UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ___________________ to _____________________
Commission File Number 1-4300
APACHE CORPORATION
-----------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 41-0747868
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Suite 100, One Post Oak Central
2000 Post Oak Boulevard, Houston, TX 77056-4400
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (713) 296-6000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---- ----
Number of shares of Registrant's common stock, outstanding as of June 30, 2001
124,979,556
We are filing this Amendment No. 1 to our Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2001, in order to include the following
footnote number 8 to our unaudited consolidated financial statements. The
footnote provides certain consolidating information for our wholly-owned
subsidiaries. No restatement of the unaudited financial statements is required,
or being made, nor have any of the numbers in the unaudited financial statements
changed. The footnote merely sets forth some of the data used to prepare the
unaudited consolidated financial statements as required by Rule 3-10 of
Regulation S-X under the Securities Exchange Act of 1934.
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, we are
including the complete text of our quarterly unaudited consolidated financial
statements, including the additional footnote.
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(UNAUDITED)
<Table>
<Caption>
FOR THE QUARTER FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------- --------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(In thousands, except per common share data)
REVENUES:
Oil and gas production revenues $ 796,045 $ 488,206 $ 1,597,643 $ 934,323
Equity in income of affiliates -- 310 -- 1,530
Other revenues (losses) 4,398 (2,103) (2,057) (1,249)
----------- ----------- ----------- -----------
800,443 486,413 1,595,586 934,604
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Depreciation, depletion and amortization 208,652 136,338 381,182 268,487
International impairments 65,000 -- 65,000 --
Lease operating costs 101,420 58,492 191,527 119,953
Severance and other taxes 20,248 11,117 41,541 20,083
Administrative, selling and other 23,193 16,593 43,569 31,242
Financing costs:
Interest expense 49,254 41,615 93,966 83,183
Amortization of deferred loan costs 532 453 1,034 1,732
Capitalized interest (13,783) (14,824) (28,868) (28,841)
Interest income (1,375) (564) (2,252) (1,104)
----------- ----------- ----------- -----------
453,141 249,220 786,699 494,735
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 347,302 237,193 808,887 439,869
Provision for income taxes 141,557 92,961 320,941 178,641
----------- ----------- ----------- -----------
INCOME BEFORE CHANGE IN ACCOUNTING
PRINCIPLE 205,745 144,232 487,946 261,228
Cumulative effect of change in accounting principle,
net of income tax -- -- -- (7,539)
----------- ----------- ----------- -----------
NET INCOME 205,745 144,232 487,946 253,689
Preferred stock dividends 4,877 4,908 9,785 10,172
INCOME ATTRIBUTABLE TO COMMON STOCK $ 200,868 $ 139,324 $ 478,161 $ 243,517
=========== =========== =========== ===========
BASIC NET INCOME PER COMMON SHARE:
Before change in accounting principle $ 1.60 $ 1.22 $ 3.84 $ 2.20
Cumulative effect of change in accounting principle -- -- -- (.06)
----------- ----------- ----------- -----------
$ 1.60 $ 1.22 $ 3.84 $ 2.14
=========== =========== =========== ===========
DILUTED NET INCOME PER COMMON SHARE:
Before change in accounting principle $ 1.55 $ 1.18 $ 3.69 $ 2.15
Cumulative effect of change in accounting principle -- -- -- (.07)
----------- ----------- ----------- -----------
$ 1.55 $ 1.18 $ 3.69 $ 2.08
=========== =========== =========== ===========
</Table>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
1
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<Table>
<Caption>
FOR THE SIX MONTHS ENDED
JUNE 30,
2001 2000
----------- -----------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 487,946 $ 253,689
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 381,182 268,487
Provision for deferred income taxes 192,158 112,968
International impairments 65,000 --
Cumulative effect of change in accounting principle -- 7,539
Other (20,745) 3,844
Other non-cash items 3,315 (1,378)
Changes in operating assets and liabilities:
(Increase) decrease in receivables 30,530 (98,416)
(Increase) decrease in advances to oil and gas ventures and other (14,011) (4,093)
(Increase) decrease in deferred charges and other (3,025) (3,848)
(Increase) decrease in product inventory 869 (13,829)
Increase (decrease) in payables (25,658) 42,658
Increase (decrease) in accrued expenses 22,394 (15,056)
Increase (decrease) in advances from gas purchasers (6,558) (13,785)
Increase (decrease) in deferred credits and noncurrent liabilities (23,318) 8,467
----------- -----------
Net cash provided by operating activities 1,090,079 547,247
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (776,450) (425,738)
Non-cash portion of net oil and gas property additions 98,381 (5,799)
Acquisition of Fletcher subsidiaries (465,018) --
Acquisition of Repsol YPF properties (446,933) (117,322)
Acquisition of Collins & Ware properties -- (316,906)
Proceeds from sales of oil and gas properties 238,715 21,224
Other, net (46,452) (7,291)
----------- -----------
Net cash used in investing activities (1,397,757) (851,832)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings 1,531,281 537,438
Payments on long-term debt (1,111,613) (198,581)
Dividends paid (9,778) (25,795)
Payments to repurchase Series C Preferred Stock -- (2,613)
Common stock activity, net 7,125 17,692
Treasury stock activity, net (16,006) (17,727)
Cost of debt and equity transactions (1,181) (3)
----------- -----------
Net cash provided by financing activities 399,828 310,411
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 92,150 5,826
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 37,173 13,171
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 129,323 $ 18,997
=========== ===========
</Table>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
2
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
------------ ------------
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 129,323 $ 37,173
Receivables 569,821 506,723
Inventories 77,452 54,764
Advances to oil and gas ventures and other 50,133 31,360
Oil and gas derivative instruments 11,279 --
------------ ------------
838,008 630,020
------------ ------------
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full cost accounting:
Proved properties 10,615,417 9,423,922
Unproved properties and properties under
development, not being amortized 1,064,371 977,491
Gas gathering, transmission and processing facilities 708,570 573,621
Other 159,860 119,590
------------ ------------
12,548,218 11,094,624
Less: Accumulated depreciation, depletion and amortization (4,722,439) (4,282,162)
------------ ------------
7,825,779 6,812,462
------------ ------------
OTHER ASSETS:
Goodwill, net 198,893 --
