exchange under Section 1031 of the U.S. Internal Revenue Code. As of the date of this filing, the Company has utilized or plans to utilize $471 million of the cash held by the qualified intermediary in the acquisition of like-kind property, and as such, this amount is classified as long-term restricted cash on Apache’s consolidated balance sheet as of September 30, 2014. The remaining $74 million of restricted cash was returned to Apache in October and, as such, is classified as short-term restricted cash on Apache’s consolidated balance sheet as of September 30, 2014. For more information regarding the sale of the deepwater Gulf of Mexico properties, please refer to Note 2—Acquisitions and Divestitures.
Liquidity
The following table presents a summary of our key financial indicators at the dates presented:
September 30, | December 31, | |||||||||||||||
2014 | 2013 | March 31, 2015 | December 31, 2014 | |||||||||||||
(In millions of dollars, except as indicated) | (In millions of dollars, except as indicated) | |||||||||||||||
Cash and cash equivalents | $ | 510 | $ | 1,906 | $ | 229 | $ | 769 | ||||||||
Short-term restricted cash | 74 | — | ||||||||||||||
Total debt | 10,922 | 9,725 | 12,273 | 11,245 | ||||||||||||
Equity | 32,986 | 35,393 | 23,405 | 28,137 | ||||||||||||
Available committed borrowing capacity | 2,072 | 3,300 | 2,702 | 3,730 | ||||||||||||
Percent of total debt-to-capitalization | 25 | % | 22 | % | 34 | % | 29 | % |
Cash and cash equivalents The CompanyWe had $510$229 million in cash and cash equivalents as of September 30, 2014,March 31, 2015, compared to $1.9 billion$769 million at December 31, 2013. Approximately $4872014. At March 31, 2015, approximately $210 million of the cash was held by foreign subsidiaries. The cash held by foreign subsidiaries may beis subject to additional U.S. income taxes if repatriated. Almost allThe majority of the cash is denominated in U.S. dollars and, at times, is invested in highly liquid, investment grade securities with maturities of three months or less at the time of purchase.
40
DebtAs of September 30, 2014,March 31, 2015, outstanding debt, which consisted of notes, debentures, commercial paper, committed bank facilities, and uncommitted bank lines, totaled $10.9$12.3 billion. The Company had approximately $20 millionCurrent debt of current debt$2.6 billion was outstanding borrowed on uncommitted credit facilities and overdraft lines as of September 30, 2014, compared with $53 million as of DecemberMarch 31, 2013.2015.
Available committed borrowing capacity As of September 30, 2014,March 31, 2015, the Company had unsecured committed revolving syndicated bank credit facilities totaling $3.3$5.3 billion, of which $2.0 billion matures in December 2015, $1.0 billion matures in August 2016, and $2.3 billion matures in June 2018 pursuant to a one-year extension approved in May 2014 under the terms of the $2.32018. Apache has $2.0 billion, facilities. The facilities consist of a $1.7 billion, facility and a $1.0 billion facility in the U.S., facilities, a $300 million Australian facility, in Australia, and a $300 million facility in Canada.Canadian facility. As of September 30, 2014,March 31, 2015, available borrowing capacity under the Company’s credit facilities was $2.1$2.7 billion. The Company’s committed credit facilities are used to support Apache’s commercial paper program.
The Company has available a $3.0$5.0 billion commercial paper program, which generally enablesallows Apache to borrow funds for up to 270 days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under the Company’s committed credit facilities. As of September 30, 2014,March 31, 2015, the Company had $1.2$2.6 billion ofin current debt outstanding commercial paper. There was no outstandingunder commercial paper, committed bank facilities, and uncommitted bank lines. This amount was classified as current on Apache’s consolidated balance sheet based on an intent to repay the obligations with the proceeds from the LNG project divestitures. All current debt was repaid in April 2015 upon closing of December 31, 2013.those divestitures.
The Company was in compliance with the terms of all credit facilities as of September 30, 2014.March 31, 2015.
Percent of total debt-to-capitalizationThe Company’s debt-to-capitalization ratio at September 30, 2014March 31, 2015 and December 31, 20132014 was 2534 percent and 2229 percent, respectively.
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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity Risk
The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices we receive for our crude oil, natural gas and NGLs, which have historically been very volatile because of unpredictable events such as economic growth or retraction, weather, and political climate. Our average crude oil realizations decreased 53 percent to $94.69$47.56 per barrel in the thirdfirst quarter of 20142015 from $108.27$101.03 per barrel in the comparable period of 2013.2014. Our average natural gas price realizations increased 9decreased 30 percent to $3.88$3.14 per Mcf in the third quarter of 2014 from $3.56$4.46 per Mcf in the comparable period of 2013.2014.
We periodically enter into derivative positions on a portion of our projected oil and natural gas production through a variety of financial and physical arrangements intended to manage fluctuations in cash flows resulting from changes in commodity prices. For the third quarterApache periodically uses futures contracts, swaps, and first nine months of 2014, approximately 11 percent and 9 percent, respectively, of our natural gas production and approximately 40 percent of our crude oil production in each period was subjectoptions to financial derivatives.mitigate commodity price risk. Apache does not hold or issue derivative instruments for trading purposes.
