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Apache Corporation (NYSE, Nasdaq: APA) today announced that non-cash charges resulted in a third-quarter 2014 net loss of $1.3 billion or $3.50 per diluted common share. Adjusted earnings, which exclude certain items that impact the comparability of results, totaled $528 million or $1.38 per share. Net cash provided by operating activities totaled approximately $1.9 billion in the third quarter of 2014, with cash from operations before changes in operating assets and liabilities totaling $2.1 billion.

Apache’s third-quarter net loss was the result of three non-cash charges:

  • An $814 million U.S. deferred tax charge related to the company’s change in policy and outlook regarding the permanent reinvestment of its foreign earnings;
  • A $249 million income tax expense related to the repatriation of cash from its Egyptian operations during the third quarter; and
  • A $1 billion after-tax reduction in the carrying value of its oil and gas properties driven by lower oil and natural gas liquids price realizations and the previously announced deep water sale.

“Our North American onshore regions delivered another strong quarter as we continued to execute our strategy to profitably grow North American liquids production,” said G. Steven Farris, Apache chairman, chief executive officer and president. “Liquids production increased 5 percent from the second quarter and 15 percent from the prior-year quarter when adjusted for asset sales.

“We are excited about the progress we have made in North America thus far in 2014, particularly in the Permian and Eagle Ford. Our Permian Region continues to deliver impressive liquids growth increasing 26 percent from the prior year quarter,” Farris said. “In our Eagle Ford program we spud 29 wells during the quarter and have now ramped to 10 rigs.  We anticipate this region will be a key contributor to profitable liquids growth going forward.”

Apache is advancing its unconventional resource capabilities and high-grading its North American onshore portfolio. During the third quarter, the company opportunistically invested $521 million in new leasehold and property acquisitions. In addition, the company is currently marketing non-core North American asset packages as part of its portfolio high-grading initiative and continues to acquire acreage in key growth areas.

“Our international businesses also delivered during the quarter with strong drilling results in Egypt, first oil production from Balnaves in Australia and a successful turnaround season in the North Sea,” Farris said. “We have built premier businesses in each of these regions and remain highly committed to the strategic separation of these assets. We will provide an update as material events unfold.”

During the quarter, Apache returned capital to shareholders through the purchase of an additional 5.7 million shares of its common stock on the open market. This brings total shares repurchased as of Sept. 30 to approximately 32 million of the 40 million shares authorized. Apache continues to see share buy-backs as an attractive use of capital.

Third-quarter 2014 production and operating highlights

Highlights from the third-quarter include:

  • North American onshore regions increased liquids production to approximately 211,000 barrels per day, an increase of 28,000 barrels per day or 15 percent from the prior-year period when adjusted for asset sales.
  • The Permian Region achieved record production of approximately 162,000 boe per day, up 23 percent from the prior-year period. The region averaged 42 operated rigs during the quarter and drilled 195 gross operated wells.
  • Total reported worldwide net daily production of oil, natural gas and natural gas liquids (NGLs) averaged 637,000 boe per day, with pro forma production averaging 562,000 boe per day, up 6 percent from the prior year.
  • Balnaves, a floating production, storage and offloading project in Australia, commenced production during the quarter and is currently producing at approximately 12,000 barrels of oil per day (net).

Oil and gas prices

Apache’s hydrocarbon production during the third-quarter 2014 consisted of approximately 60 percent liquids and 40 percent natural gas. Liquids contributed 84 percent of the company’s revenue during the period. In North America onshore, Apache received an average price of $90.30 per barrel of crude oil during the third quarter, compared with $103.44 per barrel in the prior-year period. North American onshore natural gas prices averaged $3.97 per thousand cubic feet (Mcf), compared with $3.26 per Mcf in the prior-year period. Globally, Apache received an average price of $94.69 per barrel of crude oil during the third quarter, compared with $108.27 per barrel in the prior-year period. Global natural gas prices averaged $3.88 per Mcf of natural gas, compared with $3.56 per Mcf in the prior-year period.

In the fourth quarter of 2014, Apache has oil hedges covering 62,500 barrels per day at an average West Texas Intermediate price of $90.83 per barrel and 62,500 barrels per day at an average Brent price of $100.05 per barrel.

Conference call

Apache will conduct a conference call to discuss its 2014 third-quarter results at 1 p.m. Central time Thursday, Nov. 6.  The conference call will be webcast from Apache’s website,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 Nov. 6. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 30670543.

