Attached files
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8-K - FORM 8-K - APACHE CORP | h74450e8vk.htm |
EX-99.2 - EX-99.2 - APACHE CORP | h74450exv99w2.htm |
CONTACTS: |
||||
(Media):
|
Bill Mintz | (713) 296-7276 | ||
Bob Dye | (713) 296-6662 | |||
(Investors):
|
Tom Chambers | (713) 296-6685 | ||
Rob Rayphole | (713) 296-6160 | |||
(Web site):
|
www.apachecorp.com |
APACHES PRODUCTION RISES 10 PERCENT TO RECORD 646,866 BOE PER DAY
FUELING SECOND-QUARTER EARNINGS OF $860 MILLION OR $2.53 PER SHARE
FUELING SECOND-QUARTER EARNINGS OF $860 MILLION OR $2.53 PER SHARE
Houston, July 20, 2010 Apache Corporation (NYSE, Nasdaq: APA) today reported that higher
oil output from international operations fueled record production in the second quarter as net
income climbed to $860 million or $2.53 per diluted common share, nearly double the net income of
$443 million or $1.31 per share in the prior-year period.
Production totaled 646,866 barrels of oil equivalent (boe) per day, up 10 percent from the
prior-year period. Liquid hydrocarbon production climbed to 348,272 barrels per day, up 19 percent
from the prior-year period and 16 percent from the first quarter of 2010. Natural gas production
increased to 1.79 billion cubic feet per day, a 1-percent increase from the year-earlier period and
up 5 percent from the first quarter.
Apaches increased oil production was the result of a nearly sixfold increase in output in
Australia, including a full quarter of production from the Van Gogh and Pyrenees oil developments,
and higher output from the Faghur Basin in Egypts Western Desert. Natural gas production was
higher in Australia, Gulf Coast, Egypt and the Anadarko Basin of western Oklahoma.
Cash from operations before changes in operating assets and liabilities* totaled $1.8 billion
in the second quarter, up 46 percent from $1.3 billion in the year-earlier period. At the end of
the quarter, Apaches cash balance was $1.8 billion.
Apaches second-quarter adjusted earnings*, which exclude certain items that impact the
comparability of operating results, totaled $829 million or $2.44 per diluted share, up from $474
million or $1.41 per share in the prior-year period.
Apaches second-quarter results illustrate the benefit of our focus on long-term growth,
said G. Steven Farris, chairman and chief executive officer. We are realizing the benefit of
significant discoveries and the investments Apache made to bring them on production. Apaches
financial results also benefitted from our balanced commodity mix at a time when oil prices remain
strong relative to North American natural gas prices.
Apaches international operations accounted for 56 percent of worldwide production. Liquids
sales were 54 percent of worldwide production and 78 percent of revenue. Apache realized an average
of $74.89 per barrel of oil, essentially unchanged from the first quarter, and $4.01 per thousand
cubic feet (Mcf) of natural gas, down from $4.60 per Mcf in the first quarter.
Apaches second-quarter results include production from June 9 on Gulf Shelf assets acquired
on that date from Devon Energy Corp. for $1.05 billion. The acquisition brought year-end 2009
estimated proved and probable reserves of 83 million boe across approximately 150 blocks.
Apache also expects to close its previously announced merger with Mariner Energy upon approval
of regulators and Mariners shareholders. Mariner is an independent producer with operations in the
Gulf of Mexico, the Gulf Coast and the Permian Basin with year-end 2009 estimated proved reserves
of 181 million boe (47 percent liquid hydrocarbons) as well as unbooked resource potential of 2
billion boe. Approval is projected for the third quarter.
Apache Corporation is an oil and gas exploration and production company with operations in the
United States, Canada, Egypt, the United Kingdom North Sea, Australia and Argentina. From time to
time, Apache posts announcements, updates and investor information, in addition to copies of all
press releases, on its Web site, www.apachecorp.com.
*Adjusted earnings and cash from operations before changes in operating assets and liabilities
are non-GAAP measures. Please see reconciliations below. For supplemental and non-GAAP information,
please go to www.apachecorp.com/financialinfo.
Additional Information
This communication does not constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval. Apache has filed with the Securities and
Exchange Commission (SEC) a registration statement on Form S-4 containing a preliminary proxy
statement of Mariner Energy that also constitutes a preliminary prospectus of Apache. A definitive
proxy statement/prospectus will be mailed to stockholders of Mariner. Apache and Mariner also plan
to file other documents with the SEC regarding the proposed transaction. INVESTORS AND SECURITY
HOLDERS OF MARINER ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will
be able to obtain the documents (when available) free of charge at the SECs web site, www.sec.gov.
