Apache's Second-Quarter Net Income Surges to $1.4 Billion or $4.28 Per Share

HOUSTON, July 31 /PRNewswire-FirstCall/ -- Apache Corporation
(NYSE, Nasdaq: APA) today reported that high crude oil and natural gas prices
fueled record quarterly net income of $1.4 billion or $4.28 per diluted common
share, a 128-percent increase from $632 million or $1.89 per share in the
prior-year period.
Second-quarter cash from operations before changes in operating assets and
liabilities* totaled $2.3 billion, compared with $1.5 billion in the
prior-year period, and surpassed the record of $1.9 billion set in the fourth
quarter of 2007.
Second-quarter production declined 3.6 percent from the prior-year period
and 1 percent from the first quarter to 551,600 barrels of oil equivalent
(boe) per day. The decline is primarily the result of an explosion that
disrupted operations at the gas processing and transportation hub at Varanus
Island in Australia as well as a strike at a refinery in Scotland that shut in
production from all of the fields on the Forties Pipeline System, including
Apache's Forties Field.
"The second quarter was highlighted by record financial results, continued
exploration success, and sustained progress in delivering our pipeline of
development projects," said G. Steven Farris, Apache's president and chief
executive officer. "Despite the challenges we faced during the quarter, we
remain positive about the long-term outlook. Driven by successful drilling
programs and seven development projects that are expected to add 135,000 boe
per day to worldwide net production over the next four years, we are confident
Apache is entering a period of accelerating production growth in 2009-2012."
Drilling highlights included:
-- The Geauxpher discovery in the deepwater Gulf of Mexico has estimated
proved and probable reserves of 100 billion cubic feet. Apache has a
40 percent working interest in the field;
-- The Heqet-2 well in Egypt tested 2,100 barrels per day from a depth of
more than 14,000 feet;
-- The Umbarka-174 well in Egypt tested 4,300 barrels per day;
-- In Canada, two Ootla shale wells drilled by Apache's partner EnCana
added further support to the current estimated potential of 9-16
trillion cubic feet net to Apache, and
-- Five wells drilled in the Forties Field in the North Sea during the
first half of 2008 averaged an aggregate of 8,900 barrels per day in
the second quarter. Apache has a 97 percent working interest in the
Forties Field.

In Egypt, Apache expects to commence production through the Salam gas
plant expansion in October. The gas plant project -- one element of Apache's
development pipeline -- is forecasted to contribute additional net production
of 100 million cubic feet (MMcf) of gas and 5,000 barrels of condensate per
day by the end of the year.
"At Varanus Island, we will resume partial gas sales over the next few
days," Farris said. "The initial rate is expected to be 110 MMcf per day;
later in August, we expect production to increase to 220 MMcf per day.
"We want to assure the citizens of Western Australia that Apache
understands the hardship that they have experienced and that fully restoring
production is our highest priority," Farris said.
"We are confident that Apache will overcome the temporary setbacks in
Australia and the North Sea and will register its 29th annual production
increase in the last 30 years," Farris said.
During the second quarter, Apache received an average of $110.32 per
barrel of oil -- up 72 percent from the prior-year period -- and $8.09 per
thousand cubic feet (Mcf) of gas, up 47 percent.
Apache Corporation is an oil and gas exploration and production company
with operations in the United States, Canada, Egypt, the United Kingdom North
Sea, Australia and Argentina.
*Adjusted earnings and cash from operations before changes in operating
assets and liabilities are non-GAAP measures. Please see reconciliations
below.

NOTE: Apache will conduct a conference call to discuss its first-quarter
results at 1 p.m. Central time on July 31, 2008. The call will be webcast
from Apache's Web site, http://www.apachecorp.com. The webcast replay and
podcast will be archived on Apache's Web site. The conference call will be
available for delayed playback by telephone for one week beginning at
approximately 3 p.m. on July 31. To access the telephone playback, dial
(719) 457-0820 and provide Apache's confirmation code, 5011412.
This news release contains certain "forward-looking statements" within the
meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 including, without limitation, expectations, beliefs, plans
and objectives regarding production and exploration activities. Any matters
that are not historical facts are forward-looking and, accordingly, involve
estimates, assumptions, risks and uncertainties, including, without
limitation, risks, uncertainties and other factors discussed in our 2007 Form
10-K and on our Web site. There is no assurance that Apache's expectations
will be realized, and actual results may differ materially from those
expressed in the forward-looking statements. We assume no duty to update
these statements as of any future date.

