<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________to____________________
Commission file number 1-4300
------
APACHE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 41-0747868
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 100, One Post Oak Central
2000 Post Oak Boulevard, Houston, TX 77056-4400
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (713) 296-6000
-------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---- ----
Number of shares of Apache Corporation common stock, $1.25 par
value, outstanding as of
<TABLE>
<S> <C>
March 31, 1995.......................................................69,708,077
</TABLE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
(UNAUDITED - RESTATED)
<TABLE>
<CAPTION>
(In thousands, except per share data) For the Three Months
Ended March 31,
--------------------------
1995 1994
--------- ---------
<S> <C> <C>
REVENUES:
Oil and gas production revenues $ 143,189 $ 124,978
Gathering, processing and marketing revenues 22,869 6,764
Equity in income of affiliates -- 95
Other revenues 1,660 884
--------- ---------
167,718 132,721
--------- ---------
OPERATING EXPENSES:
Depreciation, depletion and amortization 69,795 60,257
International impairments -- 3,500
Operating costs 44,979 35,639
Gathering, processing and marketing costs 21,461 5,583
Administrative, selling and other 9,689 9,287
Financing costs:
Interest expense 18,561 7,848
Amortization of deferred loan costs 1,223 779
Capitalized interest (3,582) (1,259)
Interest income (906) (169)
--------- ---------
161,220 121,465
--------- ---------
INCOME BEFORE INCOME TAXES 6,498 11,256
Provision for income taxes 2,415 3,031
--------- ---------
NET INCOME $ 4,083 $ 8,225
========= =========
NET INCOME PER COMMON SHARE $ .06 $ .12
========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 69,673 69,635
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an intergral part of this statement.
1
<PAGE> 3
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED - RESTATED)
(In thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
--------------------------
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,083 $ 8,225
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization 69,795 60,257
International impairments -- 3,500
Amortization of deferred loan costs 1,223 779
Provision for deferred income taxes 2,415 4,531
Cash distributions less than earnings of affiliates -- (95)
Gain on sale of stock held for investment (350) --
Other 3 (134)
Changes in operating assets and liabilities:
Increase in receivables (5,956) (6,377)
(Increase) decrease in advances to oil and gas ventures and other (328) 598
(Increase) decrease in deferred charges and other 609 (368)
Decrease in payables (9,785) (3,807)
Increase (decrease) in accrued operating costs 2,865 (6,984)
Decrease in advance from gas purchaser (1,653) --
Increase in deferred credits and other noncurrent liabilities 1,608 790
--------- ---------
Net cash provided by operating activities 64,529 60,915
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Exploration and development expenditures (79,431) (80,930)
Acquisition of oil and gas properties (573,137) (4,489)
Non-cash portion of net oil and gas property additions (7,846) (3,844)
Purchase of AERC stock, net of cash acquired -- (13,885)
Purchase of stock held for investment (305) (1,000)
Proceeds from sale of oil and gas properties 20,401 3,768
Proceeds from sale of investments 5,383 --
Prepaid acquisition cost 25,377 --
Increase in inventory, net (3,550) (158)
Other capital expenditures, net (1,751) (1,547)
--------- ---------
Net cash used in investing activities (614,859) (102,085)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings 720,859 44,456
Payments on long-term debt (165,241) (7,034)
Proceeds from issuance of common stock, net 600 1,124
Costs of debt and equity transactions (11,224) --
Dividends paid (4,301) (4,268)
--------- ---------
Net cash provided by financing activities 540,693 34,278
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS (9,637) (6,892)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 30,043 39,728
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20,406 $ 32,836
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an intergral part of this statement.
