Exhibit 99.1
CONTACTS:
(Media): | Bill Mintz | (713) 296-7276 | ||||
(Investor): | Robert Dye | (713) 296-6662 | ||||
David Higgins | (713) 296-6690 | |||||
(Web site): | www.apachecorp.com |
FOR RELEASE AT 7:30 A.M. CENTRAL TIME
APACHE EARNS $612 MILLION OR $1.83 PER SHARE IN THIRD QUARTER
Strong oil prices fuel record cash flow and revenue
Houston, Oct. 25, 2007 — Apache Corporation (NYSE, Nasdaq: APA) today reported that record oil and gas production revenues fueled record cash flow and third-quarter earnings of $612 million, or $1.83 per diluted common share. Excluding a non-cash charge of 34 cents per share — primarily related to the impact of foreign currency fluctuations on deferred tax balances — Apache’s adjusted earnings* were $2.17 per share.
Apache’s third-quarter adjusted earnings were 23 percent above third-quarter 2006 adjusted earnings of $1.77 per share. Before adjustments, Apache earned $646 million or $1.94 per share in the prior-year period.
Cash from operations before changes in operating assets and liabilities totaled a record $1.6 billion, up 25 percent from the year-earlier period.* Oil and gas revenues increased 21 percent to $2.5 billion in the third quarter.
“Apache’s strong third-quarter results demonstrated the value of our uniquely balanced portfolio,” said G. Steven Farris, president and chief executive officer. “With world oil prices strengthening and North American gas prices declining from the second quarter to the third, Apache’s liquid hydrocarbon production — about half of our volumes — accounted for two-thirds of our revenue.”
Apache received $70.43 per barrel of oil in the third quarter, up 10 percent from the prior-year period and the second quarter; and $4.99 per thousand cubic feet of gas, up 3 percent from the year-earlier period and a 9 percent drop from the second quarter.
Apache’s production totaled 561,412 barrels of oil equivalent (boe) per day during the third quarter, up 9 percent from the prior-year period and down slightly from the second quarter of 2007. Excluding the impact of previously announced maintenance turn-arounds in the North Sea, Apache’s production was in line with its record in the second quarter of 2007. Liquid hydrocarbon production totaled 263,965 barrels per day while natural gas production averaged 1.78 billion cubic feet per day.
“We remain on track to achieve the top end of our targeted range of 9-12 percent production growth in 2007,” Farris said. “We expect a strong finish to the year in every financial and operational aspect.
“Apache’s evolving high-impact exploration portfolio in our core growth areas of Australia, Canada and Egypt resulted in two natural gas discoveries in Australia and a gas/condensate discovery in Egypt,” he said. “In Canada, we continued to add acreage to our British Columbia shale resource play, where we now control about 400,000 gross (200,000 net) acres. We plan to test the economic viability of this play in earnest during our winter drilling campaign.
“With six development projects under way that we expect will add 108,000 boe per day over the next three years, Apache has a resource base that is capable of delivering strong growth through the end of the decade,” Farris said.
Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom North Sea, Australia and Argentina.
-end-
*Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures; see reconciliations below.
NOTE: Apache will conduct a conference call to discuss its third-quarter results at 1 p.m. Central time on Thursday, Oct. 25. The call will be webcast from Apache’s Web site,
http://www.apachecorp.com. The webcast replay and podcast will be archived on Apache’s Web site. The conference call will be available for delayed playback by telephone for one week beginning at approximately 5 p.m. on Oct. 25. To access the telephone playback, dial (719) 457-0820 and provide Apache’s confirmation code, 8842910.
