Form 10-Q APACHE CORP For: Sep 30

�

�

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 September�30, 2014

OR

�

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

For the transition period from �������������������� to ��������������������

Commission File Number 1-4300

�

�

�

APACHE CORPORATION

(exact name of registrant as specified in its charter)

�

�

�

Delaware	�	41-0747868
(State or other jurisdiction of 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.

�

Large�accelerated�filer	�	x	��	Accelerated�filer	�	�
Non-accelerated filer	�	���(Do not check if a smaller reporting company)	��	Smaller�reporting�company	�	�

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 October�31, 2014�������������������� 376,482,179

�

�

�

---

PART I � FINANCIAL INFORMATION

ITEM�1 � FINANCIAL STATEMENTS

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

�

�

��

For the Quarter Ended�September�30,

�

�

For�the�Nine�Months Ended�September�30,

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

(In millions, except per common share data)

�

REVENUES AND OTHER:

��

�

�

�

Oil and gas production revenues

��

�

�

�

Oil revenues

��

$

2,753

�

�

$

3,468

�

�

$

8,518

�

�

$

9,790

�

Gas revenues

��

�

538

�

�

�

645

�

�

�

1,773

�

�

�

2,048

�

Natural gas liquids revenues

��

�

177

�

�

�

175

�

�

�

532

�

�

�

473

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

3,468

�

�

�

4,288

�

�

�

10,823

�

�

�

12,311

�

Derivative instrument gains (losses), net

��

�

273

�

�

�

(422

)�

�

�

79

�

�

�

(275

)�

Other

��

�

(1

)�

�

�

34

�

�

�

(3

)�

�

�

78

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

3,740

�

�

�

3,900

�

�

�

10,899

�

�

�

12,114

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

OPERATING EXPENSES:

��

�

�

�

Depreciation, depletion, and amortization:

��

�

�

�

Oil and gas property and equipment

��

�

�

�

Recurring

��

�

1,173

�

�

�

1,272

�

�

�

3,437

�

�

�

3,740

�

Additional

��

�

1,562

�

�

�

627

�

�

�

1,765

�

�

�

627

�

Other assets

��

�

100

�

�

�

96

�

�

�

296

�

�

�

290

�

Asset retirement obligation accretion

��

�

46

�

�

�

65

�

�

�

135

�

�

�

192

�

Lease operating expenses

��

�

652

�

�

�

772

�

�

�

1,862

�

�

�

2,275

�

Gathering and transportation

��

�

67

�

�

�

81

�

�

�

203

�

�

�

231

�

Taxes other than income

��

�

170

�

�

�

176

�

�

�

532

�

�

�

574

�

General and administrative

��

�

112

�

�

�

120

�

�

�

309

�

�

�

359

�

Acquisition, divestiture, and separation costs

��

�

34

�

�

�

���

�

�

�

66

�

�

�

���

�

Financing costs, net

��

�

41

�

�

�

50

�

�

�

103

�

�

�

157

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

3,957

�

�

�

3,259

�

�

�

8,708

�

�

�

8,445

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

��

�

(217

)�

�

�

641

�

�

�

2,191

�

�

�

3,669

�

Current income tax provision

��

�

297

�

�

�

409

�

�

�

1,038

�

�

�

1,190

�

Deferred income tax provision (benefit)

��

�

727

�

�

�

(203

)�

�

�

930

�

�

�

229

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST

��

�

(1,241

)�

�

�

435

�

�

�

223

�

�

�

2,250

�

Net loss from discontinued operations, net of tax

��

�

���

�

�

�

(129

)�

�

�

(517

)�

�

�

(192

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

��

�

(1,241

)�

�

�

306

�

�

�

(294

)�

�

�

2,058

�

Preferred stock dividends

��

�

���

�

�

�

6

�

�

�

���

�

�

�

44

�

Net income attributable to noncontrolling interest

��

�

89

�

�

�

���

�

�

�

295

�

�

�

���

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

��

$

(1,330

)�

�

$

300

�

�

$

(589

)�

�

$

2,014

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS:

��

�

�

�

Net income (loss) from continuing operations attributable to common shareholders

��

$

(1,330

)�

�

$

429

�

�

$

(72

)�

�

$

2,206

�

Net loss from discontinued operations

��

�

���

�

�

�

(129

)�

�

�

(517

)�

�

�

(192

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net income (loss) attributable to common shareholders

��

$

(1,330

)�

�

$

300

�

�

$

(589

)�

�

$

2,014

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) PER COMMON SHARE:

��

�

�

�

Basic net income (loss) from continuing operations per share

��

$

(3.50

)�

�

$

1.08

�

�

$

(0.19

)�

�

$

5.59

�

Basic net loss from discontinued operations per share

��

�

���

�

�

�

(0.33

)�

�

�

(1.33

)�

�

�

(0.48

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Basic net income (loss) per share

��

$

(3.50

)�

�

$

0.75

�

�

$

(1.52

)�

�

$

5.11

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

DILUTED NET INCOME (LOSS) PER COMMON SHARE:

��

�

�

�

Diluted net income (loss) from continuing operations per share

��

$

(3.50

)�

�

$

1.07

�

�

$

(0.19

)�

�

$

5.53

�

Diluted net loss from discontinued operations per share

��

�

���

�

�

�

(0.32

)�

�

�

(1.33

)�

�

�

(0.47

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Diluted net income (loss) per share

��

$

(3.50

)�

�

$

0.75

�

�

$

(1.52

)�

�

$

5.06

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

��

�

�

�

Basic

��

�

381

�

�

�

399

�

�

�

387

�

�

�

394

�

Diluted

��

�

381

�

�

�

401

�

�

�

387

�

�

�

407

�

DIVIDENDS DECLARED PER COMMON SHARE

��

$

0.25

�

�

$

0.20

�

�

$

0.75

�

�

$

0.60

�

The accompanying notes to consolidated financial statements

are an integral part of this statement.

�

1

---

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)

�

�

��

For the Quarter Ended�September�30,

�

�

For�the�Nine�Months Ended�September�30,

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

(In millions)

�

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

��

$

(1,241

)�

�

$

306

�

�

$

(294

)�

�

$

2,058

�

OTHER COMPREHENSIVE INCOME (LOSS):

��

�

�

�

Commodity cash flow hedge activity, net of tax:

��

�

�

�

Reclassification of loss on settled derivative instruments

��

�

���

�

�

�

(1

)�

�

�

���

�

�

�

13

�

Change in fair value of derivative instruments

��

�

���

�

�

�

(5

)�

�

�

(1

)�

�

�

(6

)�

Derivative hedge ineffectiveness reclassified into earnings

��

�

���

�

�

�

1

�

�

�

���

�

�

�

1

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

���

�

�

�

(5

)�

�

�

(1

)�

�

�

8

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

��

�

(1,241

)�

�

�

301

�

�

�

(295

)�

�

�

2,066

�

Preferred stock dividends

��

�

���

�

�

�

6

�

�

�

���

�

�

�

44

�

Comprehensive income attributable to noncontrolling interest

��

�

89

�

�

�

���

�

�

�

295

�

�

�

���

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

��

$

(1,330

)�

�

$

295

�

�

$

(590

)�

�

$

2,022

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

The accompanying notes to consolidated financial statements

are an integral part of this statement.

�

2

---

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)

�

�	��	For the Nine Months Ended�September�30,						�
�	��	2014		�	�	2013		�
�	��	(In millions)						�
CASH FLOWS FROM OPERATING ACTIVITIES:	��				�
Net income (loss) including noncontrolling interest	��	$	(294	)�	�	$	2,058	�
Adjustments to reconcile net income to net cash provided by operating activities:	��				�
Loss from discontinued operations	��	�	517	�	�	�	192	�
Depreciation, depletion, and amortization	��	�	5,498	�	�	�	4,657	�
Asset retirement obligation accretion	��	�	135	�	�	�	192	�
Provision for deferred income taxes	��	�	930	�	�	�	229	�
Other	��	�	(263	)�	�	�	190	�
Changes in operating assets and liabilities:	��				�
Receivables	��	�	572	�	�	�	(49	)�
Inventories	��	�	78	�	�	�	(41	)�
Drilling advances	��	�	(84	)�	�	�	123	�
Deferred charges and other	��	�	(244	)�	�	�	(205	)�
Accounts payable	��	�	(303	)�	�	�	183	�
Accrued expenses	��	�	(117	)�	�	�	(369	)�
Deferred credits and noncurrent liabilities	��	�	21	�	�	�	40	�
	��	�	�	�	�	�	�	�
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES	��	�	6,446	�	�	�	7,200	�
NET CASH PROVIDED BY DISCONTINUED OPERATIONS	��	�	82	�	�	�	158	�
	��	�	�	�	�	�	�	�
NET CASH PROVIDED BY OPERATING ACTIVITIES	��	�	6,528	�	�	�	7,358	�
CASH FLOWS FROM INVESTING ACTIVITIES:	��				�
Additions to oil and gas property	��	�	(7,131	)�	�	�	(7,186	)�
Additions to gas gathering, transmission, and processing facilities	��	�	(1,035	)�	�	�	(852	)�
Proceeds from divestiture of Gulf of Mexico Shelf properties	��	�	���	�	�	�	3,594	�
Proceeds from sale of Deepwater Gulf of Mexico assets	��	�	1,367	�	�	�	���	�
Restricted cash related to divestitures	��	�	(545	)�	�	�	���	�
Proceeds from Kitimat LNG transaction, net	��	�	���	�	�	�	396	�
Proceeds from sale of other oil and gas properties	��	�	390	�	�	�	199	�
Leasehold and property acquisitions	��	�	(655	)�	�	�	(313	)�
Other, net	��	�	(80	)�	�	�	(12	)�
	��	�	�	�	�	�	�	�
NET CASH USED IN CONTINUING INVESTING ACTIVITIES	��	�	(7,689	)�	�	�	(4,174	)�
NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS	��	�	748	�	�	�	(160	)�
	��	�	�	�	�	�	�	�
NET CASH USED IN INVESTING ACTIVITIES	��	�	(6,941	)�	�	�	(4,334	)�
CASH FLOWS FROM FINANCING ACTIVITIES:	��				�
Commercial paper and bank credit facilities, net	��	�	1,246	�	�	�	(539	)�
Payments on fixed rate debt	��	�	���	�	�	�	(900	)�
Distributions to noncontrolling interest	��	�	(124	)�	�	�	���	�
Dividends paid	��	�	(271	)�	�	�	(280	)�
Treasury stock activity, net	��	�	(1,830	)�	�	�	(249	)�
Other	��	�	38	�	�	�	38	�
	��	�	�	�	�	�	�	�
NET CASH USED IN CONTINUING FINANCING ACTIVITIES	��	�	(941	)�	�	�	(1,930	)�
NET CASH USED IN DISCONTINUED OPERATIONS	��	�	(42	)�	�	�	(3	)�
	��	�	�	�	�	�	�	�
NET CASH USED IN FINANCING ACTIVITIES	��	�	(983	)�	�	�	(1,933	)�
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	��	�	(1,396	)�	�	�	1,091	�
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	��	�	1,906	�	�	�	160	�
	��	�	�	�	�	�	�	�
CASH AND CASH EQUIVALENTS AT END OF PERIOD	��	$	510	�	�	$	1,251	�
	��	�	�	�	�	�	�	�
SUPPLEMENTARY CASH FLOW DATA:	��				�
Interest paid, net of capitalized interest	��	$	143	�	�	$	185	�
Income taxes paid, net of refunds	��	�	1,134	�	�	�	1,344	�

The accompanying notes to consolidated financial statements

are an integral part of this statement.

�

3

---

APACHE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

�

�	��	September�30,		�	�	December�31,		�
�	��	2014		�	�	2013		�
�	��	(In millions)						�
ASSETS	��				�
CURRENT ASSETS:	��				�
Cash and cash equivalents	��	$	510	�	�	$	1,906	�
Short-term restricted cash	��	�	74	�	�	�	���	�
Receivables, net of allowance	��	�	2,287	�	�	�	2,952	�
Inventories	��	�	713	�	�	�	891	�
Drilling advances	��	�	434	�	�	�	371	�
Prepaid assets and other	��	�	408	�	�	�	246	�
	��	�	�	�	�	�	�	�
	��	�	4,426	�	�	�	6,366	�
	��	�	�	�	�	�	�	�
PROPERTY AND EQUIPMENT:	��				�
Oil and gas, on the basis of full-cost accounting:	��				�
Proved properties	��	�	86,963	�	�	�	83,390	�
Unproved properties and properties under development, not being amortized	��	�	7,928	�	�	�	8,363	�
Gathering, transmission and processing facilities	��	�	7,874	�	�	�	6,995	�
Other	��	�	1,107	�	�	�	1,071	�
	��	�	�	�	�	�	�	�
	��	�	103,872	�	�	�	99,819	�
Less: Accumulated depreciation, depletion, and amortization	��	�	(50,837	)�	�	�	(47,398	)�
	��	�	�	�	�	�	�	�
	��	�	53,035	�	�	�	52,421	�
	��	�	�	�	�	�	�	�
OTHER ASSETS:	��				�
Long-term restricted cash	��	�	471	�	�	�	���	�
Goodwill	��	�	1,369	�	�	�	1,369	�
Deferred charges and other	��	�	1,689	�	�	�	1,481	�
	��	�	�	�	�	�	�	�
	��	$	60,990	�	�	$	61,637	�
	��	�	�	�	�	�	�	�
LIABILITIES AND SHAREHOLDERS� EQUITY	��				�
CURRENT LIABILITIES:	��				�
Accounts payable	��	$	1,316	�	�	$	1,616	�
Current debt	��	�	20	�	�	�	53	�
Current asset retirement obligation	��	�	177	�	�	�	121	�
Derivative instruments	��	�	���	�	�	�	299	�
Other current liabilities	��	�	2,794	�	�	�	2,611	�
	��	�	�	�	�	�	�	�
	��	�	4,307	�	�	�	4,700	�
	��	�	�	�	�	�	�	�
LONG-TERM DEBT	��	�	10,902	�	�	�	9,672	�
	��	�	�	�	�	�	�	�
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:	��				�
Income taxes	��	�	9,298	�	�	�	8,364	�
Asset retirement obligation	��	�	3,096	�	�	�	3,101	�
Other	��	�	401	�	�	�	407	�
	��	�	�	�	�	�	�	�
	��	�	12,795	�	�	�	11,872	�
	��	�	�	�	�	�	�	�
COMMITMENTS AND CONTINGENCIES (Note 8)	��				�
EQUITY:	��				�
Common stock, $0.625 par, 860,000,000 shares authorized, 409,671,364 and 408,041,088 shares issued, respectively	��	�	256	�	�	�	255	�
Paid-in capital	��	�	12,379	�	�	�	12,251	�
Retained earnings	��	�	21,156	�	�	�	22,032	�
Treasury stock, at cost, 32,853,183 and 12,268,180 shares, respectively	��	�	(2,857	)�	�	�	(1,027	)�
Accumulated other comprehensive loss	��	�	(116	)�	�	�	(115	)�
	��	�	�	�	�	�	�	�
APACHE SHAREHOLDERS� EQUITY	��	�	30,818	�	�	�	33,396	�
Noncontrolling interest	��	�	2,168	�	�	�	1,997	�
	��	�	�	�	�	�	�	�
TOTAL EQUITY	��	�	32,986	�	�	�	35,393	�
	��	�	�	�	�	�	�	�
	��	$	60,990	�	�	$	61,637	�
	��	�	�	�	�	�	�	�

The accompanying notes to consolidated financial statements

are an integral part of this statement.

�

4

---

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)

�

�

�

Series D Preferred Stock

�

�

Common Stock

�

�

Paid-In Capital

�

�

Retained Earnings

�

�

Treasury Stock

�

�

Accumulated Other Comprehensive Loss

�

�

APACHE SHAREHOLDERS� EQUITY

�

�

Non Controlling Interest

�

�

TOTAL EQUITY

�

�

�

(In millions)

�

BALANCE AT DECEMBER 31, 2012

�

$

1,227

�

�

$

245

�

�

$

9,859

�

�

$

20,161

�

�

$

(30

)�

�

$

(131

)�

�

$

31,331

�

�

$

���

�

�

$

31,331

�

Net income

�

�

���

�

�

�

���

�

�

�

���

�

�

�

2,058

�

�

�

���

�

�

�

���

�

�

�

2,058

�

�

�

���

�

�

�

2,058

�

Commodity hedges, net of tax

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

8

�

�

�

8

�

�

�

���

�

�

�

8

�

Dividends:

�

�

�

�

�

�

�

�

�

Preferred

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(44

)�

�

�

���

�

�

�

���

�

�

�

(44

)�

�

�

���

�

�

�

(44

)�

Common ($0.60 per share)

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(237

)�

�

�

���

�

�

�

���

�

�

�

(237

)�

�

�

���

�

�

�

(237

)�

Common shares issued

�

�

���

�

�

�

9

�

�

�

1,218

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

1,227

�

�

�

���

�

�

�

1,227

�

Common stock activity, net

�

�

���

�

�

�

1

�

�

�

(12

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(11

)�

�

�

���

�

�

�

(11

)�

Treasury stock activity, net

�

�

���

�

�

�

���

�

�

�

(1

)�

�

�

���

�

�

�

(250

)�

�

�

���

�

�

�

(251

)�

�

�

���

�

�

�

(251

)�

Conversion of Series D preferred stock

�

�

(1,227

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(1,227

)�

�

�

���

�

�

�

(1,227

)�

Compensation expense

�

�

���

�

�

�

���

�

�

�

135

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

135

�

�

�

���

�

�

�

135

�

Other

�

�

���

�

�

�

���

�

�

�

(8

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(8

)�

�

�

���

�

�

�

(8

)�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

BALANCE AT SEPTEMBER 30, 2013

�

$

���

�

�

$

255

�

�

$

11,191

�

�

$

21,938

�

�

$

(280

)�

�

$

(123

)�

�

$

32,981

�

�

$

���

�

�

$

32,981

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

BALANCE AT DECEMBER 31, 2013

�

$

���

�

�

$

255

�

�

$

12,251

�

�

$

22,032

�

�

$

(1,027

)�

�

$

(115

)�

�

$

33,396

�

�

$

1,997

�

�

$

35,393

�

Net income (loss)

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(589

)�

�

�

���

�

�

�

���

�

�

�

(589

)�

�

�

295

�

�

�

(294

)�

Distributions to noncontrolling interest

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(124

)�

�

�

(124

)�

Commodity hedges, net of tax

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(1

)�

�

�

(1

)�

�

�

���

�

�

�

(1

)�

Dividends:

�

�

�

�

�

�

�

�

�

Common ($0.75 per share)

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(287

)�

�

�

���

�

�

�

���

�

�

�

(287

)�

�

�

���

�

�

�

(287

)�

Common stock activity, net

�

�

���

�

�

�

1

�

�

�

(12

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(11

)�

�

�

���

�

�

�

(11

)�

Treasury stock activity, net

�

�

���

�

�

�

���

�

�

�

(1

)�

�

�

���

�

�

�

(1,830

)�

�

�

���

�

�

�

(1,831

)�

�

�

���

�

�

�

(1,831

)�

Compensation expense

�

�

���

�

�

�

���

�

�

�

145

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

145

�

�

�

���

�

�

�

145

�

Other

�

�

���

�

�

�

���

�

�

�

(4

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(4

)�

�

�

���

�

�

�

(4

)�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

BALANCE AT SEPTEMBER 30, 2014

�

$

���

�

�

$

256

�

�

$

12,379

�

�

$

21,156

�

�

$

(2,857

)�

�

$

(116

)�

�

$

30,818

�

�

$

2,168

�

�

$

32,986

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

The accompanying notes to consolidated financial statements

are an integral part of this statement.

�

5

---

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 Current Report on Form 8-K dated July�17, 2014 for the fiscal year ended December�31, 2013, 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. In March 2014, Apache completed the sale of all of its operations in Argentina. Results of operations and cash flows for Argentina operations are reflected as discontinued operations in the Company�s financial statements for all periods presented. For more information regarding this divestiture, please refer to Note 2�Acquisitions and Divestitures.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of September�30, 2014, 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 Current Report on Form 8-K dated July�17, 2014 for the fiscal year ended December�31, 2013, other than the change in income taxes noted below and in Note 7�Income Taxes.

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.

Restricted Cash

The Company classifies cash balances as restricted cash when cash is restricted as to withdrawal or usage. As of September�30, 2014, the Company had $545 million of proceeds from the sale of deepwater Gulf of Mexico properties held by a qualified intermediary and available for use in a like-kind exchange under Section�1031 of the U.S. Internal Revenue Code. As of the date of this filing, the Company has utilized or plans to utilize $471 million of the cash held by the qualified intermediary in the acquisition of like-kind property, and as such, this amount is classified as long-term restricted cash on Apache�s consolidated balance sheet as of September�30, 2014. The remaining $74 million of restricted cash was returned to Apache in October and, as such, is classified as short-term restricted cash on Apache�s consolidated balance sheet as of September�30, 2014. For more information regarding the sale of the deepwater Gulf of Mexico properties, please refer to Note 2�Acquisitions and Divestitures.

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.

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. 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 Current Report on Form 8-K dated July�17, 2014 for the fiscal year ended December�31, 2013.

�

6

---

In the third quarter of 2014, the Company recorded $1.5 billion ($996 million net of tax) and $17 million ($7 million net of tax) in non-cash write-downs of the carrying value of the Company�s U.S. 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.

Income Taxes

Apache records deferred tax assets and liabilities to account for the expected future tax consequences of events that have been recognized in the financial statements and tax returns. The Company routinely assesses the realizability of its deferred tax assets. If the Company concludes that it is more likely than not that some or all of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance. Numerous judgments and assumptions are inherent in the determination of future taxable income, including factors such as future operating conditions (particularly as related to prevailing oil and gas prices) and changing tax laws.

Apache is required to assess whether the undistributed earnings of its foreign subsidiaries will be permanently reinvested. In the third quarter of 2014, Apache evaluated its permanent reinvestment position and determined that undistributed earnings from certain subsidiaries located in Apache�s Australia, Egypt, and North Sea regions will no longer be permanently reinvested. As a result of this change in position, Apache recorded a U.S. deferred income tax liability of $814 million on the undistributed earnings of subsidiaries located in these regions. Undistributed earnings of Apache�s Canadian subsidiaries remain permanently reinvested. Apache does not record U.S. deferred income taxes on foreign subsidiaries that are deemed to be permanently reinvested. When such earnings are no longer deemed permanently reinvested, Apache will recognize the appropriate U.S. current or deferred income tax liabilities. In addition, the Company recorded $249 million of U.S. deferred income tax expense on foreign earnings that were distributed to the U.S. in the third quarter of 2014.

New Pronouncements Issued But Not Yet Adopted

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.�2014-08�Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 modifies the criteria for disposals to qualify as discontinued operations and expands related disclosures. The guidance is effective for annual and interim reporting periods beginning after December�15, 2014. Adoption of this amendment will not have a material effect on our financial position or results of operations.

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. ASU 2014-09 is effective for annual and interim periods beginning after December�15, 2016. 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.

