Document and Company Informatio
Document and Company Information (USD $) | ||
9 Months Ended
Sep. 30, 2009 | Jun. 30, 2008
| |
Document and Company Information [Abstract] | ||
Entity Registrant Name | APACHE CORP | |
Entity Central Index Key | 0000006769 | |
Document Type | 10-Q | |
Document Period End Date | 2009-09-30 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Public Float | $46,488,719,719 | |
Entity Common Stock, Shares Outstanding | 336,174,361 |
Statement of Consolidated Opera
Statement of Consolidated Operations (Unaudited) (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Sep. 30, 2009 | 3 Months Ended
Sep. 30, 2008 | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
REVENUES AND OTHER: | ||||
Oil and gas production revenues | $2,325,705 | $3,368,882 | $6,003,663 | $10,450,949 |
Other | 6,726 | (3,998) | 55,971 | 1,867 |
Total revenues and other | 2,332,431 | 3,364,884 | 6,059,634 | 10,452,816 |
Depreciation, depletion and amortization | ||||
Recurring | 625,898 | 600,887 | 1,779,874 | 1,849,044 |
Additional | 0 | 0 | 2,818,161 | 0 |
Asset retirement obligation accretion | 26,053 | 24,970 | 79,274 | 77,146 |
Lease operating expenses | 445,535 | 488,166 | 1,248,297 | 1,389,542 |
Gathering and transportation | 36,232 | 42,375 | 103,050 | 123,118 |
Taxes other than income | 183,931 | 304,280 | 387,211 | 845,406 |
General and administrative | 82,492 | 57,561 | 258,443 | 218,856 |
Financing costs, net | 61,684 | 33,291 | 181,426 | 116,594 |
Total operating expenses | 1,461,825 | 1,551,530 | 6,855,736 | 4,619,706 |
INCOME (LOSS) BEFORE INCOME TAXES | 870,606 | 1,813,354 | (796,102) | 5,833,110 |
Current income tax provision | 262,430 | 305,735 | 483,171 | 1,495,641 |
Deferred income tax provision (benefit) | 166,160 | 316,794 | (409,069) | 679,902 |
NET INCOME (LOSS) | 442,016 | 1,190,825 | (870,204) | 3,657,567 |
Preferred stock dividends | 1,420 | 1,420 | 4,260 | 4,260 |
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK | $440,596 | $1,189,405 | ($874,464) | $3,653,307 |
NET INCOME (LOSS) PER COMMON SHARE: | ||||
Basic | 1.31 | 3.55 | -2.61 | 10.93 |
Diluted | 1.3 | 3.52 | -2.61 | 10.84 |
Statement of Consolidated Cash
Statement of Consolidated Cash Flows (Unaudited) (USD $) | ||
In Thousands | 9 Months Ended
Sep. 30, 2009 | 9 Months Ended
Sep. 30, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | ($870,204) | $3,657,567 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation, depletion and amortization | 4,598,035 | 1,849,044 |
Asset retirement obligation accretion | 79,274 | 77,146 |
Provision for (benefit from) deferred income taxes | (409,069) | 679,902 |
Unrealized loss on derivatives | 0 | 35,586 |
Other | 140,527 | (11,231) |
Changes in operating assets and liabilities: | ||
Receivables | (228,095) | 251,920 |
Inventories | 11,897 | (7,729) |
Advances and other | (49,569) | 27,891 |
Deferred charges and other | 868 | (200,038) |
Accounts payable | (183,884) | 71,188 |
Accrued expenses | (351,153) | (367,553) |
Deferred credits and noncurrent liabilities | (59,156) | (35,125) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,679,471 | 6,028,568 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to oil and gas property | (2,838,537) | (4,062,975) |
Additions to gas gathering, transmission and processing facilities | (203,783) | (420,850) |
Acquisition of Marathon properties | (181,133) | 0 |
Short-term investments | 791,999 | 0 |
Restricted cash | 13,880 | (13,844) |
Proceeds from sale of oil and gas properties | 0 | 306,701 |
Other, net | (98,096) | (42,509) |
NET CASH USED IN INVESTING ACTIVITIES | (2,515,670) | (4,233,477) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Commercial paper, credit facility and bank notes, net | 230,176 | (169,042) |
Payments on fixed-rate notes | (100,000) | (353) |
Dividends paid | (155,125) | (187,735) |
Common stock activity | 19,028 | 31,207 |
Treasury stock activity, net | 5,344 | 4,171 |
Cost of debt and equity transactions | (618) | (1,224) |
Other | 13,308 | 46,666 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 12,113 | (276,310) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 175,914 | 1,518,781 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 1,181,450 | 125,823 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,357,364 | 1,644,604 |