This news release contains certain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our 2006Form 10-K and on our website. 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. We assume no duty to update these statements as of any future date.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
FINANCIAL INFORMATION
(In thousands, except per share data)
For the Quarter | For the Nine Months | |||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
REVENUES AND OTHER: | ||||||||||||||||
Oil and gas production revenues | $ | 2,498,594 | $ | 2,072,815 | $ | 6,965,692 | $ | 6,108,240 | ||||||||
Gain on China divestiture | — | 173,545 | — | 173,545 | ||||||||||||
Other | 592 | 15,121 | (1,498 | ) | 40,316 | |||||||||||
2,499,186 | 2,261,481 | 6,964,194 | 6,322,101 | |||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Depreciation, depletion and amortization | 600,796 | 487,542 | 1,722,816 | 1,301,557 | ||||||||||||
Asset retirement obligation accretion | 24,436 | 22,762 | 72,634 | 64,268 | ||||||||||||
Lease operating costs | 424,232 | 361,784 | 1,235,557 | 965,800 | ||||||||||||
Gathering and transportation costs | 28,674 | 24,815 | 86,884 | 76,728 | ||||||||||||
Severance and other taxes | 125,198 | 117,704 | 353,485 | 432,520 | ||||||||||||
General and administrative | 61,405 | 53,781 | 200,065 | 151,644 | ||||||||||||
Financing costs: | ||||||||||||||||
Interest expense | 82,939 | 61,074 | 230,487 | 154,073 | ||||||||||||
Amortization of deferred loan costs | 875 | 501 | 2,421 | 1,530 | ||||||||||||
Capitalized interest | (18,880 | ) | (16,108 | ) | (56,554 | ) | (46,183 | ) | ||||||||
Interest income | (4,567 | ) | (3,481 | ) | (10,566 | ) | (13,112 | ) | ||||||||
�� | ||||||||||||||||
1,325,108 | 1,110,374 | 3,837,229 | 3,088,825 | |||||||||||||
INCOME BEFORE INCOME TAXES | 1,174,078 | 1,151,107 | 3,126,965 | 3,233,276 | ||||||||||||
Provision for income taxes | 560,730 | 504,043 | 1,387,130 | 1,201,666 | ||||||||||||
NET INCOME | 613,348 | 647,064 | 1,739,835 | 2,031,610 | ||||||||||||
Preferred stock dividends | 1,420 | 1,420 | 4,260 | 4,260 | ||||||||||||
INCOME ATTRIBUTABLE TO COMMON STOCK | $ | 611,928 | $ | 645,644 | $ | 1,735,575 | $ | 2,027,350 | ||||||||
NET INCOME PER COMMON SHARE: | ||||||||||||||||
Basic | $ | 1.84 | $ | 1.96 | $ | 5.23 | $ | 6.14 | ||||||||
Diluted | $ | 1.83 | $ | 1.94 | $ | 5.19 | $ | 6.08 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 332,668 | 329,643 | 331,903 | 329,971 | ||||||||||||
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
FINANCIAL INFORMATION
(In thousands)
For the Quarter | For the Nine Months | |||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
COSTS INCURRED: (1) | ||||||||||||||||
North America exploration and development | $ | 647,266 | $ | 825,450 | $ | 2,029,302 | $ | 2,083,158 | ||||||||
International exploration and development | 491,381 | 309,230 | 1,425,624 | 784,554 | ||||||||||||
$ | 1,138,647 | $ | 1,134,680 | $ | 3,454,926 | $ | 2,867,712 | |||||||||
Oil and gas property acquisitions | $ | 17,025 | $ | 520,358 | $ | 1,050,019 | $ | 2,414,391 | ||||||||
(1) Includes noncash asset retirement costs and capitalized interest as follows: | ||||||||||||||||
