SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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
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APACHE CORPORATION
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 41-0747868
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(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 March 31, 1997 90,250,160
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
(Unaudited)
<TABLE>
(In thousands, except per common share data) For the Quarter
Ended March 31,
-------------------------
1997 1996
---------- -----------
REVENUES:
<S> <C> <C>
Oil and gas production revenues $ 262,395 $ 171,921
Gathering, processing and marketing revenues 60,094 33,949
Equity in income of affiliates 193 --
Other revenues (854) 600
---------- ----------
321,828 206,470
---------- ----------
OPERATING EXPENSES:
Depreciation, depletion and amortization 89,318 71,861
Operating costs 59,972 52,512
Gathering, processing and marketing costs 59,354 32,410
Administrative, selling and other 9,142 8,858
Financing costs:
Interest expense 23,641 20,248
Amortization of deferred loan costs 1,327 1,155
Capitalized interest (8,640) (5,301)
Interest income (368) (679)
---------- ----------
233,746 181,064
---------- ----------
INCOME BEFORE INCOME TAXES 88,082 25,406
Provision for income taxes 35,205 9,751
---------- ----------
NET INCOME $ 52,877 $ 15,655
========== ==========
Primary earnings per common share $ .57 $ .20
Fully diluted earnings per common share .55 .20
Pro Forma earnings per share data (See Note 1)
Basic earnings per common share $ .59 $ .20
Diluted earnings per common share .55 .20
Weighted average common shares outstanding 90,143 77,422
======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
1
<PAGE>
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
<TABLE>
(In thousands) For the Quarter
Ended March 31,
-------------------------
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 52,877 $ 15,655
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation, depletion and amortization 89,318 71,861
Amortization of deferred loan costs 1,327 1,155
Provision for deferred income taxes 26,782 9,114
Cash distributions less than earnings of affiliates (167) --
Changes in operating assets and liabilities:
(Increase) decrease in receivables 35,341 (3,354)
Increase in advances to oil and gas ventures and other (6,688) (2,178)
(Increase) decrease in other assets 1,301 (1,537)
Decrease in product inventory 55 --
Decrease in accounts payable (7,556) (2,974)
Increase (decrease) in accrued expenses 101 (12,553)
Decrease in advance from gas purchaser (2,389) (2,041)
Decrease in deferred credits and
other noncurrent liabilities (3,504) (5,089)
--------- ---------
Net cash provided by operating activities 186,798 68,059
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Exploration and development expenditures (164,496) (116,482)
Acquisition of oil and gas properties (6,816) (643)
Gathering, transmission and processing expenditures (4,225) (3,093)
Non-cash portion of oil and gas property additions (10,894) 6,426
Investment in Producers Energy Marketing, LLC, net 175 (5,785)
Proceeds from sale of oil and gas properties 750 --
Other capital expenditures, net (326) (2,435)
Other, net (2,139) (2,164)
--------- ---------
Net cash used by investing activities (187,971) (124,176)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings 255,512 183,889
Payments on long-term debt (244,532) (119,268)
Proceeds from issuance of common stock, net 3,869 2,873
Treasury stock activity, net (363) (2)
Dividends paid (6,304) (5,417)
Cost of debt and equity transactions (297) --
--------- ---------
Net cash provided by financing activities 7,885 62,075
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,712 5,958
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 13,161 13,633
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 19,873 $ 19,591
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
2
<PAGE>
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
(In thousands) March 31, December 31,
1997 1996
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 19,873 $ 13,161
Receivables 199,166 234,646
Inventories 16,047 13,963
Advances to oil and gas ventures and other 13,069 6,386
----------- ------------
248,155 268,156
----------- ------------
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full cost accounting:
Proved properties 4,858,059 4,713,113
Unproved properties and properties
under development, not being amortized 409,998 388,872
International concession rights, not being amortized 99,000 99,000
Gas gathering, transmission and processing facilities 125,671 121,446
Other 58,929 58,882
----------- ------------
5,551,657 5,381,313
Less: Accumulated depreciation, depletion and amortization (2,366,731) (2,281,252)
----------- ------------
3,184,926 3,100,061
----------- ------------
OTHER ASSETS:
Deferred charges and other 60,535 64,213
----------- -----------
$ 3,493,616 $ 3,432,430
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
3
<PAGE>
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
(In thousands) March 31, December 31,
1997 1996
----------- -----------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Current maturities of long-term debt $ -- $ 2,000
Accounts payable 166,631 174,941
Accrued operating expense 21,332 17,263
Accrued exploration and development 65,526 76,465
Accrued compensation and benefits 5,737 12,262
Other accrued expenses 29,283 26,726
---------- ----------
288,509 309,657
---------- ----------
LONG-TERM DEBT 1,248,686 1,235,706
---------- ----------
DEFERRED CREDITS AND OTHER NONCURRENT
LIABILITIES:
Income taxes 281,267 254,789
Advance from gas purchaser 49,409 51,798
Other 58,441 61,964
---------- ----------
389,117 368,551
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock, $1.25 par, 215,000,000
shares authorized, 91,425,393 and
91,224,028 shares issued, respectively 114,282 114,030
Paid-in capital 1,006,157 1,002,540
Retained earnings 479,147 432,588
Treasury stock, at cost, 1,175,233 and
1,165,231 shares, respectively (15,515) (15,152)
Currency translation adjustment (16,767) (15,490)
---------- ----------
1,567,304 1,518,516
---------- ----------
$ 3,493,616 $ 3,432,430
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
4
<PAGE>
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED RETAINED EARNINGS
(Unaudited)
<TABLE>
(In thousands) For the Quarter
Ended March 31,
---------------------------
1997 1996
---------- -----------
<S> <C> <C>
RETAINED EARNINGS, beginning of period $ 432,588 $ 335,470
Net income 52,877 15,655
Dividends declared:
Common stock, $.07 per share (6,318) (5,425)
---------- ----------
RETAINED EARNINGS, end of period $ 479,147 $ 345,700
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of this statement.
