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Apache's 12-Percent Production Growth, Higher Oil and Gas Prices Propel Record 2007 Earnings of $2.8 Billion or $8.39 per ShareFourth-quarter net income tops $1 billion
HOUSTON, Feb. 7 /PRNewswire-FirstCall/ -- Apache Corporation (NYSE: APA) (NASDAQ: APA) today reported record 2007 earnings of $2.8 billion, or $8.39 per diluted common share, driven by record production and higher oil and natural gas prices. Apache earned $2.5 billion or $7.64 per share in 2006. Excluding the non-cash impact of foreign currency fluctuations and tax rate changes on deferred tax balances, Apache's 2007 adjusted earnings* were $8.65 per share or 25 percent above 2006 adjusted earnings. In the fourth quarter, Apache's net income doubled to $1.07 billion, or $3.19 per share, from $519 million, or $1.56 per share, in the prior-year period. Apache's fourth-quarter adjusted earnings were $2.92 per share, up from $1.40 per share in the prior-year period. "Apache had a record year in 2007 by virtually all financial and operational yardsticks," said G. Steven Farris, president and chief executive officer. "In addition to record earnings, Apache achieved these record results:
-- Cash from operations before changes in operating assets and
liabilities* totaled $6.2 billion in 2007, up 22 percent from 2006.
Fourth-quarter cash from operations totaled $1.9 billion, up
50 percent from the year-earlier period.
-- Production averaged 561,239 barrels of oil equivalent (boe) per day
during 2007 -- a 12-percent increase and the 28th annual increase in
the last 29 years. Fourth-quarter production averaged 574,646 boe per
day, up 8 percent from the prior-year period.
-- Proved reserves totaled 2.45 billion boe, up 6 percent from 2006 and
the 22nd consecutive annual increase. Apache replaced 167 percent of
its 2007 production, including 140 percent from drilling activity.
"With exploration success at the Julimar complex in Australia, discoveries in Egypt, and encouraging results at the Ootla shale play in northern British Columbia, we built tremendous momentum that set the stage for 2008," Farris said. "We have the largest portfolio of quality exploration prospects in the 53-year history of the company, with significant exploration drilling programs planned in our 'ACE' core growth areas of Australia, Canada and Egypt. We also have six major development projects that are expected to add production of more than 100,000 boe per day by 2011," he said. Recent developments in international gas markets are expected to contribute to Apache's future results. Natural gas prices for new contracts in Australia have climbed from less than $2 per thousand cubic feet (Mcf) to $7 or higher in the past year as demand has grown from the domestic mining industry and the liquefied natural gas export market. Apache's Reindeer and Julimar discoveries will be coming to market in this new environment. In Argentina, Apache's fourth-quarter natural gas price of $1.60 per Mcf was the highest quarterly realization since Apache began operations in the country and a 72-percent increase from the third quarter. Apache added 343 million boe of reserves from all sources in 2007. The company spent $5.25 billion on exploration and development and acquisitions, excluding asset retirement obligations and capitalized interest. Apache will redirect capital spending in Canada as a result of Alberta's recently announced changes in royalty rates. Activity in Alberta will be limited and refocused on shallow gas opportunities which were not affected by the royalty changes, and activity will increase at the Ootla shale play in British Columbia. Medium-depth gas and oil drilling activities in Alberta will be reduced. Although