Form 8-K APACHE CORP For: Aug 04

 

 

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): August 4, 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 August 4, 2016, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter ended June 30, 2016. 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 August 4, 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: August 4, 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 August 4, 2016.

Exhibit 99.1

 

		NEWS RELEASE

APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2016

FINANCIAL AND OPERATIONAL RESULTS

 

●

Transitioned from full-cost to successful-efforts method of accounting to enhance the comparability of Apache’s financial results.

 

●

Placed on production several strong wells in key operating areas including the Permian Basin and North Sea.

 

●

Achieved further cost improvements, including a 17-percent year-over-year reduction in lease operating expenses (LOE), which averaged $7.38 per barrel of oil equivalent (Boe).

 

●

Successful-efforts-based financial results were:

 

●

Net loss of $244 million, or $0.65 per share,

 

●

Adjusted net loss of $99 million, or $0.26 per share, and

 

●

Net cash from operating activities of $744 million.

 

●

Results under the full-cost method would have been:

 

●

Net loss of $601 million, or $1.58 per share,

 

●

Adjusted earnings of $20 million, or $0.05 per share, and

 

●

Net cash from operating activities of $781 million.

 

●

See the Financial and Operational Supplement for an expanded comparison of Apache’s second-quarter results under the successful-efforts and full-cost methods.

HOUSTON, Aug. 4, 2016 – Apache Corporation (NYSE, Nasdaq: APA) today announced its financial and operational results for the second quarter of 2016. Effective for the quarter, Apache voluntarily changed its method of accounting for oil and gas exploration and development activities from full cost to successful efforts. Accordingly, financial information for prior periods has been recast to reflect the retrospective application of the successful-efforts method. The Quarterly Report on Form 10-Q for the period ended June 30, 2016, that will be filed by the company after close of business today, will reflect this accounting change.

Apache reported a loss of $244 million or $0.65 per diluted common share during the second quarter of 2016. These results include a number of items outside of core earnings that

 

		2000 POST OAK BLVD / SUITE 100 / HOUSTON, TX 77056-4400        TEL (713) 296-6000

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APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2016 FINANCIAL AND OPERATIONAL RESULTS

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are typically excluded by the investment community in their published earnings estimates. When adjusted for these and certain additional items that impact the comparability of results, Apache’s second-quarter loss totaled $99 million, or $0.26 per share. Net cash provided by operating activities was $744 million, and adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (EBITDAX) was $787 million. During the quarter, Apache’s cash position increased to $1.2 billion.

“Apache’s solid second-quarter results are a testament to both the significant progress we have made on our cost structure as well as the strength of our portfolio,” said John J. Christmann IV, Apache’s chief executive officer and president. “During the quarter, we continued our efforts to reduce costs and improve capital efficiency. Our LOE costs on a Boe basis were down 4 percent from the previous quarter and 17 percent year-over-year.

“Despite an 85-percent reduction in capital investment since 2014, our base production has proven to be very resilient. We sharply reduced activity in the first quarter of 2015 and have continued to reduce spending as oil prices have remained relatively weak. Nevertheless, our production volumes have held up well, and we are on track to deliver production in line with the increased guidance provided last quarter. Although our 2016 capital program is not intended to maximize near-term production, the efficiency and productivity gains we have achieved are clearly demonstrated in our results.”

Second-quarter operational summary

Apache reported total worldwide production of 535,000 Boe per day and pro forma production of 461,000 Boe per day, which excludes Egypt noncontrolling interest and tax barrels. In North America Onshore, production was 282,000 Boe per day while pro forma International and Offshore production was 179,000 Boe per day.

 

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APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2016 FINANCIAL AND OPERATIONAL RESULTS

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Despite significant reductions in investment over the last 18 months, second-quarter North American Onshore production volumes only declined 16,000 Boe per day from the first quarter. More than 10,000 Boe per day of this decline came from lower-margin areas outside of the Permian Basin. International and Offshore production was relatively flat from first quarter to second quarter.