Oil and gas derivative instruments 62,799 --
Deferred charges and other 39,914 39,468
------------ ------------
$ 8,965,393 $ 7,481,950
============ ============
</Table>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
3
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- -----------
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 63,000 $ 25,000
Oil and gas derivative instruments 50,989 --
Accounts payable 307,543 259,120
Accrued operating expense 32,020 23,893
Accrued exploration and development 242,291 143,916
Accrued compensation and benefits 19,560 34,695
Accrued interest 34,323 25,947
Accrued income taxes 48,478 9,123
Other accrued expenses 15,286 31,653
----------- -----------
813,490 553,347
----------- -----------
LONG-TERM DEBT 2,574,926 2,193,258
----------- -----------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes 905,632 699,833
Advances from gas purchasers 146,548 153,106
Oil and gas derivative instruments 74,640 --
Other 109,817 127,766
----------- -----------
1,236,637 980,705
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock, no par value, 5,000,000 shares authorized --
Series B, 5.68% Cumulative Preferred Stock,
100,000 shares issued and outstanding 98,387 98,387
Series C, 6.5% Conversion Preferred Stock, 138,482 shares
issued and outstanding 208,207 208,207
Common stock, $1.25 par, 215,000,000 shares authorized,
128,315,528 and 126,500,776 shares issued, respectively 160,394 158,126
Paid-in capital 2,280,150 2,173,183
Retained earnings 1,704,692 1,226,531
Treasury stock, at cost, 3,335,972 and 2,866,028 shares,
respectively (94,679) (69,562)
Accumulated other comprehensive loss (16,811) (40,232)
----------- -----------
4,340,340 3,754,640
----------- -----------
$ 8,965,393 $ 7,481,950
=========== ===========
</Table>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
4
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
(UNAUDITED)
<Table>
<Caption>
SERIES B SERIES C
COMPREHENSIVE PREFERRED PREFERRED COMMON PAID-IN RETAINED
(In thousands) INCOME STOCK STOCK STOCK CAPITAL EARNINGS
------------- --------- --------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1999 $ 98,387 $ 210,490 $ 145,504 $ 1,717,027 $ 558,721
Comprehensive income:
Net income $ 253,689 -- -- -- -- 253,689
Currency translation adjustments (19,700) -- -- -- -- --
Unrealized loss on marketable
securities, net of applicable income
tax benefit of $84 (129) -- -- -- -- --
-----------
Comprehensive income $ 233,860
===========
Dividends:
Preferred -- -- -- -- (9,842)
Common ($.07 per share) -- -- -- -- (7,961)
Common shares issued -- -- 751 21,990 --
Series C Preferred Stock purchased -- (2,283) -- -- (330)
Treasury shares purchased, net -- -- -- 225 --
----------- ----------- ----------- ----------- -----------
BALANCE AT JUNE 30, 2000 $ 98,387 $ 208,207 $ 146,255 $ 1,739,242 $ 794,277
=========== =========== =========== =========== ===========
BALANCE AT DECEMBER 31, 2000 $ 98,387 $ 208,207 $ 158,126 $ 2,173,183 $ 1,226,531
Comprehensive income:
Net income $ 487,946 -- -- -- -- 487,946
Currency translation adjustments 8,284 -- -- -- -- --
Unrealized loss on marketable
securities, net of applicable income
tax benefit of $228 (443) -- -- -- -- --
Unrealized gain on derivatives, net
of applicable income tax provision
of $13,961 15,580 -- -- -- -- --
-----------
Comprehensive income $ 511,367
===========
Preferred dividends -- -- -- -- (9,785)
Common shares issued -- -- 2,268 106,967 --
Treasury shares purchased, net -- -- -- -- --
----------- ----------- ----------- ----------- -----------
BALANCE AT JUNE 30, 2001 $ 98,387 $ 208,207 $ 160,394 $ 2,280,150 $ 1,704,692
=========== =========== =========== =========== ===========
<Caption>
ACCUMULATED
OTHER TOTAL
TREASURY COMPREHENSIVE SHAREHOLDERS'
(In thousands) STOCK INCOME (LOSS) EQUITY
----------- ------------- -------------
BALANCE AT DECEMBER 31, 1999 $ (52,256) $ (8,446) $ 2,669,427
Comprehensive income:
Net income -- -- 253,689
Currency translation adjustments -- (19,700) (19,700)
Unrealized loss on marketable
securities, net of applicable income
tax benefit of $84 -- (129) (129)
Comprehensive income
Dividends:
Preferred -- -- (9,842)
Common ($.07 per share) -- -- (7,961)
Common shares issued -- -- 22,741
Series C Preferred Stock purchased -- -- (2,613)
Treasury shares purchased, net (17,437) -- (17,212)
----------- ----------- -----------
BALANCE AT JUNE 30, 2000 $ (69,693) $ (28,275) $ 2,888,400
=========== =========== ===========
BALANCE AT DECEMBER 31, 2000 $ (69,562) $ (40,232) $ 3,754,640
Comprehensive income:
Net income -- -- 487,946
Currency translation adjustments -- 8,284 8,284
Unrealized loss on marketable
securities, net of applicable income
tax benefit of $228 -- (443) (443)
Unrealized gain on derivatives, net
of applicable income tax provision
of $13,961 -- 15,580 15,580
Comprehensive income
Preferred dividends -- -- (9,785)
Common shares issued -- -- 109,235
Treasury shares purchased, net (25,117) -- (25,117)
----------- ----------- -----------
BALANCE AT JUNE 30, 2001 $ (94,679) $ (16,811) $ 4,340,340
=========== =========== ===========
</Table>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
5
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
These financial statements have been prepared by Apache Corporation (Apache
or the Company) without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC), and reflect all adjustments which are,
in the opinion of management, necessary for a fair statement of the results for
the interim periods, on a basis consistent with the annual audited financial
statements. All such adjustments are of a normal recurring nature. Certain
information, accounting policies, and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the financial statements and the summary of significant
accounting policies and notes thereto included in the Company's most recent
annual report on Form 10-K.
Change in Accounting Principle -- In December 2000, the staff of the SEC
announced that commodity inventories should be carried at cost, not market
value, despite longstanding industry practice. As a result, Apache changed its
accounting for crude oil inventories in the fourth quarter of 2000, retroactive
to the beginning of the year, and recognized a non-cash cumulative-effect charge
to earnings effective January 1, 2000. Quarterly results for 2000 have been
restated to reflect this change in accounting.
1. ACQUISITIONS AND DIVESTITURES
Acquisitions -- In June 2000, Apache completed the acquisition of
long-lived producing properties in the Permian Basin and South Texas from
Collins & Ware, Inc. (Collins & Ware) for $320.7 million. The acquisition
included estimated proved reserves of 83.7 million barrels of oil equivalent
(MMboe) as of the acquisition date. One-third of the reserves are liquid
hydrocarbons.
In August 2000, Apache completed the acquisition of a Delaware limited
liability company (LLC) owned by subsidiaries of Occidental Petroleum
Corporation (Occidental) and the related natural gas production for $321.2
million, plus future payments of approximately $44.0 million over four years.
