Apache Records 2006 Earnings of $2.55 Billion or $7.64 Per Share; Production, Reserves, Cash From Operations Reach New Highs
1 January 1970 Apache Corporation (NYSE, Nasdaq: APA) today reported 2006 earnings of $2.55 billion or $7.64 per diluted common share, down slightly from the record 2005 earnings of $2.62 billion or $7.84 per share, as record production mitigated the impact of rising industry costs and lower natural gas prices.
Proved reserves climbed to a record 2.3 billion barrels of oil equivalent (boe), up 9 percent for the 21st consecutive annual increase. Cash from operations before changes in operating assets and liabilities totaled a record $5 billion in 2006, up from $4.7 billion in 2005. (Cash from operations before changes in operating assets and liabilities is a non-GAAP measure; see reconciliation below.)
"The strength of our diversified portfolio enabled Apache to deliver another solid year of profitable growth," said G. Steven Farris, president and chief executive officer.
In the fourth quarter, Apache earned $519 million or $1.56 per share, down from $787 million or $2.35 per share in the prior-year period, reflecting substantially lower natural gas prices. Fourth-quarter cash from operations totaled $1.2 billion, down from $1.4 billion in the year-earlier period. The fourth quarter was the ninth consecutive period in which Apache's earnings exceeded $500 million and cash from operations surpassed $1 billion.
Apache received $4.77 per thousand cubic feet (Mcf) of gas in the fourth quarter, down from $7.86 per Mcf in the prior-year period, and $54.51 per barrel of oil, up from $53.63 per barrel in the fourth quarter of 2005.
Apache's production averaged 501,131 boe per day during 2006, up 10 percent; 2006 was the first year for the company's production to exceed one-half million equivalent barrels per day and the 27th increase in the past 28 years. Apache's liquid hydrocarbon production averaged 236,286 barrels per day and natural gas output averaged 1.59 billion cubic feet per day.
In the fourth quarter, Apache's production averaged 533,000 boe per day, up from 433,000 boe per day in the prior-year period, when production was curtailed as a result of hurricane damage.
Apache replaced 213 percent of its 2006 production, adding 390 million boe of proved reserves through drilling and acquisitions; half of the new reserves were added through the drillbit.
The company invested $6.4 billion in acquisitions and exploration and development activities in 2006, while divesting $635 million worth of non-core properties.
"Apache's 2006 drilling results and acquisitions in the Permian Basin, Gulf of Mexico and Argentina provide strong momentum for continued growth in 2007," Farris said. "Our seven core areas, each with a large acreage position, provide a basis for continued growth of production and reserves.
"We expect production growth of 6 to 10 percent in 2007, excluding the impact of the recently announced $1 billion acquisition of Anadarko's assets in the Permian Basin and any other acquisition and divestiture activity," he said.
"We have a deep inventory of identified drilling opportunities lined up for 2007, including a number of higher-risk, higher-reward exploration wells planned in Egypt, the North Sea, Australia and Canada," Farris said.
"While service costs have moderated somewhat from the unsustainable levels of 2006, a rebound in costs would require Apache to revisit its 2007 capital plans -- especially in North America, which experienced the greatest cost increases," he said.
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.
NOTE: Apache will webcast its conference call live from its Web site, http://www.apachecorp.com at 1 p.m. Central Time on Thursday, Feb. 1. The webcast replay and podcast will be archived on Apache's Web site and will be available for delayed playback by telephone for one week beginning at 5 p.m. on Feb. 1. To access the telephone playback, dial (719) 457-0820 and provide Apache's confirmation code, 4792336.
This news release contains certain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production, operating costs, exploration and acquisition activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions and uncertainties. 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.