In August 2014, the FASB issued ASU No.�2014-15, which requires management of public and private companies to evaluate whether there are conditions and events that raise substantial doubt about the entity�s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable) and, if so, to disclose that fact. Management will be required to make this evaluation for both annual and interim reporting periods, if applicable. ASU No.�2014-15 is effective for annual periods ending after December�15, 2016 and interim periods within annual periods beginning after December�15, 2016. The Company does not expect the adoption of this amendment to have a material impact on its consolidated financial statements.

2. ACQUISITIONS AND DIVESTITURES

2014 Activity

Gulf of Mexico Deepwater 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. Apache�s net book value of oil and gas properties was reduced by $850 million of proved property costs and $518 million of unproved property costs as a result of the transaction.

�

7

---

Canada Divestiture

On April�30, 2014, Apache completed the sale of primarily dry gas producing hydrocarbon assets in the Deep Basin area of western Alberta and British Columbia, Canada, for $374 million. The assets comprise 328,400 net acres in the Ojay, Noel, and Wapiti areas. Apache retained 100 percent of its working interest in horizons below the Cretaceous in the Wapiti area, 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 An�nima for cash consideration of $800 million (subject to customary closing adjustments) plus the assumption of $52 million of bank debt as of June�30, 2013. The results of operations related to Argentina have been classified as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q. The carrying amounts of the major classes of assets and liabilities associated with the disposition were as follows:

�

�	��	December�31,		�
�	��	2013		�
�	��	(In millions)		�
ASSETS	��
Current assets	��	$	150	�
Net property and equipment	��	�	1,416	�
Other assets	��	�	12	�
	��	�	�	�
Total assets	��	$	1,578	�
	��	�	�	�
LIABILITIES	��
Current debt	��	$	51	�
Other current liabilities	��	�	95	�
Asset retirement obligations	��	�	91	�
Other long-term liabilities	��	�	21	�
	��	�	�	�
Total liabilities	��	$	258	�
	��	�	�	�

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

�

�

��

For�the�Quarter�Ended September�30,

�

�

For�the�Nine�Months�Ended September�30,

�

�

��

2014

�

��

2013

�

�

2014

�

�

2013

�

�

��

(In millions)

�

Revenues and other from discontinued operations

��

$

���

�

��

$

118

�

�

$

87

�

�

$

364

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

Loss from Argentina divestiture

��

�

���

�

��

�

���

�

�

�

(539

)�

�

�

���

�

Loss from operations in Argentina

��

�

���

�

��

�

(129

)�

�

�

(1

)�

�

�

(192

)�

Income tax benefit

��

�

���

�

��

�

���

�

�

�

23

�

�

�

���

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

Loss from discontinued operations, net of tax

��

$

���

�

��

$

(129

)�

�

$

(517

)�

�

$

(192

)�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

2013 Activity

Egypt Partnership

On November�14, 2013, Apache completed the sale of a�one-third�minority participation in its�Egypt�oil and gas business to�a subsidiary of Sinopec International Petroleum Exploration and Production Corporation (Sinopec). Apache received cash consideration of $2.95 billion after customary closing adjustments. Apache continues to operate its Egypt upstream oil and gas business. Apache recorded

�

8

---

$1.9 billion of the proceeds as a noncontrolling interest, which is reflected as a separate component of equity in the Company�s consolidated balance sheet. This represents one-third of Apache�s net book value of its Egypt holdings at the time of the transaction. The remaining proceeds were recorded as additional paid-in capital. Included in �Net income including noncontrolling interest� for the quarter ended September�30, 2014, is net income attributable to Sinopec�s interest totaling $89 million. For the first nine months of 2014, net income attributable to Sinopec�s interest totaled $295 million, of which the Company has distributed $124 million to Sinopec.

Gulf of Mexico Shelf Divestiture

On September�30, 2013, Apache completed the sale of its Gulf of Mexico Shelf operations and properties to Fieldwood Energy LLC (Fieldwood), an affiliate of Riverstone Holdings. Under the terms of the agreement, Apache received cash consideration of $3.7 billion, and Fieldwood assumed $1.5 billion of discounted asset abandonment liabilities. Additionally, Apache retained 50 percent of its ownership interest in all exploration blocks and in horizons below production in developed blocks.

Canada LNG Project

In February 2013, Apache completed a transaction with Chevron Canada Limited (Chevron Canada) under which each company became a 50-percent owner of the Kitimat LNG plant, the Pacific Trail Pipelines Limited Partnership (PTP), and 644,000 gross undeveloped acres in the Horn River and Liard basins. Chevron Canada will operate the LNG plant and pipeline while Apache Canada will continue to operate the upstream assets. Apache�s net proceeds from the transaction were $396 million after post-closing adjustments, and no gain or loss was recorded.

3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Objectives and Strategies

The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production. Apache manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production. The Company utilizes various types of derivative financial instruments, including swaps and options, to manage fluctuations in cash flows resulting from changes in commodity prices.

Counterparty Risk

The use of derivative instruments exposes the Company to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. To reduce the concentration of exposure to any individual counterparty, Apache utilizes a diversified group of investment-grade rated counterparties, primarily financial institutions, for its derivative transactions. As of September�30, 2014, Apache had derivative positions with 14 counterparties. The Company monitors counterparty creditworthiness on an ongoing basis; however, it cannot predict sudden changes in counterparties� creditworthiness. In addition, even if such changes are not sudden, the Company may be limited in its ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, Apache may not realize the benefit of some of its derivative instruments resulting from lower commodity prices.

The Company executes commodity derivative transactions under master agreements that have netting provisions that provide for offsetting payables against receivables. In general, if a party to a derivative transaction incurs a material deterioration in its credit ratings, as defined in the applicable agreement, the other party has the right to demand the posting of collateral, demand a transfer, or terminate the arrangement. The Company�s net derivative asset position at September�30, 2014, represents the aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net asset position. The Company has not provided any collateral to any of its counterparties as of September�30, 2014.

�

9

---

Derivative Instruments

As of September�30, 2014, Apache had the following commodity derivative positions:

�

�

��

�

��

�

�

Fixed-Price Swaps

�

Production

��

�

��

�

�

�

�

��

MMBtu

�

��

Weighted�Average

�

Period

��

Commodity

��

Settlement�Index

�

Mbbls

�

��

(in�000�s)

�

��

Fixed�Price

�

2014

��

Crude�Oil

��

NYMEX�WTI

�

�

5,750

�

��

�

���

�

��

$

90.83

�

2014

��

Crude Oil

��

Dated Brent

�

�

5,750

�

��

�

���

�

��

�

100.05

�

2014

��

Natural�Gas

��

Various(1)

�

�

���

�

��

�

16,235

�

��

�

4.37

�

�

(1)�	The natural gas price represents a weighted-average of several contracts entered into on a per-million British thermal units (MMBtu) basis. These contracts are settled against NYMEX Henry Hub and various Inside FERC indices.

Apache has currently elected not to designate any of its qualifying natural gas and oil derivatives as cash flow hedges. Changes in the fair value of these derivatives for the current period are recorded in the Company�s statement of consolidated operations.

Fair Value Measurements

Apache�s commodity derivative instruments consist of variable-to-fixed price commodity swaps. The fair values of the Company�s derivatives are not actively quoted in the open market. The Company uses a market approach to estimate the fair values of its derivative instruments, utilizing commodity futures price strips for the underlying commodities provided by a reputable third party.

The following table presents the Company�s derivative assets and liabilities measured at fair value on a recurring basis:

�

�

��

Fair Value Measurements Using

�

��

�

�

��

�

�

�

�

�

�

��

Quoted

�

��

�

�

��

�

�

��

�

�

��

�

�

�

�

�

�

��

Price in

�

��

Significant

�

��

Significant

�

��

�

�

��

�

�

�

�

�

�

��

Active

�

��

Other

�

��

Unobservable

�

��

Total

�

��

�

�

�

�

�

�

��

Markets

�

��

Inputs

�

��

Inputs

�

��

Fair

�

��

�

�

�

Carrying

�

�

��

(Level�1)

�

��

(Level 2)

�

��

(Level 3)

�

��

Value

�

��

Netting(1)

�

�

Amount

�

�

��

(In�millions)

�

��

�

�

�

�

�

September�30, 2014

��

��

��

��

��

�

Assets:

��

��

��

��

��

�

Commodity Derivative Instruments

��

$

���

�

��

$

41

�

��

$

���

�

��

$

41

�

��

$

���

�

�

$

41

�

Liabilities:

��

��

��

��

��

�

Commodity Derivative Instruments

��

�

���

�

��

�

���

�

��

�

���

�

��

�

���

�

��

�

���

�

�

�

���

�

December 31, 2013

��

��

��

��

��

�

Assets:

��

��

��

��

��

�

Commodity Derivative Instruments

��

$

���

�

��

$

3

�

��

$

���

�

��

$

3

�

��

$

(2

)�

�

$

1

�

Liabilities:

��

��

��

��

��

�

Commodity Derivative Instruments

��

�

���

�

��

�

301

�

��

�

���

�

��

�

301

�

��

�

(2

)�

�

�

299

�

�

(1)�	The derivative fair values are based on analysis of each contract on a gross basis, excluding the impact of netting agreements with counterparties.

�

10

---

Derivative Assets and Liabilities Recorded in the Consolidated Balance Sheet

All derivative instruments are reflected as either assets or liabilities at fair value in the consolidated balance sheet. These fair values are recorded by netting asset and liability positions where counterparty master netting arrangements contain provisions for net settlement. The carrying value of the Company�s derivative assets and liabilities and their locations on the consolidated balance sheet are as follows:

�

�	��	September�30,		�	��	December�31,		�
�	��	2014		�	��	2013		�
�	��	(In millions)						�
Current Assets: Prepaid assets and other	��	$	41	�	��	$	1	�
Current Liabilities: Derivative instruments	��	$	���	�	��	$	299	�

Derivative Activity Recorded in the Statement of Consolidated Operations

The following table summarizes the effect of derivative instruments on the Company�s statement of consolidated operations:

�

�

��

�

��

For�the�Quarter�Ended

�

�

For�the�Nine�Months�Ended

�

�

��

Gain�(Loss)�on�Derivatives

��

September�30,

�

�

September�30,

�

�

��

Recognized in Income

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

�

��

(In millions)

�

Gain (loss) on cash flow hedges reclassified from accumulated other comprehensive loss

��

Oil�and�Gas�Production Revenues

��

$

���

�

�

$

2

�

�

$

���

�

�

$

(18

)�

Loss for ineffectiveness on cash flow hedges

��

Revenues and other: Other

��

$

���

�

�

$

(1

)�

�

$

���

�

�

$

(1

)�

Derivatives not designated as cash flow hedges:

��

��

�

�

�

Realized loss

��

��

$

(41

)�

�

$

(91

)�

�

$

(262

)�

�

$

(138

)�

Unrealized gain (loss)

��

��

�

314

�

�

�

(331

)�

�

�

341

�

�

�

(137

)�

��

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Gain (loss) on derivatives not designated as cash flow hedges

��

Derivative�instrument�gains (losses), net

��

$

273

�

�

$

(422

)�

�

$

79

�

�

$

(275

)�

Unrealized gains and losses for derivative activity recorded in the statement of consolidated operations is reflected in the statement of consolidated cash flows as a component of �Other� in �Adjustments to reconcile net income to net cash provided by operating activities.�

Derivative Activity in Accumulated Other Comprehensive Loss

A reconciliation of the components of accumulated other comprehensive loss in the statement of consolidated changes in equity related to Apache�s cash flow hedges is presented in the table below. The Company has no derivatives designated as cash flow hedges as of September�30, 2014.

�

�

��

For the Nine Months Ended September�30,

�

�

��

2014

�

�

2013

�

�

��

Before

�

�

After

�

�

Before

�

�

After

�

�

��

tax

�

�

tax

�

�

tax

�

�

tax

�

�

��

(In millions)

�

Unrealized gain (loss) on derivatives at beginning of period

��

$

1

�

�

$

1

�

�

$

(10

)�

�

$

(6

)�

Realized amounts reclassified into earnings

��

�

���

�

�

�

���

�

�

�

18

�

�

�

13

�

Net change in derivative fair value

��

�

(1

)�

�

�

(1

)�

�

�

(7

)�

�

�

(6

)�

Ineffectiveness reclassified into earnings

��

�

���

�

�

�

���

�

�

�

1

�

�

�

1

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Unrealized gain on derivatives at end of period

��

$

���

�

�

$

���

�

�

$

2

�

�

$

2

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

11

---

4. OTHER CURRENT LIABILITIES

The following table provides detail of our other current liabilities:

�

�	��	September�30,		�	��	December�31,		�
�	��	2014		�	��	2013		�
�	��	(In millions)						�
Accrued operating expenses	��	$	127	�	��	$	190	�
Accrued exploration and development	��	�	1,723	�	��	�	1,582	�
Accrued compensation and benefits	��	�	217	�	��	�	242	�
Accrued interest	��	�	119	�	��	�	161	�
Accrued income taxes	��	�	297	�	��	�	248	�
Accrued U.K. Petroleum Revenue Tax	��	�	47	�	��	�	9	�
Other	��	�	264	�	��	�	179	�
	��	�	�	�	��	�	�	�
Total Other current liabilities	��	$	2,794	�	��	$	2,611	�
	��	�	�	�	��	�	�	�

5. ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company�s asset retirement obligation (ARO) liability for the nine-month period ended September�30, 2014:

�

�	��	(In�millions)		�
Asset retirement obligation at December�31, 2013	��	$	3,222	�
Liabilities incurred	��	�	86	�
Liabilities divested	��	�	(91	)�
Liabilities settled	��	�	(79	)�
Accretion expense	��	�	135	�
	��	�	�	�
Asset retirement obligation at September�30, 2014	��	�	3,273	�
Less current portion	��	�	(177	)�
	��	�	�	�
Asset retirement obligation, long-term	��	$	3,096	�
	��	�	�	�

6. DEBT AND FINANCING COSTS

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

�

�

��

September�30, 2014

�

��

December�31, 2013

�

�

��

Carrying

�

��

Fair

�

��

Carrying

�

��

Fair

�

�

��

Amount

�

��

Value

�

��

Amount

�

��

Value

�

�

��

(In millions)

�

Uncommitted credit lines

��

$

20

�

��

$

20

�

��

$

53

�

��

$

53

�

Commercial paper

��

�

1,228

�

��

�

1,228

�

��

�

���

�

��

�

���

�

Notes and debentures

��

�

9,674

�

��

�

10,463

�

��

�

9,672

�

��

�

10,247

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

Total Debt

��

$

10,922

�

��

$

11,711

�

��

$

9,725

�

��

$

10,300

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

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 and uncommitted credit facilities 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).

As of September�30, 2014, the Company had unsecured committed revolving credit facilities totaling $3.3 billion, of which $1.0 billion matures in August 2016 and $2.3 billion matures in June 2018 pursuant to a one-year extension approved in May 2014 under the terms of the $2.3 billion facilities. The facilities consist of a $1.7 billion facility and $1.0 billion facility for the U.S., a $300 million facility for Australia, and a $300 million facility for Canada. As of September�30, 2014, available borrowing capacity under the Company�s credit facilities was $2.1 billion. The Company�s committed credit facilities are used to support Apache�s commercial paper program.

�

12

---

The Company has available a $3.0 billion commercial paper program, which generally enables Apache to borrow funds for up to 270 days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under our committed credit facilities. As of September�30, 2014, the Company had $1.2 billion outstanding in commercial paper. There was no outstanding commercial paper as of December�31, 2013.

As of September�30, 2014, the Company had $20 million of current debt outstanding borrowed on uncommitted credit facilities and overdraft lines, compared with $53 million as of December�31, 2013.

Financing Costs, Net

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

�

�

��

For�the�Quarter�Ended

�

�

For�the�Nine�Months�Ended

�

�

��

September�30,

�

�

September�30,

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

(In millions)

�

Interest expense

��

$

126

�

�

$

142

�

�

$

374

�

�

$

429

�

Amortization of deferred loan costs

��

�

2

�

�

�

2

�

�

�

5

�

�

�

6

�

Capitalized interest

��

�

(85

)�

�

�

(91

)�

�

�

(270

)�

�

�

(268

)�

Interest income

��

�

(2

)�

�

�

(3

)�

�

�

(6

)�

�

�

(10

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Financing costs, net

��

$

41

�

�

$

50

�

�

$

103

�

�

$

157

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

7. INCOME TAXES

In the third quarter of 2014, Apache evaluated its permanent reinvestment position and determined that undistributed earnings from certain foreign subsidiaries located in Apache�s Australia, Egypt, and North Sea regions will no longer be permanently reinvested. As a result of this change in position, the Company recorded $814 million of U.S. deferred income tax expense on undistributed earnings that were previously considered permanently reinvested. In addition, the Company recorded $249 million of U.S. deferred income tax expense on foreign earnings that were distributed to the U.S. in the third quarter of 2014.

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. Accordingly, in the third quarter of 2014, the Company recorded $814 million of U.S. deferred income tax expense on foreign earnings no longer deemed to be permanently reinvested as well as the income tax effect of the $1.5 billion and $17 million non-cash write-downs of its U.S. and North Sea proved oil and gas properties, respectively, as discrete items in the third quarter of 2014. In the second quarter of 2014, the Company recorded the income tax impact of a $203 million non-cash write-down of its North Sea proved oil and gas properties as a discrete item. In the third quarter of 2013, the Company recorded the income tax impact of a $552 million non-cash write-down and a $75 million non-cash impairment on its U.S. and Kenyan oil and gas properties, respectively, as discrete items.

Apache and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various state and foreign jurisdictions. The Company�s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority. In October 2014, the Internal Revenue Service concluded its audit of the 2011 and 2012 tax years. The Company is under audit in various states and in most of the Company�s foreign jurisdictions as part of its normal course of business.

�

13

---

8. 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 September�30, 2014, the Company has an accrued liability of approximately $21 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 Current Report on Form 8-K dated July�17, 2014 for the fiscal year ended December�31, 2013.

Argentine Environmental Claims and Argentina Tariff

The Asociaci�n de Superficiarios de la Patagonia (ASSUPA) filed lawsuits against Company subsidiaries in Argentina courts relating to various environmental and remediation claims concerning certain geographic areas of Argentina, including in 2003 the Neuqu�n basin and in 2012 the Austral basin. In addition, effective December�1, 2011, Enargas, an autonomous entity that functions under the Argentine Ministry of Economy, created a tariff charge on all fuel gas used by oil and gas producers in field operations, which is likewise the subject of legal proceedings in Argentina.

On March�12, 2014, the Company and its subsidiaries completed the sale of all of the Company�s subsidiaries� operations and properties in Argentina to YPF Sociedad Anonima (YPF). As part of that sale, YPF assumed responsibility for all of the past, present, and future litigation in Argentina involving Company subsidiaries, including the ASSUPA and Enargas matters, except that Company subsidiaries have agreed to indemnify YPF for certain environmental, tax, and royalty obligations capped at an aggregate of $100 million. The indemnity is subject to specific agreed conditions precedent, thresholds, contingencies, limitations, claim deadlines, loss sharing, and other terms and conditions. On April�11, 2014, YPF provided its first notice of claims pursuant to the indemnity. Company subsidiaries have not paid any amounts under the indemnity, but will continue to review and consider claims presented by YPF. Further, Company subsidiaries retain the right to enforce certain Argentina-related indemnification obligations against Pioneer Natural Resources Company (Pioneer) in an amount up to $67.5 million pursuant to the terms and conditions of stock purchase agreements entered in 2006 between Company subsidiaries and certain subsidiaries of Pioneer. No other material change in the status of these matters has occurred since the filing of Apache�s Current Report on Form 8-K dated July�17, 2014 for its 2013 fiscal year.

Louisiana Restoration�

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 Heloise, LLC, et al. v. BP America Production Company, et al., Case No.�120113 in the District Court for the Parish of Lafourche, plaintiff landowners allege that defendants� oil and gas operations contaminated their property primarily with chlorides. Apache, a defendant in the case, acquired its interest in the oil and gas operations on plaintiffs� property from the former operator, Amoco Production Company, when the Company purchased the stock of Amoco�s subsidiary, MW Petroleum Corporation, in 1991. BP America Production Company (BP America), as Amoco�s successor in interest, and Apache dispute whether and to what extent they might owe each other indemnity in the case. Plaintiffs� expert opined that the cost of remediating plaintiffs� 825 acres exceeds $200 million. Prior to trial, Apache and BP America each settled with plaintiff. The amount paid by Apache in settlement is not material and does not have a material effect on the Company�s financial position, results of operations, or liquidity. Further, as part of the overall settlement, each of Apache and BP America released and waived its indemnity claim against the other arising out of this litigation. The lawsuit is concluded.

With respect to Board of Commissioners of the Southeast Louisiana Flood Protection Authority � East v. Tennessee Gas Pipeline Company et al., Civil Action no. 13-5410, in the United States District Court for the Eastern District of Louisiana, the federal court has retained jurisdiction over the matter after denying plaintiff�s motion to remand on June�27, 2014. Further, the Louisiana state government has passed a new law (SB 469) clarifying that only entities authorized under the Coastal Zone Management Act may bring litigation to assert claims arising out of the permitted activities. Plaintiff is not one of those authorized entities. The Company and other defendants seek dismissal of the case, including pursuant to SB 469.

�

14

---

No other material change in the status of these matters has occurred since the filing of Apache�s Current Report on Form 8-K dated July�17, 2014 for its 2013 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.

In the case captioned Alcoa of Australia Limited v. Apache Energy Limited, Apache Northwest Pty Ltd, Tap (Harriet) Pty Ltd, and Kufpec Australia Pty Ltd, Civ. 1481 of 2011, in the Supreme Court of Western Australia, on June�20, 2012, the Supreme Court struck out Alcoa�s claim that the liquidated damages provisions under two long-term contracts are unenforceable as a penalty and also struck out Alcoa�s claim for damages for breach of statutory duty. On September�17, 2013, the Western Australia Court of Appeal dismissed the Company subsidiaries� appeal concerning Alcoa�s remaining tort claim for economic loss. On October�15, 2013, the Company subsidiaries applied to the High Court of Australia for special leave to appeal. On April�11, 2014, the High Court refused special leave to appeal. However, on October�8, 2014, the High Court decided a separate case on point captioned Brookfield Multiplex Ltd v. Owners Corporation Strata Plan 61288�& Anor, [2014] HCA 36. The High Court�s holding in the Brookfield case strongly favors the Company subsidiaries� defenses to Alcoa�s remaining tort claim for economic loss. All of the Company subsidiaries� defenses remain intact for further proceedings at the trial court level, including the defenses that were the subject of the special leave application and that have now been considered separately by the High Court in the Brookfield case. Further, in January 2014, an Alcoa affiliate pleaded guilty in United States of America v. Alcoa World Alumina LLC, Criminal No.�14-7, in the United States District Court for the Western District of Pennsylvania, to a charge under the Foreign Corrupt Practices Act (FCPA) anti-bribery provisions, 15 U.S.C. Section�78dd-2 and 18 U.S.C. Section�2. This matter overlaps with Alcoa�s claims against Company subsidiaries in that both cases concern alumina produced from Alcoa�s alumina refineries in Western Australia during the period of the gas supply disruption in 2008-2009. In the circumstances of the admitted, agreed, and stipulated facts set forth in the Alcoa affiliate�s Plea Agreement, which is a public document, Company subsidiaries will defend against Alcoa�s claims on the basis that Alcoa is barred by law from recovering economic losses.

