Form 10-Q APACHE CORP For: Jun 30

Form 10-Q APACHE CORP For: Jun 30

Sign up for StreetInsider Free!

Sign up for StreetInsider Free!

Create E-mail Alert Related Categories

You May Also Be Interested In

Create E-mail Alert Related Categories

Free News Feed

Article Stock Quotes (1)

FREE Breaking News Alerts from StreetInsider.com!

StreetInsider.com Top Tickers, 4/16/2024

1. SPY
2. TSLA
3. RDDT
4. TCS:IN
5. ALAB

6. JPM
7. C
8. AAPL
9. GS
10. DJT

Top News Most Read Special Reports

August 7, 2015 7:11 AM EDT

E-mail

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

¨	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

LOGO

APACHE CORPORATION

(exact name of registrant as specified in its charter)

Delaware

41-0747868

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400

(Address of principal executive offices)

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Number of shares of registrant’s common stock outstanding as of July 31, 2015 377,987,486

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)


	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
	(In millions, except per common share data)
REVENUES AND OTHER:
Oil and gas production revenues
Oil revenues	$	1,599		$	2,797		$	2,879		$	5,442
Gas revenues		295			505			595			1,065
Natural gas liquids revenues		58			169			116			355

		1,952			3,471			3,590			6,862
Derivative instrument gains (losses), net		—			(174	)		—			(194	)
Other		25			(8	)		17			9

		1,977			3,289			3,607			6,677

OPERATING EXPENSES:
Depreciation, depletion, and amortization:
Oil and gas property and equipment
Recurring		923			1,074			1,922			2,096
Additional		5,816			203			13,036			203
Other assets		83			81			166			159
Asset retirement obligation accretion		36			38			72			76
Lease operating expenses		467			560			948			1,108
Gathering and transportation		49			66			105			136
Taxes other than income		55			177			128			358
General and administrative		111			113			193			221
Transaction, reorganization, and separation costs		66			14			120			32
Financing costs, net		63			52			133			97

		7,669			2,378			16,823			4,486

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(5,692	)		911			(13,216	)		2,191
Current income tax provision		665			373			580			740
Deferred income tax provision (benefit)		(1,525	)		(19	)		(4,460	)		144

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST		(4,832	)		557			(9,336	)		1,307
Net income (loss) from discontinued operations, net of tax		(732	)		56			(864	)		(360	)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		(5,564	)		613			(10,200	)		947
Net income attributable to noncontrolling interest		36			108			51			206

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(5,600	)	$	505		$	(10,251	)	$	741

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Net income (loss) from continuing operations attributable to common shareholders	$	(4,868	)	$	449		$	(9,387	)	$	1,101
Net income (loss) from discontinued operations		(732	)		56			(864	)		(360	)

Net income (loss) attributable to common shareholders	$	(5,600	)	$	505		$	(10,251	)	$	741

NET INCOME (LOSS) PER COMMON SHARE:
Basic net income (loss) from continuing operations per share	$	(12.89	)	$	1.17		$	(24.88	)	$	2.83
Basic net income (loss) from discontinued operations per share		(1.94	)		0.14			(2.29	)		(0.93	)

Basic net income (loss) per share	$	(14.83	)	$	1.31		$	(27.17	)	$	1.90

DILUTED NET INCOME (LOSS) PER COMMON SHARE:
Diluted net income (loss) from continuing operations per share	$	(12.89	)	$	1.17		$	(24.88	)	$	2.82
Diluted net income (loss) from discontinued operations per share		(1.94	)		0.14			(2.29	)		(0.93	)

Diluted net income (loss) per share	$	(14.83	)	$	1.31		$	(27.17	)	$	1.89

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		378			385			377			390
Diluted		378			387			377			392
DIVIDENDS DECLARED PER COMMON SHARE	$	0.25		$	0.25		$	0.50		$	0.50

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	For the Quarter Ended June 30,					For the Six Months Ended June 30,
	2015			2014		2015			2014
	(In millions)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST	$	(5,564	)	$	613	$	(10,200	)	$	947
OTHER COMPREHENSIVE INCOME (LOSS):
Commodity cash flow hedge activity, net of tax:
Change in fair value of derivative instruments		—			—		—			(1	)

		—			—		—			(1	)

COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		(5,564	)		613		(10,200	)		946
Comprehensive income attributable to noncontrolling interest		36			108		51			206

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(5,600	)	$	505	$	(10,251	)	$	740

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)


	For the Six Months Ended June 30,
	2015			2014
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interest	$	(10,200	)	$	947
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss from discontinued operations		864			360
Depreciation, depletion, and amortization		15,124			2,458
Asset retirement obligation accretion		72			76
Provision for (benefit from) deferred income taxes		(4,460	)		144
Other		26			12
Changes in operating assets and liabilities:
Receivables		333			391
Inventories		74			(13	)
Drilling advances		118			67
Deferred charges and other		(171	)		(114	)
Accounts payable		(410	)		(131	)
Accrued expenses		298			(252	)
Deferred credits and noncurrent liabilities		69			4

NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES		1,737			3,949
NET CASH PROVIDED BY DISCONTINUED OPERATIONS		196			683

NET CASH PROVIDED BY OPERATING ACTIVITIES		1,933			4,632
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(2,987	)		(4,369	)
Leasehold and property acquisitions		(128	)		(112	)
Additions to gas gathering, transmission, and processing facilities		(94	)		(345	)
Proceeds from sale of Deepwater Gulf of Mexico assets		—			1,367
Restricted cash related to divestitures		—			(1,367	)
Proceeds from sale of Kitimat LNG		854			—
Proceeds from sale of other oil and gas properties		119			381
Other, net		(67	)		(33	)

NET CASH USED IN CONTINUING INVESTING ACTIVITIES		(2,303	)		(4,478	)
NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS		4,335			(13	)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		2,032			(4,491	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net		(1,570	)		(1	)
Distributions to noncontrolling interest		(40	)		(66	)
Dividends paid		(189	)		(176	)
Treasury stock activity, net		—			(1,263	)
Other		15			25

NET CASH USED IN CONTINUING FINANCING ACTIVITIES		(1,784	)		(1,481	)
NET CASH USED IN DISCONTINUED OPERATIONS		—			(42	)

NET CASH USED IN FINANCING ACTIVITIES		(1,784	)		(1,523	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,181			(1,382	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		769			1,906

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,950		$	524

SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	110		$	62
Income taxes paid, net of refunds		218			781

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)


	June 30, 2015			December 31, 2014
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,950		$	769
Receivables, net of allowance		1,589			2,024
Inventories		629			708
Drilling advances		193			388
Assets held for sale		—			1,628
Deferred tax asset		84			769
Prepaid assets and other		48			129

		5,493			6,415

PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full-cost accounting:
Proved properties		84,627			89,852
Unproved properties and properties under development, not being amortized		5,233			7,014
Gathering, transmission and processing facilities		4,299			5,440
Other		1,084			1,152

		95,243			103,458
Less: Accumulated depreciation, depletion, and amortization		(66,928	)		(55,382	)

		28,315			48,076

OTHER ASSETS:
Deferred charges and other		1,504			1,461

	$	35,312		$	55,952

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	710		$	1,210
Other current liabilities (Note 3)		1,673			2,454

		2,383			3,664

LONG-TERM DEBT		9,676			11,245

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		2,644			9,499
Asset retirement obligation		2,534			3,048
Other		320			359

		5,498			12,906

COMMITMENTS AND CONTINGENCIES (Note 7)
EQUITY:
Common stock, $0.625 par, 860,000,000 shares authorized, 411,169,515 and 409,706,347 shares issued, respectively		257			256
Paid-in capital		12,483			12,438
Retained earnings		5,809			16,249
Treasury stock, at cost, 33,181,176 and 33,201,455 shares, respectively		(2,889	)		(2,890	)
Accumulated other comprehensive loss		(116	)		(116	)

APACHE SHAREHOLDERS’ EQUITY		15,544			25,937
Noncontrolling interest		2,211			2,200

TOTAL EQUITY		17,755			28,137

	$	35,312		$	55,952

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)


	Common Stock		Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			APACHE SHAREHOLDERS’ EQUITY			Non Controlling Interest			TOTAL EQUITY
BALANCE AT DECEMBER 31, 2013	$	255	$	12,251		$	22,032		$	(1,027	)	$	(115	)	$	33,396		$	1,997		$	35,393
Net income		—		—			741			—			—			741			206			947
Distributions to noncontrolling interest		—		—			—			—			—			—			(66	)		(66	)
Commodity hedges, net of tax		—		—			—			—			(1	)		(1	)		—			(1	)
Common dividends ($0.50 per share)		—		—			(192	)		—			—			(192	)		—			(192	)
Common stock activity, net		1		(25	)		—			—			—			(24	)		—			(24	)
Treasury stock activity, net		—		(1	)		—			(1,263	)		—			(1,264	)		—			(1,264	)
Compensation expense		—		99			—			—			—			99			—			99

BALANCE AT JUNE 30, 2014	$	256	$	12,324		$	22,581		$	(2,290	)	$	(116	)	$	32,755		$	2,137		$	34,892

BALANCE AT DECEMBER 31, 2014	$	256	$	12,438		$	16,249		$	(2,890	)	$	(116	)	$	25,937		$	2,200		$	28,137
Net income (loss)		—		—			(10,251	)		—			—			(10,251	)		51			(10,200	)
Distributions to noncontrolling interest		—		—			—			—			—			—			(40	)		(40	)
Common dividends ($0.50 per share)		—		—			(189	)		—			—			(189	)		—			(189	)
Other		1		45			—			1			—			47			—			47

BALANCE AT JUNE 30, 2015	$	257	$	12,483		$	5,809		$	(2,889	)	$	(116	)	$	15,544		$	2,211		$	17,755

The accompanying notes to consolidated financial statements

are an integral part of this statement.

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 (SEC). They reflect all adjustments that 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 accounting principles generally accepted in the United States (U.S. GAAP) 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. This Quarterly Report on Form 10-Q should be read along with Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which contains a summary of the Company’s significant accounting policies and other disclosures.

The Company’s financial statements for prior periods include reclassifications that were made to conform to the current-period presentation. During the second quarter of 2015, Apache completed the sale of its Australian LNG business and oil and gas assets. In March 2014, Apache also completed the sale of all of its operations in Argentina. Results of operations and consolidated cash flows for the divested Australia assets and Argentina operations are reflected as discontinued operations in the Company’s financial statements for all periods presented. For more information regarding these divestitures, please refer to Note 2–Acquisitions and Divestitures.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of June 30, 2015, Apache’s significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies to the consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the fair value determination of acquired assets and liabilities, the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom, assessing asset retirement obligations, and the estimate of income taxes. Actual results could differ from those estimates.

Oil and Gas Property

The Company follows the full-cost method of accounting for its oil and gas property. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, including salaries, benefits and other internal costs directly identified with these activities, and oil and gas property acquisitions are capitalized. The net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for designated cash flow hedges. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. For a discussion of the calculation of estimated future net cash flows, please refer to Note 14—Supplemental Oil and Gas Disclosures to the consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as “Additional depreciation, depletion, and amortization” (DD&A) in the accompanying statement of consolidated operations. Such limitations are imposed separately on a country-by-country basis and are tested quarterly. In the second quarter of 2015, the Company recorded $4.3 billion ($2.8 billion net of tax), $835 million ($617 million net of tax), and $663 million ($331 million net of tax) in non-cash write-downs of the carrying value of the Company’s U.S., Canada, and North Sea proved oil and gas properties, respectively. In the first quarter of 2015, the Company recorded $5.3 billion ($3.4 billion net of tax), $1.4 billion ($1.0 billion net of tax), and $632 million ($316 million net of tax) in non-cash write-downs of the carrying value of the Company’s U.S., Canada, and North Sea proved oil and gas properties, respectively. In the second quarter of 2014, the Company recorded a $203 million ($77 million net of tax) non-cash write-down of the carrying value of the Company’s North Sea proved oil and gas properties.

New Pronouncements Issued But Not Yet Adopted

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-03, which simplifies the presentation of debt issuance costs. The new standard requires debt issuance costs to be presented as a direct deduction from the carrying value of the associated debt liability, whereas they are currently being presented as a component of “deferred charges and other” on the balance sheet. The new standard creates consistency in the way debt issuance costs and debt discounts are presented on the balance sheet and better aligns U.S. GAAP with International Financial Reporting Standards (IFRS). ASU 2015-03 is effective for annual and interim reporting periods beginning after December 15, 2015. The Company will apply the change retrospectively and does not expect the adoption of this amendment to have a material impact on its consolidated financial statements.

In May 2014, the FASB and the International Accounting Standards Board (IASB) issued a joint revenue recognition standard, ASU 2014-09. The new standard removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The guidance requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. In July 2015, the FASB announced a delay in the effective date of the revenue standard by one year. The deferral results in the new revenue standard being effective for annual and interim periods beginning after December 15, 2017. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Company is currently evaluating the level of effort needed to implement the standard, the impact of adopting this standard on its consolidated financial statements, and whether to use the full retrospective approach or the modified retrospective approach.

2. ACQUISITIONS AND DIVESTITURES

2015 Activity

Canada Divestiture

In April 2015, Apache completed the previously disclosed sale of its 50 percent interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard natural gas basins to Woodside Petroleum Limited (Woodside). Proceeds at closing were $854 million, of which approximately $345 million were associated with LNG assets and $510 million were associated with upstream assets. The proceeds are subject to customary post-closing adjustments.

The Kitimat LNG assets were impaired in the fourth quarter of 2014 and classified as held for sale on the consolidated balance sheet as of December 31, 2014. No material gain or loss was recognized for the LNG assets upon completion of the sale. No gain or loss was recognized on the sale of the upstream assets. In accordance with full cost accounting rules, sales of oil and gas properties are accounted for as adjustments of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves.

Australia Divestitures

Woodside Sale In April 2015, Apache completed the previously disclosed sale of the Wheatstone LNG project and associated upstream oil and gas assets to Woodside. Proceeds at closing were $2.8 billion, of which approximately $1.4 billion were associated with LNG assets and $1.4 billion were associated with the upstream assets. The proceeds are subject to customary post-closing adjustments.

The Wheatstone LNG assets were impaired in the fourth quarter of 2014 and classified as held for sale on the consolidated balance sheet as of December 31, 2014. No material gain or loss was recognized on the ultimate disposal of the LNG project. A loss of approximately $922 million was recognized on the sale of the Australian upstream assets.

Consortium Sale In June 2015, Apache completed the previously disclosed sale of its Australian subsidiary Apache Energy Limited (AEL) to a consortium of private equity funds managed by Macquarie Capital Group Limited and Brookfield Asset Management Inc. Total proceeds of $1.9 billion include customary, post-closing adjustments for the period between the effective date, October 1, 2014, and closing. A loss of approximately $1.3 billion was recognized for the sale of AEL.

Upon closing of the sale of substantially all Australian operations, the associated results of operations for the divested Australian assets and the losses on disposal were classified as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q. The carrying amounts of the major classes of consolidated assets and liabilities associated with the Australia dispositions were as follows:


	December 31,
	2014
ASSETS
Current assets	$	1,992
Net property and equipment		6,516

Total assets	$	8,508

LIABILITIES
Current liabilities	$	606
Asset retirement obligations		517
Non-current deferred tax liability		922
Other long-term liabilities		33

Total liabilities	$	2,078

Sales and other operating revenues and loss from discontinued operations related to the Australia dispositions were as follows:


	For the Quarter Ended						For the Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
	(In millions)
Revenues and other from discontinued operations	$	101		$	195		$	288		$	482

Loss on Woodside sale	$	(922	)	$	—		$	(922	)	$	—
Loss on Consortium sale		(1,329	)		—			(1,329	)		—
Income (loss) from divested Australian operations		(11	)		68			24			217
Income tax benefit (expense)		1,530			(12	)		1,363			(60	)

Income (loss) from Australian discontinued operations, net of tax	$	(732	)	$	56		$	(864	)	$	157

Leasehold and Property Acquisitions

During the second quarter and first six months of 2015, Apache completed $36 million and $128 million, respectively, of leasehold and property acquisitions primarily in our North America onshore regions.

Transaction, Reorganization, and Separation Costs

During the second quarter and first six months of 2015, Apache recorded $66 million and $120 million, respectively, in costs related to various asset transactions, company reorganization, and employee separation costs.

2014 Activity

Anadarko Basin and Southern Louisiana Divestitures

In December 2014, Apache completed the sale of certain Anadarko basin and non-core southern Louisiana oil and gas assets for approximately $1.3 billion in two separate transactions. In the Anadarko basin, Apache sold approximately 115,000 net acres in Wheeler County, Texas, and western Oklahoma. In southern Louisiana, Apache sold its working interest in approximately 90,000 net acres. The effective date of both of these transactions was October 1, 2014.

Gulf of Mexico Divestiture

On June 30, 2014, Apache completed the sale of non-operated interests in the Lucius and Heidelberg development projects and 11 primary-term deepwater exploration blocks in the Gulf of Mexico for $1.4 billion. The effective date of the transaction was May 1, 2014.

Canada Divestiture

On April 30, 2014, Apache completed the sale of producing oil and gas assets in the Deep Basin area of western Alberta and British Columbia, Canada, for $374 million. Apache sold primarily dry-gas producing properties comprising 328,400 net acres in the Ojay, Noel, and Wapiti areas. In the Wapiti area, Apache retained 100 percent of its working interest in horizons below the Cretaceous, including rights to the liquids-rich Montney and other deeper horizons. The effective date of the transaction was January 1, 2014.

Argentina Divestiture

On March 12, 2014, Apache’s subsidiaries completed the sale of all of the Company’s operations in Argentina to YPF Sociedad Anónima for cash consideration of $800 million plus the assumption of $52 million of bank debt as of June 30, 2013. The results of operations during 2014 related to Argentina have been classified as discontinued operations in this Quarterly Report on Form 10-Q. The 2014 loss from Argentina discontinued operations of $517 million is included in “Net income (loss) from discontinued operations, net of tax” on the Consolidated Statement of Operations.


