Exhibit 99.1
[APACHE LETTERHEAD]
CONTACTS:
(MEDIA): BILL MINTZ (713) 296-7276
TONY LENTINI (713) 296-6227
DAVID HIGGINS (713) 296-6690
(INVESTOR): ROBERT DYE (713) 296-6662
(WEB SITE): WWW.APACHECORP.COM
APACHE REPORTS RECORD SECOND-QUARTER OIL AND GAS PRODUCTION
Houston, July 24, 2003 - Apache Corporation (NYSE: APA) today reported
that record production fueled second-quarter earnings of $243 million, or $1.49
per diluted common share, including the impact of a non-cash charge related to
foreign currency fluctuations. Apache reported net income of $143 million, or 95
cents per share, in the prior-year period.
Excluding the non-cash charge, Apache earned $288 million or $1.76 per
diluted common share. (See below for reconciliation of this non-GAAP number.)
The $45 million charge (27 cents per share) was the result of recognizing
unrealized foreign currency gains and losses caused by the weakening U.S.
dollar.
Approximately one half of the non-cash charge was the result of a
theoretical tax on a theoretical gain calculated as though Apache had prepaid
the U.S. dollar-denominated long-term debt of its Canadian subsidiaries in
stronger Canadian dollars. As the company did not prepay the debt, nor realize a
gain, nor incur a tax, Apache believes it should not record the charge. Although
Apache recorded the charge in the second quarter, the company will seek to
resolve this issue with the Securities and Exchange Commission and the Financial
Accounting Standards Board.
-more-
APACHE REPORTS RECORD PRODUCTION - ADD ONE
Oil production rose nearly 40 percent to 211,701 barrels per day in the
second quarter, compared with 151,480 barrels per day in the year-earlier
period. Natural gas production averaged 1.25 billion cubic feet (Bcf) per day,
up 15 percent from 1.1 Bcf per day in the prior-year period. Natural gas liquids
production averaged 9,342 barrels per day, up from 8,483 barrels per day in the
prior-year period.
Cash from operations increased to $639 million from $388 million in the
prior-year period. (Please see below for a reconciliation of Apache's
calculation of cash from operations, a non-GAAP financial measure.)
For the six months ended June 30, Apache earned net income of $580
million, or $3.59 per diluted share, including $56 million, or 34 cents per
share, in non-cash charges related to foreign currency fluctuations. Excluding
the non-cash charges, Apache earned $636 million, or $3.93 per share, in the
first half. Apache earned $219 million, or $1.47 per share, in the first half of
2002. First-half cash from operations increased to $1.3 billion from $677
million in the prior-year period.
"Record production was just part of the story behind Apache's
second-quarter results," said G. Steven Farris, president and chief executive
officer. "We had significant drilling successes and we have completed $1.5
billion in acquisitions year-to-date, the impact of which will be reflected in
future quarters."
Early in the second quarter, Apache completed its two-part acquisition
of BP assets in the North Sea and the Gulf of Mexico. On July 2, Apache
announced an additional acquisition of fields in the Gulf from Shell Exploration
and Production Company.
"We also maintained our financial flexibility, with a lower
debt-to-capitalization ratio than at the beginning of the year, even with the
acquisitions," Farris said.
-more-
APACHE REPORTS RECORD PRODUCTION - ADD TWO
Apache recently announced several significant discoveries, three of
which opened new plays:
o The Qasr-1X tested at a combined rate of 51.8 million cubic feet
(MMcf) of natural gas and 2,688 barrels of condensate per day from two zones and
logged 606 feet of net pay from six formations. "We believe the Qasr-1X, in
Egypt's Khalda Concession, is the most significant Western Desert discovery in
the last decade, as it opens a new play over widespread acreage," Farris said.
o On the Matruh Concession in Egypt, Apache drilled the Alexandrite-1X
wildcat to 15,300 feet in the Jurassic Lower Safa formation. The well logged 146
net feet of gas and condensate pay; a test of the Kabrit interval flowed at a
daily rate of 20 MMcf and 1,683 barrels of condensate. "These discoveries are
important for Apache and for Egypt because the country shares in the economic
benefit associated with finding oil and gas to meet its energy needs," Farris
said.
o In early July, Apache's Ravensworth-1 well discovered oil in the
Exmouth Sub-Basin offshore Western Australia. "This discovery is the most
important well we've drilled in Australia this year," Farris said.
Apache Corporation is an independent oil and gas exploration and
production company with core operations in the United States, Canada, Egypt, the
United Kingdom North Sea and Western Australia.