Capitalized interest | $ | 16,383 | $ | 16,108 | $ | 54,057 | $ | 46,183 | ||||||||
Asset retirement costs | $ | 28,369 | $ | 231,022 | $ | 155,197 | $ | 375,708 |
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
BALANCE SHEET DATA: | ||||||||
Cash and Cash Equivalents | $ | 111,422 | $ | 140,524 | ||||
Other Current Assets | 2,442,570 | 2,349,747 | ||||||
Property and Equipment, net | 24,455,188 | 21,346,252 | ||||||
Goodwill | 189,252 | 189,252 | ||||||
Other Assets | 452,486 | 282,400 | ||||||
Total Assets | $ | 27,650,918 | $ | 24,308,175 | ||||
Current Liabilities | $ | 2,926,777 | $ | 3,811,612 | ||||
Long-Term Debt | 4,011,378 | 2,019,831 | ||||||
Deferred Credits and Other Noncurrent Liabilities | 6,039,969 | 5,285,679 | ||||||
Shareholders’ Equity | 14,672,794 | 13,191,053 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 27,650,918 | $ | 24,308,175 | ||||
Common shares outstanding at end of period | 332,647 | 330,737 |
APACHE CORPORATION
FINANCIAL INFORMATION
FINANCIAL INFORMATION
For the Quarter | For the Nine Months | |||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
FINANCIAL DATA(In thousands, except per share data): | ||||||||||||||||
Revenues and other | $ | 2,499,186 | $ | 2,261,481 | $ | 6,964,194 | $ | 6,322,101 | ||||||||
Income Attributable to Common Stock | $ | 611,928 | $ | 645,644 | $ | 1,735,575 | $ | 2,027,350 | ||||||||
Basic Net Income Per Common Share | $ | 1.84 | $ | 1.96 | $ | 5.23 | $ | 6.14 | ||||||||
Diluted Net Income Per Common Share | $ | 1.83 | $ | 1.94 | $ | 5.19 | $ | 6.08 | ||||||||
Weighted Average Common Shares Outstanding | 332,668 | 329,643 | 331,903 | 329,971 | ||||||||||||
Diluted Shares Outstanding | 335,117 | 332,855 | 334,086 | 333,402 | ||||||||||||
PRODUCTION AND PRICING DATA: | ||||||||||||||||
OIL VOLUME — Barrels per day | ||||||||||||||||
United States | 97,025 | 67,996 | 87,660 | 64,277 | ||||||||||||
Canada | 18,451 | 20,509 | 18,838 | 21,123 | ||||||||||||
Egypt | 60,395 | 54,634 | 60,219 | 55,756 | ||||||||||||
Australia | 14,685 | 12,249 | 14,308 | 12,146 | ||||||||||||
North Sea | 48,888 | 49,375 | 52,572 | 58,370 | ||||||||||||
Argentina | 11,708 | 8,960 | 11,266 | 5,632 | ||||||||||||
China | — | 2,745 | — | 4,234 | ||||||||||||
Total | 251,152 | 216,468 | 244,863 | 221,538 | ||||||||||||
AVERAGE OIL PRICE PER BARREL | ||||||||||||||||
United States | $ | 67.70 | $ | 58.39 | $ | 61.75 | $ | 55.38 | ||||||||
Canada | 73.95 | 66.09 | 63.74 | 62.30 | ||||||||||||
Egypt | 74.04 | 66.88 | 66.50 | 65.66 | ||||||||||||
Australia | 76.65 | 73.80 | 73.30 | 71.67 | ||||||||||||
North Sea | 73.18 | 67.04 | 65.21 | 64.68 | ||||||||||||
Argentina | 49.70 | 46.41 | 45.52 | 45.03 | ||||||||||||
China | — | 62.53 | — | 62.73 | ||||||||||||
Total | 70.43 | 63.66 | 63.74 | 61.85 | ||||||||||||
NATURAL GAS VOLUME — Mcf per day | ||||||||||||||||
United States | 763,693 | 719,324 | 768,520 | 653,379 | ||||||||||||
Canada | 386,659 | 422,397 | 386,312 | 408,758 | ||||||||||||
Egypt | 241,919 | 207,686 | 239,951 | 213,097 | ||||||||||||
Australia | 194,520 | 204,465 | 195,242 | 181,143 | ||||||||||||
North Sea | 1,721 | 1,738 | 1,851 | 2,055 | ||||||||||||
Argentina | 196,168 | 151,122 | 203,524 | 86,275 | ||||||||||||