	For the Six Months Ended
	June 30,
	2015		2014
	(In millions)
Revenues and other from discontinued operations	$	—	$	87

Loss from Argentina divestiture		—		(539	)
Loss from operations in Argentina		—		(1	)
Income tax benefit		—		23

Loss from discontinued operations, net of tax	$	—	$	(517	)

Leasehold and Property Acquisitions

During the second quarter and first six months of 2014, Apache completed $64 million and $112 million, respectively, of leasehold and property acquisitions primarily in our North America onshore regions.

Transaction, Reorganization, and Separation Costs

During the second quarter and first six months of 2014, Apache recorded $14 million and $32 million, respectively, in costs related to various asset transactions, company reorganization, and employee separation costs.

3. OTHER CURRENT LIABILITIES

The following table provides detail of our other current liabilities:


	June 30, 2015		December 31, 2014
	(In millions)
Accrued operating expenses	$	140	$	163
Accrued exploration and development		682		1,606
Accrued compensation and benefits		150		204
Accrued interest		155		160
Accrued income taxes		352		54
Current asset retirement obligation		28		37
Other		166		230

Total Other current liabilities	$	1,673	$	2,454

4. ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the six-month period ended June 30, 2015:


	(In millions)
Asset retirement obligation at December 31, 2014	$	3,085
Liabilities incurred		47
Liabilities divested		(619	)
Liabilities settled		(67	)
Accretion expense		85
Revisions in estimated liabilities		31

Asset retirement obligation at June 30, 2015		2,562
Less current portion		(28	)

Asset retirement obligation, long-term	$	2,534

Accretion expense for 2015 includes Australia discontinued operations of $13 million, which is included in “Net income (loss) from discontinued operations, net of tax” on the Consolidated Statement of Operations.

5. DEBT AND FINANCING COSTS

The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt:


	June 30, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Commercial paper and committed bank facilities		—		—		1,570		1,570
Notes and debentures		9,676		9,885		9,675		9,944

Total Debt	$	9,676	$	9,885	$	11,245	$	11,514

The Company’s debt is recorded at the carrying amount, net of unamortized discount, on its consolidated balance sheet. The carrying amount of the Company’s commercial paper, committed bank facilities and uncommitted bank lines, and overdraft lines approximates fair value because the interest rates are variable and reflective of market rates. Apache uses a market approach to determine the fair value of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).

In June 2015, the Company entered into a $3.5 billion five-year revolving credit facility which matures in June 2020. Proceeds from borrowings may be used for general corporate purposes. Apache’s available borrowing capacity under this facility supports its commercial paper program. In connection with entry into the $3.5 billion facility, Apache terminated existing credit facilities totaling $5.3 billion.

The Company has available a $3.5 billion commercial paper program which generally enables Apache to borrow funds for up to 270 days at competitive interest rates. At June 30, 2015, the Company had no outstanding commercial paper.

On July 30, 2015, the Company gave notice to fully redeem its $500 million 5.625% notes due in 2017 and its $400 million 1.75% notes due in 2017 on September 1, 2015. The notes are being redeemed pursuant to the provisions of each respective note’s indenture using cash on hand.

Financing Costs, Net

The following table presents the components of Apache’s financing costs, net:


	For the Quarter Ended						For the Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
	(In millions)
Interest expense	$	123		$	124		$	251		$	248
Amortization of deferred loan costs		2			1			4			3
Capitalized interest		(59	)		(72	)		(117	)		(150	)
Interest income		(3	)		(1	)		(5	)		(4	)

Financing costs, net	$	63		$	52		$	133		$	97

6. INCOME TAXES

The Company estimates its annual effective income tax rate for continuing operations in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Non-cash write-downs of the carrying value of the Company’s proved oil and gas properties, statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur.

During the second quarter of 2015 Apache’s effective tax rate was primarily impacted by an increase in the amount of valuation allowances. The Company repatriated the majority of net cash proceeds from the Kitimat LNG project and Australia divestitures and is now positioned to efficiently repatriate future foreign earnings. The Company utilized an existing deferred tax asset related to net operating losses to offset a portion of the taxable income from the repatriated proceeds. In addition, the Company established a deferred tax asset related to the creditable foreign taxes that accompanied the repatriated proceeds. Management has assessed the potential to utilize foreign tax credit carryforwards and has determined that more likely than not a portion of this deferred tax asset will not be realized. Accordingly the Company recorded tax expense of $853 million related to an increase in valuation allowance associated with the foreign tax credit carryforward.

Apache’s year-to-date effective tax rate is primarily driven by the impact described above, and an increase in the valuation allowance on Canadian deferred tax assets, partially offset by the first quarter deferred tax benefit from the previously announced U.K. tax rate change.

7. COMMITMENTS AND CONTINGENCIES

Legal Matters

Apache is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. As of June 30, 2015, the Company has an accrued liability of approximately $15 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. Apache’s estimates are based on information known about the matters and its experience in contesting, litigating, and settling similar matters. Although actual amounts could differ from management’s estimate, none of the actions are believed by management to involve future amounts that would be material to Apache’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that Apache believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and a range of potential exposure, unless an estimate cannot be made at this time. It is management’s opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

For additional information on each of the Legal Matters described below, please see Note 8—Commitments and Contingencies to the consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Argentine Environmental Claims and Argentina Tariff

No material change in the status of the YPF Sociedad Anónima and Pioneer Natural Resources Company indemnities matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2014 fiscal year.

Louisiana Restoration

As more fully described in Apache’s Annual Report on Form 10-K for its 2014 fiscal year, numerous surface owners have filed claims or sent demand letters to various oil and gas companies, including Apache, claiming that, under either expressed or implied lease terms or Louisiana law, they are liable for damage measured by the cost of restoration of leased premises to their original condition as well as damages for contamination and cleanup.

In a case captioned State of Louisiana and the Cameron Parish School Board v. Apache Corporation et al., Docket No. 10-18672, in the 38^th Judicial District Court, Parish of Cameron, State of Louisiana, plaintiffs allege that defendants’ oil and gas exploration and production activities contaminated plaintiffs’ property. Plaintiffs claim damages in the range of $7 million to $96 million, depending upon the extent of any remediation that may be ordered. Apache, a defendant in the case, acquired its interest in the oil and gas operations on plaintiffs’ property from the former operator, defendant Davis Oil Company, and subsequently sold the interest to defendant Wagner Oil Company (Wagner). Apache claims indemnity from Wagner. The case is set for trial in November 2015. While an adverse judgment against Apache might be possible, Apache disagrees with plaintiffs’ damage models and will vigorously oppose the claims.

In respect of three lawsuits filed by the Parish of Plaquemines against the Company and other oil and gas producers in the 25^th Judicial District Court for the Parish of Plaquemines, State of Louisiana (captioned Parish of Plaquemines v. Rozel Operating Company et al., Docket No. 60-996; Parish of Plaquemines v. Apache Oil Corporation et al., Docket No. 61-000; and Parish of Plaquemines v. HHE Energy Company et al., Docket No. 60-983), defendants filed notices to remove the cases to the United States District Court for the Eastern District of Louisiana, civil action Nos. 13-6722, 13-6711, and 13-6735. Plaintiff’s motions to remand have been granted.

No other material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2014 fiscal year.

Australia Gas Pipeline Force Majeure

In 2008, Company subsidiaries reported a pipeline explosion that interrupted deliveries of natural gas in Australia to customers under various long-term contracts. The civil lawsuits concerning the pipeline explosion, all of which were filed in the Supreme Court of Western Australia, have been resolved fully and dismissed on confidential terms, including for an exchange of consideration that is not material to Apache. The lawsuits are described in Apache’s Annual Report on Form 10-K for its 2014 fiscal year. On April 10, 2015, the court dismissed the lawsuits filed by plaintiffs Alcoa (Civ. 1481 of 2011), Barrick (Civ. 2656 of 2013), EDL LNG (Civ. 1751 of 2014), and Yara (Civ. 1742 of 2014). On April 9, 2015, plaintiffs Harvey (Civ. 1749 of 2014), Iluka (Civ. 1748 of 2014), Newmont (Civ. 1727 of 2014), and Wesfarmers (Civ. 1740 of 2014) discontinued their lawsuits, which were never served on the Apache defendants. All matters relating to the Australia gas pipeline force majeure are concluded.

Apollo Exploration Lawsuit

In a second amended petition filed on February 27, 2015, in a case captioned Apollo Exploration, LLC, Cogent Exploration, Ltd. Co. & SellmoCo, LLC v. Apache Corporation, Cause No. CV50538 in the 385^th Judicial District Court, Midland County, Texas, plaintiffs allege damages in excess of $1.1 billion relating to certain purchase and sale agreements, mineral leases, and areas of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. Apache believes that plaintiffs’ claims lack merit, and further that plaintiffs’ alleged damages are grossly inflated. Apache will vigorously oppose the claims.

Escheat Audits

There has been no material change with respect to the review of the books and records of the Company and its subsidiaries and related entities by the State of Delaware, Department of Finance, Division of Revenue (Unclaimed Property), to determine compliance with the Delaware Escheat Laws, since the filing of Apache’s Annual Report on Form 10-K for its 2014 fiscal year.

Burrup-Related Gas Supply Lawsuits

In the lawsuit captioned Pankaj Oswal v. Apache Corporation, No. WAD 389/2013, in the Federal Court of Australia, District of Western Australia, General Division, on the eve of a trial that was to commence on February 9, 2015, plaintiff decided to discontinue his claim. On March 18, 2015, the court entered an order dismissing the case. The lawsuit is concluded in the Company’s favor.

In the cases captioned Radhika Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al., No. SCI 2011 4653 and Pankaj Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al., No. SCI 2012 01995, in the Supreme Court of Victoria, trial is set to commence in March 2016. Certain Oswal-related proceedings (in which neither the Company nor its subsidiaries are parties) have been cross-vested with these proceedings. The Company and its subsidiaries believe that plaintiffs’ claims lack merit and will vigorously oppose them. No other material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2014 fiscal year.

Environmental Matters

As of June 30, 2015, the Company had an undiscounted reserve for environmental remediation of approximately $62 million. The Company is not aware of any environmental claims existing as of June 30, 2015, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity. There can be no assurance, however, that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered on the Company’s properties.

With respect to the June 1, 2013, leak of produced water from a below ground pipeline in the Zama Operations area in northern Alberta, the Alberta Energy Regulator has completed its investigation of the incident and issued an administrative penalty to Apache Canada Ltd. in the amount of $16,500 CAD. It is possible that additional discharges in Apache Canada Ltd. operating areas, including in the Zama Operations area, could result in additional government fines or sanction.

No other material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2014 fiscal year.

LNG Divestiture Dispute

In respect of the purchase by Woodside of the Wheatstone and Kitimat LNG projects and accompanying upstream oil and gas reserves from the Company and its subsidiaries, the base purchase price is subject to adjustment in accordance with the terms of the applicable sale and purchase agreement. Woodside has notified the Company and its subsidiaries that it seeks purchase price adjustments in the net amounts of $175 million (for working capital adjustments) and $214 million (for all other adjustments). To the extent the parties are unable to resolve their differences, the dispute will be referred to an independent accounting expert for final determination under the terms of the applicable sale and purchase agreement. The Company believes that under the terms of the sale and purchase agreements, Woodside’s requests for payment of purchase price adjustments lack merit; therefore, the Company has not recorded a liability associated with this dispute.

8. CAPITAL STOCK

Net Income (Loss) per Common Share

A reconciliation of the components of basic and diluted net income (loss) per common share for the quarters and six-month periods ended June 30, 2015, and 2014 is presented in the table below.


	For the Quarter Ended June 30,
	2015								2014
	Loss			Shares		Per Share			Income		Shares		Per Share
	(In millions, except per share amounts)
Basic:
Income (loss) from continuing operations	$	(4,868	)		378	$	(12.89	)	$	449		385	$	1.17
Income (loss) from discontinued operations		(732	)		378		(1.94	)		56		385		0.14

Income (loss) attributable to common stock	$	(5,600	)		378	$	(14.83	)	$	505		385	$	1.31

Effect of Dilutive Securities:
Stock options and other		—			—					—		2
Diluted:
Income (loss) from continuing operations	$	(4,868	)		378	$	(12.89	)	$	449		387	$	1.17
Income (loss) from discontinued operations		(732	)		378		(1.94	)		56		387		0.14

Income (loss) attributable to common stock	$	(5,600	)		378	$	(14.83	)	$	505		387	$	1.31


	For the Six Months Ended June 30,
	2015								2014
	Loss			Shares		Per Share			Income (loss)			Shares		Per Share
	(In millions, except per share amounts)
Basic:
Income (loss) from continuing operations	$	(9,387	)		377	$	(24.88	)	$	1,101			390	$	2.83
Loss from discontinued operations		(864	)		377		(2.29	)		(360	)		390		(0.93	)

Income (loss) attributable to common stock	$	(10,251	)		377	$	(27.17	)	$	741			390	$	1.90

Effect of Dilutive Securities:
Stock options and other		—			—					—			2
Diluted:
Income (loss) from continuing operations	$	(9,387	)		377	$	(24.88	)	$	1,101			392	$	2.82
Loss from discontinued operations		(864	)		377		(2.29	)		(360	)		392		(0.93	)

Income (loss) attributable to common stock	$	(10,251	)		377	$	(27.17	)	$	741			392	$	1.89

The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling 8.3 million and 3.2 million for the quarters ended June 30, 2015 and 2014, respectively, and 8.3 million and 5 million for the six months ended June 30, 2015, and 2014, respectively.

Common and Preferred Stock Dividends

For the quarters ended June 30, 2015, and 2014, Apache paid $95 million and $97 million, respectively, in dividends on its common stock. For the six months ended June 30, 2015, and 2014, Apache paid $189 million and $176 million, respectively.

Stock Repurchase Program

Apache’s Board of Directors has authorized the purchase of up to 40 million shares of the Company’s common stock. Shares may be purchased either in the open market or through privately held negotiated transactions. The Company initiated the buyback program on June 10, 2013, and through December 31, 2014, had repurchased a total of 32.2 million shares at an average price of $88.96 per share. The Company has not purchased any additional shares during 2015, and is not obligated to acquire any specific number of shares.

9. BUSINESS SEGMENT INFORMATION

Apache is engaged in a single line of business. Both domestically and internationally, the Company explores for, develops, and produces natural gas, crude oil and natural gas liquids. At June 30, 2015, the Company had production in four countries: the United States, Canada, Egypt, and the United Kingdom (U.K.) North Sea. Apache also pursues exploration interests in other countries that may, over time, result in reportable discoveries and development opportunities. Financial information for each country is presented below:


	United											Other
	States			Canada			Egypt⁽¹⁾		North Sea			International		Total⁽³⁾
	(In millions)
For the Quarter Ended June 30, 2015
Oil and Gas Production Revenues	$	767		$	138		$	664	$	383		$	—	$	1,952

Operating Income (Loss)⁽²⁾	$	(4,224	)	$	(886	)	$	214	$	(581	)	$	—	$	(5,477	)

Other Income (Expense):
Other															25
General and administrative															(111	)
Transaction, reorganization, and separation costs															(66	)
Financing costs, net															(63	)

Loss Before Income Taxes														$	(5,692	)

For the Six Months Ended June 30, 2015
Oil and Gas Production Revenues	$	1,427		$	271		$	1,196	$	696		$	—	$	3,590

Operating Income (Loss)⁽²⁾	$	(9,546	)	$	(2,314	)	$	318	$	(1,245	)	$	—	$	(12,787	)

Other Income (Expense):
Other															17
General and administrative															(193	)
Transaction, reorganization, and separation costs															(120	)
Financing costs, net															(133	)

Loss Before Income Taxes														$	(13,216	)

Total Assets	$	18,615		$	3,585		$	7,679	$	4,838		$	595	$	35,312

For the Quarter Ended June 30, 2014
Oil and Gas Production Revenues	$	1,529		$	293		$	989	$	660		$	—	$	3,471

Operating Income (Loss)⁽²⁾	$	679		$	47		$	585	$	(39	)	$	—	$	1,272

Other Income (Expense):
Derivative instrument gains (losses), net															(174	)
Other															(8	)
General and administrative															(113	)
Transaction, reorganization, and separation costs															(14	)
Financing costs, net															(52	)

Income Before Income Taxes														$	911

For the Six Months Ended June 30, 2014
Oil and Gas Production Revenues	$	3,034		$	611		$	1,939	$	1,278		$	—	$	6,862

Operating Income⁽²⁾	$	1,342		$	119		$	1,121	$	144		$	—	$	2,726

Other Income (Expense):
Derivative instrument gains (losses), net															(194	)
Other															9
General and administrative															(221	)
Transaction, reorganization, and separation costs															(32	)
Financing costs, net															(97	)

Income Before Income Taxes														$	2,191

Total Assets	$	31,547		$	6,842		$	7,264	$	6,713		$	534	$	52,900

⁽¹⁾	Includes a noncontrolling interest in Egypt.

⁽²⁾

Operating Income (Loss) consists of oil and gas production revenues less depreciation, depletion, and amortization, asset retirement obligation accretion, lease operating expenses, gathering and transportation costs, and taxes other than income. The operating income (loss) of U.S., Canada, and North Sea for the second quarter of 2015 includes non-cash write-downs of each region’s carrying value of oil and gas properties of $4.3 billion, $835 million and $663 million, respectively. For the first six months of 2015, operating income (loss) of U.S., Canada, and North Sea include non-cash write-downs of each region’s carrying value of oil and gas properties of $9.6 billion, $2.2 billion, and $1.3 billion, respectively. North Sea’s operating income (loss) for the second quarter and first six months of 2014 includes a $203 million non-cash write-down of the carrying value of oil and gas properties.

⁽³⁾	Amounts for 2014 have been restated to exclude Argentina and Australia discontinued operations. Total Assets for the 2014 periods also excludes $8.3 million of divested Australian assets.

10. SUPPLEMENTAL GUARANTOR INFORMATION

In December 1999, Apache Finance Canada issued approximately $300 million of publicly-traded notes due in 2029. The notes are fully and unconditionally guaranteed by Apache. The following condensed consolidating financial statements are provided as an alternative to filing separate financial statements.

