Exhibit 99.1
CONTACTS:
(Media): | Tony Lentini | (713/296-6227) | ||||
Bill Mintz | (713/296-7276) | |||||
(Investor): | Robert Dye | (713/296-6662) | ||||
David Higgins | (713/296-6690) | |||||
(Web site): | www.apachecorp.com |
FOR RELEASE AT 7:45 A.M. CENTRAL TIME
APACHE FIRST-QUARTER EARNINGS RISE 18 PERCENT
TO $660 MILLION OR $1.97 PER SHARE
TO $660 MILLION OR $1.97 PER SHARE
Houston, April 27, 2006 — Apache Corporation (NYSE, Nasdaq: APA) today reported that higher oil and gas prices and record natural gas production contributed to first-quarter 2006 earnings of $660 million or $1.97 per diluted common share, up from $559 million or $1.67 per share in the first quarter of 2005.
Cash from operations before changes in operating assets and liabilities totaled $1.2 billion, up from $1 billion in the year-earlier period. (This is a non-GAAP measure; see reconciliation below.)
Natural gas production of 1.4 billion cubic feet per day was 8 percent above that of the prior-year period, fueled by increased output from Apache’s Egyptian, Australian, Canadian and U.S. Central Region operations. Gas production was up 10 percent from the fourth quarter of 2005.
Liquid hydrocarbon production was approximately 9 percent below the year-earlier period, primarily due to continuing Gulf of Mexico production shut-ins caused by hurricanes Katrina and Rita. Although worldwide liquids production was even with the fourth quarter, U.S. liquids production was up 23 percent.
Total production, on a barrel-of-oil-equivalent basis, averaged 457,000 barrels per day in the first quarter, down 1 percent from the prior-year period. Production was up 5 percent from the fourth quarter.
Apache received $57.41 per barrel of oil in the quarter, up 25 percent from the prior-year period; $36.43 per barrel of natural gas liquids, up 32 percent; and $6.37 per thousand cubic feet of gas, up 20 percent. However, Apache’s realized gas price was down 19 percent from the fourth quarter to the first quarter.
“Apache got off to a strong start in the first quarter, and, barring some unforeseen world-changing event, the coming quarters should be even stronger,” said G. Steven Farris, Apache’s president, chief executive officer and chief operating officer. “We are well into a very active drilling campaign for the year, we have closed on the Pioneer acquisition in Argentina, and we plan to close the BP Gulf of Mexico transaction by the end of the second quarter.
“We expect our production growth will continue to build over the remainder of the year,” Farris said. “We believe Apache is on track to achieve 12 percent to 17 percent production growth in 2006.”
“It’s disappointing to hear the rhetoric beginning to come out of Washington, threatening to impose new taxes on the energy industry,” he said. “If taxes are increased, companies will be forced to reduce their investments accordingly.
“With only 13 percent of the world’s known hydrocarbon reserves available to private enterprise, government policies should not discourage private investment in the upstream sector,” Farris said.
Operational highlights include:
Apache’s Central Region had an outstanding quarter, with production rising 9 percent from the fourth quarter. The increase was the result of drilling 112 wells (with a 99 percent success rate), completing 145 fracture stimulations, and the acquisition of eight fields from Amerada Hess.
In the Gulf Region, oil production increased 23 percent from the fourth quarter level. Apache drilled 13 wells offshore and five wells onshore during the first quarter. Apache operated an average of seven jackup rigs, two platform rigs and one barge rig.
In Canada, gas production averaged 386 million cubic feet (MMcf) per day, even with the fourth quarter and up 11 percent from the first quarter of 2005. Apache drilled 344 wells during the quarter, with 187 still to be connected to gathering and processing infrastructure. Apache also obtained regulatory approval to co-mingle production from different zones in 357 wells, and the company has a major recompletion program during the second quarter to access the behind-pipe zones.
In the North Sea, Apache continued to commission new equipment to improve the efficiency of the Forties Field, including turbines, export pumps and platform cranes. The 4 percent drop in production from the fourth quarter was the result of downtime associated with commissioning new equipment.
In Australia, gas production increased 17 percent from the fourth quarter on rising output from the John Brookes field.
In Egypt, Apache achieved record gross gas production of 501 MMcf per day on March 5 and record gross oil production of 119,550 barrels per day on March 8. Net gas production increased 8 percent from the fourth quarter as output from the Qasr field continues to ramp up. Although gross operated oil production was higher, net oil production was down slightly from
the fourth quarter because of the impact of higher oil prices on the dynamics of production-sharing arrangements.
