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| 8-K - FORM 8-K - APACHE CORP | d606546d8k.htm |
EXHIBIT 99.1
APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On July 18, 2013, Apache Corporation (“Apache” or the “Company”) and Fieldwood Energy LLC (“Fieldwood”), an affiliate of Riverstone Holdings, entered into a Purchase and Sale Agreement (the “Agreement”), pursuant to which Apache agreed to sell its Gulf of Mexico Shelf operations and properties (“Shelf Assets”) to Fieldwood for a purchase price of $3.75 billion, subject to customary adjustments to reflect an economic effective date of July 1, 2013. The transaction closed on September 30, 2013. In the transaction, Fieldwood assumed all asset retirement obligations for the acquired properties, which are estimated by Apache to be at a discounted value of approximately $1.5 billion. Apache has retained 50 percent of its ownership interest in all exploration blocks and in horizons below production in developed blocks, where high-potential deep hydrocarbon plays are being tested. The Company intends to use the proceeds from the transaction to reduce debt and enhance financial flexibility. Pursuant to the Agreement, Apache will continue to operate the acquired properties during a transitional period.
The following unaudited pro forma condensed consolidated financial statements and explanatory notes present how the condensed consolidated financial statements of Apache may have appeared had the sales of the Shelf Assets occurred as of January 1, 2012 (with respect to the statement of operations information presented) or as of June 30, 2013 (with respect to the balance sheet information presented).
The unaudited pro forma condensed consolidated financial statements have been derived from and should be read together with the historical consolidated financial statements and the related notes of Apache included in its Annual Report on Form 10-K for the year ended December 31, 2012 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.
The unaudited pro forma condensed consolidated financial statement information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the use of estimates that affect the reported amounts of revenues and expenses. The unaudited pro forma condensed consolidated financial information does not purport to represent what the results of operations or financial position of Apache would actually have been had the transaction described above occurred on the dates noted above, or to project the results of operations or financial position of Apache for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable. The pro forma adjustments are directly attributable to the transaction and are expected to have a continuing impact on the results of operations of Apache. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma financial information have been made.
A-1
APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2012
| Apache Historical |
Pro Forma Adjustments |
Apache Pro Forma |
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| (In millions, except per common share data) | ||||||||||||
| Revenues and Other |
$ | 17,078 | $ | (2,090 | ) (a) | $ | 14,988 | |||||
| Operating Expenses |
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| Depreciation, depletion and amortization |
7,109 | (681 | ) (b) | 6,428 | ||||||||
| Asset retirement obligation accretion |
232 | (78 | ) (c) | 154 | ||||||||
| Lease operating expenses |
2,968 | (718 | ) (a) | 2,250 | ||||||||
| Gathering and transportation |
303 | (28 | ) (a) | 275 | ||||||||
| Taxes other than income |
862 | (3 | ) (a) | 859 | ||||||||
| Merger, acquisition & transition |
31 | — | 31 | |||||||||
| General and administrative |
531 | (21 | ) (a) | 510 | ||||||||
| Financing costs, net |
165 | — | 165 | |||||||||
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| $ | 12,201 | $ | (1,529 | ) | $ | 10,672 | ||||||
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| Income (Loss) Before Income Taxes |
$ | 4,877 | $ | (561 | ) | $ | 4,316 | |||||
| Provision for income taxes |
2,876 | (196 | ) (d) | 2,680 | ||||||||
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| Net Income (Loss) |
$ | 2,001 | $ | (365 | ) | $ | 1,636 | |||||
| Preferred dividend requirements |
76 | — | 76 | |||||||||
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| Income (Loss) Attributable to Common Stock |
$ | 1,925 | $ | (365 | ) | $ | 1,560 | |||||
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| Net Income (Loss) per Common Share: |
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| Basic |
4.95 | 4.01 | ||||||||||
| Diluted |
4.92 | 3.99 | ||||||||||
| Weighted average common shares outstanding |
389 | 389 | ||||||||||
| Diluted shares outstanding |
391 | 391 | ||||||||||
The accompanying notes to unaudited pro forma condensed consolidated
financial statements are an integral part of these statements.