5
<PAGE>
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These financial statements have been prepared by Apache Corporation
(Apache or 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 for a fair
statement of the results for the interim periods, on a basis consistent
with the annual audited financial 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 most recent annual report on
Form 10-K.
1. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." The new standard simplifies the computation of earnings per share
(EPS) and increases comparability to international standards. Under SFAS
No. 128, primary EPS is replaced by "Basic" EPS, which excludes dilution
and is computed by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for the period.
"Diluted" EPS, which is computed similarly to fully diluted EPS, reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock.
The Company is required to adopt the new standard in its year-end 1997
financial statements. All prior-period EPS information (including interim
EPS) is required to be restated at that time. Early adoption is not
permitted. Pro forma EPS, as if the Company adopted SFAS No. 128 on
January 1 of each period presented, are as follows:
<TABLE>
For the Quarter Ended
March 31,
-------------------
1997 1996
------- -------
<S> <C> <C>
Basic EPS $ .59 $ .20
Diluted EPS .55 .20
</TABLE>
2. ACQUISITIONS
On May 20, 1996, Apache acquired The Phoenix Resource Companies, Inc.
(Phoenix), an oil and gas company operating primarily in the Arab Republic
of Egypt. The merger (Merger) resulted in Phoenix becoming a wholly owned
subsidiary of Apache and was accounted for using the purchase method of
accounting. The financial results of Phoenix have been included since the
date of the acquisition. Pursuant to the Merger agreement, shares of
Phoenix common stock then outstanding and outstanding Phoenix stock options
(which were assumed by Apache) were converted into the right to receive (a)
.75 shares of Apache common stock with any fractional shares paid in cash,
without interest, and (b) $4.00 in cash. As a result, 12.2 million shares
of Apache common stock were issued in exchange for outstanding Phoenix
stock.
6
<PAGE>
The following unaudited pro forma financial information shows the
effect on the Company's consolidated results of operations as if the
Phoenix Merger occurred on January 1, 1996. The pro forma data is based on
numerous assumptions and is not necessarily indicative of future results of
operations.
<TABLE>
For the Quarter
Ended March 31, 1996
-----------------------------
(In thousands, except per share data) As Reported Pro Forma
----------- ---------
<S> <C> <C>
Revenues $ 206,470 $ 216,983
Net income $ 15,655 $ 18,160
Primary earnings per common share $ .20 $ .20
</TABLE>
3. NON-CASH INVESTING AND FINANCING ACTIVITIES
Supplemental Disclosure of Cash Flow Information
The Company considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash equivalents.
These investments are carried at cost, which approximates market.
The following table provides additional disclosure of cash payments:
<TABLE>
(In thousands) For the Quarter
Ended March 31,
-----------------------------
1997 1996
----------- -----------
Cash paid during the period for:
<S> <C> <C>
Interest (net of amounts capitalized) $ 10,736 $ 14,068
Income taxes (net of refunds) 8,418 740
</TABLE>
4. DEBT
In January 1997, the Company established a $300 million commercial
paper program, which allows Apache to borrow funds for up to 270 days at
competitive interest rates. The commercial paper program is supported by
availability under the $750 million United States portion of the Company's
global credit facility.
Also in January 1997, Standard & Poor's upgraded the Company's senior
long-term debt from BBB to BBB+ and subordinated debt from BBB- to BBB.
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Apache's results of operations and financial position for the first
quarter of 1997 were significantly impacted by the following factors:
Commodity Prices - Higher oil and natural gas prices contributed to
record earnings and cash flow in the first quarter of 1997. Apache's
average realized price for natural gas increased $.75 per thousand cubic
feet (Mcf) from $1.84 per Mcf in the first quarter of 1996 to $2.59 per Mcf
in the same period of 1997, favorably impacting revenues by $37.9 million.
The realized oil price increased $3.02 per barrel from $18.45 per barrel to
$21.47 per barrel, contributing $12.5 million to the increase in revenues.
Phoenix Acquisition - On May 20, 1996, Apache acquired Phoenix,
through a merger which resulted in Phoenix becoming a wholly owned subsidiary
of Apache. The assets acquired in the Phoenix acquisition contributed 13,076
barrels of oil per day during the first quarter of 1997.
RESULTS OF OPERATIONS
Apache reported 1997 first quarter net income of $52.9 million versus
$15.7 million in the prior year. Pro forma basic earnings per share
increased almost threefold, to $.59 per share from $.20 per share. The
increase over the prior period was attributable to increases in both crude
oil and natural gas prices and increased production.
For the first quarter of 1997, revenues increased 56 percent to $321.8
million as compared to $206.5 million for the same period in 1996. Crude
oil and natural gas production revenues increased 53 percent over the same
period in 1996 with crude oil contributing 46 percent and natural gas
contributing 52 percent of total oil and gas production revenues.