With the completion of Apache’s acquisition of Pioneer Resources’ assets in Argentina, the company plans to drill more than 100 wells there during 2006.
Apache Corporation is a large gas and oil independent with core operations in the United States, Canada, Egypt, the United Kingdom North Sea and Australia.
-end-
EDITOR’S NOTE: Apache will webcast a conference call to discuss its first-quarter results at 1 p.m. Central Time, Thursday, April 27, from Apache’s Web site, www.apachecorp.com. The conference call will be available for delayed playback by telephone for one week beginning at approximately 5 p.m. on April 27. To access the telephone playback, dial (719) 457-0820 and provide Apache’s confirmation code, 8102104. The conference call will be archived on Apache’s Web site.
This news release contains certain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production, operating costs, exploration and acquisition activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions and uncertainties. There is no assurance that Apache’s expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements.
APACHE CORPORATION
FINANCIAL INFORMATION
FINANCIAL INFORMATION
(In thousands, except per share data)
For the Quarter | ||||||||
Ended March 31, | ||||||||
2006 | 2005 | |||||||
REVENUES AND OTHER: | ||||||||
Oil and gas production revenues | $ | 1,950,298 | $ | 1,626,649 | ||||
Other | 48,804 | 35,639 | ||||||
1,999,102 | 1,662,288 | |||||||
OPERATING EXPENSES: | ||||||||
Depreciation, depletion and amortization | 372,577 | 339,413 | ||||||
Asset retirement obligation accretion | 20,645 | 13,159 | ||||||
Lease operating costs | 291,614 | 233,171 | ||||||
Gathering and transportation costs | 26,104 | 23,780 | ||||||
Severance and other taxes | 146,414 | 72,186 | ||||||
General and administrative | 45,672 | 50,411 | ||||||
Total operating expenses | 903,026 | 732,120 | ||||||
OPERATING INCOME | 1,096,076 | 930,168 | ||||||
FINANCING COSTS: | ||||||||
Interest expense | 42,863 | 45,266 | ||||||
Amortization of deferred loan costs | 508 | 658 | ||||||
Capitalized interest | (14,193 | ) | (13,409 | ) | ||||
Interest income | (6,364 | ) | (927 | ) | ||||
Net financing costs | 22,814 | 31,588 | ||||||
INCOME BEFORE INCOME TAXES | 1,073,262 | 898,580 | ||||||
Provision for income taxes | 412,341 | 338,097 | ||||||
NET INCOME | 660,921 | 560,483 | ||||||
Preferred stock dividends | 1,420 | 1,420 | ||||||
INCOME ATTRIBUTABLE TO COMMON STOCK | $ | 659,501 | $ | 559,063 | ||||
BASIC NET INCOME PER COMMON SHARE | $ | 2.00 | $ | 1.70 | ||||
DILUTED NET INCOME PER COMMON SHARE | $ | 1.97 | $ | 1.67 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 330,416 | 328,037 | ||||||
APACHE CORPORATION
FINANCIAL INFORMATION
FINANCIAL INFORMATION
(In thousands)
For the Quarter | ||||||||
Ended March 31, | ||||||||
2006 | 2005 | |||||||
COSTS INCURRED: | ||||||||
North America exploration and development | $ | 696,160 | $ | 529,434 | ||||
International exploration and development | 221,547 | 262,347 | ||||||
$ | 917,707 | $ | 791,781 | |||||
Oil and gas property acquisitions | $ | 256,840 | $ | 19,949 | ||||
Capitalized interest | $ | 14,193 | $ | 13,409 | ||||
Asset retirement costs | $ | 11,107 | $ | 10,513 | ||||
March 31, | December 31, | |||||||
2006 | 2005 | |||||||
BALANCE SHEET DATA: | ||||||||
Current Assets | $ | 2,357,274 | $ | 2,162,077 | ||||
Property and Equipment, net | 17,316,527 | 16,791,340 | ||||||
Goodwill | 189,252 | 189,252 | ||||||
Other Assets | 136,050 | 129,127 | ||||||
Total Assets | $ | 19,999,103 | $ | 19,271,796 | ||||
Current Liabilities | $ | 2,135,624 | $ | 2,186,564 | ||||
Long-Term Debt | 2,189,126 | 2,191,954 | ||||||
Deferred Credits and Other Noncurrent Liabilities | 4,417,857 | 4,352,063 | ||||||
Shareholders’ Equity | 11,256,496 | 10,541,215 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 19,999,103 | $ | 19,271,796 | ||||
Common shares outstanding at end of period | 330,339 | 330,121 |
NON-GAAP FINANCIAL MEASURES:
The press release discusses Apache’s cash from operations before changes in operating assets and liabilities. It is presented because management believes the information is useful for investors because it is used internally and widely accepted by those following the oil and gas industry as a financial indicator of a company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt. It is also used by research analysts to value and compare oil and gas exploration and production companies, and is frequently included in published research when providing investment recommendations. Cash from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity, but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities.