In the week prior to expiration of the applicable six-year limitations period on June�3, 2014, the following civil lawsuits were filed in connection with the Varanus Island pipeline explosion (the Incident), and the amounts specified do not include plaintiffs� alleged interest and costs:

�

�

�

�

As previously reported, a lawsuit filed by Burrup Fertilisers Pty Ltd (Burrup Fertilisers) in Texas in December 2009 was dismissed in March 2013 on the ground of forum non conveniens. On May�29, 2014, Burrup Fertilisers (now known as Yara Pilbara Fertilisers Pty Ltd, YPFPL) re-filed the lawsuit in Western Australia, captioned Yara Pilbara Fertilisers Pty Ltd vs. Apache Energy Limited et al., Civ. 1742 of 2014, in the Supreme Court of Western Australia. In the lawsuit, which is being pressed by YPFPL�s insurers, YPFPL alleges that a joint venture whose members include an Apache subsidiary supplied YPFPL with natural gas and that, as a consequence of a disruption in gas supply following the Incident, plaintiff incurred damages in the amount of nearly $166 million USD for economic losses and, alternatively, contractual liquidated damages and �abnormal costs� in the amount of approximately $13 million USD. In addition to all of their other defenses, the Company and its subsidiaries will defend against YPFPL�s claims on the basis that during the gas supply disruption there was no enforceable gas supply contract between YPFPL and Company subsidiaries.

�

�

�

�

In Wesfarmers LPG Pty Ltd et al. vs. Apache Energy Limited et al., Civ. 1740 of 2014, in the Supreme Court of Western Australia, plaintiffs allege that Alinta Sales Pty Ltd (Alinta) supplied them (and associated entities) with natural gas and that, as a consequence of a disruption in gas supply following the Incident, plaintiffs incurred an unspecified amount of damages for alleged lost profits, alternative gas, and associated expenses. Plaintiffs� Indorsement of Claim (a short form of pleading) has been filed with the court but not yet served on the Apache defendants.

�

�

�

�

In Iluka Resources Limited vs. Apache Energy Limited et al., Civ. 1748 of 2014, in the Supreme Court of Western Australia, plaintiff alleges that Alinta supplied it with natural gas and power and that, as a consequence of a disruption in gas supply following the Incident, plaintiff incurred damages of approximately $23 million (no currency is specified) for alleged lost profits, alternative energy, and associated expenses. Plaintiff�s lawyers have since clarified that the amount sought by plaintiff is $32 million. Plaintiff�s Indorsement of Claim has been filed with the court but not yet served on the Apache defendants.

�

15

---

�

�

�

In Harvey Industries Group Pty Ltd vs. Apache Energy Limited et al., Civ. 1749 of 2014, in the Supreme Court of Western Australia, plaintiff alleges that Alinta supplied it with natural gas and power and that, as a consequence of a disruption in gas supply following the Incident, plaintiff incurred an unspecified amount of damages for alleged lost profits, the cost of alternative gas and power, and associated expenses. Plaintiff�s Indorsement of Claim has been filed with the court but not yet served on the Apache defendants.

�

�

�

�

In EDL LNG (WA) Pty Ltd et al. vs. Apache Energy Limited et al., Civ. 1751 of 2014, in the Supreme Court of Western Australia, plaintiffs allege that an Apache subsidiary and Santos (BOL) Pty Ltd supplied one such plaintiff with natural gas and that, as a consequence of a disruption in gas supply following the Incident, plaintiffs incurred damages of approximately $17.5 million (no currency is specified) for alleged alternative gas and diesel, and, alternatively, plaintiffs seek an unspecified amount of liquidated damages from their gas sellers.

�

�

�

�

In Newmont Mining Services Pty Ltd et al. vs. Apache Energy Limited et al., Civ. 1727 of 2014, in the Supreme Court of Western Australia, plaintiffs allege that Santos (BOL) Pty Ltd supplied one such plaintiff with natural gas and that, as a consequence of a disruption in gas supply following the Incident, plaintiffs incurred an unspecified amount of damages for alleged alternative energy and associated expenses, except that as an alternative measure of damage plaintiffs seek to recover $6.4 million (no currency is specified) in liquidated damages from Santos (BOL) Pty Ltd. Plaintiffs� Indorsement of Claim has been filed with the court but not yet served on the Apache defendants.

With respect to the claims in which the plaintiffs have not specified an amount of alleged damages in their court filings, the exposure related to such claims is not material or, in the case of Wesfarmers, not currently determinable but not expected to be material. Insurance statistics maintained by the Insurance Council of Australia show that the total insured loss resulting from the gas supply disruption was $230 million AUD.

The applicable six-year limitations period has expired. In six years none of the above-referenced plaintiffs presented a claim to Apache or its subsidiaries prior to filing suit and instead, each allowed the same plaintiff law firm to file suit in Western Australia at the latest possible moment. The Apache defendants do not believe that any of the claims have merit and will vigorously pursue their defenses against such claims. The plaintiffs seek relief primarily in tort, in circumvention of their own positive arrangements regarding risk allocation and in contravention of the High Court�s decision in the Brookfield case. In respect of the pending claims filed prior to expiration of the limitations period, contractual liquidated damages under the long-term contracts with such provisions, and under which an Apache subsidiary is a gas supplier, would not be expected to exceed $20 million AUD exclusive of interest. This is a reduction from previous estimates. In addition, Company subsidiaries have received confirmation of liability insurance coverage from both the primary insurer and the excess insurers.

No other material change in the status of these matters has occurred since the filing of Apache�s Current Report on Form 8-K dated July�17, 2014 for its 2013 fiscal year.

Breton Lawsuit

On October�29, 2012, plaintiffs filed an amended complaint in Breton Energy, L.L.C. et al. v. Mariner Energy Resources, Inc., et al., Case 4:11-cv-03561, in the United States District Court for the Southern District of Texas, Houston Division, seeking compensation from defendants for allegedly depriving plaintiffs of rights to hydrocarbons in a reservoir described by plaintiffs as a common reservoir in West Cameron Blocks 171 and 172 offshore Louisiana in the Gulf of Mexico. Plaintiffs assert claims for waste and drainage. On May�28, 2013, the United States District Court for the Southern District of Texas dismissed the plaintiffs� claims and entered judgment in favor of the defendants. Plaintiffs appealed. On August�12, 2014, the United States Court of Appeals for the Fifth Circuit affirmed the District Court as to the claims for waste against all defendants except International Paper and also affirmed the District Court as to the claims for drainage against all defendants. The Company�s subsidiary, Mariner Energy Resources, Inc. (now known as Apache Shelf, Inc.), was dismissed from the case but is obligated to indemnify the remaining defendant, International Paper, against the sole remaining claim. Prior to trial, which was to commence on November�3, 2014, plaintiffs settled their remaining claim in an amount that is not material and does not have a material effect on the Company�s financial position, results of operations, or liquidity. The lawsuit is concluded.

Escheat Audits

The State of Delaware, Department of Finance, Division of Revenue (Unclaimed Property), has notified numerous companies, including Apache Corporation, that the State intends to examine its books and records and those of its subsidiaries and related entities to determine compliance with the Delaware Escheat Laws. The review is ongoing, and no material change in the status of this matter has occurred since the filing of Apache�s Current Report on Form 8-K dated July�17, 2014 for its 2013 fiscal year.

�

16

---

Burrup-Related Gas Supply Lawsuits

On October�11, 2013, a lawsuit captioned Pankaj Oswal v. Apache Corporation, No. WAD 389/2013, in the Federal Court of Australia, District of Western Australia, General Division, was filed in which plaintiff asserts claims against the Company under the Australian Trade Practices Act. The case has been set for a preliminary hearing commencing December�8, 2014. The Company does not believe the lawsuit has merit and will vigorously defend against it. No other material change in the status of this matter has occurred since the filing of Apache�s Current Report on Form 8-K dated July�17, 2014 for its 2013 fiscal year.

In the case captioned Radhika Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al., No. SCI 2011 4653, in the Supreme Court of Victoria, plaintiff filed an application seeking to amend her statement of claim in order to add parties as defendants to the proceedings, including the Company and certain of its subsidiaries. Similarly, in a companion case captioned Pankaj Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al., No. SCI 2012 01995, in the Supreme Court of Victoria, plaintiff also filed an application seeking to amend his statement of claim in order to add parties as defendants to the proceedings, including the Company and certain of its subsidiaries. This was the second attempt by the plaintiffs to amend their pleadings, with their first attempt having been unsuccessful. While reserving all rights, including all defenses to the plaintiffs� proposed amended pleadings, the Company and its subsidiaries did not object to the plaintiffs� revised applications to amend their pleadings, which is a procedural matter. The court granted plaintiffs� applications and entered a scheduling order with respect to the filing of all amended pleadings. On July�23, 2014, the Apache defendants filed their responsive pleadings, which include substantial counterclaims against the Oswals by a Company subsidiary. The Company and its subsidiaries do not believe the plaintiffs� claims have merit and will vigorously defend against them. Trial is set to commence August�3, 2015. No other material change in the status of these matters has occurred since the filing of Apache�s Current Report on Form 8-K dated July�17, 2014 for its 2013 fiscal year.

Concerning the action filed by Tap (Harriet) Pty Ltd (Tap) against Burrup Fertilisers Pty Ltd et al., Civ. 2329 of 2009, in the Supreme Court of Western Australia, the remaining parties have settled and the lawsuit has been discontinued by consent. The lawsuit is concluded.

Environmental Matters

As of September�30, 2014, the Company had an undiscounted reserve for environmental remediation of approximately $86 million. The Company is not aware of any environmental claims existing as of September�30, 2014, 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.

On May�25, 2011, a panel of the Bureau of Ocean Energy Management (BOEMRE, as it was then known) published a report dated May�23, 2011, and titled �OCS G-2580, Vermilion Block 380 Platform A, Incidents of Noncompliance.� The report concerned the BOEMRE�s investigation of a fire on the Vermilion 380 A platform located in the Gulf of Mexico. At the time of the incident, Mariner operated the platform. On December�27, 2011, the Bureau of Safety and Environmental Enforcement (BSEE, successor to BOEMRE) issued several Incidents of Non-Compliance, which may provide the basis for the assessment of civil penalties against Mariner. The Company�s subsidiary, Apache Deepwater LLC, which is the successor by merger to Mariner effective November�10, 2010, has been presented with a BSEE notice of proposed civil penalty assessment in an amount that is not material and that will not have a material effect on the Company�s financial position, results of operations, or liquidity.

No other material change in the status of these matters has occurred since the filing of Apache�s Current Report on Form 8-K dated July�17, 2014 for its 2013 fiscal year.

�

17

---

9. 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 nine-month periods ended September�30, 2014 and 2013 is presented in the table below.

�

�

��

For the Quarter Ended September�30,

�

�

��

2014

�

�

2013

�

�

��

Loss

�

�

Shares

�

��

Per Share

�

�

Income (Loss)

�

�

Shares

�

��

Per Share

�

�

��

(In millions, except per share amounts)

�

Basic:

��

�

��

�

�

��

Income (loss) from continuing operations

��

$

(1,330

)�

�

�

381

�

��

$

(3.50

)�

�

$

429

�

�

�

399

�

��

$

1.08

�

Loss from discontinued operations

��

�

���

�

�

�

381

�

��

�

���

�

�

�

(129

)�

�

�

399

�

��

�

(0.33

)�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

Income (loss) attributable to common stock

��

$

(1,330

)�

�

�

381

�

��

$

(3.50

)�

�

$

300

�

�

�

399

�

��

$

0.75

�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

Effect of Dilutive Securities:

��

�

��

�

�

��

Stock options and other

��

�

���

�

�

�

���

�

��

�

�

���

�

�

�

2

�

��

Diluted:

��

�

��

�

�

��

Income (loss) from continuing operations

��

$

(1,330

)�

�

�

381

�

��

$

(3.50

)�

�

$

429

�

�

�

401

�

��

$

1.07

�

Loss from discontinued operations

��

�

���

�

�

�

381

�

��

�

���

�

�

�

(129

)�

�

�

401

�

��

�

(0.32

)�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

Income (loss) attributable to common stock

��

$

(1,330

)�

�

�

381

�

��

$

(3.50

)�

�

$

300

�

�

�

401

�

��

$

0.75

�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

�

��

For the Nine Months Ended September�30,

�

�

��

2014

�

�

2013

�

�

��

Loss

�

�

Shares

�

��

Per Share

�

�

Income (Loss)

�

�

Shares

�

��

Per Share

�

�

��

(In millions, except per share amounts)

�

Basic:

��

�

��

�

�

��

Income (loss) from continuing operations

��

$

(72

)�

�

�

387

�

��

$

(0.19

)�

�

$

2,206

�

�

�

394

�

��

$

5.59

�

Loss from discontinued operations

��

�

(517

)�

�

�

387

�

��

�

(1.33

)�

�

�

(192

)�

�

�

394

�

��

�

(0.48

)�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

Income (loss) attributable to common stock

��

$

(589

)�

�

�

387

�

��

$

(1.52

)�

�

$

2,014

�

�

�

394

�

��

$

5.11

�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

Effect of Dilutive Securities:

��

�

��

�

�

��

Mandatory Convertible Preferred Stock

��

�

���

�

�

�

���

�

��

�

�

44

�

�

�

11

�

��

Stock options and other

��

�

���

�

�

�

���

�

��

�

�

���

�

�

�

2

�

��

Diluted:

��

�

��

�

�

��

Income (loss) from continuing operations

��

$

(72

)�

�

�

387

�

��

$

(0.19

)�

�

$

2,250

�

�

�

407

�

��

$

5.53

�

Loss from discontinued operations

��

�

(517

)�

�

�

387

�

��

�

(1.33

)�

�

�

(192

)�

�

�

407

�

��

�

(0.47

)�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

Income (loss) attributable to common stock

��

$

(589

)�

�

�

387

�

��

$

(1.52

)�

�

$

2,058

�

�

�

407

�

��

$

5.06

�

��

�

�

�

�

��

�

�

�

�

�

�

�

�

��

�

�

�

The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling 4.7�million and 5.4�million for the quarters ending September�30, 2014 and 2013, respectively, and 5.5�million and 6.0�million for the nine months ended September�30, 2014 and 2013, respectively. For the quarter ended September�30, 2013, 4.8�million shares related to the assumed conversion of the Mandatory Convertible Preferred Stock were also anti-dilutive.

Common and Preferred Stock Dividends

For the quarters ended September�30, 2014 and 2013, Apache paid $95 million and $78 million, respectively, in dividends on its common stock. For the nine months ended September�30, 2014 and 2013, Apache paid $271 million and $223 million, respectively.

�

18

---

In the first nine months of 2013, the Company also paid $57 million in dividends on its Series D Preferred Stock, which was converted to common stock in August 2013.

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 September�30, 2014 has repurchased a total of 31.8�million shares at an average price of $88.90 per share. For the nine-month period ended September�30, 2014, the Company repurchased a total of 20.6�million shares at an average price of $88.92 per share. The Company is not obligated to acquire any specific number of shares.

�

19

---

10. 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 September�30, 2014, the Company had production in five countries: the United States, Canada, Egypt, Australia, 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(2)

�

��

Australia

�

��

North�Sea

�

��

International

�

�

Total

�

�

��

(In millions)

�

For the Quarter Ended September�30, 2014

��

�

��

��

��

��

�

Oil and Gas Production Revenues

��

$

1,481

�

�

$

268

�

��

$

910

�

��

$

287

�

��

$

522

�

��

$

���

�

�

$

3,468

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

Operating Income (Loss) (1)

��

$

(988

)�

�

$

11

�

��

$

481

�

��

$

70

�

��

$

124

�

��

$

���

�

�

$

(302

)�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

Other Income (Expense):

��

�

��

��

��

��

�

Derivative instrument gains (losses), net

��

�

��

��

��

��

�

�

273

�

Other

��

�

��

��

��

��

�

�

(1

)�

General and administrative

��

�

��

��

��

��

�

�

(112

)�

Acquisition, divestiture, and separation costs

��

�

��

��

��

��

�

�

(34

)�

Financing costs, net

��

�

��

��

��

��

�

�

(41

)�

��

�

��

��

��

��

�

�

�

�

Loss Before Income Taxes

��

�

��

��

��

��

�

$

(217

)�

��

�

��

��

��

��

�

�

�

�

For the Nine Months Ended September�30, 2014

��

�

��

��

��

��

�

Oil and Gas Production Revenues

��

$

4,515

�

�

$

879

�

��

$

2,849

�

��

$

780

�

��

$

1,800

�

��

$

���

�

�

$

10,823

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

Operating Income(1)

��

$

354

�

�

$

131

�

��

$

1,601

�

��

$

239

�

��

$

268

�

��

$

���

�

�

$

2,593

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

Other Income (Expense):

��

�

��

��

��

��

�

Derivative instrument gains (losses), net

��

�

��

��

��

��

�

�

79

�

Other

��

�

��

��

��

��

�

�

(3

)�

General and administrative

��

�

��

��

��

��

�

�

(309

)�

Acquisition, divestiture, and separation costs

��

�

��

��

��

��

�

�

(66

)�

Financing costs, net

��

�

��

��

��

��

�

�

(103

)�

��

�

��

��

��

��

�

�

�

�

Income Before Income Taxes

��

�

��

��

��

��

�

$

2,191

�

��

�

��

��

��

��

�

�

�

�

Total Assets

��

$

30,613

�

�

$

7,100

�

��

$

7,246

�

��

$

9,148

�

��

$

6,824

�

��

$

59

�

�

$

60,990

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

For the Quarter Ended September�30, 2013

��

�

��

��

��

��

�

Oil and Gas Production Revenues(3)

��

$

2,029

�

�

$

325

�

��

$

1,022

�

��

$

279

�

��

$

633

�

��

$

���

�

�

$

4,288

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

Operating Income (Loss)(1)(3)

��

$

310

�

�

$

4

�

��

$

658

�

��

$

117

�

��

$

186

�

��

$

(76

)�

�

$

1,199

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

Other Income (Expense):

��

�

��

��

��

��

�

Derivative instrument gains (losses), net

��

�

��

��

��

��

�

�

(422

)�

Other

��

�

��

��

��

��

�

�

34

�

General and administrative

��

�

��

��

��

��

�

�

(120

)�

Financing costs, net

��

�

��

��

��

��

�

�

(50

)�

��

�

��

��

��

��

�

�

�

�

Income Before Income Taxes(3)

��

�

��

��

��

��

�

$

641

�

��

�

��

��

��

��

�

�

�

�

For the Nine Months Ended September�30, 2013

��

�

��

��

��

��

�

Oil and Gas Production Revenues(3)

��

$

5,543

�

�

$

952

�

��

$

2,924

�

��

$

867

�

��

$

2,025

�

��

$

���

�

�

$

12,311

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

Operating Income (Loss) (1)(3)

��

$

1,607

�

�

$

17

�

��

$

1,827

�

��

$

373

�

��

$

634

�

��

$

(76

)�

�

$

4,382

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

Other Income (Expense):

��

�

��

��

��

��

�

Derivative instrument gains (losses), net

��

�

��

��

��

��

�

�

(275

)�

Other

��

�

��

��

��

��

�

�

78

�

General and administrative

��

�

��

��

��

��

�

�

(359

)�

Financing costs, net

��

�

��

��

��

��

�

�

(157

)�

��

�

��

��

��

��

�

�

�

�

Income Before Income Taxes(3)

��

�

��

��

��

��

�

$

3,669

�

��

�

��

��

��

��

�

�

�

�

Total Assets(3)

��

$

29,503

�

�

$

7,083

�

��

$

7,142

�

��

$

7,567

�

��

$

7,292

�

��

$

54

�

�

$

58,641

�

��

�

�

�

�

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

(1)�

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. U.S.�s operating income (loss) for the third quarter and the first nine months of 2014 includes a $1.5 billion non-cash write-down of its carrying value of oil and gas properties. North Sea�s operating income (loss) for the third quarter and first nine months of 2014 include non-cash write-downs of the carrying value of oil and gas properties totaling $17 million and $220 million, respectively.

(2)�	Includes a noncontrolling interest in Egypt for the quarter and nine months ended September�30, 2014.

(3)�	Amounts for 2013 have been recast to exclude discontinued operations.

�

20

---

11. 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.

�

21

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended September�30, 2014

�

�

��

Apache Corporation

�

�

Apache Finance Canada

�

��

All Other Subsidiaries of Apache Corporation

�

�

Reclassifications & Eliminations

�

�

Consolidated

�

�

��

(In millions)

�

REVENUES AND OTHER:

��

�

��

�

�

Oil and gas production revenues

��

$

882

�

�

$

���

�

��

$

2,586

�

�

$

���

�

�

$

3,468

�

Equity in net income (loss) of affiliates

��

�

491

�

�

�

5

�

��

�

1

�

�

�

(497

)�

�

�

���

�

Derivative instrument gains (losses), net

��

�

320

�

�

�

���

�

��

�

(47

)�

�

�

���

�

�

�

273

�

Other

��

�

(34

)�

�

�

14

�

��

�

17

�

�

�

2

�

�

�

(1

)�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

�

1,659

�

�

�

19

�

��

�

2,557

�

�

�

(495

)�

�

�

3,740

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

OPERATING EXPENSES:

��

�

��

�

�

Depreciation, depletion, and amortization

��

�

1,914

�

�

�

���

�

��

�

921

�

�

�

���

�

�

�

2,835

�

Asset retirement obligation accretion

��

�

8

�

�

�

���

�

��

�

38

�

�

�

���

�

�

�

46

�

Lease operating expenses

��

�

137

�

�

�

���

�

��

�

515

�

�

�

���

�

�

�

652

�

Gathering and transportation

��

�

15

�

�

�

���

�

��

�

52

�

�

�

���

�

�

�

67

�

Taxes other than income

��

�

67

�

�

�

���

�

��

�

103

�

�

�

���

�

�

�

170

�

General and administrative

��

�

89

�

�

�

���

�

��

�

21

�

�

�

2

�

�

�

112

�

Acquisition, divestiture, and separation costs

��

�

34

�

�

�

���

�

��

�

���

�

�

�

���

�

�

�

34

�

Financing costs, net

��

�

45

�

�

�

11

�

��

�

(15

)�

�

�

���

�

�

�

41

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

�

2,309

�

�

�

11

�

��

�

1,635

�

�

�

2

�

�

�

3,957

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

��

�

(650

)�

�

�

8

�

��

�

922

�

�

�

(497

)�

�

�

(217

)�

Provision (benefit) for income taxes

��

�

678

�

�

�

2

�

��

�

344

�

�

�

���

�

�

�

1,024

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST

��

�

(1,328

)�

�

�

6

�

��

�

578

�

�

�

(497

)�

�

�

(1,241

)�

Net loss from discontinued operations, net of tax

��

�

���

�

�

�

���

�

��

�

���

�

�

�

���

�

�

�

���

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

��

�

(1,328

)�

�

�

6

�

��

�

578

�

�

�

(497

)�

�

�

(1,241

)�

Net income attributable to noncontrolling interest

��

�

���

�

�

�

���

�

��

�

89

�

�

�

���

�

�

�

89

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

��

$

(1,328

)�

�

$

6

�

��

$

489

�

�

$

(497

)�

�

$

(1,330

)�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK (1)

��

$

(1,328

)�

�

$

6

�

��

$

489

�

�

$

(497

)�

�

$

(1,330

)�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

�

(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.