2
<PAGE> 4
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED - RESTATED)
<TABLE>
<CAPTION>
(In thousands) March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 20,406 $ 30,043
Receivables 117,290 111,310
Inventories 12,418 8,868
Advances to oil and gas ventures and other 10,820 10,093
----------- -----------
160,934 160,314
----------- -----------
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full
cost accounting:
Proved properties 3,777,215 3,265,770
Unproved properties and properties
under development, not being amortized 280,069 157,379
Gas gathering, transmission and
processing facilities 25,809 25,809
Other 51,661 49,912
----------- -----------
4,134,754 3,498,870
Less: Accumulated depreciation,
depletion and amortization (1,751,868) (1,682,039)
----------- -----------
2,382,886 1,816,831
----------- -----------
OTHER ASSETS:
Deferred charges and other 38,644 59,482
----------- -----------
$ 2,582,464 $ 2,036,627
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an intergral part of this statement.
3
<PAGE> 5
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED - RESTATED)
<TABLE>
<CAPTION>
(In thousands) March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ -- $ 100
Accounts payable 91,067 92,861
Accrued operating expense 18,437 16,722
Accrued exploration and development 12,746 25,077
Accrued interest 9,612 4,983
Accrued compensation and benefits 4,404 10,794
Other accrued expenses 13,580 12,980
----------- -----------
149,846 163,517
----------- -----------
LONG-TERM DEBT 1,274,808 719,033
----------- -----------
DEFERRED CREDITS AND OTHER NONCURRENT
LIABILITIES:
Income taxes 154,902 151,216
Advance from gas purchaser 65,723 67,376
Other 45,390 44,398
----------- -----------
266,015 262,990
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $1.25 par, 215,000,000
shares authorized, 70,827,080 and
70,785,067 shares issued, respectively 88,534 88,482
Paid-in capital 500,650 500,101
Retained earnings 335,073 335,293
Currency translation adjustment (19,009) (19,337)
Treasury stock, at cost, 1,119,003 and
1,118,975 shares, respectively (13,453) (13,452)
----------- -----------
891,795 891,087
----------- -----------
$ 2,582,464 $ 2,036,627
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an intergral part of this statement.
4
<PAGE> 6
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF RETAINED EARNINGS
(UNAUDITED - RESTATED)
<TABLE>
<CAPTION>
(In thousands) For the Three Months
Ended March 31,
--------------------------
1995 1994
--------- ---------
<S> <C> <C>
Retained earnings, beginning of period $ 335,293 $ 306,892
Net income 4,083 8,225
Dividends declared:
Common stock, $.07 per share (4,303) (4,286)
--------- ---------
Retained earnings, end of period $ 335,073 $ 310,831
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an intergral part of this statement.
5
<PAGE> 7
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission, and reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim
periods, on a basis consistent with the annual audited statements. All such
adjustments are of a normal recurring nature. Certain information, accounting
policies, and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
financial statements and the summary of significant accounting policies and
notes thereto included in the Company's latest annual report on Form 10-K/A.
INCOME TAXES
Under the liability method specified by Statement of Financial Accounting
Standards No. 109, deferred taxes were determined based on the estimated future
tax effect of differences between the financial statement and tax bases of
assets and liabilities given the provisions of enacted laws.
INCOME PER SHARE
Primary income per common share was calculated by dividing net income by the
weighted average common shares outstanding. The effect of common stock
equivalents, including shares issuable upon the exercise of employee stock
options (calculated using the treasury stock method) and upon the assumed
conversion of the Company's 3.93-percent convertible notes and 6-percent
convertible debentures, was not significant or was anti-dilutive for all periods
presented.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. These investments are
carried at cost which approximates market.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------------
(In thousands) 1995 1994
------- -------
<S> <C> <C>
Cash paid during the period for:
Interest (net of amounts capitalized) $ 8,485 $ 3,644
Income taxes (net of refunds) 342 204
</TABLE>
6
<PAGE> 8
ACQUISITIONS
On May 17, 1995, Apache acquired DEKALB Energy Company (DEKALB, now known as DEK
Energy Company), an oil and gas company engaged in the exploration for, and the
development of, crude oil and natural gas in Canada, through a merger which
resulted in DEKALB becoming a wholly-owned subsidiary of Apache. Pursuant to the
merger agreement, DEKALB shareholders received .8764 shares of Apache common
stock in exchange for each share of DEKALB Class A stock and Class B stock. As a
result, 8.4 million shares of Apache common stock were issued in exchange for
outstanding DEKALB stock and for DEKALB employee stock options. The estimated
merger costs of approximately $10 million will be charged to expense in the
second quarter of 1995.