8
<PAGE>
Volume and price information for the Company's 1997 and 1996 first
quarter oil and gas production is summarized in the following table:
<TABLE>
For the Quarter
Ended March 31,
----------------------- Increase
1997 1996 (Decrease)
---------- ---------- ----------
Natural Gas Volume - Mcf per day:
<S> <C> <C> <C>
U.S. 484,962 475,936 2%
Canada 78,852 64,727 22%
Egypt 471 -- --
Australia 21,403 13,127 63%
---------- ----------
Total 585,688 553,790 6%
========== ==========
Average Natural Gas Price - Per Mcf:
U.S. $ 2.77 $ 1.94 43%
Canada 1.69 1.09 55%
Egypt 3.02 -- --
Australia 1.87 1.97 (5)%
Total 2.59 1.84 41%
Oil Volume - Barrels per day:
U.S. 40,575 39,840 2%
Canada 1,983 1,967 1%
Egypt 17,254 1,138 1,416%
Australia 3,041 2,612 16%
---------- ----------
Total 62,853 45,557 38%
========== ==========
Average Oil Price - Per barrel:
U.S. $ 21.78 $ 18.30 19%
Canada 21.51 18.07 19%
Egypt 20.42 18.53 10%
Australia 23.22 20.92 11%
Total 21.47 18.45 16%
Natural Gas Liquids (NGLs) - Barrels per day:
U.S. 1,863 1,346 38%
Canada 642 670 (4)%
---------- ----------
Total 2,505 2,016 24%
========== ==========
Average NGL Price - Per barrel:
U.S. $ 18.36 $ 15.07 22%
Canada 19.30 13.02 48%
Total 18.60 14.39 29%
</TABLE>
9
<PAGE>
Natural gas sales for the first quarter of 1997 totaled $136.8
million, 47 percent higher than those recorded in the first quarter of 1996.
Average realized natural gas prices increased 41 percent, favorably
impacting revenue by $37.9 million. The majority of this increase, and the
resulting impact on natural gas sales, was realized in the U.S. where the
Company sold 83 percent of its worldwide gas production at an average price
of $2.77 per Mcf, $.83 per Mcf higher than 1996. In addition, the Company
was favorably impacted by higher spot prices being received in Canada where
the Company sold 13 percent of its worldwide gas production at an average
price of $1.69 per Mcf, compared to only $1.09 per Mcf in 1996. The
Company's net hedging activity, including fixed price physical and
financial contracts, reduced realized prices by $.02 per Mcf during the
quarter ended March 31, 1997, compared to a $.13 per Mcf loss during the
same period in 1996. The loss in the first quarter of 1997 was primarily
the result of spot market prices exceeding the Company's fixed price
contracts.
First quarter 1997 gas production, when compared to 1996, increased
31.9 million cubic feet per day (MMcfd), or six percent, on a worldwide
basis. Canadian natural gas production increased due to new production in
Northeast British Columbia and favorable non-recurring prior period
adjustments for reduced crown royalties. U.S. production increased
compared to the first quarter of 1996 due primarily to the benefit from
tactical acquisition activity, partially offset by divestitures of low
interest, non-strategic properties and natural depletion. Australian
production increased over the first quarter of 1996 as production from East
Spar came on-line in the fourth quarter of 1996.
The Company's crude oil sales for the first quarter of 1997 totaled
$121.4 million, a 59 percent increase from the first quarter of 1996 due to
production increases and higher realized average prices.
Oil production increased 38 percent compared to the prior year first
quarter due primarily to the acquisition of Phoenix in the second quarter
of 1996. Egyptian oil production comprised 27 percent of the Company's
total oil production, compared to only two percent in the first quarter of
1996, resulting in an increase in revenues of $29.6 million. In addition
to the favorable impact of Egyptian sales, U.S. and Australian oil
production increased, while Canadian production did not fluctuate
significantly between periods.
The Company's realized price for first quarter sales of crude oil
increased $3.02 per barrel, or 16 percent, resulting in an increase in
revenue of $12.5 million compared to the same period in 1996.
Revenue from the sale of natural gas liquids totaled $4.2 million for
the first quarter of 1997, as compared to $2.6 million for the same period
in 1996. Realized prices increased 29 percent, contributing $.8 million to
the increase in revenue, while production increased 24 percent adding
another $.8 million to the increase in revenue. Production increased as a
result of the purchase of certain interests in the Santa Rosa field from
Headington in the fourth quarter of 1996.
OTHER REVENUES AND OPERATING EXPENSES
During the first quarter of 1997, Apache's gas gathering, processing
and marketing revenues increased 77 percent to $60.1 million, due primarily
to higher volumes compared to the first quarter 1996. Correspondingly,
marketing costs increased 83 percent to $59.4 million also due to increased
volumes. Although activity increased, gas gathering, processing and
marketing margins decreased from $1.5 million in the first quarter of 1996
to $.7 million primarily due to lower crude oil margins.
Other revenues during the first quarter of 1997 declined $1.5 million
when compared to the same period of 1996, due primarily to a $1.2 million
loss associated with declines in Canadian and Australian currency exchange
rates. These losses were partially offset by Canadian royalty tax credits.
10
<PAGE>
The Company's depreciation, depletion and amortization (DD&A) expense
for the first quarter of 1997 totaled $89.3 million compared to $71.9
million for the comparable period in 1996. On a barrel of oil equivalent
(boe) basis, full cost DD&A expense increased $.38 per boe, from $5.35 per
boe to $5.73 per boe. The increase is a function of (a) downward domestic
reserve revisions caused by low quarter-end prices, (b) the May 1996
acquisition of Phoenix, and (c) costs added to the domestic amortizable
pool.
Operating costs, including lease operating expense and severance
taxes, increased 14 percent from $52.5 million in the first quarter of 1996 to
$60.0 million for the same period in 1997. Lease operating expense,
excluding severance taxes, totaled $49.3 million, an 11 percent increase
from the same period in 1996. On an equivalent barrel basis, lease
operating expense declined from $3.47 per boe in 1996 to $3.36 per boe in
1997, primarily as a result of production increases in Egypt, Canada and
Australia, reducing per unit costs.
Administrative, selling and other costs increased slightly from a year
ago. On an equivalent barrel basis, general and administrative expense
declined 11 percent, to $.62 per boe, for the first quarter of 1997, as
compared to $.70 per boe in 1996.
Net financing costs for the first quarter of 1997 increased slightly
compared to the same period in 1996 as increases in gross interest expense
were partially offset by increases in capitalized interest. Gross interest
costs incurred increased $3.4 million due to a higher average outstanding
debt balance and a higher corporate interest rate. Capitalized interest,
which is based on the carrying value of unproved properties, increased $3.3
million due to acquisitions made during 1995 and 1996 and the resulting
increase in the unproved property base.