Copies of the documents filed with the SEC by Apache will be available free of charge on Apaches
website at www.apachecorp.com under the tab Investors or by contacting Apaches Investor
Relations Department at 713-296-6000. Copies of the documents filed with the SEC by Mariner will
be available free of charge on Mariners website at www.mariner-energy.com under the tab Investor
Information or by contacting Mariners Investor Relations Department at 713-954-5558. You may
also read and copy any reports, statements and other information filed with the SEC at the SEC
public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC
at (800) 732-0330 or visit the SECs website for further information on its public reference room.
Apache, Mariner, their respective directors and executive officers and other persons may be
deemed, under SEC rules, to be participants in the solicitation of proxies from stockholders of
Mariner in connection with the proposed transaction. Information regarding Apaches directors and
officers can be found in its proxy statement filed with the SEC on March 31, 2010, and information
regarding Mariners directors and officers can be found in its proxy statement filed with the SEC
on April 1, 2010. Additional information regarding the participants in the proxy solicitation and
a description of their direct and indirect interests in the transaction, by security holdings or
otherwise, will be contained in the definitive proxy statement/prospectus and other relevant
materials to be filed with the SEC when they become available.
Forward-Looking Statements
Statements in this document include forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. The opinions, forecasts, projections, future plans or other statements other
than statements of historical fact, are forward-looking statements. We can give no assurance that
such expectations will prove to have been correct. Actual results could differ materially as a
result of a variety of risks and uncertainties, including: the timing to consummate the proposed
transaction; the risk that a condition to closing of the proposed transaction may not be satisfied;
the risk that a regulatory approval that may be required for the proposed transaction is not
obtained or is obtained subject to conditions that are not anticipated; negative effects from the
pendency of the merger; our ability to achieve the synergies and value creation contemplated by the
proposed transaction; our ability to promptly and effectively integrate the merged businesses; and
the diversion of management time on transaction-related issues. Other factors that could
materially affect actual results are discussed in Apaches and Mariners most recent Forms 10-K as
well as each companys other filings with the SEC available at the SECs website at www.sec.gov.
Actual results may differ materially from those expected, estimated or projected. Forward-looking
statements speak only as of the date they are made, and we undertake no obligation to publicly
update or revise any of them in light of new information, future events or otherwise.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
FINANCIAL INFORMATION
(In thousands, except per share data)
For the Quarter | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
REVENUES AND OTHER: |
||||||||||||||||
Oil and gas production revenues |
$ | 2,968,765 | $ | 2,074,344 | $ | 5,662,390 | $ | 3,677,958 | ||||||||
Other |
3,145 | 19,034 | (17,229 | ) | 49,245 | |||||||||||
2,971,910 | 2,093,378 | 5,645,161 | 3,727,203 | |||||||||||||
COSTS AND EXPENSES: |
||||||||||||||||
Depreciation, depletion and amortization |
||||||||||||||||