The Occidental properties are located in 32 fields on 93 blocks on the Outer
Continental Shelf of the Gulf of Mexico. The acquisition included estimated
proved reserves of 53.1 MMboe as of the acquisition date.
In December 2000, Apache completed the acquisition of Canadian properties
from Canadian affiliates of Phillips Petroleum Company (Phillips) for $490.3
million. The acquisition included estimated proved reserves of approximately
70.0 MMboe as of the acquisition date. The properties comprise approximately
212,000 net developed acres and 275,000 net undeveloped acres, 786 square miles
of 3-D seismic and 4,155 miles of 2-D seismic located in the Zama area of
Northwest Alberta. The assets also include three sour gas plants with a total
capacity of 150 million cubic feet (MMcf) per day, 13 compressor stations and
150 miles of owned and operated gas gathering lines.
On March 22, 2001, Apache completed the acquisition of substantially all of
Repsol YPF's (Repsol) oil and gas concession interests in Egypt for
approximately $446.9 million in cash, subject to normal post closing
adjustments. The properties include interests in seven Western Desert
concessions and have estimated proved reserves of 66 MMboe as of the acquisition
date. The Company already holds interests in five of the seven concessions.
On March 27, 2001, Apache completed the acquisition of subsidiaries of
Fletcher Challenge Energy (Fletcher) for approximately $465.0 million in cash
and 1.64 million restricted shares of Apache common stock issued to Shell
Overseas Holdings (valued at $61.04 per share), subject to normal post closing
adjustments. The transaction included properties located in Canada's Western
Sedimentary Basin and in Argentina and estimated proved reserves of 120.8 MMboe
as of the acquisition date. Apache assumed a liability of $103.5 million
representing the fair value of derivative instruments and fixed-price commodity
contracts entered into by Fletcher.
6
The Fletcher and Repsol purchase prices were allocated to the assets
acquired and liabilities assumed based upon their fair values on the date of
acquisition, as follows:
<Table>
<Caption>
FLETCHER REPSOL
--------- ---------
(In thousands)
Value of properties acquired, including gathering and
transportation facilities $ 571,718 $ 299,933
Goodwill 107,200 90,000
Derivative instruments and fixed-price contracts (103,486) --
Common stock issued (100,325) --
Working capital acquired, net (8,202) 57,000
Deferred income tax liability (1,887) --
--------- ---------
Cash paid, net of cash acquired $ 465,018 $ 446,933
========= =========
</Table>
The following unaudited pro forma information shows the effect on the
Company's consolidated results of operations as if the Fletcher, Repsol, Collins
& Ware, Occidental and Phillips acquisitions occurred on January 1, 2000. The
pro forma information is based on numerous assumptions and is not necessarily
indicative of future results of operations.
<Table>
<Caption>
FOR THE SIX MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2000
------------------------ ------------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
----------- ---------- ----------- -----------
(In thousands, except per share data)
Revenues $1,595,586 $1,702,541 $ 934,604 $1,389,117
Net income 487,946 513,523 253,689 365,238
Preferred stock dividends 9,785 9,785 10,172 10,172
Income attributable to common stock 478,161 503,738 243,517 355,066
Net income per common share:
Basic $ 3.84 $ 4.02 $ 2.14 $ 2.85
Diluted 3.69 3.86 2.08 2.76
Average common shares outstanding 124,666 125,438 113,892 124,735
</Table>
Divestitures -- During the six months ended June 30, 2001, Apache sold 66.2
MMboe of proved reserves from largely marginal United States and Canadian
properties, collecting cash of $238.7 million.
2. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Apache periodically enters into commodity derivatives contracts to manage
its exposure to oil and gas price volatility. Commodity derivatives contracts,
which are usually placed with major financial institutions that the Company
believes are minimal credit risks, may take the form of futures contracts, swaps
or options. The oil and gas reference prices upon which these commodity
derivatives contracts are based, reflect various market indices that have a high
degree of historical correlation with actual prices received by the Company.
Realized gains and losses from the Company's price risk management activities
are recognized in oil and gas production revenues when the associated production
occurs and the resulting cash flows are reported as cash flows from operating
activities.
Effective January 1, 2001, Apache adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities". SFAS No. 133 establishes accounting and reporting standards
requiring that all derivative instruments (including derivative instruments
embedded in other contracts), as defined, be recorded in the balance sheet as
either an asset or liability measured at fair value and requires that changes in
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Hedge accounting treatment allows unrealized gains and losses
to be deferred in other comprehensive income (for the effective portion of the
hedge) until such time as the forecasted transaction occurs, and requires that a
company formally document, designate, and assess the effectiveness of derivative
instruments that receive hedge accounting treatment. Upon adoption, Apache
formally documented and designated all hedging relationships and
7
verified that its hedging instruments are effective in offsetting changes in
actual prices received by the Company. Such effectiveness is monitored at least
quarterly and any ineffectiveness is reported in other revenues (losses) in the
statement of consolidated operations.
Apache's derivative positions break down into three general categories:
advances from gas purchasers, Apache hedging activity and derivatives inherited
as part of the Fletcher acquisition. The carrying values at transition and June
30, 2001 are summarized below:
<Table>
<Caption>
TRANSITION
JANUARY 1, 2001 JUNE 30, 2001
--------------- --------------
(In thousands)
Advances from Gas Purchasers:
Derivatives -- asset $ 121,453 $ 74,078
Embedded derivatives -- liability (121,453) (74,078)
Apache Hedging Activity:
Fixed-price swaps $ (30,872) $ (21,420)
Zero-cost collars -- time value (35,083) 8,758
Zero-cost collars -- intrinsic value (50,274) 2,224
-------------- --------------
$ (116,229) $ (10,438)
============== ==============
</Table>
<Table>
<Caption>
ACQUISITION
CLOSING DATE
MARCH 27, 2001 JUNE 30, 2001
-------------- --------------
(In thousands)
Fletcher Acquisition:
Derivatives $ (89,401) $ (32,540)
Fixed-price physical contracts (14,085) (8,573)
-------------- --------------
$ (103,486) $ (41,113)
============== ==============
</Table>
On the transition date, January 1, 2001, Apache recognized a derivative
asset of $121.5 million reflecting the fair value of gas price swaps entered
into in connection with certain advance payments received from gas purchasers in
1998 and 1997. Apache also recognized a derivative liability of $121.5 million
as an embedded derivative in the contracts under which the advance payments were
received. The liability reflects the obligation to deliver gas at market prices
in excess of the contractual prices determined at the inception of these
transactions.
