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8-K - FORM 8-K - APACHE CORP | d488528d8k.htm |
Exhibit 99.1
NEWS RELEASE |
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017
FINANCIAL AND OPERATIONAL RESULTS
| Delivered third-quarter production of 448,000 barrels of oil equivalent (BOE) per day and adjusted production of 354,000 BOE per day, which excludes Canadian volumes, Egypt noncontrolling interest and tax barrels; |
| Returned United States production to a growth trajectory and grew net production in the North Sea and gross production in Egypt; |
| Achieved strong oil production in the Midland and Delaware basins and expect continued strong performance in the fourth quarter; |
| Completed the strategic exit from Canada, which streamlines the portfolio and increases leverage to the Permian; and |
| On track to achieve fourth-quarter production targets and end the year with less debt and considerably more cash than the start of 2017. |
HOUSTON, Nov. 2, 2017 Apache Corporation (NYSE: APA) (Nasdaq: APA) today announced its financial and operational results for the third quarter of 2017.
Apache reported earnings of $63 million or $0.16 per diluted common share for the third quarter of 2017. These results include a number of items outside of core earnings that are typically excluded by the investment community in their published earnings estimates. When adjusted for these and certain additional items that impact the comparability of results, Apaches third-quarter earnings were $14 million or $0.04 per share. Adjusted earnings include the effect of dry-hole costs of $0.06 per share, after tax. Cash flow from operations in the quarter was $554 million. Before working capital changes, Apache generated $655 million in cash flow. Adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (adjusted EBITDAX) was $821 million.
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
PAGE 2 of 8
John J. Christmann IV, Apaches chief executive officer and president, said, During the third quarter, Apache delivered strong operational results and made great progress in our ongoing portfolio transition. In the United States, we returned our production to a growth trajectory and advanced our development program at Alpine High bringing new wells online, ramping up production, and further progressing our build out of infrastructure in the area.
Across the Permian Basin, we are benefiting from the testing and optimization initiatives we put in place during 2016 and are delivering excellent results from our multiwell pad drilling programs in the Midland and Delaware basins. We anticipate continued capital efficiency gains in both of these focus areas.
With our recent Canadian divestment, our portfolio is now increasingly weighted to our Permian assets including Alpine High, which offers a unique combination of high returns and tremendous scale. This portfolio rotation is a key step in transforming Apaches long-term return on capital employed, Christmann said.
Financial position and liquidity
Oil and gas capital investment was $843 million during the quarter, with more than two-thirds focused on the Permian Basin. Apaches net debt position at quarter end was $6.6 billion, a decrease of $175 million from the previous quarter.
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
PAGE 3 of 8
Third-quarter operational summary
During the third quarter, Apache averaged 36 operated rigs worldwide, with 17 in the Permian, four in other North America areas, 12 in Egypt, and three in the North Sea. Highlights from Apaches three principal areas include:
| North America North American production was 231,000 BOE per day. Apache averaged 21 rigs and drilled and completed 41 gross-operated wells. In North America, third-quarter 2017 adjusted production, which excludes Canada, averaged 207,000 BOE per day, up 7 percent from the second quarter. |
| Permian Basin With the success of the Midland Basin drilling program and the continued production ramp at Alpine High, third-quarter production in the Permian Basin averaged 161,000 BOE per day, an 11 percent increase over the second quarter. Oil growth increased 8 percent quarter to quarter to 78,000 barrels of oil per day. |
| Delaware Basin At Alpine High, average production was 13,300 BOE per day. In addition to several high-rate wells in the wet gas and dry gas portions of the play, Apache achieved positive results from three parasequence oil tests in the Wolfcamp and the Third Bone Springs formations providing additional confirmation of the oil play at Alpine High. |
| Midland Basin Apache is focused on multiwell pad drilling development in its core areas of the Midland Basin. The company completed two pads in the Wildfire field in Midland County containing 13 wells with mile-and-a-half laterals. The average 30-day peak initial-production rate of these wells exceeded 1,000 BOE per day, consisting of 80 to 85 percent oil. |
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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At the Powell field in Upton County, Apache brought the CC 4045 pad online, which contains six wells with two-mile laterals. These wells have been online for about four weeks and are trending toward an average 30-day peak initial-production rate of 1,300 BOE per day, consisting of 80 percent oil.
| North Sea Apache averaged three rigs during the quarter. Production increased 9 percent from the second quarter to 60,000 BOE per day. Net production from the Callater Field is currently averaging approximately 14,000 BOE per day from two wells. A third well, the CB-1, was recently drilled into a new fault block and found more than 260-feet of net pay and will be placed on production later this month. |
| Egypt Apache averaged 12 rigs during the quarter. Gross production in Egypt increased slightly from the second quarter to 339,000 BOE per day. Adjusted production in Egypt, which excludes minority interest and the impact of tax barrels, decreased slightly from the second-quarter 2017 to 87,000 BOE per day. The decrease in adjusted production reflects the terms of Apaches production sharing contracts in Egypt, which generally provide for fewer cost-recovery barrels to the contactor as the price of Brent-indexed crude oil increases. During the quarter, terms were finalized on two new concessions in the Western Desert covering 1.6 million acres. |
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
PAGE 5 of 8
2017 outlook and plan update
Apache provided updated fourth-quarter production guidance on its webcast update in October, which remains unchanged. Capital guidance for 2017 of $3.1 billion remains on track for the full year. Further details on other financial and operational guidance items can be found in the Third-Quarter 2017 Financial and Operational Supplement.