Recurring |
729,751 | 573,359 | 1,368,249 | 1,153,976 | ||||||||||||
Additional |
| | | 2,818,161 | ||||||||||||
Asset retirement obligation accretion |
24,760 | 26,483 | 48,762 | 53,221 | ||||||||||||
Lease operating expenses |
445,949 | 405,273 | 886,195 | 802,762 | ||||||||||||
Gathering and transportation |
43,038 | 33,479 | 83,403 | 66,818 | ||||||||||||
Taxes other than income |
186,833 | 115,941 | 363,771 | 203,280 | ||||||||||||
General and administrative |
91,829 | 90,905 | 178,979 | 175,951 | ||||||||||||
Financing costs, net |
55,757 | 61,155 | 115,024 | 119,742 | ||||||||||||
1,577,917 | 1,306,595 | 3,044,383 | 5,393,911 | |||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES |
1,393,993 | 786,783 | 2,600,778 | (1,666,708 | ) | |||||||||||
Current income tax provision |
339,151 | 218,247 | 682,125 | 220,741 | ||||||||||||
Deferred income tax provision (benefit) |
194,619 | 123,816 | 353,449 | (575,229 | ) | |||||||||||
NET INCOME (LOSS) |
860,223 | 444,720 | 1,565,204 | (1,312,220 | ) | |||||||||||
Preferred stock dividends |
| 1,420 | | 2,840 | ||||||||||||
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK |
$ | 860,223 | $ | 443,300 | $ | 1,565,204 | $ | (1,315,060 | ) | |||||||
NET INCOME (LOSS) PER COMMON SHARE: |
||||||||||||||||
Basic |
$ | 2.55 | $ | 1.32 | $ | 4.64 | $ | (3.92 | ) | |||||||
Diluted |
$ | 2.53 | $ | 1.31 | $ | 4.61 | $ | (3.92 | ) | |||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
337,618 | 335,637 | 337,273 | 335,372 | ||||||||||||
DILUTED SHARES OUTSTANDING |
339,377 | 337,365 | 339,282 | 335,372 | ||||||||||||
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
FINANCIAL INFORMATION
(In thousands)
For the Quarter | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
COSTS INCURRED: (1) |
||||||||||||||||
North America exploration and development |
$ | 782,103 | $ | 381,782 | $ | 1,310,492 | $ | 887,098 | ||||||||
International exploration and development |
475,016 | 506,229 | 956,787 | 993,011 | ||||||||||||
Oil and gas property acquisitions |
1,028,724 | 183,195 | 1,033,394 | 243,220 | ||||||||||||
$ | 2,285,843 | $ | 1,071,206 | $ | 3,300,673 | $ | 2,123,329 | |||||||||
(1) | Includes noncash asset retirement costs and capitalized interest as follows: |
Capitalized interest |
$ | 15,747 | $ | 14,972 | $ | 31,676 | $ | 30,981 | ||||||||
Asset retirement costs |
$ | 292,373 | $ | 34,098 | $ | 314,607 | $ | 93,703 |
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
BALANCE SHEET DATA: |
||||||||
Cash and Cash Equivalents |
$ | 1,805,347 | $ | 2,048,117 | ||||
Other Current Assets |
2,701,593 | 2,537,732 | ||||||
Property and Equipment, net |
25,123,455 | 22,900,615 | ||||||
Goodwill |
189,252 | 189,252 | ||||||
Other Assets |
612,760 | 510,027 | ||||||
Total Assets |
$ | 30,432,407 | $ | 28,185,743 | ||||
Short-Term Debt |
$ | 116,205 | $ | 117,326 | ||||
Other Current Liabilities |
2,086,630 | 2,275,232 | ||||||
Long-Term Debt |
4,896,127 | 4,950,390 | ||||||
Deferred Credits and Other Noncurrent Liabilities |
5,657,685 | 5,064,174 | ||||||
Shareholders Equity |
17,675,760 | 15,778,621 | ||||||
Total Liabilities and Shareholders Equity |
$ | 30,432,407 | $ | 28,185,743 | ||||
Common shares outstanding at end of period |
337,799 | 336,437 |
APACHE CORPORATION
FINANCIAL INFORMATION
FINANCIAL INFORMATION
For the Quarter | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
PRODUCTION DATA: |
||||||||||||||||
OIL VOLUME Barrels per day |
||||||||||||||||
Gulf Coast |
50,788 | 52,054 | 50,649 | 50,441 | ||||||||||||
Central |
2,929 | 2,212 | 2,652 | 2,242 | ||||||||||||
Permian |
35,812 | 34,264 | 35,843 | 34,959 | ||||||||||||