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 flow. Apache budgets capital expenditures
based upon projected cash flow and routinely adjusts its capital
expenditures in response to changes in oil and natural gas prices and
corresponding changes in cash flow. The Company is not in a position to
predict future product prices.
Capital Expenditures - A summary of oil and gas capital expenditures
during the first quarter of 1997 and 1996 is presented below (in
millions):
<TABLE>
1997 1996
------- -------
Exploration and Development:
<S> <C> <C>
United States $ 96.2 $ 81.2
Canada 15.8 19.4
Egypt 33.4 --
Australia 11.7 13.5
Other International 7.4 2.4
------- ------
Total $ 164.5 $ 116.5
======= ======
Acquisition of Oil and Gas Properties $ 6.8 $ .6
======= =======
</TABLE>
11
<PAGE>
In North America, Apache completed 70 producing wells out of 89 wells
drilled during the first quarter of 1997; while internationally, the
Company discovered seven new producers of ten wells drilled. Worldwide,
the Company was drilling or completing an additional 107 wells as of March
31, 1997. In addition, Apache completed 62 production enhancement
projects, including 28 recompletions, during the quarter. The Company was
able to fund its worldwide exploration and development expenditures with
cash provided by operating activities during the first quarter of 1997.
Property acquisitions totaled $6.8 million in the first quarter of
1997.
Capital Resources and Liquidity
Net Cash Provided by Operating Activities - Apache's net cash provided
by operating activities during the first quarter of 1997 totaled $186.8
million, an increase of 174 percent from $68.1 million in 1996. This
increase was due primarily to higher product prices as compared to last
year.
Long-Term Borrowings - In January 1997, the Company established a $300
million commercial paper program, which allows Apache to borrow funds for
up to 270 days at attractive interest rates. The commercial paper
program is supported by availability under the $750 million United States
portion of Apache's global credit facility.
In January 1997, Standard & Poor upgraded the Company's senior long-
term debt from BBB to BBB+ and subordinated debt from BBB- to BBB.
Liquidity - The Company had $19.9 million in cash and cash equivalents
on hand at March 31, 1997, up from the $13.2 million at December 31,
1996. Apache's ratio of current assets to current liabilities at March
31, 1997 was .86:1 compared to .87:1 at December 31, 1996.
Apache believes that cash on hand, net cash generated from operations
and unused committed borrowing capacity under its global credit facility
will be adequate to satisfy the Company's financial obligations to meet
future liquidity needs for at least the next two fiscal years.
FUTURE TRENDS
Apache's growth strategy is to increase oil and gas reserves,
production, and cash flow through a combination of exploratory drilling,
development of its inventory of existing projects and tactical
acquisitions. The Company's drilling program emphasizes reserve additions
through exploratory drilling primarily on its international interests, and
moderate-risk drilling primarily on its North American interests. The
Company also emphasizes reducing operating costs per unit produced and
selling marginal and non-strategic properties in order to increase its
profit margins.
Apache's international investments and exploration activities are an
important component of its long-term growth strategy. Although
international exploration is recognized as higher-risk than most of
Apache's U.S. and Canadian activities, it offers potential for greater
rewards and significant reserve additions. Apache will direct its
international efforts in 1997 toward development of certain discoveries
offshore Western Australia and in Egypt, and toward further exploration
efforts on its concessions in Egypt, The People's Republic of China,
Indonesia and offshore the Ivory coast of western Africa. Apache believes
that reserve additions in these international areas may be made through
higher-risk exploration and through improved production practices and
recovery techniques.
12
<PAGE>
For Apache, property acquisition is only one phase in a continuing
cycle of business growth. Apache's aim is to follow each acquisition with
a cycle of reserve enhancement, property consolidation and cash flow
acceleration, facilitating asset growth and debt reduction. This approach
requires a well-planned and carefully executed property development program
and, where appropriate, a selective program of property dispositions. It
motivates Apache to target acquisitions that have ascertainable additional
reserve potential and to apply an active drilling, workover and
recompletion program to realize the potential of the acquired undeveloped
and partially developed properties. Apache prefers to operate its
properties so that it can best influence their development; as a result,
the Company operates properties accounting for over 75 percent of its
production.
In 1997, Apache expects North American exploration and development
outlays to increase from 1996 levels as the Company focuses increasing
reserves, production and cash flow through exploratory drilling and
development of its existing inventory. Internationally, the Company
projects capital expenditures to increase 68 percent over 1996 levels as
Apache continues to exploit its concessions in Egypt, Western Australia,
China and Indonesia. Proposed exploration and development expenditures in
1997 will be reviewed at least every quarter in light of fluctuating
product prices and Apache's objective to fund operations through internally
generated cash flow.
On May 1, 1997, Apache's shareholders approved the 1996 Share Price
Appreciation Plan, which provides for awards denominated in shares of
Apache common stock to be paid upon attainment of share price goals based
on $50 and $60, respectively, before January 1, 2000. Between 30 and 50
percent of the award will be paid in cash at the market value of the stock
on the date of payments, and the balance (up to a total of 2,000,000 shares
in the aggregate) will be issued in Apache common stock. Generally, any
payments will be made in three installments over 36 months.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 ("PSLRA")
Certain forward-looking information contained in this report is being
provided in reliance upon the "safe harbor" provisions of the PSLRA as set
forth in Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such information
includes, without limitation, discussions as to estimates, expectations,
beliefs, plans and objectives concerning the Company's future financial and
operating performance. Such forward-looking information is subject to
assumptions and beliefs based on current information known to the Company
and factors that could yield actual results differing materially from those
anticipated. Such factors include, without limitation, the prices received
for the Company's oil and natural gas production, the costs of acquiring,
finding, developing and producing reserves, the rates of production of the
Company's hydrocarbon reserves, the Company's success in acquiring or
finding additional reserves, unforeseen operational hazards, significant
changes in tax or regulatory environments, and the political and economic
uncertainties of foreign operations.