Apache Finance Canada is 100 percent owned by Apache Corporation. As such, these condensed consolidating financial statements should be read in conjunction with Apache’s consolidated financial statements and the notes thereto, of which this note is an integral part.

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended June 30, 2015


							All Other
				Apache			Subsidiaries
	Apache			Finance			of Apache			Reclassifications
	Corporation			Canada			Corporation			& Eliminations		Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	434		$	—		$	1,518		$	—	$	1,952
Equity in net income of affiliates		(1,987	)		(393	)		(1	)		2,381		—
Other		(10	)		12			4			19		25

		(1,563	)		(381	)		1,521			2,400		1,977

OPERATING EXPENSES:
Depreciation, depletion, and amortization		4,346			—			2,476			—		6,822
Asset retirement obligation accretion		3			—			33			—		36
Lease operating expenses		108			—			359			—		467
Gathering and transportation		7			—			42			—		49
Taxes other than income		33			—			22			—		55
General and administrative		74			—			18			19		111
Transaction, reorganization, and separation costs		66			—			—			—		66
Financing costs, net		71			11			(19	)		—		63

		4,708			11			2,931			19		7,669

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(6,271	)		(392	)		(1,410	)		2,381		(5,692	)
Provision (benefit) for income taxes		(843	)		2			(19	)		—		(860	)

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST		(5,428	)		(394	)		(1,391	)		2,381		(4,832	)
Net income (loss) from discontinued operations, net of tax		(172	)		—			(560	)		—		(732	)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		(5,600	)		(394	)		(1,951	)		2,381		(5,564	)
Net income attributable to noncontrolling interest		—			—			36			—		36

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(5,600	)	$	(394	)	$	(1,987	)	$	2,381	$	(5,600	)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(5,600	)	$	(394	)	$	(1,987	)	$	2,381	$	(5,600	)

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended June 30, 2014


							All Other
				Apache			Subsidiaries
	Apache			Finance			of Apache			Reclassifications
	Corporation			Canada			Corporation			& Eliminations			Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	895		$	—		$	2,576		$	—		$	3,471
Equity in net income (loss) of affiliates		491			24			11			(526	)		—
Derivative instrument gains (losses), net		(125	)		—			(49	)		—			(174	)
Other		(69	)		13			44			4			(8	)

		1,192			37			2,582			(522	)		3,289

OPERATING EXPENSES:
Depreciation, depletion, and amortization		356			—			1,002			—			1,358
Asset retirement obligation accretion		8			—			30			—			38
Lease operating expenses		121			—			439			—			560
Gathering and transportation		14			—			52			—			66
Taxes other than income		47			—			130			—			177
General and administrative		96			—			13			4			113
Transaction, reorganization, and separation costs		14			—			—			—			14
Financing costs, net		41			10			1			—			52

		697			10			1,667			4			2,378

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		495			27			915			(526	)		911
Provision (benefit) for income taxes		(10	)		(8	)		372			—			354

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST		505			35			543			(526	)		557
Net income from discontinued operations, net of tax		—			—			56			—			56

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		505			35			599			(526	)		613
Net income attributable to noncontrolling interest		—			—			108			—			108

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	505		$	35		$	491		$	(526	)	$	505

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	505		$	35		$	491		$	(526	)	$	505

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2015


							All Other
				Apache			Subsidiaries
	Apache			Finance			of Apache			Reclassifications
	Corporation			Canada			Corporation			& Eliminations		Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	799		$	—		$	2,791		$	—	$	3,590
Equity in net income (loss) of affiliates		(3,072	)		(1,047	)		—			4,119		—
Other		(50	)		26			22			19		17

		(2,323	)		(1,021	)		2,813			4,138		3,607

OPERATING EXPENSES:
Depreciation, depletion, and amortization		9,845			—			5,279			—		15,124
Asset retirement obligation accretion		7			—			65			—		72
Lease operating expenses		232			—			716			—		948
Gathering and transportation		16			—			89			—		105
Taxes other than income		67			—			61			—		128
General and administrative		138			—			36			19		193
Transaction, reorganization, and separation costs		120			—			—			—		120
Financing costs, net		123			21			(11	)		—		133

		10,548			21			6,235			19		16,823

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(12,871	)		(1,042	)		(3,422	)		4,119		(13,216	)
Provision (benefit) for income taxes		(2,792	)		5			(1,093	)		—		(3,880	)

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST		(10,079	)		(1,047	)		(2,329	)		4,119		(9,336	)
Net loss from discontinued operations, net of tax		(172	)		—			(692	)		—		(864	)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		(10,251	)		(1,047	)		(3,021	)		4,119		(10,200	)
Net income attributable to noncontrolling interest		—			—			51			—		51

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(10,251	)	$	(1,047	)	$	(3,072	)	$	4,119	$	(10,251	)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(10,251	)	$	(1,047	)	$	(3,072	)	$	4,119	$	(10,251	)

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2014


						All Other
				Apache		Subsidiaries
	Apache			Finance		of Apache			Reclassifications
	Corporation			Canada		Corporation			& Eliminations			Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	1,787		$	—	$	5,075		$	—		$	6,862
Equity in net income (loss) of affiliates		744			53		4			(801	)		—
Derivative instrument gains (losses), net		(145	)		—		(49	)		—			(194	)
Other		(73	)		27		52			3			9

		2,313			80		5,082			(798	)		6,677

OPERATING EXPENSES:
Depreciation, depletion, and amortization		684			—		1,774			—			2,458
Asset retirement obligation accretion		15			—		61			—			76
Lease operating expenses		249			—		859			—			1,108
Gathering and transportation		28			—		108			—			136
Taxes other than income		126			—		232			—			358
General and administrative		189			—		29			3			221
Transaction, reorganization, and separation costs		30			—		2			—			32
Financing costs, net		73			20		4			—			97

		1,394			20		3,069			3			4,486

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		919			60		2,013			(801	)		2,191
Provision for income taxes		52			2		830			—			884

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST		867			58		1,183			(801	)		1,307
Net loss from discontinued operations, net of tax		(127	)		—		(233	)		—			(360	)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST		740			58		950			(801	)		947
Net income attributable to noncontrolling interest		—			—		206			—			206

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	740		$	58	$	744		$	(801	)	$	741

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK ⁽¹⁾	$	739		$	58	$	744		$	(801	)	$	740

⁽¹⁾	Comprehensive income (loss) activity is recorded on the Apache Corporation entity and consists of derivative instrument reclassifications and changes in fair value as reflected on our Statement of Consolidated Comprehensive Income.

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2015


							All Other
				Apache			Subsidiaries
	Apache			Finance			of Apache			Reclassifications
	Corporation			Canada			Corporation			& Eliminations			Consolidated
	(In millions)
CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES	$	192		$	(21	)	$	1,566		$	—		$	1,737
CASH PROVIDED BY DISCONTINUED OPERATIONS		—			—			196			—			196

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		192			(21	)		1,762			—			1,933
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(1,222	)		—			(1,765	)		—			(2,987	)
Leasehold and property acquisitions		(124	)		—			(4	)		—			(128	)
Additions to gas gathering, transmission, and processing facilities		(24	)		—			(70	)		—			(94	)
Proceeds from sale of Kitimat LNG		—			—			854			—			854
Proceeds from sale of other oil and gas properties		4			—			115			—			119
Investment in subsidiaries, net		82			—			—			(82	)		—
Other		(16	)		—			(51	)		—			(67	)

NET CASH USED IN CONTINUING INVESTING ACTIVITIES		(1,300	)		—			(921	)		(82	)		(2,303	)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS		—			—			4,335			—			4,335

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(1,300	)		—			3,414			(82	)		2,032
CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net		(1,570	)		—			—			—			(1,570	)
Intercompany borrowings		4,551			(10	)		(4,623	)		82			—
Distributions to noncontrolling interest		—			—			(40	)		—			(40	)
Dividends paid		(189	)		—			—			—			(189	)
Treasury stock activity, net		—			—			—			—			—
Other		2			31			(18	)		—			15

NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES		2,794			21			(4,681	)		82			(1,784	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		2,794			21			(4,681	)		82			(1,784	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,686			—			495			—			2,181
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		267			—			502			—			769

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,953		$	—		$	997		$	—		$	2,950

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2014


							All Other
				Apache			Subsidiaries
	Apache			Finance			of Apache			Reclassifications
	Corporation			Canada			Corporation			& Eliminations			Consolidated
	(In millions)
CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES	$	70		$	(33	)	$	3,912		$	—		$	3,949
CASH PROVIDED BY DISCONTINUED OPERATIONS		—			—			683			—			683

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		70			(33	)		4,595			—			4,632
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(1,625	)		—			(2,744	)		—			(4,369	)
Leasehold and property acquisitions		(83	)		—			(29	)		—			(112	)
Additions to gas gathering, transmission, and processing facilities		(2	)		—			(343	)		—			(345	)
Proceeds from sale of Deepwater Gulf of Mexico assets		1,367			—			—			—			1,367
Restricted cash related to divestitures		(1,367	)		—			—			—			(1,367	)
Proceeds from sale of other oil and gas properties		69			—			312			—			381
Investment in subsidiaries, net		2,899			—			—			(2,899	)		—
Other		(35	)		—			2			—			(33	)

NET CASH PROVIDED BY (USED IN) CONTINUING INVESTING ACTIVITIES		1,223			—			(2,802	)		(2,899	)		(4,478	)
NET CASH USED IN DISCONTINUED OPERATIONS		—			—			(13	)		—			(13	)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		1,223			—			(2,815	)		(2,899	)		(4,491	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net		—			—			(1	)		—			(1	)
Intercompany borrowings		—			11			(2,909	)		2,898			—
Distributions to noncontrolling interest		—			—			(66	)		—			(66	)
Dividends paid		(176	)		—			—			—			(176	)
Treasury stock activity, net		(1,263	)		—			—			—			(1,263	)
Other		—			19			5			1			25

NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES		(1,439	)		30			(2,971	)		2,899			(1,481	)
NET CASH USED IN DISCONTINUED OPERATIONS		—			—			(42	)		—			(42	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(1,439	)		30			(3,013	)		2,899			(1,523	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(146	)		(3	)		(1,233	)		—			(1,382	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		155			3			1,748			—			1,906

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	9		$	—		$	515		$	—		$	524

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2015


					All Other
			Apache		Subsidiaries
	Apache		Finance		of Apache			Reclassifications
	Corporation		Canada		Corporation			& Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,953	$	—	$	997		$	—		$	2,950
Receivables, net of allowance		470		—		1,119			—			1,589
Inventories		38		—		591			—			629
Drilling advances		17		1		175			—			193
Deferred tax asset		72		—		12			—			84
Prepaid assets and other		22		—		26			—			48
Intercompany receivable		5,420		—		—			(5,420	)		—

		7,992		1		2,920			(5,420	)		5,493

PROPERTY AND EQUIPMENT, NET		5,096		—		23,219			—			28,315

OTHER ASSETS:
Intercompany receivable		—		—		691			(691	)		—
Equity in affiliates		21,663		149		452			(22,264	)		—
Deferred charges and other		176		1,000		1,328			(1,000	)		1,504

	$	34,927	$	1,150	$	28,610		$	(29,375	)	$	35,312

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	449	$	—	$	261		$	—		$	710
Other current liabilities		838		1		834			—			1,673
Intercompany payable		—		—		5,420			(5,420	)		—

		1,287		1		6,515			(5,420	)		2,383

LONG-TERM DEBT		9,378		298		0			—			9,676

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Intercompany payable		691		—		—			(691	)		—
Income taxes		502		—		2,142			—			2,644
Asset retirement obligation		220		—		2,314			—			2,534
Other		7,305		250		(6,235	)		(1,000	)		320

		8,718		250		(1,779	)		(1,691	)		5,498

COMMITMENTS AND CONTINGENCIES APACHE SHAREHOLDERS’ EQUITY		15,544		601		21,663			(22,264	)		15,544
Noncontrolling interest		—		—		2,211			—			2,211

TOTAL EQUITY		15,544		601		23,874			(22,264	)		17,755

	$	34,927	$	1,150	$	28,610		$	(29,375	)	$	35,312

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2014


					All Other
			Apache		Subsidiaries
	Apache		Finance		of Apache			Reclassifications
	Corporation		Canada		Corporation			& Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	267	$	—	$	502		$	—		$	769
Receivables, net of allowance		837		—		1,187			—			2,024
Inventories		24		—		684			—			708
Drilling advances		34		1		353			—			388
Assets held for sale		—		—		1,628			—			1,628
Deferred tax asset		612		—		157			—			769
Prepaid assets and other		32		—		97			—			129
Intercompany receivable		4,939		—		—			(4,939	)		—

		6,745		1		4,608			(4,939	)		6,415

PROPERTY AND EQUIPMENT, NET		13,940		—		34,136			—			48,076

OTHER ASSETS:
Intercompany receivable		—		—		608			(608	)		—
Equity in affiliates		25,791		869		444			(27,104	)		—
Goodwill		—		—		87			—			87
Deferred charges and other		175		1,002		1,197			(1,000	)		1,374

	$	46,651	$	1,872	$	41,080		$	(33,651	)	$	55,952

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	748	$	10	$	452		$	—		$	1,210
Asset retirement obligation		28		—		9			—			37
Other current liabilities		1,014		1		1,402			—			2,417
Intercompany payable		—		—		4,939			(4,939	)		—

		1,790		11		6,802			(4,939	)		3,664

LONG-TERM DEBT		10,947		298		—			—			11,245

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Intercompany payable		608		—		—			(608	)		—
Income taxes		5,076		—		4,423			—			9,499
Asset retirement obligation		211		—		2,837			—			3,048
Other		2,082		250		(973	)		(1,000	)		359

		7,977		250		6,287			(1,608	)		12,906

COMMITMENTS AND CONTINGENCIES APACHE SHAREHOLDERS’ EQUITY		25,937		1,313		25,791			(27,104	)		25,937
Noncontrolling interest		—		—		2,200			—			2,200

TOTAL EQUITY		25,937		1,313		27,991			(27,104	)		28,137

	$	46,651	$	1,872	$	41,080		$	(33,651	)	$	55,952

ITEM 2 –

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Apache Corporation, a Delaware corporation formed in 1954, is an independent energy company that explores for, develops and produces natural gas, crude oil, and natural gas liquids. The Company has exploration and production interests in four countries: the United States (U.S.), Canada, Egypt, and the United Kingdom (U.K.) North Sea. Apache also pursues exploration interests in other countries that may over time result in reportable discoveries and development opportunities.

This discussion relates to Apache Corporation and its consolidated subsidiaries and should be read in conjunction with our consolidated financial statements and accompanying notes included under Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q, as well as our consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for our 2014 fiscal year. Results of operations and consolidated cash flows for our divested Australia assets and Argentina operations are reflected as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q.

Strategic Overview

The Company’s strategic outlook and foundation for growth are based on our core producing asset base and large undeveloped acreage positions. We believe our holdings provide for growth through sustainable lower-risk drilling opportunities onshore in North America, balanced by higher-risk, higher-reward exploration in Egypt, the North Sea, and other offshore areas. We closely monitor drilling and acquisition cost trends in each of our core areas relative to product prices and, when appropriate, adjust our capital budgets accordingly and allocate funds to projects based on expected value. We do this through a disciplined and focused process that includes analyzing current economic conditions, projected rate of return on internally generated drilling inventories, and opportunities for tactical acquisitions or leasehold purchases that add substantial drilling prospects or, occasionally, provide access to new core areas that could enhance our portfolio.

Over the last five years, Apache has increasingly focused on its North American onshore resource base. Recent drilling success and the acquisition of acreage positions across North America add to our robust drilling inventory in the Permian Basin and other key onshore operating areas. As part of our strategy, this quarter we completed the sales of our Kitimat and Wheatstone LNG projects and our upstream assets in Australia. The Company believes our current portfolio, which includes a significant onshore North America resource base coupled with Brent-linked, free cash flow generating assets in the North Sea and Egypt, provides flexibility in capital allocation and a platform for sustainable growth in a volatile commodity price environment.

In response to the significant drop in commodity prices in late 2014, we moved quickly and decisively on matters within our control: capital spending, overhead, and lease operating costs. We significantly reduced capital spending in 2015; however, we are prepared to ramp up activity when commodity prices and service costs realign. We have also taken steps to reduce our operating cost structure, including organizational changes to better integrate our human resources. As part of these efforts, we streamlined our organizational structure and are in the process of closing our regional office in Tulsa, Oklahoma. By the end of 2015, we will have consolidated our corporate and Houston region employee bases into a single location, which we believe will foster increased collaboration and communication as well as accelerate technology development and transfer among our core asset teams.

The decline in the price of oil and natural gas at the end of 2014 and during the first half of 2015 was dramatic; however, we believe this low price environment will provide future growth opportunities for companies that move aggressively to reduce spending and maintain a strong balance sheet position.

Financial Highlights

Results for the quarter and six months ended June 30, 2015, include:

•

Average daily equivalent production increased 7 percent for both the quarter and six months when compared to the prior-year periods adjusted for asset divestitures.

•

Liquids production for the second quarter of 2015 averaged 365 Mboe per day (Mboe/d), with crude oil representing 83 percent of total liquids production. Liquids production, adjusted for asset divestitures, increased 8 percent from both the second quarter and first six months of 2014.

•

Oil and gas production revenues for the second quarter and first six months of 2015 totaled $2.0 billion and $3.6 billion, respectively, down 44 and 48 percent from respective prior-year periods, reflecting the significant decrease in realized commodity prices.

•

For the second quarter, Apache reported a loss from continuing operations of $4.9 billion, or $12.89 per diluted common share, compared with earnings of $449 million, or $1.17 per diluted share in the second quarter of 2014. The current period loss included after-tax charges for a ceiling test impairment of $3.7 billion.

•

For the first half of 2015, Apache reported a loss from continuing operations of $9.4 billion or $24.88 per diluted share, compared with earnings of $1.1 billion, or $2.82 per diluted share, respectively, for the prior year period. The loss for 2015 includes after-tax write-downs of oil and gas properties in the U.S., Canada, and U.K. North Sea totaling $8.4 billion.