�

22

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended September�30, 2013

�

�

��

Apache Corporation

�

�

Apache Finance Canada

�

�

All Other Subsidiaries of Apache Corporation

�

�

Reclassifications & Eliminations

�

�

Consolidated

�

�

��

(In millions)

�

REVENUES AND OTHER:

��

�

�

�

�

Oil and gas production revenues

��

$

1,374

�

�

$

���

�

�

$

2,914

�

�

$

���

�

�

$

4,288

�

Equity in net income (loss) of affiliates

��

�

619

�

�

�

(4

)�

�

�

3

�

�

�

(618

)�

�

�

���

�

Derivative instrument gains (losses), net

��

�

(422

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(422

)�

Other

��

�

2

�

�

�

16

�

�

�

17

�

�

�

(1

)�

�

�

34

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

1,573

�

�

�

12

�

�

�

2,934

�

�

�

(619

)�

�

�

3,900

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

OPERATING EXPENSES:

��

�

�

�

�

Depreciation, depletion, and amortization

��

�

1,041

�

�

�

���

�

�

�

954

�

�

�

���

�

�

�

1,995

�

Asset retirement obligation accretion

��

�

20

�

�

�

���

�

�

�

45

�

�

�

���

�

�

�

65

�

Lease operating expenses

��

�

254

�

�

�

���

�

�

�

518

�

�

�

���

�

�

�

772

�

Gathering and transportation

��

�

18

�

�

�

���

�

�

�

63

�

�

�

���

�

�

�

81

�

Taxes other than income

��

�

62

�

�

�

���

�

�

�

114

�

�

�

���

�

�

�

176

�

General and administrative

��

�

103

�

�

�

���

�

�

�

18

�

�

�

(1

)�

�

�

120

�

Financing costs, net

��

�

36

�

�

�

14

�

�

�

���

�

�

�

���

�

�

�

50

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

1,534

�

�

�

14

�

�

�

1,712

�

�

�

(1

)�

�

�

3,259

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

��

�

39

�

�

�

(2

)�

�

�

1,222

�

�

�

(618

)�

�

�

641

�

Provision (benefit) for income taxes

��

�

(267

)�

�

�

(1

)�

�

�

474

�

�

�

���

�

�

�

206

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST

��

�

306

�

�

�

(1

)�

�

�

748

�

�

�

(618

)�

�

�

435

�

Net loss from discontinued operations, net of tax

��

�

���

�

�

�

���

�

�

�

(129

)�

�

�

���

�

�

�

(129

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

��

�

306

�

�

�

(1

)�

�

�

619

�

�

�

(618

)�

�

�

306

�

Preferred stock dividends

��

�

6

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

6

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

��

$

300

�

�

$

(1

)�

�

$

619

�

�

$

(618

)�

�

$

300

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK (1)

��

$

295

�

�

$

(1

)�

�

$

619

�

�

$

(618

)�

�

$

295

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

(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.

�

23

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Nine Months Ended September�30, 2014

�

�

��

Apache Corporation

�

�

Apache Finance Canada

�

��

All Other Subsidiaries of Apache Corporation

�

�

Reclassifications & Eliminations

�

�

Consolidated

�

�

��

(In millions)

�

REVENUES AND OTHER:

��

�

��

�

�

Oil and gas production revenues

��

$

2,669

�

�

$

���

�

��

$

8,154

�

�

$

���

�

�

$

10,823

�

Equity in net income (loss) of affiliates

��

�

1,233

�

�

�

58

�

��

�

6

�

�

�

(1,297

)�

�

�

���

�

Derivative instrument gains (losses), net

��

�

175

�

�

�

���

�

��

�

(96

)�

�

�

���

�

�

�

79

�

Other

��

�

(106

)�

�

�

41

�

��

�

57

�

�

�

5

�

�

�

(3

)�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

�

3,971

�

�

�

99

�

��

�

8,121

�

�

�

(1,292

)�

�

�

10,899

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

OPERATING EXPENSES:

��

�

��

�

�

Depreciation, depletion, and amortization

��

�

2,598

�

�

�

���

�

��

�

2,900

�

�

�

���

�

�

�

5,498

�

Asset retirement obligation accretion

��

�

23

�

�

�

���

�

��

�

112

�

�

�

���

�

�

�

135

�

Lease operating expenses

��

�

386

�

�

�

���

�

��

�

1,476

�

�

�

���

�

�

�

1,862

�

Gathering and transportation

��

�

43

�

�

�

���

�

��

�

160

�

�

�

���

�

�

�

203

�

Taxes other than income

��

�

193

�

�

�

���

�

��

�

339

�

�

�

���

�

�

�

532

�

General and administrative

��

�

276

�

�

�

���

�

��

�

28

�

�

�

5

�

�

�

309

�

Acquisition, divestiture, and separation costs

��

�

66

�

�

�

���

�

��

�

���

�

�

�

���

�

�

�

66

�

Financing costs, net

��

�

118

�

�

�

31

�

��

�

(46

)�

�

�

���

�

�

�

103

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

�

3,703

�

�

�

31

�

��

�

4,969

�

�

�

5

�

�

�

8,708

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

��

�

268

�

�

�

68

�

��

�

3,152

�

�

�

(1,297

)�

�

�

2,191

�

Provision for income taxes

��

�

730

�

�

�

4

�

��

�

1,234

�

�

�

���

�

�

�

1,968

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST

��

�

(462

)�

�

�

64

�

��

�

1,918

�

�

�

(1,297

)�

�

�

223

�

Net loss from discontinued operations, net of tax

��

�

(127

)�

�

�

���

�

��

�

(390

)�

�

�

���

�

�

�

(517

)�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

��

�

(589

)�

�

�

64

�

��

�

1,528

�

�

�

(1,297

)�

�

�

(294

)�

Net income attributable to noncontrolling interest

��

�

���

�

�

�

���

�

��

�

295

�

�

�

���

�

�

�

295

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

��

$

(589

)�

�

$

64

�

��

$

1,233

�

�

$

(1,297

)�

�

$

(589

)�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK(1)

��

$

(590

)�

�

$

64

�

��

$

1,233

�

�

$

(1,297

)�

�

$

(590

)�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

�

(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.

�

24

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Nine Months Ended September�30, 2013

�

�

��

Apache Corporation

�

�

Apache Finance Canada

�

�

All Other Subsidiaries of Apache Corporation

�

�

Reclassifications & Eliminations

�

�

Consolidated

�

�

��

(In millions)

�

REVENUES AND OTHER:

��

�

�

�

�

Oil and gas production revenues

��

$

3,775

�

�

$

���

�

�

$

8,536

�

�

$

���

�

�

$

12,311

�

Equity in net income (loss) of affiliates

��

�

1,947

�

�

�

(21

)�

�

�

8

�

�

�

(1,934

)�

�

�

���

�

Derivative instrument gains (losses), net

��

�

(275

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(275

)�

Other

��

�

3

�

�

�

46

�

�

�

33

�

�

�

(4

)�

�

�

78

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

5,450

�

�

�

25

�

�

�

8,577

�

�

�

(1,938

)�

�

�

12,114

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

OPERATING EXPENSES:

��

�

�

�

�

Depreciation, depletion, and amortization

��

�

1,912

�

�

�

���

�

�

�

2,745

�

�

�

���

�

�

�

4,657

�

Asset retirement obligation accretion

��

�

60

�

�

�

���

�

�

�

132

�

�

�

���

�

�

�

192

�

Lease operating expenses

��

�

802

�

�

�

���

�

�

�

1,473

�

�

�

���

�

�

�

2,275

�

Gathering and transportation

��

�

49

�

�

�

���

�

�

�

182

�

�

�

���

�

�

�

231

�

Taxes other than income

��

�

163

�

�

�

���

�

�

�

411

�

�

�

���

�

�

�

574

�

General and administrative

��

�

305

�

�

�

���

�

�

�

58

�

�

�

(4

)�

�

�

359

�

Financing costs, net

��

�

104

�

�

�

42

�

�

�

11

�

�

�

���

�

�

�

157

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

��

�

3,395

�

�

�

42

�

�

�

5,012

�

�

�

(4

)�

�

�

8,445

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

��

�

2,055

�

�

�

(17

)�

�

�

3,565

�

�

�

(1,934

)�

�

�

3,669

�

Provision (benefit) for income taxes

��

�

(3

)�

�

�

(4

)�

�

�

1,426

�

�

�

���

�

�

�

1,419

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST

��

�

2,058

�

�

�

(13

)�

�

�

2,139

�

�

�

(1,934

)�

�

�

2,250

�

Net loss from discontinued operations, net of tax

��

�

���

�

�

�

���

�

�

�

(192

)�

�

�

���

�

�

�

(192

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST

��

�

2,058

�

�

�

(13

)�

�

�

1,947

�

�

�

(1,934

)�

�

�

2,058

�

Preferred stock dividends

��

�

44

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

44

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

��

$

2,014

�

�

$

(13

)�

�

$

1,947

�

�

$

(1,934

)�

�

$

2,014

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK (1)

��

$

2,022

�

�

$

(13

)�

�

$

1,947

�

�

$

(1,934

)�

�

$

2,022

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

(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.

�

25

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September�30, 2014

�

�

��

�

�

�

�

�

�

All Other

�

�

�

�

�

�

�

�

��

Apache Corporation

�

�

Apache Finance Canada

�

�

Subsidiaries of Apache Corporation

�

�

Reclassifications & Eliminations

�

�

Consolidated

�

�

��

(In millions)

�

CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES

��

$

3,574

�

�

$

(37

)�

�

$

2,909

�

�

$

���

�

�

$

6,446

�

CASH PROVIDED BY DISCONTINUED OPERATIONS

��

�

���

�

�

�

���

�

�

�

82

�

�

�

���

�

�

�

82

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

��

�

3,574

�

�

�

(37

)�

�

�

2,991

�

�

�

���

�

�

�

6,528

�

CASH FLOWS FROM INVESTING ACTIVITIES:

��

�

�

�

�

Additions to oil and gas property

��

�

(5,425

)�

�

�

���

�

�

�

(1,706

)�

�

�

���

�

�

�

(7,131

)�

Additions to gas gathering, transmission, and processing facilities

��

�

(21

)�

�

�

���

�

�

�

(1,014

)�

�

�

���

�

�

�

(1,035

)�

Proceeds from sale of Deepwater Gulf of Mexico assets

��

�

1,367

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

1,367

�

Restricted cash related to divestitures

��

�

(545

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(545

)�

Proceeds from sale of other oil and gas properties

��

�

35

�

�

�

���

�

�

�

355

�

�

�

���

�

�

�

390

�

Leasehold and property acquisitions

��

�

(503

)�

�

�

���

�

�

�

(152

)�

�

�

���

�

�

�

(655

)�

Investment in subsidiaries, net

��

�

2,303

�

�

�

���

�

�

�

���

�

�

�

(2,303

)�

�

�

���

�

Other

��

�

(67

)�

�

�

���

�

�

�

(13

)�

�

�

���

�

�

�

(80

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH USED IN CONTINUING INVESTING ACTIVITIES

��

�

(2,856

)�

�

�

���

�

�

�

(2,530

)�

�

�

(2,303

)�

�

�

(7,689

)�

NET CASH PROVIDED BY DISCONTINUED OPERATIONS

��

�

���

�

�

�

���

�

�

�

748

�

�

�

���

�

�

�

748

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH USED IN INVESTING ACTIVITIES

��

�

(2,856

)�

�

�

���

�

�

�

(1,782

)�

�

�

(2,303

)�

�

�

(6,941

)�

CASH FLOWS FROM FINANCING ACTIVITIES:

��

�

�

�

�

Commercial paper and bank credit facilities, net

��

�

1,248

�

�

�

���

�

�

�

(2

)�

�

�

���

�

�

�

1,246

�

Intercompany borrowings

��

�

���

�

�

�

10

�

�

�

(2,322

)�

�

�

2,312

�

�

�

���

�

Distributions to noncontrolling interest

��

�

���

�

�

�

���

�

�

�

(124

)�

�

�

���

�

�

�

(124

)�

Dividends paid

��

�

(271

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(271

)�

Treasury stock activity, net

��

�

(1,830

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(1,830

)�

Other

��

�

���

�

�

�

24

�

�

�

23

�

�

�

(9

)�

�

�

38

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES

��

�

(853

)�

�

�

34

�

�

�

(2,425

)�

�

�

2,303

�

�

�

(941

)�

NET CASH USED IN DISCONTINUED OPERATIONS

��

�

���

�

�

�

���

�

�

�

(42

)�

�

�

���

�

�

�

(42

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

��

�

(853

)�

�

�

34

�

�

�

(2,467

)�

�

�

2,303

�

�

�

(983

)�

NET DECREASE IN CASH AND CASH EQUIVALENTS

��

�

(135

)�

�

�

(3

)�

�

�

(1,258

)�

�

�

���

�

�

�

(1,396

)�

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

��

�

155

�

�

�

3

�

�

�

1,748

�

�

�

���

�

�

�

1,906

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

CASH AND CASH EQUIVALENTS AT END OF PERIOD

��

$

20

�

�

$

���

�

�

$

490

�

�

$

���

�

�

$

510

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

26

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September�30, 2013

�

�

��

�

�

�

�

�

�

All Other

�

�

�

�

�

�

�

�

��

�

�

�

Apache

�

�

Subsidiaries

�

�

�

�

�

�

�

�

��

Apache

�

�

Finance

�

�

of Apache

�

�

Reclassifications

�

�

�

�

�

��

Corporation

�

�

Canada

�

�

Corporation

�

�

& Eliminations

�

�

Consolidated

�

�

��

(In millions)

�

�

�

�

CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES

��

$

1,434

�

�

$

(89

)�

�

$

5,855

�

�

$

���

�

�

$

7,200

�

CASH PROVIDED BY DISCONTINUED OPERATIONS

��

�

���

�

�

�

���

�

�

�

158

�

�

�

���

�

�

�

158

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

��

�

1,434

��

�

�

(89

)�

�

�

6,013

�

�

�

���

�

�

�

7,358

�

CASH FLOWS FROM INVESTING ACTIVITIES:

��

�

�

�

�

Additions to oil and gas property

��

�

(2,798

)�

�

�

���

�

�

�

(4,388

)�

�

�

���

�

�

�

(7,186

)�

Additions to gas gathering, transmission, and processing facilities

��

�

(85

)�

�

�

���

�

�

�

(767

)�

�

�

���

�

�

�

(852

)�

Proceeds from divestiture of Shelf

��

�

3,594

�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

3,594

�

Proceeds from Kitimat LNG transaction, net

��

�

���

�

�

�

���

�

�

�

396

�

�

�

���

�

�

�

396

�

Proceeds from the sale of other oil and gas properties

��

�

���

�

�

�

���

�

�

�

199

�

�

�

���

�

�

�

199

�

Leasehold and property acquisitions

��

�

(158

)�

�

�

���

�

�

�

(155

)�

�

�

���

�

�

�

(313

)�

Investment in subsidiaries, net

��

�

596

�

�

�

���

�

�

�

���

�

�

�

(596

)�

�

�

���

�

Other

��

�

(41

)�

�

�

���

�

�

�

29

�

�

�

���

�

�

�

(12

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH PROVIDED BY (USED IN) CONTINUING INVESTING ACTIVITIES

��

�

1,108

�

�

�

���

�

�

�

(4,686

)�

�

�

(596

)�

�

�

(4,174

)�

NET CASH USED IN DISCONTINUED OPERATIONS

��

�

���

�

�

�

���

�

�

�

(160

)�

�

�

���

�

�

�

(160

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

��

�

1,108

��

�

�

���

�

�

�

(4,846

)�

�

�

(596

)�

�

�

(4,334

)�

CASH FLOWS FROM FINANCING ACTIVITIES:

��

�

�

�

�

Commercial paper and bank credit facilities, net

��

�

(502

)�

�

�

���

�

�

�

(37

)�

�

�

���

�

�

�

(539

)�

Intercompany borrowings

��

�

���

�

�

�

1

�

�

�

(585

)�

�

�

584

�

�

�

���

�

Payments on fixed rate debt

��

�

(900

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(900

)�

Dividends paid

��

�

(280

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(280

)�

Treasury stock activity, net

��

�

(249

)�

�

�

���

�

�

�

���

�

�

�

���

�

�

�

(249

)�

Other

��

�

17

�

�

�

88

�

�

�

(79

)�

�

�

12

�

�

�

38

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES

��

�

(1,914

)�

�

�

89

�

�

�

(701

)�

�

�

596

�

�

�

(1,930

)�

NET CASH USED IN DISCONTINUED OPERATIONS

��

�

���

�

�

�

���

�

�

�

(3

)�

�

�

���

�

�

�

(3

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

��

�

(1,914

)�

�

�

89

�

�

�

(704

)�

�

�

596

�

�

�

(1,933

)�

NET INCREASE IN CASH AND CASH EQUIVALENTS

��

�

628

�

�

�

���

�

�

�

463

��

�

�

���

�

�

�

1,091

�

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

��

�

���

��

�

�

���

�

�

�

160

�

�

�

���

�

�

�

160

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

CASH AND CASH EQUIVALENTS AT END OF PERIOD

��

$

628

��

�

$

���

�

�

$

623

�

�

$

���

�

�

$

1,251

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

27

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

September�30, 2014

�

�

��

�

�

��

�

�

��

All Other

�

�

�

�

�

�

�

�

��

�

�

��

Apache

�

��

Subsidiaries

�

�

�

�

�

�

�

�

��

Apache

�

��

Finance

�

��

of Apache

�

�

Reclassifications

�

�

�

�

�

��

Corporation

�

��

Canada

�

��

Corporation

�

�

& Eliminations

�

�

Consolidated

�

�

��

(In millions)

�

ASSETS

��

CURRENT ASSETS:

��

��

��

�

�

Cash and cash equivalents

��

$

20

�

��

$

���

�

��

$

490

�

�

$

���

�

�

$

510

�

Short-term restricted cash

��

�

74

�

��

�

���

�

��

�

���

�

�

�

���

�

�

�

74

�

Receivables, net of allowance

��

�

836

�

��

�

���

�

��

�

1,451

�

�

�

���

�

�

�

2,287

�

Inventories

��

�

31

�

��

�

���

�

��

�

682

�

�

�

���

�

�

�

713

�

Drilling advances

��

�

25

�

��

�

1

�

��

�

408

�

�

�

���

�

�

�

434

�

Derivative instruments

��

�

41

�

��

�

���

�

��

�

���

�

�

�

���

�

�

�

41

�

Prepaid assets and other

��

�

91

�

��

�

���

�

��

�

276

�

�

�

���

�

�

�

367

�

Intercompany receivable

��

�

6,442

�

��

�

���

�

��

�

���

�

�

�

(6,442

)�

�

�

���

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

�

7,560

�

��

�

1

�

��

�

3,307

�

�

�

(6,442

)�

�

�

4,426

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

PROPERTY AND EQUIPMENT, NET

��

�

17,039

�

��

�

���

�

��

�

35,996

�

�

�

���

�

�

�

53,035

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

OTHER ASSETS:

��

��

��

�

�

Intercompany receivable

��

�

���

�

��

�

���

�

��

�

740

�

�

�

(740

)�

�

�

���

�

Equity in affiliates

��

�

25,975

�

��

�

1,205

�

��

�

440

�

�

�

(27,620

)�

�

�

���

�

Long-term restricted cash

��

�

471

�

��

�

���

�

��

�

���

�

�

�

���

�

�

�

471

�

Goodwill, net

��

�

173

�

��

�

���

�

��

�

1,196

�

�

�

���

�

�

�

1,369

�

Deferred charges and other

��

�

221

�

��

�

1,004

�

��

�

1,464

�

�

�

(1,000

)�

�

�

1,689

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

$

51,439

�

��

$

2,210

�

��

$

43,143

�

�

$

(35,802

)�

�

$

60,990

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

LIABILITIES AND SHAREHOLDERS� EQUITY

��

��

��

�

�

CURRENT LIABILITIES:

��

��

��

�

�

Accounts payable

��

$

736

�

��

$

12

�

��

$

568

�

�

$

���

�

�

$

1,316

�

Current debt

��

�

20

�

��

�

���

�

��

�

���

�

�

�

���

�

�

�

20

�

Asset retirement obligation

��

�

115

�

��

�

���

�

��

�

62

�

�

�

���

�

�

�

177

�

Other current liabilities

��

�

1,300

�

��

�

5

�

��

�

1,489

�

�

�

���

�

�

�

2,794

�

Intercompany payable

��

�

���

�

��

�

���

�

��

�

6,442

�

�

�

(6,442

)�

�

�

���

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

�

2,171

�

��

�

17

�

��

�

8,561

�

�

�

(6,442

)�

�

�

4,307

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

LONG-TERM DEBT

��

�

10,604

�

��

�

298

�

��

�

���

�

�

�

���

�

�

�

10,902

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:

��

��

��

�

�

Intercompany payable

��

�

740

�

��

�

���

�

��

�

���

�

�

�

(740

)�

�

�

���

�

Income taxes

��

�

4,258

�

��

�

���

�

��

�

5,040

�

�

�

���

�

�

�

9,298

�

Asset retirement obligation

��

�

466

�

��

�

���

�

��

�

2,630

�

�

�

���

�

�

�

3,096

�

Other

��

�

2,382

�

��

�

250

�

��

�

(1,231

)�

�

�

(1,000

)�

�

�

401

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

�

7,846

�

��

�

250

�

��

�

6,439

�

�

�

(1,740

)�

�

�

12,795

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

COMMITMENTS AND CONTINGENCIES APACHE SHAREHOLDERS� EQUITY

��

�

30,818

�

��

�

1,645

�

��

�

25,975

�

�

�

(27,620

)�

�

�

30,818

�

Noncontrolling interest

��

�

���

�

��

�

���

�

��

�

2,168

�

�

�

���

�

�

�

2,168

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

TOTAL EQUITY

��

�

30,818

�

��

�

1,645

�

��

�

28,143

�

�

�

(27,620

)�

�

�

32,986

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

��

$

51,439

�

��

$

2,210

�

��

$

43,143

�

�

$

(35,802

)�

�

$

60,990

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

�

�

�

�

28

---

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December�31, 2013

�

�

��

�

�

��

�

�

��

All Other

�

��

�

�

�

�

�

�

��

�

�

��

Apache

�

��

Subsidiaries

�

��

�

�

�

�

�

�

��

Apache

�

��

Finance

�

��

of Apache

�

��

Reclassifications

�

�

�

�

�

��

Corporation

�

��

Canada

�

��

Corporation

�

��

& Eliminations

�

�

Consolidated

�

�

��

�

�

��

�

�

��

(In�millions)