SUPPLEMENTARY CASH FLOW DATA: | ||
Interest paid, net of capitalized interest | 199,570 | 137,106 |
Income taxes paid, net of refunds | $461,024 | $1,512,864 |
Consolidated Balance Sheet (Una
Consolidated Balance Sheet (Unaudited) (USD $) | ||
In Thousands | Sep. 30, 2009
| Dec. 31, 2008
|
CURRENT ASSETS: | ||
Cash and cash equivalents | $1,357,364 | $1,181,450 |
Short-term investments | 0 | 791,999 |
Receivables, net of allowance | 1,590,913 | 1,356,979 |
Inventories | 539,442 | 498,567 |
Drilling advances | 138,889 | 93,377 |
Derivative instruments | 29,166 | 154,280 |
Prepaid taxes | 292,332 | 303,414 |
Prepaid assets and other | 71,596 | 70,908 |
Total current assets | 4,019,702 | 4,450,974 |
Oil and gas, on the basis of full-cost accounting: | ||
Proved properties | 43,516,994 | 40,639,281 |
Unproved properties and properties under development, not being amortized | 1,370,951 | 1,300,347 |
Gas gathering, transmission and processing facilities | 3,087,572 | 2,883,789 |
Other | 481,619 | 452,989 |
Total property and equipment, gross | 48,457,136 | 45,276,406 |
Less: Accumulated depreciation, depletion and amortization | (25,911,605) | (21,317,889) |
Total property and equipment, net | 22,545,531 | 23,958,517 |
OTHER ASSETS: | ||
Restricted cash | 0 | 13,880 |
Goodwill, net | 189,252 | 189,252 |
Deferred charges and other | 471,011 | 573,862 |
Total assets | 27,225,496 | 29,186,485 |
CURRENT LIABILITIES: | ||
Accounts payable | 391,900 | 548,945 |
Accrued operating expense | 114,409 | 168,531 |
Accrued exploration and development | 662,387 | 964,859 |
Accrued compensation and benefits | 122,216 | 111,907 |
Accrued interest | 75,153 | 91,456 |
Accrued income taxes | 50,311 | 48,028 |
Current debt | 39,669 | 112,598 |
Asset retirement obligation | 267,269 | 339,155 |
Derivative instruments | 63,842 | 0 |
Other | 199,793 | 134,956 |
Total current liabilities | 1,986,949 | 2,520,435 |
LONG-TERM DEBT | 5,010,030 | 4,808,975 |
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES: | ||
Income taxes | 2,643,522 | 3,166,657 |
Asset retirement obligation | 1,623,347 | 1,555,529 |
Other | 606,326 | 626,168 |
Total deferred credits and other noncurrent liabilities | 4,873,195 | 5,348,354 |
SHAREHOLDERS' EQUITY: | ||
Preferred stock, no par value, 5,000,000 shares authorized - Series B, 5.68% Cumulative, $100 million aggregate liquidation value, 100,000 shares issued and outstanding | 98,387 | 98,387 |
Common stock, $0.625 par, 430,000,000 shares authorized, 343,907,219 and 342,754,114 shares issued, respectively | 214,942 | 214,221 |
Paid-in capital | 4,563,848 | 4,472,826 |
Retained earnings | 10,904,323 | 11,929,827 |
Treasury stock, at cost, 7,732,858 and 8,044,050 shares, respectively | (219,472) | (228,304) |
Accumulated other comprehensive income (loss) | (206,706) | 21,764 |
Total shareholders' equity | 15,355,322 | 16,508,721 |
Total liabilities and shareholders' equity | $27,225,496 | $29,186,485 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) (Unaudited) (USD $) | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2009
| Dec. 31, 2008
|
SHAREHOLDERS' EQUITY: | ||
Preferred stock, par value | 0 | 0 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 100,000 | 100,000 |
Preferred stock, shares outstanding | 100,000 | 100,000 |
Cumulative preferred stock-Series B, liquidation value | $100 | $100 |
Series B, Cumulative Preferred Stock Interest Rate | 0.0568 | 0.0568 |
Common stock, par value | 0.625 | 0.625 |
Common stock, shares authorized | 430,000,000 | 430,000,000 |
Common stock, shares issued | 343,907,219 | 342,754,114 |
Treasury stock, shares | 7,732,858 | 8,044,050 |
Statement of Consolidated Share
Statement of Consolidated Shareholders Equity (Unaudited) (USD $) | |||||||
In Thousands | Common Stock
| Series B Preferred Stock
| Paid-In Capital
| Treasury Stock
| Retained Earnings
| Accumulated Other Comprehensive Income (Loss)
| Total
|
Beginning Balance at Dec. 31, 2007 | $213,326 | $98,387 | $4,367,149 | ($238,264) | $11,457,592 | ($520,211) | $15,377,979 |
Comprehensive income (loss): | |||||||
Net income (loss) | 3,657,567 | 3,657,567 | |||||
Commodity hedges, net of income tax benefit of $124,671 and $89,376 for 2009 and 2008 respectively | (172,989) | (172,989) | |||||