•

Net cash provided by continuing operating activities totaled $1.7 billion for the first half of 2015, compared to $3.9 billion in the comparable prior-year period, reflecting a significant decline in commodity prices.

•

The proceeds received from asset divestments enabled us to reduce total debt 21 percent during the quarter, to $9.7 billion, and exit the quarter with $3 billion in cash. We have also initiated steps to pay off $900 million of outstanding 2017 bonds.

Operational Developments

Our internally generated exploration and drilling opportunities provide the foundation for our growth. Highlights of our 2015 drilling successes and other operational developments are discussed below.

North America

•

North America onshore production in the second quarter and first six months of 2015 of 317 Mboe/d and 312 Mboe/d, respectively, represents 56 percent of Apache’s total worldwide production for each respective period.

•

Onshore oil production during the second quarter of 2015 decreased 2 percent from the prior-year quarter; however, production was up 7 percent when excluding volumes from 2014 divestitures. This production performance is notable given that Apache reduced its North American onshore exploration and development capital spending by 68 percent in the second quarter of 2015 compared to the prior-year quarter.

•

Production from the Permian Basin region, which accounts for more than half of Apache’s total onshore North American production, increased 8 percent in the second quarter of 2015 compared to the second quarter of 2014. The increase in production was achieved despite a 75 percent reduction in exploration and development capital spending in the second quarter of 2015 compared to the prior-year quarter.

International and Offshore

•

In Egypt, second quarter 2015 gross production of 349 Mboe/d was down slightly compared to the second quarter of 2014 as strong growth in higher margin oil production was offset by a decline in low margin natural gas production. Gross oil production of 203 thousand barrels of oil per day (Mb/d) was up 3 percent compared to the 2014 second quarter as Apache continued to successfully delineate the Ptah and Berenice oil discoveries. Gross production from the Ptah and Berenice fields achieved a combined daily peak rate of more than 22 Mb/d.

•

Apache drilled 8 wells in the North Sea during the second quarter of 2015 with a 90 percent success rate. Production of 69 Mboe/d was down approximately 3 Mboe/d a result of annual platform maintenance programs that are typically performed during the third quarter. Excluding the associated downtime, North Sea production in the second quarter was approximately flat compared to the second quarter of 2014.

•

During the second quarter of 2015, Apache completed the previously disclosed sale of its 50 percent interest in the Kitimat LNG project in Canada, along with the associated upstream oil and gas assets, to Woodside Petroleum Limited (Woodside) for total proceeds of approximately $854 million. Proceeds include reimbursement of Apache’s net expenditure in the project, changes in working capital and other contractual adjustments between the effective date, July 1, 2014, and closing.

•

Apache completed the sale of the Wheatstone LNG project and associated upstream oil and gas assets in Australia to Woodside for total proceeds of $2.8 billion during the second quarter of 2015. Proceeds include reimbursement of Apache’s net expenditure in the project, changes in working capital, and other contractual adjustments between the effective date, July 1, 2014, and closing.

•

Also in the second quarter of 2015, Apache completed the sale of its Australian subsidiary Apache Energy Limited (AEL) to a consortium of private equity funds managed by Macquarie Capital Group Limited and Brookfield Asset Management Inc. for cash consideration of $1.9 billion which includes customary, post-closing adjustments. The effective date of the sale is October 1, 2014.

Results of Operations

Oil and Gas Revenues

The table below presents revenues by geographic region and each region’s percent contribution to revenues for 2015 and 2014.


	For the Quarter Ended June 30,										For the Six Months Ended June 30,
	2015					2014					2015					2014
	$		%			$		%			$		%			$		%
	Value		Contribution			Value		Contribution			Value		Contribution			Value		Contribution
	($ in millions)
Total Oil Revenues:
United States	$	627		39	%	$	1,145		41	%	$	1,137		39	%	$	2,237		41	%
Canada		75		5	%		154		5	%		135		5	%		294		6	%

North America		702		44	%		1,299		46	%		1,272		44	%		2,531		47	%

Egypt ⁽¹⁾		553		35	%		885		32	%		986		34	%		1,731		32	%
North Sea		344		22	%		613		22	%		621		22	%		1,180		21	%

International ⁽¹⁾		897		56	%		1,498		54	%		1,607		56	%		2,911		53	%

Total⁽¹⁾	$	1,599		100	%	$	2,797		100	%	$	2,879		100	%	$	5,442		100	%

Total Gas Revenues:
United States	$	90		31	%	$	245		49	%	$	193		32	%	$	511		48	%
Canada		61		20	%		122		24	%		128		22	%		270		25	%

North America		151		51	%		367		73	%		321		54	%		781		73	%

Egypt ⁽¹⁾		107		36	%		99		19	%		203		34	%		202		19	%
North Sea		37		13	%		39		8	%		71		12	%		82		8	%

International ⁽¹⁾		144		49	%		138		27	%		274		46	%		284		27	%

Total⁽¹⁾	$	295		100	%	$	505		100	%	$	595		100	%	$	1,065		100	%

Natural Gas Liquids (NGL)
Revenues:
United States	$	50		86	%	$	139		82	%	$	97		84	%	$	286		81	%
Canada		2		3	%		17		10	%		8		7	%		47		13	%

North America		52		90	%		156		92	%		105		91	%		333		94	%

Egypt ⁽¹⁾		4		7	%		5		3	%		7		6	%		6		2	%
North Sea		2		3	%		8		5	%		4		3	%		16		4	%

International ⁽¹⁾		6		10	%		13		8	%		11		9	%		22		6	%

Total ⁽¹⁾	$	58		100	%	$	169		100	%	$	116		100	%	$	355		100	%

Total Oil and Gas Revenues:
United States	$	767		39	%	$	1,529		44	%	$	1,427		40	%	$	3,034		44	%
Canada		138		7	%		293		8	%		271		7	%		611		9	%

North America		905		46	%		1,822		52	%		1,698		47	%		3,645		53	%

Egypt ⁽¹⁾		664		34	%		989		29	%		1,196		33	%		1,939		28	%
North Sea		383		20	%		660		19	%		696		20	%		1,278		19	%

International ⁽¹⁾		1,047		54	%		1,649		48	%		1,892		53	%		3,217		47	%

Total ⁽¹⁾	$	1,952		100	%	$	3,471		100	%	$	3,590		100	%	$	6,862		100	%

Discontinued Operations—Argentina and Australia
Oil Revenues	$	57				$	153				$	138				$	368
Gas Revenues		53					84					140					209
NGL Revenues		—					—					—					3

Total	$	110				$	237				$	278				$	580

⁽¹⁾	Includes revenues attributable to a noncontrolling interest in Egypt.

Production

The table below presents the second-quarter and year-to-date 2015 and 2014 production and the relative increase or decrease from the prior period.


	For the Quarter Ended June 30,							For the Six Months Ended June 30,
					Increase							Increase
	2015		2014		(Decrease)			2015		2014		(Decrease)
Oil Volume – b/d
United States		127,698		130,398		(2	%)		127,171		129,181		(2	%)
Canada		15,791		17,981		(12	%)		16,330		17,786		(8	%)

North America		143,489		148,379		(3	%)		143,501		146,967		(2	%)

Egypt⁽¹⁾⁽²⁾		99,975		88,643		13	%		95,995		88,370		9	%
North Sea		58,873		61,610		(4	%)		60,279		60,358		0	%

International		158,848		150,253		6	%		156,274		148,728		5	%

Total		302,337		298,632		1	%		299,775		295,695		1	%

Natural Gas Volume – Mcf/d
United States		446,788		596,970		(25	%)		441,333		594,840		(26	%)
Canada		282,971		316,740		(11	%)		285,251		347,057		(18	%)

North America		729,759		913,710		(20	%)		726,584		941,897		(23	%)

Egypt⁽¹⁾⁽²⁾		405,544		367,950		10	%		384,881		372,628		(23	%)
North Sea		56,367		54,848		3	%		53,423		49,986		7	%

International		461,911		422,798		9	%		438,304		422,614		4	%

Total		1,191,670		1,336,508		(11	%)		1,164,888		1,364,511		(15	%)

NGL Volume – b/d
United States		54,944		56,625		(3	%)		51,104		54,851		(7	%)
Canada		5,825		5,921		(2	%)		5,839		6,840		(15	%)

North America		60,769		62,546		0	%		56,943		61,691		(8	%)

Egypt⁽¹⁾⁽²⁾		1,214		884		37	%		1,123		560		101	%
North Sea		826		1,367		(40	%)		856		1,230		(30	%)

International		2,040		2,251		(9	%)		1,979		1,790		11	%

Total		62,809		64,797		(3	%)		58,922		63,481		(7	%)

BOE per day⁽³⁾
United States		257,107		286,518		(10	%)		251,831		283,173		(11	%)
Canada		68,778		76,692		(10	%)		69,711		82,469		(15	%)

North America		325,885		363,210		(10	%)		321,542		365,642		(12	%)

Egypt⁽²⁾		168,779		150,853		12	%		161,264		151,035		7	%
North Sea		69,094		72,118		(4	%)		70,038		69,918		0	%

International		237,873		222,971		7	%		231,302		220,953		5	%

Total		563,758		586,181		(4	%)		552,844		586,595		(6	%)

Discontinued Operations — Argentina and Australia
Oil (b/d)		9,849		14,555					15,346		19,107
Gas (Mcf/d)		149,336		210,470					189,789		283,402
NGL (b/d)		—		—					—		640
BOE/d		34,738		49,633					46,978		66,981
(1) Gross oil, natural gas, and NGL production in Egypt for the second quarter and six-month period of 2015 and 2014 were as follows:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
Oil (b/d)		203,319		197,069		200,568		197,839
Gas (Mcf/d)		861,181		907,752		861,555		914,558
NGL (b/d)		2,549		2,698		2,436		1,679

(2)	Includes production volumes per day attributable to a noncontrolling interest in Egypt for the second quarter and six-month period of 2015 and 2014 of:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
Oil (b/d)		33,247		29,508		31,966		29,288
Gas (Mcf/d)		134,445		122,665		127,963		123,726
NGL (b/d)		404		295		374		187

(3)	The table shows production on a barrel of oil equivalent basis (boe) in which natural gas is converted to an equivalent barrel of oil based on a 6:1 energy equivalent ratio. This ratio is not reflective of the price ratio between the two products.

Pricing

The table below presents second-quarter and year-to-date 2015 and 2014 pricing and the relative increase or decrease from the prior periods.


	For the Quarter Ended June 30,							For the Six Months Ended June 30,
					Increase							Increase
	2015		2014		(Decrease)			2015		2014		(Decrease)
Average Oil Price—Per barrel
United States	$	53.94	$	96.46		(44	%)	$	49.38	$	95.66		(48	%)
Canada		52.22		94.66		(45	%)		45.81		91.47		(50	%)
North America		53.75		96.24		(44	%)		48.97		95.15		(49	%)
Egypt		60.83		109.74		(45	%)		56.76		108.24		(48	%)
North Sea		64.03		109.33		(41	%)		56.86		108.00		(47	%)
International		62.02		109.57		(43	%)		56.80		108.14		(47	%)
Total⁽¹⁾		58.09		102.95		(44	%)		53.05		101.69		(48	%)
Average Natural Gas Price—Per Mcf
United States	$	2.21	$	4.51		(51	%)	$	2.42	$	4.75		(49	%)
Canada		2.34		4.21		(44	%)		2.46		4.30		(43	%)
North America		2.26		4.41		(49	%)		2.44		4.58		(47	%)
Egypt		2.91		2.96		(2	%)		2.92		2.99		(2	%)
North Sea		7.35		7.75		(5	%)		7.37		9.07		(19	%)
International		3.45		3.58		(4	%)		3.46		3.71		(7	%)
Total⁽²⁾		2.73		4.15		(34	%)		2.82		4.31		(35	%)
Average NGL Price—Per barrel
United States	$	10.11	$	27.06		(63	%)	$	10.52	$	28.86		(64	%)
Canada		4.41		31.67		(86	%)		7.74		37.56		(79	%)
North America		9.56		27.50		(65	%)		10.23		29.83		(66	%)
Egypt		28.82		57.67		(50	%)		32.23		59.05		(45	%)
North Sea		30.94		61.81		(50	%)		27.75		69.77		(60	%)
International		29.68		60.19		(51	%)		30.29		66.41		(54	%)
Total		10.21		28.64		(64	%)		10.91		30.86		(65	%)
Discontinued Operations — Argentina and Australia
Oil price ($/Bbl)	$	63.60	$	115.34				$	49.76	$	106.35
Gas price ($/Mcf)		3.88		4.40					4.07		4.07
NGL price ($/Bbl)		—		—					—		24.57

Second-Quarter 2015 compared to Second-Quarter 2014

Crude Oil Revenues Crude oil revenues for the second quarter of 2015 totaled $1.6 billion, a $1.2 billion decrease from the comparative 2014 quarter. A one percent increase in average daily production increased second-quarter 2015 revenues by $20 million compared to the prior-year quarter, while 44 percent lower realized prices decreased revenues by $1.2 billion. Crude oil prices realized in the second quarter of 2015 averaged $58.09 per barrel, compared with $102.95 in the comparative prior-year quarter. Crude oil accounted for 82 percent of oil and gas production revenues and 54 percent of worldwide production in the second quarter of 2015.

Worldwide oil production remained essentially flat from the second quarter of 2014, as production growth from our North American onshore area and higher net production in Egypt as a function of our production sharing contracts was offset by production related to divested properties. Exclusive of production from divested assets during 2014 and 2015, oil production increased 18.7 Mb/d.

Natural Gas Revenues Gas revenues for the second quarter of 2015 totaled $295 million, down 42 percent from the second quarter of 2014. An 11 percent decrease in average production reduced natural gas revenues by $36 million as compared to the prior-year quarter, while a 34 percent decrease in average realized prices decreased revenues by $174 million. Natural gas accounted for 15 percent of our oil and gas production revenues and 35 percent of our equivalent production.

Worldwide natural gas production was 145 million cubic feet per day (MMcf/d) lower than the second quarter of 2014, primarily the result of divestitures during 2014. Exclusive of production from these divested assets, our worldwide gas production increased by 64.5 MMcf/d on production growth from our North American onshore area and higher net production in Egypt as a function of our production sharing contracts.

NGL Revenues NGL revenues for the second quarter of 2015 totaled $58 million, down $111 million from the second quarter of 2014. A decrease in average NGL production by 3 percent compared to the prior-year quarter reduced NGL revenues by $2 million, while a 64 percent decrease in average realized prices decreased revenues by $109 million. NGLs accounted for nearly 3 percent of our oil and gas production revenues and 11 percent of our equivalent production during the second quarter of 2015.

Worldwide production of NGLs decreased 1.7 Mb/d to 63.0 Mb/d in the second quarter of 2015, primarily the result of 2014 divestitures and natural declines in our midcontinent area. Exclusive of production from divested assets, our worldwide NGL production increased 8.2 Mb/d on production growth from our North American onshore area.

Year-to-Date 2015 compared to Year-to-Date 2014

Crude Oil Revenues Crude oil revenues for the first six months of 2015 totaled $2.9 billion, $2.6 billion lower than the comparative 2014 period, the result of a 1 percent increase in worldwide production and a 48 percent decrease in average realized prices. Crude oil accounted for 80 percent of oil and gas production revenues and 54 percent of worldwide production for the first six months of 2015, and 79 percent of production revenues and 50 percent of worldwide production for the 2014 comparative period. Lower production volumes reduced revenues by $39 million compared to the first six months of 2014, while lower realized prices reduced revenues by $2.6 billion. Crude oil prices realized in the first six months of 2015 averaged $53.05 per barrel, compared with $101.69 in the comparative prior-year period.

Worldwide production remained essentially flat in the first six months of 2015 from the same period last year, primarily as a result of production growth in our North American onshore areas and Egypt region offset by divestitures during 2014. Exclusive of production from these divested assets, worldwide production increased 20.0 Mb/d. Production increased 11 Mb/d in our North American onshore areas on drilling and recompletion activity. Net production in our Egypt region was 7.6 Mb/d higher primarily as a function of our production sharing contracts.

Natural Gas Revenues Gas revenues for the first six months of 2015 totaled $0.6 billion, down 44 percent from the comparative 2014 period. A 15 percent decline in average production reduced natural gas revenues by $102 million, while a 35 percent decrease in average realized prices reduced revenues by $368 million. Natural gas accounted for 17 percent of our oil and gas production revenues and 35 percent of our equivalent production, compared to 16 percent and 39 percent, respectively, for the 2014 period.

Our worldwide natural gas production was 199 MMcf/d lower than the first six months of 2014, the result of divestitures in 2014. Exclusive of production from divested assets, worldwide production increased 43.7 MMcf/d on higher production in the North American onshore areas and higher net production in Egypt as a function of our production sharing contracts.

NGL Revenues NGL revenues for the first six months of 2015 totaled $116 million, down $239 million from the comparative 2014 period. A 7 percent decrease in average production decreased NGL revenues by $9 million as compared to the prior-year period, while a 65 percent decrease in average realized prices decreased revenues by $230 million. NGLs accounted for nearly 3 percent of our oil and gas production revenues and 11 percent of our equivalent production during the first six months of 2015.

Worldwide production of NGLs decreased 4.4 Mb/d to 59.1 Mb/d in the first six months of 2015, primarily from natural declines in the midcontinent area as well as divestitures during 2014 and 2015. Exclusive of production from divested assets, our worldwide NGL production increased 6.9 Mb/d driven by growth in our North American onshore areas.

Operating Expenses

The table below presents a comparison of our expenses on an absolute dollar basis and a boe basis. Our discussion may reference expenses on a boe basis, on an absolute dollar basis or both, depending on their relevance. Operating expenses include costs attributable to a noncontrolling interest in Egypt but exclude discontinued operations in Australia and Argentina.


