Form 8-K APACHE CORP For: Feb 25

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 25, 2016

 

 

APACHE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		1-4300		41-0747868
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

2000 Post Oak Boulevard

Suite 100

Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (713) 296-6000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

 

Item 2.02.

Results of Operations and Financial Condition.

On February 25, 2016, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter and year ended December 31, 2015. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press Release of Apache Corporation dated February 25, 2016.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

APACHE CORPORATION

 

Date:		February 25, 2016						/s/ Rebecca A. Hoyt
								Rebecca A. Hoyt
								Senior Vice President, Chief Accounting Officer, and Controller (Principal Accounting Officer)

 

 

 

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INDEX TO EXHIBITS

 

Exhibit No.		Description
99.1		Press Release of Apache Corporation dated February 25, 2016.

 

 

Exhibit 99.1

 

		NEWS RELEASE

APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

 

Ø

Delivered full-year 2015 production of 535 thousand barrels of oil equivalent (Mboe) per day and pro forma production of 486 Mboe per day, which represented pro forma growth in North America Onshore and International and Offshore of 3 percent and 13 percent, respectively;

 

Ø

Reduced 2015 total capital spending more than 60 percent year-over-year;

 

Ø

Reduced total debt during 2015 by $2.5 billion to $8.8 billion and ended the year with approximately $1.5 billion of cash;

 

Ø

Realized a 35-percent reduction in average North American Onshore drilled and completed well costs from the fourth quarter 2014 to the fourth quarter 2015;

 

Ø

Establishes a 2016 capital budget of $1.4 to $1.8 billion. Plans to achieve cash flow neutrality for the full year 2016 assuming flat WTI and Brent oil prices of $35 per barrel; and

 

Ø

Projects a 7 to 11 percent pro forma production decline year-over-year in 2016.

HOUSTON, Feb. 25, 2016 – Apache Corporation (NYSE, Nasdaq: APA) today announced its financial and operational results for the fourth quarter and full year 2015.

Apache reported a net loss of $7.2 billion or $19.07 per diluted common share during the fourth quarter 2015, including non-cash after-tax ceiling test write downs and impairments of $5.9 billion driven by current low commodity price levels. When adjusted for these and certain additional items that impact the comparability of results, Apache’s fourth-quarter net loss totaled $24 million, or $0.06 per share. Net cash provided by continuing operating activities in the fourth quarter was approximately $262 million, and adjusted EBITDA was $781 million. Cash flow from operations was reduced in the quarter by a one-time income tax payment of $484 million, associated with the repatriation of foreign divestment proceeds. Capital expenditures were $674 million in the fourth quarter, excluding leasehold acquisitions, capitalized interest and Egypt noncontrolling interest.

For the year ending 2015, Apache reported a net loss of $23.1 billion, or $61.20 per diluted common share. On an adjusted basis, Apache’s 2015 loss totaled $130 million, or $0.34 per share. Net cash provided by continuing operating activities was approximately $2.8 billion, and adjusted EBITDA

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APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

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was $3.9 billion in 2015. Total capital expenditures were $4.7 billion for the full year, or $3.6 billion when excluding leasehold acquisitions, capitalized interest, Egypt noncontrolling interest, and spending on divested LNG and associated assets. This was at the low end of the company’s full-year 2015 guidance range of $3.6 to $3.8 billion.

John J. Christmann IV, Apache’s chief executive officer and president, said, “During 2015, we completed several important portfolio-related transactions and used the proceeds from asset sales to significantly improve our liquidity and financial position. We reacted quickly to the lower price environment by dramatically reducing our activity levels and taking decisive steps to attack our overhead, operating and capital costs. Our operational focus during the year was on strategically delineating our core acreage positions and conducting key exploratory tests to position for future growth and optimal returns when the investment environment improves. In 2016, we plan to be cash flow neutral after dividends and believe this can be achieved at $35 oil with minimal non-core, non-producing asset sales. Our target is for net debt at the end of 2016 to be unchanged or lower than it was at the end of 2015.”

2016 capital budget and production outlook

Christmann continued, “With current 2016 strip prices 30 to 35 percent below year-ago levels, we believe a conservative plan and a flexible capital spending program are paramount to protecting the financial position we have worked hard to establish over the last 18 months. Accordingly, we are reducing our 2016 total capital program to $1.4 to $1.8 billion, which the company will adjust up or down to align with actual commodity prices and resulting cash flow. This is a reduction of more than 60 percent from 2015 levels and more than 80 percent from 2014 levels.”

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APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

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The company’s discretionary capital is being prioritized to higher rate-of-return opportunities in Egypt and the North Sea and to key strategic testing in North America Onshore. Apache has a large inventory of low-cost drilling opportunities in North America, but with the majority of its net acreage held-by-production, does not view spending on development wells as a necessary or prudent use of limited dollars at current oil prices. The company will maintain capital allocation and operational flexibility to respond quickly to changing oil price scenarios and has developed specific plans for adding rigs back in the event prices and costs come back into better alignment.