-end-
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 capital expenditures and future production. Among the important factors
that could cause actual results to differ materially from those indicated by
such forward-looking statements are delays and difficulties in completing
acquisitions and developing currently owned properties, the failure of
exploratory drilling to result in commercial wells, delays due to the limited
availability of drilling equipment and personnel, fluctuations in oil and gas
prices, general economic conditions and the risk factors detailed from time to
time in Apache's periodic reports and registration statements filed with the
Securities and Exchange Commission.
NOTE: Apache will conduct its quarterly conference call to discuss second
quarter results on Thursday, July 24, at 1 p.m. Central Time. The call will be
webcast live on 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 July 25. To access the telephone playback, dial (719)
457-0820 and provide Apache's confirmation code, 624896.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
FOR THE QUARTER FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------------------- ----------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
REVENUES:
Oil and gas production revenues $ 1,044,330 $ 652,264 $ 2,019,492 $ 1,181,653
Other revenues 10,026 4,051 1,473 2,658
----------- ----------- ----------- -----------
Total revenues 1,054,356 656,315 2,020,965 1,184,311
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Depreciation, depletion and amortization 272,356 210,790 486,705 421,829
Asset retirement obligation accretion 10,445 -- 15,758 --
International impairments -- -- -- 4,600
Lease operating costs 186,286 112,087 320,421 223,230
Gathering and transportation costs 15,131 11,112 26,992 19,345
Severance and other taxes 32,742 17,345 57,296 32,705
General and administrative 30,574 28,015 58,405 53,367
----------- ----------- ----------- -----------
Total operating expenses 547,534 379,349 965,577 755,076
----------- ----------- ----------- -----------
OPERATING INCOME 506,822 276,966 1,055,388 429,235
FINANCING COSTS:
Interest expense 41,428 41,451 79,124 78,333
Amortization of deferred loan costs 536 466 1,067 800
Capitalized interest (12,618) (10,442) (23,850) (20,464)
Interest income (428) (1,043) (1,502) (2,212)
----------- ----------- ----------- -----------
Net financing costs 28,918 30,432 54,839 56,457
----------- ----------- ----------- -----------
Preferred interests of subsidiaries 3,330 5,129 6,692 8,662
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 474,574 241,405 993,857 364,116
Provision for income taxes 230,193 95,095 437,179 137,134
----------- ----------- ----------- -----------
INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE 244,381 146,310 556,678 226,982
Cumulative effect of change in accounting principle, net of tax -- -- 26,632 --
----------- ----------- ----------- -----------
NET INCOME 244,381 146,310 583,310 226,982
Preferred stock dividends 1,420 3,081 2,840 7,989
----------- ----------- ----------- -----------
INCOME ATTRIBUTABLE TO COMMON STOCK $ 242,961 $ 143,229 $ 580,470 $ 218,993
=========== =========== =========== ===========
INCOME ATTRIBUTABLE TO COMMON STOCK
BEFORE CHANGE IN ACCOUNTING PRINCIPLE $ 242,961 $ 143,229 $ 553,838 $ 218,993
=========== =========== =========== ===========
BASIC NET INCOME PER COMMON SHARE
Before change in accounting principle $ 1.50 $ .97 $ 3.45 $ 1.50
=========== =========== =========== ===========
After change in accounting principle $ 1.50 $ .97 $ 3.62 $ 1.50
=========== =========== =========== ===========
DILUTED NET INCOME PER COMMON SHARE
Before change in accounting principle $ 1.49 $ 0.95 $ 3.42 $ 1.47
=========== =========== =========== ===========
After change in accounting principle $ 1.49 $ 0.95 $ 3.59 $ 1.47
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 161,704 147,814 160,486 145,997
=========== =========== =========== ===========
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
FOR THE QUARTER FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
CAPITALIZED COSTS INCURRED:
North America exploration and development $ 246,176 $ 115,856 $ 498,503 $ 253,233
International exploration and development 108,083 57,708 198,032 118,579
---------- ---------- ---------- ----------
$ 354,259 $ 173,564 $ 696,535 $ 371,812
========== ========== ========== ==========
Acquisitions:
Oil and gas properties $ 686,443 $ 4,145 $1,230,814 $ 4,253
Gas gathering, transmission and processing facilities -- -- 5,484 --
Goodwill -- -- -- --
---------- ---------- ---------- ----------
Total Acquisitions $ 686,443 $ 4,145 $1,236,298 $ 4,253
========== ========== ========== ==========
Capitalized interest $ 12,618 $ 10,442 $ 23,850 $ 20,464
Property sales $ -- $ -- $ (286) $ --
JUNE 30, DECEMBER 31,
2003 2002
---------- ------------
BALANCE SHEET DATA:
Preferred interests of subsidiaries $ 437,615 $ 436,626
Total debt $2,349,502 $2,158,815
Shareholders' equity $5,999,524 $4,924,280
Common shares outstanding at end of period 161,797 151,253
NON-GAAP FINANCIAL MEASURES:
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 THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net cash provided by operating activities $ 686,124 $ 418,820 $1,224,165 $ 624,085
Changes in operating assets and liabilities (47,624) (30,610) 58,300 53,333
---------- ---------- ---------- ----------
Cash from operations $ 638,500 $ 388,210 $1,282,465 $ 677,418
========== ========== ========== ==========
Earnings per share before non-cash adjustments, a non-GAAP financial measure,
excludes items (such as the impact of currency fluctuations on deferred taxes)
that management deems not representative of the Company's financial performance.
