APACHE CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - APACHE CORP	d726044d8k.htm

Exhibit 99.1

NEWS RELEASE

Apache reports record North America onshore liquids production for first-quarter 2014 with 21 percent year-over-year growth

•

Total North America onshore liquids volumes achieves record of 198,500 barrels per day

•

Worldwide production averages 640,000 barrels of oil equivalent (boe) per day; 672,000 boe per day including discontinued operations

•

Earnings from continuing operations of $1.90 per diluted share/$753 million; adjusted earnings of $1.78 per share/$707 million*

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Cash flow from operating activities of $2.3 billion; $2.2 billion from continuing operations before changes in working capital*

•

Repurchased an additional 5.9 million shares for $485 million during first-quarter 2014

HOUSTON, May 8, 2014 – Apache Corporation (NYSE, Nasdaq: APA) today announced first-quarter 2014 earnings from continuing operations of $753 million or $1.90 per diluted common share and adjusted earnings,* which exclude certain items that impact the comparability of results, of $707 million or $1.78 per share. For the same period in the prior year, Apache reported earnings from continuing operations of $759 million or $1.91 per diluted common share and adjusted earnings of $797 million or $2.00 per share. Net cash provided by operating activities totaled approximately $2.3 billion in first-quarter 2014, compared with $2.6 billion in the prior year, with cash from continuing operations before changes in operating assets and liabilities* totaling $2.2 billion, compared with $2.3 billion in first-quarter 2013.

“A record-setting performance by our Permian Region continues to drive strong overall results for the company,” said G. Steven Farris, chairman, chief executive officer and president of Apache. “We remained the most active driller in onshore North America, operating an average of 82 rigs during the quarter.”

Apache’s onshore North American liquids production increased 21 percent in first-quarter 2014 compared with the same period a year ago. The first-quarter 2014 average of 198,500 barrels per day for North American onshore liquids was up 6 percent compared with the fourth-quarter 2013.

LOGO

APACHE REPORTS FIRST-QUARTER 2014 RESULTS — ADD 1

“We continued to strengthen our portfolio and build momentum toward a strong second half of 2014,” Farris said. “Apache intensified its focus on North America liquids production by completing the sale of our Argentina operations and selected conventional natural gas properties in Western Canada.

“We are currently testing new plays and completion ideas along the Gulf Coast and are encouraged by early results in Canada where a focus on liquids-rich plays contributed to a 10 percent increase in crude oil and natural gas liquids (NGLs) compared with the preceding quarter,” Farris said. “Internationally, we are on track for first oil from significant development projects offshore Australia later this year at the Balnaves and Coniston fields, and we announced two new discoveries at the Matruh and Shushan basins in Egypt’s Western Desert.”

Apache also returned additional capital to shareholders, purchasing 5.9 million shares of Apache common stock on the open market from January through March 2014.

First-quarter production and operating highlights

Highlights from first-quarter drilling include:

•

Total worldwide net daily production of oil, natural gas and NGLs averaged 640,000 boe per day. Including discontinued operations in Argentina, daily production averaged 672,000 boe per day. Liquids production comprised 58 percent of the total from continuing operations, up from 57 percent for the fourth-quarter 2013.

•

The Permian and Central regions increased liquids production 31,000 barrels per day over the prior-year period. Total production from the two regions averaged 239,000 boe per day.

•

The Permian Region achieved record production averaging 150,000 boe per day, up 25 percent from the prior-year period. The region averaged 38 rigs in operation during the quarter and spud 202 gross wells (80 horizontals).

APACHE REPORTS FIRST-QUARTER 2014 RESULTS — ADD 2

Oil and gas prices

Apache’s mix of hydrocarbon production during the first-quarter 2014 included approximately 48 percent crude oil and 10 percent NGLs. Crude oil and NGLs contributed 82 percent of the company’s revenue during the period.

Worldwide, Apache received an average price of $101.03 per barrel of crude oil during the first quarter compared with $102.42 per barrel in the prior-year period. Apache received an average price of $4.46 per thousand cubic feet (Mcf) of natural gas, compared with $3.77 per Mcf in the prior-year period.

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom and Australia. 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 Google Play Store.