The balance of Apache's derivative instruments relate to cash flow hedges
on forecasted oil and gas sales, primarily entered into as the result of
Apache's acquisition hedging strategy. On the transition date, the fair value of
these derivative instruments represented a net liability of $116.2 million. The
Company incurred a charge to earnings for minor ineffectiveness of $1.1 million
during the first half of 2001. The time value of zero-cost collars at June 30,
2001 of $8.8 million will not trigger any cash receipts and will reduce to zero
as the options expire over the course of the next 24 months.
In connection with the Fletcher acquisition, Apache assumed liabilities for
derivative instruments (fixed-price swaps and put options) and fixed-price
physical contracts entered into by Fletcher. The $103.5 million fair value on
the closing date was recorded as a cost of the Fletcher acquisition (see Note
1).
8
A reconciliation of the components of accumulated other comprehensive
income (loss) in the statement of consolidated shareholders' equity related to
Apache's derivative activities is presented in the table below (in thousands):
<Table>
<Caption>
GROSS AFTER-TAX
------------ ------------
Cumulative effect of change in accounting principle $ (116,229) $ (71,287)
Reclassification of net realized losses into earnings 46,937 28,834
Net change in derivative fair value 97,708 57,330
Ineffectiveness recognized in earnings 1,125 703
------------ -------------
Accumulated other comprehensive income related
to derivatives at June 30, 2001 $ 29,541 $ 15,580
============ ============
</Table>
3. NET INCOME PER COMMON SHARE
A reconciliation of the components of basic and diluted net income per
common share is presented in the table below:
<Table>
<Caption>
FOR THE QUARTER ENDED JUNE 30,
-------------------------------------------------------------------------------------
2001 2000
------------------------------------------ ----------------------------------------
INCOME SHARES PER SHARE INCOME SHARES PER SHARE
------------ ------------ ------------ ------------ ------------ ------------
(In thousands, except per share amounts)
BASIC:
Income attributable to common stock $ 200,868 125,444 $ 1.60 $ 139,324 113,946 $ 1.22
============ ============
EFFECT OF DILUTIVE SECURITIES:
Stock options and other -- 1,011 -- 1,069
Series C Preferred Stock 3,488 5,676 3,488 5,676
------------ ------------ ------------ ------------
DILUTED:
Income attributable to common stock,
including assumed conversions $ 204,356 132,131 $ 1.55 $ 142,812 120,691 $ 1.18
============ ============ ============ ============ ============ ============
</Table>
<Table>
<Caption>
FOR THE SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------------------
2001 2000
------------------------------------------ ----------------------------------------
INCOME SHARES PER SHARE INCOME SHARES PER SHARE
------------ ------------ ------------ ------------ ------------ ------------
(In thousands, except per share amounts)
BASIC:
Income attributable to common stock $ 478,161 124,666 $ 3.84 $ 243,517 113,892 $ 2.14
============ ============
EFFECT OF DILUTIVE SECURITIES:
Stock options and other -- 1,116 -- 802
Series C Preferred Stock 6,976 5,676 7,332 5,676
------------ ------------ ------------ ------------
DILUTED:
Income attributable to common stock,
including assumed conversions $ 485,137 131,458 $ 3.69 $ 250,849 120,370 $ 2.08
============ ============ ============ ============ ============ ============
</Table>
9
4. DEBT
The Company's 9.25 percent notes due June 2002 were classified as long-term
debt in the accompanying consolidated balance sheet as the Company has the
ability and intent to refinance such amount on a long-term basis through either
the issuance of commercial paper or borrowing under the U.S. portion of the
global credit facility and the 364-day revolving credit facility.
5. RECENTLY ISSUED ACCOUNTING STANDARDS
Apache's goodwill represents the excess of the purchase price over the
estimated fair value of the assets acquired and liabilities assumed in the
Fletcher and Repsol acquisitions (see Note 1). The goodwill is being amortized
on a straight-line basis over 20 years. In June 2001, the Financial Accounting
Standards Board issued SFAS No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 142 establishes accounting and reporting standards requiring that
goodwill not be amortized, but rather tested at least annually for impairment.
Apache will continue to record amortization of approximately $2.5 million
per quarter through December 31, 2001. The Company will adopt SFAS No. 142 on
January 1, 2002. No impairment of goodwill is currently anticipated; however,
the Company will continue to assess recoverability of goodwill on an ongoing
basis.
6. SUPPLEMENTAL CASH FLOW INFORMATION
NON-CASH INVESTING AND FINANCING ACTIVITIES
In January 2000, the Company acquired producing properties formerly owned
by a subsidiary of Repsol for cash, plus assumed liabilities of $29.8 million.
In March 2001, the Company acquired substantially all of Repsol's oil and
gas concession interests in Egypt for cash and the assumption of certain
non-cash liabilities. The accompanying financial statements include the non-cash
amounts detailed in Note 1.
In March 2001, the Company acquired subsidiaries of Fletcher for cash, 1.64
million restricted shares of common stock and the assumption of certain non-cash
liabilities. The accompanying financial statements include the non-cash amounts
detailed in Note 1.
In June 2001, the Company repurchased 500,000 shares of its common stock at
an average price of $51.70, of which $9.4 million was settled and paid in July
2001.
CASH PAID FOR INTEREST AND TAXES
The following table provides supplemental disclosure of cash flow
information:
<Table>
<Caption>
FOR THE SIX MONTHS ENDED JUNE 30,
---------------------------------
2001 2000
-------------- ----------------
(In thousands)
Cash paid during the period for:
Interest (net of amounts capitalized) $ 56,722 $ 54,876
Income taxes (net of refunds) 89,428 64,053
</Table>
10
7. BUSINESS SEGMENT INFORMATION
Apache has five reportable segments which are primarily in the business of
natural gas and crude oil exploration and production. The Company evaluates
performance based on profit or loss from oil and gas operations before income
and expense items incidental to oil and gas operations and income taxes.