13
<PAGE>
ITEM 1. LEGAL PROCEEDINGS
The information set forth in Note 10 to the Consolidated
Financial Statements contained in the Company's Form 10-K for the
year ended December 31, 1996 (filed with the Securities and
Exchange Commission on March 28, 1997) 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
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 - 1990 Employee Stock Option Plan of The Phoenix
Resource Companies, Inc., as amended through May 20, 1996.
11.1 - Computation of Earnings per Share.
27.1 - Financial Data Table.
(b) Reports filed on Form 8-K.
None.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
APACHE CORPORATION
Dated: May 14, 1997 /s/ Mark A. Jackson
---------------------------------------
Mark A. Jackson
Vice President and Chief Financial Officer
Dated: May 14, 1997 /s/ Thomas L. Mitchell
---------------------------------------
Thomas L. Mitchell
Controller and Chief Accounting Officer
1990 EMPLOYEE STOCK OPTION PLAN
OF
THE PHOENIX RESOURCE COMPANIES, INC.
(EFFECTIVE APRIL 9, 1990)
As Amended Through May 20, 1996
Exhibit 10.1
1. Purpose of the Plan.
This 1990 Employee Stock Option Plan (the "Plan") is intended as
an employment incentive, to retain in the employ of The Phoenix
Resource Companies, Inc., a Delaware corporation (the "Company"),
and any Parent or Subsidiary of the Company (within the meaning of
Section 425(e) or (f) of the Internal Revenue Code of 1986, as
amended ("Code")), persons of training, experience and ability, to
attract new employees, to encourage the sense of proprietorship of
such persons and to stimulate the active interest of such persons
in the development and financial success of the Company. It is
further intended that the options granted under the Plan will not
be incentive stock options as that term is defined in Section 422A
of the Code.
2. Administration of the Plan.
The Plan shall be administered by the Stock Option Plan Committee
of the Board of Directors of Apache Corporation (the "Committee").
No Committee member who is eligible to participate in the Plan
shall take part in any Committee deliberations or action
respecting the Plan related to such member. The Committee shall
have full power and authority to designate participants, to
determine the terms and provisions of respective option grants
(which need not be identical) and to interpret the provisions and
supervise the administration of the Plan. All decisions and
selections made by the Committee pursuant to the provisions of the
Plan shall be made by a majority of its members. Any decision
reduced to writing and signed by all the members shall be fully
effective as if it had been made by a majority at a meeting duly
held. The Committee shall have the authority to grant, in its
discretion, to the holder of an outstanding Option in exchange for
the surrender and cancellation of such Option, a new Option having
a purchase price per share lower than provided in the Option so
surrendered and cancelled and containing such other terms and
conditions as the Committee may prescribe in accordance with the
provisions of the Plan. All Options granted under this Plan are
subject to, and may not be exercised before, the approval of the
Plan by the stockholders of the Company pursuant to Rule 16b-3 of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). For purposes of compliance with such rule, the entry of an
order of confirmation of the bankruptcy plan of reorganization
with respect to any company will constitute stockholder approval.
1
<PAGE>
3. Designation of Participants.
The persons eligible for participation in the Plan as recipients
of Options shall include only employees of the Company or of any
Parent or wholly-owned subsidiary of the Company. Directors of
the Company shall not be eligible to participate in the Plan as
directors, but Directors otherwise qualified shall be eligible to
participate. An employee who has been granted an Option hereunder
("Optionee") may be granted an additional Option or Options, if
the Committee shall so determine.
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Paragraph 9 hereof, a total
of one million, six hundred thousand (1,600,000) shares of Common
Stock, par value $.01 per share ("Stock"), of the Company shall be
subject to this Plan. Pursuant to Amendment Number One of the
Plan, approved by the stockholders at its 1995 Annual Meeting, an
additional 600,000 shares of Common Stock, par value $.01 per
share, of the Company shall be subject to this Plan, subject to
adjustment as provided in Paragraph 9 hereof. The Shares subject
to this Plan shall consist of unissued shares or previously issued
shares reacquired and held by the Company, or any Parent or
wholly-owned subsidiary of the Company, and such amount of shares
shall be and is hereby reserved for such purpose. Any of such
shares which may remain unsold and which are not subject to
outstanding Options at the termination of this Plan shall cease to
be reserved for the purpose of this Plan, but until termination of
this Plan the Company shall at all times reserve a sufficient
number of shares to meet the requirements of this Plan. Should
any Option expire or be cancelled prior to its exercise or
relinquishment in full, the shares theretofore subject to such
Option, to the extent it had not been exercised, may again be
subjected to an Option under the Plan.
5. Option Price.
(a) The purchase price of each share of Stock subject to an
Option shall be determined by the Committee prior to
granting the Option and shall not be less than the fair
market value per share of Stock on the date of the grant.
2
<PAGE>
(b) The fair market value of a share on a particular date shall
be deemed to be (i) in the event the Stock is not listed on
a stock exchange or traded in the over-the-counter market,
the value determined in good faith by the Board of Directors
of the Company, which determination shall be conclusive,
(ii) in the event the Stock is listed on a national or
regional stock exchange, the closing sales price per share
of the Stock on such exchange on the date, or, if there
shall have been no sale on that date, on the last preceding
date on which such a sale or sales were so reported (the
"Sale Date") or (iii) if the Stock is traded in the over-
the-counter market, the mean between the highest closing bid
and lowest closing asked price for the Stock as reported by
the National Association of Securities Dealers Automated
Quotation System on the Sale Date, or if not reported by
such system, the mean between the closing bid and asked
price on the Sale Date as quoted by such quotation source as
shall be designated by the Committee.