Additional Information

Additional information follows, including reconciliations of adjusted earnings and cash from operations before changes in operating assets and liabilities (non-GAAP financial measures) to GAAP measures and information regarding pro forma 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, 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.

Non-GAAP financial measures

Apache’s financial information includes information prepared in conformity with generally accepted accounting standards (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 and cash from continuing operations before changes in operating assets and liabilities 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.                 

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.

 

APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

For the Quarter

For the Nine Months

Ended September 30,

Ended September 30,

2014

2013

2014

2013

REVENUES AND OTHER:

     Oil revenues

$  2,753

$ 3,468

$ 8,518

$ 9,790

     Gas revenues

538

645

1,773

2,048

     NGL revenues

177

175

532

473

Oil and gas production revenues

3,468

4,288

10,823

12,311

Derivative instrument gains (losses)

273

(422)

79

(275)

Other 

(1)

34

(3)

78

3,740

3,900

10,899

12,114

COSTS AND EXPENSES:

Depreciation, depletion and amortization

Oil and gas property and equipment

    Recurring

1,173

1,272

3,437

3,740

    Additional

1,562

627

1,765

627

Other assets

100

96

296

290

Asset retirement obligation accretion

46

65

135

192

Lease operating expenses

652

772

1,862

2,275

Gathering and transportation 

67

81

203

231

Taxes other than income

170

176

532

574

General and administrative

112

120

309

359

Acquisition, divestiture & separation costs

34

66

Financing costs, net

41

50

103

157

3,957

3,259

8,708

8,445

INCOME (LOSS) BEFORE INCOME TAXES

(217)

641

2,191

3,669

Current income tax provision 

297

409

1,038

1,190

Deferred income tax provision (benefit)

727

(203)

930

229

INCOME (LOSS) FROM CONTINUING OPS INCLUDING NONCONTROLLING INTEREST

(1,241)

435

223

2,250

Loss from discontinued operations, net of tax

(129)

(517)

(192)

INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

(1,241)

306

(294)

2,058

Net income attributable to noncontrolling interest

89

295

Preferred stock dividends

6

44

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

$ (1,330)

$    300

$   (589)

$ 2,014

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

Net income (loss) from continuing operations attributable to common shareholders

$ (1,330)

$    429

$     (72)

$ 2,206

Net loss from discontinued operations

(129)

(517)

(192)

Net income (loss) attributable to common shareholders

$ (1,330)

$    300

$   (589)

$ 2,014

BASIC NET INCOME (LOSS) PER COMMON SHARE:

Basic net income (loss) from continuing operations per share

$   (3.50)

$   1.08

$  (0.19)

$   5.59

Basic net loss from discontinued operations per share

(0.33)

(1.33)

(0.48)

Basic net income (loss) per share

$   (3.50)

$   0.75

$  (1.52)

$   5.11

DILUTED NET INCOME (LOSS) PER COMMON SHARE:

Diluted net income (loss) from continuing operations per share

$   (3.50)

$   1.07

$  (0.19)

$   5.53

Diluted net loss from discontinued operations per share

(0.32)

(1.33)

(0.47)

Diluted net income (loss) per share

$   (3.50)

$   0.75

$  (1.52)

$   5.06

WEIGHTED-AVERAGE NUMBER OF COMMON 

   SHARES OUTSTANDING:

Basic

381

399

387

394

Diluted

381

401

387

407

DIVIDENDS DECLARED PER COMMON SHARE

$     0.25

$   0.20

$   0.75

$   0.60

 

APACHE CORPORATION

PRODUCTION INFORMATION

% Change

3Q14

2Q14

3Q13

3Q14 to 2Q14

3Q14 to 3Q13

YTD 2014

YTD 2013

  OIL VOLUME – Barrels per day

Permian

91,844

90,536

73,910

1%

24%

90,249

70,229

Central

22,866

21,987

25,659

4%

-11%

22,184

22,730

Gulf Coast

12,923

10,977

11,126

18%

16%

11,632

10,570

Canada

17,672

17,981

18,573

-2%

-5%

17,748

18,112

N.A. Onshore

145,305

141,481

129,268

3%

12%

141,813

121,641

Gulf of Mexico

5,980

6,896

7,564

-13%

-21%

6,386

7,675

GOM Shelf

2

45,431

NM

NM

224

45,599

North America

151,285

148,379

182,263

2%

-17%

148,423

174,915

Egypt(1, 2)

