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 7:45 A.M. CENTRAL TIME
APACHE'S THIRD-QUARTER EARNINGS RISE 60 PERCENT
TO RECORD $686 MILLION OR $2.05 PER SHARE
HOUSTON, Oct. 27, 2005 - Apache Corporation (NYSE, Nasdaq: APA) said
today that third-quarter earnings increased 60 percent to a record $686 million
or $2.05 per diluted common share despite the impact of Hurricanes Katrina and
Rita on Apache's production and as a result of offsetting strong oil and natural
gas prices. Apache earned $429 million or $1.30 per share, in the prior-year
period.
Cash from operations before changes in operating assets and liabilities
rose 43 percent to a record $1.26 billion in the third quarter from $883 million
in the year-earlier period.*
For the first three quarters of 2005, Apache reported net income of $1.8
billion or $5.49 per share, up 58 percent from $1.16 billion or $3.51 per share
in the year-earlier period. Cash from operations totaled $3.4 billion for the
nine-month period, up 45 percent.
Third-quarter production of 453,845 barrels of oil equivalent (boe) per
day was approximately 1 percent below the prior-year period and 3 percent below
the second-quarter 2005 level as a result of curtailments caused by Hurricanes
Katrina and Rita.
-more-
APACHE'S THIRD-QUARTER EARNINGS RISE 60 PERCENT - ADD 1
Excluding Apache's Gulf Coast Region, Apache's production increased 3
percent in the third quarter from the second quarter.
"Even with the impact of the hurricanes' one-two punch, we had a strong
quarter, with high prices and good production from all of our core areas," said
G. Steven Farris, Apache president and chief executive officer.
"Despite the negative impact of the hurricanes, 2005 should be Apache's
26th year of production growth in the last 27 years," Farris said. "Our
prospects for continued production growth in 2006 are excellent, as we restore
production in the Gulf and continue to grow in Egypt, Australia, the North Sea,
Canada and the U.S. Central Region."
The storms' impact on U.S. oil and gas production drove commodity prices
higher worldwide. This had a significant offsetting influence on Apache's
financial results. Apache received an average of $58.66 per barrel of oil, up 54
percent from the prior-year period, and $6.54 per thousand cubic feet (Mcf) of
gas, up 37 percent. In North America, where Apache produces 76 percent of its
natural gas, the average price was $7.51 per Mcf, up 19 percent.
HURRICANE IMPACT
Apache's production on the Outer Continental Shelf of the Gulf of Mexico
will continue to be curtailed in the fourth quarter of 2005 and the first half
of 2006 because of damage to some Apache facilities as well as damage to some
third-party pipelines and infrastructure that must be repaired before they can
handle Apache production.
-more-
APACHE'S THIRD-QUARTER EARNINGS RISE 60 PERCENT - ADD 2
"The two hurricanes were the most damaging storms ever to hit a region
that provides 25 percent of the nation's domestic oil and gas production,"
Farris said. "A month after Rita, the Minerals Management Service reports that 1
million barrels per day - nearly two-thirds of the industry's oil production in
the Gulf - and 5.6 billion cubic feet of gas per day - more than half of the
industry's gas - is still shut in."
Current gross operated production in Apache's Gulf Coast region, which
includes Apache's Outer Continental Shelf properties as well as fields onshore
Louisiana and Texas, is approximately 556 million cubic feet of gas (MMcf) per
day, or 70 percent of pre-storm levels and 42,756 barrels of oil per day, or 57
percent of pre-hurricane levels.
Apache's net Gulf Coast production averaged 104,871 boe per day in the
third quarter, down 20 percent from the second quarter of 2005. The production
impact will be greater in the fourth quarter because it will be felt over a full
period.
Apache has $750 million in total potential insurance coverage for the
two hurricanes. The company carries property damage insurance of $250 million
per storm (subject to a $7.5 million deductible) and another $100 million in
aggregate for the policy year. The $250 million in coverage is provided through
a large mutual insurer of energy companies and will be prorated if total claims
received by the mutual for a single event exceed $1 billion.
Apache also carries business interruption insurance which will cover up
to $150 million in revenue losses caused by storms in the Gulf during the policy
year. Coverage begins Oct. 29.
-more-
APACHE'S THIRD-QUARTER EARNINGS RISE 60 PERCENT - ADD 3
Storm-related costs, including insurance premiums and increased lease
operating expenses were $18 million in the third quarter. Operating expenses
will continue to be higher than normal because of storm-related factors.
Even with the disruptions from the hurricanes, Apache continued its
active drilling program in the Gulf Coast region, employing 10 rigs during the
third quarter. The company completed 12 producers in the Gulf during the
quarter.