We continue to benefit from our cost structure focus, with both LOE per BOE and G&A costs remaining low as a result of the significant rationalization efforts over the last two years. Our capital investment is in line with our target for 2017, and we are actively working our 2018 and 2019 plans. We are closely monitoring commodity prices as we prioritize next years activity and identify areas where the capital program could be pared back if necessary. We look forwarding to providing details of our 2018 plan along with a view into 2019 on our fourth-quarter results call in February, Christmann concluded.
Conference call
Apache will host a conference call to discuss its third-quarter 2017 results at 1 p.m. Central time, Thursday, Nov. 2. The conference call will be webcast from Apaches website at www.apachecorp.com and investor.apachecorp.com, and the webcast replay will be archived there as well. A replay of the conference call will be available for seven days following the call. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 48384429. Sign up for email alerts to be reminded of the webcast at investor.apachecorp.com/alerts.cfm.
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
PAGE 6 of 8
Additional Information
Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX and net debt (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. Apaches quarterly supplement is available at www.apachecorp.com/financialdata.
About Apache
Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com, and on its Media and Investor Center mobile application, which is available for free download from the Apple App Store and the Googles Play store.
Non-GAAP financial measures
Apaches financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP information. It is managements intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX and net debt are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
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Forward-looking statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as anticipates, intends, plans, seeks, believes, estimates, expects, guidance, outlook, and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations and objectives for Apaches operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See Risk Factors in our 2016 Form 10-K filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.
APACHE CORPORATION ANNOUNCES THIRD-QUARTER 2017 FINANCIAL AND OPERATIONAL RESULTS
PAGE 8 of 8
Cautionary note to investors
The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SECs definitions for such terms. Apache may use certain terms in this earnings release, such as resources, potential resources, resource potential, estimated net reserves, recoverable reserves, and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apaches Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2016, available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SECs website at www.sec.gov.
Contacts
Investor: (281) 302-2286 Gary Clark
Media: (713) 296-7276 Castlen Kennedy
Website: www.apachecorp.com
-end-
APACHE CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
(In millions, except per share data)
For the Quarter Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
REVENUES AND OTHER: |
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Oil and gas production revenues |
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Oil revenues |
$ | 1,070 | $ | 1,117 | $ | 3,292 | $ | 3,057 | ||||||||
Gas revenues |
238 | 263 | 726 | 695 | ||||||||||||
Natural gas liquids revenues |
81 | 59 | 229 | 160 | ||||||||||||
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1,389 | 1,439 | 4,247 | 3,912 | |||||||||||||
Derivative instrument gains (losses), net |
(110 | ) | | (69 | ) | | ||||||||||
Gain on divestiture |
296 | 5 | 616 | 21 | ||||||||||||
Other |
| (6 | ) | 43 | (30 | ) | ||||||||||
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1,575 | 1,438 | 4,837 | 3,903 | |||||||||||||
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OPERATING EXPENSES: |
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Lease operating expenses |
358 | 382 | 1,066 | 1,119 | ||||||||||||
Gathering and transportation |
39 | 51 | 144 | 155 | ||||||||||||
Taxes other than income |
46 | 9 | 117 | 85 | ||||||||||||
Exploration |
231 | 161 | 431 | 347 | ||||||||||||
General and administrative |
98 | 102 | 307 | 298 | ||||||||||||
Transaction, reorganization and separation |
20 | 12 | 14 | 36 | ||||||||||||
Depreciation, depletion and amortization: |
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Oil and gas property and equipment |
524 | 610 | 1,598 | 1,875 | ||||||||||||
Other assets |
35 | 38 | 109 | 120 | ||||||||||||