Management believes this measure provides a clearer understanding of the
Company's financial results and enables investors to better compare its results
with those of other companies.
FOR THE PERIODS ENDED
JUNE 30, 2003
-------------------------
THREE SIX
MONTHS MONTHS
---------- ----------
Earnings per share $ 1.49 $ 3.59
Non-cash adjustments 0.27 0.34
---------- ----------
Earnings per share before non-cash adjustments $ 1.76 $ 3.93
========== ==========
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
FOR THE QUARTER FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------------------- -----------------------------------
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
FINANCIAL DATA:
Revenues $ 1,054,356 $ 656,315 $ 2,020,965 $ 1,184,311
=============== =============== =============== ===============
Income Attributable to Common Stock $ 242,961 $ 143,229 $ 580,470 $ 218,993
=============== =============== =============== ===============
Basic Net Income Per Common Share:
Before change in accounting principle $ 1.50 $ .97 $ 3.45 $ 1.50
=============== =============== =============== ===============
After change in accounting principle $ 1.50 $ .97 $ 3.62 $ 1.50
=============== =============== =============== ===============
Diluted Net Income Per Common Share:
Before change in accounting principle $ 1.49 $ .95 $ 3.42 $ 1.47
=============== =============== =============== ===============
After change in accounting principle $ 1.49 $ .95 $ 3.59 $ 1.47
=============== =============== =============== ===============
Weighted Average Common Shares Outstanding 161,704 147,814 160,486 145,997
=============== =============== =============== ===============
Diluted Shares Outstanding 163,060 152,065 161,827 152,178
=============== =============== =============== ===============
PRODUCTION AND PRICING DATA:
NATURAL GAS VOLUME - Mcf per day
United States 702,109 514,740 627,858 527,516
Canada 317,079 321,641 313,164 318,169
Egypt 113,169 118,101 118,415 117,815
Australia 106,698 126,670 103,941 123,675
North Sea 2,103 -- 1,057 --
Argentina 7,741 8,607 7,267 6,244
--------------- --------------- --------------- ---------------
Total 1,248,899 1,089,759 1,171,702 1,093,419
=============== =============== =============== ===============
AVERAGE NATURAL GAS PRICE PER MCF
United States $ 5.19 $ 3.35 $ 5.64 $ 2.84
Canada 4.81 2.97 5.08 2.65
Egypt 3.77 3.63 4.15 3.34
Australia 1.40 1.31 1.35 1.27
North Sea 2.08 -- 2.08 --
Argentina 0.50 0.38 0.46 0.46
Total 4.61 3.01 4.92 2.65
OIL VOLUME - Barrels per day
United States 72,477 54,462 64,947 55,142
Canada 24,890 24,965 24,813 25,150
Egypt 47,687 43,945 46,704 44,161
Australia 32,673 27,515 31,562 30,213
North Sea 33,387 -- 16,786 --
Argentina 587 593 592 631
--------------- --------------- --------------- ---------------
Total 211,701 151,480 185,404 155,297
=============== =============== =============== ===============
AVERAGE OIL PRICE PER BARREL
United States $ 26.90 $ 25.55 $ 27.81 $ 23.04
Canada 27.80 23.50 29.92 21.18
Egypt 24.45 24.36 27.37 22.89
Australia 26.61 25.34 29.67 22.77
North Sea 25.50 -- 25.50 --
Argentina 27.02 22.87 29.49 21.39
Total 26.19 24.82 28.09 22.64
NGL VOLUME - Barrels per day
United States 7,448 6,869 6,769 6,882
Canada 1,894 1,614 1,652 1,487
--------------- --------------- --------------- ---------------
Total 9,342 8,483 8,421 8,369
=============== =============== =============== ===============
AVERAGE NGL PRICE PER BARREL
United States $ 20.24 $ 16.31 $ 22.07 $ 14.55
Canada 15.46 12.05 19.39 11.55
Total 19.27 15.50 21.55 14.02