Exhibit 99.1
CONTACTS:
(MEDIA): TONY LENTINI (713) 296-6227)
DAVID HIGGINS (713) 296-6690)
(INVESTOR): ROBERT DYE (713) 296-6662
(WEB SITE): WWW.APACHECORP.COM
FOR RELEASE AT 8:00 A.M. CENTRAL TIME
APACHE EARNINGS CROSS BILLION-DOLLAR MILESTONE
FULL-YEAR RESULTS BOOSTED BY STRONG COMMODITY PRICES,
RECORD PRODUCTION AND DRILLING RESULTS
Houston (Jan. 29, 2004) - Apache Corporation (NYSE, NASDAQ: APA) today
reported full-year 2003 earnings of $1.1 billion, or $3.43 per diluted common
share, on strong commodity prices and record production, up 105 percent from
$544 million, or $1.80 per share in 2002. All per-share amounts in this release
reflect the recent two-for-one stock split. Cash from operations before changes
in operating assets and liabilities (non-GAAP; see reconciliation below) totaled
$2.8 billion in 2003, up 79 percent from $1.6 billion in 2002.
Apache's fourth-quarter net income of $260 million, or 80 cents per
share, was 45 percent above net income of $179 million, or 59 cents per share,
in 2002. Cash from operations before changes in operating assets and liabilities
(non-GAAP; see reconciliation below) grew 69 percent to $786 million.
Absent the impact of non-cash deferred tax expenses resulting from the
erosion of the U.S. dollar, partially offset by a reduction in Canadian tax
rates, Apache would have earned $1.2 billion or $3.74 per share for the full
year and $284 million or 87 cents per share in the fourth quarter. (Non-GAAP;
see reconciliation below.)
-more-
APACHE EARNINGS SURPASS $1 BILLION--ADD 1
"Strong commodity prices are only part of the story of our 2003 record
results," said G. Steven Farris, president, chief executive officer and chief
operating officer. "In addition to earning over $1 billion--our best year
ever--production increased 22 percent and worldwide reserves increased 26
percent. We replaced 330 percent of our production through a combination of
strategic acquisitions and outstanding drilling success at an all-in 2003
finding cost of $6.07 per barrel of oil equivalent. In a year in which we added
over half a billion barrels of oil equivalent on $3 billion of investments,
Apache reduced its debt to 26 percent of capitalization."
Among the financial and operational highlights for 2003:
o Apache ended the year with proved reserves of 1.7 billion barrels of
oil equivalent (boe), marking the 18th consecutive year of reserve growth;
o Production averaged a record 417,400 boe per day, the 24th year of
production increases in the last 25 years;
o Apache added 234 million boe of proved reserves (154 percent of 2003
production) through exploration and development activities--one of the company's
best drilling performances ever;
o Another 267 million boe were added through acquisitions, including
the company's strategic entree into the North Sea; and
o Apache commenced production from the Zhao Dong block in Bohai Bay,
China.
"We had outstanding exploration success in Egypt and Western Australia
last year that will help drive production and financial results in the future,"
Farris said.
Apache's fourth-quarter production averaged 441,400 boe per day,
compared with 338,300 boe per day in the prior-year period. Liquid hydrocarbon
production averaged 231,400
-more-
APACHE EARNINGS SURPASS $1 BILLION--ADD 2
barrels per day, up 45 percent from the prior-year period, while natural gas
production averaged 1.26 billion cubic feet per day, up 17 percent.
Apache's results include the fourth-quarter after-tax write-down of
$10.2 million reflecting remaining costs associated with the termination of
operations in Poland. The impairment reduced full-year earnings by 3 cents per
diluted common share.
Apache Corporation is a large oil and gas independent with core
operations in the United States, Canada, Egypt, the United Kingdom North Sea and
Western Australia.
NOTE: Apache will conduct its quarterly conference call to discuss
fourth-quarter and full-year results on Thursday, Jan. 29, at 1 p.m. Central
Time. The call will be webcast live and posted 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 Jan 29. To access
the telephone playback, dial (719) 457-0820 and provide Apache's confirmation
code, 516142.
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 and financial results. 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.