Apache expects total pro forma production volumes (excluding Egypt noncontrolling interest and tax barrels) to range from 433 to 453 Mboe per day, which represents a decline of 7 to 11 percent from pro forma 2015 production of 486 Mboe per day. With approximately 45 percent of its 2016 budget allocated to North America Onshore, pro forma production is projected to be in a range of 263 to 273 Mboe per day, which represents a decline of 12 to 15 percent compared to 2015. The remaining 55 percent of the capital budget will be allocated to International and Offshore, where pro forma production is projected to be 170 to 180 Mboe per day, or roughly flat when compared to 2015 pro forma production of 176 Mboe per day.

Christmann concluded, “While returns in select areas are still adequate at the well level, we believe it is better to wait until fully burdened rates of return improve to higher double-digit percentages, before materially increasing our rig count and developing our acreage. In the meantime, we will focus on key strategic testing activities within our existing operating footprint to further define and expand our high-quality inventory for the future. We will also continue investing in our highly successful exploration portfolio in the North Sea and in our highly prospective blocks 53 and 58 in offshore Suriname. Apache enjoys several advantages in the current low-price environment including a

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APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

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strong financial position, a relatively low base production decline rate, a lean cost structure, and a disciplined capital-spending program. We have a portfolio of high-quality assets with robust inventory in North America, higher-cash-margin assets in Egypt and the North Sea and exciting longer-term exploration prospects.”

Fourth-quarter operational highlights

During the fourth quarter, Apache operated an average of 39 rigs and drilled and completed 113 gross-operated wells worldwide. Highlights from Apache’s three principal areas include:

 

•

North America Onshore – Apache drilled and completed 79 gross-operated wells in North America Onshore during the fourth quarter and increased production to an average of 308 Mboe per day in the fourth quarter 2015 from 306 Mboe per day in the third quarter 2015. The increase was primarily due to the timing of completions and solid well performance.

In the Permian Basin, Apache operated 11 rigs and drilled and completed 57 gross-operated wells during the quarter, down from 64 wells drilled and completed in the third quarter. Production averaged 174 Mboe per day, up 2 percent sequentially from the 2015 third quarter.

 

¡

During the quarter, the company drilled and completed 15 gross-operated wells in the Delaware Basin primarily targeting the Bone Springs formation.

 

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The company also drilled and completed 42 gross-operated wells during the quarter in the Midland Basin, Northwest Shelf and Central Basin Platform.

 

•

North Sea – Production in the North Sea was 72 Mboe per day, which was a 2-percent decline compared to the previous quarter. During the quarter, Apache brought online three strong

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APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 5 of 8

 

development wells, two in the Beryl Area and one in the Forties Field. For the full year 2015, Apache North Sea drilled 23 development wells with an overall success rate of 83 percent.

 

•

Egypt – Gross production in Egypt declined 3 percent from the third quarter. On a net basis and excluding minority interest and tax barrels, Egypt production was up 5 percent sequentially from the third quarter to 102 Mboe per day. Successful development continued in the Ptah and Berenice fields where the company had 12 wells producing at year end. Since November 2014, Ptah and Berenice have produced more than 8 million barrels of oil.

Portfolio activity

During the fourth quarter, Apache completed the sale of its Yara Pilbara fertilizer plant in Australia and three North American gas processing facilities for total proceeds of $531 million. Earlier in 2015, the company sold its Kitimat and Wheatstone LNG assets, upstream Australian assets and its working interest in the non-operated Scott-Telford field in the North Sea, for which it received net proceeds of approximately $6 billion. A portion of the 2015 proceeds were used to reduce debt and increase the company’s cash balance. Apache also invested $340 million in new leasehold within or near its existing operational footprint, primarily in the Permian and Anadarko basins.

Debt and liquidity

At year-end, the company had access to available liquidity of approximately $5 billion, including $1.5 billion in cash on hand and $3.5 billion in available borrowing capacity under its committed credit facility. The company’s credit facility matures in June 2020. Apache reduced debt by $2.5 billion from year-end 2014 and reported debt of $8.8 billion as of Dec. 31, 2015. Apache has no debt maturities before 2018 and only $700 million of debt maturing before 2021.

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APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

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Year-end 2015 proved reserves

Worldwide estimated proved reserves totaled 1.6 billion barrels of oil equivalent (Boe) at year-end 2015, down from 2.4 billion Boe at year-end 2014. The decrease in reserves is primarily driven by significant divestitures in Australia and Canada; a significant decline in oil, gas and NGL prices used to calculate reserves volumes and values; and an approximate 60-percent year-over-year reduction in capital spending. The decrease in reserves consisted of the following: divestitures of 385 million barrels of oil equivalent (MMboe); production of 204 MMboe; and revisions of previous estimates of 368 MMboe. These decreases were partially offset by 117 MMboe of proved reserves added through net extensions and discoveries.