87,499

88,643

89,294

-1%

-2%

88,076

89,530

Australia

22,014

14,555

18,787

51%

17%

17,817

20,195

North Sea

55,247

61,610

57,861

-10%

-5%

58,636

63,291

International(1)

164,760

164,808

165,942

0%

-1%

164,529

173,016

Total(1)

316,045

313,187

348,205

1%

-9%

312,952

347,931

  TOTAL LIQUIDS – Barrels per day

Permian

125,674

119,712

99,967

5%

26%

119,702

93,360

Central

47,353

45,725

49,096

4%

-4%

46,410

44,736

Gulf Coast

15,322

13,522

13,342

13%

15%

14,088

12,913

Canada

23,053

23,902

25,585

-4%

-10%

24,097

24,900

N.A. Onshore

211,402

202,861

187,990

4%

12%

204,297

175,909

Gulf of Mexico

6,905

8,062

8,130

-14%

-15%

7,360

8,546

GOM Shelf

71

2

50,665

NM

NM

278

51,887

North America

218,378

210,925

246,785

4%

-12%

211,935

236,342

Egypt(1, 2)

88,225

89,527

89,294

-1%

-1%

88,692

89,530

Australia

22,014

14,555

18,787

51%

17%

17,817

20,195

North Sea

56,541

62,977

58,958

-10%

-4%

59,887

64,554

International(1)

166,780

167,059

167,039

0%

0%

166,396

174,279

Total(1)

385,158

377,984

413,824

2%

-7%

378,331

410,621

  NATURAL GAS VOLUME – Mcf per day

Permian

216,804

213,192

190,192

2%

14%

215,289

188,803

Central

260,443

264,948

274,061

-2%

-5%

261,897

275,520

Gulf Coast

82,710

95,765

110,889

-14%

-25%

92,512

107,928

Canada

300,803

316,740

529,402

-5%

-43%

331,470

523,163

N.A. Onshore

860,760

890,645

1,104,544

-3%

-22%

901,168

1,095,414

Gulf of Mexico

19,109

22,804

11,804

-16%

62%

19,379

22,562

GOM Shelf

122

261

243,477

NM

NM

488

253,360

North America

879,991

913,710

1,359,825

-4%

-35%

921,035

1,371,336

Egypt(1, 2)

377,838

367,950

350,504

3%

8%

374,384

357,747

Australia

201,386

210,470

212,141

-4%

-5%

209,163

212,845

North Sea

50,647

54,848

46,971

-8%

8%

50,209

50,108

International(1)

629,871

633,268

609,616

-1%

3%

633,756

620,700

Total(1)

1,509,862

1,546,978

1,969,441

-2%

-23%

1,554,791

1,992,036

  BOE per day

Permian

161,808

155,244

131,665

4%

23%

155,583

124,826

Central

90,760

89,883

94,773

1%

-4%

90,060

90,657

Gulf Coast

29,107

29,483

31,823

-1%

-9%

29,507

30,901

Canada

73,187

76,692

113,819

-5%

-36%

79,341

112,095

N.A. Onshore

354,862

351,302

372,080

1%

-5%

354,491

358,479

Gulf of Mexico

10,090

11,862

10,098

-15%

0%

10,589

12,306

GOM Shelf

92

46

91,245

NM

NM

360

94,114

North America

365,044

363,210

473,423

1%

-23%

365,440

464,899

Egypt(1, 2)

151,198

150,853

147,711

0%

2%

151,090

149,154

Australia

55,578

49,633

54,144

12%

3%

52,677

55,669

North Sea

64,982

72,118

66,787

-10%

-3%

68,255

72,905

International(1)

271,758

272,604

268,642

0%

1%

272,022

277,728

Total(1)

636,802

635,814

742,065

0%

-14%

637,462

742,627

Total excluding noncontrolling interest

586,189

585,567

742,065

0%

-21%

587,192

742,627

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

Oil (b/d)

29,201

29,508

29,259

Gas (mcf/d)

127,020

122,665

124,836

NGL (b/d)

242

295

205

(2)BOE per day Egypt Gross Production

345,708

351,059

346,530

-2%

0%

349,843

347,209

  Discontinued Operations – Argentina

Oil (b/d)

9,560

2,269

9,408

Gas (mcf/d)

185,962

46,599

186,241

NGL (b/d)

1,713

424

2,254

BOE/d

42,266

10,461

42,702

 

APACHE CORPORATION

PRO FORMA PRODUCTION INFORMATION

Pro forma production excludes certain items that management believes affect the comparability of operating results for the periods presented. Pro forma production excludes production attributable to assets that have been divested (in the Gulf of Mexico shelf, Argentina, Canada, and South Texas), production attributable to a noncontrolling interest in our Egypt oil and gas business, and Egypt tax barrels. Management uses pro forma production to evaluate the company’s operational trends and performance and believes it is useful to investors and other third parties.