-end-
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
FOR THE QUARTER FOR THE YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
--------------------------- ---------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
REVENUES AND OTHER:
Oil and gas production revenues $ 1,069,413 $ 722,178 $ 4,198,920 $ 2,559,748
Other (4,620) 8,195 (8,621) 125
----------- ----------- ----------- -----------
Total revenues and other 1,064,793 730,373 4,190,299 2,559,873
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Depreciation, depletion and amortization 293,696 213,262 1,073,286 843,879
Asset retirement obligation accretion 10,663 -- 37,763 --
International impairments 12,813 15,000 12,813 19,600
Lease operating costs 184,668 118,359 699,663 457,903
Gathering and transportation costs 16,520 9,353 60,460 38,567
Severance and other taxes 22,910 18,540 121,793 67,309
General and administrative 45,427 25,758 138,524 104,588
----------- ----------- ----------- -----------
Total operating expenses 586,697 400,272 2,144,302 1,531,846
----------- ----------- ----------- -----------
OPERATING INCOME 478,096 330,101 2,045,997 1,028,027
FINANCING COSTS:
Interest expense 41,182 38,547 169,090 155,667
Amortization of deferred loan costs 539 529 2,163 1,859
Capitalized interest (14,819) (10,198) (52,891) (40,691)
Interest income (541) (575) (3,290) (4,002)
----------- ----------- ----------- -----------
Net financing costs 26,361 28,303 115,072 112,833
----------- ----------- ----------- -----------
Preferred interests of subsidiaries -- 3,640 8,668 16,224
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 451,735 298,158 1,922,257 898,970
Provision for income taxes 190,121 117,339 827,004 344,641
----------- ----------- ----------- -----------
INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLE 261,614 180,819 1,095,253 554,329
Cumulative effect of change in accounting
principle, net of tax -- -- 26,632 --
----------- ----------- ----------- -----------
NET INCOME 261,614 180,819 1,121,885 554,329
Preferred stock dividends 1,420 1,420 5,680 10,815
----------- ----------- ----------- -----------
INCOME ATTRIBUTABLE TO COMMON STOCK $ 260,194 $ 179,399 $ 1,116,205 $ 543,514
=========== =========== =========== ===========
INCOME ATTRIBUTABLE TO COMMON STOCK
BEFORE CHANGE IN ACCOUNTING PRINCIPLE $ 260,194 $ 179,399 $ 1,089,573 $ 543,514
=========== =========== =========== ===========
BASIC NET INCOME PER COMMON SHARE
Before change in accounting principle $ 0.80 $ 0.59 $ 3.38 $ 1.83
=========== =========== =========== ===========
After change in accounting principle $ 0.80 $ 0.59 $ 3.46 $ 1.83
=========== =========== =========== ===========
DILUTED NET INCOME PER COMMON SHARE
Before change in accounting principle $ 0.80 $ 0.59 $ 3.35 $ 1.80
=========== =========== =========== ===========
After change in accounting principle $ 0.80 $ 0.59 $ 3.43 $ 1.80
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 324,248 302,582 322,498 297,234
=========== =========== =========== ===========
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
FOR THE QUARTER FOR THE YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
----------------------------- -----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
CAPITALIZED COSTS INCURRED:
North America exploration and development $ 280,910 $ 136,585 $ 1,019,036 $ 560,802
International exploration and development 139,386 99,040 466,215 299,382
------------ ------------ ------------ ------------
$ 420,296 $ 235,625 $ 1,485,251 $ 860,184
============ ============ ============ ============
Acquisitions:
Oil and gas properties $ 66,794 $ 321,852 $ 1,568,106 $ 351,707
Gas gathering, transmission and processing
facilities -- 2,875 5,484 2,875
------------ ------------ ------------ ------------
Total Acquisitions $ 66,794 $ 324,727 $ 1,573,590 $ 354,582
============ ============ ============ ============
Asset Retirement Obligation Costs $ (49,561) $ -- $ 333,474 $ --