On September 30, 2014, the Company As of March 31, 2015, Apache had no open natural gas derivatives in an asset position with a fair value of $6 million. A 10 percent movement in natural gas prices would move the fair value by approximately $6 million. The Company also had open oil derivatives in an asset position with a fair value of $35 million. A 10 percent decrease in oil prices would increase the asset by approximately $107 million, while a 10 percent increase in prices would move the derivatives to a liability position of $71 million. These fair value changes assume volatility based on prevailing market parameters at September 30, 2014. See Note 3—Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements in Item 1 of this Form 10-Q for notional volumes and terms associated with the Company’scommodity derivative contracts.positions.
Interest Rate Risk
The Company considers its interest rate risk exposure to be minimal as a result of fixing interest rates on approximately 8979 percent of the Company’s debt. At September 30, 2014,March 31, 2015, total debt included approximately $1.2$2.6 billion of floating-rate debt. As a result, Apache’s annual interest costs will fluctuate based on short-term interest rates on 11approximately 21 percent of our total debt outstanding at September 30, 2014.March 31, 2015. The impact on cash flow of a 10 percent change in the floating interest rate based on debt balances at September 30, 2014,March 31, 2015, would be approximately $103,000$588,570 per quarter.
Foreign Currency Risk
The Company’s cash flow stream relating to certain international operations is based on the U.S. dollar equivalent of cash flows measured in foreign currencies. In Australia, oil production is sold under U.S. dollar contracts, and gas production is sold under a combinationmixture of Australianfixed-price U.S. dollar and U.S.Australian dollar fixed-price contracts. Approximately 40 percent of the costs incurred for Australian operations are paid in U.S. dollars. In Canada, oil and gas prices and costs, such as equipment rentals and services, are generally denominated in Canadian dollars but heavily influenced by U.S. markets. Our North Sea production is sold under U.S. dollar contracts, and the majority of costs incurred are paid in British pounds. In Egypt, all oil and gas production is sold under U.S. dollar contracts, and the majority of the costs incurred are denominated in U.S. dollars. Revenue and disbursement transactions denominated in Australian dollars, Canadian dollars, and British pounds are converted to U.S. dollar equivalents based on average exchange rates during the period.
Foreign currency gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated at the end of each month. Currency gains and losses are included as either a component of “Other” under “Revenues and Other” or, as is the case when we re-measure our foreign tax liabilities, as a component of the Company’s provision for income tax expense on the statement of consolidated operations. A foreign currency net gain or loss of $176 million would result from a 10 percent strengthening or weakening or strengthening, respectively, inof the Australian dollar, Canadian dollar, and British pound as of September 30, 2014.March 31, 2015, would result in a foreign currency net loss or gain, respectively, of approximately $163 million.
4232
Forward-Looking Statements and Risk
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on our examination of historical operating trends, the information that was used to prepare our estimate of proved reserves as of December 31, 2013,2014, and other data in our possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” or “continue” or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, our assumptions about:
All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. We assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise.
4333
ITEM 4 – CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
G. Steven Farris,John J. Christmann, the Company’s Chairman of the Board, Chief Executive Officer and President, in his capacity as principal executive officer, and P. Anthony Lannie,Stephen J. Riney, the Company’s Executive Vice President and Chief Financial Officer, in his capacity as principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2014,March 31, 2015, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Company’s disclosure controls and procedures were effective, providing effective means to ensure that information we are required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
We periodically review the design and effectiveness of our disclosure controls, including compliance with various laws and regulations that apply to our operations both inside and outside the United States. We make modifications to improve the design and effectiveness of our disclosure controls, and may take other corrective action, if our reviews identify deficiencies or weaknesses in our controls.
Changes in Internal Control over Financial Reporting
There was no change in our internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
Please refer to both Note 8—Commitments and ContingenciesPart I, Item 3 of the notes to the consolidated financial statementsCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 contained in Apache’s Current Report on Form 8-K dated July 17, 2014, and Note 8—7—Commitments and Contingencies of the notes to the consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a description of material legal proceedings.
ITEM 1A. | RISK FACTORS |
Please refer to both Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013,2014, and as noted above in Part I, Item 3—Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
The following table presents information onApache’s Board of Directors has authorized the purchase of up to 40 million shares of the Company’s common stockstock. Shares may be purchased either in the open market or through privately held negotiated transactions. The Company initiated the buyback program on June 10, 2013, and through December 31, 2014, had repurchased by thea total of 32.2 million shares at an average price of $88.96 per share. The Company has not purchased any additional shares during the quarter ended September 30, 2014:2015, and is not obligated to acquire any specific number of shares.