United States |
89,529 | 88,530 | 89,144 | 87,642 | ||||||||||||
Canada |
14,561 | 15,833 | 14,447 | 16,090 | ||||||||||||
North America |
104,090 | 104,363 | 103,591 | 103,732 | ||||||||||||
Egypt |
98,495 | 95,359 | 94,642 | 89,475 | ||||||||||||
Australia |
60,680 | 10,478 | 43,978 | 9,164 | ||||||||||||
North Sea |
58,141 | 59,688 | 57,995 | 60,089 | ||||||||||||
Argentina |
9,874 | 11,948 | 9,897 | 12,192 | ||||||||||||
International |
227,190 | 177,473 | 206,512 | 170,920 | ||||||||||||
Total |
331,280 | 281,836 | 310,103 | 274,652 | ||||||||||||
NATURAL GAS VOLUME Mcf per day |
||||||||||||||||
Gulf Coast |
382,550 | 364,961 | 381,636 | 338,792 | ||||||||||||
Central |
206,386 | 202,594 | 198,478 | 206,697 | ||||||||||||
Permian |
85,950 | 95,279 | 93,247 | 92,405 | ||||||||||||
United States |
674,886 | 662,834 | 673,361 | 637,894 | ||||||||||||
Canada |
339,611 | 373,796 | 326,646 | 365,551 | ||||||||||||
North America |
1,014,497 | 1,036,630 | 1,000,007 | 1,003,445 | ||||||||||||
Egypt |
388,367 | 376,737 | 375,249 | 347,443 | ||||||||||||
Australia |
203,147 | 161,069 | 205,209 | 151,607 | ||||||||||||
North Sea |
2,516 | 2,645 | 2,540 | 2,663 | ||||||||||||
Argentina |
183,028 | 192,542 | 168,953 | 192,250 | ||||||||||||
International |
777,058 | 732,993 | 751,951 | 693,963 | ||||||||||||
Total |
1,791,555 | 1,769,623 | 1,751,958 | 1,697,408 | ||||||||||||
NGL VOLUME Barrels per day |
||||||||||||||||
Gulf Coast |
4,903 | 3,935 | 4,901 | 3,614 | ||||||||||||
Central |
500 | 201 | 496 | 279 | ||||||||||||
Permian |
6,475 | 1,347 | 3,977 | 1,305 | ||||||||||||
United States |
11,878 | 5,483 | 9,374 | 5,198 | ||||||||||||
Canada |
1,996 | 2,052 | 1,866 | 2,082 | ||||||||||||
North America |
13,874 | 7,535 | 11,240 | 7,280 | ||||||||||||
Argentina |
3,118 | 3,091 | 3,204 | 3,114 | ||||||||||||
Total |
16,992 | 10,626 | 14,444 | 10,394 | ||||||||||||
BOE per day |
||||||||||||||||
Gulf Coast |
119,450 | 116,816 | 119,156 | 110,520 | ||||||||||||
Central |
37,827 | 36,178 | 36,228 | 36,971 | ||||||||||||
Permian |
56,612 | 51,491 | 55,362 | 51,665 | ||||||||||||
United States |
213,889 | 204,485 | 210,746 | 199,156 | ||||||||||||
Canada |
73,159 | 80,185 | 70,753 | 79,097 | ||||||||||||
North America |
287,048 | 284,670 | 281,499 | 278,253 | ||||||||||||
Egypt |
163,223 | 158,148 | 157,184 | 147,382 | ||||||||||||
Australia |
94,538 | 37,323 | 78,179 | 34,431 | ||||||||||||
North Sea |
58,560 | 60,129 | 58,418 | 60,533 | ||||||||||||
Argentina |
43,497 | 47,130 | 41,260 | 47,348 | ||||||||||||
International |
359,818 | 302,730 | 335,041 | 289,694 | ||||||||||||
Total |
646,866 | 587,400 | 616,540 | 567,947 | ||||||||||||
APACHE CORPORATION
FINANCIAL INFORMATION
FINANCIAL INFORMATION
For the Quarter | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
PRICING DATA: |
||||||||||||||||
AVERAGE OIL PRICE PER BARREL |
||||||||||||||||
Gulf Coast |
$ | 76.95 | $ | 57.40 | $ | 76.94 | $ | 49.05 | ||||||||
Central |
74.20 | 56.07 | 74.66 | 45.94 | ||||||||||||
Permian |
73.95 | 52.23 | 74.50 | 43.36 | ||||||||||||
United States (1) |
74.20 | 57.00 | 74.26 | 49.95 | ||||||||||||
Canada |
70.87 | 55.17 | 73.10 | 46.49 | ||||||||||||
North America (1) |
73.73 | 56.72 | 74.10 | 49.41 | ||||||||||||
Egypt |
76.08 | 60.30 | 76.27 | 51.90 | ||||||||||||
Australia |
74.42 | 63.01 | 74.58 | 49.74 | ||||||||||||
North Sea |
78.78 | 58.77 | 76.58 | 51.51 | ||||||||||||
Argentina |
55.41 | 46.17 | 56.60 | 46.73 | ||||||||||||
International |
75.43 | 58.99 | 75.05 | 51.28 | ||||||||||||
Total (1) |
74.89 | 58.15 | 74.74 | 50.57 | ||||||||||||
AVERAGE NATURAL GAS PRICE PER MCF |
||||||||||||||||
Gulf Coast |