Apache's reportable segments are managed separately because of their geographic
locations. Financial information by operating segment is presented below:
<Table>
<Caption>
OTHER
UNITED STATES CANADA EGYPT AUSTRALIA INTERNATIONAL TOTAL
------------- ------------- ------------- ------------- ------------- -------------
(In thousands)
FOR THE SIX MONTHS ENDED JUNE 30, 2001
Oil and Gas Production Revenues ......... $ 918,732 $ 333,679 $ 225,558 $ 119,674 $ -- $ 1,597,643
============= ============= ============= ============= =========== =============
Operating Income (Loss) (1) (2) ......... $ 568,523 $ 199,951 $ 148,092 $ 66,851 $ (65,024) $ 918,393
============= ============= ============= ============= ===========
Other Income (Expense):
Other revenues (losses) .............. (2,057)
Administrative, selling and other .... (43,569)
Financing costs, net ................. (63,880)
-------------
Income Before Income Taxes .............. $ 808,887
=============
Total Assets ............................ $ 4,279,718 $ 2,178,399 $ 1,519,549 $ 861,657 $ 126,070 $ 8,965,393
============= ============= ============= ============= =========== =============
FOR THE SIX MONTHS ENDED JUNE 30, 2000
Oil and Gas Production Revenues ......... $ 514,474 $ 130,566 $ 186,673 $ 102,610 $ -- $ 934,323
============= ============= ============= ============= =========== =============
Operating Income (Loss) (1) ............. $ 263,663 $ 73,437 $ 131,037 $ 57,687 $ (24) $ 525,800
============= ============= ============= ============= ===========
Other Income (Expense):
Equity in income of affiliates ....... 1,530
Other revenues (losses) .............. (1,249)
Administrative, selling and other .... (31,242)
Financing costs, net ................. (54,970)
-------------
Income Before Income Taxes .............. $ 439,869
=============
Total Assets ............................ $ 3,404,705 $ 918,520 $ 923,421 $ 789,751 $ 166,126 $ 6,202,523
============= ============= ============= ============= =========== =============
</Table>
(1) Operating income consists of oil and gas production revenues less
depreciation, depletion and amortization (DD&A) expense, international
impairments, lease operating costs, and severance and other taxes.
(2) During the second quarter of 2001, the Company recorded a nonrecurring
$65 million impairment ($41 million after-tax) of unproved property
costs in Poland and China.
11
8. SUPPLEMENTAL GUARANTOR INFORMATION
Prior to 2001, Apache Finance Pty Ltd. (Apache Finance Australia) was a
finance subsidiary of Apache with no independent operations. In this capacity,
it issued approximately $270 million of publicly traded notes that are fully and
unconditionally guaranteed by Apache and, beginning in 2001, Apache North
America, Inc. The guarantors of Apache Finance Australia have joint and
severable liability. Similarly, Apache Finance Canada Corporation (Apache
Finance Canada) was also a finance subsidiary of Apache and had issued
approximately $300 million of publicly traded notes that were fully and
unconditionally guaranteed by Apache.
Generally, the issuance of publicly traded securities would subject those
subsidiaries to the reporting requirements of the Securities and Exchange
Commission (SEC). Since these subsidiaries had no independent operations and
qualified as "finance subsidiaries", they were exempted from these requirements.
During 2001, Apache contributed stock of its Australian and Canadian
operating subsidiaries to Apache Finance Australia and Apache Finance Canada,
respectively. As a result of these contributions, they no longer qualify as
finance subsidiaries. As allowed by the SEC rules, the following condensed
consolidating financial statements are provided as an alternative to filing
separate financial statements.
Each of the companies presented in the condensed consolidating financial
statements has been fully consolidated in Apache Corporation's consolidated
financial statements. As such, the condensed consolidating financial statements
should be read in conjunction with the financial statements of Apache
Corporation and subsidiaries and notes thereto of which this note is an integral
part.
12
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 2001
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- --------- --------------
REVENUES:
Oil and gas production revenues ..................... $ 394,080 $ -- $ -- $ --
Equity in net income of affiliates .................. 82,250 5,599 8,578 30,633
Other revenues (losses) ............................. (1,031) -- -- --
----------- ------------- --------- --------------
475,299 5,599 8,578 30,633
----------- ------------- --------- --------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ............ 103,007 -- -- --
International impairments ........................... -- -- -- --
Lease operating costs ............................... 53,444 -- -- --
Severance and other taxes ........................... 14,201 -- -- --
Administrative, selling and other ................... 20,860 -- -- --
Financing costs, net ................................ 19,574 -- 4,512 10,206
----------- ------------- --------- --------------
211,086 -- 4,512 10,206
----------- ------------- --------- --------------
INCOME (LOSS) BEFORE INCOME TAXES ...................... 264,213 5,599 4,066 20,427
Provision (benefit) for income taxes ................ 58,468 -- (1,534) (4,449)
----------- ------------- --------- --------------
NET INCOME ............................................. 205,745 5,599 5,600 24,876
Preferred stock dividends ........................... 4,877 -- -- --
----------- ------------- --------- --------------
INCOME ATTRIBUTABLE TO COMMON STOCK .................... $ 200,868 $ 5,599 $ 5,600 $ 24,876
=========== ============= ========= ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------- ----------------- ------------
REVENUES:
Oil and gas production revenues ..................... $ 530,076 $ (128,111) $ 796,045
Equity in net income of affiliates .................. (8,735) (118,325) --
Other revenues (losses) ............................. 5,429 -- 4,398
----------- -------------- ------------
526,770 (246,436) 800,443
----------- -------------- ------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ............ 105,645 -- 208,652
International impairments ........................... 65,000 -- 65,000
Lease operating costs ............................... 176,087 (128,111) 101,420
Severance and other taxes ........................... 6,047 -- 20,248
Administrative, selling and other ................... 2,333 -- 23,193
Financing costs, net ................................ 336 -- 34,628
----------- -------------- ------------
355,448 (128,111) 453,141
----------- -------------- ------------
INCOME (LOSS) BEFORE INCOME TAXES ...................... 171,322 (118,325) 347,302
Provision (benefit) for income taxes ................ 89,072 -- 141,557
----------- -------------- ------------
NET INCOME ............................................. 82,250 (118,325) 205,745
Preferred stock dividends ........................... -- -- 4,877
----------- -------------- ------------
INCOME ATTRIBUTABLE TO COMMON STOCK .................... $ 82,250 $ (118,325) $ 200,868
=========== ============== ============
</Table>
13
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 2000
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- ----------- --------------
REVENUES:
Oil and gas production revenues ................. $ 277,179 $ -- $ -- $ --
Equity in net income of affiliates ............. 68,789 -- -- 6,001
Other revenues (losses) ......................... (1,002) -- -- --
----------- ------------- ----------- --------------
344,966 -- -- 6,001
----------- ------------- ----------- --------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ........ 80,061 -- -- --
Lease operating costs ........................... 36,495 -- -- --
Severance and other taxes ....................... 9,363 -- -- --
Administrative, selling and other ............... 13,933 -- -- --
Financing costs, net ............................ 18,766 -- -- 5,839
----------- ------------- ----------- --------------
158,618 -- -- 5,839
----------- ------------- ----------- --------------