Asset retirement obligation accretion |
30 | 40 | 103 | 116 | ||||||||||||
Impairments |
| 836 | 8 | 1,009 | ||||||||||||
Financing costs, net |
101 | 102 | 300 | 311 | ||||||||||||
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1,482 | 2,343 | 4,197 | 5,471 | |||||||||||||
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NET INCOME (LOSS) BEFORE INCOME TAXES |
93 | (905 | ) | 640 | (1,568 | ) | ||||||||||
Current income tax provision (benefit) |
99 | 150 | 413 | 284 | ||||||||||||
Deferred income tax provision (benefit) |
(111 | ) | (529 | ) | (758 | ) | (755 | ) | ||||||||
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NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST |
105 | (526 | ) | 985 | (1,097 | ) | ||||||||||
Income (Loss) from discontinued operations, net of tax |
| (33 | ) | | (33 | ) | ||||||||||
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INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST |
105 | (559 | ) | 985 | (1,130 | ) | ||||||||||
Net income attributable to noncontrolling interest |
42 | 48 | 137 | 93 | ||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK |
$ | 63 | $ | (607 | ) | $ | 848 | $ | (1,223 | ) | ||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS |
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Net income (loss) from continuing operations attributable to common shareholders |
$ | 63 | $ | (574 | ) | $ | 848 | $ | (1,190 | ) | ||||||
Net income (loss) from discontinued operations |
| (33 | ) | | (33 | ) | ||||||||||
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Net income (loss) attributable to common shareholders |
$ | 63 | $ | (607 | ) | $ | 848 | $ | (1,223 | ) | ||||||
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BASIC NET INCOME (LOSS) PER COMMON SHARE: |
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Basic net income (loss) from continuing operations per share |
$ | 0.16 | $ | (1.51 | ) | $ | 2.23 | $ | (3.14 | ) | ||||||
Basic net income (loss) from discontinued operations per share |
| (0.09 | ) | | (0.08 | ) | ||||||||||
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Basic net income (loss) per share |
$ | 0.16 | $ | (1.60 | ) | $ | 2.23 | $ | (3.22 | ) | ||||||
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DILUTED NET INCOME (LOSS) PER COMMON SHARE: |
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Diluted net income (loss) from continuing operations per share |
$ | 0.16 | $ | (1.51 | ) | $ | 2.22 | $ | (3.14 | ) | ||||||
Diluted net income (loss) from discontinued operations per share |
| (0.09 | ) | | (0.08 | ) | ||||||||||
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Diluted net income (loss) per share |
$ | 0.16 | $ | (1.60 | ) | $ | 2.22 | $ | (3.22 | ) | ||||||
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WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: |
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Basic |
381 | 380 | 381 | 379 | ||||||||||||
Diluted |
383 | 380 | 383 | 379 | ||||||||||||
DIVIDENDS DECLARED PER COMMON SHARE |
$ | 0.25 | $ | 0.25 | $ | 0.75 | $ | 0.75 |
Page 1
APACHE CORPORATION
PRODUCTION INFORMATION
For the Quarter Ended | % Change | For the Nine Months Ended | ||||||||||||||||||||||||||
September 30, 2017 |
June 30, 2017 |
September 30, 2016 |
3Q17 to 2Q17 |
3Q17 to 3Q16 |
September 30, 2017 |
September 30, 2016 |
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OIL VOLUMEBarrels per day |
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Permian |
77,701 | 71,891 | 79,751 | 8 | % | -3 | % | 74,943 | 86,462 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
9,670 | 10,197 | 13,727 | -5 | % | -30 | % | 10,331 | 16,025 | |||||||||||||||||||
Gulf of Mexico |
3,512 | 3,983 | 4,791 | -12 | % | -27 | % | 3,954 | 4,437 | |||||||||||||||||||
Canada |
3,441 | 11,638 | 12,619 | -70 | % | -73 | % | 8,881 | 13,331 | |||||||||||||||||||
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North America |
94,324 | 97,709 | 110,888 | -3 | % | -15 | % | 98,109 | 120,255 | |||||||||||||||||||
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Egypt (1, 2) |
93,749 | 96,961 | 110,809 | -3 | % | -15 | % | 97,447 | 105,118 | |||||||||||||||||||
North Sea |
49,945 | 48,091 | 49,192 | 4 | % | 2 | % | 49,274 | 55,071 | |||||||||||||||||||
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International (1) |
143,694 | 145,052 | 160,001 | -1 | % | -10 | % | 146,721 | 160,189 | |||||||||||||||||||
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Total (1) |
238,018 | 242,761 | 270,889 | -2 | % | -12 | % | 244,830 | 280,444 | |||||||||||||||||||
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NATURAL GAS VOLUMEMcf per day |