$ | 4.45 | $ | 3.76 | $ | 5.07 | $ | 4.29 | ||||||||
Central |
4.23 | 2.96 | 4.95 | 3.38 | ||||||||||||
Permian |
4.76 | 4.08 | 6.03 | 3.94 | ||||||||||||
United States (1) |
5.11 | 3.88 | 5.58 | 4.21 | ||||||||||||
Canada (1) |
4.51 | 3.86 | 4.88 | 4.26 | ||||||||||||
North America (1) |
4.91 | 3.88 | 5.35 | 4.23 | ||||||||||||
Egypt |
3.51 | 3.85 | 3.54 | 3.73 | ||||||||||||
Australia |
2.22 | 1.82 | 2.22 | 1.71 | ||||||||||||
North Sea |
17.15 | 12.24 | 17.73 | 9.82 | ||||||||||||
Argentina |
1.88 | 1.89 | 2.01 | 1.94 | ||||||||||||
International |
2.83 | 2.92 | 2.88 | 2.82 | ||||||||||||
Total (1) |
4.01 | 3.48 | 4.29 | 3.65 | ||||||||||||
AVERAGE NGL PRICE PER BARREL |
||||||||||||||||
Gulf Coast |
$ | 44.27 | $ | 27.13 | $ | 49.25 | $ | 26.33 | ||||||||
Central |
38.87 | 27.28 | 44.40 | 23.21 | ||||||||||||
Permian |
37.73 | 28.04 | 38.96 | 25.30 | ||||||||||||
United States |
40.48 | 27.36 | 44.63 | 25.90 | ||||||||||||
Canada |
35.76 | 24.23 | 37.97 | 22.40 | ||||||||||||
North America |
39.80 | 26.50 | 43.52 | 24.90 | ||||||||||||
Argentina |
25.68 | 15.91 | 30.23 | 16.51 | ||||||||||||
Total |
37.21 | 23.42 | 40.58 | 22.39 |
(1) | Prices reflect the impact of financial derivative hedging activities. |
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
FINANCIAL INFORMATION
(In thousands, except per share data)
NON-GAAP FINANCIAL MEASURES:
Reconciliation of income attributable to common stock to adjusted earnings:
The press release discusses Apaches adjusted earnings. Adjusted earnings exclude certain items that management believes affect the comparability of operating results and are meaningful for the following reasons:
| Management uses adjusted earnings to evaluate the companys operational trends and performance relative to other oil and gas producing companies. |
| Management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends. |
| The reconciling items below are the types of items management believes are frequently excluded by analysts when evaluating the operating trends and comparability of the companys results. |
For the Quarter | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Income (Loss) Attributable to Common Stock (GAAP) |
$ | 860,223 | $ | 443,300 | $ | 1,565,204 | $ | (1,315,060 | ) | |||||||
Adjustments: |
||||||||||||||||
Foreign currency fluctuation
impact on deferred tax expense |
(31,511 | ) | 31,164 | (24,927 | ) | 26,350 | ||||||||||
Additional depletion, net of tax |
| | | 1,981,398 | ||||||||||||
Adjusted Earnings (Non-GAAP) |
$ | 828,712 | $ | 474,464 | $ | 1,540,277 | $ | 692,688 | ||||||||
Adjusted Earnings Per Share (Non-GAAP) |
||||||||||||||||
Basic |
$ | 2.45 | $ | 1.41 | $ | 4.57 | $ | 2.07 | ||||||||
Diluted |
$ | 2.44 | $ | 1.41 | $ | 4.54 | $ | 2.05 | ||||||||
Average Number of Common Shares |
||||||||||||||||
Basic |
337,618 | 335,637 | 337,273 | 335,372 | ||||||||||||
Diluted |
339,377 | 337,365 | 339,282 | 337,198 | ||||||||||||
Reconciliation of net cash provided by operating activities to cash from operations before changes in operating assets and liabilities:
The press release discusses Apaches 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 companys 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 Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net cash provided by operating activities |
$ | 1,932,012 | $ | 823,513 | $ | 3,085,441 | $ | 1,366,729 | ||||||||
Changes in operating assets and liabilities |
(97,289 | ) | 436,071 | 317,162 | 875,914 | |||||||||||
Cash from operations before changes in
operating assets and liabilities |
$ | 1,834,723 | $ | 1,259,584 | $ | 3,402,603 | $ | 2,242,643 | ||||||||