Conference call

Apache will host a conference call to discuss its fourth-quarter and full-year 2015 results at 1 p.m. Central time, Thursday, Feb. 25. The conference call will be webcast from Apache’s website, www.apachecorp.com. The webcast replay will be archived on Apache’s website.

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 13719037.

Sign up for email alerts to be reminded of the webcast at http://investor.apachecorp.com/alerts.cfm.

Additional Information

Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDA and net debt (non-GAAP financial measures) to GAAP measures and information regarding pro forma production. Apache’s quarterly supplement is available at www.apachecorp.com/financialdata.

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APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

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About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, 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 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, adjusted EBITDA 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.

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,” 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 2014 Form 10-K filed, and 2015 Form 10-K when 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.

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APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2015

FINANCIAL AND OPERATIONAL RESULTS

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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, 2014, (and Apache’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2015, when filed) 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-

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APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

		For the Quarter Ended December 31,								For the Year Ended December 31,
		2015				2014				2015				2014
REVENUES AND OTHER:
Oil revenues		$	907			$	2,046			$	4,999			$	10,040
Gas revenues			253				467				1,157				1,983
NGL revenues			61				135				227				668
Oil and gas production revenues			1,221				2,648				6,383				12,691
Other			42				35				(17	)			110
			1,263				2,683				6,366				12,801
COSTS AND EXPENSES:
Depreciation, depletion and amortization
Oil and gas property and equipment
Recurring			780				1,206				3,531				4,388
Additional			6,760				3,236				25,517				5,001
Other assets			79				85				324				331
Asset retirement obligation accretion			36				39				145				154
Lease operating expenses			456				542				1,854				2,238
Gathering and transportation			48				70				211				273
Taxes other than income			50				95				282				577
Impairments			1,553				1,919				1,920				1,919
General and administrative			98				119				377				451
Transaction, reorganization & separation costs			12				1				132				67
Financing costs, net			59				54				299				211
			9,931				7,366				34,592				15,610
INCOME (LOSS) BEFORE INCOME TAXES			(8,668	)			(4,683	)			(28,226	)			(2,809	)
Current income tax provision			(187	)			209				309				1,177
Deferred income tax provision (benefit)			(611	)			(1,198	)			(5,778	)			(514	)
INCOME (LOSS) FROM CONTINUING OPS INCLUDING NONCONTROLLING INTEREST			(7,870	)			(3,694	)			(22,757	)			(3,472	)
Income (Loss) from discontinued operations, net of tax			188				(1,072	)			(771	)			(1,588	)
INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST			(7,682	)			(4,766	)			(23,528	)			(5,060	)
Net income (loss) attributable to noncontrolling interest			(469	)			48				(409	)			343
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK		$	(7,213	)		$	(4,814	)		$	(23,119	)		$	(5,403	)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
Net income (loss) from continuing operations attributable to common shareholders		$	(7,401	)		$	(3,742	)		$	(22,348	)		$	(3,815	)
Net income (loss) from discontinued operations			188				(1,072	)			(771	)			(1,588	)
Net income (loss) attributable to common shareholders		$	(7,213	)		$	(4,814	)		$	(23,119	)		$	(5,403	)
BASIC NET INCOME (LOSS) PER COMMON SHARE:
Basic net income (loss) from continuing operations per share		$	(19.57	)		$	(9.93	)		$	(59.16	)		$	(9.93	)
Basic net income (loss) from discontinued operations per share			0.50				(2.85	)			(2.04	)			(4.13	)
Basic net income (loss) per share		$	(19.07	)		$	(12.78	)		$	(61.20	)		$	(14.06	)
DILUTED NET INCOME (LOSS) PER COMMON SHARE:
Diluted net income (loss) from continuing operations per share		$	(19.57	)		$	(9.93	)		$	(59.16	)		$	(9.93	)
Diluted net income (loss) from discontinued operations per share			0.50				(2.85	)			(2.04	)			(4.13	)
Diluted net income (loss) per share		$	(19.07	)		$	(12.78	)		$	(61.20	)		$	(14.06	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic			378				377				378				384
Diluted			378				377				378				384
DIVIDENDS DECLARED PER COMMON SHARE		$	0.25			$	0.25			$	1.00			$	1.00

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APACHE CORPORATION

PRODUCTION INFORMATION

 