	For the Quarter Ended June 30,								For the Six Months Ended June 30,
	2015		2014		2015		2014		2015		2014		2015		2014
	(In millions)				(Per boe)				(In millions)				(Per boe)
Depreciation, depletion, and amortization:
Oil and gas property and equipment
Recurring	$	923	$	1,074	$	17.98	$	20.14	$	1,922	$	2,096	$	19.20	$	19.74
Additional		5,816		203		113.37		3.81		13,036		203		130.28		1.91
Other assets		83		81		1.61		1.51		166		159		1.66		1.50
Asset retirement obligation accretion		36		38		0.70		0.72		72		76		0.72		0.72
Lease operating costs		467		560		9.11		10.49		948		1,108		9.47		10.44
Gathering and transportation costs		49		66		0.97		1.24		105		136		1.06		1.27
Taxes other than income		55		177		1.07		3.31		128		358		1.28		3.37
General and administrative		111		113		2.16		2.13		193		221		1.93		2.08
Transaction, reorganization, and separation costs		66		14		1.28		0.26		120		32		1.20		0.30
Financing costs, net		63		52		1.22		0.98		133		97		1.33		0.92

Total	$	7,669	$	2,378	$	149.47	$	44.59	$	16,823	$	4,486	$	168.13	$	42.25

Recurring Depreciation, Depletion, and Amortization (DD&A) Oil and gas property recurring DD&A expense of $0.9 billion in the second quarter of 2015 decreased $151 million compared to the prior-year quarter. Oil and gas property recurring DD&A expense of $1.9 billion in the first six months of 2015 decreased $174 million compared to the prior-year period. The Company’s oil and gas property recurring DD&A rate decreased $2.16 and $0.54 per boe for the second quarter and first six months of 2015, respectively, compared to the prior-year periods. The primary factor driving both lower absolute dollar expense and lower DD&A per boe rates was the reduction in the Company’s oil and gas property carrying values resulting from significant property write-downs incurred in the first quarter of 2015.

Additional DD&A Under the full cost method of accounting, the Company is required to review the carrying value of its proved oil and gas properties each quarter on a country-by-country basis. Under these rules, capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, may not exceed the present value of estimated future net cash flows from proved oil and gas reserves, net of related tax effects and discounted at 10 percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements.

As a result of a significant and sustained drop in commodity prices, Apache recorded non-cash after-tax write-downs of its proved oil and gas properties totaling $4.7 and $3.7 billion in the first and second quarters of 2015, respectively. The following table reflects write-downs by country:


	For the Quarter Ended June 30, 2015				For the Six Months Ended June 30, 2015
	Before tax		After tax		Before tax		After tax
	(In millions)
U.S.	$	4,318	$	2,785	$	9,554	$	6,162
Canada		835		617		2,187		1,628
North Sea		663		331		1,295		647

Total impairment	$	5,816	$	3,733	$	13,036	$	8,437

If commodity prices do not recover significantly from current levels, the Company expects further write-downs of the carrying value of its oil and gas properties as the full cost ceiling limitation was calculated using a historical 12-month pricing average that included oil prices from the last half of 2014. These prices were significantly higher than current commodity futures prices. To estimate the full cost ceiling limitation for the remainder of 2015, had the Company utilized commodity futures prices as of June 30, 2015 for the remaining six months of 2015 in lieu of using historical commodity prices for the last six months of 2014 to calculate the 12 month unweighted arithmetic average price, the write-down as of June 30, 2015 would have been higher by $5.5 billion ($3.5 billion net of tax).

Lease Operating Expenses (LOE) LOE decreased $93 million, or 17 percent, for the quarter, and $160 million, or 14 percent, for the six month period, on an absolute dollar basis relative to the comparable periods of 2014. On a per unit basis, LOE decreased 13 percent to $9.11 per boe for the second quarter of 2015, as compared to the same prior-year period, and decreased 9 percent to $9.47 per boe for the first six months of 2015, as compared to the prior-year six-month period. The following table identifies changes in Apache’s LOE rate between the second quarters and six-month periods of 2015 and 2014.


For the Quarter Ended June 30,				For the Six Months Ended June 30,
	Per boe				Per boe
2014 LOE	$	10.49		2014 LOE	$	10.44
Divestitures⁽¹⁾		0.35		Divestitures⁽¹⁾		0.50
Repairs and maintenance		(0.20	)	Repairs and maintenance		(0.14	)
Non-operated property costs		(0.20	)	Non-operated property costs		(0.19	)
FX impact		(0.25	)	FX impact		(0.32	)
Power and fuel costs		(0.26	)	Power and fuel costs		(0.27	)
Labor and overhead costs		(0.27	)	Labor and overhead costs		(0.20	)
Other		(0.07	)	Other		0.12
Increased production		(0.48	)	Increased production		(0.47	)

2015 LOE	$	9.11		2015 LOE	$	9.47

⁽¹⁾	Per-unit impact is shown net of associated production for the divestiture of our Anadarko basin and non-core southern Louisiana oil and gas assets.

Gathering and Transportation Gathering and transportation costs totaled $49 million and $105 million in the second quarter and first six months of 2015, respectively, down $17 million and $31 million from the second quarter and first six months of 2014, respectively. The decrease was driven primarily by North American onshore divestitures, partially offset by an increase in production and rate changes in the Permian Basin and increased export volumes in Egypt.

Taxes other than Income Taxes other than income totaled $55 million and $128 million for the second quarter and the first six months of 2015, respectively, a decrease of $122 million and $230 million, respectively, from the comparative prior-year periods. The following table presents a comparison of these expenses:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2015		2014		2015		2014
	(In millions)
Severance taxes	$	33	$	51	$	63	$	124
Ad valorem taxes		18		22		42		62
U.K. PRT and Other		4		104		23		172

Total Taxes other than income	$	55	$	177	$	128	$	358

The North Sea Petroleum Revenue Tax (PRT) is assessed on qualifying fields in the U.K. North Sea. For the second quarter of 2015, U.K. PRT was $98 million lower than the 2014 period as a result of lower revenues recorded during the second quarter. Severance tax expense and ad valorem tax expense decreased $18 million and $4 million, respectively, on lower oil and gas prices and divestitures made throughout the last year.

U.K. PRT for the first six months of 2015 was $147 million lower when compared to the 2014 period as a result of a decrease in production revenue offset by lower capital expenditures. For the first six months of 2015, lower oil prices and property divestitures lowered severance taxes by $61 million as compared to the first six months of 2014. Ad valorem tax decreased $20 million in the first half of 2015 compared to 2014 as a result of property divestitures.

General and Administrative Expenses General and administrative expenses (G&A) for the second quarter of 2015 decreased $2 million from the second quarter of 2014 on an absolute basis and was essentially flat on a per-unit basis. For the first six months of 2015 G&A decreased $28 million on an absolute basis from the comparable 2014 period and decreased $0.15 per boe on a per-unit basis.

Transaction, Reorganization, and Separation Costs The Company incurred $66 million in the second quarter of 2015 and $120 million for the year related to our recent divestiture activity and company reorganization. The cost incurred for the year includes $60 million for executive and employee separation costs; $25 million associated with the closing of our office in Tulsa, consolidating office space in Houston, and other reorganization efforts; and $35 million related to transaction costs for Australia and other transactions.

Financing Costs, Net Financing costs incurred during the period comprised the following:


	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2015			2014			2015			2014
	(In millions)
Interest expense	$	123		$	124		$	251		$	248
Amortization of deferred loan costs		2			1			4			3
Capitalized interest		(59	)		(72	)		(117	)		(150	)
Interest income		(3	)		(1	)		(5	)		(4	)

Financing costs, net	$	63		$	52		$	133		$	97

Net financing costs were up $11 million and $36 million in the second quarter and first six months of 2015, respectively, compared to the same 2014 periods. The primary factor was the decrease in capitalized interest of $13 million and $33 million in the second quarter and first six months of 2015, respectively. Lower capitalized interest was a result of lower project activities during the quarter and first half of 2015 compared to the prior year periods.

Provision for Income Taxes The Company estimates its annual effective income tax rate for continuing operations in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Non-cash write-downs of the carrying value of the Company’s proved oil and gas properties, statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur.

Capital Resources and Liquidity

Operating cash flows are the Company’s primary source of liquidity. We may also elect to utilize available committed borrowing capacity, access to both debt and equity capital markets, or proceeds from the sale of nonstrategic assets for all other liquidity and capital resource needs.

Apache’s operating cash flows, both in the short-term and the long-term, are impacted by highly volatile oil and natural gas prices, as well as costs and sales volumes. Significant changes in commodity prices impact our revenues, earnings, and cash flows. These changes potentially impact our liquidity if costs do not trend with changes in commodity prices. Historically, costs have trended with commodity prices, albeit on a lag. Sales volumes also impact cash flows; however, they have a less volatile impact in the short-term.

Deterioration in commodity prices also impacts estimated quantities of proved reserves. In the first half of 2015, we recognized negative reserve revisions of approximately five percent of our year-end 2014 estimated proved reserves as a result of lower prices. If realized prices for the remainder of 2015 approximate commodity future prices as of June 30, 2015, the Company is reasonably likely to report additional negative revisions, currently estimated at five to seven percent of year-end 2014 estimated proved reserves.

Apache’s long-term operating cash flows are dependent on reserve replacement and the level of costs required for ongoing operations. Cash investments are required to fund activity necessary to offset the inherent declines in production and proved crude oil and natural gas reserves. Future success in maintaining and growing reserves and production is highly dependent on the success of our drilling program and our ability to add reserves economically.

We believe the liquidity and capital resource alternatives available to Apache, combined with proactive measures to adjust our 2015 capital budget to reflect lower oil prices and anticipated operating cash flows, will be adequate to fund short-term and long-term operations, including our capital spending program, repayment of debt maturities, payment of dividends, and any amount that may ultimately be paid in connection with commitments and contingencies.

For additional information, please see Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and Part I, Items 1 and 2, “Business and Properties,” and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for our 2014 fiscal year.

Sources and Uses of Cash

The following table presents the sources and uses of our cash and cash equivalents for the periods presented.


	For the Six Months Ended June 30,
	2015		2014
	(In millions)
Sources of Cash and Cash Equivalents:
Net cash provided by continuing operating activities	$	1,737	$	3,949
Proceeds from sale of Kitimat LNG		854		—
Proceeds from sales of Australian assets		4,693		—
Net cash provided by Argentina discontinued operations		—		788
Proceeds from sale of other oil and gas properties		119		381

		7,403		5,118

Uses of Cash and Cash Equivalents:
Capital expenditures⁽¹⁾	$	3,081	$	4,714
Leasehold and property acquisitions		128		112
Net cash used by Australia discontinued operations		162		160
Net commercial paper and bank loan repayments		1,570		1
Dividends paid		189		176
Treasury stock activity, net		—		1,263
Distributions to noncontrolling interest		40		66
Other		52		8

		5,222		6,500

Increase (decrease) in cash and cash equivalents⁽²⁾	$	2,181	$	(1,382	)

⁽¹⁾	The table presents capital expenditures on a cash basis; therefore, the amounts may differ from those discussed elsewhere in this document, which include accruals.

⁽²⁾	For the six months ended June 30, 2014, Apache has recorded $1.4 billion in restricted cash of proceeds from the sale of the Deepwater Gulf of Mexico assets. The amount is excluded from the table above.

Net Cash Provided by Continuing Operating Activities Operating cash flows are our primary source of capital and liquidity and are impacted, both in the short-term and the long-term, by volatile oil and natural gas prices. The factors that determine operating cash flow are largely the same as those that affect net earnings, with the exception of non-cash expenses such as DD&A, asset retirement obligation (ARO) accretion, and deferred income tax expense, which affect earnings but do not affect cash flows.

Net cash provided by continuing operating activities for the first six months of 2015 totaled $1.7 billion, a decrease of $2.2 billion from the first six months of 2014. The decrease primarily reflects lower commodity prices and divestitures. Since the end of 2014, we have taken steps to reduce drilling, operating, and overhead costs, with a target of spending within cash flow in 2016.

For a detailed discussion of commodity prices, production, and expenses, refer to the “Results of Operations” of this Item 2. For additional detail on the changes in operating assets and liabilities and the non-cash expenses that do not impact net cash provided by operating activities, please see the statement of consolidated cash flows in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q.

Kitimat LNG Divestiture During the second quarter of 2015, Apache completed the sale of its 50 percent interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard basins to Woodside for total proceeds of $854 million.

Australia Discontinued Operations In the second quarter of 2015, Apache completed the sale of its Wheatstone LNG project and associated upstream assets to Woodside for total proceeds of $2.8 billion. During the second quarter of 2015, Apache also completed the sale of its Australian subsidiary AEL to a consortium of private equity funds managed by Macquarie Capital Group Limited and Brookfield Asset Management Inc. for total proceeds of $1.9 billion.

The associated results of operations for the divested Australian assets and the losses on disposal are classified as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q.

For more information regarding our acquisitions and divestitures, please see Note 2—Acquisitions and Divestitures in the notes to consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Capital Expenditures Worldwide E&D expenditures for the first six months of 2015 totaled $3.0 billion, compared to $4.4 billion for the first six months of 2014. Apache’s E&D capital spending was primarily focused on North American onshore assets. In the North America onshore region, Apache operated an average of 14 drilling rigs during the first six months of 2015.

Apache also completed leasehold and property acquisitions totaling $36 million and $64 million during the second quarters of 2015 and 2014, respectively. For the first six months of 2015 and 2014, Apache had $128 million and $112 million in total leasehold and property acquisitions. Our 2015 acquisition investments continue to focus on adding new leasehold positions to our North American onshore portfolio.

Apache’s investment in gas gathering, transmission, and processing (GTP) facilities totaled $94 million during the first six months of 2015 compared to $345 million in the comparative prior-year period. The Company’s investment in GTP was primarily associated with the Kitimat LNG project, which was divested in the second quarter of 2015.

Dividends For the six-month periods ended June 30, 2015, and 2014, the Company paid $189 million and $176 million, respectively, in dividends on its common stock.

Liquidity

The following table presents a summary of our key financial indicators at the dates presented:


	June 30, 2015			December 31, 2014
	(In millions of dollars, except as indicated)
Cash and cash equivalents	$	2,950		$	769
Total debt		9,676			11,245
Equity		17,755			28,137
Available committed borrowing capacity		3,500			3,730
Percent of total debt-to-capitalization		35	%		29	%

Cash and cash equivalents The Company had $3.0 billion in cash and cash equivalents as of June 30, 2015, compared to $769 million at December 31, 2014. At June 30, 2015, approximately $1.0 billion of the cash was held by foreign subsidiaries. The cash held by foreign subsidiaries may be subject to additional U.S. income taxes if repatriated. The majority of the cash is invested in highly liquid, investment grade securities with maturities of three months or less at the time of purchase.

Debt As of June 30, 2015, outstanding debt, which consisted of notes, debentures, commercial paper, committed bank facilities, and uncommitted bank lines, totaled $9.7 billion. Current debt of $416,000 was outstanding as of June 30, 2015.

Available committed borrowing capacity In June 2015, the Company entered into a $3.5 billion five-year revolving credit facility which matures in June 2020. Proceeds from borrowings may be used for general corporate purposes. Apache’s available borrowing capacity under this facility supports its commercial paper program. In connection with entry into the $3.5 billion facility, Apache terminated existing credit facilities totaling $5.3 billion.

The Company has available a $3.5 billion commercial paper program, which generally enables Apache to borrow funds for up to 270 days at competitive interest rates. As of June 30, 2015, the Company had no debt outstanding under commercial paper, committed bank facilities, and uncommitted bank lines.

The Company was in compliance with the terms of all credit facilities as of June 30, 2015.

Percent of total debt-to-capitalization The Company’s debt-to-capitalization ratio at June 30, 2015, and December 31, 2014, was 35 percent and 29 percent, respectively.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices we receive for our crude oil, natural gas, and NGLs, which have historically been very volatile because of unpredictable events such as economic growth or retraction, weather, political climate, and global supply and demand. Our average crude oil realizations have decreased to $58.09 per barrel in the second quarter of 2015 from $102.95 per barrel in the comparable period of 2014. Our average natural gas price realizations have also decreased 34 percent to $2.73 per Mcf in the second quarter of 2015 from $4.15 per Mcf in the comparable period of 2014.

We periodically enter into derivative positions on a portion of our projected oil and natural gas production through a variety of financial and physical arrangements intended to manage fluctuations in cash flows resulting from changes in commodity prices. Apache periodically uses futures contracts, swaps, and options to mitigate commodity price risk. Apache does not hold or issue derivative instruments for trading purposes. As of June 30, 2015, Apache had no open commodity derivative positions.

Foreign Currency Risk

The Company’s cash flow stream relating to certain international operations is based on the U.S. dollar equivalent of cash flows measured in foreign currencies. In Canada, oil and gas prices and costs, such as equipment rentals and services, are generally denominated in Canadian dollars but heavily influenced by U.S. markets. Our North Sea production is sold under U.S. dollar contracts, and the majority of costs incurred are paid in British pounds. In Egypt, all oil and gas production is sold under U.S. dollar contracts, and the majority of the costs incurred are denominated in U.S. dollars. Revenue and disbursement transactions denominated in Canadian dollars and British pounds are converted to U.S. dollar equivalents based on average exchange rates during the period.

Foreign currency gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated at the end of each month. Currency gains and losses are included as either a component of “Other” under “Revenues and Other” or, as is the case when we re-measure our foreign tax liabilities, as a component of the Company’s provision for income tax expense on the statement of consolidated operations. A foreign currency net gain or loss of $141 million would result from a 10 percent weakening or strengthening, respectively, in the Canadian dollar and British pound as of June 30, 2015.

