Exhibit 99.1
CONTACTS:
| (Media): | Tony Lentini | (713/296-6227) | ||
| Bill Mintz | (713/296-7276) | |||
| David Higgins | (713/296-6690) | |||
| (Investor): | Robert Dye | (713/296-6662) | ||
| (Web site): | www.apachecorp.com |
FOR RELEASE AT 8 A.M. CENTRAL TIME
APACHE REPORTS RECORD FIRST-QUARTER EARNINGS OF $2.10 PER SHARE
Houston (April 24, 2003) — Apache Corporation (NYSE: APA) today reported that rising commodity prices and strong production fueled record first-quarter earnings of $337.5 million or $2.10 per diluted common share, including the cumulative effect of a change in accounting principles regarding asset retirement obligations.
Excluding the effect of the accounting change, Apache earned $1.94 per diluted common share, or $310.9 million, which was nearly four times first quarter 2002 earnings of 52 cents per diluted common share, or $75.8 million.
“In just one quarter, Apache’s net income exceeded the full-year totals for all but three of our 48 years,” said G. Steven Farris, president, chief executive officer and chief operating officer. “In March alone, Apache earned $147.8 million, or nearly $5 million a day. In one month, Apache earned more than the company earned in all of 1996.”
Apache reported that cash from operations totaled $644 million in the first quarter, up from $289.2 million in the prior-year period, and exceeded the full-year totals for the first 44 years of Apache’s 48-year history. (Please see below for a reconciliation of Apache’s calculation of cash from operations, a non-GAAP financial measure.)
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APACHE REPORTS RECORD FIRST-QUARTER EARNINGS — ADD ONE
“Apache’s record financial results reflected a combination of robust commodity prices and strong production added at responsible costs,” Farris said.
First-quarter operating results reflect 18 days of oil and gas sales from the Gulf of Mexico portion of Apache’s $1.3 billion acquisition of properties from BP, but no impact from the purchase of the North Sea Forties field portion, which was completed on April 2. Production from both segments of the acquisition will be included going forward.
As a result of cash generated by higher commodity prices and rising production, as well as Apache’s $554 million common stock offering during the first quarter, Apache expects to end the second quarter with a lower debt-to-capitalization ratio than at the beginning of the year, Farris said.
“With the additional production from the BP acquisition and first production expected this summer from the Zhao Dong development in China, we are on course for strong production growth in 2003,” Farris said.
Oil production averaged 158,815 barrels per day in the first quarter, up from 150,253 barrels per day in the fourth quarter of 2002. Natural gas production averaged 1.09 billion cubic feet (Bcf) per day, up from 1.07 Bcf per day in the fourth quarter. Natural gas liquids (NGLs) production averaged 7,489 barrels per day, down from 8,967 barrels per day in the fourth quarter.
During the first quarter, Apache realized average prices of $5.29 per thousand cubic feet (Mcf) of natural gas, up from $3.43 per Mcf in the fourth quarter; $30.67 per barrel of oil, up from $26.77 per barrel in the fourth quarter; and $24.42 per barrel of NGLs, up from $16.19 per barrel in the fourth quarter.
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APACHE REPORTS RECORD FIRST-QUARTER EARNINGS — ADD TWO
Oil and gas production revenues totaled $975.2 million in the first quarter, also a record.
Apache’s first-quarter results reflect the adoption of Statement of Financial Accounting Standards No. 143 (SFAS No. 143), “Accounting for Asset Retirement Obligations,” which requires companies to record the present value of estimated future abandonment obligations as a liability, with a corresponding entry to oil and gas assets. The adoption of SFAS No. 143 resulted in a non-cash cumulative-effect benefit of $27 million. The effect of this rule over time will be zero because, in the end, it is simply a timing issue.
“Once again, the rule makers have served to complicate an accepted and readily understood historical industry practice,” said Apache Chairman Raymond Plank. “In our case, we had already reflected through our amortization rate a significant portion of our future abandonment liabilities. This rule caused us to reverse prior charges and recognize a gain we didn’t earn. It tinkers with comprehendible accounting.”
Apache Corporation is a large gas and oil independent with core operations in the United States, Canada, Egypt, the United Kingdom North Sea and Western Australia.
