XNYS:APA Apache Corporation Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

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

For the quarterly period ended June 30, 2012

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 July 31, 2012

     391,215,367   

 

 

 


PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

 

     For the Quarter
Ended June 30,
    For the Six Months
Ended June 30,
 
     2012     2011     2012      2011  
     (In millions, except per common share data)  

REVENUES AND OTHER:

         

Oil and gas production revenues

   $ 3,956      $ 4,355      $ 8,413       $ 8,233   

Other

     16        (17     95         30   
  

 

 

   

 

 

   

 

 

    

 

 

 
     3,972        4,338        8,508         8,263   
  

 

 

   

 

 

   

 

 

    

 

 

 

OPERATING EXPENSES:

         

Depreciation, depletion and amortization

         

Recurring

     1,284        1,003        2,503         1,939   

Additional

     648        26        1,169         26   

Asset retirement obligation accretion

     57        38        112         75   

Lease operating expenses

     704        662        1,377         1,285   

Gathering and transportation

     72        73        149         149   

Taxes other than income

     203        255        460         419   

General and administrative

     132        103        260         215   

Merger, acquisitions & transition

     16        6        22         11   

Financing costs, net

     45        41        85         86   
  

 

 

   

 

 

   

 

 

    

 

 

 
     3,161        2,207        6,137         4,205   
  

 

 

   

 

 

   

 

 

    

 

 

 

INCOME BEFORE INCOME TAXES

     811        2,131        2,371         4,058   

Current income tax provision

     460        576        1,185         1,219   

Deferred income tax provision (benefit)

     (5     296        33         446   
  

 

 

   

 

 

   

 

 

    

 

 

 

NET INCOME

     356        1,259        1,153         2,393   

Preferred stock dividends

     19        19        38         38   
  

 

 

   

 

 

   

 

 

    

 

 

 

INCOME ATTRIBUTABLE TO COMMON STOCK

   $ 337      $ 1,240      $ 1,115       $ 2,355   
  

 

 

   

 

 

   

 

 

    

 

 

 

NET INCOME PER COMMON SHARE:

         

Basic

   $ 0.87      $ 3.23      $ 2.88       $ 6.14   

Diluted

   $ 0.86      $ 3.17      $ 2.86       $ 6.03   

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

         

Basic

     389        384        387         383   

Diluted

     390        397        403         397   

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.17      $ 0.15      $ 0.34       $ 0.30   

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 June 30,
    For the Six Months
Ended June 30,
 
     2012     2011     2012     2011  
     (In millions)  

NET INCOME

   $  356      $  1,259      $  1,153      $  2,393   

OTHER COMPREHENSIVE INCOME (LOSS):

        

Commodity cash flow hedge activity, net of tax:

        

Reclassification of (gain) loss on settled derivative instruments

     (58     40        (92     36   

Change in fair value of derivative instruments

     111        208        112        (94

Derivative hedge ineffectiveness reclassified into earnings

     —          (3     —          (1
  

 

 

   

 

 

   

 

 

   

 

 

 
     53        245        20        (59
  

 

 

   

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME

     409        1,504        1,173        2,334   

Preferred stock dividends

     19        19        38        38   
  

 

 

   

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCK

   $ 390      $ 1,485      $ 1,135      $ 2,296   
  

 

 

   

 

 

   

 

 

   

 

 

 

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 Six Months Ended
June 30,
 
     2012     2011  
     (In millions)  

CASH FLOWS FROM OPERATING ACTIVITIES:

  

Net income

   $ 1,153      $ 2,393   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation, depletion and amortization

     3,672        1,965   

Asset retirement obligation accretion

     112        75   

Provision for deferred income taxes

     33        446   

Other

     56        3   

Changes in operating assets and liabilities:

    

Receivables

     490        (355

Inventories

     24        (97

Drilling advances

     (125     4   

Deferred charges and other

     (53     (14

Accounts payable

     (113     206   

Accrued expenses

     (472     78   

Deferred credits and noncurrent liabilities

     22        20   
  

 

 

   

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

     4,799        4,724   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Additions to oil and gas property

     (3,756     (3,170

Additions to gas gathering, transmission and processing facilities

     (442     (269

Acquisition of Cordillera Energy Partners III, LLC

     (2,607     —     

Equity investment in Yara Pilbara Holdings Pty Limited

     (439     —     

Acquisitions, other

     (65     (78

Proceeds from sale of oil and gas properties

     9        192   

Other, net

     (286     (52
  

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (7,586     (3,377
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Commercial paper, credit facility and bank notes, net