INCOME (LOSS) BEFORE INCOME TAXES .................. 186,348 -- -- 162
Provision (benefit) for income taxes ............ 42,116 -- -- (2,546)
----------- ------------- ----------- --------------
NET INCOME ......................................... 144,232 -- -- 2,708
Preferred stock dividends ....................... 4,908 -- -- --
----------- ------------- ----------- --------------
INCOME ATTRIBUTABLE TO COMMON STOCK ................ $ 139,324 $ -- $ -- $ 2,708
=========== ============= =========== ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------ ----------------- ------------
REVENUES:
Oil and gas production revenues ................. $ 275,928 $ (64,901) $ 488,206
Equity in net income of affiliates ............. (3,293) (71,187) 310
Other revenues (losses) ......................... (1,101) -- (2,103)
------------ ----------------- ------------
271,534 (136,088) 486,413
------------ ----------------- ------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ........ 56,277 -- 136,338
Lease operating costs ........................... 86,898 (64,901) 58,492
Severance and other taxes ....................... 1,754 -- 11,117
Administrative, selling and other ............... 2,660 -- 16,593
Financing costs, net ............................ 2,075 -- 26,680
------------ ----------------- ------------
149,664 (64,901) 249,220
------------ ----------------- ------------
INCOME (LOSS) BEFORE INCOME TAXES .................. 121,870 (71,187) 237,193
Provision (benefit) for income taxes ............ 53,391 -- 92,961
------------ ----------------- ------------
NET INCOME ......................................... 68,479 (71,187) 144,232
Preferred stock dividends ....................... -- -- 4,908
------------ ----------------- ------------
INCOME ATTRIBUTABLE TO COMMON STOCK ................ $ 68,479 $ (71,187) $ 139,324
============ ================= ============
</Table>
14
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- ----------- --------------
REVENUES:
Oil and gas production revenues ................. $ 943,985 $ -- $ -- $ --
Equity in net income of affiliates ............. 151,371 7,646 11,618 47,397
Other revenues (losses) ......................... (502) -- 3,078 --
----------- ------------- ----------- --------------
1,094,854 7,646 14,696 47,397
----------- ------------- ----------- --------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ........ 205,828 -- -- --
International impairments ....................... -- -- -- --
Lease operating costs ........................... 110,963 -- -- --
Severance and other taxes ....................... 32,860 -- -- --
Administrative, selling and other ............... 38,893 -- -- --
Financing costs, net ............................ 36,958 -- 9,094 16,815
----------- ------------- ----------- --------------
425,502 -- 9,094 16,815
----------- ------------- ----------- --------------
INCOME (LOSS) BEFORE INCOME TAXES .................. 669,352 7,646 5,602 30,582
Provision (benefit) for income taxes ............ 181,406 -- (2,045) (7,331)
----------- ------------- ----------- --------------
NET INCOME ......................................... 487,946 7,646 7,647 37,913
Preferred stock dividends ....................... 9,785 -- -- --
INCOME ATTRIBUTABLE TO COMMON STOCK ................ $ 478,161 $ 7,646 $ 7,647 $ 37,913
=========== ============= =========== ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------ ----------------- ------------
REVENUES:
Oil and gas production revenues ................. $ 950,602 $ (296,944) $ 1,597,643
Equity in net income of affiliates ............. (13,455) (204,577) --
Other revenues (losses) ......................... (4,633) -- (2,057)
------------ ----------------- ------------
932,514 (501,521) 1,595,586
------------ ----------------- ------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ........ 175,354 -- 381,182
International impairments ....................... 65,000 -- 65,000
Lease operating costs ........................... 377,508 (296,944) 191,527
Severance and other taxes ....................... 8,681 -- 41,541
Administrative, selling and other ............... 4,676 -- 43,569
Financing costs, net ............................ 1,013 -- 63,880
------------ ----------------- ------------
632,232 (296,944) 786,699
------------ ----------------- ------------
INCOME (LOSS) BEFORE INCOME TAXES .................. 300,282 (204,577) 808,887
Provision (benefit) for income taxes ............ 148,911 -- 320,941
------------ ----------------- ------------
NET INCOME ......................................... 151,371 (204,577) 487,946
Preferred stock dividends ....................... -- -- 9,785
INCOME ATTRIBUTABLE TO COMMON STOCK ................ $ 151,371 $ (204,577) $ 478,161
============ ================= ============
</Table>
15
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- ----------- --------------
REVENUES:
Oil and gas production revenues ................. $ 516,611 $ -- $ -- $ --
Equity in net income of affiliates ............. 135,646 -- -- 9,250
Other revenues (losses) ......................... (819) -- -- --
----------- ------------- ----------- --------------
651,438 -- -- 9,250
----------- ------------- ----------- --------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ........ 159,203 -- -- --
Lease operating costs ........................... 75,577 -- -- --
Severance and other taxes ....................... 16,216 -- -- --
Administrative, selling and other ............... 26,005 -- -- --
Financing costs, net ............................ 42,974 -- -- 7,638
----------- ------------- ----------- --------------
319,975 -- -- 7,638
----------- ------------- ----------- --------------
INCOME (LOSS) BEFORE INCOME TAXES .................. 331,463 -- -- 1,612
Provision (benefit) for income taxes ............ 70,235 -- -- (3,330)
----------- ------------- ----------- --------------
INCOME (LOSS) BEFORE CHANGE IN
ACCOUNTING PRINCIPLE ............................. 261,228 -- -- 4,942
Cumulative effect of change in accounting
principle, net of income tax .................. (7,539) -- -- --
----------- ------------- ----------- --------------
NET INCOME ......................................... 253,689 -- -- 4,942
Preferred stock dividends ....................... 10,172 -- -- --
----------- ------------- ----------- --------------
INCOME ATTRIBUTABLE TO COMMON STOCK ................ $ 243,517 $ -- $ -- $ 4,942
=========== ============= =========== ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------ ----------------- ------------
REVENUES:
Oil and gas production revenues ................. $ 557,272 $ (139,560) $ 934,323
Equity in net income of affiliates ............. (4,308) (139,058) 1,530
Other revenues (losses) ......................... (430) -- (1,249)
------------ ----------------- ------------
552,534 (278,618) 934,604
------------ ----------------- ------------
OPERATING EXPENSES:
Depreciation, depletion and amortization ........ 109,284 -- 268,487
Lease operating costs ........................... 183,936 (139,560) 119,953
Severance and other taxes ....................... 3,867 -- 20,083
Administrative, selling and other ............... 5,237 -- 31,242
Financing costs, net ............................ 4,358 -- 54,970
------------ ----------------- ------------
306,682 (139,560) 494,735
------------ ----------------- ------------
INCOME (LOSS) BEFORE INCOME TAXES .................. 245,852 (139,058) 439,869
Provision (benefit) for income taxes ............ 111,736 -- 178,641
------------ ----------------- ------------
INCOME (LOSS) BEFORE CHANGE IN
ACCOUNTING PRINCIPLE ............................. 134,116 (139,058) 261,228
Cumulative effect of change in accounting
principle, net of income tax .................. (4,831) 4,831 (7,539)
------------ ----------------- ------------
NET INCOME ......................................... 129,285 (134,227) 253,689
Preferred stock dividends ....................... -- -- 10,172
------------ ----------------- ------------
INCOME ATTRIBUTABLE TO COMMON STOCK ................ $ 129,285 $ (134,227) $ 243,517
============ ================= ============
</Table>
16