The merger was accounted for as a "pooling of interests". As a result, this Form
10-Q/A has been prepared to present restated information for 1995 and preceding
years on a combined basis using the "pooling of interests" method of accounting.
The common stock data presented herein includes DEKALB, restated based upon the
.8764 exchange ratio for the merger.
In connection with the DEKALB merger, the methods used by Apache and DEKALB in
computing depreciation, depletion and amortization (DD&A) of proved oil and gas
properties were conformed to the units-of-production method using physical
units. This method was previously used by DEKALB and in conforming the methods
used, Apache adopted the units-of-production method in lieu of the future gross
revenue method. The conforming adjustments for DD&A have been reflected
retroactively in the combined financial statements along with an adjustment to
DEKALB's previously recorded deferred tax valuation allowance for U.S. operating
loss carryforwards expected to be utilized by Apache in future periods. All
other adjustments are reclassifications to conform financial statement
presentation. A reconciliation of the previously separate results to the
restated combined results is set forth below:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
March 31, 1995 March 31, 1994
-------------- --------------
(In Thousands)
<S> <C> <C>
Revenues:
Apache $ 158,652 $ 121,591
DEKALB 9,066 11,130
--------- ---------
$ 167,718 $ 132,721
========= =========
Net income (loss):
Apache $ 5,991 $ 9,407
DEKALB (409) 1,750
Conforming adjustments (1,499) (2,932)
--------- ---------
$ 4,083 $ 8,225
========= =========
Net income (loss) per common share:
Apache $ .10 $ .15
--------- ---------
DEKALB $ (.04) $ .18
--------- ---------
As combined $ .08 $ .16
Conforming adjustments (.02) (.04)
--------- ---------
$ .06 $ .12
========= =========
</TABLE>
7
<PAGE> 9
On March 1, 1995, Apache completed the acquisition of 315 oil and gas fields
from Texaco Exploration and Production Inc. (Texaco) for an adjusted purchase
price of $564 million. The acquisition of the Texaco properties was accounted
for using the purchase method of accounting and was included in the financial
statements of the Company since the date of the acquisition. The following
unaudited pro forma financial information shows the pro forma effect on the
Company's consolidated results of operations as if the acquisition were
effective on January 1 of the year indicated. The pro forma data presented is
based on numerous assumptions and should not necessarily be viewed as being
indicative of future operations.
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended March 31, 1995 Ended March 31, 1994
------------------------ -------------------------
As Reported Pro Forma As Reported Pro Forma
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues and other income $167,718 $191,493 $132,721 $174,391
Net income $ 4,083 $ 2,790 $ 8,225 $ 4,656
Net income per common share $ .06 $ .04 $ .12 $ .07
Weighted average common shares
outstanding 69,673 69,673 69,635 69,635
</TABLE>
ACQUISITION FINANCING
On March 1, 1995, in connection with the acquisition of certain oil and gas
properties from Texaco, lenders increased the size of Apache's revolving credit
facility from $700 million to $1 billion, subject to borrowing base
availability. The borrowing base is the estimated loan value of the Company's
oil and gas reserves, not including reserves outside the United States and
subject to certain other exclusions, based upon forecast oil and gas prices and
rates of production, as periodically redetermined by the lenders. Upon closing
of the Texaco transaction on March 1, 1995, Apache had approximately
$840 million in loans outstanding under the facility with approximately
$60 million unborrowed and available.