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Permian |
278,308 | 237,455 | 237,313 | 17 | % | 17 | % | 247,991 | 240,253 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
115,982 | 114,534 | 141,273 | 1 | % | -18 | % | 117,978 | 148,336 | |||||||||||||||||||
Gulf of Mexico |
10,196 | 12,063 | 16,476 | -15 | % | -38 | % | 12,656 | 15,693 | |||||||||||||||||||
Canada |
107,524 | 205,408 | 233,635 | -48 | % | -54 | % | 175,787 | 248,912 | |||||||||||||||||||
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North America |
512,010 | 569,460 | 628,697 | -10 | % | -19 | % | 554,412 | 653,194 | |||||||||||||||||||
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Egypt (1, 2) |
378,426 | 383,296 | 405,863 | -1 | % | -7 | % | 389,533 | 403,832 | |||||||||||||||||||
North Sea |
50,057 | 34,348 | 69,509 | 46 | % | -28 | % | 42,800 | 66,884 | |||||||||||||||||||
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International (1) |
428,483 | 417,644 | 475,372 | 3 | % | -10 | % | 432,333 | 470,716 | |||||||||||||||||||
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Total (1) |
940,493 | 987,104 | 1,104,069 | -5 | % | -15 | % | 986,745 | 1,123,910 | |||||||||||||||||||
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NGL VOLUMEBarrels per day |
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Permian |
36,737 | 34,067 | 39,929 | 8 | % | -8 | % | 35,070 | 38,716 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
12,137 | 12,636 | 15,838 | -4 | % | -23 | % | 12,649 | 16,752 | |||||||||||||||||||
Gulf of Mexico |
275 | 326 | 588 | -16 | % | -53 | % | 344 | 429 | |||||||||||||||||||
Canada |
2,183 | 4,365 | 6,039 | -50 | % | -64 | % | 3,780 | 5,879 | |||||||||||||||||||
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North America |
51,332 | 51,394 | 62,394 | 0 | % | -18 | % | 51,843 | 61,776 | |||||||||||||||||||
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Egypt (1, 2) |
916 | 880 | 1,124 | 4 | % | -19 | % | 917 | 1,120 | |||||||||||||||||||
North Sea |
1,219 | 741 | 1,697 | 65 | % | -28 | % | 1,044 | 1,557 | |||||||||||||||||||
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International (1) |
2,135 | 1,621 | 2,821 | 32 | % | -24 | % | 1,961 | 2,677 | |||||||||||||||||||
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Total |
53,467 | 53,015 | 65,215 | 1 | % | -18 | % | 53,804 | 64,453 | |||||||||||||||||||
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BOE per day |
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Permian |
160,823 | 145,533 | 159,232 | 11 | % | 1 | % | 151,346 | 165,221 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
41,138 | 41,923 | 53,111 | -2 | % | -23 | % | 42,643 | 57,500 | |||||||||||||||||||
Gulf of Mexico |
5,486 | 6,319 | 8,125 | -13 | % | -32 | % | 6,407 | 7,481 | |||||||||||||||||||
Canada |
23,544 | 50,238 | 57,597 | -53 | % | -59 | % | 41,959 | 60,695 | |||||||||||||||||||
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North America |
230,991 | 244,013 | 278,065 | -5 | % | -17 | % | 242,355 | 290,897 | |||||||||||||||||||
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Egypt (1, 2) |
157,737 | 161,724 | 179,575 | -2 | % | -12 | % | 163,286 | 173,544 | |||||||||||||||||||
North Sea |
59,507 | 54,556 | 62,475 | 9 | % | -5 | % | 57,451 | 67,775 | |||||||||||||||||||
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International (1) |
217,244 | 216,280 | 242,050 | 0 | % | -10 | % | 220,737 | 241,319 | |||||||||||||||||||
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Total (1) |
448,235 | 460,293 | 520,115 | -3 | % | -14 | % | 463,092 | 532,216 | |||||||||||||||||||
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Total excluding noncontrolling interests |
395,578 | 405,989 | 460,363 | -3 | % | -14 | % | 408,502 | 474,447 | |||||||||||||||||||
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(1) Includes net production volumes attributed to our noncontrolling partner in Egypt below: |
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Oil (b/d) |
31,275 | 32,562 | 36,839 | 32,573 | 34,964 | |||||||||||||||||||||||
Gas (Mcf/d) |
126,459 | 128,696 | 135,233 | 130,263 | 134,591 | |||||||||||||||||||||||
NGL (b/d) |
305 | 293 | 374 | 306 | 373 | |||||||||||||||||||||||
(2) Egypt Gross ProductionBOE per day |
339,069 | 334,496 | 350,366 | 1 | % | -3 | % | 333,942 | 351,015 |
Page 2
APACHE CORPORATION
ADJUSTED PRODUCTION INFORMATION
Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) divested assets, 2) noncontrolling interest in Egypt, and 3) Egypt tax barrels. Management uses adjusted production to evaluate the companys operational trends and performance and believes it is useful to investors and other third parties.
