APACHE CORP - FORM 8-K - EX-99.1

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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, Apache’s 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, Apache’s 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 Apache’s 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. Apache’s 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 Apache’s 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

— PAGE 4 of 8

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 Apache’s 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 year’s 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 Apache’s 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. Apache’s 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 Google’s Play store.

Non-GAAP financial measures

Apache’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP information. It is management’s 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

— PAGE 7 of 8

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 Apache’s 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 SEC’s 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 Apache’s 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 SEC’s 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:
Oil and gas production revenues
Oil revenues	$	1,070		$	1,117		$	3,292		$	3,057
Gas revenues		238			263			726			695
Natural gas liquids revenues		81			59			229			160

		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	)

		1,575			1,438			4,837			3,903

OPERATING EXPENSES:
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:
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

		1,482			2,343			4,197			5,471

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	)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		105			(526	)		985			(1,097	)
Income (Loss) from discontinued operations, net of tax		—			(33	)		—			(33	)

INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		105			(559	)		985			(1,130	)
Net income attributable to noncontrolling interest		42			48			137			93

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	63		$	(607	)	$	848		$	(1,223	)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
Net income (loss) from continuing operations attributable to common shareholders	$	63		$	(574	)	$	848		$	(1,190	)
Net income (loss) from discontinued operations		—			(33	)		—			(33	)

Net income (loss) attributable to common shareholders	$	63		$	(607	)	$	848		$	(1,223	)

BASIC NET INCOME (LOSS) PER COMMON SHARE:
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	)

Basic net income (loss) per share	$	0.16		$	(1.60	)	$	2.23		$	(3.22	)

DILUTED NET INCOME (LOSS) PER COMMON SHARE:
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	)

Diluted net income (loss) per share	$	0.16		$	(1.60	)	$	2.22		$	(3.22	)

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
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
OIL VOLUME—Barrels per day
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

North America		94,324		97,709		110,888		-3	%		-15	%		98,109		120,255

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

International ⁽¹⁾		143,694		145,052		160,001		-1	%		-10	%		146,721		160,189

Total ⁽¹⁾		238,018		242,761		270,889		-2	%		-12	%		244,830		280,444

NATURAL GAS VOLUME—Mcf per day
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

North America		512,010		569,460		628,697		-10	%		-19	%		554,412		653,194

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

International ⁽¹⁾		428,483		417,644		475,372		3	%		-10	%		432,333		470,716

Total ⁽¹⁾		940,493		987,104		1,104,069		-5	%		-15	%		986,745		1,123,910

NGL VOLUME—Barrels per day
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

North America		51,332		51,394		62,394		0	%		-18	%		51,843		61,776

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

International ⁽¹⁾		2,135		1,621		2,821		32	%		-24	%		1,961		2,677

Total		53,467		53,015		65,215		1	%		-18	%		53,804		64,453

BOE per day
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

North America		230,991		244,013		278,065		-5	%		-17	%		242,355		290,897

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

International ⁽¹⁾		217,244		216,280		242,050		0	%		-10	%		220,737		241,319

Total ⁽¹⁾		448,235		460,293		520,115		-3	%		-14	%		463,092		532,216

Total excluding noncontrolling interests		395,578		405,989		460,363		-3	%		-14	%		408,502		474,447


⁽¹⁾ Includes net production volumes attributed to our noncontrolling partner in Egypt below:
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 Production—BOE 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 company’s 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 VOLUME—Barrels 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 VOLUME—Mcf 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 VOLUME—Barrels 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

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 settlements—realized gain	$	23		$	—		$	23		$	—
Amortization of put premium—realized (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 company’s 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 Company’s 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 Company’s 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 Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s 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

Adjusted earnings (Non-GAAP)	$	18		$	(4	)	$	14			0.04		$	(17	)	$	5		$	(12	)		(0.03	)


	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	)

*	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 Company’s 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 Apache’s 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 Apache’s 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

Total Costs incurred and GTP capital investments	$	928		$	493		$	2,529		$	1,542

Reconciliation of Costs incurred and GTP to Oil and gas capital investment
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	)

Total Oil and gas capital investment	$	843		$	432		$	2,227		$	1,258

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 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 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	)

Cash flows from operations before changes in operating assets and liabilities	$	655	$	603		$	620		$	1,988	$	1,633

Page 7

APACHE CORP - FORM 8-K - EX-99.1 - November 2, 2017

Attached files

APACHE CORP Reports