Issuer Purchases of Equity Securities | ||||||||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1) | ||||||||||||
July 1 to July 31, 2014 | — | $ | — | — | 13,922,662 | |||||||||||
August 1 to August 31, 2014 | 2,504,119 | 99.68 | 2,504,119 | 11,418,543 | ||||||||||||
September 1 to September 30, 2014 | 3,239,674 | 97.93 | 3,239,674 | 8,178,869 | ||||||||||||
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Total | 5,743,793 | $ | 98.69 | |||||||||||||
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44
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None
ITEM 4. | MINE SAFETY DISCLOSURES |
None
ITEM 5. | OTHER INFORMATION |
None
34
ITEM 6. | EXHIBITS |
3.1 | – | Restated Certificate of Incorporation of Registrant, dated September 19, 2013, as filed with the Secretary of State of Delaware on September 19, 2013 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed September 20, 2013, SEC File No. 001-4300). | ||
3.2 | – | Bylaws of Registrant, as amended May 16, 2013 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed May 17, 2013, SEC File No. 001-4300). | ||
*10.1 | – | 2014 Employee Release and Settlement Agreement, by and between Registrant and Thomas P. Chambers, effective as of August 31, 2014. | ||
*10.2 | – | Amendment of Stock Option Grants (2007 and 2011 Omnibus Equity Compensation Plans) by and between Registrant and Thomas P. Chambers, effective as of August 31, 2014. | ||
*10.3 | – | Amendment of Restricted Stock Unit Awards (2007 and 2011 Omnibus Equity Compensation Plans) by and between Registrant and Thomas P. Chambers, effective as of August 31, 2014. | ||
*10.4 | – | Employee Resignation Agreement by and between Registrant and Alfonso Leon, effective as of October 13, 2014. | ||
*10.5 | – | Amendment of Stock Option Grants (2007 and 2011 Omnibus Equity Compensation Plans) by and between Registrant and Alfonso Leon, effective as of October 9, 2014. | ||
*10.6 | – | Amendment of Restricted Stock Unit Awards (2007 and 2011 Omnibus Equity Compensation Plans), effective October 9, 2014, between Registrant and Alfonso Leon. | ||
*31.1 | – | Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer. | ||
*31.2 | – | Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer. | ||
*32.1 | – | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer. | ||
*101.INS | – | XBRL Instance Document. | ||
*101.SCH | – | XBRL Taxonomy Schema Document. | ||
*101.CAL | – | XBRL Calculation Linkbase Document. | ||
*101.LAB | – | XBRL Label Linkbase Document. | ||
*101.PRE | – | XBRL Presentation Linkbase Document. | ||
*101.DEF | – | XBRL Definition Linkbase Document. |
3.1 | – | Restated Certificate of Incorporation of Registrant, dated September 19, 2013, as filed with the Secretary of State of Delaware on September 19, 2013 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed September 20, 2013, SEC File No. 001 -4300). | ||
3.2 | – | Bylaws of Registrant, as amended February 19, 2015 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed February 23, 2015, SEC File No. 001-4300). | ||
*10.1 | – | Form of 2015 Performance Share Program Award Notice and Agreement. | ||
*10.2 | – | 2015 Long Term Cash Performance Program Award Notice and Agreement between Registrant and Stephen J. Riney, dated April 8, 2015. | ||
10.3 | – | Retirement Agreement, dated January 19, 2015, between Registrant and G. Steven Farris (incorporated by reference to Exhibit 10.39 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014, SEC File No. 001-4300). | ||
10.4 | – | Amendment of Stock Option Grants (2011 Omnibus Equity Compensation Plan), dated January 20, 2015, between Registrant and G. Steven Farris (incorporated by reference to Exhibit 10.63 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014, SEC File No. 001-4300). | ||
10.5 | – | Amendment of Restricted Stock Unit Awards (2007 and 2011 Omnibus Equity Compensation Plans), dated January 20, 2015, between Registrant and G. Steven Farris (incorporated by reference to Exhibit 10.64 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014, SEC File No. 001-4300). | ||
10.6 | – | Amendment of 2014 Performance Program (Business Performance) Award (2011 Omnibus Compensation Plan), dated January 20, 2015, between Registrant and G. Steven Farris (incorporated by reference to Exhibit 10.65 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014, SEC File No. 001-4300). | ||
*10.7 | – | Restricted Stock Unit Award Agreement between Registrant and John J. Christmann, dated February 18, 2015. | ||
*31.1 | – | Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer. | ||
*31.2 | – | Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer. | ||
*32.1 | – | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer. | ||
*101.INS | – | XBRL Instance Document. | ||
*101.SCH | – | XBRL Taxonomy Schema Document. | ||
*101.CAL | – | XBRL Calculation Linkbase Document. | ||
*101.LAB | – | XBRL Label Linkbase Document. | ||
*101.PRE | – | XBRL Presentation Linkbase Document. | ||
*101.DEF | – | XBRLDefinition Linkbase Document. | ||
* Filed herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
APACHE CORPORATION | ||||
Dated: | /s/ | |||
Stephen J. Riney | ||||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||||
Dated: | /s/ REBECCA A. HOYT | |||
Rebecca A. Hoyt | ||||
Senior Vice President, Chief Accounting Officer, and Controller (Principal Accounting Officer) |
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