Highlights from Apache’s key operating areas include:

 

●

North America Onshore – Apache placed on production 20 gross-operated wells during the second quarter.

 

●

In the Delaware Basin, the company placed on production two gross-operated wells, including the Blue Jay 103H Third Bone Springs well, which achieved a 30-day average rate of nearly 3,200 Boe per day.

 

●

In the Midland Basin, Northwest Shelf and Central Basin Platform, the company placed on production 16 gross-operated wells. Apache generated strong production rates in the Midland Basin from the Connell 38B 2HM and Connell 38C 2HM Wolfcamp B wells, each of which achieved a 30-day average rate of approximately 1,300 Boe per day from one-mile laterals.

 

●

In the Woodford-SCOOP, the company placed on production two gross-operated wells, including the Truman 3-28H, which achieved a 30-day average rate of approximately 1,800 Boe per day from a 4,400 foot lateral.

 

●

North Sea – Production averaged 71,000 Boe per day. During the quarter, the company achieved a 100-percent drilling success rate and placed on production

 

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APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2016 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 4 of 7

 

three strong development wells in the Beryl area: the LP7, BCR and FNT. Each well achieved a 30-day average rate in excess of 6,000 Boe per day. During the quarter, the company also commenced drilling the Storr prospect in the Beryl area, which was highlighted in the November 2015 North Sea Investor Update Presentation.

 

●

Egypt – Gross production averaged 350,000 Boe per day, and net production, excluding minority interest and tax barrels, averaged 101,000 Boe per day. During the quarter, Apache drilled 15 gross wells with a 93-percent success rate.

2016 outlook and plan update

Apache has taken a conservative budgeting approach to 2016 with a planned oil price of $35 and an overriding financial goal to spend within cash flow. As oil prices have begun to show modest signs of improvement relative to the first quarter, Apache is slowly deploying incremental capital. The company recently added a rig in the Midland Basin, is maintaining operations on two platform rigs in the North Sea, and is accelerating strategic testing initiatives. Apache now expects to spend at the high end of its 2016 capital guidance range of $1.4 to $1.8 billion.

“Our conservative budgeting and rigorous allocation of capital over the last 18 months have resulted in tangible benefits to the company. We refrained from significant development drilling in a low commodity-price environment, and instead, turned our focus to capital efficiency improvements and strategic testing. As a result, we have made significant progress on our cost structure and are positioning Apache very well for the future,” concluded Christmann.

 

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APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2016 FINANCIAL AND OPERATIONAL RESULTS

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Conference call

Apache will host a conference call to discuss its second-quarter 2016 results at 1 p.m. Central time, Thursday, Aug. 4. The conference call will be webcast from Apache’s website at www.apachecorp.com and investor.apachecorp.com, and the webcast replay will be archived there as well. The conference call will also be available for playback by telephone for one week beginning at approximately 4 p.m. Central time Aug. 4. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 13741868.

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 EBITDAX 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/quarterlyresults.

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 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 Google’s Play store. To sign up to receive email alerts regarding news and other website updates, please visit http://investor.apachecorp.com/alerts.cfm.

 

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APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2016 FINANCIAL AND OPERATIONAL RESULTS

— PAGE 6 of 7

 

Non-GAAP financial measures

Apache’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX and net debt are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

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 2015 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.

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, 2015, 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.

 

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APACHE CORPORATION ANNOUNCES SECOND-QUARTER 2016 FINANCIAL AND OPERATIONAL RESULTS