Dividends: | |||||||
Preferred | (4,260) | (4,260) | |||||
Common $.45 and $.55 per share for 2009 and 2008 respectively | (183,735) | (183,735) | |||||
Common shares issued | 885 | 36,109 | 36,994 | ||||
Treasury shares issued, net | 247 | 9,283 | 9,530 | ||||
Compensation expense | 65,645 | 65,645 | |||||
FIN 48 | (23,770) | (23,770) | |||||
Other | 131 | 14 | 145 | ||||
Ending Balance at Sep. 30, 2008 | 214,211 | 98,387 | 4,445,511 | (228,981) | 14,927,178 | (693,200) | 18,763,106 |
Beginning Balance at Jun. 30, 2008 | 98,387 | ||||||
Dividends: | |||||||
Ending Balance at Sep. 30, 2008 | 98,387 | ||||||
Beginning Balance at Dec. 31, 2008 | 214,221 | 98,387 | 4,472,826 | (228,304) | 11,929,827 | 21,764 | 16,508,721 |
Comprehensive income (loss): | |||||||
Net income (loss) | (870,204) | (870,204) | |||||
Commodity hedges, net of income tax benefit of $124,671 and $89,376 for 2009 and 2008 respectively | (228,470) | (228,470) | |||||
Dividends: | |||||||
Preferred | (4,260) | (4,260) | |||||
Common $.45 and $.55 per share for 2009 and 2008 respectively | (151,040) | (151,040) | |||||
Common shares issued | 721 | 3,778 | 4,499 | ||||
Treasury shares issued, net | (5,706) | 8,832 | 3,126 | ||||
Compensation expense | 95,731 | 95,731 | |||||
Other | (2,781) | (2,781) | |||||
Ending Balance at Sep. 30, 2009 | 214,942 | 98,387 | 4,563,848 | (219,472) | 10,904,323 | (206,706) | 15,355,322 |
Beginning Balance at Jun. 30, 2009 | 98,387 | ||||||
Dividends: | |||||||
Ending Balance at Sep. 30, 2009 | $98,387 |
1_Statement of Consolidated Sha
Statement of Consolidated Shareholders Equity (Parenthetical) (Unaudited) (USD $) | ||||
In Thousands, except Per Share data | Retained Earnings
| Accumulated Other Comprehensive Income (Loss)
| Comprehensive Income (Loss)
| Total
|
Comprehensive income (loss): | ||||
Income tax benefit to commodity hedges | $89,376 | $89,376 | $89,376 | |
Dividends: | ||||
Common stock, dividends, per Share | 0.55 | 0.55 | ||
Comprehensive income (loss): | ||||
Income tax benefit to commodity hedges | $124,671 | $124,671 | $124,671 | |
Dividends: | ||||
Common stock, dividends, per Share | 0.45 | 0.45 |
General Accounting Description
General Accounting Description | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
General Accounting Description [Abstract] | |
General Accounting Description | 0. General Accounting Description 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 the Annual Report on Form 10-K for the fiscal year ended December31, 2008, which contains a summary of the Companys significant accounting policies and other disclosures. Additionally, the Companys financial statements for prior periods include reclassifications that were made to conform to the current period presentation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES As of September30, 2009, Apaches significant accounting policies are consistent with those discussed in Note 1 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December31, 2008. 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 and disclosure of contingent 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 estimate of proved oil and gas reserves and related present value estimates of future net cash flow therefrom, asset retirement obligations and income taxes. Actual results could differ from those estimates. Recently Adopted Accounting Pronouncements In December2007, the Financial Accounting Standards Board (FASB)issued Statement of Financial Accounting Standards (SFAS)No.141 (Revised), Business Combinations (SFAS No.141 (R)), which was amended by FASB Staff Position (FSP)FAS No.141 (R)-1 in April2009. This guidance has been primarily codified into the FASB Accounting Standards Codification (ASC, also known collectively as the Codification) Topic 805, Business Combinations. The guidance broadens the definition of a business combination to include all transactions or other events in which control of one or more businesses is obtained. Further, the standard establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interests in the acquiree and the goodwill acquired. The statement requires the acquiring entity in a business combination to recognize the fair value of all the assets acquired and