For the Quarter Ended | % Change | For the Nine Months Ended | ||||||||||||||||||||||||||
September 30, 2017 |
June 30, 2017 |
September 30, 2016 |
3Q17 to 2Q17 |
3Q17 to 3Q16 |
September 30, 2017 |
September 30, 2016 |
||||||||||||||||||||||
OIL VOLUMEBarrels per day |
||||||||||||||||||||||||||||
Permian |
77,701 | 71,891 | 79,177 | 8 | % | -2 | % | 74,796 | 85,845 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
9,670 | 10,197 | 13,727 | -5 | % | -30 | % | 10,331 | 16,025 | |||||||||||||||||||
Gulf of Mexico |
3,512 | 3,983 | 4,791 | -12 | % | -27 | % | 3,954 | 4,437 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
90,883 | 86,071 | 97,695 | 6 | % | -7 | % | 89,081 | 106,307 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
49,992 | 51,776 | 57,476 | -3 | % | -13 | % | 51,134 | 58,439 | |||||||||||||||||||
North Sea |
49,945 | 48,091 | 49,192 | 4 | % | 2 | % | 49,274 | 55,071 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
99,937 | 99,867 | 106,668 | 0 | % | -6 | % | 100,408 | 113,510 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
190,820 | 185,938 | 204,363 | 3 | % | -7 | % | 189,489 | 219,817 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NATURAL GAS VOLUMEMcf per day |
||||||||||||||||||||||||||||
Permian |
278,308 | 237,455 | 233,503 | 17 | % | 19 | % | 247,335 | 237,135 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
115,982 | 114,534 | 141,273 | 1 | % | -18 | % | 117,978 | 148,336 | |||||||||||||||||||
Gulf of Mexico |
10,196 | 12,063 | 16,476 | -15 | % | -38 | % | 12,656 | 15,693 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
404,486 | 364,052 | 391,252 | 11 | % | 3 | % | 377,969 | 401,164 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
216,990 | 220,061 | 236,740 | -1 | % | -8 | % | 218,061 | 248,094 | |||||||||||||||||||
North Sea |
50,057 | 34,348 | 69,509 | 46 | % | -28 | % | 42,800 | 66,884 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
267,047 | 254,409 | 306,249 | 5 | % | -13 | % | 260,861 | 314,978 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
671,533 | 618,461 | 697,501 | 9 | % | -4 | % | 638,830 | 716,142 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
NGL VOLUMEBarrels per day |
||||||||||||||||||||||||||||
Permian |
36,737 | 34,067 | 39,041 | 8 | % | -6 | % | 34,968 | 38,029 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
12,137 | 12,636 | 15,838 | -4 | % | -23 | % | 12,649 | 16,752 | |||||||||||||||||||
Gulf of Mexico |
275 | 326 | 588 | -16 | % | -53 | % | 344 | 429 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
49,149 | 47,029 | 55,467 | 5 | % | -11 | % | 47,961 | 55,210 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
534 | 540 | 631 | -1 | % | -15 | % | 529 | 700 | |||||||||||||||||||
North Sea |
1,219 | 741 | 1,697 | 65 | % | -28 | % | 1,044 | 1,557 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
1,753 | 1,281 | 2,328 | 37 | % | -25 | % | 1,573 | 2,257 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
50,902 | 48,310 | 57,795 | 5 | % | -12 | % | 49,534 | 57,467 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
BOE per day |
||||||||||||||||||||||||||||
Permian |
160,823 | 145,533 | 157,134 | 11 | % | 2 | % | 150,988 | 163,396 | |||||||||||||||||||
MidContinent/Gulf Coast Region |
41,138 | 41,923 | 53,111 | -2 | % | -23 | % | 42,643 | 57,500 | |||||||||||||||||||
Gulf of Mexico |
5,486 | 6,319 | 8,125 | -13 | % | -32 | % | 6,407 | 7,481 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
North America |
207,447 | 193,775 | 218,370 | 7 | % | -5 | % | 200,038 | 228,377 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Egypt |
86,691 | 88,993 | 97,564 | -3 | % | -11 | % | 88,006 | 100,488 | |||||||||||||||||||
North Sea |
59,507 | 54,556 | 62,475 | 9 | % | -5 | % | 57,451 | 67,775 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
International |
146,198 | 143,549 | 160,039 | 2 | % | -9 | % | 145,457 | 168,263 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
353,645 | 337,324 | 378,409 | 5 | % | -7 | % | 345,495 | 396,640 | |||||||||||||||||||
|
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|
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Page 3
APACHE CORPORATION
PRICE INFORMATION
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
September 30, 2017 |
June 30, 2017 |
September 30, 2016 |
September 30, 2017 |
September 30, 2016 |
||||||||||||||||
AVERAGE OIL PRICE PER BARREL |
||||||||||||||||||||
Permian |
$ | 45.68 | $ | 45.09 | $ | 41.85 | $ | 46.64 | $ | 37.63 | ||||||||||