Capitalized interest $ 14,819 $ 10,198 $ 52,891 $ 40,691
Property sales $ (42,742) $ (7,984) $ (58,944) $ (7,043)
DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
BALANCE SHEET DATA:
Current Assets $ 899,072 $ 766,781
Property and Equipment, net 11,260,085 8,465,585
Goodwill 189,252 189,252
Other Assets 67,717 38,233
------------ ------------
Total Assets $ 12,416,126 $ 9,459,851
============ ============
Current Liabilities $ 820,378 $ 532,235
Long-Term Debt 2,326,966 2,158,815
Deferred Credits and Other Noncurrent Liabilities 2,735,984 1,407,895
Preferred Interests of Subsidiaries -- 436,626
Shareholders' Equity 6,532,798 4,924,280
------------ ------------
Total Liabilities and Shareholders' Equity $ 12,416,126 $ 9,459,851
============ ============
Common shares outstanding at end of period 324,497 302,506
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 FOR THE YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
----------------------------- -----------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net cash provided by operating activities $ 626,791 $ 371,449 $2,705,900 $1,380,718
Changes in operating assets and liabilities 159,309 94,333 94,658 186,152
---------- ---------- ---------- ----------
Cash from operations before changes in
operating assets and liabilities $ 786,100 $ 465,782 $2,800,558 $1,566,870
========== ========== ========== ==========
Earnings and earnings per share absent non-cash deferred tax impacts, a non-GAAP
measure, exclude certain tax items that management believes distort the
Company's results of operations. These items relate to deferred tax expense
resulting from currency fluctuations and the effects of a tax rate reduction in
Canada. Management believes that, during periods of volatility in foreign
currency exchange rates and foreign tax rates, the exclusion of these items from
earnings and earnings per share provides a more representative report of the
Company's financial performance and will enable investors to better compare our
results with other companies by eliminating items that have distinctive effects
on the Company.
FOR THE QUARTER FOR THE YEAR
ENDED DECEMBER 31, 2003 ENDED DECEMBER 31, 2003
----------------------- -------------------------
EARNINGS EPS EARNINGS EPS
--------- ------ ----------- ------
Earnings and earnings per share $ 260,194 $ 0.80 $ 1,116,205 $ 3.43
--------- ------ ----------- ------
Deferred tax expense resulting from
currency fluctuations 94,680 0.29 171,930 0.53
Effects of tax rate reduction in Canada (71,340) (0.22) (71,340) (0.22)
--------- ------ ----------- ------
Earnings and earnings per share absent
non-cash deferred tax impacts $ 283,534 $ 0.87 $ 1,216,795 $ 3.74
========= ====== =========== ======
APACHE CORPORATION
FINANCIAL INFORMATION
FOR THE QUARTER FOR THE YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------------------ ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
FINANCIAL DATA (In thousands, except per share data):
Revenues and other $ 1,064,793 $ 730,373 $ 4,190,299 $ 2,559,873
============= ============= ============= =============
Income Attributable to Common Stock $ 260,194 $ 179,399 $ 1,116,205 $ 543,514
============= ============= ============= =============
Basic Net Income Per Common Share:
Before change in accounting principle $ 0.80 $ 0.59 $ 3.38 $ 1.83
============= ============= ============= =============
After change in accounting principle $ 0.80 $ 0.59 $ 3.46 $ 1.83
============= ============= ============= =============
Diluted Net Income Per Common Share:
Before change in accounting principle $ 0.80 $ 0.59 $ 3.35 $ 1.80
============= ============= ============= =============
After change in accounting principle $ 0.80 $ 0.59 $ 3.43 $ 1.80
============= ============= ============= =============
Weighted Average Common Shares Outstanding 324,248 302,582 322,498 297,234
============= ============= ============= =============
Diluted Shares Outstanding 327,280 304,905 325,330 304,612