     431        (289

Fixed rate debt borrowings

     2,991        —     

Payments on fixed rate debt

     (400     —     

Dividends paid

     (161     (153

Common stock activity, net

     17        38   

Treasury stock activity, net

     2        4   

Other

     (27     26   
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     2,853        (374
  

 

 

   

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

     66        973   

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

     295        134   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 361      $ 1,107   
  

 

 

   

 

 

 

SUPPLEMENTARY CASH FLOW DATA:

    

Interest paid, net of capitalized interest

   $ 64      $ 72   

Income taxes paid, net of refunds

     1,277        894   

The accompanying notes to consolidated financial statements

are an integral part of this statement.

 

3


APACHE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

 

     June 30,
2012
    December 31,
2011
 
     (In millions)  

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 361      $ 295   

Receivables, net of allowance

     2,625        3,079   

Inventories

     745        655   

Drilling advances

     356        229   

Derivative instruments

     232        304   

Prepaid assets and other

     320        241   
  

 

 

   

 

 

 
     4,639        4,803   
  

 

 

   

 

 

 

PROPERTY AND EQUIPMENT:

    

Oil and gas, on the basis of full-cost accounting:

    

Proved properties

     72,545        67,805   

Unproved properties and properties under development, not being amortized

     8,539        5,530   

Gathering, transmission and processing facilities

     5,623        5,175   

Other

     870        709   
  

 

 

   

 

 

 
     87,577        79,219   

Less: Accumulated depreciation, depletion and amortization

     (37,442     (33,771
  

 

 

   

 

 

 
     50,135        45,448   
  

 

 

   

 

 

 

OTHER ASSETS:

    

Goodwill

     1,114        1,114   

Deferred charges and other

     1,329        686   
  

 

 

   

 

 

 
   $ 57,217      $ 52,051   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

CURRENT LIABILITIES:

    

Accounts payable

   $ 1,061      $ 1,048   

Current debt

     568        431   

Current asset retirement obligation

     447        447   

Derivative instruments

     41        113   

Other current liabilities

     3,004        2,924   
  

 

 

   

 

 

 
     5,121        4,963   
  

 

 

   

 

 

 

LONG-TERM DEBT

     9,670        6,785   
  

 

 

   

 

 

 

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:

    

Income taxes

     7,383        7,197   

Asset retirement obligation

     3,739        3,440   

Other

     631        673   
  

 

 

   

 

 

 
     11,753        11,310   
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 8)

    

SHAREHOLDERS’ EQUITY:

    

Preferred stock, no par value, 10,000,000 shares authorized, 6% Cumulative

Mandatory Convertible, Series D, $1,000 per share liquidation preference,

1,265,000 shares issued and outstanding

     1,227        1,227   

Common stock, $0.625 par, 860,000,000 shares authorized, 392,271,262 and

    

385,249,885 shares issued, respectively

     245        241   

Paid-in capital

     9,736        9,066   

Retained earnings

     19,484        18,500   

Treasury stock, at cost, 1,073,057 and 1,132,242 shares, respectively

     (30     (32

Accumulated other comprehensive income (loss)

     11        (9
  

 

 

   

 

 

 
     30,673        28,993   
  

 

 

   

 

 

 
   $ 57,217      $ 52,051   
  

 

 

   

 

 

 

The accompanying notes to consolidated financial statements

are an integral part of this statement.

 

4


APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(Unaudited)

 

     Series D
Preferred
Stock
     Common
Stock
     Paid-In
Capital
    Retained
Earnings
    Treasury
Stock
    Accumulated
Other
Comprehensive
Income (Loss)
    Total
Shareholders’
Equity
 
     (In millions)  

BALANCE AT DECEMBER 31, 2010

   $ 1,227       $ 240       $ 8,864      $ 14,223      $ (36   $ (141   $ 24,377   

Net income

     —           —           —          2,393        —          —          2,393   

Commodity hedges, net of tax

     —           —           —          —          —          (59     (59

Dividends:

                

Preferred

     —           —           —          (38     —          —          (38

Common ($0.30 per share)

     —           —           —          (115     —          —          (115

Common stock activity, net

     —           1         19        —          —          —          20   

Treasury stock activity, net

     —           —           2        —          3        —          5   

Compensation expense

     —           —           84        —          —          —          84   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE AT JUNE 30, 2011

   $ 1,227       $ 241       $ 8,969      $ 16,463      $ (33   $ (200   $ 26,667   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE AT DECEMBER 31, 2011