Adjusted earnings, cash from continuing operations before changes in operating assets and liabilities, and adjusted effective tax rate are non-GAAP measures. Please see reconciliations below. For supplemental financial and operational data and non-GAAP information, please go to http://www.apachecorp.com/financialdata.

Conference call

Apache will conduct a conference call to discuss its results and review its portfolio at 1 p.m. Central time Thursday, May 8. The conference call will be webcast from Apache’s website,

APACHE REPORTS FIRST-QUARTER 2014 RESULTS — ADD 3

www.apachecorp.com. The webcast replay will be archived on Apache’s website. The conference call will be available for delayed playback by telephone for one week beginning at approximately 4 p.m. Central time May 8. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 30665579.

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” and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations and objectives for Apache’s operations, including statements about our drilling plans and production expectations, asset sales and monetizations and share repurchases. 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 2013 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.

Contacts


Media:	(713) 296-6100	Patrick Cassidy
	(713) 296-7276	Bill Mintz
	(713) 296-6662	Bob Dye

Investor:	(281) 302-2286	Castlen Kennedy
		Christopher Cortez
		Alicia Reis

Website: www.apachecorp.com

APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(In millions, except per share data)


	For the Quarter Ended March 31,
	2014			2013

REVENUES AND OTHER:
Oil revenues	$	2,815		$	3,192
Gas revenues		646			681
NGL revenues		186			148

Oil and gas production revenues		3,647			4,021
Derivative instrument gains (losses)		(20	)		(100	)
Other		48			25

		3,675			3,946


COSTS AND EXPENSES:
Depreciation, depletion and amortization
Oil and gas property and equipment
Recurring		1,109			1,210
Other assets		97			102
Asset retirement obligation accretion		44			63
Lease operating expenses		597			722
Gathering and transportation		70			73
Taxes other than income		181			229
General and administrative		119			112
Acquisitions, divestitures & transition		2			—
Financing costs, net		27			55

		2,246			2,566


INCOME BEFORE INCOME TAXES		1,429			1,380
Current income tax provision		416			497
Deferred income tax provision		162			105


INCOME FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST		851			778
Loss from discontinued operations, net of tax		(517	)		(61	)


INCOME INCLUDING NONCONTROLLING INTEREST		334			717
Net income attributable to noncontrolling interest		98			—
Preferred stock dividends		—			19


NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	236		$	698


NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
Net income from continuing operations attributable to common shareholders	$	753		$	759
Net income (loss) from discontinued operations		(517	)		(61	)

Net income attributable to common shareholders	$	236		$	698


BASIC NET INCOME (LOSS) PER COMMON SHARE:
Basic net income from continuing operations per share	$	1.92		$	1.94
Basic net loss from discontinued operations per share		(1.32	)		(0.16	)

Basic net income per share	$	0.60		$	1.78


DILUTED NET INCOME (LOSS) PER COMMON SHARE:
Diluted net income from continuing operations per share	$	1.90		$	1.91
Diluted net loss from discontinued operations per share		(1.30	)		(0.15	)

Diluted net income per share	$	0.60		$	1.76


WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		394			392
Diluted		396			408

DIVIDENDS DECLARED PER COMMON SHARE	$	0.25		$	0.20

APACHE CORPORATION

SUMMARY OF CAPITAL COSTS INCURRED

(In millions)


	For the Quarter Ended March 31,
	2014		2013
CAPITAL EXPENDITURES:
Exploration & Development Costs
United States	$	1,349	$	1,269
Canada		269		258

North America		1,618		1,527

Egypt ⁽¹⁾		320		262
Australia		261		225
North Sea		227		177
Argentina		12		33
New Ventures - International		1		5

International ⁽¹⁾		821		702

Worldwide Exploration & Development Costs ⁽¹⁾	$	2,439	$	2,229


Gathering, Transmission and Processing Facilities
United States	$	45	$	18
Canada		102		30
Egypt ⁽¹⁾		15		19
Australia		168		180
Argentina		1		2
North Sea		1		—