6. Option Period.
Any Option granted under this Plan shall terminate and be of no
force and effect with respect to any securities not previously
taken up by the Optionee thereunder upon the expiration of the
term of such Option as specified in the option agreement relating
thereto, which term shall not exceed ten (10) years from the date
of grant of such Option.
7. Exercise of Options.
(a) The Committee, in granting Options hereunder, shall have
discretion to determine the terms upon which such Options
shall be exercisable, subject to the applicable provisions
of the Plan. The Committee may determine to permit any
Option granted hereunder to be exercisable at any time after
six (6) months from the date of grant of such Option.
(b) Options may be exercised solely by the Optionee during his
lifetime or after his death by the personal representative
of the Optionee's estate or the person or persons entitled
thereto under his will or under the laws of descent and
distribution.
(c) The purchase price of the shares as to which an Option is
exercised shall be paid in full at the time of the exercise.
Such purchase price shall be payable in cash, or at the
option of the holder of such Option, in Stock theretofore
owned by such holder (or any combination of cash and such
Stock). For purposes of determining the amount, if any, of
the purchase price satisfied by payment in Stock, such Stock
shall be valued at its fair market value on the date of
exercise in accordance with Paragraph 5(b) hereof. Any
Stock delivered in satisfaction of all or a portion of the
purchase price shall be appropriately endorsed for transfer
and assignment to the Company. No holder of an Option shall
be, or have any of the rights or privileges of, a
stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares shall
have been issued by the Company to such holders. The
Company may make loans to the Optionees the proceeds of
which will be used to exercise the Options granted pursuant
to the Plan. Although the terms of any such loans will be
determined on an individual basis, such loans will be
secured by a lien on the Stock to be purchased by the
Optionee and will bear interest at an interest rate to be
determined on the date the loan is made that is sufficient
to avoid the classification of the loan as a below-market
loan under Section 7872 of the Code.
3
<PAGE>
8. Relinquishment of Options; Assignability.
(a) The Committee, in granting Options hereunder, shall have
discretion to determine whether or not Options shall include
a right of relinquishment as hereinafter provided by this
Paragraph 8. The Committee shall also have discretion to
determine whether an option agreement evidencing an Option
granted by the Committee shall be amended or supplemented to
include such a right of relinquishment. Neither the
Committee nor the Company shall be under any obligation or
incur any liability to any person by reason of the
Committee's refusing to grant or include a right of
relinquishment in any Option granted hereunder or in any
option agreement evidencing the same. Subject to the
Committee's determining in any case that the grant by it of
a right of relinquishment is consistent with Paragraph 1
hereof, any Option granted under the Plan, and the option
agreement evidencing such Option, may provide:
(i) That the Optionee, or his heirs or other legal
representatives to the extent entitled to exercise
the Option under the terms thereof, in lieu of
purchasing the entire number of shares subject to
purchase thereunder, shall have the right to
relinquish all or any part of the then unexercised
portion of the Option (to the extent exercisable as
provided in (iv) hereinbelow) for a number of shares
of Stock, for an amount of cash or for a combination
of Stock and cash, to be determined as follows:
(A) The written notice of exercise of such right
of relinquishment, provided for in clause (ii)
of this subparagraph (a), shall state the
percentage, if any, of the Appreciated Value
(as defined below), that such Optionee elects
to receive in cash (which percentage is called
the "Cash Percentage"), such Cash Percentage
to be in increments of 10% of such Appreciated
Value up to 100% thereof;
(B) The number of shares of Stock of the Company,
if any, issuable pursuant to such
relinquishment shall be the number of such
shares, rounded to the next greater number of
full shares, as shall be equal to: 100% of the
Appreciated Value less the Cash Percentage,
multiplied by the excess of (1) the aggregate
current market value of the shares of Stock
covered by the Option or the portion thereof
so relinquished over (2) the aggregate
purchase price for such shares specified in
such Option (which excess is called the
"Appreciated Value"), divided by the then-
current market value per share of such Stock;
and
(C) The amount of cash payable pursuant to such
relinquishment shall be an amount equal to the
Appreciated Value less the aggregate current
market value of the Stock issued pursuant to
such relinquishment, if any, which cash shall
be paid by the Company subject to such
conditions as are deemed advisable by the
Committee to permit compliance by the Company
with the withholding provisions applicable to
employers under the Code (and under any
applicable State income tax law);
4
<PAGE>
(ii) That such right of relinquishment may be exercised
only upon receipt by the Company of a written notice
of such relinquishment which shall be dated the date
of election to make such relinquishment; and that,
for the purposes of the Plan, such date of election
shall be deemed to be the date when such notice is
sent by registered or certified mail, or when receipt
is acknowledged by the Company, if mailed by other
than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment
of the sender or otherwise delivered, provided that,
in the event the method described above for
determining such date of election shall not be or
remain consistent with provisions of Section 16(b) of
the Exchange Act or the rules and regulations adopted
by the Securities and Exchange Commission thereunder,
as presently existing or as may be hereafter amended,
which exempt from the operation of said Section 16(b)
in whole or in part any such relinquishment
transaction, then such date of election shall be
determined by such other method consistent with said
Section 16(b) or rules or regulations as the
Committee shall in its discretion select and apply;
(iii) That the "current market value" of a share on a
particular date shall be deemed to be its fair market
value on that date as determined in accordance with
Paragraph 5(b) hereof; and
(iv) That the Option, or any portion thereof, may be
relinquished only to the extent that (A) it is
exercisable on the date written notice of
relinquishment is received by the Company and (B) the
Committee, subject to the provisions of Paragraph
8(b) hereof, shall consent to the election of the
holder of such Option to relinquish such Option as
set forth in such written notice of relinquishment,
and (C) the holder of such Option pays, or makes
provision satisfactory to the Company for the payment
of, any taxes which the Company is obligated to
collect with respect to such relinquishment.