MidContinent/Gulf Coast Region |
45.99 | 46.19 | 41.98 | 47.21 | 36.96 | |||||||||||||||
Gulf of Mexico |
46.50 | 45.85 | 41.63 | 47.24 | 37.75 | |||||||||||||||
Canada |
42.23 | 44.52 | 40.17 | 45.25 | 36.04 | |||||||||||||||
North America |
45.56 | 45.10 | 41.65 | 46.42 | 37.36 | |||||||||||||||
Egypt |
51.23 | 47.98 | 46.54 | 50.78 | 41.97 | |||||||||||||||
North Sea |
53.11 | 48.21 | 45.47 | 51.35 | 41.28 | |||||||||||||||
International |
51.87 | 48.06 | 46.20 | 50.97 | 41.74 | |||||||||||||||
Total |
49.34 | 46.89 | 44.35 | 49.15 | 39.86 | |||||||||||||||
AVERAGE NATURAL GAS PRICE PER MCF |
||||||||||||||||||||
Permian |
$ | 2.56 | $ | 2.50 | $ | 2.60 | $ | 2.54 | $ | 2.03 | ||||||||||
MidContinent/Gulf Coast Region |
2.78 | 2.88 | 2.79 | 2.93 | 2.05 | |||||||||||||||
Gulf of Mexico |
2.97 | 3.03 | 3.08 | 3.04 | 2.42 | |||||||||||||||
Canada |
1.90 | 2.14 | 1.71 | 2.17 | 1.47 | |||||||||||||||
North America |
2.47 | 2.39 | 2.31 | 2.45 | 1.80 | |||||||||||||||
Egypt |
2.81 | 2.73 | 2.75 | 2.77 | 2.69 | |||||||||||||||
North Sea |
5.27 | 4.54 | 4.14 | 5.27 | 4.12 | |||||||||||||||
International |
3.10 | 2.88 | 2.96 | 3.02 | 2.89 | |||||||||||||||
Total |
2.75 | 2.60 | 2.59 | 2.70 | 2.26 | |||||||||||||||
AVERAGE NGL PRICE PER BARREL |
||||||||||||||||||||
Permian |
$ | 16.68 | $ | 13.08 | $ | 10.42 | $ | 15.47 | $ | 9.08 | ||||||||||
MidContinent/Gulf Coast Region |
12.92 | 10.03 | 7.38 | 12.65 | 7.67 | |||||||||||||||
Gulf of Mexico |
19.64 | 13.10 | 12.93 | 18.46 | 8.49 | |||||||||||||||
Canada |
15.80 | 15.99 | 6.10 | 16.39 | 6.61 | |||||||||||||||
North America |
15.77 | 12.58 | 9.25 | 14.87 | 8.46 | |||||||||||||||
Egypt |
36.47 | 31.11 | 28.12 | 35.98 | 27.54 | |||||||||||||||
North Sea |
26.92 | 22.92 | 24.45 | 30.51 | 21.82 | |||||||||||||||
International |
31.02 | 27.37 | 25.91 | 33.07 | 24.21 | |||||||||||||||
Total |
16.38 | 13.03 | 9.97 | 15.53 | 9.11 |
Page 4
APACHE CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
SUMMARY OF DERIVATIVE INSTRUMENT GAINS (LOSSES), NET (Unaudited) (In millions) |
| |||||||||||||||
For the Quarter Ended September 30, |
For the Nine Months Ended Ended September 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Derivative settlementsrealized gain |
$ | 23 | $ | | $ | 23 | $ | | ||||||||
Amortization of put premiumrealized (loss) |
(50 | ) | | (50 | ) | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Realized (loss) |
(27 | ) | | (27 | ) | | ||||||||||
Unrealized mark-to-market (loss) |
(83 | ) | | (42 | ) | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | (110 | ) | $ | | $ | (69 | ) | $ | | |||||||
|
|
|
|
|
|
|
|
|||||||||
SUMMARY EXPLORATION EXPENSE INFORMATION (Unaudited) (In millions) |
| |||||||||||||||
For the Quarter Ended September 30, |
For the Nine Months Ended Ended September 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Unproved leasehold impairments |
$ | 160 | $ | 114 | $ | 214 | $ | 222 | ||||||||
Dry hole expense |
38 | 7 | 136 | 38 | ||||||||||||
Geological and geophysical expense |
12 | 21 | 24 | 30 | ||||||||||||
Exploration overhead and other |
21 | 19 | 57 | 57 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 231 | $ | 161 | $ | 431 | $ | 347 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
SUMMARY CASH FLOW INFORMATION (Unaudited) (In millions) |
| |||||||||||||||
For the Quarter Ended September 30, |
For the Nine Months Ended Ended September 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net cash provided by operating activities |
$ | 554 | $ | 651 | $ | 1,760 | $ | 1,634 | ||||||||
Net cash used in investing activities |
(94 | ) | (396 | ) | (623 | ) | (1,362 | ) | ||||||||
Net cash used in financing activities |
(185 | ) | (226 | ) | (572 | ) | (509 | ) |
SUMMARY BALANCE SHEET INFORMATION
(Unaudited)
(In millions)
September 30, 2017 |
December 31, 2016 |
|||||||
Cash and cash equivalents |
$ | 1,846 | $ | 1,377 | ||||
Restricted cash |
96 | | ||||||
Other current assets |
1,827 | 1,864 | ||||||
Property and equipment, net |
17,655 | 18,867 | ||||||
Other assets |
411 | 411 | ||||||
|
|
|
|
|||||
Total assets |
$ | 21,835 | $ | 22,519 | ||||
|
|
|
|
|||||
Current Debt |
$ | 550 | $ | | ||||
Current liabilities |
1,915 | 1,843 | ||||||
Long-term debt |
7,933 | 8,544 | ||||||
Deferred credits and other noncurrent liabilities |
3,060 | 4,453 | ||||||
Apache shareholders equity |
7,011 | 6,238 | ||||||
Noncontrolling interest |
1,366 | 1,441 | ||||||
|
|
|
|