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)

For the Quarter For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
REVENUES AND OTHER:
Oil and gas production
revenues $3,904,118 $2,444,031 $7,082,067 $4,467,098
Other (3,927) 28,513 5,865 8,321
3,900,191 2,472,544 7,087,932 4,475,419

COSTS AND EXPENSES:
Depreciation, depletion
and amortization 627,668 591,107 1,248,157 1,122,020
Asset retirement
obligation accretion 25,679 24,134 52,176 48,198
Lease operating expenses 446,738 406,667 901,376 788,774
Gathering and
transportation 39,767 34,435 80,743 65,698
Taxes other than income 298,548 143,791 541,126 253,761
General and administrative 78,872 70,798 161,295 138,660
Financing costs, net 39,050 63,358 83,303 105,421
1,556,322 1,334,290 3,068,176 2,522,532

INCOME BEFORE INCOME
TAXES 2,343,869 1,138,254 4,019,756 1,952,887
Current income tax
provision 702,106 297,058 1,189,906 483,580
Deferred income tax
provision 196,534 207,658 363,108 342,820

NET INCOME 1,445,229 633,538 2,466,742 1,126,487
Preferred stock dividends 1,420 1,420 2,840 2,840

INCOME ATTRIBUTABLE TO
COMMON STOCK $1,443,809 $632,118 $2,463,902 $1,123,647

NET INCOME PER COMMON SHARE:
Basic $4.32 $1.91 $7.38 $3.39
Diluted $4.28 $1.89 $7.32 $3.37

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 334,208 331,812 333,801 331,514

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands)

For the Quarter For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
COSTS INCURRED: (1)
North America
exploration and
development $801,279 $641,261 $1,544,635 $1,382,036
International
exploration and
development 682,766 507,874 1,291,229 934,243
$1,484,045 $1,149,135 $2,835,864 $2,316,279

Oil and gas property
acquisitions $142,848 $6,098 $150,795 $1,032,994

(1) Includes noncash asset retirement costs and capitalized interest as
follows:

Capitalized interest $17,878 $15,898 $35,056 $37,674
Asset retirement
costs $86,434 $52,007 $171,506 $126,828

June 30, December 31,
2008 2007

BALANCE SHEET DATA:
Cash and Cash Equivalents $1,008,442 $125,823
Other Current Assets 3,147,904 2,626,428
Property and Equipment, net 26,934,253 25,231,593
Restricted Cash 94,357 -
Goodwill 189,252 189,252
Other Assets 502,951 461,555
Total Assets $31,877,159 $28,634,651

Current Liabilities $4,124,303 $2,665,016
Long-Term Debt 3,912,136 4,011,605
Deferred Credits and Other
Noncurrent Liabilities 7,326,251 6,580,051
Shareholders' Equity 16,514,469 15,377,979
Total Liabilities and
Shareholders' Equity $31,877,159 $28,634,651

Common shares outstanding at end
of period 334,451 332,927

APACHE CORPORATION
FINANCIAL INFORMATION

For the Quarter For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
FINANCIAL DATA
(In thousands, except
per share data):

Revenues and other $3,900,191 $2,472,544 $7,087,932 $4,475,419

Income Attributable to
Common Stock $1,443,809 $632,118 $2,463,902 $1,123,647

Basic Net Income Per
Common Share $4.32 $1.91 $7.38 $3.39

Diluted Net Income Per
Common Share $4.28 $1.89 $7.32 $3.37

Weighted Average Common
Shares Outstanding 334,208 331,812 333,801 331,514

Diluted Shares
Outstanding 337,676 333,906 336,802 333,595

PRODUCTION AND PRICING DATA:
OIL VOLUME - Barrels per day
United States 100,049 91,060 100,364 82,901
Canada 17,746 19,036 17,547 19,034
Egypt 64,886 59,890 63,718 60,129
Australia 8,367 16,071 8,894 14,117
North Sea 56,570 55,209 57,670 54,445
Argentina 12,067 11,282 12,146 11,041
Total 259,685 252,548 260,339 241,667

AVERAGE OIL PRICE PER BARREL
United States $97.64 $60.08 $90.59 $58.21
Canada 119.16 63.75 106.33 58.71
Egypt 126.20 68.65 112.28 62.65
Australia 133.79 74.96 116.78 71.54
North Sea 121.10 66.59 108.23 61.57
Argentina 50.12 45.78 47.61 43.26
Total 110.32 64.12 99.76 60.21