% Change

3Q14

2Q14

3Q13

3Q14 to 2Q14

3Q14 to 3Q13

YTD 2014

YTD 2013

  OIL VOLUME – Barrels per day

Permian

91,844

90,536

73,910

1%

24%

90,249

70,229

Central

22,866

21,987

25,659

4%

-11%

22,184

22,730

Gulf Coast

12,902

10,677

10,543

21%

22%

11,416

10,059

Canada

17,649

17,817

17,357

-1%

2%

17,626

16,895

N.A. Onshore

145,261

141,017

127,469

3%

14%

141,475

119,913

Gulf of Mexico

5,980

6,896

7,564

-13%

-21%

6,386

7,675

GOM Shelf

0%

0%

North America

151,241

147,913

135,033

2%

12%

147,861

127,588

Egypt

44,372

43,117

41,853

3%

6%

43,803

42,510

Australia

22,014

14,555

18,787

51%

17%

17,817

20,195

North Sea

55,247

61,610

57,861

-10%

-5%

58,636

63,291

International

121,633

119,282

118,501

2%

3%

120,256

125,996

Total

272,874

267,195

253,534

2%

8%

268,117

253,584

  TOTAL LIQUIDS – Barrels per day

Permian

125,674

119,712

99,967

5%

26%

119,702

93,360

Central

47,353

45,725

49,096

4%

-4%

46,410

44,736

Gulf Coast

15,238

12,701

11,724

20%

30%

13,509

11,440

Canada

23,025

23,257

22,849

-1%

1%

23,347

22,134

N.A. Onshore

211,290

201,395

183,636

5%

15%

202,968

171,670

Gulf of Mexico

6,905

8,062

8,130

-14%

-15%

7,360

8,546

GOM Shelf

0%

0%

North America

218,195

209,457

191,766

4%

14%

210,328

180,216

Egypt

44,749

43,572

41,853

3%

7%

44,123

42,510

Australia

22,014

14,555

18,787

51%

17%

17,817

20,195

North Sea

56,541

62,977

58,958

-10%

-4%

59,887

64,554

International

123,304

121,104

119,598

2%

3%

121,827

127,259

Total

341,499

330,561

311,364

3%

10%

332,155

307,475

  NATURAL GAS VOLUME – Mcf per day

Permian

216,804

213,192

190,192

2%

14%

215,289

188,803

Central

260,443

264,948

274,061

-2%

-5%

261,897

275,520

Gulf Coast

82,032

80,976

86,621

1%

-5%

81,852

84,078

Canada

300,624

289,744

315,745

4%

-5%

294,421

311,241

N.A. Onshore

859,903

848,860

866,619

1%

-1%

853,459

859,642

Gulf of Mexico

19,109

22,804

11,804

-16%

62%

19,379

22,562

GOM Shelf

0%

0%

North America

879,012

871,664

878,423

1%

0%

872,838

882,204

Egypt

192,484

181,792

167,986

6%

15%

189,054

173,311

Australia

201,386

210,470

212,141

-4%

-5%

209,163

212,845

North Sea

50,647

54,848

46,971

-8%

8%

50,209

50,108

International

444,517

447,110

427,098

-1%

4%

448,426

436,264

Total

1,323,529

1,318,774

1,305,521

0%

1%

1,321,264

1,318,468

  BOE per day

Permian

161,808

155,244

131,665

4%

23%

155,583

124,826

Central

90,760

89,883

94,773

1%

-4%

90,060

90,657

Gulf Coast

28,910

26,197

26,161

10%

11%

27,151

25,453

Canada

73,129

71,548

75,473

2%

-3%

72,417

74,008

N.A. Onshore

354,607

342,872

328,072

3%

8%

345,211

314,944

Gulf of Mexico

10,090

11,862

10,098

-15%

0%

10,589

12,306

GOM Shelf

0%

0%

North America

364,697

354,734

338,170

3%

8%

355,800

327,250

Egypt

76,830

73,871

69,851

4%

10%

75,633

71,395

Australia

55,578

49,633

54,144

12%

3%

52,677

55,669

North Sea

64,982

72,118

66,787

-10%

-3%

68,255

72,905

International

197,390

195,622

190,782

1%

3%

196,565

199,969

Total

562,087

550,356

528,952

2%

6%

552,365

527,219

 