�

��

�

�

�

�

�

ASSETS

��

��

��

��

�

CURRENT ASSETS:

��

��

��

��

�

Cash and cash equivalents

��

$

155

�

��

$

3

�

��

$

1,748

�

��

$

���

�

�

$

1,906

�

Receivables, net of allowance

��

�

1,043

�

��

�

���

�

��

�

1,909

�

��

�

���

�

�

�

2,952

�

Inventories

��

�

48

�

��

�

���

�

��

�

843

�

��

�

���

�

�

�

891

�

Drilling advances

��

�

49

�

��

�

���

�

��

�

322

�

��

�

���

�

�

�

371

�

Derivative instruments

��

�

1

�

��

�

���

�

��

�

���

�

��

�

���

�

�

�

1

�

Prepaid assets and other

��

�

99

�

��

�

���

�

��

�

146

�

��

�

���

�

�

�

245

�

Intercompany receivable

��

�

5,357

�

��

�

���

�

��

�

���

�

��

�

(5,357

)�

�

�

���

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

6,752

�

��

�

3

�

��

�

4,968

�

��

�

(5,357

)�

�

�

6,366

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

PROPERTY AND EQUIPMENT, NET

��

�

16,092

�

��

�

���

�

��

�

36,329

�

��

�

���

�

�

�

52,421

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

OTHER ASSETS:

��

��

��

��

�

Intercompany receivable

��

�

1,572

�

��

�

���

�

��

�

���

�

��

�

(1,572

)�

�

�

���

�

Equity in affiliates

��

�

24,743

�

��

�

1,155

�

��

�

449

�

��

�

(26,347

)�

�

�

���

�

Goodwill, net

��

�

173

�

��

�

���

�

��

�

1,196

�

��

�

���

�

�

�

1,369

�

Deferred charges and other

��

�

166

�

��

�

1,006

�

��

�

1,309

�

��

�

(1,000

)�

�

�

1,481

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

��

$

49,498

�

��

$

2,164

�

��

$

44,251

�

��

$

(34,276

)�

�

$

61,637

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

LIABILITIES AND SHAREHOLDERS� EQUITY

��

��

��

��

�

CURRENT LIABILITIES:

��

��

��

��

�

Accounts payable

��

$

956

�

��

$

2

�

��

$

658

�

��

$

���

�

�

$

1,616

�

Current debt

��

�

���

�

��

�

���

�

��

�

53

�

��

�

���

�

�

�

53

�

Asset retirement obligation

��

�

115

�

��

�

���

�

��

�

6

�

��

�

���

�

�

�

121

�

Derivative instruments

��

�

299

�

��

�

���

�

��

�

���

�

��

�

���

�

�

�

299

�

Other current liabilities

��

�

896

�

��

�

10

�

��

�

1,705

�

��

�

���

�

�

�

2,611

�

Intercompany payable

��

�

���

�

��

�

���

�

��

�

5,357

�

��

�

(5,357

)�

�

�

���

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

2,266

�

��

�

12

�

��

�

7,779

�

��

�

(5,357

)�

�

�

4,700

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

LONG-TERM DEBT

��

�

9,374

�

��

�

298

�

��

�

���

�

��

�

���

�

�

�

9,672

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:

��

��

��

��

�

Intercompany payable

��

�

���

�

��

�

���

�

��

�

1,572

�

��

�

(1,572

)�

�

�

���

�

Income taxes

��

�

3,586

�

��

�

���

�

��

�

4,778

�

��

�

���

�

�

�

8,364

�

Asset retirement obligation

��

�

430

�

��

�

���

�

��

�

2,671

�

��

�

���

�

�

�

3,101

�

Other

��

�

446

�

��

�

250

�

��

�

711

�

��

�

(1,000

)�

�

�

407

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

4,462

�

��

�

250

�

��

�

9,732

�

��

�

(2,572

)�

�

�

11,872

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

COMMITMENTS AND CONTINGENCIES APACHE SHAREHOLDERS� EQUITY

��

�

33,396

�

��

�

1,604

�

��

�

24,743

�

��

�

(26,347

)�

�

�

33,396

�

Noncontrolling interest

��

�

���

�

��

�

���

�

��

�

1,997

�

��

�

���

�

�

�

1,997

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

TOTAL EQUITY

��

�

33,396

�

��

�

1,604

�

��

�

26,740

�

��

�

(26,347

)�

�

�

35,393

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

��

$

49,498

�

��

$

2,164

�

��

$

44,251

�

��

$

(34,276

)�

�

$

61,637

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

�

�

�

�

�

29

---

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 five countries: the United States (U.S.), Canada, Egypt, Australia, 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 Current Report on Form 8-K dated July�17, 2014 for our 2013 fiscal year.

Strategic Overview

Over the last five years, Apache has greatly enlarged and enhanced its North American onshore resource base, which we believe is capable of driving our growth and performance for the foreseeable future. During the last 18 months, we have further increased the focus on our North American Onshore business by divesting $10 billion of properties. In North America, we completed the sale of our Gulf of Mexico Shelf region assets, certain non-producing assets in the deepwater Gulf of Mexico, and non-strategic, primarily dry-gas, assets in Canada. Internationally, we sold a one-third noncontrolling interest in our Egypt operations and all of our assets in Argentina. In addition, we intend to completely exit the Wheatstone and Kitimat LNG projects, and, in light of our expanding opportunity set in North American Onshore, we are evaluating our international assets and exploring multiple opportunities, including the potential separation of some or all of them through the capital markets.

In addition, in June 2013 we launched a share repurchase program. Through September�30, 2014, we have repurchased a total of 31.8�million of the 40�million shares authorized by our Board of Directors. Under the program, we are not obligated to acquire any specific number of shares.

Financial Highlights

�

�

�

�

Net cash provided by operating activities (operating cash flows or cash flows) totaled $6.5 billion for the first nine months of 2014, driven by the strength of our North American drilling program.

�

�

�

�

For the third quarter of 2014, Apache reported a loss of $1.3 billion, or $3.50 per diluted common share, compared with earnings of $300 million, or $0.75 per diluted share, for the prior-year quarter. The loss for the 2014 third quarter reflects after-tax write-downs of oil and gas properties in the U.S. and U.K. North Sea totaling $1.0 billion, a deferred tax charge on undistributed foreign earnings totaling $814 million, and a deferred tax charge on distributed foreign earnings of $249 million. These expenses were partially offset by an unrealized after-tax gain on commodity derivative mark-to-market changes of $202 million.

�

�

�

�

Results for the first nine months of 2014 reflected a loss of $589 million, or $1.52 per diluted common share, compared with earnings of $2.0 billion, or $5.06 per diluted share, in the comparable prior-year period. The loss for the 2014 nine-month period reflects after-tax write-downs of oil and gas properties in the U.S. and U.K. North Sea totaling $1.1 billion, third-quarter deferred tax adjustments noted above, and an after-tax loss of $517 million on discontinued operations in Argentina. These expenses were partially offset by an unrealized after-tax gain on commodity derivative mark-to-market changes of $220 million.

Third Quarter Operational Developments

Average daily production in the third quarter of 2014 totaled 637�thousand barrels of oil equivalent (Mboe), a decrease of 105 Mboe from the comparative 2013 quarter. The prior-year quarter includes volumes from properties in the Gulf of Mexico Shelf and Canada that have since been divested.

North America

�

�

�

�

North American onshore liquids averaged 211,402 barrels per day, up 12 percent over the prior-year quarter.

�

30

---

�

�

�

North American onshore liquids production represented nearly 55 percent of our worldwide liquids production and 33 percent of our overall production.

�

�

�

�

The Permian region averaged 42 operated rigs during the quarter, drilling 195 gross wells, 144 net wells. Combined, drilling activity in the region resulted in a production increase of 23 percent relative to the prior-year period.

�

�

�

�

The Central region averaged 31 operated rigs during the quarter, drilling 70 gross wells, 46 net wells, in plays such as the Granite Wash, Marmaton and Cleveland. In the Canyon Lime play, the region averaged 2 rigs in the third quarter, increasing to 5 by October.

�

�

�

�

Gulf Coast region averaged 10 operated rigs during the quarter, drilling 19 gross wells, 14 net wells. In the East Texas Eagle Ford play, the region brought on 6 new wells in the Reveille area of Brazos County with an average 30-day initial production of 687 barrels of oil equivalent per day (boe/d).

�

�

�

�

The Canada region averaged 8 operated rigs, 2 at Kitimat, during the quarter, drilling 25 gross wells, 20 net wells. Apache spud initial wells at the Duvernay seven well pad and drilled the first well at the Montney two well pad.

International

�

�

�

�

The Australia region averaged 2 rigs, drilling 5 gross wells, 2 net wells, during the quarter. Production was up 12 percent over the second quarter of 2014 as a result of the successful commencement of production from the Balnaves Oil Development. In addition, during the quarter, the Company made a significant first oil discovery in Australia�s offshore Canning Basin at the Phoenix South-1 well which encountered oil in 4 discrete columns, the results of which are still being evaluated.

�

�

�

�

The North Sea region averaged 5 rigs, drilling 4 gross wells, 4 net wells. During the quarter, the region successfully completed the regular scheduled annual maintenance turnaround across all operated assets ahead of schedule and without incident.

�

�

�

�

The Egypt region averaged 27 rigs during the quarter, drilling 63 gross wells, 54 net wells.

�

31

---

Results of Operations

Oil and Gas Revenues

Oil and gas production revenues for the third quarter of 2014 totaled $3.5 billion, a $820 million decrease from the comparative 2013 quarter. The table below presents revenues by region and each region�s percent contribution to revenues for 2014 and 2013.

�

�

��

For the Quarter Ended September�30,

�

�

For the Nine Months Ended September�30,

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

$

�

��

%

�

�

$

�

��

%

�

�

$

�

��

%

�

�

$

�

��

%

�

�

��

Value

�

��

Contribution

�

�

Value

�

��

Contribution

�

�

Value

�

��

Contribution

�

�

Value

�

��

Contribution

�

�

��

($�in�millions)

�

Total Oil Revenues:

��

��

�

��

�

��

�

��

United States

��

$

1,121

�

��

�

41

%�

�

$

1,594

�

��

�

46

%�

�

$

3,358

�

��

�

40

%�

�

$

4,253

�

��

�

43

%�

Canada

��

�

140

�

��

�

5

%�

�

�

167

�

��

�

5

%�

�

�

434

�

��

�

5

%�

�

�

442

�

��

�

5

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

North America

��

�

1,261

�

��

�

46

%�

�

�

1,761

�

��

�

51

%�

�

�

3,792

�

��

�

45

%�

�

�

4,695

�

��

�

48

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Egypt (1)

��

�

805

�

��

�

29

%�

�

�

925

�

��

�

26

%�

�

�

2,536

�

��

�

30

%�

�

�

2,633

�

��

�

27

%�

Australia

��

�

200

�

��

�

7

%�

�

�

201

�

��

�

6

%�

�

�

523

�

��

�

6

%�

�

�

603

�

��

�

6

%�

North Sea

��

�

487

�

��

�

18

%�

�

�

581

�

��

�

17

%�

�

�

1,667

�

��

�

19

%�

�

�

1,859

�

��

�

19

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

International (1)

��

�

1,492

�

��

�

54

%�

�

�

1,707

�

��

�

49

%�

�

�

4,726

�

��

�

55

%�

�

�

5,095

�

��

�

52

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Total(1)(2)

��

$

2,753

�

��

�

100

%�

�

$

3,468

�

��

�

100

%�

�

$

8,518

�

��

�

100

%�

�

$

9,790

�

��

�

100

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Total Gas Revenues:

��

��

�

��

�

��

�

��

United States

��

$

210

�

��

�

39

%�

�

$

286

�

��

�

44

%�

�

$

721

�

��

�

41

%�

�

$

894

�

��

�

44

%�

Canada

��

�

112

�

��

�

21

%�

�

�

139

�

��

�

22

%�

�

�

382

�

��

�

21

%�

�

�

457

�

��

�

22

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

North America

��

�

322

�

��

�

60

%�

�

�

425

�

��

�

66

%�

�

�

1,103

�

��

�

62

%�

�

�

1,351

�

��

�

66

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Egypt (1)

��

�

101

�

��

�

19

%�

�

�

97

�

��

�

15

%�

�

�

303

�

��

�

17

%�

�

�

291

�

��

�

14

%�

Australia

��

�

87

�

��

�

16

%�

�

�

78

�

��

�

12

%�

�

�

257

�

��

�

15

%�

�

�

264

�

��

�

13

%�

North Sea

��

�

28

�

��

�

5

%�

�

�

45

�

��

�

7

%�

�

�

110

�

��

�

6

%�

�

�

142

�

��

�

7

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

International (1)

��

�

216

�

��

�

40

%�

�

�

220

�

��

�

34

%�

�

�

670

�

��

�

38

%�

�

�

697

�

��

�

34

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Total(1)(3)

��

$

538

�

��

�

100

%�

�

$

645

�

��

�

100

%�

�

$

1,773

�

��

�

100

%�

�

$

2,048

�

��

�

100

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Natural Gas Liquids (NGL)

��

��

�

��

�

��

�

��

Revenues:

��

��

�

��

�

��

�

��

United States

��

$

150

�

��

�

85

%�

�

$

149

�

��

�

85

%�

�

$

436

�

��

�

82

%�

�

$

396

�

��

�

84

%�

Canada

��

�

16

�

��

�

9

%�

�

�

19

�

��

�

11

%�

�

�

63

�

��

�

12

%�

�

�

53

�

��

�

11

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

North America

��

�

166

�

��

�

94

%�

�

�

168

�

��

�

96

%�

�

�

499

�

��

�

94

%�

�

�

449

�

��

�

95

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Egypt (1)

��

�

4

�

��

�

2

%�

�

�

���

�

��

�

0

%�

�

�

10

�

��

�

2

%�

�

�

���

�

��

�

0

%�

North Sea

��

�

7

�

��

�

4

%�

�

�

7

�

��

�

4

%�

�

�

23

�

��

�

4

%�

�

�

24

�

��

�

5

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

International (1)

��

�

11

�

��

�

6

%�

�

�

7

�

��

�

4

%�

�

�

33

�

��

�

6

%�

�

�

24

�

��

�

5

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Total (1)

��

$

177

�

��

�

100

%�

�

$

175

�

��

�

100

%�

�

$

532

�

��

�

100

%�

�

$

473

�

��

�

100

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Total Oil and Gas Revenues:

��

��

�

��

�

��

�

��

United States

��

$

1,481

�

��

�

42

%�

�

$

2,029

�

��

�

47

%�

�

$

4,515

�

��

�

42

%�

�

$

5,543

�

��

�

45

%�

Canada

��

�

268

�

��

�

8

%�

�

�

325

�

��

�

8

%�

�

�

879

�

��

�

8

%�

�

�

952

�

��

�

8

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

North America

��

�

1,749

�

��

�

50

%�

�

�

2,354

�

��

�

55

%�

�

�

5,394

�

��

�

50

%�

�

�

6,495

�

��

�

53

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Egypt (1)

��

�

910

�

��

�

27

%�

�

�

1,022

�

��

�

24

%�

�

�

2,849

�

��

�

26

%�

�

�

2,924

�

��

�

24

%�

Australia

��

�

287

�

��

�

8

%�

�

�

279

�

��

�

6

%�

�

�

780

�

��

�

7

%�

�

�

867

�

��

�

7

%�

North Sea

��

�

522

�

��

�

15

%�

�

�

633

�

��

�

15

%�

�

�

1,800

�

��

�

17

%�

�

�

2,025

�

��

�

16

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

International (1)

��

�

1,719

�

��

�

50

%�

�

�

1,934

�

��

�

45

%�

�

�

5,429

�

��

�

50

%�

�

�

5,816

�

��

�

47

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Total (1)

��

$

3,468

�

��

�

100

%�

�

$

4,288

�

��

�

100

%�

�

$

10,823

�

��

�

100

%�

�

$

12,311

�

��

�

100

%�

��

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

�

�

�

�

��

�

�

�

Discontinued Operations - Argentina

��

��

�

��

�

��

�

��

Oil Revenues

��

$

���

�

��

�

$

71

�

��

�

$

45

�

��

�

$

200

�

��

Gas Revenues

��

�

���

�

��

�

�

47

�

��

�

�

39

�

��

�

�

148

�

��

NGL Revenues

��

�

���

�

��

�

�

4

�

��

�

�

3

�

��

�

�

16

�

��

��

�

�

�

��

�

�

�

�

��

�

�

�

�

��

�

�

�

�

��

Total

��

$

���

�

��

�

$

122

�

��

�

$

87

�

��

�

$

364

�

��

��

�

�

�

��

�

�

�

�

��

�

�

�

�

��

�

�

�

�

��

�

(1)�	Includes revenues attributable to a noncontrolling interest in Egypt for the quarter and nine months ended September�30, 2014.

(2)�	Financial derivative hedging activities decreased oil revenues $2 million for the 2014 nine-month period, and $7 million and $44 million for the 2013 third quarter and nine-month period, respectively.

(3)�	Financial derivative hedging activities increased natural gas revenues $2 million for the 2014 nine-month period, and $9 million and $26 million for the 2013 third quarter and nine-month period, respectively.

�

32

---

Production

The table below presents third-quarter and year-to-date 2014 and 2013 production and the relative increase or decrease from the prior period.

�

�

��

For the Quarter Ended September�30,

�

�

For�the�Nine�Months�Ended�September�30,

�

�

��

�

�

��

�

�

��

Increase

�

�

�

�

��

�

�

��

Increase

�

�

��

2014

�

��

2013

�

��

(Decrease)

�

�

2014

�

��

2013

�

��

(Decrease)

�

Oil Volume � b/d

��

��

��

�

��

��

United States

��

�

133,613

�

��

�

163,690

�

��

�

(18

%)�

�

�

130,675

�

��

�

156,803

�

��

�

(17

%)�

Canada

��

�

17,672

�

��

�

18,573

�

��

�

(5

%)�

�

�

17,748

�

��

�

18,112

�

��

�

(2

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

North America

��

�

151,285

�

��

�

182,263

�

��

�

(17

%)�

�

�

148,423

�

��

�

174,915

�

��

�

(15

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Egypt(1)(2)

��

�

87,499

�

��

�

89,294

�

��

�

(2

%)�

�

�

88,076

�

��

�

89,530

�

��

�

(2

%)�

Australia

��

�

22,014

�

��

�

18,787

�

��

�

17

%�

�

�

17,817

�

��

�

20,195

�

��

�

(12

%)�

North Sea

��

�

55,247

�

��

�

57,861

�

��

�

(5

%)�

�

�

58,636

�

��

�

63,291

�

��

�

(7

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

International

��

�

164,760

�

��

�

165,942

�

��

�

(1

%)�

�

�

164,529

�

��

�

173,016

�

��

�

(5

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Total

��

�

316,045

�

��

�

348,205

�

��

�

(9

%)�

�

�

312,952

�

��

�

347,931

�

��

�

(10

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Natural Gas Volume � Mcf/d

��

��

��

�

��

��

United States

��

�

579,188

�

��

�

830,423

�

��

�

(30

%)�

�

�

589,565

�

��

�

848,173

�

��

�

(30

%)�

Canada

��

�

300,803

�

��

�

529,402

�

��

�

(43

%)�

�

�

331,470

�

��

�

523,163

�

��

�

(37

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

North America

��

�

879,991

�

��

�

1,359,825

�

��

�

(35

%)�

�

�

921,035

�

��

�

1,371,336

�

��

�

(33

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Egypt(1)(2)

��

�

377,838

�

��

�

350,504

�

��

�

8

%�

�

�

374,384

�

��

�

357,747

�

��

�

5

%�

Australia

��

�

201,386

�

��

�

212,141

�

��

�

(5

%)�

�

�

209,163

�

��

�

212,845

�

��

�

(2

%)�

North Sea

��

�

50,647

�

��

�

46,971

�

��

�

8

%�

�

�

50,209

�

��

�

50,108

�

��

�

0

%�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

International

��

�

629,871

�

��

�

609,616

�

��

�

3

%�

�

�

633,756

�

��

�

620,700

�

��

�

2

%�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Total

��

�

1,509,862

�

��

�

1,969,441

�

��

�

(23

%)�

�

�

1,554,791

�

��

�

1,992,036

�

��

�

(22

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

NGL Volume � b/d

��

��

��

�

��

��

United States

��

�

61,712

�

��

�

57,510

�

��

�

7

%�

�

�

57,163

�

��

�

54,639

�

��

�

5

%�

Canada

��

�

5,381

�

��

�

7,012

�

��

�

(23

%)�

�

�

6,349

�

��

�

6,788

�

��

�

(6

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

North America

��

�

67,093

�

��

�

64,522

�

��

�

4

%�

�

�

63,512

�

��

�

61,427

�

��

�

3

%�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Egypt(1)(2)

��

�

726

�

��

�

���

�

��

�

NM

��

�

�

616

�

��

�

���

�

��

�

NM

��

North Sea

��

�

1,294

�

��

�

1,097

�

��

�

18

%�

�

�

1,251

�

��

�

1,263

�

��

�

(1

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

International

��

�

2,020

�

��

�

1,097

�

��

�

84

%�

�

�

1,867

�

��

�

1,263

�

��

�

48

%�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Total

��

�

69,113

�

��

�

65,619

�

��

�

5

%�

�

�

65,379

�

��

�

62,690

�

��

�

4

%�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

BOE per day(3)

��

��

��

�

��

��

United States

��

�

291,857

�

��

�

359,604

�

��

�

(19

%)�

�

�

286,099

�

��

�

352,804

�

��

�

(19

%)�

Canada

��

�

73,187

�

��

�

113,819

�

��

�

(36

%)�

�

�

79,341

�

��

�

112,095

�

��

�

(29

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

North America

��

�

365,044

�

��

�

473,423

�

��

�

(23

%)�

�

�

365,440

�

��

�

464,899

�

��

�

(21

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Egypt(2)

��

�

151,198

�

��

�

147,711

�

��

�

2

%�

�

�

151,090

�

��

�

149,154

�

��

�

1

%�

Australia

��

�

55,578

�

��

�

54,144

�

��

�

3

%�

�

�

52,677

�

��

�

55,669

�

��

�

(5

%)�

North Sea

��

�

64,982

�

��

�

66,787

�

��

�

(3

%)�

�

�

68,255

�

��

�

72,905

�

��

�

(6

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

International

��

�

271,758

�

��

�

268,642

�

��

�

1

%�

�

�

272,022

�

��

�

277,728

�

��

�

(2

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Total

��

�

636,802

�

��

�

742,065

�

��

�

(14

%)�

�

�

637,462

�

��

�

742,627

�

��

�

(14

%)�

��

�

�

�

��

�

�

�

��

�

�

�

�

��

�

�

�

��

Discontinued Operations � Argentina

��

��

��

�

��

��

Oil (b/d)

��

�

���

�

��

�

9,560

�

��

�

NM

��

�

�

2,269

�

��

�

9,408

�

��

�

NM

��

Gas (Mcf/d)

��

�

���

�

��

�

185,962

�

��

�

NM

��

�

�

46,599

�

��

�

186,241

�

��

�

NM

��

NGL (b/d)

��

�

���

�

��

�

1,713

�

��

�

NM

��

�

�

424

�

��

�

2,254

�

��

�

NM

��

BOE/d

��

�

���

�

��

�

42,266

�

��

�

NM

��

�

�

10,461

�

��

�

42,702

�

��

�

NM

��

�

(1)	Gross oil, natural gas, and NGL production in Egypt for the third quarter and nine-month periods of 2014 and 2013 were as follows:

�

�

��

For�the�Quarter�Ended September 30,

�

��

For�the�Nine�Months�Ended September 30,

�

�

��

2014

�

��

2013

�

��

2014

�

��

2013

�

Oil (b/d)

��

�

195,165

�

��

�

193,869

��

��

�

196,938

�

��

�

195,442

�

Gas (Mcf/d)

��

�

891,392

�

��

�

915,965

��

��

�

906,751

�

��

�

910,599

�

NGL (b/d)

��

�

1,978

�

��

�

���

��

��

�

1,780

�

��

�

���

�

�

(2)	Includes production volumes per day attributable to a noncontrolling interest in Egypt for the third quarter and nine-month periods of 2014 of:

�

�

��

For�the�Quarter�Ended September�30,

�

��

For�the�Nine�Months�Ended September�30,

�

�

��

2014

�

��

2013

�

��

2014

�

��

2013

�

Oil (b/d)

��

�

29,201

�

��

�

���

��

��

�

29,259

�

��

�

���

�

Gas (Mcf/d)

��

�

127,020

�

��

�

���

��

��

�

124,836

�

��

�

���

�

NGL (b/d)

��

�

242

�

��

�

���

��

��

�

205

�

��

�

���

�

�

(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.