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Contacts
Investor:		(281) 302-2286    Gary Clark
Media:		(713) 296-7189    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								For the Six Months
		Ended June 30,								Ended June 30,
		2016				2015				2016				2015
REVENUES AND OTHER:
Oil revenues		$	1,118			$	1,618			$	1,940			$	2,911
Gas revenues			209				315				432				623
NGL revenues			59				58				101				116
Oil and gas production revenues			1,386				1,991				2,473				3,650
Other			(21	)			28				(24	)			22
Gain (loss) on divestiture			17				227				16				209
			1,382				2,246				2,465				3,881
COSTS AND EXPENSES:
Lease operating expenses			359				467				737				948
Gathering and transportation			52				49				104				105
Taxes other than income			65				55				76				128
Exploration expense			91				225				186				483
General and administrative			103				111				196				195
Depreciation, depletion and amortization
Oil and gas property and equipment			629				711				1,265				1,454
Other assets			40				83				82				166
Asset retirement obligation accretion			38				36				76				72
Impairments			173				512				173				2,424
Transaction, reorganization & separation costs			9				66				24				120
Financing costs, net			104				117				209				241
			1,663				2,432				3,128				6,336
INCOME (LOSS) BEFORE INCOME TAXES			(281	)			(186	)			(663	)			(2,455	)
Current income tax provision (benefit)			144				900				134				848
Deferred income tax provision (benefit)			(225	)			(169	)			(226	)			(1,318	)
INCOME (LOSS) FROM CONTINUING OPS INCLUDING NONCONTROLLING INTEREST			(200	)			(917	)			(571	)			(1,985	)
Income (Loss) from discontinued operations, net of tax			—				120				—				(118	)
INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST			(200	)			(797	)			(571	)			(2,103	)
Net income attributable to noncontrolling interest			44				63				45				91
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK		$	(244	)		$	(860	)		$	(616	)		$	(2,194	)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
Net income (loss) from continuing operations attributable to common shareholders		$	(244	)		$	(980	)		$	(616	)		$	(2,076	)
Net income (loss) from discontinued operations			—				120				—				(118	)
Net income (loss) attributable to common shareholders		$	(244	)		$	(860	)		$	(616	)		$	(2,194	)
BASIC NET INCOME (LOSS) PER COMMON SHARE:
Basic net income (loss) from continuing operations per share		$	(0.65	)		$	(2.60	)		$	(1.63	)		$	(5.50	)
Basic net income (loss) from discontinued operations per share			—				0.32				—				(0.31	)
Basic net income (loss) per share		$	(0.65	)		$	(2.28	)		$	(1.63	)		$	(5.81	)
DILUTED NET INCOME (LOSS) PER COMMON SHARE:
Diluted net income (loss) from continuing operations per share		$	(0.65	)		$	(2.60	)		$	(1.63	)		$	(5.50	)
Diluted net income (loss) from discontinued operations per share			—				0.32				—				(0.31	)
Diluted net income (loss) per share		$	(0.65	)		$	(2.28	)		$	(1.63	)		$	(5.81	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic			379				378				379				377
Diluted			379				378				379				377
DIVIDENDS DECLARED PER COMMON SHARE		$	0.25			$	0.25			$	0.50			$	0.50

NOTE: All amounts included herein are stated under successful efforts.

 

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APACHE CORPORATION

PRODUCTION INFORMATION

 