(b) The Committee shall have sole discretion to consent to or
disapprove any election of a holder of an Option to
relinquish such Option for Stock and cash as provided in
Paragraph 8(a) hereof. Neither the Committee nor the
Company shall be under any liability to any person by reason
of the Committee's disapproval of any election pursuant to
this subparagraph (b).
(c) The Committee, in granting Options hereunder, shall have
discretion to determine the terms upon which such Options
shall be relinquishable, subject to the applicable
provisions of the Plan, and including such provisions as are
deemed advisable to permit the exemption from the operation
from Section 16(b) of the Exchange Act in whole or in part
of any such transaction involving such relinquishment, and
Options outstanding, and option agreements evidencing such
Options, may be amended, if necessary, to permit such
exemption. If an Option is relinquished, such Option shall
be deemed to have been exercised to the extent of the number
of shares of Stock covered by the Option or part thereof
which is relinquished, and no further Options may be granted
covering such shares of Stock.
5
<PAGE>
(d) Neither any Option nor any right to relinquish the same to
the Company as contemplated by this Paragraph 8 shall be
assignable or otherwise transferable except by will or the
laws of descent and distribution.
(e) No right of relinquishment may be exercised within the first
six months of the date of grant of such right; provided,
however, that this limitation shall not apply in the event
of death or disability.
9. Capital Change of the Company; Certain Corporate Transactions.
(a) The existence of this Plan and Options granted hereunder
shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business,
or any merger or consolidation of the Company, or any issue
of bonds, debentures, preferred or prior preference stocks
ahead of or affecting the Company's Stock or the rights
thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether
of a similar character or otherwise.
(b) The shares with respect to which Options may be granted
hereunder are shares of the Stock of the Company as
presently constituted. If, and whenever, prior to the
delivery by the Company of all of the shares of the Stock
that are subject to Options granted hereunder, the Company
shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend,
a stock split, combination of shares or recapitalization or
other increase or reduction of the number of shares of the
Stock outstanding without receiving compensation therefor in
money, services or property, the number of shares of Stock
available under the Plan and the number of shares of Stock
with respect to which Options granted hereunder may
thereafter be exercised shall (i) in the event of an
increase in the number of outstanding shares, be
proportionately increased, and the cash consideration
payable per share with respect to Options then issued and
outstanding shall be proportionately reduced; and (ii) in
the event of a reduction in the number of outstanding
shares, be proportionately reduced, and the cash
consideration payable per share with respect to Options then
issued and outstanding shall be proportionately increased.
(c) Except as expressly provided herein, the issue by the
Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Stock
subject to Options granted hereunder.
6
<PAGE>
(d) If the Company is reorganized, or merged or consolidated or
party to a plan of exchange with another corporation
pursuant to which reorganization, merger, consolidation, or
plan of exchange stockholders of the Company receive any
shares of Stock or other securities or if the Company shall
distribute ("Spin Off") securities of another corporation to
its stockholders, there shall be substituted for the shares
subject to the unexercised portions of outstanding Options
an appropriate number of shares of (i) each class of stock
or other securities which were distributed to the
stockholders of the Company in respect of such shares in the
case of a reorganization, merger, consolidation, or plan of
exchange, or (ii) in the case of a Spin Off, the securities
distributed to stockholders of the Company together with
shares of Stock, such number of shares or securities to be
determined in accordance with the provisions of Section 425
of the Code (or other applicable provisions of the Code or
regulations issued thereunder which may from time to time
govern the treatment of incentive stock options in such a
transaction). Notwithstanding the foregoing, any unmatured
installments of the Options shall be accelerated and the
Option shall thereupon be exercisable in full without regard
to any installment exercise provision in the event of a
Change of Control (as defined below).
(i) For purposes of this Plan, a Change of Control will
occur when
(A) any "person," including a "group" as
determined in accordance with Section 13(d)(3)
of the Exchange Act is, or becomes the
beneficial owner, directly or indirectly, of
securities of the Company representing a
Control Percentage (as defined below) of the
combined voting power of the then outstanding
securities of the Company;
(B) as a result of, or in connection with, any
tender offer or exchange offer, merger or
other business combination, sale of assets or
contested election, or any combination of the
foregoing transactions (a "Transaction"), the
persons who were Directors of the Company
before the Transaction shall cease to
constitute a majority of the Board of
Directors of the Company, or any successor to
the Company <F1>;
- ---------------------
[FN]
<F1> Pursuant to resolution of the Board of Directors
on May 23, 1990, in determining whether a person
is the beneficial owner of a Control Percentange,
the Stock originally received by a person pursuant
to the plan of reorganization of Texas
International Company in exchange for securities
of Texas International Company shall not be
included in the numerator of such computation.
7
<PAGE>
(C) the Company is merged or consolidated with
another corporation and as a result of such
merger or consolidation a Control Percentage
of the outstanding voting securities of the
surviving or resulting corporation shall no
longer be owned in the aggregate by the
stockholders of the Company on April 9, 1990,
or their respective affiliates within the
meaning of the Exchange Act;
(D) the Company transfers substantially all of its
assets to another corporation that is not an
affiliate of the Company.
(ii) The term "Control Percentage" shall mean at least 25%
in the event the applicable securities are registered
under the Exchange Act or at least 40% in the event
the applicable securities are not registered under
the Exchange Act.
10. Purchase for Investment.
Unless the Options and shares covered by the Plan have been
registered under the Securities Act of 1933, as amended, or the
Company has determined that such registration is unnecessary, each
person exercising an Option under the Plan may be required by the
Company to give a representation in writing that he is acquiring
such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part
thereof.