liabilities assumed in the transaction. It also modifies disclosure requirements. Apache adopted this statement effective January1, 2009. However, since the Company did not close any material business combinations during the nine months ended September30, 2009, the adoption had a negligible impact on the Companys consolidated financial statements. Also in December2007, the FASB issued SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements, which was primarily codified into ASC Topic 810, Consolidations. This statement amends Accounting Research Bulletin No.51, Consolidated Financial Statements. This guidance establishes accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, sometimes called a minority interest, is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, the amounts of consolidated net income attributable to both the parent and the noncontrolling interest must be reported separately on the face of the income statement. Apache adopted thi |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Derivative Instruments and Hedging Activities [Abstract] | |
Derivative Instruments and Hedging Activities | 2. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Objectives and Strategies for Using Derivative Instruments The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production. Management believes it is prudent to manage the variability in cash flows on a portion of its crude oil and natural gas production. The Company utilizes various types of derivative financial instruments to manage fluctuations in cash flows resulting from changes in commodity prices. Derivative instruments typically entered into are swaps and options and are generally designated as cash flow hedges. Counterparty Risk The use of derivative transactions exposes the Company to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. Apaches commodity derivative instruments are with a diversified group of counterparties, primarily financial institutions. To reduce the concentration of exposure to any individual counterparty, Apache had positions with 17 counterparties as of September30, 2009. All of these counterparties are rated A- or higher by Standard Poors and A3 or higher by Moodys. 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 under 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, as defined in the applicable agreement, in its credit ratings, the other party will have the right to demand the posting of collateral, demand a transfer or terminate the arrangement. Commodity Derivative Instruments As of September30, 2009, Apache had the following open crude oil derivative positions: Weighted Weighted Production Average Average Period Mbbls Floor Price (1) Ceiling Price (1) 2009 3,036 $ 63.24 $ 78.13 2010 (2) 12,049 65.44 77.54 2011 9,122 67.45 79.09 2012 5,846 68.84 78.91 2013 1,451 72.01 72.01 2014 76 74.50 74.50 (1) Crude oil prices represent a weighted average of all fixed-price swap contracts and collars. (2) Subsequent to September30, 2009, Apache entered into crude oil hedges totaling 730 thousands of barrels (Mbbls). After consideration of these hedges, the weighted average floor and ceiling prices for our 2010 production period positions are $65.70 and $78.58 per barrel, respectively. As of September30, 2009, Apache had the following open natural gas derivative positions: Weighted Weighted Production MMBtu (1) Average |
Debt
Debt | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Debt [Abstract] | |
Debt | 3. DEBT As of September30, 2009, the Company had unsecured committed revolving syndicated bank credit facilities totaling $2.3billion. The facilities consist of a $1.5billion facility and a $450 million facility in the U.S., a $200million facility in Australia and a $150million facility in Canada. There are no outstanding borrowings or commercial paper at quarter-end, and the full $2.3 billion of unsecured credit facilities is available to the Company. The Company has available a $1.95billion commercial paper program, which generally enables Apache to borrow funds for up to 270days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under U.S. committed credit facilities, which expire in 2013. One of the Companys Australian subsidiaries has a secured revolving syndicated credit facility for