liquid hydrocarbons represented about 47 percent of Apache's 2007 production, liquids provided 65 percent of revenues because global oil prices outpaced natural gas prices. Apache received $68.84 per barrel of oil in 2007, up from $59.92 per barrel in 2006, and $5.34 per Mcf of gas compared with $5.17 per Mcf in the prior year. In the fourth quarter, Apache received $83 per barrel of oil and $5.65 per Mcf of gas. Apache Corporation discovers and produces oil and gas in the United States, Canada, the United Kingdom sector of the North Sea, Egypt, Australia and Argentina. *Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below. NOTE: Apache will conduct a conference call to discuss its fourth-quarter and full-year 2007 results at 11 a.m. Central Time on Thursday, Feb. 7. The call will be webcast from Apache's Web site, http://www.apachecorp.com. The webcast replay and podcast will be archived on Apache's Web site. The conference call will be available for delayed playback by telephone for one week beginning at approximately 3 p.m. on Feb. 7. To access the telephone playback, dial (719) 457-0820 and provide Apache's confirmation code, 4030561. This news release contains certain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties, including, without limitation, risks, uncertainties and other factors discussed in our 2006 Form 10-K and on our Web site. There is no assurance that Apache's expectations will be realized, and actual results may differ materially from those expressed in the forward-looking statements. We assume no duty to update these statements as of any future date.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
For the Quarter For the Year
Ended December 31, Ended December 31,
2007 2006 2007 2006
REVENUES AND OTHER:
Oil and gas production
revenues $2,996,290 $1,966,013 $9,961,982 $8,074,253
Gain on China
divestiture - - - 173,545
Other 17,374 665 15,876 40,981
3,013,664 1,966,678 9,977,858 8,288,779
COSTS AND EXPENSES:
Depreciation,
depletion and
amortization 624,975 514,802 2,347,791 1,816,359
Asset retirement
obligation accretion 23,804 24,663 96,438 88,931
Lease operating costs 470,442 396,574 1,705,999 1,362,374
Gathering and
transportation costs 31,150 27,594 118,034 104,322
Severance and other
taxes 188,497 121,458 541,982 553,978
General and
administrative 75,000 59,690 275,065 211,334
Financing costs, net 54,149 45,578 219,937 141,886
1,468,017 1,190,359 5,305,246 4,279,184
INCOME BEFORE INCOME
TAXES 1,545,647 776,319 4,672,612 4,009,595
Provision for income
taxes 473,124 255,478 1,860,254 1,457,144
NET INCOME 1,072,523 520,841 2,812,358 2,552,451
Preferred stock
dividends 1,420 1,420 5,680 5,680
INCOME ATTRIBUTABLE TO
COMMON STOCK $1,071,103 $519,421 $2,806,678 $2,546,771
NET INCOME PER COMMON
SHARE:
Basic $3.22 $1.57 $8.45 $7.72
Diluted $3.19 $1.56 $8.39 $7.64
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 333,049 330,417 332,192 330,083
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
For the Quarter For the Year
Ended December 31, Ended December 31,
2007 2006 2007 2006
COSTS INCURRED: (1)
North America
exploration and
development $653,768 $783,784 $2,683,070 $2,866,942
International
exploration and
development 601,543 319,902 2,027,167 1,104,456
$1,255,311 $1,103,686 $4,710,237 $3,971,398
Oil and gas property
acquisitions $ - $58,690 $1,050,018 $2,473,081
(1) Includes noncash asset retirement costs and capitalized interest
as follows:
Capitalized
interest $15,400 $15,118 $69,457 $61,301
Asset
retirement
costs $284,171 $14,904 $439,368 $390,612
December 31, December 31,
2007 2006
BALANCE SHEET DATA:
Cash and Cash Equivalents $125,823 $140,524
Other Current Assets 2,626,428 2,349,747
Property and Equipment, net 25,231,593 21,346,252