		For the Quarter Ended												% Change								For the Six Months Ended
		June 30, 2016				March 31, 2016				June 30, 2015				2Q16 to 1Q16				2Q16 to 2Q15				June 30, 2016				June 30, 2015
OIL VOLUME - Barrels per day
Permian			86,430				93,278				97,814				-7	%			-12	%			89,854				96,146
MidContinent/Gulf Coast Region			15,959				18,415				24,431				-13	%			-35	%			17,187				25,357
Canada			12,917				14,463				15,791				-11	%			-18	%			13,690				16,330
N.A. Onshore			115,306				126,156				138,036				-9	%			-16	%			120,731				137,833
Gulf of Mexico			4,352				4,166				5,453				4	%			-20	%			4,259				5,668
Egypt (1)			106,223				98,259				103,865				8	%			2	%			102,241				99,494
North Sea			59,124				56,962				58,873				4	%			0	%			58,043				60,279
International & GOM (1)			169,699				159,387				168,191				6	%			1	%			164,543				165,441
Total (1)			285,005				285,543				306,227				0	%			-7	%			285,274				303,274
TOTAL LIQUIDS - Barrels per day
Permian			125,118				130,797				133,043				-4	%			-6	%			127,958				127,773
MidContinent/Gulf Coast Region			32,578				36,225				43,623				-10	%			-25	%			34,401				44,299
Canada			18,009				20,966				21,616				-14	%			-17	%			19,487				22,169
N.A. Onshore			175,705				187,988				198,282				-7	%			-11	%			181,846				194,241
Gulf of Mexico			4,677				4,537				5,976				3	%			-22	%			4,607				6,203
Egypt (1)			107,173				99,547				105,154				8	%			2	%			103,360				100,698
North Sea			60,687				58,371				59,699				4	%			2	%			59,529				61,135
International & GOM (1)			172,537				162,455				170,829				6	%			1	%			167,496				168,036
Total (1)			348,242				350,443				369,111				-1	%			-6	%			349,342				362,277
NATURAL GAS VOLUME - Mcf per day
Permian			242,019				241,461				234,379				0	%			3	%			241,740				225,722
MidContinent/Gulf Coast Region			148,841				154,972				192,219				-4	%			-23	%			151,906				195,030
Canada			246,830				266,438				282,971				-7	%			-13	%			256,635				285,251
N.A. Onshore			637,690				662,871				709,569				-4	%			-10	%			650,281				706,003
Gulf of Mexico			17,266				13,328				20,190				30	%			-14	%			15,297				20,581
Egypt (1)			408,013				397,598				478,170				3	%			-15	%			402,806				437,611
North Sea			60,318				70,795				56,367				-15	%			7	%			65,556				53,423
International & GOM (1)			485,597				481,721				554,727				1	%			-12	%			483,659				511,615
Total (1)			1,123,287				1,144,592				1,264,296				-2	%			-11	%			1,133,940				1,217,618
BOE per day
Permian			165,455				171,041				172,106				-3	%			-4	%			168,248				165,394
MidContinent/Gulf Coast Region			57,384				62,053				75,661				-8	%			-24	%			59,719				76,804
Canada			59,148				65,372				68,778				-10	%			-14	%			62,260				69,711
N.A. Onshore			281,987				298,466				316,545				-6	%			-11	%			290,227				311,909
Gulf of Mexico			7,554				6,759				9,340				12	%			-19	%			7,156				9,633
Egypt (1, 2)			175,175				165,813				184,848				6	%			-5	%			170,494				173,634
North Sea			70,740				70,170				69,094				1	%			2	%			70,455				70,038
International & GOM (1)			253,469				242,742				263,282				4	%			-4	%			248,105				253,305
Total (1)			535,456				541,208				579,827				-1	%			-8	%			538,332				565,214
Total excluding noncontrolling interests			477,110				486,019				518,342				-2	%			-8	%			481,564				507,402
(1)       Includes net production volumes attributed to our noncontrolling partner in Egypt below:
Oil (b/d)			35,357				32,676				34,580												34,017				33,144
Gas (Mcf/d)			136,029				132,503				158,848												134,266				145,598
NGL (b/d)			317				429				430												373				402
(2)       Egypt Gross Production - BOE per day			349,689				353,000				349,398				-1	%			0	%			351,344				346,597
Discontinued Operations:
Oil (b/d)			—				—				9,849												—				15,346
Gas (Mcf/d)			—				—				149,336												—				189,789
NGL (b/d)			—				—				—												—				—
BOE/d			—				—				34,738												—				46,978

 

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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.

 