|||||
Total Liabilities and shareholders equity |
$ | 21,835 | $ | 22,519 | ||||
|
|
|
|
|||||
Common shares outstanding at end of period |
381 | 379 |
Page 5
APACHE CORPORATION
NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
Reconciliation of net cash provided by operating activities to adjusted EBITDAX
Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a companys ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Companys on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Net cash provided by operating activities |
$ | 554 | $ | 751 | $ | 651 | $ | 1,760 | $ | 1,634 | ||||||||||
Adjustments: |
||||||||||||||||||||
Exploration expense other than dry hole expense and unproved leasehold impairments |
33 | 23 | 40 | 81 | 87 | |||||||||||||||
Current income tax provision |
99 | 126 | 150 | 413 | 284 | |||||||||||||||
Other adjustments to reconcile net loss to net cash provided by operating activities |
(87 | ) | (5 | ) | (35 | ) | (167 | ) | (126 | ) | ||||||||||
Changes in operating assets and liabilities |
101 | (148 | ) | (31 | ) | 228 | (1 | ) | ||||||||||||
Financing costs, net |
101 | 99 | 102 | 300 | 311 | |||||||||||||||
Transaction, reorganization & separation costs |
20 | 4 | 12 | 14 | 36 | |||||||||||||||
Contract termination charges |
| | 7 | | 10 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted EBITDAX (Non-GAAP) |
$ | 821 | $ | 850 | $ | 896 | $ | 2,629 | $ | 2,235 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Reconciliation of income (loss) attributable to common stock to adjusted earnings
Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Companys operational trends and comparability of results to our peers.
Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Companys on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Companys industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.
For the Quarter Ended | For the Quarter Ended | |||||||||||||||||||||||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||||||||||||||||||||||
Before Tax |
Tax Impact |
After Tax |
Diluted EPS |
Before Tax |
Tax Impact |
After Tax |
Diluted EPS |
|||||||||||||||||||||||||
Income (loss) attributable to common stock (GAAP) |
$ | 51 | $ | 12 | $ | 63 | 0.16 | $ | (986 | ) | $ | 379 | $ | (607 | ) | (1.60 | ) | |||||||||||||||
Adjustments: * |
||||||||||||||||||||||||||||||||
Valuation allowance and other tax adjustments |
| (1 | ) | (1 | ) | | | (58 | ) | (58 | ) | (0.15 | ) | |||||||||||||||||||
Gain on divestitures |
(296 | ) | 77 | (219 | ) | (0.56 | ) | (5 | ) | 2 | (3 | ) | | |||||||||||||||||||
Asset impairments |
160 | (56 | ) | 104 | 0.27 | 950 | (322 | ) | 628 | 1.65 | ||||||||||||||||||||||
Unrealized derivative instrument loss |
83 | (29 | ) | 54 | 0.14 | | | | | |||||||||||||||||||||||
Transaction, reorganization & separation costs |
20 | (7 | ) | 13 | 0.03 | 12 | (4 | ) | 8 | 0.02 | ||||||||||||||||||||||
Elimination of PRT liability |
| | | | (28 | ) | 11 | (17 | ) | (0.04 | ) | |||||||||||||||||||||
Discontinued Operations |
| | | | 33 | | 33 | 0.08 | ||||||||||||||||||||||||
Contract termination charges |
| | | | 7 | (3 | ) | 4 | 0.01 | |||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted earnings (Non-GAAP) |
$ | 18 | $ | (4 | ) | $ | 14 | 0.04 | $ | (17 | ) | $ | 5 | $ | (12 | ) | (0.03 | ) | ||||||||||||||
|
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|
|
|
|
|
|
|||||||||||||||||
For the Nine Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||||||||||||||||||||||
Before Tax |
Tax Impact |
After Tax |
Diluted EPS |
Before Tax |
Tax Impact |
After Tax |
Diluted EPS |
|||||||||||||||||||||||||
Income (Loss) Attributable to Common Stock (GAAP) |
$ | 503 | $ | 345 | $ | 848 | 2.22 | $ | (1,694 | ) | $ | 471 | $ | (1,223 | ) | (3.22 | ) | |||||||||||||||
Adjustments: * |
||||||||||||||||||||||||||||||||
Valuation allowance and other tax adjustments |
| (641 | ) | (641 | ) | (1.69 | ) | | (29 | ) | (29 | ) | (0.07 | ) | ||||||||||||||||||
Gain on divestitures |
(616 | ) | 194 | (422 | ) | (1.10 | ) | (21 | ) | 6 | (15 | ) | (0.04 | ) | ||||||||||||||||||
Asset impairments |
222 | (78 | ) | 144 | 0.38 | 1,231 | (436 | ) | 795 | 2.09 | ||||||||||||||||||||||
Unrealized derivative instrument loss |
42 | (15 | ) | 27 | 0.07 | | | | | |||||||||||||||||||||||
Transaction, reorganization & separation costs |
14 | (5 | ) | 9 | 0.03 | 36 | (12 | ) | 24 | 0.06 | ||||||||||||||||||||||
Loss on extinguishment of debt |
1 | | 1 | | | | | | ||||||||||||||||||||||||