   $ 1,227       $ 241       $ 9,066      $ 18,500      $ (32   $ (9   $ 28,993   

Net income

     —           —           —          1,153        —          —          1,153   

Commodity hedges, net of tax

     —           —           —          —          —          20        20   

Dividends:

                

Preferred

     —           —           —          (38     —          —          (38

Common ($0.34 per share)

     —           —           —          (131     —          —          (131

Common shares issued

     —           4         598        —          —          —          602   

Common stock activity, net

     —           —           (15     —          —          —          (15

Treasury stock activity, net

     —           —           1        —          2        —          3   

Compensation expense

     —           —           86        —          —          —          86   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE AT JUNE 30, 2012

   $ 1,227       $ 245       $ 9,736      $ 19,484      $ (30   $ 11      $ 30,673   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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 (GAAP) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which contains a summary of the Company’s significant accounting policies and other disclosures. Additionally, the Company’s financial statements for prior periods include reclassifications that were made to conform to the current-period presentation.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of June 30, 2012, Apache’s significant accounting policies are consistent with those discussed in Note 1 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Use of Estimates

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

Oil and Gas Property

The Company follows the full-cost method of accounting for its oil and gas property. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, including salaries, benefits and other internal costs directly associated 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 cash flow hedges. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. For a discussion of the calculation of estimated future net cash flows, please refer to Note 14—Supplemental Oil and Gas Disclosures in Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

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” in the accompanying statement of consolidated operations. Such limitations are imposed separately on a country-by-country basis and are tested quarterly. At March 31, 2012, the Company recorded a $521 million ($390 million net of tax) non-cash write-down of the carrying value of the Company’s Canadian proved oil and gas properties. At June 30, 2012, the Company recorded an additional $641 million ($480 million net of tax) non-cash write-down of the carrying value of the Company’s Canadian proved oil and gas properties. Excluding the effects of cash flow hedges in calculating the ceiling limitation, the write-down as of March 31, 2012, and June 30, 2012, would have been $656 million ($491 million net of tax) and $744 million ($557 million net of tax), respectively.

 

6


New Pronouncements Issued But Not Yet Adopted

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11, which increases disclosures about offsetting assets and liabilities. New disclosures are required to enable users of financial statements to understand significant quantitative differences in balance sheets prepared under GAAP and International Financial Reporting Standards (IFRS) related to the offsetting of financial instruments. The existing GAAP guidance allowing balance sheet offsetting, including industry-specific guidance, remains unchanged. The guidance in ASU No. 2011-11 is effective for annual and interim reporting periods beginning on or after January 1, 2013. The disclosures should be applied retrospectively for all prior periods presented. The Company does not expect the adoption of this amendment to impact its consolidated financial statements.

2. ACQUISITIONS AND DIVESTITURES

2012 Activity

Cordillera Energy Partners

On April 30, 2012, Apache completed the acquisition of Cordillera Energy Partners III, LLC (Cordillera), a privately held exploration and production company, in a stock and cash transaction. Cordillera’s properties include approximately 312,000 net acres in the Granite Wash, Tonkawa, Cleveland, and Marmaton plays in western Oklahoma and the Texas Panhandle which are complementary to our existing holdings in our Central region. The effective date of the transaction was September 1, 2011.

Apache issued 6,272,667 shares of common stock and paid approximately $2.6 billion of cash to the sellers as consideration for the transaction, subject to normal post-closing adjustments. The cash paid at closing was funded with a portion of the proceeds from the Company’s April 2012 public note offering. For further discussion of this equity issuance and note offering, please see Note 9—Capital Stock and Note 6—Debt and Financing Costs of this Form 10-Q.

The transaction was accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes the preliminary estimates of the assets acquired and liabilities assumed in the acquisition. The final determination of fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained. These amounts will be finalized as soon as possible, but no later than one year from the acquisition date.