Total Gathering, Transmission and Processing ⁽¹⁾	$	332	$	249


Asset Retirement Costs	$	28	$	134


Capitalized Interest ⁽²⁾	$	98	$	93


Capital Expenditures, excluding Acquisitions ⁽¹⁾	$	2,897	$	2,705


Asset Retirement Costs - Acquired	$	—	$	53


Acquisitions	$	2	$	310

⁽¹⁾	Includes capital costs attributable to noncontrolling interest in Egypt

⁽²⁾	Capitalized interest in both quarters includes Argentina discontinued operations of $3M

APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(In millions)


	March 31, 2014		December 31, 2013

Cash and Cash Equivalents	$	1,643	$	1,906
Other Current Assets		3,820		4,460
Property and Equipment, net		52,752		52,421
Goodwill		1,369		1,369
Other Assets		1,537		1,481

Total Assets	$	61,121	$	61,637


Short-Term Debt	$	—	$	53
Other Current Liabilities		4,356		4,647
Long-Term Debt		9,673		9,672
Deferred Credits and Other Noncurrent Liabilities		11,915		11,872
Apache Shareholders’ Equity		33,082		33,396
Noncontrolling interest		2,095		1,997

Total Liabilities and Shareholders’ Equity	$	61,121	$	61,637


Common shares outstanding at end of period		390		396

APACHE CORPORATION

PRODUCTION INFORMATION


	For the Quarter Ended March 31,
	2014		2013

OIL VOLUME - Barrels per day
Central		21,686		20,526
Permian		88,327		67,900
Gulf of Mexico		6,266		7,235
Gulf Coast		10,975		9,977
GOM Shelf		697		43,625

United States		127,951		149,263
Canada		17,589		17,176

North America		145,540		166,439

Egypt ⁽¹⁾		88,093		91,315
Australia		16,825		20,001
North Sea		59,092		68,462

International ⁽¹⁾		164,010		179,778

Total ⁽¹⁾		309,550		346,217


NATURAL GAS VOLUME - Mcf per day
Central		260,298		277,025
Permian		215,860		185,713
Gulf of Mexico		16,123		31,136
Gulf Coast		99,242		105,412
GOM Shelf		1,162		254,405

United States		592,685		853,691
Canada		377,712		519,175

North America		970,397		1,372,866

Egypt ⁽¹⁾		377,357		365,612
Australia		215,792		214,395
North Sea		45,071		55,032

International ⁽¹⁾		638,220		635,039

Total ⁽¹⁾		1,608,617		2,007,905


NGL VOLUME - Barrels per day
Central		24,455		19,517
Permian		25,260		20,583
Gulf of Mexico		828		887
Gulf Coast		2,423		2,313
GOM Shelf		92		5,999

United States		53,058		49,299
Canada		7,769		6,663

North America		60,827		55,962

Egypt ⁽¹⁾		233		—
North Sea		1,091		1,494

International ⁽¹⁾		1,324		1,494

Total ⁽¹⁾		62,151		57,456


BOE per day
Central		89,524		86,215
Permian		149,564		119,435
Gulf of Mexico		9,781		13,311
Gulf Coast		29,939		29,859
GOM Shelf		982		92,024

United States		279,790		340,844
Canada		88,310		110,368

North America		368,100		451,212

Egypt ⁽¹⁾		151,219		152,250
Australia		52,790		55,734
North Sea		67,695		79,128

International ⁽¹⁾		271,704		287,112

Total ⁽¹⁾		639,804		738,324



Total excluding noncontrolling interest		589,860		738,324

⁽¹⁾Includes production volume per day attributable to noncontrolling interest in Egypt

Oil (b/d)		29,066		—
Gas (mcf/d)		124,799		—
NGL (b/d)		78		—

Discontinued Operations - Argentina
Oil (b/d)		6,885		9,297
Gas (mcf/d)		141,352		188,259
NGL (b/d)		1,287		2,822
BOE/d		31,731		43,495

APACHE CORPORATION

PRICE INFORMATION


	For the Quarter Ended March 31,
	2014		2013

AVERAGE OIL PRICE PER BARREL
Central	$	93.72	$	88.15
Permian		93.76		82.78
Gulf of Mexico		101.44		110.47
Gulf Coast		101.87		111.03
GOM Shelf		NM		111.67
United States ⁽¹⁾		94.84		94.45
Canada		88.19		82.33
North America ⁽¹⁾		94.03		93.20
Egypt		106.70		110.99
Australia		112.26		112.35
North Sea		106.60		110.53
International		107.24		110.97
Total ⁽¹⁾		101.03		102.42