NM � Not meaningful

�

33

---

Pricing

The table below presents third-quarter and year-to-date 2014 and 2013 pricing and the relative increase or decrease from the prior periods.

�

�

��

For�the�Quarter�Ended�September�30,

�

�

For�the�Nine�Months�Ended�September�30,

�

�

��

2014

�

��

2013

�

��

Increase (Decrease)

�

�

2014

�

��

2013

�

��

Increase (Decrease)

�

Average Oil Price�Per barrel

��

��

��

�

��

��

United States

��

$

91.26

�

��

$

105.82

�

��

�

(14

%)�

�

$

94.14

�

��

$

99.35

�

��

�

(5

%)�

Canada

��

�

85.43

�

��

�

97.58

�

��

�

(12

%)�

�

�

89.45

�

��

�

89.33

�

��

�

0

%�

North America

��

�

90.58

�

��

�

104.98

�

��

�

(14

%)�

�

�

93.58

�

��

�

98.31

�

��

�

(5

%)�

Egypt

��

�

100.06

�

��

�

112.61

�

��

�

(11

%)�

�

�

105.50

�

��

�

107.73

�

��

�

(2

%)�

Australia

��

�

98.82

�

��

�

116.21

�

��

�

(15

%)�

�

�

107.50

�

��

�

109.40

�

��

�

(2

%)�

North Sea

��

�

95.80

�

��

�

109.33

�

��

�

(12

%)�

�

�

104.13

�

��

�

107.61

�

��

�

(3

%)�

International

��

�

98.47

�

��

�

111.87

�

��

�

(12

%)�

�

�

105.23

�

��

�

107.88

�

��

�

(2

%)�

Total(1)

��

�

94.69

�

��

�

108.27

�

��

�

(13

%)�

�

�

99.71

�

��

�

103.07

�

��

�

(3

%)�

Average Natural Gas Price�Per Mcf

��

��

��

�

��

��

United States

��

$

3.94

�

��

$

3.75

�

��

�

5

%�

�

$

4.48

�

��

$

3.86

�

��

�

16

%�

Canada

��

�

4.04

�

��

�

2.87

�

��

�

41

%�

�

�

4.22

�

��

�

3.20

�

��

�

32

%�

North America

��

�

3.97

�

��

�

3.41

�

��

�

16

%�

�

�

4.39

�

��

�

3.61

�

��

�

22

%�

Egypt

��

�

2.91

�

��

�

3.01

�

��

�

(3

%)�

�

�

2.96

�

��

�

2.98

�

��

�

(1

%)�

Australia

��

�

4.70

�

��

�

3.98

�

��

�

18

%�

�

�

4.51

�

��

�

4.54

�

��

�

(1

%)�

North Sea

��

�

6.10

�

��

�

10.29

�

��

�

(41

%)�

�

�

8.06

�

��

�

10.37

�

��

�

(22

%)�

International

��

�

3.74

�

��

�

3.91

�

��

�

(4

%)�

�

�

3.88

�

��

�

4.11

�

��

�

(6

%)�

Total(2)

��

�

3.88

�

��

�

3.56

�

��

�

9

%�

�

�

4.18

�

��

�

3.77

�

��

�

11

%�

Average NGL Price�Per barrel

��

��

��

�

��

��

United States

��

$

26.39

�

��

$

28.25

�

��

�

(7

%)�

�

$

27.96

�

��

$

26.55

�

��

�

5

%�

Canada

��

�

33.50

�

��

�

28.77

�

��

�

16

%�

�

�

36.40

�

��

�

28.49

�

��

�

28

%�

North America

��

�

26.96

�

��

�

28.30

�

��

�

(5

%)�

�

�

28.81

�

��

�

26.76

�

��

�

8

%�

Egypt

��

�

52.80

�

��

�

���

�

��

�

NM

��

�

�

56.57

�

��

�

���

�

��

�

NM

��

North Sea

��

�

59.47

�

��

�

69.77

�

��

�

(15

%)�

�

�

66.18

�

��

�

70.51

�

��

�

(6

%)�

International

��

�

57.07

�

��

�

69.77

�

��

�

(18

%)�

�

�

63.01

�

��

�

70.51

�

��

�

(11

%)�

Total

��

�

27.84

�

��

�

29.00

�

��

�

(4

%)�

�

�

29.78

�

��

�

27.64

�

��

�

8

%�

Discontinued Operations�Argentina

��

��

��

�

��

��

Oil price ($/Bbl)

��

$

���

�

��

$

79.77

�

��

�

NM

��

�

$

72.70

�

��

$

77.66

�

��

�

(6

%)�

Gas price ($/Mcf)

��

�

���

�

��

�

2.76

�

��

�

NM

��

�

�

3.04

�

��

�

2.91

�

��

�

4

%�

NGL price ($/Bbl)

��

�

���

�

��

�

22.19

�

��

�

NM

��

�

�

24.57

�

��

�

25.11

�

��

�

(2

%)�

�

(1)�	Reflects a per-barrel decrease of $0.02 from derivative hedging activities for the 2014 nine-month period, and a decrease of $0.22 and $0.45 from derivative hedging activities for the comparative 2013 third quarter and nine-month period, respectively.

(2)�	Reflects a per-Mcf increase of $0.05 and $0.04 from derivative hedging activities for the comparative 2013 third quarter and nine-month period, respectively.

NM � Not meaningful

Third-Quarter 2014 compared to Third-Quarter 2013

Crude Oil Revenues Crude oil revenues for the third quarter of 2014 totaled $2.8 billion, a $715 million decrease from the comparative 2013 quarter. A 9 percent decrease in average daily production decreased third-quarter 2014 revenues by $280 million compared to the prior-year quarter, while 13 percent lower realized prices decreased revenues by $435 million. Crude oil prices realized in the third quarter of 2014 averaged $94.69 per barrel, compared with $108.27 in the comparative prior-year quarter. Crude oil accounted for 79 percent of oil and gas production revenues and 50 percent of worldwide production in the third quarter of 2014.

Worldwide production decreased 32�thousand barrels of oil per day (Mb/d) from the third quarter of 2013 to 316 Mb/d, primarily as a result of the divestiture of our Gulf of Mexico Shelf assets on September�30, 2013. Exclusive of production from these divested assets, oil production increased 13 Mb/d, primarily on drilling and recompletion activity in the U.S. Permian region, partially offset by production decreases in Canada, Egypt and the North Sea.

Natural Gas Revenues Gas revenues for the third quarter of 2014 totaled $538 million, down 17 percent from the third quarter of 2013. A 23 percent decrease in average production reduced natural gas revenues by $164 million as compared to the prior-year quarter, while a 9 percent increase in average realized prices increased revenues by $57 million. Natural gas accounted for 16 percent of our oil and gas production revenues and 40 percent of our equivalent production.

�

34

---

Worldwide natural gas production was 460�million cubic feet per day (MMcf/d) lower than the third quarter of 2013, primarily as a result of the divestiture of our Gulf of Mexico Shelf assets on September�30, 2013 and certain Western Canadian assets over the last 12 months. Exclusive of production from these divested assets, our worldwide gas production was essentially flat.

NGL Revenues NGL revenues for the third quarter of 2014 totaled $177 million, up $2 million from the third quarter of 2013. A 5 percent increase in average NGL production increased NGL revenues by $9 million compared to the prior-year quarter, while a 4 percent decrease in average realized prices decreased revenues by $7 million. NGLs accounted for approximately 5 percent of our oil and gas production revenues and 10 percent of our equivalent production during the third quarter of 2014.

Worldwide production of NGLs increased 3.5 Mb/d to 69.1 Mb/d in the third quarter of 2014, primarily from increased drilling activity in the Permian region offset by the divestiture of our Gulf of Mexico Shelf assets on September�30, 2013. Exclusive of production from these divested assets, our worldwide NGL production increased 8.7 Mb/d.

Year-to-Date 2014 compared to Year-to-Date 2013

Crude Oil Revenues Crude oil revenues for the first nine months of 2014 totaled $8.5 billion, $1.3 billion lower than the comparative 2013 period, the result of a 10 percent decrease in worldwide production and a 3 percent decrease in average realized prices. Crude oil accounted for 79 percent of oil and gas production revenues and 49 percent of worldwide production for the first nine months of 2014. Lower production volumes reduced revenue by $952 million compared to the first nine months of 2013, and lower realized prices reduced revenues by $320 million. Crude oil prices realized in the first nine months of 2014 averaged $99.71 per barrel, compared with $103.07 in the comparative prior-year period.

Worldwide production declined 35 Mb/d to 313 Mb/d in the first nine months of this year from the same period last year, primarily as a result of the divestiture of our Gulf of Mexico Shelf assets on September�30, 2013. Exclusive of production from these divested assets, worldwide production increased 10 Mb/d, primarily a result of drilling and recompletion activity in our Permian region.

Natural Gas Revenues Gas revenues for the first nine months of 2014 totaled $1.8 billion, down 13 percent from the comparative 2013 period. A 22 percent decline in average production reduced natural gas revenues by $499 million, partially offset by an 11 percent increase in average realized prices that added $224 million to revenues. Natural gas accounted for 16 percent of our oil and gas production revenues and 41 percent of our equivalent production, compared to 17 percent and 45 percent, respectively, for the 2013 period.

Our worldwide natural gas production was 437 MMcf/d lower than the first nine months of 2013 as a result of the divestiture of our Gulf of Mexico Shelf assets on September�30, 2013 and certain Western Canadian assets over the last 12 months. Exclusive of production from these divested assets, worldwide production was essentially flat.

NGL Revenues NGL revenues for the first nine months of 2014 totaled $532 million, up $59 million from the comparative 2013 period. A 4 percent increase in average production increased NGL revenues by $22 million as compared to the prior-year period, and an 8 percent increase in average realized prices increased revenues by $37 million. NGLs accounted for nearly 5 percent of our oil and gas production revenues and 10 percent of our equivalent production during the first nine months of 2014.

Worldwide production of NGLs increased 2.7 Mb/d to 65.4 Mb/d in the first nine months of 2014, primarily from drilling and recompletion activity in the Central and Permian regions. Exclusive of production from divested assets, our worldwide NGL production increased 9.4 Mb/d.

�

35

---

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 Argentina.

�

�

��

For the Quarter Ended September�30,

�

��

For�the�Nine�Months�Ended�September�30,

�

�

��

2014

�

��

2013

�

��

2014

�

��

2013

�

��

2014

�

��

2013

�

��

2014

�

��

2013

�

�

��

(In�millions)

�

��

(Per�boe)

�

��

(In�millions)

�

��

(Per�boe)

�

Depreciation, depletion, and amortization:

��

��

��

��

��

��

��

��

Oil and gas property and equipment

��

��

��

��

��

��

��

��

Recurring

��

$

1,173

�

��

$

1,272

�

��

$

20.03

�

��

$

18.63

�

��

$

3,437

�

��

$

3,740

�

��

$

19.75

�

��

$

18.45

�

Additional

��

�

1,562

�

��

�

627

�

��

�

26.65

�

��

�

9.18

�

��

�

1,765

�

��

�

627

�

��

�

10.14

�

��

�

3.09

�

Other assets

��

�

100

�

��

�

96

�

��

�

1.72

�

��

�

1.41

�

��

�

296

�

��

�

290

�

��

�

1.70

�

��

�

1.43

�

Asset retirement obligation accretion

��

�

46

�

��

�

65

�

��

�

0.78

�

��

�

0.95

�

��

�

135

�

��

�

192

�

��

�

0.78

�

��

�

0.95

�

Lease operating costs

��

�

652

�

��

�

772

�

��

�

11.13

�

��

�

11.31

�

��

�

1,862

�

��

�

2,275

�

��

�

10.70

�

��

�

11.22

�

Gathering and transportation costs

��

�

67

�

��

�

81

�

��

�

1.16

�

��

�

1.19

�

��

�

203

�

��

�

231

�

��

�

1.16

�

��

�

1.13

�

Taxes other than income

��

�

170

�

��

�

176

�

��

�

2.90

�

��

�

2.56

�

��

�

532

�

��

�

574

�

��

�

3.06

�

��

�

2.83

�

General and administrative expense

��

�

112

�

��

�

120

�

��

�

1.91

�

��

�

1.78

�

��

�

309

�

��

�

359

�

��

�

1.78

�

��

�

1.77

�

Acquisition, divestiture, and separation costs

��

�

34

�

��

�

���

�

��

�

0.58

�

��

�

���

�

��

�

66

�

��

�

���

�

��

�

0.38

�

��

�

���

�

Financing costs, net

��

�

41

�

��

�

50

�

��

�

0.69

�

��

�

0.74

�

��

�

103

�

��

�

157

�

��

�

0.59

�

��

�

0.78

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

Total

��

$

3,957

�

��

$

3,259

�

��

$

67.55

�

��

$

47.75

�

��

$

8,708

�

��

$

8,445

�

��

$

50.04

�

��

$

41.65

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

Recurring Depreciation, Depletion, and Amortization (DD&A) The following table details the changes in recurring DD&A of oil and gas properties between the third quarter and nine-month periods of 2014 and 2013:

�

�	��	For�the�Quarter�Ended September�30,		�	�	For�the�Nine�Months�Ended September�30,		�
�	��	(In millions)		�	�	(In millions)		�
2013 DD&A	��	$	1,272	�	�	$	3,740	�
Volume change	��	�	(157	)�	�	�	(487	)�
DD&A rate change	��	�	58	�	�	�	184	�
	��	�	�	�	�	�	�	�
2014 DD&A	��	$	1,173	�	�	$	3,437	�
	��	�	�	�	�	�	�	�

Oil and gas property recurring DD&A expense of $1.2 billion in the third quarter of 2014 decreased $99 million compared to the prior-year quarter on an absolute dollar basis: $157 million from lower volumes offset by $58 million increase on rate. Oil and gas property recurring DD&A expense of $3.4 billion in the first nine months of 2014 decreased $303 million compared to the prior-year period on an absolute dollar basis: $487 million from lower volumes offset by $184 million increase on rate. The Company�s oil and gas property recurring DD&A rate increased $1.40 and $1.30 per boe for the third quarter and first nine months of 2014, respectively, compared to the prior-year periods.

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 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. 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 DD&A� in the statement of consolidated operations.

In the third quarter of 2014, the Company recorded $1.5 billion ($996 million net of tax) and $17 million ($7 million net of tax) in non-cash write-down of the carrying value of the Company�s U.S. 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.

�

36

---

Lease Operating Expenses (LOE) LOE decreased $120 million, or 16 percent, for the quarter, and $413 million, or 18 percent, for the nine-month period, on an absolute dollar basis relative to the comparable periods of 2013. The following table identifies changes in Apache�s LOE rate between the third quarters and nine-month periods of 2014 and 2013.

�

For the Quarter Ended September�30,				�	�	For the Nine Months Ended September�30,				�
�	��	Per boe		�	�	�	��	Per boe		�
2013 LOE	��	$	11.31	�	�	2013 LOE	��	$	11.22	�
Labor and overhead costs	��	�	0.42	�	�	Labor and overhead costs	��	�	0.18	�
Saltwater disposal	��	�	0.12	�	�	Saltwater disposal	��	�	0.09	�
Materials	��	�	0.07	�	�	Materials	��	�	0.07	�
Divestitures(1)	��	�	(0.75	)�	�	Repairs and maintenance	��	�	0.07	�
Other	��	�	0.30	�	�	Transportation	��	�	0.05	�
Other increased production	��	�	(0.34	)�	�	Equipment rental	��	�	0.04	�
	��				�	Workovers	��	�	0.04	�
	��				�	Divestitures(1)	��	�	(1.16	)�
	��				�	Other	��	�	0.36	�
	��				�	Other increased production	��	�	(0.26	)�
	��	�	�	�	�		��	�	�	�
2014 LOE	��	$	11.13	�	�	2014 LOE	��	$	��������������������10.70	�
	��	�	�	�	�		��	�	�	�

�

(1)�	Per-unit impact of divestitures is shown net of associated production.

Gathering and Transportation Gathering and transportation costs totaled $67 million and $203 million in the third quarter and first nine months of 2014, respectively, down $14 million and $28 million from the third quarter and first nine months of 2013, respectively. The following table presents gathering and transportation costs paid by Apache directly to third-party carriers for each of the periods presented:

�

�

��

For�the�Quarter�Ended September�30,

�

��

For�the�Nine�Months�Ended September�30,

�

�

��

2014

�

��

2013

�

��

2014

�

��

2013

�

�

��

(In millions)

�

Canada

��

$

29

�

��

$

38

�

��

$

93

�

��

$

118

�

U.S.

��

�

24

�

��

�

23

�

��

�

69

�

��

�

67

�

Egypt

��

�

10

�

��

�

11

�

��

�

31

�

��

�

31

�

North Sea

��

�

4

�

��

�

9

�

��

�

10

�

��

�

15

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

Total Gathering and transportation

��

$

67

�

��

$

81

�

��

$

203

�

��

$

231

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

Taxes other than Income Taxes other than income totaled $170 million and $532 million for the third quarter and the first nine months of 2014, respectively, a decrease of $6 million and $42 million, respectively, from the comparative prior-year periods. The following table presents a comparison of these expenses:

�

�

��

For�the�Quarter�Ended September�30,

�

��

For�the�Nine�Months�Ended September�30,

�

�

��

2014

�

��

2013

�

��

2014

�

��

2013

�

�

��

(In millions)

�

Australia PRRT and U.K. PRT

��

$

61

�

��

$

66

�

��

$

215

�

��

$

273

�

Severance taxes

��

�

75

�

��

�

71

�

��

�

199

�

��

�

185

�

Ad valorem taxes

��

�

26

�

��

�

29

�

��

�

89

�

��

�

88

�

Other

��

�

8

�

��

�

10

�

��

�

29

�

��

�

28

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

Total Taxes other than income

��

$

170

�

��

$

176

�

��

$

532

�

��

$

574

�

��

�

�

�

��

�

�

�

��

�

�

�

��

�

�

�

Australia Petroleum Resource Rent Tax (PRRT) expense is a levy assessed on the sale of hydrocarbons derived from specific developmental areas in Australia. We incurred a $45 million charge in the third quarter of 2014. Prior periods reflect no PRRT expense as sales subject to PRRT were fully offset by credits derived from exploration and development expenditures. The North Sea Petroleum Revenue Tax (PRT) is assessed on qualifying fields in the U.K. North Sea. U.K. PRT for the third quarter of 2014 was lower than the 2013 period based on lower revenues. Severance tax expense increased $4 million as a result of higher U.S. onshore production.

�

37

---

U.K. PRT for the first nine months of 2014 was lower when compared to the 2013 period based on a decrease in production revenue. For the first nine months of 2014, higher sales volumes increased severance taxes by $14 million as compared to the first nine months of 2013.

General and Administrative Expenses General and administrative expenses (G&A) for the third quarter of 2014 decreased $8 million from the third quarter of 2013 on an absolute basis and increased $0.13 per boe on a per-unit basis. For the first nine months of 2014 G&A decreased $50 million on an absolute basis from the comparable 2013 period and increased $0.01 per boe on a per-unit basis. Expense for the nine-month 2014 period includes a $25 million benefit from nonrecurring third party cost reimbursements.

Acquisition, Divestiture and Separation Costs During the third quarter of 2014, the Company recognized $34 million in acquisition, divestiture, and separation costs related to acquisition and divestiture activity. For the nine-month 2014 period, the Company recognized $66 million in acquisition, divestiture, and separation costs.

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

�

�

��

For�the�Quarter�Ended September�30,

�

�

For�the�Nine�Months�Ended September�30,

�

�

��

2014

�

�

2013

�

�

2014

�

�

2013

�

�

��

(In millions)

�

Interest expense

��

$

126

�

�

$

142

�

�

$

374

�

�

$

429

�

Amortization of deferred loan costs

��

�

2

�

�

�

2

�

�

�

5

�

�

�

6

�

Capitalized interest

��

�

(85

)�

�

�

(91

)�

�

�

(270

)�

�

�

(268

)�

Interest income

��

�

(2

)�

�

�

(3

)�

�

�

(6

)�

�

�

(10

)�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Financing costs, net

��

$

41

�

�

$

50

�

�

$

103

�

�

$

157

�

��

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Net financing costs were down $9 million and $54 million in the third quarter and first nine months of 2014, respectively, compared to the same 2013 periods. The $16 million and $55 million decreases in interest expense in the third quarter and first nine months of 2014, respectively, were a result of lower average debt balances.

Provision for Income Taxes In the third quarter of 2014, Apache evaluated its permanent reinvestment position and determined that undistributed earnings from certain foreign subsidiaries located in Apache�s Australia, Egypt, and North Sea regions will no longer be permanently reinvested. As a result of this change in position, the Company recorded $814 million of U.S. deferred income tax expense on the undistributed earnings that were previously considered permanently reinvested. In addition, the Company recorded $249 million of U.S. deferred income tax expense on foreign earnings that were distributed to the U.S. in the third quarter of 2014.