 

     (In millions)  

Current assets

   $ 56   

Proved properties

     1,040   

Unproved properties

     2,288   

Gathering, transmission and processing facilities

     1   
  

 

 

 

Total assets acquired

   $ 3,385   
  

 

 

 

Current liabilities

     86   

Non-current obligations

     5   
  

 

 

 

Total liabilities assumed

   $ 91   
  

 

 

 

Net assets acquired

   $ 3,294   
  

 

 

 

Yara Pilbara Holdings Pty Limited

On January 31, 2012, a subsidiary of Apache Energy Limited completed the acquisition of a 49-percent interest in Yara Pilbara Holdings Pty Limited (YPHL, formerly Burrup Holdings Limited) for $439 million, including working capital adjustments. The transaction was funded with debt. YPHL is the owner of an ammonia plant on the Burrup Peninsula of Western Australia. Apache has supplied gas to the plant since operations commenced in 2006. Yara Australia Pty Ltd (Yara) owns the remaining 51 percent of YPHL and will operate the plant. In addition, Apache also acquired an interest in a planned technical ammonia nitrate plant to be developed with Yara. The investment in YPHL is accounted for under the equity method of accounting, with the balance recorded as a component of “Deferred charges and other” in Apache’s consolidated balance sheet and results of operations recorded as a component of “Other” under “Revenues and Other” in the Company’s statement of consolidated operations.

 

7


2011 Activity

Mobil North Sea Limited Acquisition

On December 30, 2011, Apache completed the acquisition of Mobil North Sea Limited (Mobil North Sea). The assets acquired include: operated interests in the Beryl, Nevis, Nevis South, Skene and Buckland fields; operated interest in the Beryl/Brae gas pipeline and the SAGE gas plant; non-operated interests in the Maclure, Scott and Telford fields; and Benbecula (west of Shetlands) exploration acreage. This acquisition expands Apache’s presence in the North Sea and its portfolio of future drilling locations. The Mobil North Sea acquisition was funded with existing cash on hand.

The transaction was accounted for using the acquisition method of accounting. The following table summarizes the preliminary estimates of the assets acquired and liabilities assumed in the acquisition. The final determination of fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained. These amounts will be finalized as soon as possible, but no later than one year from the acquisition date.

 

     (In millions)  

Current assets

   $ 208   

Proved properties

     2,341   

Unproved properties

     476   

Gathering, transmission and processing facilities

     338   

Goodwill (1)

     82   
  

 

 

 

Total assets acquired

   $ 3,445   
  

 

 

 

Current liabilities

     148   

Asset retirement obligation

     517   

Deferred income tax liabilities

     1,533   

Other long-term obligations

     1   
  

 

 

 

Total liabilities assumed

   $ 2,199   
  

 

 

 

Net assets acquired

   $ 1,246   
  

 

 

 

 

(1) 

Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from assets acquired that could not be individually identified and separately recognized. Goodwill is not deductible for tax purposes.

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 instruments 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. Derivatives entered into are typically designated as cash flow hedges.

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 June 30, 2012, Apache had derivative positions with 17 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.

 

8


Derivative Instruments

As of June 30, 2012, Apache had the following open crude oil derivative positions:

 

    Fixed-Price Swaps     Collars  

Production

Period

  Mbbls     Weighted
Average
Fixed Price (1)
    Mbbls     Weighted
Average
Floor Price (1)
    Weighted
Average
Ceiling Price (1)
 
2012     1,882      $ 74.32        5,617      $ 77.66      $ 103.08   
2013     1,972        74.29        5,701        82.84        111.63   
2014     76        74.50        —          —          —     

 

(1) 

Crude oil prices represent a weighted average of several contracts entered into on a per-barrel basis. Crude oil contracts are primarily settled against NYMEX WTI Cushing Index. Approximately 31 percent of 2012 collars and 58 percent of 2013 collars are settled against Dated Brent.

As of June 30, 2012, Apache had the following open natural gas derivative positions:

 

    Fixed-Price Swaps     Collars  

Production

Period

  MMBtu
(in  000’s)
    GJ
(in 000’s)
    Weighted
Average
Fixed Price (1)
    MMBtu
(in  000’s)
    GJ
(in 000’s)
    Weighted
Average
Floor Price (1)
    Weighted
Average
Ceiling Price (1)
 
2012     23,243        —        $ 6.24        11,040        —        $ 5.54      $ 7.30   
2012     —          22,080      C$ 6.61        —          3,680      C$ 6.50      C$ 7.27   
2013     10,095        —        $ 6.74        6,825        —        $ 5.35      $ 6.67   
2014     1,295        —        $ 6.72        —          —        $ —        $ —     

 

(1)

U.S. natural gas prices represent a weighted average of several contracts entered into on a per-million British thermal units (MMBtu) basis and are settled primarily against NYMEX Henry Hub and various Inside FERC indices. The Canadian gas contracts are entered into on a per-gigajoule (GJ) basis and are settled against AECO Index. The Canadian natural gas prices represent a weighted average of AECO Index prices and are shown in Canadian dollars.