														% Change
		4Q15				3Q15				4Q14				4Q15 to 3Q15				4Q15 to 4Q14				FY 2015				FY 2014
OIL VOLUME – Barrels per day
Permian			93,728				93,048				98,017				1	%			-4	%			94,756				92,207
MidContinent/Gulf Coast Region			21,735				21,486				38,212				1	%			-43	%			23,468				34,923
Canada			15,635				14,795				17,133				6	%			-9	%			15,768				17,593
N.A. Onshore			131,098				129,329				153,362				1	%			-15	%			133,992				144,723
Gulf of Mexico			4,561				5,878				6,319				-22	%			-28	%			5,442				6,369
GOM Shelf			—				—				—				—				—				—				168
Egypt (1)			59,576				91,132				87,445				-35	%			-32	%			85,589				87,917
North Sea			58,479				58,330				66,822				0	%			-12	%			59,334				60,699
International & GOM (1)			122,616				155,340				160,586				-21	%			-24	%			150,365				155,153
Total (1)			253,714				284,669				313,948				-11	%			-19	%			284,357				299,876
TOTAL LIQUIDS – Barrels per day
Permian			132,346				128,973				131,429				3	%			1	%			129,228				122,658
MidContinent/Gulf Coast Region			41,103				39,808				67,801				3	%			-39	%			42,361				62,338
Canada			22,011				21,235				22,812				4	%			-4	%			21,894				23,773
N.A. Onshore			195,460				190,016				222,042				3	%			-12	%			193,483				208,769
Gulf of Mexico			5,039				6,582				7,004				-23	%			-28	%			6,005				7,270
GOM Shelf			—				—				—				—				—				—				208
Egypt (1)			60,592				92,128				88,278				-34	%			-31	%			86,653				88,588
North Sea			59,841				59,770				68,632				0	%			-13	%			60,465				62,091
International & GOM (1)			125,472				158,480				163,914				-21	%			-23	%			153,123				158,157
Total (1)			320,932				348,496				385,956				-8	%			-17	%			346,606				366,926
NATURAL GAS VOLUME – Mcf per day
Permian			248,071				246,141				223,787				1	%			11	%			236,502				217,431
MidContinent/Gulf Coast Region			167,553				179,578				353,755				-7	%			-53	%			184,209				354,244
Canada			258,869				270,027				297,004				-4	%			-13	%			274,764				322,783
N.A. Onshore			674,493				695,746				874,546				-3	%			-23	%			695,475				894,458
Gulf of Mexico			16,661				19,520				18,955				-15	%			-12	%			19,326				19,272
GOM Shelf			—				—				—				—				NM				—				365
Egypt (1)			271,142				365,552				358,031				-26	%			-24	%			351,341				370,262
North Sea			70,538				81,392				73,042				-13	%			-3	%			64,787				55,964
International & GOM (1)			358,341				466,464				450,028				-23	%			-20	%			435,454				445,863
Total (1)			1,032,834				1,162,210				1,324,574				-11	%			-22	%			1,130,929				1,340,321
BOE per day
Permian			173,691				169,997				168,728				2	%			3	%			168,645				158,897
MidContinent/Gulf Coast Region			69,028				69,737				126,759				-1	%			-46	%			73,063				121,379
Canada			65,156				66,239				72,312				-2	%			-10	%			67,688				77,569
N.A. Onshore			307,875				305,973				367,799				1	%			-16	%			309,396				357,845
Gulf of Mexico			7,816				9,835				10,163				-21	%			-23	%			9,226				10,482
GOM Shelf			—				—				—				—				NM				—				269
Egypt (1, 2)			105,782				153,054				147,950				-31	%			-29	%			145,210				150,298
North Sea			71,598				73,335				80,806				-2	%			-11	%			71,262				71,419
International & GOM (1)			185,196				236,224				238,919				-22	%			-22	%			225,698				232,468
Total (1)			493,071				542,197				606,718				-9	%			-19	%			535,094				590,313
Total excluding noncontrolling interests			458,901				490,249				557,118				-6	%			-18	%			486,775				540,212
(1) Includes net production volumes attributed to our noncontrolling partner in Egypt below:
Oil (b/d)			19,383				30,671				29,391												28,468				29,292
Gas (Mcf/d)			86,494				125,657				119,578												116,929				123,511
NGL (b/d)			371				334				279												363				224
(2) Egypt Gross Production – BOE per day			351,705				362,073				344,122				-3	%			2	%			351,785				348,401
Discontinued Operations:
Oil (b/d)			—				—				28,577												7,610				22,227
Gas (Mcf/d)			—				—				228,284												94,114				248,837
NGL (b/d)			—				—				—												—				317
BOE/d			—				—				66,625												23,296				64,017