Forward-Looking Statements and Risk

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on our examination of historical operating trends, the information that was used to prepare our estimate of proved reserves as of December 31, 2014, and other data in our possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” or “continue” or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, our assumptions about:

•

the market prices of oil, natural gas, NGLs, and other products or services;

•

our commodity hedging arrangements;

•

the integration of acquisitions;

•

the supply and demand for oil, natural gas, NGLs, and other products or services;

•

production and reserve levels;

•

drilling risks;

•

economic and competitive conditions;

•

the availability of capital resources;

•

capital expenditure and other contractual obligations;

•

currency exchange rates;

•

weather conditions;

•

inflation rates;

•

the availability of goods and services;

•

legislative or regulatory changes;

•

the impact on our operations from changes in the Egyptian government;

•

terrorism or cyber attacks;

•

occurrence of property acquisitions or divestitures;

•

the securities or capital markets and related risks such as general credit, liquidity, market, and interest-rate risks; and

•

other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in our most recently filed Annual Report on Form 10-K, other risks and uncertainties in our second-quarter 2015 earnings release, other factors disclosed under Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q, and other filings that we make with the Securities and Exchange Commission.

All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. We assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise.

ITEM 4 –

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

John J. Christmann, the Company’s Chief Executive Officer and President, in his capacity as principal executive officer, and Stephen J. Riney, the Company’s Executive Vice President and Chief Financial Officer, in his capacity as principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2015, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Company’s disclosure controls and procedures were effective, providing effective means to ensure that information we are required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

We periodically review the design and effectiveness of our disclosure controls, including compliance with various laws and regulations that apply to our operations both inside and outside the United States. We make modifications to improve the design and effectiveness of our disclosure controls, and may take other corrective action, if our reviews identify deficiencies or weaknesses in our controls.

Changes in Internal Control over Financial Reporting

There was no change in our internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Please refer to both Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (filed with the SEC on February 27, 2015) and Note 7—Commitments and Contingencies in the notes to the consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a description of material legal proceedings.

ITEM 1A.

RISK FACTORS

Please refer to Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and Part I, Item 3—Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

MINE SAFETY DISCLOSURES

None

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS


3.1	–	Restated Certificate of Incorporation of Registrant, dated September 19, 2013, as filed with the Secretary of State of Delaware on September 19, 2013 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed September 20, 2013, SEC File No. 001-4300).

3.2	–	Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated May 14, 2015, as filed with the Secretary of State of Delaware on May 14, 2015 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed May 20, 2015, SEC File No. 001-4300).

3.3	–	Bylaws of Registrant, as amended May 14, 2015 (incorporated by reference to Exhibit 3.3 to Registrant’s Current Report on Form 8-K filed May 20, 2015, SEC File No. 001-4300).

*10.1	–	2015 Employee Release and Settlement Agreement between Registrant and Michael S. Bahorich, dated April 8, 2015.

*10.2	–	Amendment of 2014 Performance Program (Business Performance) Award Agreement (2011 Omnibus Equity Compensation Plan), effective June 30, 2015, between Registrant and Michael S. Bahorich.

*10.3	–	Amendment of Stock Option Grants (2011 Omnibus Equity Compensation Plan), effective June 30, 2015, between Registrant and Michael S. Bahorich.

*10.4	–	Amendment of Restricted Stock Unit Awards (2011 Omnibus Equity Compensation Plan), effective June 30, 2015, between Registrant and Michael S. Bahorich.

*10.5	–	Apache Corporation Non-Employee Directors’ Compensation Plan, as amended and restated May 14, 2015.

*10.6	–	Apache Corporation Non-Employee Directors’ Restricted Stock Units Program, as amended and restated May 14, 2015.

10.7	–	Credit Agreement, dated as of June 4, 2015, among Apache Corporation, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Citibank, N.A., as Co-Syndication Agents, and Royal Bank of Canada, HSBC Bank USA, National Association, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Wells Fargo Bank, National Association, and Mizuho Bank, Ltd., as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed June 9, 2015, SEC File No. 001-4300).

*31.1	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.

*31.2	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.

*32.1	–	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.

*101.INS	–	XBRL Instance Document.

*101.SCH	–	XBRL Taxonomy Schema Document.

*101.CAL	–	XBRL Calculation Linkbase Document.

*101.LAB	–	XBRL Label Linkbase Document.

*101.PRE	–	XBRL Presentation Linkbase Document.

*101.DEF	–	XBRL Definition Linkbase Document.

*	Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


						APACHE CORPORATION

Dated: August 6, 2015						/s/ STEPHEN J. RINEY
						Stephen J. Riney
						Executive Vice President and Chief Financial Officer
						(Principal Financial Officer)

Dated: August 6, 2015						/s/ REBECCA A. HOYT
						Rebecca A. Hoyt
						Senior Vice President, Chief Accounting Officer
						and Controller
						(Principal Accounting Officer)

Exhibit 10.1

APACHE CORPORATION

2015 EMPLOYEE RELEASE AND SETTLEMENT AGREEMENT

The parties to this agreement are APACHE CORPORATION (“Apache”) and Michael S. Bahorich (“Employee”).

This document describes the agreements of Apache and Employee concerning the termination of Employee’s employment with Apache. This agreement and the severance pay and other benefits described below give valuable consideration to both Apache and Employee.

Termination of Employment Relationship: Apache and Employee have agreed that Employee’s employment relationship with Apache will terminate on June 30, 2015 (the “Termination Date”). Apache and Employee both agree that Employee will “separate from service” (for purposes of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) on June 30, 2015.

Termination Pay: Apache will pay Employee the following as soon as reasonably practical following the Termination Date:

•

Employee’s regular pay through the Termination Date.

Such amounts shall be subject to all lawful deductions and withholding for taxes.

Severance Pay: Subject to this agreement becoming effective, Apache will pay Employee a lump sum amount of $1,575,000 of Severance Pay.

The Severance Pay has been subject to arms’ length negotiations between the parties and thus is not deferred compensation subject to Code section 409A. The Severance Pay will be subject to all lawful deductions and withholding for taxes and will be paid as soon as administratively practical after this agreement becomes effective.

Additional Severance Benefits: Subject to this agreement becoming effective and subject to any delay in payment required by Code section 409A, Apache will provide Employee with the following additional Severance Benefits:

•

Prorated vesting of outstanding unvested restricted stock units and stock options, subject to any agreed amendments to said equity plans and award agreements, and the terms of this Agreement. Distribution of restricted stock units will occur as soon as permissible under Code section 409A.

•

Extended exercise period for vested stock options, including the prorated portion, to full term (10 year anniversary of the grant date).

•

Prorated vesting of TSR performance awards, based on time in performance period. Results of the TSR program will be calculated at the end of the performance period and, if a payout is warranted, awards will be paid in cash according to the performance program’s vesting schedule. In the event that the

-1-

TSR performance goals related to such grants are achieved at the conclusion of each respective performance period, then as soon as practicable following the first business day following the applicable vesting dates set forth below, provided that Employee is then in compliance with the provisions of this Agreement, Apache will pay Employee a cash amount equal to the fair market value of a share of common stock of Apache (determined at the close of the third trading day preceding the payment date) multiplied by the number of prorated units indicated below. Because FICA taxation will occur when the performance goal is met, and Employee will not be receiving payment at that time, Employee’s share of FICA taxes will be paid by reducing the cash amount payable to Employee.


Condition Precedent	Vesting Date	Number of Prorated Units
2013 TSR Goal Achieved	12/31/15	50% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 9,891

2013 TSR Goal Achieved	12/31/16	25% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 9,891

2013 TSR Goal Achieved	12/31/17	25% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 9,891

2014 TSR Goal Achieved	12/31/16	50% of (i) multiple of Target Amount achieved under 2014 TSR Plan times (ii) 4,161

2014 TSR Goal Achieved	12/31/17	50% of (i) multiple of Target Amount achieved under 2014 TSR Plan times (ii) 4,161

•

Awards made under the 2014 Business Performance Share Program will vest according to the schedule specified in the grant agreement.

•

Provide COBRA subsidy for dental and vision plans at active rates for the first 12 months following the Termination Date. The former Employee is required to file the application in accordance with COBRA guidelines. Subsequently, you may continue coverage under COBRA by paying the monthly premiums.

•

Being that the Employee is age 55 or older with at least 5 years of service on the Termination Date, the Employee can elect coverage under the Retiree Medical Plan. The first 12 months of coverage will be provided at active employee premium rates. Thereafter, the Employee’s premium will be based on the Retiree Medical Plan’s regular age + service premium table, calculated with three additional years of service credit.

•

Outplacement assistance as arranged by Apache.

-2-

Employee Acknowledgement: Employee acknowledges that the Severance Pay and Severance Benefits are consideration over and above that to which Employee otherwise would be entitled upon termination of employment, and are paid in consideration for this agreement.

Employee Resignation: Employee agrees to resign from all positions he holds with Apache and its affiliates forthwith and to sign all documents necessary to effectuate his resignations.

Release by Employee: In consideration of receipt of the Severance Pay and Severance Benefits, Employee hereby releases and waives, on behalf of himself, his heirs, estate, beneficiaries and assigns, all claims of any kind or character for loss, damage or injury arising from, based upon, connected in any way with, or relating to the following (“Claims”):

•

the employment of Employee by Apache, including the termination of Employee’s employment;

•

employment discrimination in violation of the Age Discrimination in Employment Act;

•

employment discrimination in violation of Title VII of the Civil Rights Act of 1964;

•

any violations of federal, state or local statutes, ordinances, regulations, rules, decisions or laws;

•

retaliation under the whistleblower provisions of Section 806 of the Sarbanes Oxley Act of 2002 or any other anti-retaliation law;

•

failure to act in good faith and deal fairly;

•

injuries, illness or disabilities of Employee;

•

exposure of Employee to toxic or hazardous materials;

•

stress, anxiety or mental anguish;

•

discrimination on the basis of sex, race, religion, national origin or another basis;

•

sexual harassment;

•

defamation based on statements of Apache or others;

•

breach of an express or implied employment contract;

•

compensation or reimbursement of Employee;

•

unfair employment practices; and

•

any act or omission by or on behalf of Apache.

Claims Included: The Claims released and waived by Employee are those arising before the effective date of this agreement, whether known, suspected, unknown or unsuspected, and include, without limitation:

•

those for reinstatement;

-3-

•

those for actual, consequential, punitive or special damages;

•

those for attorney’s fees, costs, experts’ fees and other expenses of investigating, litigating or settling Claims; and

•

those against Apache and/or Apache’s present, former and future subsidiaries, affiliates, employees, officers, directors, agents, contractors, benefit plans, shareholders, advisors, insurance carriers, and legal representatives (together with Apache the “Released Parties”).

Claims Excluded: Employee does not release or waive (1) any rights that may not by law be waived, (2) vested benefits, if any, to which Employee may be entitled pursuant to the terms of Apache’s benefits plans, including Employee’s right to any benefits under health, life or disability policies covering Employee and Employee’s right to all vested incentive compensation and the continued vesting thereof as described in this Agreement (for the avoidance of doubt, Employee is, however, releasing and waiving any claim that he is subject to or covered by any Change of Control provisions other than the continuation of vesting of Apache Corporation equity), or (3) the right to recovery for breach of this agreement by Apache,(4) Employee’s right to indemnity, contribution and a defense under any agreement, statute, by-law or company agreement or other corporate governance document, (5) Employee’s right to continuing coverage under all Apache directors’ and officers’, fiduciary, errors and omissions and general liability and umbrella insurance policies, (6) payment to Employee of any unpaid business or business travel expense payable under the Company’s usual practices, (7) distribution to Employee, as soon as practical after the effective date of this agreement and consistent with the requirements of Code section 409A, applicable deferral agreements and governing terms of any Plan, previously vested but withheld shares of restricted stock, (8) Employee’s rights as an option holder, as a holder of restricted stock and as a shareholder; (9) any deferred compensation including Employee’s right to any payment or compensation that may be deferred because of compliance with Code section 409A; (10) Employee’s rights to payment of overrides under previous Apache employee benefit plans and (11) Employee’s rights as a retiree of Apache.

Agreement Not To Sue: Employee will not sue any Released Party for any released Claim. Excluded from this agreement not to sue is Employee’s right to file a charge with an administrative agency or participate in an agency investigation. Employee is, however, waiving the right to receive money in connection with such charge or investigation. Employee is also waiving the right to recover money in connection with a charge filed by any other individual or by the Equal Employment Opportunity Commission or any other federal or state agency.

Future Employment: The Released Parties will not have any obligation to consider or accept any future employment or reinstatement application from Employee.

No Admission: Neither Apache nor Employee alleges or admits any wrongdoing or liability. Apache and Employee have executed this agreement solely to avoid the expense of potential litigation. The additional Severance Pay and additional Severance Benefits described above fully compromise and settle any and all Claims of Employee.

Confidentiality: Employee and Apache will keep this agreement strictly confidential, except that Employee may disclose this agreement to his spouse, attorneys, financial and tax advisors

-4-

and will cause Employee’s spouse, attorneys, financial and tax advisors to do likewise, and Apache may disclose this agreement to its officials who need to see this agreement and shall cause them to keep this agreement strictly confidential, except, as to both parties, to the extent disclosure is necessary for tax, securities law and regulations, stock exchange rules, financial advice, tax advice and filings or other legal requirements.

Confidences: Employee will maintain the confidentiality of all Released Party trade secrets, proprietary information, insider information, security procedures and other confidences that came into Employee’s possession or knowledge during employment by Apache. Employee will not use information concerning a Released Party’s business prospects or practices to profit Employee or others. The parties understand Employee may elect to continue his professional activities and/or employment in the oil and gas exploration and development industry subsequent to the Termination Date. Accordingly, nothing in this agreement shall prevent Employee from utilizing general knowledge, skills and experience he acquired during his employment with Apache. Further, nothing in this agreement shall prevent Employee from using any public information that is generally known or reasonably accessible or available to him

Property: Employee represents that Employee possesses no property of a Released Party. If any Released Party property comes into Employee’s possession before departure from Apache premises, or if the date of Employee’s termination is in the future, Employee will return the Released Party property to Apache prior to departure from the Apache premises and without request or demand by Apache.

References: Apache may respond to inquiries from third parties about Employee’s employment with Apache by identifying only Employee’s date of hire, date of termination and position held at the time of termination of employment. Apache will have no obligation to provide further information to prospective employers of Employee.

Non-disparagement: Employee shall refrain from publishing any oral or written statements about the Company, any Apache Entity and/or any of the Released Parties that are disparaging, slanderous, libelous, or defamatory; or that disclose private or confidential information about their business affairs; or that constitute an intrusion into their seclusion or private lives; or that give rise to unreasonable publicity about their private lives; or that place them in a false light before the public; or that constitute a misappropriation of their name or likeness. Likewise, the Released Parties shall refrain from publishing any oral or written statements about Employee that are disparaging, slanderous, libelous, or defamatory; or that disclose private or confidential information about his business affairs; or that constitute an intrusion into seclusion or private life; or that give rise to unreasonable publicity about his private life; or that places him in a false light before the public; or that constitute a misappropriation of his name or likeness.

Assistance in Legal Actions: In the event Apache is or becomes involved in any legal action relating to events which occurred while Employee was rendering services to Apache or about which Employee possesses any information, Employee agrees to assist, subject to Employee’s “reasonable availability”, in the preparation, prosecution or defense of any case involving Apache, including without limitation, executing truthful declarations or documents or providing information requested by Apache and attending and/or testifying truthfully at deposition or at trial without the necessity of a subpoena or compensation. All reasonable travel expenses

-5-

incurred by you in rendering such assistance will be reimbursed by Apache. Employee’s compliance with the obligations of this paragraph shall not interfere with his future employment or enterprise, and shall not be so extensive or intrusive that Employee incurs economic damage as a result of his compliance.

Non-solicitation: Because of the confidential information shared with Employee and in exchange for the payments described herein, for a period of two years following the Resignation date, Employee, and his assigns, agree not to directly or indirectly solicit any employee of Apache for employment elsewhere (i.e., employment with any person or entity other than Apache).

Other Agreements: This is the entire agreement concerning the termination of Employee’s employment with Apache. Employee is not entitled to rely upon any other written or oral offer or agreement from Apache or any other person.

Amendment: This agreement can be modified only by a document signed by both parties.

Successors: This agreement benefits and binds the parties’ successors, including Employee’s estates and heirs.

Texas Law: This agreement will be interpreted in accordance with the laws of the State of Texas.

Jurisdiction. Any legal proceeding arising as a result of, based upon, or relating to this agreement, Employee’s employment or termination thereof shall be filed in and heard exclusively in Houston, Texas without regard to conflicts of law and Employee hereby irrevocably consents to the jurisdiction of such courts.

Enforceability: If any portion of this agreement is unenforceable, the remaining portions of the agreement will remain enforceable.

Fees and Costs: If litigation is commenced concerning Employee’s employment, termination of employment or this agreement, the prevailing party shall be entitled to an award of reasonable attorneys’ fees and expenses, court costs, experts’ fees and expenses, and all other expenses of litigation.

409A Compliance: The benefits provided under this agreement are intended to comply with, or be exempted from, the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations issued thereunder and shall be administered accordingly. This agreement may be amended without the consent of the Employee in any respect deemed by Apache to be necessary in order to preserve compliance with, or exemption from, Code section 409A.

-6-

EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT IS A FINAL AND BINDING WAIVER OF ANY AND ALL CLAIMS OF EMPLOYEE AGAINST THE RELEASED PARTIES, INCLUDING CLAIMS FOR AGE DISCRIMINATION UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT AND CLAIMS FOR SEX, RACE OR OTHER DISCRIMINATION UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964.

THE ONLY PROMISES MADE TO CAUSE EMPLOYEE TO SIGN THIS AGREEMENT ARE THOSE STATED IN THIS AGREEMENT.

EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS BEEN INFORMED BY APACHE TO CONSULT WITH HIS/HER OWN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT.

EMPLOYEE REPRESENTS THAT THIS AGREEMENT HAS BEEN FULLY EXPLAINED BY EMPLOYEE’S ATTORNEY OR THAT EMPLOYEE HAS WAIVED CONSULTATION WITH AN ATTORNEY, CONTRARY TO APACHE’S RECOMMENDATION.

EMPLOYEE HAS BEEN ADVISED AND UNDERSTANDS THAT THE OFFER OF SEVERANCE PAY AND SEVERANCE BENEFITS CONTAINED IN THIS AGREEMENT SHALL REMAIN OPEN ONLY UNTIL APRIL 8, 2015. IF EMPLOYEE HAS NOT FULLY EXECUTED AND RETURNED THIS AGREEMENT BY THAT DATE, THE OFFER HEREIN OF SEVERANCE PAY AND SEVERANCE BENEFITS IS AUTOMATICALLY WITHDRAWN WITHOUT FURTHER ACTION BY APACHE EFFECTIVE AS OF SUCH DATE.

EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS THE RIGHT TO REVOKE THIS AGREEMENT FOR 7 DAYS AFTER SIGNING IT. THIS AGREEMENT WILL NOT BE EFFECTIVE UNTIL THAT TIME FOR REVOCATION HAS PASSED.

EMPLOYEE REPRESENTS THAT HE/SHE HAS CAREFULLY READ AND FULLY UNDERSTANDS THIS AGREEMENT AND THAT HE/SHE HAS ENTERED INTO AND EXECUTED THIS AGREEMENT KNOWINGLY AND WITHOUT DURESS OR COERCION FROM APACHE OR ANY OTHER PERSON OR SOURCE.


EMPLOYEE				APACHE CORPORATION

/s/ Michael S. Bahorich				/s/ Margery M. Harris
Michael S. Bahorich				Margery M. Harris
				Executive Vice President, Human Resources

-7-


STATE OF TEXAS		§

		§

COUNTY OF HARRIS		§

The foregoing Employee Release and Settlement Agreement was acknowledged before me this 8th day of April, 2015, by Michael S. Bahorich.


[SEAL]				/s/ Heather Cates
				NOTARY PUBLIC

My commission expires: July 23, 2016


STATE OF TEXAS		§

		§

COUNTY OF HARRIS		§

The foregoing Employee Release and Settlement Agreement was acknowledged before me this 8th day of April, 2015, by Margery M. Harris, Executive Vice President, Human Resources of Apache Corporation.


[SEAL]				/s/ Iliana R. Garcia
				NOTARY PUBLIC

My commission expires: April 5, 2017

-8-

Exhibit 10.2

Apache Corporation

Amendment of 2014 Performance Program (Business Performance) Award


Recipient Name:		Michael S. Bahorich (“Recipient”, “Employee,” “you” or “your”)

Company:		Apache Corporation

Amendment:		This is a summary of the amendment of the terms of your conditional grant of Restricted Stock Units (“RSUs”) under the award notice dated February 3, 2014 (the “Award Notice”) subject to the terms of the Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended (the “Plan”) and the 2014 Performance Program Agreement (Business Performance) (the “2014 Agreement”).

		You were previously awarded Apache Corporation conditional RSUs in accordance with the terms of the Plan and the 2014 Agreement. In connection with your release from service with the Company effective June 30, 2015 (the “Termination Date”) and the terms of the release and settlement agreement between you and the Company (the “Release Agreement”), for purposes of vesting of the Final Amount of your conditional RSUs determined under the Plan, upon your acceptance of this Amendment, the Company agrees that Final Amount of such outstanding conditional RSUs will continue to vest according to the original schedule and any agreed amendments to said Plan and the 2014 Agreement, provided that such vesting shall occur at such times solely if you are then in compliance with the provisions of the Release Agreement.

Affected Award:		Final Amount of the conditional RSUs under the Award Notice, the 2014 Agreement, and the Plan.

Plan:		Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended

Acceptance:		Please indicate your acceptance of this Amendment by executing the attached Amendment and returning it to Margery M. Harris. Upon acceptance of this Amendment you will be able to continue to access your account at netbenefits.fidelity.com. By accepting this Amendment, you will have agreed to the terms and conditions set forth in the Amendment and the terms and conditions of the Plan. You also agree to immediately notify Apache Corporation of any future change in your address or other contact information.

Apache Corporation

Amendment of 2014 Performance Program Agreement (Business Performance)

This Amendment to the 2014 Performance Program Agreement (Business Performance) is entered into in connection with the Recipient’s release from service with Apache Corporation (together with its Affiliates, the “Company”) effective June 30, 2015 (the “Termination Date”) and the terms of the release and separation agreement between the Recipient and the Company (the “Release Agreement”) and governs the Final Amount of the conditional award of RSUs under the Plan and the 2014 Agreement, between the Company and the Recipient.

Section 4 of the 2014 Agreement is hereby amended to add a new paragraph at the end thereof, which shall read as follows:

Release Agreement. Notwithstanding the provisions of Section 4 of the 2014 Agreement or the provisions of the Award Notice or the Plan to the contrary, for purposes of vesting of the Final Amount of RSUs, the Recipient shall be deemed to satisfy the conditions for continued vesting of Section 6 of the 2014 Agreement as of the Termination Date, provided that the Recipient remains in compliance with the provisions of the Release Agreement. The Recipient shall immediately notify the Company of any future change in address or other contact information.

The remaining terms of the 2014 Agreement and the Plan shall continue in full force and effect except as provided in the controlling Apache Corporation Employee Release and Settlement Agreement between Recipient and Apache Corporation.

This Amendment may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

If any provision of this Amendment is held invalid or unenforceable, the remainder of this Amendment shall nevertheless remain in full force and effect, and if any provision is held invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances, to the fullest extent permitted by law.

IN WITNESS HEREOF the parties have caused this Amendment to be executed, agreed, and accepted, effective as of June 30, 2015.


APACHE CORPORATION		MICHAEL S. BAHORICH, RECIPIENT

By:	/s/ Margery M. Harris	By:	/s/ Michael S. Bahorich
	Margery M. Harris		Michael S. Bahorich
	Executive Vice President,
	Human Resources

ATTEST:

/s/ Cheri L. Peper

Cheri L. Peper

Corporate Secretary

Exhibit 10.3

Apache Corporation

Amendment of Stock Option Grants


Participant Name:		Michael S. Bahorich (“Participant,” “Employee’ “you” or “your”)

Company:		Apache Corporation

Amendment:		This is a summary of the amendment of the terms of your previous grants of Non-Qualified Stock Options to purchase Shares (“Stock Options”) under certain prior notices (the “Grant Notices”) subject to the terms of the Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended (the “Plan”) and the related Stock Option Award Agreements (the “Agreements”).

		You were previously granted Stock Options to purchase Shares in accordance with the terms of the Plan and the related Stock Option Award Agreements. In connection with your release from service with the Company effective June 30, 2015 (the “Termination Date”) and the terms of the release and settlement agreement between you and the Company (the “Release Agreement”), for purposes of continued vesting of the prorated portion of your unvested Stock Options and continued exercisability of your vested Stock Options under the Plan determined as of the Termination Date, upon your acceptance of this Amendment, the Company agrees that the prorated portion of your unvested Stock Options will continue to vest according to their original schedules and any agreed amendments to said equity plan and award agreements as if you continued employment with the Company after your Termination Date, provided that such vesting shall occur at such times solely if you are then in compliance with the provisions of the Release Agreement. For the avoidance of doubt, you shall not be treated as continuing employment with the Company after the Termination Date for purposes of the Change of Control provisions of the Plan and the Agreements. Employee’s exclusion from receiving the benefits of the Change of Control provisions of the Plan and Agreements shall not diminish nor terminate the other rights and benefits provided to Employee regarding Stock Options under the Apache Corporation Employee Release and Settlement Agreement between Employee and Apache Corporation.

Affected Awards:		Prorated portion of your unvested Stock Options as set forth in Annex I and all vested Stock Options under the Plan as of the Termination Date

Plans:		Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended

Expiration Date:		Your Stock Options will remain subject to expiration ten years from the original Grant Date for each such Stock Option.



Acceptance:		Please indicate your acceptance of this Amendment by executing the attached Amendment and returning it to Margie M. Harris. Upon acceptance of this Amendment you will be able to continue to access your account at netbenefits.fidelity.com. By accepting this Amendment, you will have agreed to the terms and conditions set forth in the Amendment and the terms and conditions of the Plans. You also agree to immediately notify Apache Corporation of any future change in your address or other contact information. If you do not accept this Amendment, for purposes of continued vesting of the prorated portion of your unvested Stock Options and continued exercisability of your vested Stock Options, you be treated as terminating with the Company on the Termination Date.

Apache Corporation

Amendment to Stock Option Award Agreements

This Amendment to the Stock Option Award Agreements is entered into in connection with the Participant’s release from service with Apache Corporation (together with its Affiliates, the “Company”) effective June 30, 2015 (the “Termination Date”) and the terms of the release and settlement agreement between the Participant and the Company (the “Release Agreement”) and governs all outstanding Stock Options under the Plan and the Agreements, determined as of the Termination Date, between the Company and the Participant.

Section 4 of each of the Agreements is hereby amended to add a new paragraph at the end thereof, which shall read as follows:

Release Agreement. Notwithstanding the provisions of Section 4 of any Agreement or the provisions of the Grant Notices or the Plan to the contrary, for purposes of continued vesting of the prorated portion of unvested Stock Options and continued exercisability of vested Stock Options, the Participant’s employment shall be deemed to continue with the Company following the Termination Date provided that the Participant remains in compliance with the provisions of the Release Agreement. The Participant shall immediately notify the Company of any future change in address or other contact information. The Participant shall not be treated as continuing in employment with the Company following the Termination Date for purposes of the Change of Control provisions of this Agreement, the Grant Notice, and the Plan. Employee’s exclusion from receiving the benefits of the Change of Control provisions of the Plan and Agreements shall not diminish nor terminate the other rights and benefits provided to Employee regarding Stock Options under the Apache Corporation Employee Release and Settlement Agreement between Employee and Apache Corporation.

The remaining terms of the Agreements and the Plan shall continue in full force and effect except as provided in the controlling Apache Corporation Employee Release and Settlement Agreement between Recipient/Employee and Apache Corporation.

IN WITNESS HEREOF the parties have caused this Amendment to be executed, agreed, and accepted, effective as of June 30, 2015.


APACHE CORPORATION		MICHAEL S. BAHORICH, PARTICIPANT

By:	/s/ Margery M. Harris	By:	/s/ Michael S. Bahorich
	Margery M. Harris		Michael S. Bahorich
	Executive Vice President,
	Human Resources

ATTEST:

/s/ Cheri L. Peper

Cheri L. Peper

Corporate Secretary

Apache Corporation

Prorated Portion of Unvested Stock Options

Annex I

Non-Qualified Stock Option Grants (SOs)

Grant

Grant
Date

Last Vesting
Date

Next Vesting
Date

Prorated
Portion of
Award¹

Next Tranche of
Awards Vesting

Prorated Award
Based on Days

2012 SOP

05/22/12

05/22/15

05/22/16

4,565

486

2013 SOP

05/16/13

05/16/15

05/16/16

8,527

1,048

Subtotal:

13,092

1,534

¹	Represents the portion of the vesting period worked since the most recent vesting date.

Exhibit 10.4

Apache Corporation

Amendment of Restricted Stock Unit Awards


Recipient Name:		Michael S. Bahorich (“Recipient”, “Employee,” “you” or “your”)

Company:		Apache Corporation

Amendment:		This is a summary of the amendment of the terms of your grant(s) of Restricted Stock Units (“RSUs”) under certain prior notices (the “Grant Notices”) subject to the terms of the Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended (the “Plan”) and the Restricted Stock Unit Award Agreements (the “Agreements”).

		You were previously awarded Apache Corporation RSUs in accordance with the terms of the Plan and the Agreements. In connection with your release from service with the Company effective June 30, 2015 (the “Termination Date”) and the terms of the release and settlement agreement between you and the Company (the “Release Agreement”), for purposes of continued vesting of the prorated portion of your outstanding RSUs under the Plan determined as of the Termination Date, upon your acceptance of this Amendment, the Company agrees that such prorated portion of your outstanding RSUs will continue to vest according to their original schedules and any agreed amendments to said equity plan and award agreements as if you continued employment with the Company after your Termination Date, provided that such vesting shall occur at such times solely if you are then in compliance with the provisions of the Release Agreement. For the avoidance of doubt, however, you will not be treated as continuing in employment with the Company after the Termination Date for purposes of the Change of Control provisions of the Plan and the Agreements. Employee’s exclusion from receiving the benefits of the Change of Control provisions of the Plans and Agreements shall not diminish nor terminate the other rights and benefits provided to Employee regarding RSUs and in lieu of TSRs under the Apache Corporation Employee Release and Settlement Agreement between Employee and Apache Corporation.

Affected Awards:		Prorated portion of your outstanding RSUs under the Plan as of the Termination Date as set forth in Annex A.

Plan:		Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended



Acceptance:		Please indicate your acceptance of this Amendment by executing the attached Amendment and returning it to Margery M. Harris. Upon acceptance of this Amendment you will be able to continue to access your account at netbenefits.fidelity.com. By accepting this Amendment, you will have agreed to the terms and conditions set forth in the Amendment and the terms and conditions of the Plan. You also agree to immediately notify Apache Corporation of any future change in your address or other contact information. If you do not accept this Amendment, for purposes of continued vesting of the prorated portion of your outstanding RSUs, you will be treated as terminating from employment with the Company on the Termination Date.

Apache Corporation

Amendment of Restricted Stock Unit Agreements

This Amendment to the Restricted Stock Unit Award Agreements is entered into in connection with the Recipient’s release from service with Apache Corporation (together with its Affiliates, the “Company”) effective June 30, 2015 (the “Termination Date”) and the terms of the release and settlement agreement between the Recipient and the Company (the “Release Agreement”) and governs all outstanding RSUs under the Plan and the Agreements, determined as of the Termination Date, between the Company and the Recipient.

Section 3 of each of the Agreements is hereby amended to add a new paragraph at the end thereof, which shall read as follows:

Release Agreement. Notwithstanding the provisions of Section 3 of any Agreement or the provisions of the Grant Notices or the Plans to the contrary, for purposes of continued vesting of the prorated portion of your outstanding RSUs, the Recipient’s employment shall be deemed to continue with the Company following the Termination Date provided that the Recipient remains in compliance with the provisions of the Release Agreement. The Recipient shall immediately notify the Company of any future change in address or other contact information.

IN WITNESS HEREOF the parties have caused this Amendment to be executed, agreed, and accepted, effective as of June 30, 2015.


APACHE CORPORATION		MICHAEL S. BAHORICH, RECIPIENT

By:	/s/ Margery M. Harris	By:	/s/ Michael S. Bahorich
	Margery M. Harris		Michael S. Bahorich
	Executive Vice President,
	Human Resources

ATTEST:

/s/ Cheri L. Peper

Cheri L. Peper

Corporate Secretary

Apache Corporation

Prorated Portion of Unvested RSUs

Annex A

Restricted Stock Unit Grants (RSUs)

Grant

Grant
Date

Last Vesting
Date

Next Vesting
Date

Prorated
Portion of
Award¹

Next Tranche of
Awards Vesting

Prorated Award
Based on Days

2012 RSU

05/22/12

05/22/15

05/22/16

1,724

183

2013 RSU

05/16/13

05/16/15

05/16/16

2,867

352

2014 RSU

05/13/14

05/13/15

05/13/16

4,134

542

Subtotal:

8,725

1,077

¹	Represents the portion of the vesting period worked since the most recent vesting date.

Exhibit 10.5

APACHE CORPORATION

NON-EMPLOYEE DIRECTORS’ COMPENSATION PLAN

As Amended and Restated May 14, 2015

PURPOSE

The purpose of the Non-Employee Directors’ Compensation Plan (the “Plan”) is to set forth certain of the compensation arrangements for members of the board of directors (the “Board”) of Apache Corporation (“Apache”) who are not also employees of Apache (“Non-Employee Directors”). The Plan does not supersede or amend in any way any other arrangements relating to Non-Employee Directors including specifically, without limitation, the Outside Directors’ Retirement Plan, the 2007 and 2011 Omnibus Equity Compensation Plans, indemnification provisions of Apache’s charter or bylaws, or policies with respect to reimbursement of expenses.

It is Apache’s express intention that this Plan comply with the requirements of Code §409A, and the Plan shall be interpreted in that light.

PLAN PROVISIONS

1. Board Retainer. Each Non-Employee Director shall be paid $25,000 at the end of each calendar quarter (or as soon thereafter as is administratively practicable) during which he or she served as a member of Apache’s Board (“Cash Retainer Fee”). If a Non-Employee Director serves as a member of Apache’s Board for less than an entire calendar quarter, the Cash Retainer Fee for that quarter shall be prorated on the basis of the number of weeks served during that calendar quarter.

2. Non-Executive Chairman Retainer. Subject to section 4 below, each Non-Employee Director serving as non-executive chairman of Apache’s Board shall be paid $25,000 at the end of each calendar quarter (or as soon thereafter as is administratively practicable) (“Non-Executive Chairman Retainer Fee”). If a Non-Employee Director serves as non-executive chairman for less than an entire calendar quarter, the Non-Executive Chairman Retainer Fee for that quarter shall be prorated on the basis of the number of weeks served as non-executive chairman during that calendar quarter.

3. Committee Chairperson Retainers. Subject to section 4 below, each Non-Employee Director serving as chairperson of any committee of Apache’s Board shall be paid the fee indicated below at the end of each calendar quarter (or as soon thereafter as is administratively practicable) (“Committee Chairperson Retainer Fee”):

•

Audit Committee - $5,000

•

Corporate Governance and Nominating Committee - $3,750

•

Management Development and Compensation Committee - $5,000

If a Non-Employee Director serves as chairperson of any committee of Apache’s Board for less than an entire calendar quarter, the applicable Committee Chairperson Retainer Fee for that quarter shall be prorated on the basis of the number of weeks served as chairperson during that calendar quarter.

4. Combined Non-Executive Chairman and Committee Chairperson Retainer. If the Non-Employee Director serving as non-executive chairman of Apache’s Board is also serving as chairperson of any committee of Apache’s Board, the Non-Employee Director shall be paid $25,000 at the end of each calendar quarter (or as soon thereafter as is administratively practicable) (“Combined Retainer Fee”). If a Non-Employee Director serves as both non-executive chairman and committee chairperson for less than an entire calendar quarter, the Combined Retainer Fee for that quarter shall be prorated on the basis of the number of weeks served as both non-executive chairman and chairperson during that calendar quarter.

5. Attendance Fees. No attendance fee shall be paid to any Non-Employee Director for any meeting of the Board or any committee thereof attended in person or by teleconference, video conference, or other similar means.