its Van Gogh and Pyrenees oil developments offshore Western Australia. The facility provides for total commitments of $350million, with availability determined by a borrowing-base formula. The borrowing base was set at $350million and will be redetermined after the fields commence production and certain tests have been met, and semi-annually thereafter. The outstanding balance under the facility as of September30, 2009 and December31, 2008, respectively, was $335 million and $100million. As of September30, 2009, available borrowing capacity was $15million. Under the terms of the agreement, the facility amount begins reducing on June30, 2010 and semi-annually thereafter until maturity on March31, 2014. The outstanding amount under this facility must not exceed $300million on June30, 2010. Accordingly, $35million of the current balance will be repaid by June30, 2010 and has been classified as current debt at September30, 2009. At September30, 2009 and December31, 2008, there was $4.7million and $12.6million, respectively, borrowed on uncommitted overdraft lines. On March15, 2009, $100million of Apache Finance Pty Ltd (Apache Finance Australia) 7.0% notes matured and were repaid using existing cash balances. Financing Costs, Net Financing costs incurred during the periods noted are composed of the following: For the Quarter Ended For the Nine Months Ended September 30, September 30, 2009 2008 2009 2008 (In thousands) Interest expense $ 76,860 $ 66,055 $ 233,137 $ 201,690 Amortization of deferred loan costs 1,400 818 4,173 2,498 Capitalized interest (14,345 ) (24,032 ) (45,325 ) (68,419 ) Interest income (2,231 ) (9,550 ) (10,559 ) (19,175 ) Financing costs, net $ 61,684 $ 33,291 $ 181,426 $ 116,594 |
Income taxes
Income taxes | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Income Taxes [Abstract] | |
Income Taxes | 4. INCOME TAXES 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. The year-to-date tax provision includes the tax impact of the non-cash write-down of proved oil and gas properties recorded as a discrete item in the first quarter of 2009. 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 Companys tax reserves are related to tax years that may be subject to examination by the relevant taxing authority. The Company is in Administrative Appeals with the United States Internal Revenue Service (IRS) regarding the 2004 and 2005 tax years and under IRS audit for the 2006 and 2007 tax years. The Company is also under audit in various states and in most of the Companys foreign jurisdictions as part of its normal course of business. |
Capital Stock
Capital Stock | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Capital Stock [Abstract] | |
Capital Stock | 5. CAPITAL STOCK Net Income (Loss) per Common Share A reconciliation of the components of basic and diluted net income (loss)per common share is presented in the table below: For the Quarter Ended September 30, 2009 2008 Income Shares Per Share Income Shares Per Share (In thousands, except per share amounts) Basic: Income attributable to common stock $ 440,596 336,159 $ 1.31 $ 1,189,405 334,825 $ 3.55 Effect of Dilutive Securities: Stock options and other 1,713 3,069 Diluted: Income attributable to common stock, including assumed conversions $ 440,596 337,872 $ 1.30 $ 1,189,405 337,894 $ 3.52 For the Nine Months Ended September 30, 2009 2008 Loss Shares Per Share Income Shares Per Share (In thousands, except per share amounts) Basic: Income (Loss) attributable to common stock $ (874,464 ) 335,637 $ (2.61 ) $ 3,653,307 334,145 $ 10.93 Effect of Dilutive Securities: Stock options and other 3,006 Diluted: Income (Loss) attributable to common stock, including assumed conversions $ (874,464 ) 335,637 $ (2.61 ) $ 3,653,307 337,151 $ 10.84 The diluted earnings per share calculation excludes options and restricted stock that were anti-dilutive totaling 2.4million and 4.0million for the three- and nine-month periods ending September30, 2009, respectively, and 358,000 for the three- and nine-month periods ending September30, 2008. As more fully described in Note 1 Summary of Significant Accounting Policies of this Form 10-Q, the Company adopted the provisions of ASC Topic 260, Earnings Per Share. The adoption of ASC Topic 260 had a negligible