Under terms of the credit facility, as amended March 1, 1995, the Company must
(i) maintain a minimum tangible net worth of $650 million, which is adjusted
quarterly for subsequent earnings and securities transactions, and (ii) maintain
a ratio of (A) earnings before interest expense, state and federal taxes and
DD&A to (B) consolidated interest expense, of not less than 3.7:1. Restrictive
covenants under the facility include certain limitations on indebtedness and
contingent obligations, as well as certain restrictions on liens and investments
in international subsidiaries. The Company has complied with its financial
ratios and covenant requirements at all times since the inception of the
revolving credit facility in July 1991. The facility matures on March 1, 2000,
and may be extended in one-year increments with the lenders' consent.
8
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
On May 17, 1995, Apache Corporation (Apache or the Compamy) acquired
DEKALB Energy Company (DEKALB, now known as DEK Energy Company) through a merger
which resulted in DEKALB becoming a wholly-owned subsidiary of Apache. (See
"Acquisitions" in the notes to the consolidated financial statements.) The
merger was accounted for as a "pooling of interests". As a result, the
following discussion and analysis has been prepared on a combined basis
using the "pooling of interests" method of accounting.
FINANCIAL RESULTS
For the first quarter of 1995, Apache reported net income of $4.1 million, or
$.06 per share, on total revenues of $167.7 million compared to net income of
$8.2 million, or $.12 per share, on total revenues of $132.7 million a year ago.
The 50-percent decline in earnings reflected the impact of lower gas prices
coupled with higher financing costs. Apache's financial performance for the
first quarter of 1995 was impacted by the following items:
Acquisitions:
On March 1, 1995, Apache completed the acquisition of 315 oil and gas fields
from Texaco Production and Exploration Inc. (Texaco) for an adjusted purchase
price of $564 million. With the acquisition, Apache's total equivalent reserves
increased 34 percent over year-end 1994. Oil reserves, as a percent of total
reserves, increased from 34 percent to approximately 43 percent. Estimated
production volumes from the Texaco properties during the month of March were
18,114 barrels of oil per day (bopd) and 73 million cubic feet per day (MMcfd),
which on a quarterly basis added 6,420 bopd to reported oil volumes and 25
MMcfd to reported gas volumes. This acquisition accounted for 22 percent of the
increase in total gas production over a year ago. Acquisitions completed in the
second half of 1994 added approximately 53 MMcfd of gas and 3,700 bopd of oil
to 1995 production. The Texaco transaction, and four smaller acquisitions in
which Apache purchased additional interests in existing properties, added 111
million barrels of oil equivalent (MMboe) of reserves for the quarter.
Oil and Gas Production and Pricing:
The company posted record oil and gas production during the first quarter of
1995, boosting total revenues to $167.7 million. A $4.03 per barrel increase in
Apache's average realized oil price in 1995 partially offset a 28-percent
decline in realized gas prices.
9
<PAGE> 11
RESULTS OF OPERATIONS
Volume and price information concerning the Company's 1995 and 1994 first
quarter oil and gas production is summarized in the following table:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
--------------------- Increase
1995 1994 (Decrease)
-------- ------- ----------
<S> <C> <C> <C>
Selected Oil and Gas
Operating Statistics
- --------------------
Gas Volume - Mcf per day:
U.S 486,028 382,763 27%
Canada 61,165 51,879 18%
Australia 6,125 4,140 48%
------- -------
Total 553,318 438,782 26%
======= =======
Average Gas Price - Per Mcf:
U.S $ 1.52 $ 2.09 (27%)
Canada .97 1.70 (43%)
Australia 1.99 1.89 5%
Total 1.47 2.05 (28%)
Oil Volume - Barrels per day:
U.S 39,738 32,019 24%
Canada 1,966 2,103 (7%)
Australia 3,072 2,643 16%
------- -------
Total 44,776 36,765 22%
======= =======
Average Oil Price - Per barrel:
U.S $ 16.69 $ 12.56 33%
Canada 16.69 12.26 36%
Australia 18.94 16.37 16%
Total 16.84 12.81 31%
Natural Gas Liquids (NGL) - Barrels per day:
U.S 1,562 1,323 18%
Canada 559 650 (14%)
------- -------
Total 2,121 1,973 8%
======= =======
Average NGL Price - Per barrel:
U.S $ 12.77 $ 11.03 16%
Canada 10.21 8.24 24%
Total 12.10 10.11 20%
</TABLE>
Oil and gas production revenues for the first quarter of 1995 increased 15
percent to $143.2 million compared to $125 million last year. A 24-percent
increase in equivalent production and 31-percent rise in realized oil prices
mitigated the impact of lower gas prices from the comparable period of 1994.