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)
For the Quarter For the Year
Ended December 31, Ended December 31,
2006 2005 2006 2005
REVENUES AND OTHER:
Oil and gas production
revenues $1,966,013 $2,004,363 $8,074,253 $7,457,291
Gain on China divestiture - - 173,545 -
Other 665 97,310 40,981 126,953
1,966,678 2,101,673 8,288,779 7,584,244
OPERATING EXPENSES:
Depreciation, depletion
and amortization 514,802 360,099 1,816,359 1,415,682
Asset retirement
obligation accretion 24,663 13,704 88,931 53,720
Lease operating costs 396,574 271,879 1,362,374 1,040,475
Gathering and
transportation costs 27,594 26,731 104,322 100,260
Severance and other
taxes 121,458 144,085 553,978 453,258
General and
administrative 59,690 45,812 211,334 198,272
Total operating
expenses 1,144,781 862,310 4,137,298 3,261,667
OPERATING INCOME 821,897 1,239,363 4,151,481 4,322,577
FINANCING COSTS:
Interest expense 63,381 41,829 217,454 175,419
Amortization of deferred
loan costs 518 522 2,048 3,748
Capitalized interest (15,118) (14,335) (61,301) (56,988)
Interest income (3,203) (1,853) (16,315) (5,856)
Net financing costs 45,578 26,163 141,886 116,323
INCOME BEFORE INCOME
TAXES 776,319 1,213,200 4,009,595 4,206,254
Provision for income
taxes 255,478 424,978 1,457,144 1,582,524
NET INCOME 520,841 788,222 2,552,451 2,623,730
Preferred stock dividends 1,420 1,420 5,680 5,680
INCOME ATTRIBUTABLE TO
COMMON STOCK $519,421 $786,802 $2,546,771 $2,618,050
BASIC NET INCOME PER
COMMON SHARE $1.57 $2.39 $7.72 $7.96
DILUTED NET INCOME PER
COMMON SHARE $1.56 $2.35 $7.64 $7.84
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 330,417 329,859 330,083 328,929
APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)
For the Quarter For the Year
Ended December 31, Ended December 31,
2006 2005 2006 2005
COSTS INCURRED: (1)
North America
exploration and
development $783,784 $1,100,795 $2,866,942 $2,852,713
International
exploration and
development 319,902 219,841 1,104,456 1,104,612
$1,103,686 $1,320,636 $3,971,398 $3,957,325
Oil and gas property
acquisitions $58,690 $3,402 $2,473,081 $53,392
(1) Includes asset
retirement costs
and capitalized
interest as
follows:
Capitalized
interest $15,118 $14,335 $61,301 $56,988
Asset
retirement
costs $14,904 $469,963 $390,612 $546,669
December 31, December 31,
2006 2005
BALANCE SHEET DATA:
Current Assets $2,458,753 $2,162,077
Property and Equipment, net 21,346,252 16,791,340
Goodwill 189,252 189,252
Other Assets 219,047 129,127
Total Assets $24,213,304 $19,271,796
Current Liabilities $3,826,493 $2,186,564
Long-Term Debt 2,019,831 2,191,954
Deferred Credits and Other
Noncurrent Liabilities 5,175,927 4,352,063
Shareholders' Equity 13,191,053 10,541,215
Total Liabilities and Shareholders'
Equity $24,213,304 $19,271,796
Common shares outstanding at end of
period 330,737 330,121
NON-GAAP FINANCIAL MEASURES
The press release discusses Apache's cash from operations before changes in operating assets and liabilities. 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 flow 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,
2006 2005 2006 2005
Net cash provided by
operating activities $1,032,947 $1,172,174 $4,431,959 $4,332,270
Changes in operating
assets and liabilities 176,539 179,882 563,975 412,063
Cash from operations
before changes in
operating assets and
liabilities $1,209,486 $1,352,056 $4,995,934 $4,744,333
APACHE CORPORATION
FINANCIAL INFORMATION
For the Quarter For the Year
Ended December 31, Ended December 31,
2006 2005 2006 2005
FINANCIAL DATA (In
thousands, except per
share data):
Revenues and other $1,966,678 $2,101,673 $8,288,779 $7,584,244
Income Attributable to
Common Stock $519,421 $786,802 $2,546,771 $2,618,050
Basic Net Income Per
Common Share $1.57 $2.39 $7.72 $7.96
Diluted Net Income Per
Common Share $1.56 $2.35 $7.64 $7.84
Weighted Average Common
Shares Outstanding 330,417 329,859 330,083 328,929
Diluted Shares
Outstanding 332,881 334,307 333,211 333,749
PRODUCTION AND PRICING
DATA:
OIL VOLUME - Barrels per
day
United States 74,413 49,677 66,832 66,268
Canada 19,504 23,310 20,715 22,499
Egypt 58,988 58,202 56,570 55,141
Australia 11,140 15,544 11,892 15,379
North Sea 59,060 67,036 58,544 65,488
Argentina 10,491 1,424 6,857 1,163
China - 4,892 3,167 8,132
Total 233,596 220,085 224,577 234,070
AVERAGE OIL PRICE PER
BARREL
United States $51.27 $49.03 $54.22 $47.97
Canada 52.21 55.70 59.90 53.05
Egypt 57.81 54.80 63.60 53.69
Australia 57.19 56.31 68.25 57.61