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NOTE: Apache will webcast its conference call live at 1 p.m. Central Time from its Web site, www.apachecorp.com. The replay will be available on the Web site or by dialing (719) 457-0820 and using pass code 452671. The telephone replay will be available for one week beginning at approximately 5 p.m. on April 24.
This news release contains certain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding Apache’s financing, financial ratios, use of funds, production growth and timing of new developments. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions and uncertainties. There is no assurance that Apache’s expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
| For the Quarter | |||||||||
| Ended March 31, | |||||||||
| 2003 | 2002 | ||||||||
REVENUES: | |||||||||
| Oil and gas production revenues | $ | 975,162 | $ | 529,389 | |||||
| Other revenues | (8,553 | ) | (1,393 | ) | |||||
| Total revenues | 966,609 | 527,996 | |||||||
OPERATING EXPENSES: | |||||||||
| Depreciation, depletion and amortization | 214,349 | 211,039 | |||||||
| Asset retirement obligation accretion | 5,313 | — | |||||||
| International impairments | — | 4,600 | |||||||
| Lease operating costs | 134,135 | 112,304 | |||||||
| Gathering and transportation costs | 11,861 | 8,233 | |||||||
| Severance and other taxes | 24,554 | 14,199 | |||||||
| General and administrative | 27,831 | 25,352 | |||||||
| Total operating expenses | 418,043 | 375,727 | |||||||
OPERATING INCOME | 548,566 | 152,269 | |||||||
FINANCING COSTS: | |||||||||
| Interest expense | 37,696 | 36,882 | |||||||
| Amortization of deferred loan costs | 531 | 334 | |||||||
| Capitalized interest | (11,232 | ) | (10,022 | ) | |||||
| Interest income | (1,074 | ) | (1,169 | ) | |||||
| Net financing costs | 25,921 | 26,025 | |||||||
| Preferred interests of subsidiaries | 3,362 | 3,533 | |||||||
INCOME BEFORE INCOME TAXES | 519,283 | 122,711 | |||||||
| Provision for income taxes | 206,986 | 42,039 | |||||||
INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE | 312,297 | 80,672 | |||||||
| Cumulative effect of change in accounting principle, net of tax | 26,632 | — | |||||||
NET INCOME | 338,929 | 80,672 | |||||||
| Preferred stock dividends | 1,420 | 4,908 | |||||||
INCOME ATTRIBUTABLE TO COMMON STOCK | $ | 337,509 | $ | 75,764 | |||||
INCOME ATTRIBUTABLE TO COMMON STOCK BEFORE CHANGE IN ACCOUNTING PRINCIPLE | $ | 310,877 | $ | 75,764 | |||||
BASIC NET INCOME PER COMMON SHARE | |||||||||
| Before change in accounting principle | $ | 1.95 | $ | .53 | |||||
| After change in accounting principle | $ | 2.12 | $ | .53 | |||||
DILUTED NET INCOME PER COMMON SHARE | |||||||||
| Before change in accounting principle | $ | 1.94 | $ | 0.52 | |||||
| After change in accounting principle | $ | 2.10 | $ | 0.52 | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 159,255 | 144,159 | |||||||
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
| For the Quarter | ||||||||||
| Ended March 31, | ||||||||||
| 2003 | 2002 | |||||||||
CAPITALIZED COSTS INCURRED: | ||||||||||
| North America exploration and development | $ | 252,327 | $ | 137,377 | ||||||
| International exploration and development | 89,949 | 60,871 | ||||||||
| Total exploration and development | $ | 342,276 | $ | 198,248 | ||||||
| Acquisitions: | ||||||||||
| Oil and gas properties | $ | 544,371 | $ | 108 | ||||||
| Gas gathering, transmission and processing facilities | 5,484 | — | ||||||||
| Goodwill | — | — | ||||||||
| Total Acquisitions | $ | 549,855 | $ | 108 | ||||||
| Asset Retirement Obligation | $ | 350,686 | $ | — | ||||||
| Capitalized interest | $ | 11,232 | $ | 10,022 | ||||||
| Property sales | $ | (521 | ) | $ | (796 | ) | ||||
| March 31, | December 31, | ||||||||
| 2003 | 2002 | ||||||||
BALANCE SHEET DATA: | |||||||||
| Preferred interests of subsidiaries | $ | 437,088 | $ | 436,626 | |||||
| Total debt | $ | 1,943,364 | $ | 2,158,815 | |||||
| Shareholders’ equity | $ | 5,803,100 | $ | 4,924,280 | |||||
| Common shares outstanding at end of period | 161,602 | 151,253 | |||||||
NON-GAAP FINANCIAL MEASURE:
Cash from operations represents net cash provided by operating activities before changes in operating assets and liabilities. Cash from operations is presented because management believes it is a useful adjunct to net cash provided by operating activities under accounting principles generally accepted in the United States (GAAP). Cash from operations is widely accepted as a financial indicator of an oil and gas company’s ability to generate cash which is used to internally fund exploration and development activities and to service debt. Cash from operations is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities, as an indicator of cash flows, or as a measure of liquidity. The following table reconciles net cash provided by operating activities to cash from operations.