The following table reconciles net cash provided by operating activities to cash from operations before changes in operating assets and liabilities.
For the Quarter | ||||||||
Ended March 31, | ||||||||
2006 | 2005 | |||||||
Net cash provided by operating activities | $ | 1,043,284 | $ | 836,172 | ||||
Changes in operating assets and liabilities | 180,916 | 186,896 | ||||||
Cash from operations before changes in operating assets and liabilities | $ | 1,224,200 | $ | 1,023,068 | ||||
APACHE CORPORATION
FINANCIAL INFORMATION
FINANCIAL INFORMATION
For the Quarter | ||||||||
Ended March 31, | ||||||||
2006 | 2005 | |||||||
FINANCIAL DATA (In thousands, except per share data): | ||||||||
Revenues and other | $ | 1,999,102 | $ | 1,662,288 | ||||
Income Attributable to Common Stock | $ | 659,501 | $ | 559,063 | ||||
Basic Net Income Per Common Share | $ | 2.00 | $ | 1.70 | ||||
�� | ||||||||
Diluted Net Income Per Common Share | $ | 1.97 | $ | 1.67 | ||||
Weighted Average Common Shares Outstanding | 330,416 | 328,037 | ||||||
Diluted Shares Outstanding | 334,469 | 334,038 | ||||||
PRODUCTION AND PRICING DATA: | ||||||||
OIL VOLUME — Barrels per day | ||||||||
United States | 59,290 | 73,630 | ||||||
Canada | 21,691 | 23,277 | ||||||
Egypt | 57,292 | 54,579 | ||||||
Australia | 11,911 | 15,976 | ||||||
North Sea | 64,445 | 61,870 | ||||||
China | 4,559 | 10,507 | ||||||
Argentina | 1,272 | 704 | ||||||
Total | 220,460 | 240,543 | ||||||
AVERAGE OIL PRICE PER BARREL | ||||||||
United States | $ | 50.22 | $ | 44.00 | ||||
Canada | 54.17 | 47.14 | ||||||
Egypt | 60.89 | 48.77 | ||||||
Australia | 66.39 | 52.99 | ||||||
North Sea | 60.66 | 46.10 | ||||||
China | 58.12 | 33.91 | ||||||
Argentina | 39.30 | 33.97 | ||||||
Total | 57.41 | 46.05 | ||||||
NATURAL GAS VOLUME — Mcf per day | ||||||||
United States | 601,045 | 637,803 | ||||||
Canada | 385,982 | 346,742 | ||||||
Egypt | 212,874 | 155,328 | ||||||
Australia | 153,659 | 113,734 | ||||||
North Sea | 2,269 | 2,178 | ||||||
Argentina | 3,143 | 3,473 | ||||||
Total | 1,358,972 | 1,259,258 | ||||||
AVERAGE NATURAL GAS PRICE PER MCF | ||||||||
United States | $ | 7.41 | $ | 6.04 | ||||
Canada | 7.73 | 5.59 | ||||||
Egypt | 4.41 | 4.30 | ||||||
Australia | 1.67 | 1.82 | ||||||
North Sea | 9.98 | 5.30 | ||||||
Argentina | 1.19 | 0.91 | ||||||
Total | 6.37 | 5.30 | ||||||
NGL VOLUME — Barrels per day | ||||||||
United States | 7,553 | 9,104 | ||||||
Canada | 2,178 | 2,419 | ||||||
Total | 9,731 | 11,523 | ||||||
AVERAGE NGL PRICE PER BARREL | ||||||||
United States | $ | 36.52 | $ | 28.26 | ||||
Canada | 36.10 | 25.46 | ||||||
Total | 36.43 | 27.68 |