============= ============= ============= =============
PRODUCTION AND PRICING DATA:
NATURAL GAS VOLUME - MCF PER DAY
United States 685,704 466,834 665,156 503,310
Canada 328,089 364,365 318,528 329,344
Egypt 116,579 137,051 113,554 122,655
Australia 121,881 101,127 111,061 117,802
North Sea 1,400 -- 1,714 --
China -- -- -- --
Argentina 6,186 5,335 7,144 7,276
------------- ------------- ------------- -------------
Total 1,259,839 1,074,712 1,217,157 1,080,387
============= ============= ============= =============
AVERAGE NATURAL GAS PRICE PER MCF
United States $ 4.70 $ 3.86 $ 5.22 $ 3.15
Canada 4.16 3.28 4.69 2.74
Egypt 4.13 4.05 4.18 3.71
Australia 1.57 1.24 1.44 1.28
North Sea 5.94 -- 2.77 --
China -- -- -- --
Argentina 0.46 0.39 0.47 0.42
Total 4.18 3.43 4.61 2.87
OIL VOLUME - BARRELS PER DAY
United States 71,982 49,310 69,404 53,009
Canada 25,450 25,344 25,220 25,220
Egypt 47,982 44,460 47,551 43,772
Australia 26,553 30,553 30,589 30,361
North Sea 40,950 -- 29,260 --
China 7,943 -- 2,791 --
Argentina 557 586 579 617
------------- ------------- ------------- -------------
Total 221,417 150,253 205,394 152,979
============= ============= ============= =============
AVERAGE OIL PRICE PER BARREL
United States $ 27.38 $ 27.64 $ 27.48 $ 25.31
Canada 28.58 25.39 29.06 23.46
Egypt 28.64 26.12 27.64 24.65
Australia 31.35 27.46 29.87 25.17
North Sea 24.13 -- 25.40 --
China 26.82 -- 26.33 --
Argentina 29.53 26.29 29.23 23.90
Total 27.65 26.77 27.76 24.78
NGL VOLUME - BARRELS PER DAY
United States 8,504 6,263 7,578 6,691
Canada 1,515 2,704 1,565 1,756
------------- ------------- ------------- -------------
Total 10,019 8,967 9,143 8,447
============= ============= ============= =============
AVERAGE NGL PRICE PER BARREL
United States $ 23.50 $ 17.94 $ 21.70 $ 15.29
Canada 20.51 12.14 19.25 12.41
Total 23.05 16.19 21.28 14.69
APACHE CORPORATION
CALCULATION OF FINDING COSTS
For the Year Ended December 31, 2003
(In thousands, except per BOE data)
DOMESTIC CANADA N. AMERICA AUSTRALIA EGYPT
---------- ---------- ---------- ---------- ----------
FINDING COSTS *
E & D (excluding
cap. int. & GTM) $ 439,541 $ 579,495 $1,019,036 $ 128,261 $ 242,652
Acquisitions
(FCP only) 846,736 6,366 853,102 27,105 --
---------- ---------- ---------- ---------- ----------
Total All Sources $1,286,277 $ 585,861 $1,872,138 $ 155,366 $ 242,652
---------- ---------- ---------- ---------- ----------
RESERVES ADDED (MBOE)
E & D 54,304 80,237 134,541 32,965 51,333
Acquisitions 114,137 1,325 115,462 6,749 --
Revisions 1,967 (1,351) 616 (2) 1,363
---------- ---------- ---------- ---------- ----------
Total All Sources 170,408 80,211 250,619 39,712 52,696
---------- ---------- ---------- ---------- ----------
E & D and Revisions 56,271 78,886 135,157 32,963 52,696
---------- ---------- ---------- ---------- ----------
FINDING COST PER BOE: *
E & D Only $ 8.09 $ 7.22 $ 7.57 $ 3.89 $ 4.73
E & D and Revisions 7.81 7.35 7.54 3.89 4.60
Acquisitions Only 7.42 4.80 7.39 4.02 --
ALL SOURCES 7.55 7.30 7.47 3.91 4.60
NORTH SEA CHINA OTHER WORLDWIDE
---------- ---------- ---------- ----------
FINDING COSTS *
E & D (excluding
cap. int. & GTM) $ 60,204 $ 30,729 $ 4,369 $1,485,251
Acquisitions
(FCP only) 687,899 -- -- 1,568,106
---------- ---------- ---------- ----------
Total All Sources $ 748,103 $ 30,729 $ 4,369 $3,053,357
---------- ---------- ---------- ----------
RESERVES ADDED (MBOE)
E & D 14,506 620 368 234,333
Acquisitions 144,808 267,019
Revisions -- (114) -- 1,863
---------- ---------- ---------- ----------
Total All Sources 159,314 506 368 503,215
---------- ---------- ---------- ----------
E & D and Revisions 14,506 506 368 236,196
---------- ---------- ---------- ----------
FINDING COST PER BOE: *
E & D Only $ 4.15 $ 49.56 $ 11.87 $ 6.34
E & D and Revisions 4.15 60.73 11.87 6.29
Acquisitions Only 4.75 -- -- 5.87
ALL SOURCES 4.70 60.73 11.87 6.07
* Excludes Asset Retirement Obligation Costs of $333 million, or
$0.66 / BOE, Worldwide.