10
<PAGE> 12
In 1995, gas sales declined $7.8 million, or ten percent, from last year to $73
million. A $.58 per Mcf drop in average realized gas prices from last year
negatively impacted gas sales by $23.6 million, while increased production added
$15.8 million to gas revenues. The Company reported natural gas production of
553.3 MMcfd in the first quarter of 1995, a 114.5 MMcfd increase from 1994
levels. Acquisitions, both in the second half of 1994 and the first quarter of
1995, accounted for 68 percent of the increase.
First quarter oil production of 44.8 Mbopd rose 8 Mbopd, or 22 percent, over the
same period in 1994. Oil sales rose by $25.5 million to $67.9 million for the
first quarter 1995 from increased production, resulting principally from
acquisitions, and from increased oil prices. In the first quarter of 1995, oil
prices increased by $4.03 per barrel to a realized price of $16.84. The increase
in oil volumes impacted 1995 oil sales by $9.2 million while the rise in oil
prices impacted sales by $16.3 million.
Revenues from the sale of natural gas liquids (NGL) for the first quarter of
1995 increased $.5 million from a year ago to $2.3 million. Higher production
and increased prices drove the 27-percent increase in NGL sales.
Gathering, processing and marketing revenues of $22.9 million in the first
quarter of 1995 tripled the revenues from a year ago. The activity reflects
increased volumes of purchase and resale transactions by Apache's oil and gas
marketing subsidiaries. These marketing transactions generally carry a low
margin.
Depreciation, depletion and amortization (DD&A) expense for the first quarter of
1995 rose $9.5 million, or 16 percent, to $69.8 million. DD&A expense for oil
and gas properties was higher due to increased oil and gas production compared
to a year ago. Apache's amortization rate decreased from $6.33 in 1994 to $5.57
in 1995 due to the impact of the Texaco properties. There were no international
impairments in the first quarter of 1995.
Reflecting the impact of acquisitions, operating costs for the first quarter of
1995 rose 26 percent from a year ago to $45 million. Operating costs include
lifting costs, workover expense, production taxes and other taxes. Based on an
equivalent unit of production, operating costs rose $.06 barrel of oil
equivalent (boe), or one percent, in 1995 to $3.60 boe. The unit cost increase
reflects the acquisition of the Texaco properties which are 69 percent oil on an
energy equivalent basis. Oil properties typically have a higher expense than gas
properties. The unit cost increase was partially offset by $.9 million of
production tax refunds in 1995.
First quarter administrative, selling and other costs increased $.4 million
compared to a year ago, while declining $.16 on a boe basis. The decline in
administrative costs per barrel of oil equivalent reflects continued cost
controls and the increase in production. Administrative costs increased due to
expenses to assimilate the Texaco properties into Apache's operations.
Net financing costs increased $8.1 million, or 112 percent, for the first
quarter of 1995, to $15.3 million due to an increase in debt outstanding and
higher interest rates since last year. Apache's effective interest rate
increased from 5.68 percent in the first quarter of 1994 to 7.40 percent in the
first quarter of 1995 primarily due to increases in market rates. Debt increased
$556 million since December 31, 1994, primarily as a result of increased
borrowings to fund acquisitions.
CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
CAPITAL COMMITMENTS
Apache's primary needs for cash are for exploration, development and acquisition
of oil and gas properties, repayment of principal and interest on outstanding
debt and payment of dividends. The Company generally funds its exploration and
development activities through internally generated cash flows. Apache budgets
its capital expenditures based upon projected cash flows and routinely adjusts
its capital expenditures in response to changes in oil and gas prices and
corresponding changes in cash flow.
11
<PAGE> 13
Expenditures for exploration and development decreased to $79.4 million for the
first quarter of 1995 from $80.9 million during the comparable period last year.
Apache completed 22 producing wells out of 38 U.S. wells drilled for the first
quarter of 1995. By comparison, the Company completed 55 producing wells of 64
gross U.S. wells during the first quarter of last year. U.S. expenditures
declined slightly from 1994 while international exploration and development
costs rose 85 percent to $9.8 million.
Apache acquired $573.1 million of oil and gas properties during the first
quarter of 1995, compared with $4.5 million a year ago. On March 1, 1995, the
Company completed its acquisition of 315 oil and gas fields from Texaco for an
adjusted purchase price of $564 million. Apache also divested $20.4 million of
non-core oil and gas properties in the first quarter of 1995. Other capital
expenditures during the first quarter of 1995 increased $1.8 million from $1.5
million for the same period a year ago.
CAPITAL RESOURCES AND LIQUIDITY
Apache's primary capital resources are net cash provided by operating
activities, proceeds from financing activities and proceeds from the sale of
non-strategic assets. Net cash provided by operating activities during the first
quarter of 1995, rose to $66.6 million compared to $61 million for the same
period last year.
On January 4, 1995, Apache completed the issuance of $172.5 million principal
amount of its 6-percent Convertible Subordinated Debentures due 2002, which are
convertible into Apache common stock at a conversion price of $30.68 per share.
Net proceeds were used to reduce bank debt, provide funds for acquisitions and
general corporate purposes. The 6-percent debentures have not been registered
under the United States Securities Act of 1933 and may not be offered or sold in
the United States absent registration or an applicable exemption from such
registration requirements. Costs associated with the issue of the 6-percent
debentures totaled $4.1 million.
On March 1, 1995, the Company's revolving credit facility was amended and
restated, increasing it from $700 million to $1 billion. The facility matures on
March 1, 2000, and may be extended in one-year increments with the lenders'
consent. Based on the Company's ratio of debt to total capital, the interest
rate margin over LIBOR at March 31, 1995, was 1.125 percent. The Company also
pays a facility fee based on its ratio of debt to total capital. The facility
fee at March 31, 1995, was .375 percent of the available portion of the
commitment and .1875 percent of the unavailable portion of the commitment. As of
March 31, 1995, the available portion of the commitment was $881 million, of
which $836 million was outstanding. Costs associated with the amendment of the
facility totaled $7.2 million. At March 31, 1995, Apache had a total of $1.3
billion in long-term debt outstanding, up $556 million from the end of 1994.
The Company had $20.4 million in cash equivalents on hand at March 31, 1995,
down $9.6 million from December 31, 1994. The Company's ratio of current assets
to current liabilities at the end of first quarter of 1995 of 1.1:1 increased
from 1:1 at year-end 1994.
Management believes that cash on hand, net cash generated from operations and
unused available borrowing capacity under the revolving credit facility will be
adequate to meet future liquidity needs for the next two fiscal years, including
satisfying the Company's financial obligations and funding exploration and
development operations and routine acquisitions.
12
<PAGE> 14
FUTURE TRENDS
The Company plans to implement several strategic initiatives designed to
accelerate the integration of acquired properties, streamline operations and
strengthen its balance sheet. To maximize profit margins and rationalize its
enlarged asset base, Apache announced plans on February 15, 1995 to accelerate
the disposition of all of its oil and gas properties in its Rocky Mountain
region and non-strategic assets in other operating regions, and to close the
Denver, Colorado office. Funds received from property sales will be applied
toward the reduction of debt. Capital and human resources from Apache's Rocky
Mountain region will be redeployed within the Company. Apache has continually
followed a practice of expanding and upgrading its reserves through a
combination of exploratory and development drilling, acquisitions, reworkings
and recompletions and upgrading its production base by disposing of lower-margin
and non-strategic properties.