| For the Quarter | ||||||||
| Ended March 31, | ||||||||
| 2003 | 2002 | |||||||
| Net cash provided by operating activities | $ | 538,041 | $ | 205,265 | ||||
| Changes in operating assets and liabilities | (105,924 | ) | (83,943 | ) | ||||
| Cash from operations | $ | 643,965 | $ | 289,208 | ||||
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
| For the Quarter | ||||||||||
| Ended March 31, | ||||||||||
| 2003 | 2002 | |||||||||
FINANCIAL DATA: | ||||||||||
| Revenues | $ | 966,609 | $ | 527,996 | ||||||
| Income Attributable to Common Stock | $ | 337,509 | $ | 75,764 | ||||||
| Basic Net Income Per Common Share: | ||||||||||
| Before change in accounting principle | $ | 1.95 | $ | .53 | ||||||
| After change in accounting principle | $ | 2.12 | $ | .53 | ||||||
| Diluted Net Income Per Common Share: | ||||||||||
| Before change in accounting principle | $ | 1.94 | $ | .52 | ||||||
| After change in accounting principle | $ | 2.10 | $ | .52 | ||||||
| Weighted Average Common Shares Outstanding | 159,255 | 144,159 | ||||||||
| Diluted Shares Outstanding | 160,580 | 145,767 | ||||||||
PRODUCTION AND PRICING DATA: | ||||||||||
NATURAL GAS VOLUME — Mcf per day | ||||||||||
| United States | 552,783 | 540,433 | ||||||||
| Canada | 309,205 | 314,659 | ||||||||
| Egypt | 123,719 | 117,525 | ||||||||
| Australia | 101,153 | 120,645 | ||||||||
| Argentina | 6,788 | 3,856 | ||||||||
| Total | 1,093,648 | 1,097,118 | ||||||||
AVERAGE NATURAL GAS PRICE PER MCF | ||||||||||
| United States | $ | 6.22 | $ | 2.35 | ||||||
| Canada | 5.35 | 2.33 | ||||||||
| Egypt | 4.50 | 3.05 | ||||||||
| Australia | 1.31 | 1.23 | ||||||||
| Argentina | 0.42 | 0.64 | ||||||||
| Total | 5.29 | 2.29 | ||||||||
OIL VOLUME — Barrels per day | ||||||||||
| United States | 57,334 | 55,829 | ||||||||
| Canada | 24,735 | 25,339 | ||||||||
| Egypt | 45,710 | 44,378 | ||||||||
| Australia | 30,439 | 32,941 | ||||||||
| Argentina | 597 | 669 | ||||||||
| Total | 158,815 | 159,156 | ||||||||
AVERAGE OIL PRICE PER BARREL | ||||||||||
| United States | $ | 28.97 | $ | 20.56 | ||||||
| Canada | 32.09 | 18.87 | ||||||||
| Egypt | 30.46 | 21.42 | ||||||||
| Australia | 33.00 | 20.60 | ||||||||
| Argentina | 31.95 | 20.07 | ||||||||
| Total | 30.67 | 20.53 | ||||||||
NGL VOLUME — Barrels per day | ||||||||||
| United States | 6,083 | 6,895 | ||||||||
| Canada | 1,406 | 1,358 | ||||||||
| Total | 7,489 | 8,253 | ||||||||
AVERAGE NGL PRICE PER BARREL | ||||||||||
| United States | $ | 24.34 | $ | 12.78 | ||||||
| Canada | 24.75 | 10.95 | ||||||||
| Total | 24.42 | 12.48 | ||||||||