OPERATIONAL RESULTS
- In Egypt, Apache's net production of 81,793 boe per day was 6 percent
above the second-quarter level, driven by Apache's active drilling program and
new gas and condensate sales from the Qasr field.
- In Canada, production of 86,385 boe per day was essentially flat with
the second quarter. Apache has wells with a total of 110 MMcf per day of gross
productive capacity awaiting tie-ins. The company expects to ramp up production
over the next several quarters as processing facilities are commissioned and
wells are connected.
- At the Forties Field in the North Sea, production averaged 68,110 boe
per day, up 4 percent from the second quarter, as Apache continued major
infrastructure upgrades that will increase the field's production and operating
efficiency.
- In Australia, production averaged 39,543 boe per day, up 24 percent
from the second quarter. Oil production increased 22 percent to 16,499 barrels
per day and gas production increased 26 percent to 138 MMcf per day.
-more-
APACHE'S THIRD-QUARTER EARNINGS RISE 60 PERCENT - ADD 4
- In the Central Region, production averaged 64,818 boe per day, up 1
percent from the second quarter. The region completed 53 producers during the
quarter and is operating 21 rigs.
"In spite of two major hurricanes, we expect a record fourth quarter,
record results in 2005 and continued production growth in 2006," Farris said.
Apache Corporation is a large oil and gas exploration and production
company with core operations in the United States, Canada, Egypt, the United
Kingdom North Sea and Australia.
*(This is a non-GAAP measure; see reconciliation below.)
-end-
NOTE: Apache will webcast its conference call live at 1 p.m. Central
Time on Thursday, Oct. 27, from its Web site, www.apachecorp.com. The replay
will be available on the Web site or by dialing (719) 457-0820 and using
Apache's confirmation code, 856315. The telephone replay will be available for
one week beginning at approximately 5 p.m. on Oct. 27.
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 exploration and development opportunities. 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 FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------- ---------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
REVENUES AND OTHER:
Oil and gas production revenues $ 2,051,744 $ 1,414,128 $ 5,452,928 $ 3,814,294
Other 9,308 (7,126) 29,643 (16,620)
----------- ----------- ----------- -----------
2,061,052 1,407,002 5,482,571 3,797,674
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Depreciation, depletion and amortization 357,159 313,520 1,055,583 895,485
Asset retirement obligation accretion 13,527 11,071 40,016 32,723
Lease operating costs (A) 279,995 208,372 768,596 616,387
Gathering and transportation costs 23,571 20,902 73,529 60,698
Severance and other taxes 150,394 47,148 309,173 77,691
General and administrative 50,047 38,583 152,460 123,821
China litigation provision - - - 71,216
----------- ----------- ----------- -----------
Total operating expenses 874,693 639,596 2,399,357 1,878,021
----------- ----------- ----------- -----------
OPERATING INCOME 1,186,359 767,406 3,083,214 1,919,653
FINANCING COSTS:
Interest expense 43,517 41,753 133,590 122,495
Amortization of deferred loan costs 521 652 3,226 1,814
Capitalized interest (14,990) (12,593) (42,653) (38,951)
Interest income (2,201) (962) (4,003) (1,795)
----------- ----------- ----------- -----------
Net financing costs 26,847 28,850 90,160 83,563
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 1,159,512 738,556 2,993,054 1,836,090
Provision for income taxes 472,517 308,081 1,157,546 675,764
----------- ----------- ----------- -----------
NET INCOME 686,995 430,475 1,835,508 1,160,326
Preferred stock dividends 1,420 1,420 4,260 4,260
----------- ----------- ----------- -----------
INCOME ATTRIBUTABLE TO COMMON STOCK $ 685,575 $ 429,055 $ 1,831,248 $ 1,156,066
=========== =========== =========== ===========
BASIC NET INCOME PER COMMON SHARE $ 2.08 $ 1.31 $ 5.57 $ 3.55
=========== =========== =========== ===========
DILUTED NET INCOME PER COMMON SHARE $ 2.05 $ 1.30 $ 5.49 $ 3.51
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 329,219 326,294 328,615 325,657
=========== =========== =========== ===========
(A) Third-quarter 2005 lease operating costs includes $18 million of
storm-related costs.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
FOR THE QUARTER FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------ ------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