APACHE CORPORATION

PRICE INFORMATION

3Q14

2Q14

3Q13

YTD 2014

YTD 2013

  AVERAGE OIL PRICE PER BARREL

Permian

$ 88.71

$ 94.33

$ 104.52

$   92.22

$   93.53

Central

95.17

100.39

101.90

96.43

93.71

Gulf Coast

99.41

103.81

110.06

101.56

109.08

Canada

85.43

94.66

97.58

89.45

89.33

N.A. Onshore

90.30

96.06

103.44

93.32

94.27

Gulf of Mexico

97.86

102.63

108.07

100.74

107.91

GOM Shelf

 NM 

 NM 

110.40

 NM 

109.60

North America (1)

90.58

96.24

104.98

93.58

98.31

Egypt

100.06

109.74

112.61

105.50

107.73

Australia

98.82

115.34

116.21

107.50

109.40

North Sea

95.80

109.33

109.33

104.13

107.61

International

98.47

110.08

111.87

105.23

107.88

Total(1)

94.69

103.53

108.27

99.71

103.07

  AVERAGE NATURAL GAS PRICE PER MCF

Permian

$   3.79

$   4.48

$      3.66

$      4.35

$      3.76

Central

4.00

4.49

3.61

4.56

3.75

Gulf Coast

4.19

4.72

3.67

4.63

3.83

Canada

4.04

4.21

2.87

4.22

3.20

N.A. Onshore

3.97

4.41

3.26

4.41

3.49

Gulf of Mexico

3.50

4.35

3.35

4.31

3.29

GOM Shelf

 NM 

 NM 

3.71

 NM 

3.82

North America (1)

3.97

4.41

3.41

4.39

3.61

Egypt

2.91

2.96

3.01

2.96

2.98

Australia

4.70

4.40

3.98

4.51

4.54

North Sea

6.10

7.75

10.29

8.06

10.37

International

3.74

3.85

3.91

3.88

4.11

Total (1)

3.88

4.18

3.56

4.18

3.77

  AVERAGE NGL PRICE PER BARREL

Permian

$ 27.29

$ 28.46

$   29.93

$   28.86

$   27.25

Central

24.94

25.03

25.61

26.78

24.51

Gulf Coast

24.85

27.86

30.06

29.48

30.80

Canada

33.50

31.67

28.77

36.40

28.49

N.A. Onshore

26.83

27.42

28.07

28.84

26.45

Gulf of Mexico

34.44

31.73

31.68

32.67

32.50

GOM Shelf

 NM 

 NM 

30.52

 NM 

28.66

North America

26.96

27.50

28.30

28.81

26.76

Egypt

52.80

57.67

56.57

North Sea

59.47

61.81

69.77

66.18

70.51

International

57.07

60.19

69.77

63.01

70.51

Total

27.84

28.64

29.00

29.78

27.64

  Discontinued Operations – Argentina

Oil price ($/Bbl)

$        –

$        –

$   79.77

$   72.70

$   77.66

Gas price ($/Mcf)

2.76

3.04

2.91

NGL price ($/Bbl)

22.19

24.57

25.11

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

 

APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(Unaudited)

(In millions)

September 30,

December 31,

2014

2013

Cash and Cash Equivalents

$                 510

$            1,906

Short-Term Restricted Cash

74

Other Current Assets 

3,842

4,460

Property and Equipment, net

53,035

52,421

Long-Term Restricted Cash

471

Goodwill

1,369

1,369

Other Assets

1,689

1,481

    Total Assets

$           60,990

$          61,637

Short-Term Debt

$                   20

$                  53

Other Current Liabilities

4,287

4,647

Long-Term Debt

10,902

9,672

Deferred Credits and Other Noncurrent Liabilities

12,795

11,872

Apache Shareholders’ Equity

30,818

33,396

Noncontrolling interest

2,168

1,997

    Total Liabilities and Shareholders’ Equity

$           60,990

$          61,637

Common shares outstanding at end of period

377

396

% of total debt-to-capitalization

25%

22%

APACHE CORPORATION

SUMMARY OF COSTS INCURRED AND GTP CAPITAL INVESTMENTS

(Unaudited)

(In millions)