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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 1) divested assets, 2) noncontrolling interest in Egypt, and 3) 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
		4Q15				3Q15				4Q14				4Q15 to 3Q15				4Q15 to 4Q14				FY 2015				FY 2014
OIL VOLUME – Barrels per day
Permian			93,728				93,048				98,017				1	%			-4	%			94,756				92,207
MidContinent/Gulf Coast Region			21,735				21,441				26,287				1	%			-17	%			23,456				21,965
Canada			15,650				14,795				17,117				6	%			-9	%			15,754				17,500
N.A. Onshore			131,113				129,284				141,421				1	%			-7	%			133,966				131,672
Gulf of Mexico			4,561				5,878				6,319				-22	%			-28	%			5,442				6,369
Egypt			60,877				56,972				49,361				7	%			23	%			56,833				45,204
North Sea			58,479				58,330				64,344				0	%			-9	%			58,693				57,934
International & GOM			123,917				121,180				120,024				2	%			3	%			120,968				109,507
Total			255,030				250,464				261,445				2	%			-2	%			254,934				241,179
TOTAL LIQUIDS – Barrels per day
Permian			132,346				128,973				131,429				3	%			1	%			129,228				122,658
MidContinent/Gulf Coast Region			41,103				39,763				46,484				3	%			-12	%			42,329				39,505
Canada			22,020				21,238				22,796				4	%			-3	%			21,870				23,212
N.A. Onshore			195,469				189,974				200,709				3	%			-3	%			193,427				185,375
Gulf of Mexico			5,039				6,582				7,004				-23	%			-28	%			6,005				7,270
Egypt			61,810				57,597				49,835				7	%			24	%			57,542				45,563
North Sea			59,841				59,770				66,020				0	%			-9	%			59,806				59,168
International & GOM			126,690				123,949				122,859				2	%			3	%			123,353				112,001
Total			322,159				313,923				323,568				3	%			0	%			316,780				297,376
NATURAL GAS VOLUME – Mcf per day
Permian			248,071				246,141				223,787				1	%			11	%			236,502				217,431
MidContinent/Gulf Coast Region			167,549				179,980				199,845				-7	%			-16	%			184,741				187,056
Canada			258,677				269,774				294,664				-4	%			-12	%			274,070				292,635
N.A. Onshore			674,297				695,895				718,296				-3	%			-6	%			695,313				697,122
Gulf of Mexico			16,661				19,520				18,955				-15	%			-12	%			19,326				19,275
Egypt			242,070				238,104				201,474				2	%			20	%			234,266				192,184
North Sea			70,538				81,392				70,116				-13	%			1	%			64,291				51,682
International & GOM			329,269				339,016				290,545				-3	%			13	%			317,883				263,141
Total			1,003,566				1,034,911				1,008,841				-3	%			-1	%			1,013,196				960,263
BOE per day
Permian			173,691				169,997				168,728				2	%			3	%			168,645				158,897
MidContinent/Gulf Coast Region			69,027				69,771				79,791				-1	%			-13	%			73,118				70,681
Canada			65,133				66,190				71,905				-2	%			-9	%			67,548				71,984
N.A. Onshore			307,851				305,958				320,424				1	%			-4	%			309,311				301,562
Gulf of Mexico			7,816				9,835				10,163				-21	%			-23	%			9,226				10,483
Egypt			102,155				97,281				83,414				5	%			22	%			96,586				77,593
North Sea			71,598				73,335				77,706				-2	%			-8	%			70,521				67,782
International & GOM			181,569				180,451				171,283				1	%			6	%			176,333				155,858
Total			489,420				486,409				491,707				1	%			0	%			485,644				457,420

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APACHE CORPORATION

PRICE INFORMATION

		4Q15				3Q15				4Q14				FY 2015				FY 2014
AVERAGE OIL PRICE PER BARREL
Permian		$	39.66			$	44.87			$	67.59			$	45.76			$	85.62
MidContinent/Gulf Coast Region			38.36				42.67				71.07				45.36				90.71
Canada			37.30				40.07				65.52				42.33				83.57
N.A. Onshore			39.18				43.98				68.21				45.28				86.61
Gulf of Mexico			38.64				45.30				73.94				47.14				94.03
Egypt			35.59				47.84				73.34				50.65				97.44
North Sea			41.70				49.46				73.16				51.26				95.53
Total			38.86				46.34				70.81				48.17				91.73
AVERAGE NATURAL GAS PRICE PER MCF
Permian		$	2.14			$	2.61			$	3.71			$	2.36			$	4.18
MidContinent/Gulf Coast Region			1.99				2.49				4.04				2.44				4.44
Canada			2.26				2.39				3.56				2.40				4.07
N.A. Onshore			2.07				2.46				3.79				2.36				4.26
Gulf of Mexico			2.19				2.75				3.88				2.64				4.20
Egypt			2.98				2.87				2.94				2.92				2.96
North Sea			6.13				6.41				8.77				6.73				8.29
Total			2.66				2.89				3.83				2.80				4.05
AVERAGE NGL PRICE PER BARREL
Permian		$	10.44			$	8.51			$	20.53			$	10.13			$	26.55
MidContinent/Gulf Coast Region			8.45				7.47				17.62				8.90				24.47
Canada			3.83				3.23				24.38				5.52				33.61
N.A. Onshore			9.18				7.63				19.59				9.26				26.34
Gulf of Mexico			10.94				11.44				21.46				12.65				30.52
Egypt			32.08				27.04				41.35				30.97				51.80
North Sea			25.99				25.61				45.55				26.53				59.42
Total			9.88				8.38				20.52				9.98				27.28
Discontinued Operations:
Oil price ($/Bbl)		$	—			$	—			$	71.83			$	49.76			$	93.28
Gas price ($/Mcf)			—				—				4.24				4.07				4.24
NGL price ($/Bbl)			—				—				—				—				24.57