Goodwill 189,252 189,252
Other Assets 461,555 282,400
Total Assets $28,634,651 $24,308,175
Current Liabilities $2,665,016 $3,811,612
Long-Term Debt 4,011,605 2,019,831
Deferred Credits and Other
Noncurrent Liabilities 6,580,051 5,285,679
Shareholders' Equity 15,377,979 13,191,053
Total Liabilities and Shareholders'
Equity $28,634,651 $24,308,175
Common shares outstanding at end of
period 332,927 330,737
APACHE CORPORATION
FINANCIAL INFORMATION
For the Quarter For the Year
Ended December 31, Ended December 31,
2007 2006 2007 2006
FINANCIAL DATA
(In thousands, except
per share data):
Revenues and other $3,013,664 $1,966,678 $9,977,858 $8,288,779
Income Attributable to
Common Stock $1,071,103 $519,421 $2,806,678 $2,546,771
Basic Net Income Per
Common Share $3.22 $1.57 $8.45 $7.72
Diluted Net Income Per
Common Share $3.19 $1.56 $8.39 $7.64
Weighted Average
Common Shares
Outstanding 333,049 330,417 332,192 330,083
Diluted Shares
Outstanding 335,780 332,881 334,596 333,211
PRODUCTION AND PRICING DATA:
OIL VOLUME - Barrels
per day
United States 99,953 74,413 90,759 66,832
Canada 18,511 19,504 18,756 20,715
Egypt 62,266 58,988 60,735 56,570
Australia 12,207 11,140 13,778 11,892
North Sea 56,777 59,060 53,632 58,544
Argentina 11,957 10,491 11,440 6,857
China - - - 3,167
Total 261,671 233,596 249,100 224,577
AVERAGE OIL PRICE PER
BARREL
United States $78.78 $51.27 $66.48 $54.22
Canada 82.02 52.21 68.29 59.90
Egypt 89.77 57.81 72.51 63.60
Australia 102.35 57.19 79.79 68.25
North Sea 86.67 58.25 70.93 63.04
Argentina 47.32 39.24 45.99 42.79
China - - - 62.73
Total 83.00 54.51 68.84 59.92
NATURAL GAS VOLUME -
Mcf per day
United States 772,789 707,281 769,596 666,965
Canada 393,847 391,170 388,211 404,325
Egypt 243,226 230,968 240,777 217,601
Australia 193,998 200,883 194,928 186,119
North Sea 2,175 2,079 1,933 2,061
Argentina 193,128 188,310 200,903 111,994
Total 1,799,163 1,720,691 1,796,348 1,589,065
AVERAGE NATURAL GAS
PRICE PER MCF
United States $7.29 $6.32 $7.04 $6.54
Canada 6.42 5.68 6.30 6.09
Egypt 5.13 4.19 4.60 4.42
Australia 2.07 1.66 1.89 1.65
North Sea 20.66 10.19 15.03 10.64
Argentina 1.60 1.05 1.17 0.97
Total 5.65 4.77 5.34 5.17
NGL VOLUME - Barrels
per day
United States 7,778 7,681 7,702 7,985
Canada 2,383 2,239 2,246 2,187
Argentina 2,953 2,676 2,800 1,537
Total 13,114 12,596 12,748 11,709
AVERAGE NGL PRICE PER
BARREL
United States $55.79 $34.83 $45.24 $38.54
Canada 50.14 31.31 40.55 35.40
Argentina 45.25 31.96 37.78 36.64
Total 52.39 33.59 42.78 37.70
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
NON-GAAP FINANCIAL MEASURES:
Reconciliation of income attributable to stock to adjusted earnings:
The press release discusses Apache's adjusted earnings. Adjusted earnings
excludes certain items that management believes affect the comparability
of operating results. The following provides the reasons adjusted
earnings is a meaningful measure:
-- 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 For the Year
Ended December 31, Ended December 31,
2007 2006 2007 2006
Income Attributable to
Common Stock (GAAP) $1,071,103 $519,421 $2,806,678 $2,546,771
Adjustments:
Foreign currency
fluctuation impact on
deferred tax expense 46,035 (53,562) 232,301 (4,891)
Impact of Canadian
Federal tax rate
reductions (135,429) - (145,503) -
Impact of Canadian
Federal and Provincial
tax rate reductions - - - (127,683)
Impact of increased
tax rates in the
United Kingdom - - - 63,395
Gain on China
divestiture - - - (173,545)
Adjusted Earnings
(Non-GAAP) $981,709 $465,859 $2,893,476 $2,304,047
Adjusted Earnings Per
Share (Non-GAAP)
Basic $2.95 $1.41 $8.71 $6.98
Diluted $2.92 $1.40 $8.65 $6.91
Average Number of Common
Shares
Basic 333,049 330,417 332,192 330,083
Diluted 335,780 332,881 334,596 333,211