 For the Quarter 

 For the Nine Months 

 Ended September 30, 

 Ended September 30, 

2014

2013

2014

2013

Costs Incurred in Oil and Gas Property:

    Acquisitions

           Proved

$                   98

$                    4

$    103

$    130

           Unproved

429

51

552

325

    Exploration and Development

2,538

2,640

7,524

7,696

3,065

2,695

8,179

8,151

GTP Capital Investments:

    Acquisitions

$                      –

$                     –

$          –

$       83

    GTP Facilities

300

361

1,022

853

300

361

1,022

936

Total Costs Incurred and GTP Capital Investments

$             3,365

$            3,056

$ 9,201

$ 9,087

 

APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(Unaudited)

(In millions, except per share data)

Reconciliation of income attributable to common stock to adjusted earnings:

Adjusted earnings and adjusted earnings per share are non-GAAP financial measures. Adjusted earnings generally exclude certain items that management believes affect the comparability of operating results or are not related to Apache’s ongoing operations. Management uses adjusted earnings to evaluate the company’s operational trends and performance relative to other oil and gas 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. 

For the Quarter

For the Nine Months

Ended September 30,

Ended September 30,

2014

2013

2014

2013

Income (Loss) Attributable to Common Stock (GAAP)

$ (1,330)

$  300

$   (589)

$ 2,014

Adjustments:

Oil & gas property write-downs, net of tax

$  1,002

$  402

$ 1,079

$    402

Deferred tax adjustments  (1)

1,054

(79)

1,049

(51)

Argentina discontinued operations, net of tax

129

517

192

Acquisition, divestiture & separation costs, net of tax

22

43

Rig stacking costs, net of tax

18

27

Unrealized foreign currency fluctuation impact on deferred tax expense  

(36)

(28)

(16)

(98)

Unrealized commodity derivative mark-to-market, net of tax

(202)

213

(220)

88

Adjusted Earnings  (Non-GAAP)

$      528

$  937

$ 1,890

$ 2,547

Net Income (Loss) per Common Share – Diluted (GAAP)

$   (3.50)

$ 0.75

$  (1.52)

$   5.06

Adjustments:

Oil & gas property write-downs, net of tax

$     2.62

$ 0.99

$   2.78

$   0.98

Deferred tax adjustments  (1)

2.76

(0.19)

2.70

(0.12)

Argentina discontinued operations, net of tax

0.31

1.33

0.47

Acquisition, divestiture & separation costs, net of tax

0.06

0.11

Rig stacking costs, net of tax

0.05

0.07

Unrealized foreign currency fluctuation impact on deferred tax expense  

(0.09)

(0.07)

(0.04)

(0.24)

Unrealized commodity derivative mark-to-market, net of tax

(0.52)

0.53

(0.57)

0.22

Adjusted Earnings Per Share – Diluted (Non-GAAP)

$     1.38

$ 2.32

$   4.86

$   6.37

Total income tax provision (GAAP)

$  1,024

$  206

$ 1,968

$ 1,419

Adjustments:

Tax impact on oil & gas property write-downs

$      560

$  225

$    686

$    225

Tax impact on acquisition, divestiture & separation costs

12

23

Foreign currency fluctuation impact on deferred tax expense

36

28

16

98

Tax impact on rig stacking costs

9

15

Tax impact on unrealized commodity derivative mark-to-market

(111)

117

(121)

49

Deferred tax adjustments  (1)

(1,054)

79

(1,049)

51

Adjusted total income tax provision

$      476

$  655

$ 1,538

$ 1,842

Adjusted Effective Tax Rate (Non-GAAP)

43.5%

41.0%

41.3%

41.5%

(1)

Deferred tax adjustments for the third quarter and nine-month period of 2014 include $814 million related to undistributed foreign earnings, $249 million related to distributed foreign earnings, and certain other adjustments.

 

APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(Unaudited)

(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:

Cash from 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 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 Nine Months

Ended September 30,

Ended September 30,

2014

2013

2014

2013

Net cash provided by operating activities (GAAP)

$ 1,896

$ 1,978

$ 6,528

$ 7,358

Less: Discontinued operations

(54)

(82)

(158)

Net cash provided by operating activities excluding discontinued operations

$ 1,896

$ 1,924

$ 6,446

$ 7,200

Changes in operating assets and liabilities

177

744

77

318

Cash from continuing operations before changes in operating assets and liabilities

$ 2,073

$ 2,668

$ 6,523

$ 7,518