impact on Apaches earnings per share. Common and Preferred Stock Dividends For each of the quarters ending September30, 2009 and 2008, Apache paid $50million in dividends on its common stock. For the nine-month periods ended September30, 2009 and 2008, the Company paid $151million and $183million, respectively. The higher common stock dividends for the first nine months of 2008 were attributable to a special cash dividend of 10 cents per common share paid on March18, 2008. In addition, for each of the three- and nine-month periods ended September30, 2009 and 2008, Apache paid a total of $1.4million and $4.3million, respectively, in dividends on its SeriesB Prefer |
Asset Retirement Obligation
Asset Retirement Obligation | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Asset Retirement Obligation [Abstract] | |
Asset Retirement Obligation | 6. ASSET RETIREMENT OBLIGATION The following table describes changes to the Companys asset retirement obligation (ARO) liability for the nine months ended September30, 2009: (In thousands) Asset retirement obligation at December31, 2008 $ 1,894,684 Liabilities incurred 180,133 Liabilities settled (304,806 ) Accretion expense 79,274 Revisions in estimated liabilities 41,331 Asset retirement obligation at September30, 2009 1,890,616 Less current portion 267,269 Asset retirement obligation, long-term $ 1,623,347 The ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation and similar activities associated with Apaches oil and gas properties. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. To determine the current present value of this obligation, some key assumptions the Company must estimate include the ultimate productive life of the properties, a risk-adjusted discount rate and an inflation factor. To the extent future revisions to these assumptions impact the present value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Liabilities settled primarily relate to individual properties plugged and abandoned during the period. Most of the activity was in the Gulf of Mexico, a portion of which relates to the continued abandonment activity on platforms toppled in 2005 during Hurricanes Katrina and Rita and in 2008 during Hurricane Ike. |
Commitments and Contingencies
Commitments and Contingencies | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 7. COMMITMENTS AND CONTINGENCIES Apache is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. The Company has an accrued liability of approximately $18million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. Apaches 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 managements estimate, none of the actions are believed by management to involve future amounts that would be material to Apaches financial position or results of operations after consideration of recorded accruals. It is managements opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse affect on the Companys financial position or results of operations. Legal Matters Grynberg As more fully described in Note 9 of the financial statements in our Annual Report on Form 10-K for our 2008 fiscal year, in 1997, Jack J. Grynberg began filing lawsuits against other natural gas producers, gatherers and pipelines claiming that the defendants have underpaid royalty to the federal government and Indian tribes by mismeasurement of the volume and heating content of natural gas and are responsible for acts of others who mis-measured natural gas. The claims filed against Apache in 2005 were dismissed, though Mr.Grynberg appealed the dismissal. On March17, 2009, the United States Court of Appeals for the Tenth Circuit affirmed the dismissal, and on May4, 2009, the Tenth Circuit denied Mr.Grynbergs petition for rehearing. On October5, 2009, the United States Supreme Court denied Mr.Grynbergs petition for a writ of certiorari. This matter is concluded. Argentine Environmental Claims As more fully described in Note 9 of the financial statements in our Annual Report on Form 10-K for our 2008 fiscal year, in connection with the Pioneer acquisition in 2006, the Company acquired a subsidiary of Pioneer in Argentina (PNRA)that is involved in various administrative proceedings with environmental authorities in the Neuqun Province relating to permits for and