COSTS INCURRED:
North America exploration and development $ 617,123 $ 362,054 $1,657,329 $1,064,872
International exploration and development 308,507 207,597 874,165 551,294
---------- ---------- ---------- ----------
$ 925,630 $ 569,651 $2,531,494 $1,616,166
========== ========== ========== ==========
Oil and gas property acquisitions $ 10,172 $ 492,371 $ 35,826 $ 490,832
========== ========== ========== ==========
Capitalized interest $ 14,990 $ 12,593 $ 42,653 $ 38,951
========== ========== ========== ==========
Asset retirement costs $ 39,417 $ 116,944 $ 76,706 $ 137,026
========== ========== ========== ==========
SEPTEMBER 30, DECEMBER 31,
2005 2004
------------- -------------
BALANCE SHEET DATA:
Current Assets $ 1,719,636 $ 1,348,782
Property and Equipment, net 15,745,485 13,860,359
Goodwill 189,252 189,252
Other Assets 131,755 104,087
------------- -------------
Total Assets $ 17,786,128 $ 15,502,480
============= =============
Current Liabilities $ 2,076,295 $ 1,282,891
Long-Term Debt 2,191,785 2,588,390
Deferred Credits and Other Noncurrent Liabilities 3,805,197 3,426,778
Shareholders' Equity 9,712,851 8,204,421
------------- -------------
Total Liabilities and Shareholders' Equity $ 17,786,128 $ 15,502,480
============= =============
Common shares outstanding at end of period 329,294 327,458
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 NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------- --------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net cash provided by operating activities $ 1,330,915 $ 1,021,486 $ 3,160,096 $ 2,320,538
Changes in operating assets and liabilities (67,354) (138,582) 232,181 20,062
----------- ----------- ----------- -----------
Cash from operations before changes in
operating assets and liabilities $ 1,263,561 $ 882,904 $ 3,392,277 $ 2,340,600
=========== =========== =========== ===========
APACHE CORPORATION
FINANCIAL INFORMATION
FOR THE QUARTER FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------- ---------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
FINANCIAL DATA (In thousands, except per share data):
Revenues and other $ 2,061,052 $ 1,407,002 $ 5,482,571 $ 3,797,674
=========== =========== =========== ===========
Income Attributable to Common Stock $ 685,575 $ 429,055 $ 1,831,248 $ 1,156,066
=========== =========== =========== ===========
Basic Net Income Per Common Share $ 2.08 $ 1.31 $ 5.57 $ 3.55
=========== =========== =========== ===========
Diluted Net Income Per Common Share $ 2.05 $ 1.30 $ 5.49 $ 3.51
=========== =========== =========== ===========
Weighted Average Common Shares Outstanding 329,219 326,294 328,615 325,657
=========== =========== =========== ===========
Diluted Shares Outstanding 334,164 330,193 333,602 329,458
=========== =========== =========== ===========
PRODUCTION AND PRICING DATA:
OIL VOLUME - BARRELS PER DAY
United States 64,906 65,017 71,860 67,110
Canada 21,974 24,743 22,226 25,409
Egypt 54,728 52,602 54,110 51,706
Australia 16,499 32,199 15,323 26,041
North Sea 67,713 58,031 64,966 49,866
China 6,533 7,948 9,224 7,121
Argentina 1,339 532 1,074 542
----------- ----------- ----------- -----------
Total 233,692 241,072 238,783 227,795
=========== =========== =========== ===========
AVERAGE OIL PRICE PER BARREL
United States $ 53.85 $ 41.45 $ 47.72 $ 36.90
Canada 60.66 41.34 52.12 36.72
Egypt 60.38 41.51 53.29 35.81
Australia 66.52 46.72 58.06 40.96
North Sea 60.46 25.18 52.33 23.36
China 50.76 35.99 42.35 32.77
Argentina 39.18 31.28 36.96 33.28
Total 58.66 38.04 51.05 34.00
NATURAL GAS VOLUME - MCF PER DAY
United States 586,111 640,467 625,716 649,997
Canada 373,079 325,535 366,892 322,390
Egypt 162,386 141,072 154,839 135,709
Australia 138,267 121,088 120,759 118,587
North Sea 2,384 2,043 2,287 1,769
Argentina 2,715 3,467 3,142 3,985
----------- ----------- ----------- -----------
Total 1,264,942 1,233,672 1,273,635 1,232,437
=========== =========== =========== ===========
AVERAGE NATURAL GAS PRICE PER MCF
United States $ 7.73 $ 5.30 $ 6.71 $ 5.32
Canada 7.17 5.10 6.28 5.10
Egypt 4.97 4.45 4.67 4.41
Australia 1.69 1.58 1.73 1.64
North Sea 10.57 4.36 7.63 4.57
Argentina 1.35 0.78 1.14 0.62
Total 6.54 4.77 5.86 4.79
NGL VOLUME - BARRELS PER DAY
United States 7,097 8,934 8,529 8,218
Canada 2,232 2,794 2,187 2,665
----------- ----------- ----------- -----------
Total 9,329 11,728 10,716 10,883
=========== =========== =========== ===========
AVERAGE NGL PRICE PER BARREL
United States $ 34.54 $ 27.56 $ 31.10 $ 25.25
Canada 32.13 24.94 27.59 22.90
Total 33.97 26.94 30.38 24.67