Reconciliation of net cash provided by operating activities to cash
from 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 For the Year
Ended December 31, Ended December 31,
2007 2006 2007 2006
Net cash provided by
operating activities $1,799,961 $913,894 $5,677,433 $4,312,906
Changes in operating
assets and
liabilities 117,660 367,691 517,647 755,127
Cash from operations
before changes in
operating assets and
liabilities $1,917,621 $1,281,585 $6,195,080 $5,068,033
APACHE CORPORATION
OIL & GAS RESERVE INFORMATION
For the Year Ended December 31, 2007
OIL (Mbbls)
U.S. Canada Egypt Australia
Balance - Dec 31, 2006 495,271 180,974 88,811 70,522
Extensions 31,504 8,083 34,148 9,812
Purchases 56,954 208 186 1,424
Revisions 5,546 (3,644) (6,369) -
Production (35,938) (7,666) (22,168) (5,029)
Sales (1,722) - - -
Balance - Dec 31, 2007 551,615 177,955 94,608 76,729
GAS (MMcf)
U.S. Canada Egypt Australia
Balance - Dec 31, 2006 2,695,362 2,365,719 1,155,984 803,747
Extensions 217,560 122,745 178,978 414,896
Purchases 79,532 4,179 - -
Revisions 8,881 (15,889) (64,196) -
Production (280,902) (141,697) (87,883) (71,149)
Sales (21,385) (1,529) - -
Balance - Dec 31, 2007 2,699,048 2,333,528 1,182,883 1,147,494
TOTAL MBOE
U.S. Canada Egypt Australia
Balance - Dec 31, 2006 944,499 575,261 281,475 204,480
Extensions 67,763 28,541 63,978 78,961
Purchases 70,209 905 186 1,424
Revisions 7,024 (6,292) (17,068) -
Production (82,755) (31,282) (36,815) (16,887)
Sales (5,286) (255) - -
Balance - Dec 31, 2007 1,001,454 566,878 291,756 267,978
Net Change (Growth) 56,955 (8,383) 10,281 63,498
2007 BOE Percentages 40.9% 23.2% 11.9% 11.0%
North America 64.1%
OIL (Mbbls)
North Sea Argentina Total
Balance - Dec 31, 2006 195,670 29,793 1,061,041
Extensions 28,622 3,353 115,521
Purchases - - 58,772
Revisions - 138 (4,328)
Production (19,575) (5,198) (95,574)
Sales - - (1,722)
Balance - Dec 31, 2007 204,717 28,086 1,133,710
GAS (MMcf)
North Sea Argentina Total
Balance - Dec 31, 2006 6,840 485,267 7,512,919
Extensions 169 91,236 1,025,584
Purchases - - 83,712
Revisions - 287 (70,917)
Production (705) (73,330) (655,667)
Sales - - (22,914)
Balance - Dec 31, 2007 6,304 503,460 7,872,717
TOTAL MBOE
North Sea Argentina Total
Balance - Dec 31, 2006 196,810 110,671 2,313,194
Extensions 28,650 18,559 286,452
Purchases - - 72,724
Revisions - 186 (16,150)
Production (19,693) (17,420) (204,850)
Sales - - (5,541)
Balance - Dec 31, 2007 205,767 111,996 2,445,829
Net Change (Growth) 8,957 1,325 132,635
2007 BOE Percentages 8.4% 4.6% 100.0%
North America
Production (BOE)
Oil 46.7%
Gas 53.3%
100.0%
APACHE CORPORATION
OIL & GAS RESERVE INFORMATION
For the Year Ended December 31, 2007
Reserve Additions (MBOE)
U.S. Canada Egypt Australia
Extensions 67,763 28,541 63,978 78,961
Revisions 7,024 (6,292) (17,068) -
Purchases 70,209 905 186 1,424
Total Adds 144,996 23,154 47,096 80,385
Costs Incurred (In thousands)
U.S. Canada Egypt Australia
Exploration & Development $1,901,832 $781,238 $611,936 $554,947
Acquisitions 965,476 24,474 19,261 31,041
Total $2,867,308 $805,712 $631,197 $585,988
Included in the costs
incurred are the following:
Capitalized Interest $20,577 $13,106 $6,821 $6,447
Asset Retirement Cost $271,183 $117,456 $ - $37,866
Reserve Additions (MBOE)
North Sea Argentina Total
Extensions 28,650 18,559 286,452
Revisions - 186 (16,150)
Purchases - - 72,724
Total Adds 28,650 18,745 343,026
Costs Incurred (In thousands)
North Sea Argentina Total
Exploration & Development $539,394 $320,890 $4,710,237
Acquisitions 507 9,259 1,050,018
Total $539,901 $330,149 $5,760,255
Included in the costs incurred
are the following:
Capitalized Interest $1,526 $20,980 $69,457
Asset Retirement Cost $ - $12,863 $439,368
APA-F
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