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- ----------- --------------
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES ....................................... $ 838,619 $ -- $ (1,550) $ (14)
----------- ------------- ----------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .............. (372,520) -- -- --
Acquisitions ..................................... -- -- -- --
Proceeds from sales of oil and gas properties .... 108,458 -- -- --
Investment in subsidiaries ....................... (987,497) (5,568) (5,568) (250,724)
Other, net ....................................... (8,472) -- -- --
----------- ------------- ----------- --------------
NET CASH USED IN INVESTING ACTIVITIES .............. (1,260,031) (5,568) (5,568) (250,724)
----------- ------------- ----------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt activity, net ..................... 530,072 -- 1,552 250,738
Dividends paid ................................... (9,778) -- -- --
Common stock activity, net ....................... 7,125 5,568 5,568 --
Treasury stock activity, net ..................... (16,006) -- -- --
Cost of debt and equity transactions ............. (1,181) -- -- --
----------- ------------- ----------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES .......... 510,232 5,568 7,120 250,738
----------- ------------- ----------- --------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................. 88,820 -- 2 --
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR ................................ 5,257 -- -- --
----------- ------------- ----------- --------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD .................................... $ 94,077 $ -- $ 2 $ --
=========== ============= =========== ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------ ----------------- ------------
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES ....................................... $ 253,024 $ -- $ 1,090,079
------------ ----------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .............. (305,549) -- (678,069)
Acquisitions ..................................... (911,951) -- (911,951)
Proceeds from sales of oil and gas properties .... 130,257 -- 238,715
Investment in subsidiaries ....................... (256,292) 1,505,649 --
Other, net ....................................... (37,980) -- (46,452)
------------ ----------------- ------------
NET CASH USED IN INVESTING ACTIVITIES .............. (1,381,515) 1,505,649 (1,397,757)
------------ ----------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt activity, net ..................... 614,183 (976,877) 419,668
Dividends paid ................................... -- -- (9,778)
Common stock activity, net ....................... 517,636 (528,772) 7,125
Treasury stock activity, net ..................... -- -- (16,006)
Cost of debt and equity transactions ............. -- -- (1,181)
------------ ----------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES .......... 1,131,819 (1,505,649) 399,828
------------ ----------------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................. 3,328 -- 92,150
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR ................................ 31,916 -- 37,173
------------ ----------------- ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD .................................... $ 35,244 $ -- $ 129,323
============ ================= ============
</Table>
17
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- ----------- --------------
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES ....................................... $ 272,141 $ -- $ 127 $ 1,271
----------- ------------- ----------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .............. (248,899) -- -- --
Acquisitions ..................................... (434,228) -- -- --
Proceeds from sales of oil and gas properties .... 4,045 -- -- --
Investment in subsidiaries ....................... 9,620 -- (204) (14,976)
Other, net ....................................... (3,132) -- -- --
----------- ------------- ----------- --------------
NET CASH USED IN INVESTING ACTIVITIES .............. (672,594) -- (204) (14,976)
----------- ------------- ----------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt activity, net ..................... 429,466 -- 77 167
Dividends paid ................................... (25,795) -- -- --
Issuance (repurchase) of preferred stock ......... (2,613) -- -- --
Common stock activity, net ....................... 17,692 -- -- 13,538
Treasury stock activity, net ..................... (17,727) -- -- --
Cost of debt and equity transactions ............. (3) -- -- --
----------- ------------- ----------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES .......... 401,020 -- 77 13,705
----------- ------------- ----------- --------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................. 567 -- -- --
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR ................................ 1,542 -- -- --
----------- ------------- ----------- --------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD .................................... $ 2,109 $ -- $ -- $ --
=========== ============= =========== ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------ ----------------- ------------
CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES ....................................... $ 273,708 $ -- $ 547,247
------------ ----------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment .............. (182,638) -- (431,537)
Acquisitions ..................................... -- -- (434,228)
Proceeds from sales of oil and gas properties .... 17,179 -- 21,224
Investment in subsidiaries ....................... (13,693) 19,253 --
Other, net ....................................... (4,159) -- (7,291)
------------ ----------------- ------------
NET CASH USED IN INVESTING ACTIVITIES .............. (183,311) 19,253 (851,832)
------------ ----------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt activity, net ..................... (102,101) 11,248 338,857
Dividends paid ................................... -- -- (25,795)
Issuance (repurchase) of preferred stock ......... -- -- (2,613)
Common stock activity, net ....................... 16,963 (30,501) 17,692
Treasury stock activity, net ..................... -- -- (17,727)
Cost of debt and equity transactions ............. -- -- (3)
------------ ----------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES .......... (85,138) (19,253) 310,411
------------ ----------------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ................................. 5,259 -- 5,826
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR ................................ 11,629 -- 13,171
------------ ----------------- ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD .................................... $ 16,888 $ -- $ 18,997
============ ================= ============
</Table>
18
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2001
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- ----------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................ $ 94,077 $ -- $ 2 $ --
Receivables ...................................... 180,769 -- -- --
Inventories ...................................... 14,770 -- -- --
Advances to oil and gas ventures and others ...... 20,605 -- -- --
Oil and gas derivative instruments ............... 11,279 -- -- --
----------- ------------- ----------- --------------
321,500 -- 2 --
----------- ------------- ----------- --------------
PROPERTY AND EQUIPMENT, NET ........................ 3,791,242 -- -- --
OTHER ASSETS:
Intercompany receivable, net ..................... 1,807,513 -- -- (250,900)
Goodwill, net .................................... -- -- -- --
Equity in affiliates ............................. 1,649,528 171,177 440,343 1,067,558
Oil and gas derivative instruments ............... 62,799 -- -- --
Deferred charges and other ....................... 29,137 -- -- 2,610
----------- ------------- ----------- --------------
$ 7,661,719 $ 171,177 $ 440,345 $ 819,268
=========== ============= =========== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ............. $ 63,000 $ -- $ -- $ --