8
<PAGE>
11. Taxes.
The Company may make such provisions as it may deem appropriate
for the withholding of any taxes which it determines is required
in connection with any Options or rights of relinquishment granted
under the Plan. However, the holder of an Option may pay all or
any portion of the taxes required to be withheld by the Company or
paid by the holder of the Option in connection with the exercise
of all or any portion of this Option (including an exercise
through relinquishment) by electing to have the Company withhold
shares of Stock, or by delivering previously owned shares of
Stock, having a fair market value determined in accordance with
Paragraph 5(b) hereof, equal to the amount required to be withheld
or paid. The holder of the Option must make the foregoing
election on or before the date that the amount of tax to be
withheld is determined ("Tax Date"). Any such election is
irrevocable and subject to disapproval by the Committee. If the
holder of the Option is subject to the short-swing profits
recapture provisions of Section 16(b) of the Exchange Act, in the
event the method described above for determining such date of
election shall not be or remain consistent with provisions of
Section 16(b) of the Exchange Act or the rules and regulations
adopted by the Securities and Exchange Commission thereunder, as
now existing or as may be hereafter amended, then such date of
election shall be determined by such other method consistent with
the provisions of Section 16(b) of the Exchange Act or rules and
regulations as the Committee in its discretion shall select and
apply.
12. Other Rights of Optionees and the Company.
(a) The Committee, in granting any Option hereunder, shall have
the discretion to afford the grantee of such Option any one
or more of the following rights, on such terms and subject
to such conditions (which may vary from Option to Option) as
the Committee shall prescribe in the option agreement
relating to such Option: (i) the right to have the shares
underlying such Option, to the extent purchasable ("Vested
Shares") sold in an underwritten public offering; and (ii)
the right to have his Vested Shares purchased or repurchased
on the occurrence of such events as may be specified in the
option agreement relating to such Option.
(b) The Committee, in granting any Option hereunder, shall have
the discretion to afford the Company the right, on the terms
and subject to such conditions (which may vary from Option
to Option) as the Committee shall prescribe in the option
agreement relating to such Option, to repurchase or cause
the purchase of the Vested Shares underlying such Option on
the occurrence of such events as may be specified in such
option agreement.
13. Effective Date of Plan.
The Plan shall be effective as of April 9, 1990.
14. Amendments or Termination.
The Board of Directors may amend, alter or discontinue the Plan,
except that no amendment or alteration shall be made which would
impair the rights of any Optionee under any Option theretofore
granted, without his consent, and except that no amendment or
alteration shall be made which, without the approval of the
stockholders, would:
(a) Increase the total number of shares reserved for the
purposes of the Plan, except as is provided in Paragraph 9
of the Plan; or
(b) Alter the class of employees eligible to participate in the
Plan, as described in Paragraph 3 hereof.
9
<PAGE>
15. Government Regulations.
The Plan, and the granting and exercise of Options thereunder, and
the obligation of the Company to sell and deliver shares under
such Options, shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
THE PHOENIX RESOURCE COMPANIES, INC.
APACHE CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
EXHIBIT 11.1
<TABLE>
For the Quarter Ended
March 31,
---------------------------
1997 1996
----------- -----------
Weighted Average Calculation:
- -----------------------------
<S> <C> <C>
Net income $ 52,877 $ 15,655
========== ==========
Weighted average common shares outstanding 90,143 77,422
========== ==========
Net income per common share,
based on weighted average
common shares outstanding $ .59 $ .20
=========== ==========
Primary Calculation:
- --------------------
Net income $ 52,877 $ 15,655
Assumed conversion of
3.93-percent convertible notes 516 534
---------- ----------
Net income, as adjusted $ 53,393 $ 16,189
========== ==========
Common Stock Equivalents:
Weighted average common shares outstanding 90,143 77,422
Stock options, using the
treasury stock method 791 140
Assumed conversion of 3.93-percent
convertible notes 2,778 2,778
---------- ----------
93,712 80,340
========== ==========
Primary earnings per common share $ .57 $ .20
========== ==========
</TABLE>
<PAGE>
APACHE CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
EXHIBIT 11.1
(Continued)
<TABLE>
For the Quarter Ended
March 31,
---------------------------
1997 1996
----------- ------------
Fully-Diluted Calculation:
--------------------------
<S> <C> <C>
Net income $ 52,877 $ 15,655
Assumed conversion of:
3.93-percent convertible notes 516 534
6-percent convertible
subordinated debentures 1,685 --
---------- ----------
Net income, as adjusted $ 55,078 $ 16,189
========== ==========
Common Stock Equivalents:
Weighted average common shares outstanding 90,143 77,422
Stock options, using the treasury
stock method 791 140
Assumed conversion of 3.93 percent
convertible notes 2,778 2,778
Assumed conversion of 6 percent
convertible subordinated debentures 5,623 --
---------- ----------
99,335 80,340
========== ==========
Net income per common
share fully diluted $ .55 $ .20
========== ==========
</TABLE>
Note: The assumed conversion of the six-percent convertible subordinated
debentures was anti-dilutive for the first quarter of 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000006769
<NAME> ART. 5 FDS FOR 1997 FIRST QUARTER 10-Q
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1,000
<CASH> 19,873
<SECURITIES> 0
<RECEIVABLES> 199,166
<ALLOWANCES> 0
<INVENTORY> 16,047
<CURRENT-ASSETS> 248,155
<PP&E> 5,551,657
<DEPRECIATION> 2,366,731
<TOTAL-ASSETS> 3,493,616
<CURRENT-LIABILITIES> 288,509
<BONDS> 1,248,686
0
0
<COMMON> 114,282
<OTHER-SE> 1,453,022
<TOTAL-LIABILITY-AND-EQUITY> 3,493,616
<SALES> 322,489
<TOTAL-REVENUES> 321,828
<CGS> 208,644
<TOTAL-COSTS> 208,644
<OTHER-EXPENSES> 9,142
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,960
<INCOME-PRETAX> 88,082
<INCOME-TAX> 35,205
<INCOME-CONTINUING> 52,877
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,877
<EPS-PRIMARY> .57
<EPS-DILUTED> .55
</TABLE>