North Sea 58.25 54.91 63.04 53.00
Argentina 39.24 38.82 42.79 37.54
China - 54.82 62.73 44.24
Total 54.51 53.63 59.92 51.66
NATURAL GAS VOLUME - Mcf
per day
United States 707,281 513,695 666,965 597,481
Canada 391,170 386,827 404,325 371,917
Egypt 230,968 197,972 217,601 165,710
Australia 200,883 130,823 186,119 123,295
North Sea 2,079 2,360 2,061 2,306
Argentina 188,310 3,030 111,994 3,114
Total 1,720,691 1,234,707 1,589,065 1,263,823
AVERAGE NATURAL GAS
PRICE PER MCF
United States $6.32 $9.07 $6.54 $7.22
Canada 5.68 10.12 6.09 7.29
Egypt 4.19 4.41 4.42 4.59
Australia 1.66 1.68 1.65 1.72
North Sea 10.19 13.60 10.64 9.17
Argentina 1.05 1.11 0.97 1.14
Total 4.77 7.86 5.17 6.35
NGL VOLUME - Barrels per
day
United States 7,681 4,655 7,985 7,553
Canada 2,239 2,378 2,187 2,235
Argentina 2,676 - 1,537 -
Total 12,596 7,033 11,709 9,788
AVERAGE NGL PRICE PER
BARREL
United States $34.83 $39.75 $38.54 $32.44
Canada 31.31 40.56 35.40 31.07
Argentina 31.96 - 36.64 -
Total 33.59 40.02 37.70 32.13
APACHE CORPORATION
OIL & GAS RESERVE INFORMATION
For the Year Ended December 31, 2006
OIL
U.S. Canada Egypt Australia
Balance - Dec 31, 2005 461,568 170,197 90,893 51,322
Extensions 12,354 18,430 18,535 23,517
Purchases 53,853 643 - -
Revisions (2,009) 63 31 24
Production (27,308) (8,359) (20,648) (4,341)
Sales (3,187) - - -
Balance - Dec 31, 2006 495,271 180,974 88,811 70,522
GAS
U.S. Canada Egypt Australia
Balance - Dec 31, 2005 2,566,187 2,366,592 1,080,357 824,817
Extensions 253,707 248,549 151,086 46,860
Purchases 195,552 1,500 - -
Revisions (74,225) (102,922) 3,965 4
Production (243,441) (147,579) (79,424) (67,934)
Sales (2,418) (421) - -
Balance - Dec 31, 2006 2,695,362 2,365,719 1,155,984 803,747
TOTAL BOE
U.S. Canada Egypt Australia
Balance - Dec 31, 2005 889,266 564,629 270,953 188,792
Extensions 54,639 59,855 43,716 31,327
Purchases 86,445 893 - -
Revisions (14,381) (17,091) 692 25
Production (67,882) (32,956) (33,885) (15,663)
Sales (3,590) (70) - -
Balance - Dec 31, 2006 944,497 575,260 281,476 204,481
Net Change (Growth) 55,231 10,631 10,523 15,689
2006 BOE Percentages 40.8% 24.9% 12.2% 8.8%
Production (BOE)
Oil 40.2% 25.4% 60.9% 27.7%
Gas 59.8% 74.6% 39.1% 72.3%
OIL
North Sea Argentina China Total
Balance - Dec 31, 2005 195,262 1,661 5,007 975,910
Extensions 21,777 3,422 3,386 101,421
Purchases - 28,351 - 82,847
Revisions - 147 (19) (1,763)
Production (21,369) (3,064) (1,156) (86,245)
Sales - (724) (7,218) (11,129)
Balance - Dec 31, 2006 195,670 29,793 - 1,061,041
GAS
North Sea Argentina China Total
Balance - Dec 31, 2005 7,475 2,594 - 6,848,022
Extensions 118 36,986 - 737,306
Purchases - 484,707 - 681,759
Revisions - 1,858 - (171,320)
Production (753) (40,878) - (580,009)
Sales - - - (2,839)
Balance - Dec 31, 2006 6,840 485,267 - 7,512,919
TOTAL BOE
North Sea Argentina China Total
Balance - Dec 31, 2005 196,508 2,093 5,007 2,117,248
Extensions 21,797 9,586 3,385 224,305
Purchases - 109,135 - 196,473
Revisions - 457 (19) (30,317)
Production (21,495) (9,877) (1,155) (182,913)
Sales - (724) (7,218) (11,602)
Balance - Dec 31, 2006 196,810 110,670 - 2,313,194
Net Change (Growth) 302 108,577 (5,007) 195,946
2006 BOE Percentages 8.5% 4.8% 0.0% 100.0%
Production (BOE)
Oil 99.4% 31.0% 47.2%
Gas 0.6% 69.0% 52.8%
100.0%
APACHE CORPORATION
OIL & GAS RESERVE INFORMATION
For the Year Ended December 31, 2006
Reserve Additions (BOE's)
U.S. Canada Egypt Australia
Extensions 54,639 59,855 43,716 31,327
Revisions (14,381) (17,091) 692 25
Purchases 86,445 893 - -
Total Adds 126,703 43,657 44,408 31,352
Costs Incurred
U.S. Canada Egypt Australia
Exploration &
Development 1,763,234 1,103,708 461,281 185,819
Acquisitions 1,318,008 5,859 - 23,981
Total 3,081,242 1,109,567 461,281 209,800
Included in the costs
incurred are the following:
Capitalized Interest 29,300 21,793 6,389 3,819
Asset Retirement Cost 348,057 25,301 - 2,108
Reserve Additions (BOE's) North Sea Argentina China Total
Extensions 21,797 9,586 3,385 224,305
Revisions - 457 (19) (30,317)
Purchases - 109,135 - 196,473
Total Adds 21,797 119,178 3,366 390,461
Costs Incurred
North Sea Argentina China Total
Exploration & Development 329,498 115,570 12,288 3,971,398
Acquisitions 3,060 1,122,173 - 2,473,081
Total 332,558 1,237,743 12,288 6,444,479
Included in the costs incurred
are the following:
Capitalized Interest - - - 61,301
Asset Retirement Cost - 15,146 - 390,612 APA-F
Source: prnewswire
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