discharges from operations in that province. In addition, PNRA was named in a suit initiated against oil companies operating in the Neuqun basin entitled Asociacin de Superficiarios de la Patagonia v. YPF S.A., et. al., originally filed on August21, 2003, in the Argentine National Supreme Court of Justice relating to various environmental and remediation claims. No material change in the status of these matters has occurred since the filing of our most recent Annual Report on Form 10-K. Louisiana Restoration As more fully described in Note 9 of the financial statements in our Annual Report on Form 10-K for our 2008 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 l |
Subsequent Events
Subsequent Events | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Subsequent Events [Abstract] | |
Subsequent Events | 8. SUBSEQUENT EVENTS Subsequent events have been evaluated for recognition and disclosure through November6, 2009, the date these financial statements were filed with the SEC. On October22, 2009, Apache and Kuwait Foreign Petroleum Exploration Co. (KUFPEC)signed an exclusive agreement to supply gas from the Julimar and Brunello discoveries and become foundation equity partners in Chevrons Wheatstone liquefied natural gas (LNG)hub in Western Australia, opening up new markets for gas reserves from two of Apaches largest discoveries. Apache holds a 65-percent interest in the discoveries. Apaches projected net sales would approximate 190 MMcf/d and 5,100 b/d with a projected 15-year production plateau when the multi-year project is fully operational. Chevron, which has a 100-percent interest in the Wheatstone field, will operate the LNG facilities with a 75-percent project interest. Apache and KUFPEC will own the remaining 25-percent project interest. Wheatstones first phase will consist of an offshore processing platform and pipeline to shore, along with two LNG processing trains with a combined capacity of approximately 8.6million tons per year. Our net capital for the project is currently estimated to be $1.2 billion for upstream development of the Julimar and Brunello fields and $3.0billion in the Wheatstone facilities. The investment will be funded as the multi-year project is developed. |
Fair Value Measurements
Fair Value Measurements | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 9. FAIR VALUE MEASUREMENTS ASC 820-10-35 provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable, and these valuations have the lowest priority. Assets and Liabilities Measured at Fair Value on a Recurring Basis Certain assets and liabilities are reported at fair value on a recurring basis in Apaches Consolidated Balance Sheet. The following methods and assumptions were used to estimate the fair values: Cash, Cash Equivalents, Short-Term Investments, Accounts Receivable and Accounts Payable The carrying amounts approximate fair value due to the short-term nature or maturity of the instruments. Commodity Derivative Instruments Apaches commodity derivative instruments consist of variable-to-fixed price commodity swaps and options. The Company estimates the fair values of derivative instruments using published commodity futures price strips for the underlying commodities as of the date of the estimate. The fair values of the Companys derivative instruments are not actively quoted in the open market and are valued using forward commodity price curves provided by a reputable third-party. These valuations are Level 2 inputs. See Note 2 Derivative Instruments and Hedging Activities of this Form 10-Q for further information. The following table presents the Companys material assets and liabilities measured at fair value on a recurring basis for each hierarchy level: September 30, 2009 Fair Value Measurements Using Quoted Price Significant Significant in Active Other Unobservable Markets Inputs Inputs Total Fair Carrying (Level 1) (Level 2) (Level 3) Value Netting (1) Amount (In millions) Assets: Commodity Derivative Instruments $ $ 81 $ $ 81 $ (29 ) $ 52 Liabilities: Commodity Derivative Instruments 222 222 (29 ) 193 (1) The derivative fair values above are based on analysis of each contract as required by ASC Topic 820. Derivative assets and liabilities with the same counterparty are presented here on a gross basis, even where the legal right of offset exists. See Note 2 Derivative Instruments and Hedging Activities of this Form 10-Q for a discussion of net amounts recorded on the Consolidated Balance Sheet at September30, 2009. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are reported at fair value on a nonrecurring basis in Apaches Consolidated Balance Sheet. The following methods and assumptions were used to estimate the fair values: Asset Retirement Obligations Incurred in Current Period Apa |