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APACHE CORPORATION

SUMMARY BALANCE SHEET INFORMATION

(Unaudited)

(In millions)

 

		December 31, 2015				December 31, 2014
Cash and Cash Equivalents		$	1,467			$	769
Assets Held for Sale			—				1,628
Other Current Assets			2,285				4,018
Property and Equipment, net			14,119				48,076
Other Assets			971				1,461
Total Assets		$	18,842			$	55,952
Current Liabilities		$	1,841			$	3,664
Long-Term Debt			8,777				11,245
Deferred Credits and Other Noncurrent Liabilities			3,996				12,906
Apache Shareholders’ Equity			2,566				25,937
Noncontrolling interest			1,662				2,200
Total Liabilities and Shareholders’ Equity		$	18,842			$	55,952
Common shares outstanding at end of period			378				377
% of debt-to-capitalization as calculated under credit facility			34	%			29	%

APACHE CORPORATION

SUMMARY OF COSTS INCURRED AND GTP CAPITAL INVESTMENTS

(Unaudited)

(In millions)

 

		For the Quarter Ended December 31,								For the Year Ended December 31,
		2015				2014				2015				2014
Costs Incurred in Oil and Gas Property:
Acquisitions
Proved		$	33			$	1			$	35			$	104
Unproved			88				836				340				1,388
Exploration and Development			790				2,629				4,091				10,153
			911				3,466				4,466				11,645
GTP Capital Investments:
GTP Facilities			9				317				282				1,339
Total Costs Incurred and GTP Capital Investments		$	920			$	3,783			$	4,748			$	12,984

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APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(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 Ended December 31,								For the Year Ended December 31,
		2015				2014				2015				2014
Income (Loss) Attributable to Common Stock (GAAP)		$	(7,213	)		$	(4,814	)		$	(23,119	)		$	(5,403	)
Adjustments:
Oil & gas property write-downs, net of tax (1)			4,372				1,990				16,526				3,068
Tax adjustments (2)			1,971				182				4,200				1,005
Impairments, net of tax (1)			1,062				1,752				1,362				1,752
Discontinued operations, net of tax			(188	)			1,071				771				1,588
Transaction, reorganization & separation costs, net of tax			8				1				86				44
Contract termination charges, net of tax			2				8				57				35
Loss on extinguishment of debt, net of tax			—				—				25				—
Divested assets, net of tax			(38	)			116				(38	)			116
Unrealized commodity derivative mark-to-market, net of tax			—				27				—				(193	)
Adjusted Earnings (Non-GAAP)		$	(24	)		$	333			$	(130	)		$	2,012
Net Income (Loss) per Common Share – Diluted (GAAP)		$	(19.07	)		$	(12.78	)		$	(61.20	)		$	(14.06	)
Adjustments:
Oil & gas property write-downs, net of tax (1)			11.56				5.26				43.75				7.95
Tax adjustments (2)			5.22				0.51				11.12				2.63
Impairments, net of tax (1)			2.80				4.64				3.60				4.56
Discontinued operations, net of tax			(0.50	)			2.83				2.04				4.11
Transaction, reorganization & separation costs, net of tax			0.02				—				0.23				0.12
Contract termination charges, net of tax			0.01				0.03				0.15				0.10
Loss on extinguishment of debt, net of tax			—				—				0.07				—
Divested assets, net of tax			(0.10	)			0.31				(0.10	)			0.30
Unrealized commodity derivative mark-to-market, net of tax			—				0.08				—				(0.50	)
Adjusted Earnings Per Share – Diluted (Non-GAAP)		$	(0.06	)		$	0.88			$	(0.34	)		$	5.21
Total income tax provision (GAAP)		$	(798	)		$	(989	)		$	(5,469	)		$	663
Adjustments:
Tax impact on oil & gas property write-downs (1)			2,294				1,246				8,897				1,932
Tax impact on impairments (1)			137				168				204				168
Tax impact on transaction, reorganization & separation costs			4				—				46				23
Tax impact on contract termination charges			1				5				31				19
Tax impact on extinguishment of debt			—				—				14				—
Tax impact on divested assets			(21	)			64				(21	)			64
Tax impact on unrealized commodity derivative mark-to-market			—				15				—				(107	)
Tax adjustments (2)			(1,971	)			(182	)			(4,200	)			(1,005	)
Adjusted total income tax provision		$	(354	)		$	327			$	(498	)		$	1,757
Adjusted Effective Tax Rate (Non-GAAP)			41.8	%			46.4	%			48.0	%			42.7	%

 

(1)	Excludes Egypt noncontrolling interest impact

(2)	Tax adjustments are primarily related to valuation allowances associated with projected utilization of the Company’s U.S. and Canadian net deferred tax assets. The valuation allowances were partially offset by $619 million in benefits for the North Sea tax rate change in the first quarter of 2015.