6. Optional Deferral of Fees.

(a) Deferrable Fees. A Non-Employee Director may defer all or any portion of any unpaid Cash Retainer Fees, Non-Executive Chairman Retainer Fees, Committee Chairperson Retainer Fees, and Combined Retainer Fees (“Deferrable Fees”).

(b) Election to Defer. A Non-Employee Director’s election to defer all or any portion of Deferrable Fees (“Deferral Election”) shall be effected by the completion of a Deferral Election form. A Deferral Election form must be executed by the deferring Non-Employee Director and received by Apache on or before December 31 of the year prior to the year in which the Deferrable Fees are earned, except that a new Non-Employee Director may enter into a Deferral Election within 30 days of becoming a Non-Employee Director. A Deferral Election shall apply only to Deferrable Fees paid for services rendered after the date of the Deferral Election. Each December 31, a Deferral Election made for the following year shall become irrevocable. A new Deferral Election must be made each year for the upcoming year.

(c) Memorandum Account. Apache shall maintain a separate account (“Memorandum Account”) for each deferring Non-Employee Director. Each Memorandum Account shall be subdivided into a “Cash Account” and a “Stock Account.” The Memorandum Accounts are merely for recordkeeping purposes, and do not represent any actual property that has been set aside for Non-Employee Directors. Nothing contained in this Plan shall be construed to require Apache to fund any Memorandum Account. Neither the deferring Non-Employee Director nor his or her Beneficiary shall have any property interest whatsoever in any specific assets of Apache. A Non-Employee Director shall have no ownership rights with respect to any balance in his or her Memorandum Account, and thus shall have no right to vote any Stock in his or her Stock Account.

(d) Crediting of Cash Accounts. Any deferred Cash Retainer Fees and deferred Committee Chairperson Retainer Fees shall be credited to the Cash Account. Any dividends paid on Stock in the Stock Accounts shall be credited to the Cash Account.

All amounts credited to a Cash Account shall be credited with investment earnings at the rate of interest earned by Apache’s short-term marketable securities portfolio or an equivalent index or market rate for similar investments in short-term marketable securities.

(e) Crediting of Stock Accounts. No deferrals shall be credited to a Stock Account; however, see section 6(f) for transfers from the Cash Account to the Stock Account. All amounts credited to a Stock Account shall be treated as if such amounts were invested in Stock. Apache shall at all times have reserved from its treasury shares for issuance under this Plan a number of shares at least equal to the number of shares of Stock in the Stock Accounts.

(f) Transfers from Cash Account to Stock Account. Each year, a Non-Employee Director may elect to transfer all or a portion of his or her Cash Account to his or her Stock Account (but only in whole-share increments) by completing an election form that must be received by Apache on or before December 31. Any such transfer shall be made as of the first trading day of the following year, and shall be based on the per share closing price of the Stock as reported on the Composite Tape for the first trading day of the year. Transfers are not permitted from a Stock Account to a Cash Account.

(g) Payout Elections. If a Non-Employee Director’s directorship terminated before January 1, 2005, his or her benefit payments shall be determined under the terms of the Plan on December 31, 2004 and the payout elections in effect at the time his or her directorship terminated. If a Non-Employee Director had a Separation from Service after December 31, 2004 and before January 1, 2009, his or her benefits shall be determined under the terms of the Plan in effect at the time of his or her Separation from Service (defined in paragraph (v) below). The remainder of this section 6(g) shall only apply to individuals who continue as Non-Employee Directors after December 31, 2008, or who become Non-Employee Directors after December 31, 2008.

(i) Election. Each individual who is Non-Employee Director on January 1, 2009 has made a payout election for his or her Memorandum Account, which specified both the timing and form of distribution. A new Non-Employee Director shall make a payout election at the same time that he or she makes his or her first Deferral Election. If no payout election is timely made, the Non-Employee Director shall be deemed to have elected to be paid a single lump-sum payment in January after his or her Separation from Service. The payout election with respect to a Memorandum Account is irrevocable after the deadline for making the payout election. The payout election will not apply if there is a change of control (see section 6(h)) or the Non-Employee Director dies (see section 6(i)).

(ii) Form of Payout. A Non-Employee Director may elect to be paid out in a single lump-sum payment or in two to ten annual installments. Each installment from a Stock Account shall be equal to the number of shares in the Stock Account on the second trading day of that year, divided by the number of remaining installments, rounded down to the nearest whole share. For example, the first installment from a Stock Account payable in seven

installments beginning in 2010 shall be one-seventh of the shares in the account on the second trading day of 2010; the second installment shall be one-sixth of the shares in the account on the second trading date of 2011; etc. Each installment from a Cash Account shall be equal to the balance of the Cash Account on the second trading day of the year, divided by the number of remaining installments, except that the last installment shall equal the balance of the Cash Account at the time the distribution is processed. Distributions from the Stock Account shall be paid in whole shares of Stock. Distributions from the Cash Account shall be paid in cash.

(iii) Timing of Payment(s). A Non-Employee Director may select a specific year in which the single lump-sum payment is made or the installment payments begin (“In-Service Distribution”), in which case the payment will be made as soon as administratively practicable in January of the earlier of the selected year or the year after the Non-Employee Director’s Separation from Service. Alternatively, a Non-Employee Director may elect for his or her single lump-sum payment or first installment to be paid as soon as administratively practicable in the January after his or her Separation from Service. Subsequent installment payments shall be made in January of each year, beginning with the year after the first installment was paid.

(iv) Special Rules Where Payments Begin While Still a Director. This paragraph (iv) applies to a Non-Employee Director who elected an In-Service Distribution. A second Memorandum Account shall be established for the Non-Employee Director for any amounts deferred into the Plan during or after the year in which the In-Service Distribution is scheduled to begin. Distributions from the second Memorandum Account shall be subject to the rules specified in this section 6(g), except that a Non-Employee Director must complete a payout election for the second Memorandum Account by the December 31 that immediately precedes the year in which amounts are first deferred into the second Memorandum Account.

(v) Definition of Separation from Service. The term “Separation from Service” has the same meaning as the term “separation from service” in Code §409A(a)(2)(A)(i), determined using the default rules in the regulations and other guidance of general applicability issued pursuant to Code §409A, including the special rules for members of a board of directors found in Treasury Regulation §1.409A-1(h)(5) and §1.409A-1(c)(2)(ii). In general, a Separation from Service will occur when a Non-Employee Director ceases to be a member of the Board.

(vi) Special Rules for Specified Employees.

If a Non-Employee Director is a Specified Employee, (A) any payments under paragraph (iii) above that are triggered by his or her Separation from Service and scheduled to occur within six months after the Separation from Service shall be delayed and paid six months after the Separation from Service, and (B) section 6(h) is modified for a Non-Employee Director whose Separation from Service preceded a change of control by less than six months to provide that the lump sum payment will not occur until six months after the Separation from Service.

The term “Specified Employee” has the same meaning as the term “specified employee” in Code §409A(a)(2)(B)(i), and is determined using the default rules in the regulations and other guidance of general applicability issued pursuant to Code §409A.

(h) Change of Control. If there is a change of control of Apache that is described in Code §409A(a)(2)(A)(v), each Memorandum Account shall be paid to the appropriate Non-Employee Director (or to the Beneficiary of a deceased Non-Employee Director) in a single lump-sum payment made on the date of the change of control or as soon thereafter as is administratively practicable and in no event later than the end of the calendar year in which the change of control occurs.

(i) Beneficiaries. If a Non-Employee Director dies while there is still a balance in his or her Memorandum Account, that amount shall be paid to his or her Beneficiary in a single lump-sum payment that is made as soon as administratively convenient four months after the Non-Employee Director’s death, but in no event later than the end of the calendar year that contains the day that is four months after the Non-Employee Director’s death. This four-month period is designed to provide the Beneficiary with a sufficient opportunity to disclaim all or part of the benefit, as explained in paragraph (iv) below. No payment shall be made until Apache has been furnished with proof of death and such other information as it may reasonably require.

(i) Designation. Each Non-Employee Director shall designate one or more persons, trusts, or other entities as his or her beneficiary (“Beneficiary”). In the absence of an effective Beneficiary designation as to part or all of a Memorandum Account, such amount shall be distributed to the Non-Employee Director’s surviving Spouse, if any, otherwise to the Non-Employee Director’s estate. Unless the Non-Employee Director’s Beneficiary designation form specifies otherwise, if a Beneficiary dies after the Non-Employee Director but before being paid by the Plan, the Plan shall pay the Beneficiary’s estate.

(ii) Changing Beneficiaries. A Beneficiary designation may be changed by the Non-Employee Director at any time and without the consent of any previously designated Beneficiary. However, if the Non-Employee Director is married, the Non-Employee Director’s Spouse shall be the Beneficiary unless the Spouse has consented to the designation of a different Beneficiary. To be effective, the Spouse’s consent must have been made before January 1, 2005 or, if made on or after January 1, 2005, the Spouse’s consent must be in writing, witnessed by a notary public, and filed with Apache. If the Non-Employee Director has designated his or her Spouse as a primary or contingent Beneficiary, and the Non-Employee Director and Spouse later divorce (or their marriage is annulled), then the former Spouse will be treated as having pre-deceased the Non-Employee Director for purposes of interpreting a Beneficiary designation form completed prior to the divorce or annulment; this provision will apply only if Apache is notified of the divorce or annulment before payment to the former Spouse is made.

(iii) “Spouse” shall mean the individual to whom a Non-Employee Director is lawfully married according to the laws of the state of the Non-Employee Director’s domicile.

(iv) Disclaimers. Any individual or legal entity who is a Beneficiary may disclaim all or any portion of his or her interest in the Plan, provided that the disclaimer satisfies the requirements of Code §2518(b) and applicable state law. The legal guardian of a minor or legally incompetent person may disclaim for such person. The personal representative (or the individual or legal entity acting in the capacity of the personal representative according to applicable state law) may disclaim on behalf of a Beneficiary who has died. The amount disclaimed shall be distributed as if the disclaimant had predeceased the individual whose death caused the disclaimant to become a Beneficiary.

(j) Adjustments in Stock. In the event of any merger, consolidation, liquidation, dissolution, recapitalization, or reorganization of Apache, split, subdivision, or consolidation of shares of Stock, the payment of a stock dividend, or any other material change in Apache’s capital structure, the number of shares of Stock shown in each deferring Non-Employee Director’s Stock Account shall be adjusted to reflect that number of shares of Stock or such cash, securities, or other property to which such Non-Employee Director would have been entitled if, immediately prior thereto, such Non-Employee Director had been the holder of record of the number of shares of Stock shown in the Stock Account. Notwithstanding the foregoing, the issuance by Apache of Stock, rights, options, or warrants to acquire Stock, or securities convertible or exchangeable into Stock in consideration of cash, property, labor, or services, whether or not for fair value, shall not result in an adjustment pursuant to this section 6(j).

7. Assignment and Transfer. The right of the Non-Employee Director or any other person to receive payments under the Plan shall not be assigned, transferred, pledged, or encumbered.

8. Amendment of Plan. The Plan may be amended from time to time or terminated by vote of the Board. Upon such amendment or termination, Non-Employee Directors shall not be entitled to receive pursuant to the Plan any compensation or other rights or benefits not accrued hereunder prior to the time of amendment or termination hereof; provided, however, that no such Plan amendment or termination shall impair any rights of Non-Employee Directors to amounts previously accrued pursuant to the Plan or accumulated in such Non-Employee Director’s Memorandum Account. A Plan termination shall not affect the timing of any benefit payments from a Memorandum Account; payment may occur substantially after the Plan is terminated.

9. Successors and Assigns. The Plan is binding upon Apache and its successors and assigns. The Plan shall continue in effect until terminated by the Board. Any such termination shall operate only prospectively and shall not affect the rights and obligations under elections previously made.

10. Administrative Delays. The Plan shall be administered by the Management Development and Compensation Committee (the “MD&C Committee”) of the Board. The MD&C Committee may delay any payment from this Plan for as short a period as is administratively necessary. For example, a delay may be imposed upon all payments from the Plan when there is a change of recordkeeper, and a delay may be imposed on payments to any recipient until they have provided the information needed for tax withholding and tax reporting, as well as any other information reasonably requested by the MD&C Committee. If possible, the delay will satisfy one of the conditions to be considered a permissible delay under Code §409A.

11. 409A Noncompliance. To the extent that Apache or the MD&C Committee takes any action that causes a violation of Code §409A or fails to take reasonable actions required to comply with Code §409A, Apache shall pay an additional amount (the “gross-up”) to the individual(s) who are subject to the penalty tax under Code §409A(a)(1) that is sufficient to put the individual in the same after-tax position he or she would have been in had there been no violation of Code §409A. Apache shall not pay a gross-up if the cause of the violation of Code §409A is the recipient’s failure to take reasonable actions (such as failing to timely provide the information required for tax withholding or failing to timely provide other information reasonably requested by the MD&C Committee – with the result that the delay in payment violates Code §409A). Any gross-up will be made as soon as administratively convenient after the MD&C Committee determines the gross-up is owed, and no later than the end of the calendar year immediately following the calendar year in which the additional taxes are remitted. However, if the gross-up is due to a tax audit or litigation addressing the existence or amount of a tax liability, the gross-up will be paid as soon as administratively convenient after the litigation or audit is completed, and no later than the end of the calendar year following the calendar year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the litigation.

12. Notices. Any notice, form, or election required or permitted to be given under the Plan shall be in writing and shall be given by first class mail, by Federal Express, UPS, or other carrier, by fax or other electronic means, or by personal delivery to the appropriate party, addressed:

(a) If to Apache, to Apache Corporation at its principal place of business at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400 (Attention: Corporate Secretary) or at such other address as may have been furnished in writing by Apache to a Non-Employee Director; or

(b) If to a Non-Employee Director or Spouse, at the address the Non-Employee Director has furnished to Apache in writing.

(c) If to a Beneficiary, at the address the Non-Employee Director has furnished to Apache in writing for such Beneficiary, unless the Beneficiary has furnished his or her own address in writing to Apache.

Any such notice to a Non-Employee Director, Spouse, or Beneficiary shall be deemed to have been given as of the third day after deposit in the United States Postal Service, postage prepaid, properly addressed as set forth above, in the case of a mailed notice, or as of the date delivered in the case of any other method of delivery.

13. Gender. Any term used herein in the singular shall also include the plural, and the masculine gender shall also include the feminine gender, and vice versa.

14. Statutory References. Any reference to a specific section of the Code shall be deemed to refer to that section or to the appropriate successor section.

15. Governing Law. The Plan shall be governed by the laws of the State of Texas, ignoring any conflicts-of-law provisions.

Dated: May 14, 2015


ATTEST:	APACHE CORPORATION

/s/ Cheri L. Peper	By:	/s/ Margery M. Harris
Cheri L. Peper	Margery M. Harris
Corporate Secretary	Executive Vice President,
	Human Resources

Exhibit 10.6

Apache Corporation

Non-Employee Directors’ Restricted Stock Units Program Specifications

As Amended and Restated Effective May 14, 2015


Share Plan:		2011 Omnibus Equity Compensation Plan (the “Omnibus Plan”), the terms of which are incorporated herein by reference.

Administration:		This Program is administered by the Management Development and Compensation Committee of the Company’s Board of Directors.

Eligible Participants:		Members of the Company’s Board of Directors, as of the applicable grant date, who are neither officers nor employees of the Company.

Objective:		The program is designed to be administered in conjunction with the provisions of the current Non-Employee Directors’ Compensation Plan as a means to recognize the non-employee directors for services rendered through the awarding of equity compensation.

Quarterly Grant Dates:		The last day of each calendar quarter.

Quarterly Grant to Non-Employee Directors*:		RSUs the number of which is calculated by dividing $50,000 by the Fair Market Value (as defined in the Omnibus Plan) of a share of Apache Common Stock on the grant date. If applicable, the grant shall be prorated for a non-employee director’s service during the calendar quarter. If the calculated number of RSUs includes a fraction, the number shall be rounded down to the nearest whole number.

Quarterly Grant to Non-Executive Chairman*:		RSUs the number of which is calculated by dividing $25,000 by the Fair Market Value (as defined in the Omnibus Plan) of a share of Apache Common Stock on the grant date. If applicable, the grant shall be prorated for the non-employee, non-executive chairman’s service during the calendar quarter. If the calculated number of RSUs includes a fraction, the number shall be rounded down to the nearest whole number.

Program Term:		Until termination of the Omnibus Plan

Vesting:		100% as of grant date, with 100% automatic, mandatory deferral as described below.

Automatic Deferral		Upon vesting, the RSUs will be deferred into the Outside Directors’ Deferral Program and the RSUs and the associated dividend amounts (converted to shares of the Company’s common stock) will be distributed in a lump sum at the times specified in the Outside Directors’ Deferral Program.

*	These grants do not result in any change to the cash retainers for board, non-executive chairman, and committee service paid under the provisions of the Non-Employee Directors’ Compensation Plan.

EXHIBIT 31.1

CERTIFICATIONS

I, John J. Christmann, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Apache Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John J. Christmann

John J. Christmann

Chief Executive Officer and President

(principal executive officer)

Date: August 6, 2015

EXHIBIT 31.2

CERTIFICATIONS

I, Stephen J. Riney, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Apache Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Stephen J. Riney

Stephen J. Riney

Executive Vice President and Chief Financial Officer

(principal financial officer)

Date: August 6, 2015

EXHIBIT 32.1

APACHE CORPORATION

Certification of Principal Executive Officer

and Principal Financial Officer

I, John J. Christmann, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Corporation for the quarterly period ending June 30, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Corporation.


/s/ John J. Christmann
By:		John J. Christmann
Title:		Chief Executive Officer and President
		(principal executive officer)

Date:		August 6, 2015

I, Stephen J. Riney, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Corporation for the quarterly period ending June 30, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Corporation.


/s/ Stephen J. Riney
By:		Stephen J. Riney
Title:		Executive Vice President and Chief Financial Officer
		(principal financial officer)

Date:		August 6, 2015

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

SEC Filings

Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company