A-2
APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2013
| Apache Historical |
Pro Forma Adjustments |
Apache Pro Forma |
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| (In millions, except per common share data) | ||||||||||||
| Revenues and Other |
$ | 8,459 | $ | (1,119 | ) (a) | $ | 7,340 | |||||
| Operating Expenses |
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| Depreciation, depletion and amortization |
2,839 | (356 | ) (b) | 2,483 | ||||||||
| Asset retirement obligation |
130 | (36 | ) (c) | 94 | ||||||||
| Lease operating expenses |
1,600 | (392 | ) (a) | 1,208 | ||||||||
| Gathering and transportation |
154 | (17 | ) (a) | 137 | ||||||||
| Taxes other than income |
425 | (1 | ) (a) | 424 | ||||||||
| General and administrative |
249 | (11 | ) (a) | 238 | ||||||||
| Financing costs, net |
104 | — | 104 | |||||||||
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| $ | 5,501 | $ | (813 | ) | $ | 4,688 | ||||||
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| Income (Loss) Before Income Taxes |
$ | 2,958 | $ | (306 | ) | $ | 2,652 | |||||
| Provision for income taxes |
1,206 | (107 | ) (d) | 1,099 | ||||||||
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| Net Income (Loss) |
$ | 1,752 | $ | (199 | ) | $ | 1,553 | |||||
| Preferred stock dividends |
38 | — | 38 | |||||||||
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| Income (Loss) Attributable to Common Stock |
$ | 1,714 | $ | (199 | ) | $ | 1,515 | |||||
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| Net Income per Common Share: |
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| Basic |
4.37 | 3.87 | ||||||||||
| Diluted |
4.30 | 3.81 | ||||||||||
| Weighted average common shares outstanding |
392 | 392 | ||||||||||
| Diluted shares outstanding |
408 | 408 | ||||||||||
The accompanying notes to unaudited pro forma condensed consolidated
financial statements are an integral part of these statements.
A-3
APACHE CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2013
| Apache Historical |
Pro Forma Adjustments |
Apache Pro Forma |
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| (In millions) | ||||||||||||
| Assets |
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| Current assets |
$ | 4,758 | $ | 2,279 | (e),(f) | $ | 7,037 | |||||
| Property and equipment |
99,493 | (5,191 | ) (g) | 94,302 | ||||||||
| Less: Accumulated DD&A |
(43,672 | ) | — | (43,672 | ) | |||||||
| Other noncurrent assets |
2,771 | — | 2,771 | |||||||||
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| $ | 63,350 | $ | (2,912 | ) | $ | 60,438 | ||||||
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| Liabilities and Shareholders’ Equity |
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| Current liabilities |
$ | 5,158 | $ | (213 | ) (e),(h) | $ | 4,945 | |||||
| Long-term debt |
12,297 | (1,430 | ) (e) | 10,867 | ||||||||
| Deferred income tax liabilities |
8,496 | — | 8,496 | |||||||||
| Asset retirement obligation |
4,278 | (1,269 | ) (h) | 3,009 | ||||||||
| Other noncurrent liabilities |
400 | — | 400 | |||||||||
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| Total Liabilities |
$ | 30,629 | $ | (2,912 | ) | $ | 27,717 | |||||
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| Preferred stock |
$ | 1,227 | $ | — | $ | 1,227 | ||||||
| Common stock |
246 | — | 246 | |||||||||
| Other shareholders’ equity |
31,248 | — | 31,248 | |||||||||
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| Shareholders’ equity |
$ | 32,721 | $ | — | $ | 32,721 | ||||||
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| $ | 63,350 | $ | (2,912 | ) | $ | 60,438 | ||||||
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The accompanying notes to unaudited pro forma condensed consolidated
financial statements are an integral part of these statements.
A-4
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
JUNE 30, 2013 AND DECEMBER 31, 2012
| 1. | BASIS OF PRESENTATION |
The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2012, is based on the Company’s audited consolidated financial statements in its annual report on Form 10-K for the year ended December 31, 2012 and the adjustments and assumptions described below.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 and unaudited pro forma condensed consolidated statement of operations for the six months ended June 30, 2013 is based on the Company’s unaudited condensed consolidated financial statements in its quarterly report on Form 10-Q as of and for the six months ended June 30, 2013 and the adjustments and assumptions described below.
| 2. | PRO FORMA ADJUSTMENTS |
The following adjustments were made in the preparation of the unaudited pro forma condensed consolidated financial statements:
Condensed Consolidated Statements of Operations
| (a) | To eliminate the revenues and direct operating expense for the assets sold. |
| (b) | To adjust depletion to give effect to the reduction in Apache’s pro forma oil and gas property and equipment carrying value, total estimated proved reserves, and production volumes as a result of the assets sold. |
| (c) | To eliminate accretion expense attributable to asset retirement obligations associated with the assets sold. |
| (d) | To eliminate income tax expense based on the Company’s current federal statutory tax rate of 35%. |
Condensed Consolidated Balance Sheet
| (e) | Adjustments reflect $3.79 billion of cash consideration for the sales of the Shelf Assets to Fieldwood and for properties subject to preferential purchase rights. Of the net cash proceeds received, approximately $1.4 billion was used to repay the Company’s commercial paper and approximately $26 million was used to repay the Company’s money market lines in the U.S. and Canada. |
| (f) | To eliminate current assets of approximately $58 million related to the assets sold. |
| (g) | To record the sales proceeds attributable to the proved and unproved oil and gas properties in accordance with the full cost method of accounting. For a detailed discussion of the Company’s Significant Accounting Policy for property and equipment, please see Note 1 – Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of the Company’s annual report on Form 10-K for the year ended December 31, 2012. |
| (h) | To eliminate approximately $1.5 billion related to the current and non-current portion of asset retirement obligation associated with the assets sold. |
A-5