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APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of income (loss) before taxes to adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure. EBITDA is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. Adjusted EBITDA generally excludes certain items that management believes affect the comparability of operating results or are not related to Apache’s ongoing operations. Management uses adjusted EBITDA to evaluate the company’s operational trends and performance relative to other oil and gas companies.

 

		For the Quarter Ended December 31,								For the Year Ended December 31,
		2015				2014				2015				2014
Income (loss) before income taxes		$	(8,668	)		$	(4,683	)		$	(28,226	)		$	(2,809	)
Adjustments:
Depreciation, depletion and amortization
Oil and gas property and equipment
Recurring			780				1,206				3,531				4,388
Additional			6,760				3,236				25,517				5,001
Other assets			79				85				324				331
Asset retirement obligation accretion			36				39				145				154
Impairments			1,553				1,919				1,920				1,919
Impact of Egypt impairments & write-downs on tax volumes			167				—				167				—
Transaction, reorganization & separation costs			12				1				132				67
Financing costs, net			59				54				299				211
Contract termination charges			3				12				87				54
Unrealized commodity derivative mark-to-market			—				41				—				(300	)
Adjusted EBITDA (Non-GAAP)		$	781			$	1,910			$	3,896			$	9,016

Reconciliation of debt to net debt

Net debt 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 equivelents on hand.

 

		December 31, 2015				September 30, 2015				June 30, 2015				March 31, 2015
Current debt		$	1			$	—			$	—			$	2,598
Long-term debt			8,777				8,777				9,676				9,675
Total debt			8,778				8,777				9,676				12,273
Cash			1,467				1,655				2,950				229
Net debt		$	7,311			$	7,122			$	6,726			$	12,044

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 Ended December 31,								For the Year Ended December 31,
		2015				2014				2015				2014
Net cash provided by operating activities (GAAP)		$	262			$	1,933			$	2,984			$	8,461
Less: Discontinued operations			—				(172	)			(150	)			(944	)
Net cash provided by operating activities excluding discontinued operations		$	262			$	1,761			$	2,834			$	7,517
Changes in operating assets and liabilities			487				52				170				239
Cash from continuing operations before changes in operating assets and liabilities		$	749			$	1,813			$	3,004			$	7,756

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APACHE CORPORATION

OIL & GAS RESERVES INFORMATION

For the Year Ended December 31, 2015

 

OIL (Mbbl)
			U.S.				Canada				Egypt1				Australia				North Sea				Argentina				Total1
Balance – Dec 31, 2014			614,565				135,799				143,329				55,771				124,805				—				1,074,269
Extensions and Discoveries			13,903				4,550				24,524				—				16,579				—				59,556
Purchases			—				1,763				—				—				—				—				1,763
Revisions			(173,907	)			(27,966	)			25,407				11,189				(2,255	)			—				(167,532	)
Production			(45,138	)			(5,755	)			(31,240	)			(2,778	)			(21,657	)			—				(106,568	)
Sales			(121	)			(2,218	)			—				(64,182	)			(1,908	)			—				(68,429	)
Balance – Dec 31, 2015			409,302				106,173				162,020				—				115,564				—				793,059
NGL’s (Mbbl)
			U.S.				Canada				Egypt1				Australia				North Sea				Argentina				Total1
Balance – Dec 31, 2014			253,393				25,115				1,558				—				2,141				—				282,207
Extensions and Discoveries			5,768				1,473				144				—				689				—				8,074
Purchases			—				976				—				—				—				—				976
Revisions			(64,226	)			(4,886	)			255				—				(321	)			—				(69,178	)
Production			(19,684	)			(2,236	)			(388	)			—				(413	)			—				(22,721	)
Sales			(47	)			(357	)			—				—				(17	)			—				(421	)
Balance — Dec 31, 2015			175,204				20,085				1,569				—				2,079				—				198,937
Oil & NGL’s
			U.S.				Canada				Egypt	1			Australia				North Sea				Argentina				Total	1
Balance – Dec 31, 2014			867,958				160,914				144,887				55,771				126,946				—				1,356,476
Extensions and Discoveries			19,671				6,023				24,668				—				17,268				—				67,630
Purchases			—				2,739				—				—				—				—				2,739
Revisions			(238,133	)			(32,852	)			25,662				11,189				(2,576	)			—				(236,710	)
Production			(64,822	)			(7,991	)			(31,628	)			(2,778	)			(22,070	)			—				(129,289	)
Sales			(168	)			(2,575	)			—				(64,182	)			(1,925	)			—				(68,850	)
Balance – Dec 31, 2015			584,506				126,258				163,589				—				117,643				—				991,996
GAS (MMcf)
			U.S.				Canada				Egypt1				Australia				North Sea				Argentina				Total1
Balance – Dec 31, 2014			2,196,803				1,517,768				808,883				1,604,819				110,487				—				6,238,760
Extensions and Discoveries			40,901				121,216				94,777				—				41,755				—				298,649
Purchases			—				24,727				—				—				—				—				24,727
Revisions			(503,939	)			(325,375	)			54,811				8,162				(22,373	)			—				(788,714	)
Production			(160,614	)			(100,289	)			(128,239	)			(34,352	)			(23,647	)			—				(447,141	)
Sales			(383	)			(315,917	)			—				(1,578,629	)			(930	)			—				(1,895,859	)
Balance – Dec 31, 2015			1,572,768				922,130				830,232				—				105,292				—				3,430,422
TOTAL BOE (Mboe)
			U.S.				Canada				Egypt1				Australia				North Sea				Argentina				Total1
Balance – Dec 31, 2014			1,234,092				413,876				279,702				323,241				145,359				—				2,396,270
Extensions and Discoveries			26,488				26,226				40,464				—				24,227				—				117,405
Purchases			—				6,860				—				—				—				—				6,860
Revisions			(322,123	)			(87,081	)			34,797				12,549				(6,305	)			—				(368,163	)
Production			(91,591	)			(24,706	)			(53,001	)			(8,503	)			(26,011	)			—				(203,812	)
Sales			(232	)			(55,228	)			—				(327,287	)			(2,080	)			—				(384,827	)
Balance – Dec 31, 2015			846,634				279,947				301,962				—				135,190				—				1,563,733
Proved developed reserves:
Oil + NGL’s (Mbbls)			499,062				83,093				145,655				—				106,039				—				833,849
Gas (Mboe)			227,362				126,554				129,378				—				14,254				—				497,548
Balance – Dec 31, 2015 (Mboe)			726,424				209,647				275,033				—				120,293				—				1,331,397