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. Accordingly, in the third quarter of 2014, the Company recorded $814 million of U.S. deferred income tax expense on foreign earnings no longer deemed to be permanently reinvested as well as the income tax effect of the $1.5 billion and $17 million non-cash write-downs of its U.S. and North Sea proved oil and gas properties, respectively, as discrete items in the third quarter of 2014. In the second quarter of 2014, the Company recorded the income tax impact of a $203 million non-cash write-down of its North Sea proved oil and gas properties as a discrete item. In the third quarter of 2013, the Company recorded the income tax impact of a $552 million non-cash write-down and a $75 million non-cash impairment on its U.S. and Kenyan oil and gas properties, respectively, as discrete items. Excluding these items and certain other tax adjustments, the third quarter 2014 and 2013 rates would have been 44 percent and 41 percent, respectively.

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. As a majority of our capital investment activity is discretionary, we routinely adjust our capital budget on a quarterly basis in response to changing market conditions and operating cash flow forecasts.

Apache�s operating cash flows, both in the short-term and the long-term, are impacted by volatile oil and natural gas prices. Significant deterioration in commodity prices negatively impacts our revenues, earnings and cash flows, and potentially our liquidity if spending does not trend downward as well. Sales volumes and costs also impact cash flows; however, these historically have not been as volatile and have less impact than commodity prices in the short-term.

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 at reasonable costs.

�

38

---

We believe the liquidity and capital resource alternatives available to Apache, combined with internally generated cash flows, will be adequate to fund short-term and long-term operations, including our capital spending program, repayment of debt maturities, and any amount that may ultimately be paid in connection with 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 2013 fiscal year.

Sources and Uses of Cash

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

�

�	��	For�the�Nine�Months�Ended September�30,						�
�	��	2014		�	�	2013		�
�	��	(In millions)						�
Sources of Cash and Cash Equivalents:	��				�
Net cash provided by continuing operating activities	��	$	6,446	�	�	$	7,200	�
Proceeds from the sale of Argentina	��	�	786	�	�	�	���	�
Net cash provided by Argentina operations	��	�	2	�	�	�	���	�
Proceeds from sale of Deepwater Gulf of Mexico assets	��	�	1,367	�	�	�	���	�
Proceeds from divestiture of Gulf of Mexico Shelf properties	��	�	���	�	�	�	3,594	�
Proceeds from Kitimat LNG transaction, net	��	�	���	�	�	�	396	�
Proceeds from sale of other oil and gas properties	��	�	390	�	�	�	199	�
Net commercial paper and bank loan borrowings	��	�	1,246	�	�	�	���	�
Other	��	�	���	�	�	�	26	�
	��	�	�	�	�	�	�	�
	��	�	10,237	�	�	�	11,415	�
	��	�	�	�	�	�	�	�
Uses of Cash and Cash Equivalents:	��				�
Capital expenditures for exploration and development (E&D) activity	��	$	7,131	��	�	$	7,186	��
Capital expenditures for gas gathering, transmission, and processing facilities	��	�	1,035	�	�	�	852	�
Net cash used by Argentina operations	��	�	���	�	�	�	5	�
Leasehold and property acquisitions	��	�	655	��	�	�	313	��
Restricted cash from sale of Deepwater Gulf of Mexico assets	��	�	545	�	�	�	���	�
Payments on fixed rate debt	��	�	���	�	�	�	900	�
Net commercial paper and bank loan repayments	��	�	���	�	�	�	539	�
Dividends	��	�	271	�	�	�	280	�
Treasury stock activity, net	��	�	1,830	�	�	�	249	�
Distributions to noncontrolling interest	��	�	124	�	�	�	���	�
Other	��	�	42	�	�	�	���	�
	��	�	�	�	�	�	�	�
	��	�	11,633	�	�	�	10,324	�
	��	�	�	�	�	�	�	�
Increase (decrease) in cash and cash equivalents	��	$	(1,396	)�	�	$	1,091	�
	��	�	�	�	�	�	�	�
Sources of Restricted Cash:	��				�
Short-term restricted cash from sale of Deepwater Gulf of Mexico assets	��	�	74	�	�	�	���	�
Long-term restricted cash from sale of Deepwater Gulf of Mexico assets	��	�	471	�	�	�	���	�
	��	�	�	�	�	�	�	�
Increase in restricted cash	��	$	545	�	�	$	���	�
	��	�	�	�	�	�	�	�

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 nine months of 2014 totaled $6.4 billion, a decrease of $754 million from the first nine months of 2013. The decrease primarily reflects the impact of 2013 divestitures and comparative changes in working capital during the periods.

�

39

---

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.

Proceeds from the Sale of Argentina In March 2014, we completed the previously disclosed sale of our Argentina operations and properties to YPF Sociedad An�nima for cash consideration of $800 million (subject to customary closing adjustments) plus the assumption of $52 million of bank debts as of June�30, 2013. The results of operations related to Argentina have been classified as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q.

Capital Expenditures During the first nine months of 2014, capital spending for E&D activities totaled $7.1 billion compared to $7.2 billion in the prior year period. Apache�s E&D capital spending was primarily focused on our North American onshore assets. In the Permian region we averaged 42 operated drilling rigs during the quarter. Our recent drilling successes in the Permian have led the region to increase the number of horizontal drilling rigs being utilized, and now two-thirds of our rigs are drilling horizontal wells that, given their nature, are more costly than vertical wells. In our Gulf Coast region, we are increasing activity on our Eagle Ford acreage in Texas and have nearly tripled E&D spending over the 2013 nine-month period.

Apache also completed leasehold and property acquisitions totaling $655 million during the first nine months of 2014, compared with $313 million in the 2013 period. Our 2014 acquisition investments focused on adding new leasehold positions to our North American onshore portfolio.

Apache�s investment in gas gathering, transmission, and processing facilities totaled $1.0 billion during the first nine months of 2014 compared to $852 million in the prior year period. Apache�s 2014 GTP capital expenditures were primarily for the Wheatstone and Kitimat LNG facilities.

Dividends For the nine-month periods ended September�30, 2014 and 2013, the Company paid $271 million and $223 million, respectively, in dividends on its common stock. In the first nine months of 2013, the Company also paid $57 million in dividends on its Series D Preferred Stock, which was converted to common stock in August 2013.

Shares Repurchased 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 September�30, 2014 has repurchased a total of 31.8�million shares at an average price of $88.90 per share. For the nine-month period ended September�30, 2014, the Company repurchased a total of 20.6�million shares at an average price of $88.92 per share. The Company is not obligated to acquire any specific number of shares.

Restricted Cash The Company classifies cash balances as restricted cash when cash is restricted as to withdrawal or usage. As of September�30, 2014, the Company had $545 million of proceeds from the sale of deepwater Gulf of Mexico properties held by a qualified intermediary and available for use in a like-kind exchange under Section�1031 of the U.S. Internal Revenue Code. As of the date of this filing, the Company has utilized or plans to utilize $471 million of the cash held by the qualified intermediary in the acquisition of like-kind property, and as such, this amount is classified as long-term restricted cash on Apache�s consolidated balance sheet as of September�30, 2014. The remaining $74 million of restricted cash was returned to Apache in October and, as such, is classified as short-term restricted cash on Apache�s consolidated balance sheet as of September�30, 2014. For more information regarding the sale of the deepwater Gulf of Mexico properties, please refer to Note 2�Acquisitions and Divestitures.

Liquidity

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

�

�	��	September�30,		�	�	December�31,		�
�	��	2014		�	�	2013		�
�	��	(In�millions�of�dollars,�except�as�indicated)						�
Cash and cash equivalents	��	$	510	�	�	$	1,906	�
Short-term restricted cash	��	�	74	�	�	�	���	�
Total debt	��	�	10,922	�	�	�	9,725	�
Equity	��	�	32,986	��	�	�	35,393	�
Available committed borrowing capacity	��	�	2,072	�	�	�	3,300	�
Percent of total debt-to-capitalization	��	�	25	%�	�	�	22	%�

Cash and cash equivalents The Company had $510 million in cash and cash equivalents as of September�30, 2014, compared to $1.9 billion at December�31, 2013. Approximately $487 million 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. Almost all of the cash is denominated in U.S. dollars and, at times, is invested in highly liquid investment grade securities with maturities of three months or less at the time of purchase.

�

40

---

Debt As of September�30, 2014, outstanding debt, which consisted of notes, debentures, and uncommitted bank lines, totaled $10.9 billion. The Company had approximately $20 million of current debt outstanding borrowed on uncommitted credit facilities and overdraft lines as of September�30, 2014, compared with $53 million as of December�31, 2013.

Available committed borrowing capacity As of September�30, 2014, the Company had unsecured committed revolving syndicated bank credit facilities totaling $3.3 billion, of which $1.0�billion matures in August�2016 and $2.3 billion matures in June 2018 pursuant to a one-year extension approved in May 2014 under the terms of the $2.3 billion facilities. The facilities consist of a $1.7�billion facility and a $1.0 billion facility in the U.S., a $300�million facility in Australia, and a $300�million facility in Canada. As of September�30, 2014, available borrowing capacity under the Company�s credit facilities was $2.1 billion. The Company�s committed credit facilities are used to support Apache�s commercial paper program.

The Company has available a $3.0�billion commercial paper program, which generally enables Apache to borrow funds for up to 270�days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under the Company�s committed credit facilities. As of September�30, 2014, the Company had $1.2 billion of outstanding commercial paper. There was no outstanding commercial paper as of December�31, 2013.

The Company was in compliance with the terms of all credit facilities as of September�30, 2014.

Percent of total debt-to-capitalization The Company�s debt-to-capitalization ratio at September�30, 2014 and December�31, 2013 was 25 percent and 22 percent, respectively.

�

41

---

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, and political climate. Our average crude oil realizations decreased to $94.69 per barrel in the third quarter of 2014 from $108.27 per barrel in the comparable period of 2013. Our average natural gas price realizations increased 9 percent to $3.88 per Mcf in the third quarter of 2014 from $3.56 per Mcf in the comparable period of 2013.

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. For the third quarter and first nine months of 2014, approximately 11 percent and 9 percent, respectively, of our natural gas production and approximately 40 percent of our crude oil production in each period was subject to financial derivatives. Apache does not hold or issue derivative instruments for trading purposes.

On September�30, 2014, the Company had open natural gas derivatives in an asset position with a fair value of $6 million. A 10 percent movement in natural gas prices would move the fair value by approximately $6 million. The Company also had open oil derivatives in an asset position with a fair value of $35 million. A 10 percent decrease in oil prices would increase the asset by approximately $107 million, while a 10 percent increase in prices would move the derivatives to a liability position of $71 million. These fair value changes assume volatility based on prevailing market parameters at September�30, 2014. See Note 3�Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements in Item�1 of this Form 10-Q for notional volumes and terms associated with the Company�s derivative contracts.

Interest Rate Risk

The Company considers its interest rate risk exposure to be minimal as a result of fixing interest rates on approximately 89 percent of the Company�s debt. At September�30, 2014, total debt included approximately $1.2 billion of floating-rate debt. As a result, Apache�s annual interest costs will fluctuate based on short-term interest rates on 11 percent of our total debt outstanding at September�30, 2014. The impact on cash flow of a 10 percent change in the floating interest rate based on debt balances at September�30, 2014, would be approximately $103,000 per quarter.

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 Australia, oil production is sold under U.S. dollar contracts, and gas production is sold under a combination of Australian dollar and U.S. dollar fixed-price contracts. Approximately 40 percent of the costs incurred for Australian operations are paid in U.S. dollars. 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 Australian dollars, 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 $176 million would result from a 10 percent weakening or strengthening, respectively, in the Australian dollar, Canadian dollar, and British pound as of September�30, 2014.

�

42

---

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, 2013, 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 and elsewhere in our most recently filed Form 10-K, 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 Current Report on Form 8-K dated July�17, 2014, other risks and uncertainties in our third-quarter 2014 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.

�

43

---

ITEM�4��

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

G. Steven Farris, the Company�s Chairman of the Board, Chief Executive Officer, and President, in his capacity as principal executive officer, and P. Anthony Lannie, 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 September�30, 2014, 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 Note 8�Commitments and Contingencies of the notes to the consolidated financial statements for the fiscal year ended December�31, 2013 contained in Apache�s Current Report on Form 8-K dated July�17, 2014, and Note 8�Commitments and Contingencies of 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, 2013, and as noted above in 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

The following table presents information on shares of common stock repurchased by the Company during the quarter ended September�30, 2014:

�

Issuer Purchases of Equity Securities

�

Period

��

Total�Number of Shares Purchased

�

��

Average�Price Paid�per�Share

�

��

Total�Number�of Shares�Purchased as�Part�of�Publicly Announced Plans or Programs(1)

�

��

Maximum�Number of Shares that May Yet Be Purchased Under the Plans or Programs(1)

�

July�1 to July�31, 2014

��

�

���

�

��

$

���

�

��

�

���

�

��

�

13,922,662

�

August�1 to August�31, 2014

��

�

2,504,119

�

��

�

99.68

�

��

�

2,504,119

�

��

�

11,418,543

�

September�1 to September�30, 2014

��

�

3,239,674

�

��

�

97.93

�

��

�

3,239,674

�

��

�

8,178,869

�

��

�

�

�

��

�

�

�

��

��

Total

��

�

5,743,793

�

��

$

98.69

�

��

��

��

�

�

�

��

�

�

�

��

��

�

(1)�

On May�9, 2013, the Company announced that its Board of Directors authorized the repurchase of up to 30�million shares of the Company�s common stock. Additionally, on May�15, 2014, the Company announced that the Board of Directors had authorized the repurchase of an additional 10�million shares, supplementing the May 2013 authorization. The Company may buy shares from time to time on the open market, in privately negotiated transactions, or a combination of both. The timing and amounts of any repurchases will be at the discretion of Apache�s management and will depend on a variety of factors, including the stock price, corporate and regulatory requirements, and other market and economic conditions. Repurchased shares will be available for general corporate purposes.

�

44

---

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	�	�	��	Bylaws of Registrant, as amended May 16, 2013 (incorporated by reference to Exhibit 3.1 to Registrant�s Current Report on Form 8-K filed May 17, 2013, SEC File No. 001-4300).
��*10.1	�	�	��	2014 Employee Release and Settlement Agreement, by and between Registrant and Thomas P. Chambers, effective as of August 31, 2014.
��*10.2	�	�	��	Amendment of Stock Option Grants (2007 and 2011 Omnibus Equity Compensation Plans) by and between Registrant and Thomas P. Chambers, effective as of August 31, 2014.
��*10.3	�	�	��	Amendment of Restricted Stock Unit Awards (2007 and 2011 Omnibus Equity Compensation Plans) by and between Registrant and Thomas P. Chambers, effective as of August 31, 2014.
��*10.4	�	�	��	Employee Resignation Agreement by and between Registrant and Alfonso Leon, effective as of October 13, 2014.
��*10.5	�	�	��	Amendment of Stock Option Grants (2007 and 2011 Omnibus Equity Compensation Plans) by and between Registrant and Alfonso Leon, effective as of October 9, 2014.
��*10.6	�	�	��	Amendment of Restricted Stock Unit Awards (2007 and 2011 Omnibus Equity Compensation Plans), effective October 9, 2014, between Registrant and Alfonso Leon.
��*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

�

45

---

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: November 6, 2014	�	/s/ P. ANTHONY LANNIE
	�	P. Anthony Lannie
	�	Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Dated: November 6, 2014	�	/s/ REBECCA A. HOYT
	�	Rebecca A. Hoyt
	�	Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)

�

46

Exhibit 10.1

APACHE CORPORATION

2014 EMPLOYEE RELEASE AND SETTLEMENT AGREEMENT

The parties to this agreement are APACHE CORPORATION (�Apache�) and Thomas P. Chambers (�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 August�31, 2014 (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 August�31, 2014.

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.

Severance Pay: Subject to this agreement becoming effective, Apache will pay Employee a lump sum amount of $1,600,000 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 FICA taxes will also be withheld from this payment for any additional severance benefits discussed below that become subject to FICA taxation when this Agreement becomes effective, even though many of the additional severance benefits will not be paid or subject to federal income tax until later years.

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:

�

�

�

�

Accelerated vesting of the 8,000 outstanding restricted stock units granted on February�9, 2011 in accordance with your grant agreement. Pursuant to your prior election, half will be paid out upon your termination of employment, but subject to a six-month delay to satisfy the requirements of Code section 409A (and so will be paid out as soon as practicable after February�28, 2015). The other half will be deferred to the Deferred Delivery Plan and paid out according to the terms of that plan. All 8,000 previously unvested restricted stock units become subject to FICA taxation when this Agreement becomes effective, even though payment will not occur until later.

�

-1-

---

�

�

�

Continued vesting of all outstanding unvested restricted stock units and all stock options according to their original schedules as if Employee remained Employed, subject to any agreed amendments to said equity plans and award agreements, and the terms of this Agreement. Payment of unvested restricted stock units will occur at the later of the time vesting occurs or six months after the Employee separates from service, while payment of vested restricted stock units that were deferred to the Deferred Delivery Plan before the Employee�s separation from service shall be paid as the Employee elected under such plan. Vested restricted stock units have already been subject to FICA taxation, while all unvested restricted stock units become subject to FICA taxation when this Agreement becomes effective.

�

�

�

�

Extended exercise period of all stock options, vested and unvested, to full term (10 year anniversary of the grant date).

�

�

�

�

In accordance with their terms, any outstanding TSR and business performance grants will be immediately void and forfeited as of the Termination Date. However, in the event that the TSR and business 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 trading day immediately preceding the payment date) multiplied by the number of vested units indicated below. Because FICA taxation will occur when the TSR goal or business 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 Units
2012 TSR Goal Achieved	��	12/31/14	��	50% of (i) multiple of Target Amount achieved under 2012 TSR Plan times (ii) 6,455
2012 TSR Goal Achieved	��	12/31/15	��	25% of (i) multiple of Target Amount achieved under 2012 TSR Plan times (ii) 6,455
2012 TSR Goal Achieved	��	12/31/16	��	25% of (i) multiple of Target Amount achieved under 2012 TSR Plan times (ii) 6,455
2013 TSR Goal Achieved	��	12/31/15	��	50% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 10,976

�

-2-

---

2013 TSR Goal Achieved	��	12/31/16	��	25% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 10,976
2013 TSR Goal Achieved	��	12/31/17	��	25% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 10,976
2014 TSR Goal Achieved	��	12/31/16	��	50% of (i) multiple of Target Amount achieved under 2014 TSR Plan times (ii) 7,167
2014 TSR Goal Achieved	��	12/31/17	��	50% of (i) multiple of Target Amount achieved under 2014 TSR Plan times (ii) 7,167
2014 Business Performance Goal Achieved	��	12/31/16	��	50% of (i) multiple of Target Amount achieved under 2014 Performance Share Program times (ii) 7,750 shares
2014 Business Performance Goal Achieved	��	12/31/17	��	50% of (i) multiple of Target Amount achieved under 2014 Performance Share Program times (ii) 7,750 shares

�

�

�

�

Waive the premium for the first two months of coverage under COBRA for dental and vision plans. 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. Employee�s premium will be based on the Retiree Medical Plan�s regular age + service premium table.

�

�

�

�

Outplacement assistance as arranged by Apache.

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;

�

-3-

---

�

�

�

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;

�

�

�

�

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,

�

-4-

---

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 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

�

-5-

---

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 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).

�

-6-

---

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.

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.

�

-7-

---

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 AUGUST 28, 2014. 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/ Thomas P. Chambers	��		�	/s/ Margery M. Harris
Thomas P. Chambers	��		�	Margery M. Harris
	��		�	Executive Vice President, Human Resources

�

-8-

---

STATE OF TEXAS	��	�	��
	��	�	��
COUNTY OF HARRIS	��	�	��

The foregoing Employee Release and Settlement Agreement was acknowledged before me this 19th day of August, 2014, by Thomas P. Chambers.

�

[SEAL]	�	/s/ Cynthia E. Smith
	�	NOTARY PUBLIC

My commission expires: July�7, 2017

�

STATE OF TEXAS	��	�	��
	��	�	��
COUNTY OF HARRIS	��	�	��

The foregoing Employee Release and Settlement Agreement was acknowledged before me this 19th day of August, 2014, by Margery M. Harris, Executive Vice President, Human Resources of Apache Corporation.

�

[SEAL]	�	/s/ Cynthia E. Smith
	�	NOTARY PUBLIC

My commission expires: July�7, 2017

�

-9-

Exhibit 10.2

Apache Corporation

Amendment of Stock Option Grants

�

Participant Name:	��	Thomas P. Chambers (�Participant,� �Employee� �you� or �your�)
Company:	��	Apache Corporation
Amendment:	��	This is a summary of the amendment of the terms of your previous grants of Stock Options to purchase Shares (�Options�) under certain prior notices (the �Grant Notices�) subject to the terms of the Apache Corporation 2007 Omnibus Equity Compensation Plan, as amended and the Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended (the �Plans�) 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 Plans and the related Stock Option Award Agreements. In connection with your separation from service with the Company effective August 31, 2014 (the �Separation Date�) and the terms of the separation agreement between you and the Company (the �Separation Agreement�), for purposes of vesting and exercisability of your outstanding Options determined as of the Separation Date under the Plan, upon your acceptance of this Amendment, the Company agrees that such outstanding Options will continue to vest according to their original schedules and any agreed amendments to said equity plans and award agreements as if you continued employment with the Company after your Separation Date, provided that such vesting shall occur at such times solely if you are then in compliance with the provisions of the Separation Agreement. For the avoidance of doubt, you shall not be treated as continuing employment with the Company after the Separation 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 stock options under the Apache Corporation Employee Release and Settlement Agreement between Employee and Apache Corporation.
Affected Awards:	��	All outstanding Non-Qualified Stock Options under the Plans as of the Separation Date
Plans:	��	Apache Corporation 2007 Omnibus Equity Compensation Plan, as amended
	��	Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended
Expiration Date:	��	Your Options will remain subject to expiration ten years from the original Grant Date for each such Option.

�

1

---

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 vesting and exercisability of your Options, you be treated as terminating with the Company on the Separation Date.

�

2

---

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 separation from service with Apache Corporation (together with its Affiliates, the �Company�) effective August�31, 2014 (the �Separation Date�) and the terms of the separation agreement between the Participant and the Company (the �Separation Agreement�) and governs all outstanding Options under the Plans and the Agreements, determined as of the Separation Date, between the Company and the Participant.

�

�

1.

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

Separation 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 the Options, the Participant�s employment shall be deemed to continue with the company following the Separation Date provided that the Participant remains in compliance with the provisions of the Separation 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 Separation 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.

�

�

2.

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

�

�

3.

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.

�

�

4.

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.

�

1

---

IN WITNESS HEREOF the parties have caused this Amendment to be executed, agreed and accepted, effective as of August�31, 2014.