13
<PAGE> 15
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth in Note 9 to the Consolidated Financial
Statements contained in the registrant's restated 1994 annual report on Form
10-K/A, for the year ended December 31, 1994, filed August, 2, 1995, is
incorporated herein by reference.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On April 17, 1995, the Securities and Exchange Commission declared
effective Apache's Registration Statement on Form S-4 relating to the
Company's previously announced merger agreement with DEKALB Energy
Company.
In February 1995, Apache announced plans to accelerate the disposition
of lower margin and non-strategic properties, including sales of a
substantial portion of its Rocky Mountain properties and non-strategic
assets from its other regions. In 1995 to date, divestitures closed
or under contract total $239 million, as discussed below.
On July 18, 1995, Apache entered into a purchase and sale agreement to
sell certain of its Rocky Mountain properties to Citation Oil & Gas
Corporation for $55 million, subject to adjustment. The assets being
sold include Apache's interest in 138 fields with approximately 1,600
active wells located in Colorado, Montana, North Dakota, South Dakota,
Utah and Wyoming. Apache issued a press release dated July 19, 1995,
which is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
In addition to the sale of Rocky Mountain properties described above,
Apache has sold or agreed to sell $84 million of its non-core
properties in 22 other transactions. The assets sold or being sold
include Apache's interest in 1,226 wells in the Midcontinent region for
$55 million, 65 wells in the Gulf of Mexico region for $14 million,
eight wells in the Permian Basin region for $12 million, and 13 wells
in the Rocky Mountain region for $3 million.
14
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
11.1 Computation of Earnings per Share.
27.1 Financial Data Table.
99.1 Press release dated July 19, 1995 (Apache to sell Rocky
Mountain Properties to Citation for $155 million).
b. Reports filed on Form 8-K.
During the fiscal quarter ended March 31, 1995, Apache filed a
Current Report on Form 8-K and Amendment No. 1 on Form 8-K/A,
each dated March 1, 1995 for:
Item 2. Acquisition or Disposition of
Assets-Registrant closed the purchase of the interest
of Texaco Exploration and Production Inc. in
approximately 315 oil and gas properties.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits-Relating to the Texaco
transaction, Apache filed (i) the Statement of
Combined Revenues and Direct Operating Expenses for
the Oil and Gas Properties of Texaco Exploration and
Production Inc. Sold to Apache, for the years ended
December 31, 1993 and 1994; (ii) the Unaudited Pro
Forma Consolidated Condensed Statement of Operations
of Apache Corporation and Subsidiaries, as of
December 31, 1994; and (iii) the Unaudited Pro Forma
Consolidated Condensed Balance Sheet of Apache
Corporation and Subsidiaries, as of December 31,
1994.
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 on
Form 10-Q/A to be signed on its behalf by the undersigned thereto duly
authorized.
APACHE CORPORATION
Dated: August 4, 1995 /s/ Mark A. Jackson
---------------------------------------
Mark A. Jackson
Vice President, Finance
Dated: August 4, 1995 /s/ R. Kent Samuel
---------------------------------------
R. Kent Samuel
Controller and Chief Accounting Officer
16
<PAGE> 18
EXHIBIT INDEX
Exhibit No.
11.1 Computation of Earnings per Share.
27.1 Financial Data Table.
99.1 Press release dated July 19, 1995 (Apache to sell Rocky
Mountain Properties to Citation for $155 million).