 

(1)	Includes reserves attributable to noncontrolling interest in Egypt.

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APACHE CORPORATION

OIL & GAS RESERVES AND COSTS

For the Year Ended December 31, 2015

 

Reserve Additions (Mboe)
			U.S.				Canada				Egypt (1)				Australia				North Sea				Argentina				Other				Total (1)
Extensions and Discoveries			26,488				26,226				40,464				—				24,227				—				—				117,405
Purchases			—				6,860				—				—				—				—				—				6,860
Additions excluding revisions			26,488				33,086				40,464				—				24,227				—				—				124,265
Revisions			(322,123	)			(87,081	)			34,797				12,549				(6,305	)			—				—				(368,163	)
Total			(295,635	)			(53,995	)			75,261				12,549				17,922				—				—				(243,898	)
Capital Cost Information (Non-GAAP) (in millions)
			U.S.				Canada				Egypt (1)				Australia				North Sea				Argentina				Other				Total (1)
Exploration & Development, excluding Capitalized Interest and Asset Retirement Cost (ARC)		$	1,796			$	201			$	857			$	123			$	784			$	—			$	29			$	3,790
Acquisitions, excluding ARC – Acquired
Proved			1				8				25				1				—				—				—				35
Unproved			313				23				4				—				—				—				—				340
Total		$	2,110			$	232			$	886			$	124			$	784			$	—			$	29			$	4,165

Reconciliation of Exploration and Development Costs to Exploration and Development Costs, excluding Capitalized Interest and Asset Retirement Cost, a Non-GAAP Financial Measure

Presented below is a reconciliation of exploration and development costs (GAAP) to exploration and development costs, excluding capitalized interest and asset retirement cost (Non-GAAP). Management believes exploration and development costs, excluding capitalized interest and asset retirement cost is a more accurate reflection of the expenditures during the current year.

 

			U.S.				Canada				Egypt (1)				Australia				North Sea				Argentina				Other				Total (1)
Exploration & Development Costs (in millions)		$	2,088			$	234			$	874			$	132			$	734			$	—			$	29			$	4,091
Less: Capitalized Interest			(169	)			(25	)			(17	)			(9	)			(16	)			—				—				(236	)
Less: ARC			(123	)			(8	)			—				—				66				—				—				(65	)
Total Adds		$	1,796			$	201			$	857			$	123			$	784			$	—			$	29			$	3,790

Reconciliation of Total Acquisition Costs to Acquisitions, excluding Asset Retirement Cost – Acquired, a Non-GAAP Financial Measure

Presented below is a reconciliation of total acquisition costs (GAAP) to acquisitions, excluding asset retirement cost – acquired (Non-GAAP). Management believes acquisitions, excluding asset retirement cost – acquired is a more accurate reflection of the costs of acquisitions during the current year.

 

			U.S.				Canada				Egypt (1)				Australia				North Sea				Argentina				Other				Total (1)
Total Acquisition Costs (in millions)
Proved		$	1			$	8			$	25			$	1			$	—			$	—			$	—			$	35
Unproved			313				23				4				—				—								—				340
Less: ARC – Acquired			—				—				—				—				—				—				—				—
Acquisitions, excluding ARC – Acquired		$	314			$	31			$	29			$	1			$	—			$	—			$	—			$	375

 

(1)	Includes reserves and costs attributable to noncontrolling interest in Egypt.