Discontinued Operations |
| | | | 33 | | 33 | 0.08 | ||||||||||||||||||||||||
Contract termination charges |
| | | | 10 | (3 | ) | 7 | 0.02 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Adjusted Earnings (Non-GAAP) |
$ | 166 | $ | (200 | ) | $ | (34 | ) | (0.09 | ) | $ | (405 | ) | $ | (3 | ) | $ | (408 | ) | (1.08 | ) | |||||||||||
|
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|
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|
|
* | The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides. |
Page 6
APACHE CORPORATION
NON-GAAP FINANCIAL MEASURES
(In millions)
Reconciliation of Debt to Net debt
Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Companys outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
December 31, 2016 |
|||||||||||||
Current debt |
$ | 550 | $ | 150 | $ | 150 | $ | | ||||||||
Long-term debt |
7,933 | 8,329 | 8,327 | 8,544 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total debt |
8,483 | 8,479 | 8,477 | 8,544 | ||||||||||||
Cash and cash equivalents |
1,846 | 1,667 | 1,521 | 1,377 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net debt |
$ | 6,637 | $ | 6,812 | $ | 6,956 | $ | 7,167 | ||||||||
|
|
|
|
|
|
|
|
Reconciliation of Costs incurred and GTP capital investments to Oil and gas capital investment
Management believes the presentation of oil and gas capital investments is useful for investors to assess Apaches expenditures related to our oil and gas capital activity. We define oil and gas capital investments as costs incurred for oil and gas activities and GTP activities, adjusted to exclude asset retirement obligations revisions and liabilities incurred, while including amounts paid during the period for abandonment and decommissioning expenditures. Capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of Apaches cash expenditures related to oil and gas capital activity and is consistent with how we plan our capital budget.
For the Quarter Ended September 30, |
For the Nine Months Ended Ended September 30, |
|||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Costs incurred in oil and gas property: |
||||||||||||||||
Acquisitions |
||||||||||||||||
Proved |
$ | | $ | 2 | $ | 3 | $ | 43 | ||||||||
Unproved |
85 | 52 | 149 | 160 | ||||||||||||
Exploration and development |
734 | 408 | 1,980 | 1,308 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
819 | 462 | 2,132 | 1,511 | |||||||||||||
GTP capital investments: |
||||||||||||||||
GTP facilities |
109 | 31 | 397 | 31 | ||||||||||||
|
|
|
|
|
|
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Total Costs incurred and GTP capital investments |
$ | 928 | $ | 493 | $ | 2,529 | $ | 1,542 | ||||||||
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Reconciliation of Costs incurred and GTP to Oil and gas capital investment |
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Asset retirement obligations incurred and revisions |
$ | (1 | ) | $ | (1 | ) | $ | (120 | ) | (100 | ) | |||||
Asset retirement obligations settled |
10 | 8 | 32 | 35 | ||||||||||||
Exploration expense other than dry hole expense and unproved leasehold impairments |
(33 | ) | (40 | ) | (81 | ) | (87 | ) | ||||||||
Less noncontrolling interest |
(61 | ) | (28 | ) | (133 | ) | (132 | ) | ||||||||
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Total Oil and gas capital investment |
$ | 843 | $ | 432 | $ | 2,227 | $ | 1,258 | ||||||||
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Reconciliation of net cash provided by operating activities to cash flows from continuing operations before changes in operating assets and liabilities
Cash flows from continuing operations before changes in operating assets and liabilities is a non-GAAP financial measure. Apache uses it internally and provides the information because management believes it is useful for investors 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 flows 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.
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
Net cash provided by operating activities |
$ | 554 | $ | 751 | $ | 651 | $ | 1,760 | $ | 1,634 | ||||||||||
Changes in operating assets and liabilities |
101 | (148 | ) | (31 | ) | 228 | (1 | ) | ||||||||||||
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Cash flows from operations before changes in operating assets and liabilities |
$ | 655 | $ | 603 | $ | 620 | $ | 1,988 | $ | 1,633 | ||||||||||
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