Total | 1,784,680 | 1,706,732 | 1,795,400 | 1,544,707 | ||||||||||||
AVERAGE NATURAL GAS PRICE PER MCF | ||||||||||||||||
United States | $ | 6.59 | $ | 6.27 | $ | 6.95 | $ | 6.62 | ||||||||
Canada | 5.54 | 5.38 | 6.25 | 6.22 | ||||||||||||
Egypt | 4.72 | 4.63 | 4.42 | 4.50 | ||||||||||||
Australia | 1.93 | 1.70 | 1.83 | 1.65 | ||||||||||||
North Sea | 16.98 | 13.20 | 12.80 | 10.79 | ||||||||||||
Argentina | 0.93 | 0.89 | 1.03 | 0.91 | ||||||||||||
Total | 4.99 | 4.83 | 5.24 | 5.32 | ||||||||||||
NGL VOLUME — Barrels per day | ||||||||||||||||
United States | 7,766 | 7,896 | 7,677 | 8,088 | ||||||||||||
Canada | 2,253 | 2,104 | 2,199 | 2,169 | ||||||||||||
Argentina | 2,794 | 2,083 | 2,749 | 1,154 | ||||||||||||
Total | 12,813 | 12,083 | 12,625 | 11,411 | ||||||||||||
AVERAGE NGL PRICE PER BARREL | ||||||||||||||||
United States | $ | 47.18 | $ | 42.19 | $ | 41.64 | $ | 39.73 | ||||||||
Canada | 40.39 | 38.66 | 37.05 | 36.83 | ||||||||||||
Argentina | 37.74 | 42.15 | 35.07 | 40.31 | ||||||||||||
Total | 43.92 | 41.57 | 39.41 | 39.23 |
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
FINANCIAL INFORMATION
(In thousands)
NON-GAAP FINANCIAL MEASURES:
Reconciliation of income attributable to common stock to adjusted earnings:
The press release discusses Apache’s adjusted earnings. Adjusted earnings excludes certain items that management believes affect the comparability of operating results. The following provides the reasons adjusted earnings is a meaningful measure:
• | Management uses adjusted earnings to evaluate the company’s operational trends and performance relative to other oil and gas producing companies. | |
• | Management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends. | |
• | The reconciling items below are the types of items management believes are frequently excluded by analysts when evaluating the operating trends and comparability of the company’s results. |
For the Quarter | ||||||||
Ended September 30, | ||||||||
2007 | 2006 | |||||||
Income Attributable to Common Stock (GAAP) | $ | 611,928 | $ | 645,644 | ||||
Adjustments: | ||||||||
Foreign currency fluctuation impact on deferred tax expense | 113,882 | 23,610 | ||||||
Impact of increased tax rates in the United Kingdom | — | 92,362 | ||||||
Gain on China divestiture | — | (173,545 | ) | |||||
Adjusted Earnings (Non-GAAP) | $ | 725,810 | $ | 588,071 | ||||
Adjusted Earnings Per Share (Non-GAAP) | ||||||||
Basic | $ | 2.18 | $ | 1.78 | ||||
Diluted | $ | 2.17 | $ | 1.77 | ||||
Average Number of Common Shares | ||||||||
Basic | 332,668 | 329,643 | ||||||
Diluted | 335,117 | 332,855 | ||||||
Reconciliation of net cash provided by operating activities to cash
from operations before changes in operating assets and liabilities:
from operations before changes in operating assets and liabilities:
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 September 30, | ||||||||
2007 | 2006 | |||||||
Net cash provided by operating activities | $ | 1,427,467 | $ | 1,173,704 | ||||
Changes in operating assets and liabilities | 190,511 | 122,865 | ||||||
Cash from operations before changes in operating assets and liabilities | $ | 1,617,978 | $ | 1,296,569 | ||||