Accounts payable ................................. 102,828 -- -- --
Other accrued expenses ........................... 280,998 -- 2,599 1,132
Oil and gas derivative instruments ............... -- -- -- --
----------- ------------- ----------- --------------
446,826 -- 2,599 1,132
----------- ------------- ----------- --------------
LONG-TERM DEBT ..................................... 1,974,922 -- 268,615 296,973
----------- ------------- ----------- --------------
DEFERRED CREDITS AND OTHER
NONCURRENT LIABILITIES:
Income taxes ..................................... 567,071 -- (2,046) (35)
Advances from gas purchasers ..................... 146,548 -- -- --
Oil and gas derivative instruments ............... 93,312 -- -- --
Other ............................................ 92,700 -- -- --
----------- ------------- ----------- --------------
899,631 -- (2,046) (35)
----------- ------------- ----------- --------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY ............................... 4,340,340 171,177 171,177 521,198
----------- ------------- ----------- --------------
$ 7,661,719 $ 171,177 $ 440,345 $ 819,268
=========== ============= =========== ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------ ----------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................ $ 35,244 $ -- $ 129,323
Receivables ...................................... 389,052 -- 569,821
Inventories ...................................... 62,682 -- 77,452
Advances to oil and gas ventures and others ...... 29,528 -- 50,133
Oil and gas derivative instruments ............... -- -- 11,279
------------ ----------------- ------------
516,506 -- 838,008
------------ ----------------- ------------
PROPERTY AND EQUIPMENT, NET ........................ 4,034,537 -- 7,825,779
OTHER ASSETS:
Intercompany receivable, net ..................... (1,556,613) -- --
Goodwill, net .................................... 198,893 -- 198,893
Equity in affiliates ............................. (815,526) (2,513,080) --
Oil and gas derivative instruments ............... -- -- 62,799
Deferred charges and other ....................... 8,167 -- 39,914
------------ ----------------- ------------
$ 2,385,964 $ (2,513,080) $ 8,965,393
============ ================= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ............. $ -- $ -- $ 63,000
Accounts payable ................................. 204,715 -- 307,543
Other accrued expenses ........................... 107,229 -- 391,958
Oil and gas derivative instruments ............... 50,989 -- 50,989
------------ ----------------- ------------
362,933 -- 813,490
------------ ----------------- ------------
LONG-TERM DEBT ..................................... 34,416 -- 2,574,926
------------ ----------------- ------------
DEFERRED CREDITS AND OTHER
NONCURRENT LIABILITIES:
Income taxes ..................................... 340,642 -- 905,632
Advances from gas purchasers ..................... -- -- 146,548
Oil and gas derivative instruments ............... (18,672) -- 74,640
Other ............................................ 17,117 -- 109,817
------------ ----------------- ------------
339,087 -- 1,236,637
------------ ----------------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY ............................... 1,649,528 (2,513,080) 4,340,340
------------ ----------------- ------------
$ 2,385,964 $ (2,513,080) $ 8,965,393
============ ================= ============
</Table>
19
APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000
(IN THOUSANDS)
<Table>
<Caption>
APACHE
APACHE APACHE FINANCE APACHE
CORPORATION NORTH AMERICA AUSTRALIA FINANCE CANADA
----------- ------------- ----------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................ $ 5,257 $ -- $ -- $ --
Receivables ...................................... 267,514 -- -- --
Inventories ...................................... 13,481 -- -- --
Advances to oil and gas ventures and others ...... 18,840 -- -- --
----------- ------------- ----------- --------------
305,092 -- -- --
----------- ------------- ----------- --------------
PROPERTY AND EQUIPMENT, NET ........................ 3,643,439 -- -- --
----------- ------------- ----------- --------------
OTHER ASSETS:
Intercompany receivable, net ..................... 1,081,360 -- 269,177 (176)
Equity in affiliates ............................. 1,205,257 -- -- 321,417
Deferred charges and other ....................... 26,565 -- 1,870 2,656
----------- ------------- ----------- --------------
$ 6,261,713 $ -- $ 271,047 $ 323,897
=========== ============= =========== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ............. $ 25,000 $ -- $ -- $ --
Accounts payable ................................. 102,766 -- -- --
Other accrued expenses ........................... 181,968 -- 2,599 1,103
----------- ------------- ----------- --------------
309,734 -- 2,599 1,103
----------- ------------- ----------- --------------
LONG-TERM DEBT ..................................... 1,482,850 -- 268,448 296,959
----------- ------------- ----------- --------------
DEFERRED CREDITS AND OTHER
NONCURRENT LIABILITIES:
Income taxes ..................................... 451,380 -- -- (57)
Advances from gas purchasers ..................... 153,106 -- -- --
Other ............................................ 110,003 -- -- --
----------- ------------- ----------- --------------
714,489 -- -- (57)
----------- ------------- ----------- --------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY ............................... 3,754,640 -- -- 25,892
----------- ------------- ----------- --------------
$ 6,261,713 $ -- $ 271,047 $ 323,897
=========== ============= =========== ==============
<Caption>
ALL OTHER
SUBSIDIARIES
OF APACHE RECLASSIFICATIONS
CORPORATION & ELIMINATIONS CONSOLIDATED
------------ ----------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................ $ 31,916 $ -- $ 37,173
Receivables ...................................... 239,209 -- 506,723
Inventories ...................................... 41,283 -- 54,764
Advances to oil and gas ventures and others ...... 12,520 -- 31,360
------------ ----------------- ------------
324,928 -- 630,020
------------ ----------------- ------------
PROPERTY AND EQUIPMENT, NET ........................ 3,169,023 -- 6,812,462
------------ ----------------- ------------
OTHER ASSETS:
Intercompany receivable, net ..................... (1,350,361) -- --
Equity in affiliates ............................. (295,525) (1,231,149) --
Deferred charges and other ....................... 8,377 -- 39,468
------------ ----------------- ------------
$ 1,856,442 $ (1,231,149) $ 7,481,950
============ ================= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ............. $ -- $ -- $ 25,000
Accounts payable ................................. 156,354 -- 259,120
Other accrued expenses ........................... 83,557 -- 269,227
------------ ----------------- ------------
239,911 -- 553,347
------------ ----------------- ------------
LONG-TERM DEBT ..................................... 145,001 -- 2,193,258
------------ ----------------- ------------
DEFERRED CREDITS AND OTHER
NONCURRENT LIABILITIES:
Income taxes ..................................... 248,510 -- 699,833
Advances from gas purchasers ..................... -- -- 153,106
Other ............................................ 17,763 -- 127,766
------------ ----------------- ------------
266,273 -- 980,705
------------ ----------------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY ............................... 1,205,257 (1,231,149) 3,754,640
------------ ----------------- ------------
$ 1,856,442 $ (1,231,149) $ 7,481,950
============ ================= ============
</Table>
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be signed
on its behalf by the undersigned thereunto duly authorized.
APACHE CORPORATION
Dated: March 21, 2002 /s/ Roger B. Plank
-----------------------------------------
Roger B. Plank
Executive Vice President and Chief
Financial Officer
Dated: March 21, 2002 /s/ Thomas L. Mitchell
-----------------------------------------
Thomas L. Mitchell
Vice President and Controller
(Chief Accounting Officer)