		For the Quarter Ended												% Change								For the Six Months Ended
		June 30, 2016				March 31, 2016				June 30, 2015				2Q16 to 1Q16				2Q16 to 2Q15				June 30, 2016				June 30, 2015
OIL VOLUME - Barrels per day
Permian			86,430				93,278				97,814				-7	%			-12	%			89,854				96,146
MidContinent/Gulf Coast Region			15,959				18,415				24,452				-13	%			-35	%			17,187				25,354
Canada			12,987				14,406				15,776				-10	%			-18	%			13,696				16,294
N.A. Onshore			115,376				126,099				138,042				-9	%			-16	%			120,737				137,794
Gulf of Mexico			4,352				4,166				5,453				4	%			-20	%			4,259				5,668
Egypt			57,955				59,896				54,977				-3	%			5	%			58,925				54,769
North Sea			59,124				56,962				58,164				4	%			2	%			58,043				58,986
International & GOM			121,431				121,024				118,594				0	%			2	%			121,227				119,423
Total			236,807				247,123				256,636				-4	%			-8	%			241,964				257,217
TOTAL LIQUIDS - Barrels per day
Permian			125,118				130,797				133,043				-4	%			-6	%			127,958				127,773
MidContinent/Gulf Coast Region			32,578				36,225				43,531				-10	%			-25	%			34,401				44,250
Canada			18,133				20,891				21,575				-13	%			-16	%			19,511				22,120
N.A. Onshore			175,829				187,913				198,149				-6	%			-11	%			181,870				194,143
Gulf of Mexico			4,677				4,537				5,976				3	%			-22	%			4,607				6,203
Egypt			58,565				60,755				55,648				-4	%			5	%			59,659				55,411
North Sea			60,687				58,371				58,966				4	%			3	%			59,529				59,807
International & GOM			123,929				123,663				120,590				0	%			3	%			123,795				121,421
Total			299,758				311,576				318,739				-4	%			-6	%			305,665				315,564
NATURAL GAS VOLUME - Mcf per day
Permian			242,019				241,461				234,380				0	%			3	%			241,740				225,721
MidContinent/Gulf Coast Region			148,841				154,972				192,678				-4	%			-23	%			151,906				195,900
Canada			245,682				266,254				282,651				-8	%			-13	%			255,968				284,078
N.A. Onshore			636,542				662,687				709,709				-4	%			-10	%			649,614				705,699
Gulf of Mexico			17,266				13,328				20,190				30	%			-14	%			15,297				20,581
Egypt			251,983				255,684				233,797				-1	%			8	%			253,834				228,701
North Sea			60,318				70,795				55,489				-15	%			9	%			65,556				52,424
International & GOM			329,567				339,807				309,476				-3	%			6	%			334,687				301,706
Total			966,109				1,002,494				1,019,185				-4	%			-5	%			984,301				1,007,405
BOE per day
Permian			165,455				171,041				172,106				-3	%			-4	%			168,248				165,393
MidContinent/Gulf Coast Region			57,384				62,053				75,643				-8	%			-24	%			59,719				76,900
Canada			59,079				65,267				68,684				-9	%			-14	%			62,173				69,466
N.A. Onshore			281,918				298,361				316,433				-6	%			-11	%			290,140				311,759
Gulf of Mexico			7,554				6,759				9,340				12	%			-19	%			7,156				9,633
Egypt			100,562				103,369				94,615				-3	%			6	%			101,965				93,527
North Sea			70,740				70,170				68,214				1	%			4	%			70,455				68,544
International & GOM			178,856				180,298				172,169				-1	%			4	%			179,576				171,704
Total			460,774				478,659				488,602				-4	%			-6	%			469,716				483,463

 

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APACHE CORPORATION

PRICE INFORMATION

 