APACHE CORPORATION 2003 RESERVE SUMMARY
US CANADA N. AMERICA EGYPT AUSTRALIA
----------------------------------------------------------------------------
OIL, MBO
12/31/02 BAL 333,422 163,639 497,061 74,791 52,248
Production (28,098) (9,776) (37,874) (17,356) (11,165)
Additions 35,378 15,649 51,027 15,090 11,712
Sales (1,176) (1,692) (2,868) 0 0
Purchases 48,886 574 49,460 0 309
Revisions 953 12 965 648 (2)
----------------------------------------------------------------------------
12/31/03 BAL 389,365 168,406 557,771 73,173 53,102
============================================================================
GAS, MMCF
12/31/02 BAL 1,784,093 1,338,751 3,122,844 370,667 557,656
Production (242,782) (116,263) (359,045) (41,447) (40,537)
Additions 113,552 387,533 501,085 217,455 127,516
Sales (23,054) (671) (23,725) 0 0
Purchases 391,510 4,510 396,020 0 38,638
Revisions 6,073 (8,177) (2,104) 4,292 0
----------------------------------------------------------------------------
12/31/03 BAL 2,029,392 1,605,683 3,635,075 550,967 683,273
============================================================================
MMBOE
12/31/02 BAL 630,771 386,764 1,017,535 136,569 145,191
Production (68,562) (29,153) (97,715) (24,264) (17,921)
Additions 54,306 80,237 134,543 51,333 32,965
Sales (5,018) (1,804) (6,822) 0 0
Purchases 114,137 1,325 115,462 0 6,749
Revisions 1,965 (1,351) 614 1,363 (2)
----------------------------------------------------------------------------
12/31/03 BAL 727,599 436,019 1,163,617 165,001 166,981
============================================================================
REPLACEMENT RATE
Adds only 79% 275% 138% 212% 184%
Adds & Rev 82% 271% 138% 217% 184%
All Adds 249% 275% 256% 217% 222%
GROWTH % 15.4% 12.7% 14.4% 20.8% 15.0%
R/P 10.6 15.0 11.9 6.8 9.3
RESV, % GAS 46% 61% 52% 56% 68%
PROD, % GAS 59% 66% 61% 28% 38%
CHINA ARGENTINA NORTH SEA TOTAL INTL TOTAL
------------------------------------------------------------------------
OIL, MBO
12/31/02 BAL 11,333 1,332 0 139,704 636,765
Production (1,019) (211) (10,680) (40,431) (78,305)
Additions 620 20 14,489 41,931 92,958
Sales 0 0 0 0 (2,868)
Purchases 0 0 144,071 144,380 193,840
Revisions (114) 1 0 533 1,498
------------------------------------------------------------------------
12/31/03 BAL 10,820 1,142 147,880 286,117 843,888
========================================================================
GAS, MMCF
12/31/02 BAL 0 3,469 0 931,792 4,054,636
Production 0 (2,607) (626) (85,217) (444,262)
Additions 0 2,084 105 347,160 848,245
Sales 0 (196) 0 (196) (23,921)
Purchases 0 0 4,423 43,061 439,081
Revisions 0 1 0 4,293 2,189
------------------------------------------------------------------------
12/31/03 BAL 0 2,751 3,902 1,240,893 4,875,968
========================================================================
MMBOE
12/31/02 BAL 11,333 1,910 0 295,003 1,312,538
Production (1,019) (646) (10,784) (54,634) (152,349)
Additions 620 367 14,506 99,791 234,333
Sales 0 (33) 0 (33) (6,855)
Purchases 0 0 144,808 151,557 267,019
Revisions (114) 1 0 1,249 1,863
------------------------------------------------------------------------
12/31/03 BAL 10,820 1,601 148,530 492,932 1,656,549
========================================================================
REPLACEMENT RATE
Adds only 61% 57% 135% 183% 154%
Adds & Rev 50% 57% 135% 185% 155%
All Adds 50% 57% 1,477% 462% 330%
GROWTH % (4.5%) (16.2%) NA 67.1% 26.2%
R/P 10.6 2.5 13.8 9.0 10.9
RESV, % GAS 0% 29% 0% 42% 49%
PROD, % GAS 0% 67% 1% 26% 49%