AVERAGE NATURAL GAS PRICE PER MCF
Central	$	5.20	$	3.73
Permian		4.78		3.77
Gulf of Mexico		5.23		3.40
Gulf Coast		4.93		3.55
GOM Shelf		NM		3.54
United States ⁽¹⁾		4.98		3.75
Canada		4.38		3.23
North America ⁽¹⁾		4.75		3.56
Egypt		3.02		2.95
Australia		4.42		4.94
North Sea		10.69		10.00
International		4.03		4.23
Total ⁽¹⁾		4.46		3.77

AVERAGE NGL PRICE PER BARREL
Central	$	30.39	$	26.54
Permian		31.46		25.71
Gulf of Mexico		32.00		34.68
Gulf Coast		35.90		33.69
GOM Shelf		NM		28.87
United States		30.81		26.96
Canada		42.09		32.15
North America		32.25		27.58
Egypt		64.34		—
North Sea		79.84		71.16
International		77.11		71.16
Total		33.20		28.71

Discontinued Operations - Argentina
Oil price ($/Bbl)	$	72.70	$	75.36
Gas price ($/Mcf)		3.04		3.18
NGL price ($/Bbl)		24.57		30.28

⁽¹⁾	Prices reflect the impact of financial derivative hedging activities.

APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of income attributable to common stock to adjusted earnings:

The press release discusses Apache’s 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 company’s 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 company’s results.


	For the Quarter Ended March 31,
	2014			2013

Income Attributable to Common Stock (GAAP)	$	236		$	698

Adjustments:
Argentina discontinued operations, net of tax	$	517		$	61
Unrealized foreign currency fluctuation impact on deferred tax expense		7			(4	)
Acquisitions, divestitures & transition costs		1			—
Deferred tax adjustments		(5	)		11
Commodity derivative mark-to-market, net of tax		(49	)		31

Adjusted Earnings (Non-GAAP)	$	707		$	797


Net Income per Common Share - Diluted (GAAP)	$	0.60		$	1.76

Adjustments:
Argentina discontinued operations, net of tax		1.30			0.15
Unrealized foreign currency fluctuation impact on deferred tax expense		0.02			(0.01	)
Deferred tax adjustments		(0.01	)		0.03
Commodity derivative mark-to-market, net of tax		(0.13	)		0.07

Adjusted Earnings Per Share - Diluted (Non-GAAP)	$	1.78		$	2.00


Total income tax provision (GAAP)	$	578		$	602
Tax impact on commodity derivative mark-to-market		(27	)		17
Foreign currency fluctuation impact on deferred tax expense		(7	)		4
Deferred tax adjustments		5			(11	)
Tax impact on acquisitions, divestitures & transition costs		1			—

Total income tax provision, net of adjustments	$	550		$	612


Effective Rate excluding Adjustments (Non-GAAP)		40.6	%		42.9	%

APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of net cash provided by operating activities to cash from continuing operations before changes in operating assets and liabilities:

The press release discusses Apache’s cash from operations before changes in operating assets and liabilities. It is presented because management believes the information is useful for investors because it is used internally and widely accepted by those following the oil and gas industry as a financial indicator of a company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt. It is also used by research analysts to value and compare oil and gas exploration and production companies, and is frequently included in published research when providing investment recommendations. Cash from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity, but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities.

The following table reconciles net cash provided by operating activities to cash from operations before changes in operating assets and liabilities.


	For the Quarter Ended March 31,
	2014			2013
Net cash provided by operating activities (GAAP)	$	2,293		$	2,621
Less: Discontinued operations		(82	)		(64	)

Net cash provided by operating activities excluding discontinued operations	$	2,211		$	2,557
Changes in operating assets and liabilities		11			(262	)

Cash from continuing operations before changes in operating assets and liabilities	$	2,222		$	2,295

APACHE CORP - FORM 8-K - EX-99.1 - May 8, 2014

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