		For the Quarter Ended												For the Six Months Ended
		June 30,				March 31,				June 30,				June 30,				June 30,
		2016				2016				2015				2016				2015
AVERAGE OIL PRICE PER BARREL
Permian		$	41.82			$	30.10			$	53.77			$	35.74			$	49.21
MidContinent/Gulf Coast Region			42.17				28.65				53.86				34.93				49.56
Canada			39.39				29.40				52.22				34.11				45.81
N.A. Onshore			41.65				29.78				53.56				35.45				48.85
Gulf of Mexico			41.14				29.70				57.69				35.54				51.59
Egypt			45.42				33.04				60.83				39.47				56.56
North Sea			45.56				33.50				64.03				39.64				56.86
Total			43.14				31.62				58.06				37.37				53.03
AVERAGE NATURAL GAS PRICE PER MCF
Permian		$	1.72			$	1.77			$	2.24			$	1.74			$	2.33
MidContinent/Gulf Coast Region			1.71				1.69				2.37				1.70				2.62
Canada			1.01				1.69				2.34				1.36				2.46
N.A. Onshore			1.43				1.69				2.31				1.56				2.45
Gulf of Mexico			2.04				2.09				2.61				2.06				2.77
Egypt			2.72				2.58				2.91				2.65				2.92
North Sea			3.95				4.24				7.35				4.11				7.37
Total			2.04				2.14				2.74				2.09				2.83
AVERAGE NGL PRICE PER BARREL
Permian		$	10.00			$	6.70			$	10.28			$	8.37			$	10.87
MidContinent/Gulf Coast Region			9.32				6.37				9.67				7.80				9.83
Canada			8.54				5.58				4.41				6.88				7.74
N.A. Onshore			9.69				6.49				9.52				8.07				10.20
Gulf of Mexico			NM				8.88				14.72				4.69				14.24
Egypt			27.68				26.92				28.95				27.24				32.14
North Sea			22.25				18.13				30.94				20.29				27.75
Total			10.22				7.16				10.24				8.67				10.93
Discontinued Operations:
Oil price ($/Bbl)		$	—			$	—			$	63.60			$	—			$	49.76
Gas price ($/Mcf)			—				—				3.88				—				4.07
NGL price ($/Bbl)			—				—				—				—				—

 

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APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

 

		For the Quarter Ended June 30,								For the Six Months Ended June 30,
		2016				2015				2016				2015
Unproved leasehold impairments		$	66			$	148			$	108			$	316
Dry hole expense			3				35				31				69
Geological and geophysical expense			4				17				9				47
Exploration overhead and other			18				25				38				51
		$	91			$	225			$	186			$	483

SUMMARY BALANCE SHEET INFORMATION

 

		June 30, 2016				December 31, 2015
Cash and Cash Equivalents		$	1,201			$	1,467
Other Current Assets			2,091				2,285
Property and Equipment, net			20,143				20,838
Other Assets			911				910
Total Assets		$	24,346			$	25,500
Current Liabilities		$	1,570			$	1,841
Long-Term Debt			8,719				8,716
Deferred Credits and Other Noncurrent Liabilities			5,361				5,453
Apache Shareholders’ Equity			7,142				7,888
Noncontrolling interest			1,554				1,602
Total Liabilities and Shareholders’ Equity		$	24,346			$	25,500
Common shares outstanding at end of period			379				378

SUMMARY OF COSTS INCURRED AND GTP CAPITAL INVESTMENTS

 

		For the Quarter Ended June 30,								For the Six Months Ended June 30,
		2016				2015				2016				2015
Costs Incurred in Oil and Gas Property:
Acquisitions
Proved		$	41			$	—			$	41			$	—
Unproved			90				36				108				128
Exploration and Development			423				969				900				2,333
			554				1,005				1,049				2,461
GTP Capital Investments:
GTP Facilities			—				36				—				260
Total Costs Incurred and GTP Capital Investments		$	554			$	1,041			$	1,049			$	2,721

NOTE: All amounts included herein are stated under successful efforts.

 

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APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

RECONCILIATION OF INCOME (LOSS) BEFORE TAXES TO ADJUSTED EBITDAX

Adjusted EBITDAX is a non-GAAP financial measure. EBITDAX 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 EBITDAX 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 EBITDAX to evaluate the company’s operational trends and performance relative to other oil and gas companies.

 

		For the Quarter								For the Six Months
		Ended June 30,								Ended June 30,
		2016				2015				2016				2015
Income (loss) before income taxes (GAAP)		$	(281	)		$	(186	)		$	(663	)		$	(2,455	)
Adjustments:
Depreciation, depletion and amortization
Oil and gas property and equipment			629				711				1,265				1,454
Other assets			40				83				82				166
Exploration expense			91				225				186				483
Asset retirement obligation accretion			38				36				76				72
Impairments			173				512				173				2,424
(Gain)/loss on divestitures, net			(17	)			(227	)			(16	)			(209	)
Transaction, reorganization & separation costs			9				66				24				120
Financing costs, net			104				117				209				241
Contract termination charges			1				—				3				43
Adjusted EBITDAX (Non-GAAP)		$	787			$	1,337			$	1,339			$	2,339

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 equivalents on hand.