Business Segment Information
Business Segment Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Business Segment Information [Abstract] | |
Business Segment Information | 10. 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. The Company has production in six countries: the United States (Gulf Coast and Central regions), Canada, Egypt, offshore Australia, offshore the United Kingdom (U.K.) in the North Sea and Argentina. Apache also has exploration interests on the Chilean side of the island of Tierra del Fuego. Financial information by country is presented below: United U.K. Other States Canada Egypt Australia North Sea Argentina International Total (In thousands) For the Quarter Ended September30, 2009 Oil and Gas Production Revenues $ 801,841 $ 213,840 $ 697,207 $ 115,868 $ 411,148 $ 85,801 $ $ 2,325,705 Operating Income (1) $ 295,292 $ 52,223 $ 476,828 $ 15,160 $ 151,300 $ 17,253 $ $ 1,008,056 Other Income (Expense): Other 6,726 General and administrative (82,492 ) Financing costs, net (61,684 ) Income Before Income Taxes $ 870,606 For the Nine Months Ended September30, 2009 Oil and Gas Production Revenues $ 2,104,781 $ 639,234 $ 1,772,498 $ 245,429 $ 976,101 $ 265,620 $ $ 6,003,663 Operating Income (Loss) (1) $ (561,283 ) $ (1,442,810 ) $ 1,140,765 $ 15,051 $ 379,102 $ 56,971 $ $ (412,204 ) Other Income (Expense): Other 55,971 General and administrative (258,443 ) Financing costs, net (181,426 ) Loss Before Income Taxes $ (796,102 ) Total Assets $ 10,547,529 $ 4,549,469 $ 5,273,039 $ 3,147,525 |
Supplemental Guarantor Informat
Supplemental Guarantor Information | |
9 Months Ended
Sep. 30, 2009 USD / shares | |
Supplemental Guarantor Information [Abstract] | |
Supplemental Guarantor Information | 11. SUPPLEMENTAL GUARANTOR INFORMATION Apache Finance Canada Corporation (Apache Finance Canada) is a subsidiary of Apache and has approximately $650million of publicly traded notes outstanding that 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 Pty Ltd. (Apache Finance Australia), a subsidiary of Apache, had $100million of publicly traded securities, which matured on March15, 2009. The notes were repaid using existing cash balances. Each of these companies has been fully consolidated in Apaches consolidated financial statements. As such, these condensed consolidating financial statements should be read in conjunction with the financial statements of Apache Corporation and subsidiaries and notes thereto, of which this note is an integral part. APACHE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS For the Quarter Ended September30, 2009 All Other Apache Subsidiaries Apache Finance of Apache Reclassifications Corporation Canada Corporation Eliminations Consolidated (In thousands) REVENUES AND OTHER: Oil and gas production revenues $ 728,072 $ $ 1,597,633 $ $ 2,325,705 Equity in net income (loss)of affiliates 315,186 8,480 (8,100 ) (315,566 ) Other 1,240 14,824 (8,302 ) (1,036 ) 6,726 1,044,498 23,304 1,581,231 (316,602 ) 2,332,431 OPERATING EXPENSES: Depreciation, depletion and amortization 228,120 397,778 625,898 Asset retirement obligation accretion 15,607 10,446 26,053 Lease operating expenses 193,952 251,583 445,535 Gathering and transportation costs 8,526 27,706 36,232 Taxes other than income 27,408 156,523 183,931 General and administrative 64,001 19,527 (1,036 ) 82,492 Financing costs, net 58,295 14,110 (10,721 ) 61,684 595,909 14,110 852,842 (1,036 ) 1,461,825 INCOME BEFORE INCOME TAXES 448,589 9,194 728,389 (315,566 ) 870,606 Provision for income taxes 6,573 8,814 413,203 428,590 NET INCOME 442,016 380 315,186 (315,566 ) 442,016 Preferred stock dividends 1,420 1,420 INCOME ATTRIBUTABLE TO COMMON STOCK $ 440,596 $ 380 $ 315,186 $ (315,566 ) $ 440,596 APACHE CORPORATION AND SUBSIDIARIES C |