<PAGE> 1
EXHIBIT 11.1
APACHE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the Three Months Ended For the Three Months Ended
March 31, 1995 March 31, 1994
-------------------------- -------------------------
<S> <C> <C>
Weighted Average Calculation:
Net income $ 4,083 $ 8,225
======== ========
Weight average shares outstanding 69,673 69,635
======== ========
Net income per share,
based on weight average common shares outstanding $ .06 $ .12
======== ========
Primary Calculation:
Net income $ 4,083 $ 8,225
Assumed conversion of
3.93-percent debentures 549 539
-------- --------
Net income, as adjusted $ 4,632 $ 8,764
======== ========
Common Stock Equivalents:
Weighted average common shares outstanding 69,673 69,635
Stock options, using the treasury stock method 87 204
Assumed conversion of 3.93-percent
debentures 2,778 2,778
-------- --------
72,538 72,617
======== ========
Net income per common share primary $ .06 $ .12
======== ========
</TABLE>
The assumed conversion of the 6-percent convertible debentures due 2002 would be
anti-dilutive for the first quarter of 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
APACHE CORPORATION AND SUBSIDIARIES
RESTATED FINANCIAL DATA TABLE
PURSUANT TO ARTICLE 5 OF REGULATION S-X
</LEGEND>
<S> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 20,406
<SECURITIES> 0
<RECEIVABLES> 117,290
<ALLOWANCES> 0
<INVENTORY> 12,418
<CURRENT-ASSETS> 160,934
<PP&E> 4,134,754
<DEPRECIATION> (1,751,868)
<TOTAL-ASSETS> 2,582,464
<CURRENT-LIABILITIES> 149,846
<BONDS> 1,274,808
<COMMON> 88,534
0
0
<OTHER-SE> 803,261
<TOTAL-LIABILITY-AND-EQUITY> 2,582,464
<SALES> 143,189
<TOTAL-REVENUES> 167,718
<CGS> 112,478
<TOTAL-COSTS> 136,235
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,203
<INCOME-PRETAX> 6,498
<INCOME-TAX> 2,415
<INCOME-CONTINUING> 4,083
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,083
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
<PAGE> 1
EXHIBIT 99.1
(LETTERHEAD OF APACHE CORPORATION)
CONTACTS:
(MEDIA): TONY LENTINI (713/296-6227)
DEBBIE SIEGFRIED (713/296-6218)
(INVESTOR): ROGER PLANK (713/296-6106)
FOR IMMEDIATE RELEASE
---------------------
APACHE TO SELL ROCKY MOUNTAIN PROPERTIES TO CITATION FOR $155 MILLION
Houston, July 19, 1995--Apache Corporation announced today that the
company has signed an agreement to sell its Rocky Mountain properties to
Houston-based Citation Oil & Gas Corp. for $155 million, subject to adjustment.
Upon closing, approximately 5 percent of the sales price will be paid to
Apache-managed interests.
Apache will retain its assets in the Green River Basin of Colorado and
Wyoming and in the San Juan Basin of Colorado and New Mexico.
"With nearly $875 million of acquisitions, 1995 has been a time of
extraordinary growth for us," said Apache Chairman and Chief Executive Raymond
Plank. "Early in the year, we decided to concentrate on those areas that provide
the greatest return to shareholders. Consistent with that strategic focus, in
February we announced our intention to sell Apache's non-core Rocky Mountain
assets." He said proceeds will be used to pay down debt.
The transaction is subject to government and other approvals,
with closing expected in late August. The assets include Apache's interests in
138 fields with approximately 1,600 active wells in Colorado, Montana, North and
South Dakota, Utah and Wyoming. The properties' daily production is
approximately 9,500 barrels of oil and 9 million cubic feet of gas. Following
the sale, Apache plans to close its Denver office and integrate the remaining
assets with its Permian Basin region located in Houston.
Plank said that, including the Rocky Mountain divestiture, the company
has closed on or signed agreements to sell $239 million of properties thus far
in 1995. "We're well on our way toward our goal of reducing debt to 50 percent
of total capitalization," Plank noted.
Apache Corporation, with operations in North America and overseas, is
one of the nation's larger independent gas and oil companies. Its securities are
traded on the New York and Chicago stock exchanges under the symbol APA.