�

APACHE CORPORATION			�		�		�	THOMAS P. CHAMBERS
By:	�	/s/ Margery M. Harris	�		�	By:	�	/s/ Thomas P. Chambers
	�	Margery M. Harris	�		�		�	Thomas P. Chambers
Executive Vice President, Human Resources			�		�		�

�

ATTEST:

/s/ Cheri L. Peper

Cheri L. Peper

Corporate Secretary

�

2

Exhibit 10.3

Apache Corporation

Amendment of Restricted Stock Unit Awards

�

Recipient Name:	��	Thomas P. Chambers (�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 2007 Omnibus Equity Compensation Plan, as amended and the Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended (the �Plans�) and the Restricted Stock Unit Award Agreements (the �Agreements�).
	��	You were previously awarded Apache Corporation RSUs in accordance with the terms of the Plans and the Agreements. In connection with your separation from service with the Company effective August 31, 2014 (the �Separation Date�) and the terms of the separation agreement between you and the Company (the �Separation Agreement�), for purposes of vesting of your outstanding RSUs determined as of the Separation Date under the Plans, upon your acceptance of this Amendment, the Company agrees that such outstanding RSUs will continue to vest according to their original schedules and any agreed amendments to said equity plans and award agreements as if you continued employment with the Company after your Separation Date, provided that such vesting shall occur at such times solely if you are then in compliance with the provisions of the Separation Agreement. For the avoidance of doubt, however, you will not be treated as continuing in employment with the Company after the Separation Date for purposes of the Change of Control provisions of the Plans 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 restricted stock units, and in lieu of TSRs and Business Performance Shares under the Apache Corporation Employee Release and Settlement Agreement between Employee and Apache Corporation.
Affected Awards:	��	All outstanding Restricted Stock Units under the Plans as of the Separation Date.
Plans:	��	Apache Corporation 2007 Omnibus Equity Compensation Plan, as amended.
	��	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

�

1

---

	��	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 vesting of your RSUs, you will be treated as terminating from employment with the Company on the Separation Date.

�

2

---

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 separation from service with Apache Corporation (together with its Affiliates, the �Company�) effective August�31, 2014 (the �Separation Date�) and the terms of the separation agreement between the Recipient and the Company (the �Separation Agreement�) and governs all outstanding RSUs under the Plans and the Agreements, determined as of the Separation Date, between the Company and the Recipient.

�

�

1.

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

Separation 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 vesting of the RSUs, the Recipient�s employment shall be deemed to continue with the Company following the Separation Date provided that the Recipient remains in compliance with the provisions of the Separation Agreement. The Recipient shall immediately notify the Company of any future change in address or other contact information.

�

�

2.

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

�

�

3.

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.

�

�

4.

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.

�

1

---

IN WITNESS HEREOF the parties have caused this Amendment to be executed, agreed and accepted, effective as of August�31, 2014.

�

APACHE CORPORATION			�		�		�	THOMAS P. CHAMBERS
By:	�	/s/ Margery M. Harris	�		�	By:	�	/s/ Thomas P. Chambers
	�	Margery M. Harris	�		�		�	Thomas P. Chambers
Executive Vice President, Human Resources			�		�		�

�

ATTEST:

/s/ Cheri L. Peper

Cheri L. Peper

Corporate Secretary

�

2

Exhibit 10.4

APACHE CORPORATION

EMPLOYEE RESIGNATION AGREEMENT

The parties to this agreement are APACHE CORPORATION (�Apache�) and Alfonso Leon (�Employee�).

This document describes the agreements of Apache and Employee concerning the termination of Employee�s employment with Apache. This agreement, the provision of confidential information, and the consideration and other arrangements described below, give valuable consideration to both Apache and Employee.

Termination of Employment Relationship: Apache and Employee have agreed to the following terms and conditions concerning Employee�s resignation from Apache.

Employee�s last day of work for Apache was October�9, 2014 (�Resignation 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 October�9, 2014.

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

Employee�s regular pay through October�15, 2014

Such amounts shall be subject to all lawful deductions.

Severance Pay: Subject to this agreement becoming effective and as soon as reasonably practical, Apache will pay Employee a lump sum amount of $1,700,000 of Severance Pay.

The Severance Pay has been subject to arms� length negotiations between the parties and you had no right to this pay prior to this agreement 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 but not prior to the ninth day following such date. Additional FICA taxes will also be withheld from this payment for any additional severance benefits discussed below that become subject to FICA taxation when this Agreement becomes effective, even though much of the additional resignation consideration will not be paid or subject to federal income tax until later years.

Additional Resignation Consideration: 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 -Resignation Consideration:

�

�

�

�

Accelerated vesting of the 3000 outstanding restricted stock units granted on May�22, 2012 in accordance with your grant agreement. These 3,000 previously unvested restricted stock units become subject to FICA taxation when this Agreement becomes effective, even though payment will not occur until later.

�

1

---

�

�

�

Continued vesting of all outstanding unvested restricted stock units and all stock options according to their original schedules as if Employee remained Employed, subject to any agreed amendments to said equity plans and award agreements, and the terms of this Agreement, which shall be prepared by Apache and signed by the parties expeditiously. Payment of unvested restricted stock units will occur at the later of the time vesting occurs or six months after the Employee separates from service, while payment of vested restricted stock units that were deferred to the Deferred Delivery Plan before the Employee�s separation from service shall be paid as the Employee elected under such plan. Vested restricted stock units have already been subject to FICA taxation, while all unvested restricted stock units become subject to FICA taxation when this Agreement becomes effective.

�

�

�

�

Extended exercise period of all stock options, vested and unvested, to full term (10 year anniversary of the grant date).

In accordance with their terms, any outstanding TSR and business performance grants will be immediately void and forfeited as of the Termination Date. However, in the event that the TSR and business 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 trading day immediately preceding the payment date) multiplied by the number of vested units indicated below. Because FICA taxation will occur when the TSR goal or business performance goal is met, Employee�s share of FICA taxes will be paid by reducing the cash amount payable to Employee.

In the event that a Change of Control occurs prior to the conclusion of a performance period under any of the 2012, 2013, or 2014 TSR programs, and the Committee (as defined in the TSR grant agreement) determines an appropriate adjustment to measure Apache�s TSR for those Apache employees that are terminated following a Change of Control, then such adjustment shall be applied to the equivalent value calculations for TSRs below. In the event a Change of Control occurs prior to the termination of the 2014 Business Performance Shares� performance period, then a multiple of 1.00 shall be applied to the Target Amount of shares and the total equivalent value of the same shall be paid to Employee. Notwithstanding the foregoing or anything else in this agreement, all payments to Employee pursuant to this agreement that constitute a �parachute payment� under I.R.C. 280G shall not exceed 2.99 times the �base amount� as defined in I.R.C. 280G.

�

2

---

Condition Precedent	��	Vesting Date	��	Number of Units
2012 TSR Goal Achieved	��	12/31/14	��	50% of (i) multiple of Target Amount achieved under 2012 TSR Plan times (ii) 2,227
2012 TSR Goal Achieved	��	12/31/15	��	25% of (i) multiple of Target Amount achieved under 2012 TSR Plan times (ii) 2,227
2012 TSR Goal Achieved	��	12/31/16	��	25% of (i) multiple of Target Amount achieved under 2012 TSR Plan times (ii) 2,227
2013 TSR Goal Achieved	��	12/31/15	��	50% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 6,403
2013 TSR Goal Achieved	��	12/31/16	��	25% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 6,403
2013 TSR Goal Achieved	��	12/31/17	��	25% of (i) multiple of Target Amount achieved under 2013 TSR Plan times (ii) 6,403
2014 TSR Goal Achieved	��	12/31/16	��	50% of (i) multiple of Target Amount achieved under 2014 TSR Plan times (ii) 5,674
2014 TSR Goal Achieved	��	12/31/17	��	50% of (i) multiple of Target Amount achieved under 2014 TSR Plan times (ii) 5,674
2014 Business Performance Goal Achieved	��	12/31/16	��	50% of (i) multiple of Target Amount achieved under 2014 Performance Share Program times (ii) 6,136 shares
2014 Business Performance Goal Achieved	��	12/31/17	��	50% of (i) multiple of Target Amount achieved under 2014 Performance Share Program times (ii) 6,136 shares

�

�

�

�

Waive the premium for the first eighteen months of coverage under COBRA for health, dental and vision plans or until such time Employee is eligible for another group health insurance plan whichever comes first. 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.

�

�

�

�

For the avoidance of doubt, any such Additional Resignation Consideration shall be subject to all lawful deductions and withholding for taxes including but not limited to any FICA.

Employee Acknowledgment: Employee acknowledges that the Resignation Consideration described herein are consideration over and above that to which Employee would be entitled to and are paid in consideration for this agreement including, but not limited to, Employee�s nonsolicitation promises given herein.

�

3

---

Employee Resignation: Employee agrees that he has resigned from all positions, including but not limited to as officer, that he held with Apache and all of its subsidiaries and affiliated entities and to sign all documents necessary to effectuate his resignations.

Release by Employee: In consideration of receipt of the Resignation Consideration, 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;

�

�

�

�

those for actual, consequential, punitive or special damages;

�

4

---

�

�

�

those for attorneys� 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 or his dependents and beneficiaries may be entitled pursuant to the terms of Apache�s benefits plans including but not limited to Employee�s right and his dependents and beneficiaries rights to any benefits under health, life or disability policies covering Employee or his dependents and beneficiaries and the Apache 401K Plan, the Apache Non-Qualified Retirement/Savings Plan,; (3)�Employee�s right to all vested incentive compensation and the continued vesting thereof as described in this Agreement, (4)�the right to recovery for breach of this agreement by Apache., (5 Employee�s right to indemnity, contribution and a defense under any agreement, statute, by-law or company agreement or other corporate governance document, (6)�Employee�s right to continuing coverage under all Apache directors� and officers�, fiduciary, errors and omissions and general liability and umbrella insurance policies, (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, any deferred sums and 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.

Agreement Not To Sue: Employee will not sue any Released Party for any released Claim. Employee will also not file suit seeking to hold any portion of this Agreement unenforceable. 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: Apache 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 consideration 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 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.

�

5

---

Confidences, Covenant Not to Disclose, Etc., Obligations. Employee agrees to fully comply with the following confidentiality, nondisparagement, and covenant not to disclose provisions:

(a) Employee acknowledges and agrees that (i)�by reason of his position with Apache, he has been given access to certain non-public trade secrets, proprietary information, designs, plans, forecasting, marketing plans, strategies, policies and procedures, as well as other confidential materials and information; and (ii)�the foregoing constitute trade secrets and/or confidential, proprietary information respecting the business operations of Apache. As such, Employee agrees not to, directly or indirectly, for a period ending the earlier of two years from the date hereof or such time as when the confidential information may become generally available in the public market through means other than provided by Employee, disclose to any third party or use for the benefit of anyone other than Apache, or use for Employee�s own benefit or purposes, any such confidential, proprietary information without the prior written approval of the Company�s Chief Executive Officer. Employee agrees to return all electronic information, internet or cloud information, emails and attachments, documents, and writings of any kind, including both originals and copies, whether developed by Employee or others, within Employee�s custody, possession or control, which contain any material non-public information which in any way relates or refers to Apache or any of its subsidiaries.

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, Apache shall instruct its directors and executive officers to 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�, which includes not being required to be available if being available would unduly interfere with Employee�s future employment or enterprise 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, legal and other expenses incurred by you in rendering such assistance will be reimbursed by Apache. If any required assistance pursuant to this paragraph results in Employee losing income, Apache shall reimburse Employee for such loss.

�

6

---

Nonsolicitation: Because of the confidential information shared with Employee and in exchange for the payments and other consideration described herein, for a period of two years following the Resignation date, Employee, and his assigns, agrees not to directly or indirectly solicit any employee of Apache for employment elsewhere (i.e., employment with any person or entity other than Apache). It is expressly understood that unsolicited requests for employment elsewhere by Apache employees made to Employee are not prohibited by this agreement: provided that Employee immediately informs such Apache employee that Employee cannot and will not help them or refer them to any employment opportunities or employer. Moreover, Employee will not confer with any Person about employees of Apache, discuss employees of Apache with any Person, nor give any employee of Apache a reference, regarding employment.

Property: Employee represents that Employee possesses no property of Apache. If any Apache property comes into Employee�s possession before departure from Apache premises, Employee will return the Apache 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 and shall not provide further information to prospective employers of Employee.

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

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

Assignment�& Successors: This agreement benefits and binds Apache�s successors and assigns and Employees estate, heirs, beneficiaries and assigns. This agreement may not be assigned by either party without the written consent of the other party.

Texas Law: This agreement will be interpreted in accordance with the laws of the State of Texas excluding any conflict of law provisions.

Jurisdiction: Any legal proceeding arising as a result of, based upon, or relating to this agreement, Employee�s employment or resignation shall be heard exclusively by courts in 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. The Employee acknowledges that a violation by the Employee of any of the Employee covenants contained in this Agreement would cause irreparable damage to Apache and its affiliates in an amount that would be material but not readily ascertainable, and that any remedy at law (including the payment of damages) would be inadequate. Accordingly, Employee agrees that, notwithstanding any provision of this Agreement to the contrary, in addition to any other damages it is able to show, if Apache can prove to a substantial certainty that Employee intentionally breaches the Non Solicitation, Non Disparagement, or Confidences, Covenant Not to

�

7

---

Disclose, Etc., Obligations paragraphs of this agreement Apache may seek Court approval to be entitled (without the necessity of showing economic loss or other actual damage) to cease payment of the Resignation Consideration and to seek return of any portion of the Resignation Consideration already paid and (ii)�injunctive relief (including temporary restraining orders, preliminary injunctions and permanent injunctions), without posting a bond, in any court of competent jurisdiction for any actual or threatened breach of any of the covenants set forth in this Agreement in addition to any other legal or equitable remedies it may have. The preceding sentence shall not be construed as a waiver of the rights that Apache may have for damages under this Agreement or otherwise, and all such rights shall be unrestricted. In addition, should any court find to a substantial certainty that any rule or regulation, including but not limited to the rules and regulations of the U.S. Securities and Exchange Commission, the New York Stock Exchange (or any other applicable securities exchange) or other applicable law that invalidates or otherwise requires repayment, in whole or in part, of the Resignation Consideration, that Employee must repay any such amounts and must forgo any amounts not yet paid in accordance with such rule or regulation, Employee agrees to comply with such ruling after all appeals are exhausted.

409A Compliance: The payment, consideration and 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 only with the consent of the Employee, which shall not be unreasonably withheld, in any respect deemed by Apache to be necessary in order to preserve compliance with, or exemption from, Code section 409A, except the amounts of payments and incentive and other compensation shall not be reduced, other than for required taxation withholding, by any amendment permitted by this paragraph. This right of unilateral modification shall apply only to paragraphs providing financial consideration to Employee and to paragraphs relating to Code section 409A.

�

8

---

EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT IS A FINAL AND BINDING WAIVER OF ANY CLAIMS AGAINST APACHE, 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 TOLD BY APACHE TO CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT.

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

EMPLOYEE HAS BEEN ADVISED THAT THE OFFER OF SEPARATION PAY AND BENEFITS CONTAINED IN THIS AGREEMENT SHALL REMAIN OPEN UNTIL OCTOBER ����14����. IF EMPLOYEE HAS NOT FULLY EXECUTED AND RETURNED THIS AGREEMENT BY THAT DATE, THE OFFER OF SEPARATION PAY AND BENEFITS SHALL BE WITHDRAWN.

�

EMPLOYEE:	�		�	APACHE CORPORATION
/s/ Alfonso Leon	�		�	BY:	�	/s/ Margery H. Harris
Signature of Employee	�		�	Margery M. Harris
	�		�	Executive Vice President, Human Resources
Alfonso Leon	�		�		�
Typed or Printed Name of Employee	�		�		�

�

9

---

STATE OF TEXAS	��	�	��
	��	�	��
COUNTY OF HARRIS	��	�	��

The foregoing Employee Release and Settlement Agreement were acknowledged before me this 13th day of October, 2014, by Margery M. Harris, Executive Vice President, Human Resources of Apache Corporation.

�

My commission expires:

[SEAL]

�

STATE OF TEXAS	��	�	��
	��	�	��
COUNTY OF HARRIS	��	�	��

The foregoing Employee Release and Settlement Agreement was acknowledged before me this 13th day of October, 2014, by Alfonso Leon (Employee).

�

[SEAL]	�		�	/s/ Cynthia E. Smith
	�		�	NOTARY PUBLIC

My commission expires:

[SEAL]

�

10

Exhibit 10.5

Apache Corporation

Amendment of Stock Option Grants

�

Participant Name:	��	Alfonso Leon (�Participant,� �Employee� �you� or �your�)
Company:	��	Apache Corporation
Amendment:	��	This is a summary of the amendment of the terms of your previous grants of Stock Options to purchase Shares (�Options�) under certain prior notices (the �Grant Notices�) subject to the terms of the Apache Corporation 2007 Omnibus Equity Compensation Plan, as amended and the Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended (the �Plans�) 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 Plans and the related Stock Option Award Agreements. In connection with your separation from service with the Company effective October 9, 2014 (the �Resignation Date�) and the terms of the resignation agreement between you and the Company (the �Resignation Agreement�), for purposes of vesting and exercisability of your outstanding Options determined as of the Resignation Date under the Plan, upon your acceptance of this Amendment, the Company agrees that such outstanding Options will continue to vest according to their original schedules and any agreed amendments to said equity plans and award agreements as if you continued employment with the Company after your Resignation Date, provided that such vesting shall occur at such times solely if you are then in compliance with the provisions of the Resignation Agreement. For the avoidance of doubt, you shall not be treated as continuing employment with the Company after the Resignation 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 stock options under the Apache Corporation Employee Resignation Agreement between Employee and Apache Corporation.
Affected Awards:	��	All outstanding Non-Qualified Stock Options under the Plans as of the Resignation Date
Plans:	��	Apache Corporation 2007 Omnibus Equity Compensation Plan, as amended
	��	Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended
Expiration Date:	��	Your Options will remain subject to expiration ten years from the original Grant Date for each such Option.

�

1

---

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 vesting and exercisability of your Options, you be treated as terminating with the Company on the Resignation Date.

�

2

---

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 separation from service with Apache Corporation (together with its Affiliates, the �Company�) effective October�9, 2014 (the �Resignation Date�) and the terms of the resignation agreement between the Participant and the Company (the �Resignation Agreement�) and governs all outstanding Options under the Plans and the Agreements, determined as of the Resignation Date, between the Company and the Participant.

�

�

1.

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

Resignation 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 the Options, the Participant�s employment shall be deemed to continue with the company following the Resignation Date provided that the Participant remains in compliance with the provisions of the Resignation 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 Resignation 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 Resignation Agreement between Employee and Apache Corporation.

�

�

2.

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 Resignation Agreement between Recipient/Employee and Apache Corporation.

�

�

3.

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.

�

�

4.

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.

�

1

---

IN WITNESS HEREOF the parties have caused this Amendment to be executed, agreed and accepted, effective as of October�9, 2014.

�

APACHE CORPORATION			�		�		�	ALFONSO LEON
By:	�	/s/ Margery M. Harris	�		�	By:	�	/s/ Alfonso Leon
	�	Margery M. Harris	�		�		�	Alfonso Leon
Executive Vice President, Human Resources			�		�		�
ATTEST:			�		�		�
/s/ Cheri L. Peper			�		�		�
Cheri L. Peper			�		�		�
Corporate Secretary			�		�		�

�

2

Exhibit 10.6

Apache Corporation

Amendment of Restricted Stock Unit Awards

�

Recipient Name:	��	Alfonso Leon (�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 2007 Omnibus Equity Compensation Plan, as amended, and the Apache Corporation 2011 Omnibus Equity Compensation Plan, as amended (the �Plans�) and the Restricted Stock Unit Award Agreements (the �Agreements�).
	��	You were previously awarded Apache Corporation RSUs in accordance with the terms of the Plans and the Agreements. In connection with your separation from service with the Company effective October 9, 2014 (the �Resignation Date�) and the terms of the resignation agreement between you and the Company (the �Resignation Agreement�), for purposes of vesting of your outstanding RSUs determined as of the Resignation Date under the Plans, upon your acceptance of this Amendment, the Company agrees that such outstanding RSUs will continue to vest according to their original schedules and any agreed amendments to said equity plans and award agreements as if you continued employment with the Company after your Resignation Date, provided that such vesting shall occur at such times solely if you are then in compliance with the provisions of the Resignation Agreement. For the avoidance of doubt, however, you will not be treated as continuing in employment with the Company after the Resignation Date for purposes of the Change of Control provisions of the Plans 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 restricted stock units, and in lieu of TSRs and Business Performance Shares under the Apache Corporation Employee Resignation Agreement between Employee and Apache Corporation.
Affected Awards:	��	All outstanding Restricted Stock Units under the Plans as of the Resignation Date.
Plans:	��	Apache Corporation 2007 Omnibus Equity Compensation Plan, as amended
	��	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

�

1

---

	��	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 vesting of your RSUs, you will be treated as terminating from employment with the Company on the Resignation Date.

�

2

---

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 separation from service with Apache Corporation (together with its Affiliates, the �Company�) effective October�9, 2014 (the �Resignation Date�) and the terms of the resignation agreement between the Recipient and the Company (the �Resignation Agreement�) and governs all outstanding RSUs under the Plans and the Agreements, determined as of the Resignation Date, between the Company and the Recipient.

�

�

1.

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

Resignation 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 vesting of the RSUs, the Recipient�s employment shall be deemed to continue with the Company following the Resignation Date provided that the Recipient remains in compliance with the provisions of the Resignation Agreement. The Recipient shall immediately notify the Company of any future change in address or other contact information.

�

�

2.

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

�

�

3.

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.

�

�

4.

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.

�

1

---

IN WITNESS HEREOF the parties have caused this Amendment to be executed, agreed and accepted, effective as of October�9, 2014.

�

APACHE CORPORATION			�		�		�	ALFONSO LEON, RECIPIENT
By:	�	/s/ Margery M. Harris	�		�	By:	�	/s/ Alfonso Leon
	�	Margery M. Harris	�		�		�	Alfonso Leon
Executive Vice President, Human Resources			�		�		�
ATTEST:			�		�		�
/s/ Cheri L. Peper			�		�		�
Cheri L. Peper			�		�		�
Corporate Secretary			�		�		�

�

2

EXHIBIT 31.1

CERTIFICATIONS

I, G. Steven Farris, 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;

�

4.

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/ G. Steven Farris

G. Steven Farris

Chairman�of�the�Board,�Chief�Executive�Officer�and�President (principal executive officer)

Date: November�6, 2014

EXHIBIT 31.2

CERTIFICATIONS

I, P. Anthony Lannie, 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;

�

4.

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/ P. Anthony Lannie

P. Anthony Lannie

Executive�Vice�President and�Chief�Financial�Officer (principal financial officer)

Date: November�6, 2014

EXHIBIT 32.1

APACHE CORPORATION

Certification of Principal Executive Officer

and Principal Financial Officer

I, G. Steven Farris, 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 September�30, 2014, 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/ G. Steven Farris
By:	�	G. Steven Farris
Title:	�	Chairman of the Board, Chief Executive Officer and President
	�	(principal executive officer)
Date:	�	November 6, 2014

I, P. Anthony Lannie, 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 September�30, 2014, 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/ P. Anthony Lannie
By:	�	P. Anthony Lannie
Title:	�	Executive Vice President and Chief Financial Officer
	�	(principal financial officer)
Date:	�	November 6, 2014