 

		June 30,				March 31,				December 31,				September 30,
		2016				2016				2015				2015
Current debt		$	1			$	1			$	1			$	—
Long-term debt			8,719				8,718				8,716				8,715
Total debt			8,720				8,719				8,717				8,715
Cash			1,201				1,004				1,467				1,655
Net debt		$	7,519			$	7,715			$	7,250			$	7,060

NOTE: All amounts included herein are stated under successful efforts.

 

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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 UNDER SUCCESSFUL EFFORTS

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 Six Months
		Ended June 30,								Ended June 30,
		2016				2015				2016				2015
Income (Loss) Attributable to Common Stock (GAAP) - Successful Efforts		$	(244	)		$	(860	)		$	(616	)		$	(2,194	)
Adjustments: *
Asset impairments, net of tax			139				486				168				1,816
Valuation allowance and other tax adjustments			13				774				30				386
Transaction, reorganization & separation costs, net of tax			5				43				15				78
Contract termination charges, net of tax			1				—				2				28
Discontinued operations, net of tax			—				(120	)			—				118
Divested assets, net of tax			(13	)			(145	)			(12	)			(133	)
Adjusted Earnings (Non-GAAP)		$	(99	)		$	178			$	(413	)		$	99
Net Income (Loss) per Common Share - Diluted (GAAP)		$	(0.65	)		$	(2.28	)		$	(1.63	)		$	(5.81	)
Adjustments: *
Asset impairments, net of tax			0.37				1.28				0.44				4.81
Valuation allowance and other tax adjustments			0.04				2.05				0.08				1.01
Transaction, reorganization & separation costs, net of tax			0.01				0.11				0.04				0.21
Contract termination charges, net of tax			—				—				0.01				0.07
Discontinued operations, net of tax			—				(0.31	)			—				0.32
Divested assets, net of tax			(0.03	)			(0.38	)			(0.03	)			(0.35	)
Adjusted Earnings Per Share - Diluted (Non-GAAP)		$	(0.26	)		$	0.47			$	(1.09	)		$	0.26

 

*	The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

NOTE: All amounts included herein are stated under successful efforts.

 

Page 14

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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 UNDER FULL COST ACCOUNTING

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 Six Months
		Ended June 30,								Ended June 30,
		2016				2015				2016				2015
Income (Loss) Attributable to Common Stock (GAAP) - Full Cost		$	(601	)		$	(5,600	)		$	(1,090	)		$	(10,251	)
Adjustments: *
Asset impairments, net of tax			522				3,734				793				8,438
Valuation allowance and other tax adjustments			97				1,173				152				758
Transaction, reorganization & separation costs, net of tax			5				43				15				78
Contract termination charges, net of tax			1				—				2				28
Discontinued operations, net of tax			—				732				—				864
Divested assets, net of tax			(4	)			—				(4	)			—
Adjusted Earnings (Non-GAAP)		$	20			$	82			$	(132	)		$	(85	)
Net Income (Loss) per Common Share - Diluted (GAAP)		$	(1.58	)		$	(14.83	)		$	(2.88	)		$	(27.17	)
Adjustments: *
Asset impairments, net of tax			1.38				9.87				2.09				22.37
Valuation allowance and other tax adjustments			0.25				3.12				0.41				2.00
Transaction, reorganization & separation costs, net of tax			0.01				0.12				0.04				0.21
Contract termination charges, net of tax			—				—				—				0.07
Discontinued operations, net of tax			—				1.94				—				2.29
Divested assets, net of tax			(0.01	)			—				(0.01	)			—
Adjusted Earnings Per Share - Diluted (Non-GAAP)		$	0.05			$	0.22			$	(0.35	)		$	(0.23	)

 

*	The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

 

Page 15