NATURAL GAS VOLUME - Mcf per day
United States 758,524 801,778 751,269 770,974
Canada 357,828 389,218 359,289 386,136
Egypt 233,793 234,466 238,385 238,951
Australia 129,531 196,249 160,355 195,608
North Sea 2,507 1,944 2,556 1,917
Argentina 197,284 216,187 181,209 207,263
Total 1,679,467 1,839,842 1,693,063 1,800,849

AVERAGE NATURAL GAS PRICE PER MCF
United States $10.62 $7.29 $9.50 $7.13
Canada 9.63 6.79 8.59 6.62
Egypt 6.26 4.48 5.72 4.26
Australia 2.17 1.79 2.14 1.78
North Sea 21.90 13.39 19.05 10.90
Argentina 1.39 1.02 1.60 1.08
Total 8.09 5.51 7.25 5.37

NGL VOLUME - Barrels per day
United States 7,231 8,060 7,236 7,631
Canada 1,868 2,113 2,052 2,172
Argentina 2,905 2,816 2,812 2,726
Total 12,004 12,989 12,100 12,529

AVERAGE NGL PRICE PER BARREL
United States $65.27 $42.10 $61.32 $38.78
Canada 59.26 39.28 56.05 35.29
Argentina 32.31 36.06 39.98 33.68
Total 56.36 40.33 55.46 37.06

APACHE CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share data)

NON-GAAP FINANCIAL MEASURES:

Reconciliation of income attributable to common stock to adjusted
earnings:
The press release discusses Apache's adjusted earnings. Adjusted earnings
excludes certain items that management believes affect the comparability of
operating results. The following provides the reasons adjusted earnings is a
meaningful measure:
-- Management uses adjusted earnings to evaluate the company's
operational trends and performance relative to other oil and gas producing
companies.
-- Management believes this presentation may be useful to investors who
follow the practice of some industry analysts who adjust reported company
earnings for items that may obscure underlying fundamentals and trends.
-- The reconciling items below are the types of items management believes
are frequently excluded by analysts when evaluating the operating trends and
comparability of the company's results.

For the Quarter For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007

Income Attributable to
Common Stock (GAAP) $1,443,809 $632,118 $2,463,902 $1,123,647

Adjustments:
Foreign currency
fluctuation impact on
deferred tax expense 281 68,256 (12,079) 70,652
Impact of Canadian Federal
tax rate reductions - (17,685) - (17,074)

Adjusted Earnings
(Non-GAAP) $1,444,090 $682,689 $2,451,823 $1,177,225

Adjusted Earnings Per Share (Non-GAAP)
Basic $4.32 $2.06 $7.35 $3.55
Diluted $4.28 $2.04 $7.28 $3.53

Average Number of Common Shares
Basic 334,208 331,812 333,801 331,514
Diluted 337,676 333,906 336,802 333,595

Reconciliation of net cash provided by operating activities to cash from
operations before changes in operating assets and liabilities:
The press release discusses Apache's cash from operations before changes
in operating assets and liabilities. It is presented because management
believes the information is useful for investors because it is used internally
and widely accepted by those following the oil and gas industry as a financial
indicator of a company's ability to generate cash to internally fund
exploration and development activities, fund dividend programs, and service
debt. It is also used by research analysts to value and compare oil and gas
exploration and production companies, and is frequently included in published
research when providing investment recommendations. Cash from operations
before changes in operating assets and liabilities, therefore, is an
additional measure of liquidity, but is not a measure of financial performance
under GAAP and should not be considered as an alternative to cash flows from
operating, investing, or financing activities.
The following table reconciles net cash provided by operating activities
to cash from operations before changes in operating assets and liabilities.

For the Quarter For the Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
Net cash provided by
operating activities $1,929,509 $1,386,446 $3,737,913 $2,450,005
Changes in operating
assets and liabilities 390,240 80,575 426,520 209,476
Cash from operations
before changes in
operating assets and
liabilities $2,319,749 $1,467,021 $4,164,433 $2,659,481

APA-F

SOURCE Apache Corporation

Bill Mintz, +1-713-296-7276, or Investors, Robert Dye, +1-713-296-6662, or
David Higgins, +1-713-296-6690, all of Apache Corporation