Apache Earnings Cross Billion-Dollar Milestone

Apache Corporation reported full-year 2003 earnings of $1.1 billion, or $3.43 per diluted common share, on strong commodity prices and record production, up 105 percent from $544 million, or $1.80 per share in 2002. All per-share amounts in this release reflect the recent two-for-one stock split. Cash from operations before changes in operating assets and liabilities totaled $2.8 billion in 2003, up 79 percent from $1.6 billion in 2002.

Apache's fourth-quarter net income of $260 million, or 80 cents per share, was 45 percent above net income of $179 million, or 59 cents per share, in 2002. Cash from operations before changes in operating assets and liabilities (non-GAAP; see reconciliation below) grew 69 percent to $786 million. Absent the impact of non-cash deferred tax expenses resulting from the erosion of the U.S. dollar, partially offset by a reduction in Canadian tax rates, Apache would have earned $1.2 billion or $3.74 per share for the full year and $284 million or 87 cents per share in the fourth quarter.

"Strong commodity prices are only part of the story of our 2003 record results," said G. Steven Farris, president, chief executive officer and chief operating officer. "In addition to earning over $1 billion -- our best year ever -- production increased 22 percent and worldwide reserves increased 26 percent. We replaced 330 percent of our production through a combination of strategic acquisitions and outstanding drilling success at an all-in 2003 finding cost of $6.07 per barrel of oil equivalent. In a year in which we added over half a billion barrels of oil equivalent on $3 billion of investments, Apache reduced its debt to 26 percent of capitalization."

Among the financial and operational highlights for 2003:

  • Apache ended the year with proved reserves of 1.7 billion barrels of oil equivalent (boe), marking the 18th consecutive year of reserve growth;
  • Production averaged a record 417,400 boe per day, the 24th year of production increases in the last 25 years;
  • Apache added 234 million boe of proved reserves (154 percent of 2003 production) through exploration and development activities -- one of the company's best drilling performances ever;
  • Another 267 million boe were added through acquisitions, including the company's strategic entree into the North Sea; and
  • Apache commenced production from the Zhao Dong block in Bohai Bay, China.

  • "We had outstanding exploration success in Egypt and Western Australia last year that will help drive production and financial results in the future," Farris said.

    Apache's fourth-quarter production averaged 441,400 boe per day, compared with 338,300 boe per day in the prior-year period. Liquid hydrocarbon production averaged 231,400 barrels per day, up 45 percent from the prior-year period, while natural gas production averaged 1.26 billion cubic feet per day, up 17 percent.

    Apache's results include the fourth-quarter after-tax write-down of $10.2 million reflecting remaining costs associated with the termination of operations in Poland. The impairment reduced full-year earnings by 3 cents per diluted common share.