Common-Size Income Statement
Quarterly Data
Apache Corp., common-size consolidated income statement (quarterly data)
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
The financial trajectory from 2011 through mid-2016 is characterized by a transition from stable, high-margin profitability to a period of severe financial volatility and massive non-cash impairment charges. Initial performance was marked by consistent gross profit margins exceeding 80%, which eventually eroded due to rising operating costs and catastrophic asset write-downs.
- Revenue Stream Diversification
- Between March 2011 and December 2013, revenues were derived exclusively from oil. Starting in the first quarter of 2014, the revenue mix diversified to include natural gas and natural gas liquids. Natural gas revenues typically fluctuated between 15% and 20% of total production revenues, while natural gas liquids contributed between 3% and 5% through June 2016.
- Operating Cost and Margin Erosion
- Cost of revenues remained relatively stable between 16% and 22% from 2011 until late 2014. However, a significant upward trend in lease operating expenses occurred in 2015, peaking at 37.35% of revenues in December 2015. This contributed to a decline in gross profit margins, which fell from a high of 83.17% in early 2012 to a low of 58.72% by the end of 2015.
- Asset Impairments and Depreciation
- The most substantial impact on the income statement resulted from massive spikes in depreciation, depletion, and amortization (DD&A) and related property and equipment charges. While these figures were manageable between 2011 and 2013, they reached extreme levels in 2015, with DD&A peaking at 624.00% of revenues in December 2015. Specific impairment charges also became prominent, notably 80.55% in late 2014 and 127.19% in late 2015, indicating significant write-downs of asset values.
- Operating and Net Income Volatility
- Operating income maintained a positive range of 20% to 50% until September 2014. The subsequent period saw a collapse into deep negative territory, with operating losses reaching 708.44% of revenues in December 2015. Consequently, net income attributable to common stock shifted from a peak of 28.75% in March 2011 to a nadir of 590.75% loss in December 2015. A partial recovery in the percentage of loss is observed in the first half of 2016, although the figures remained negative.
- Financial and Tax Impacts
- Financing costs as a percentage of revenue increased toward the end of the period, rising from approximately 1% in 2011 to 9.66% by March 2016. During the period of heaviest losses in 2015, significant income tax benefits were recorded—peaking at 65.36% of revenues in December 2015—which served to partially offset the operational losses.
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