Fair Value Measurements

Apache’s commodity derivative instruments consist of variable-to-fixed price commodity swaps and options. The Company uses a market approach to estimate the fair values of its derivative instruments. A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company’s derivatives are not actively quoted in the open market but are valued utilizing commodity futures price strips for the underlying commodities, which are provided by a reputable third party. For additional information regarding fair value measurements, please see Note 11—Fair Value Measurements of our Annual Report on Form 10-K for the year ended December 31, 2011.

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
Active
Markets
(Level 1)
     Significant
Other
Inputs
(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
     Total
Fair
Value
     Netting (1)     Carrying
Amount
 
     (In millions)  

June 30, 2012

                

Assets:

                

Commodity Derivative Instruments

   $ —         $ 277       $ —         $ 277       $ (20   $ 257   

Liabilities:

                

Commodity Derivative Instruments

     —           63         —           63         (20     43   

December 31, 2011

                

Assets:

                

Commodity Derivative Instruments

   $ —         $ 428       $ —         $ 428       $ (96   $ 332   

Liabilities:

                

Commodity Derivative Instruments

     —           250         —           250         (96     154   

 

(1)

The derivative fair values above are based on analysis of each contract on a gross basis, even where the legal right of offset exists.

 

9


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:

 

     June 30,      December 31,  
     2012      2011  
     (In millions)  

Current Assets: Derivative instruments

   $ 232       $ 304   

Other Assets: Deferred charges and other

     25         28   
  

 

 

    

 

 

 

Total Assets

   $ 257       $ 332   
  

 

 

    

 

 

 

Current Liabilities: Derivative instruments

   $ 41       $ 113   

Noncurrent Liabilities: Other

     2         41   
  

 

 

    

 

 

 

Total Liabilities

   $ 43       $ 154   
  

 

 

    

 

 

 

Derivative Activity Recorded in Statement of Consolidated Operations

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

 

    

Gain (Loss) on Derivatives
Recognized in Income

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

June 30,
 
        2012      2011     2012      2011  
          (In millions)  

Gain (loss) reclassified from accumulated other comprehensive income (loss) into operations (effective portion)

   Oil and Gas Production Revenues    $ 78       $ (53   $ 119       $ (47

Gain on derivatives recognized in operations (ineffective portion and basis)

   Revenues and Other: Other    $ 1       $ 4      $ —         $ 1   

Derivative Activity in Accumulated Other Comprehensive Income (Loss)

A reconciliation of the components of accumulated other comprehensive income (loss) in the statement of consolidated shareholders’ equity related to Apache’s cash flow hedges is presented in the table below:

 

                                                                               
     For the Six Months Ended June 30,  
     2012     2011  
     Before
tax
    After
tax
    Before
tax
    After
tax
 
     (In millions)  

Unrealized gain (loss) on derivatives at beginning of period

   $ 145      $ 114      $ (54   $ (19

Realized amounts reclassified into earnings

     (119     (92     47        36   

Net change in derivative fair value

     171        112        (119     (94

Ineffectiveness reclassified into earnings

     —          —          (1     (1
  

 

 

   

 

 

   

 

 

   

 

 

 

Unrealized gain (loss) on derivatives at end of period

   $ 197      $ 134      $ (127   $ (78
  

 

 

   

 

 

   

 

 

   

 

 

 

Gains and losses on existing hedges will be realized in future earnings through mid-2014, in the same period as the related sales of natural gas and crude oil production occur. Included in accumulated other comprehensive income (loss) as of June 30, 2012, is a net gain of approximately $175 million ($121 million after tax) that applies to the next 12 months; however, estimated and actual amounts are likely to vary materially as a result of changes in market conditions.

 

10


4. OTHER CURRENT LIABILITIES

The following table provides detail of our other current liabilities at June 30, 2012, and December 31, 2011:

 

     June 30,
2012
     December 31,
2011
 
     (In millions)  

Accrued operating expenses

   $ 219       $ 221   

Accrued exploration and development

     1,681         1,430   

Accrued compensation and benefits

     130         180   

Accrued interest

     157         143   

Accrued income taxes

     472         533   

Accrued United Kingdom Petroleum Revenue Tax

     180         284   

Other

     165         133   
  

 

 

    

 

 

 

Total Other current liabilities

   $ 3,004       $ 2,924   
  

 

 

    

 

 

 

5. ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the six-month period ended June 30, 2012:

 

     (In millions)  

Asset retirement obligation at December 31, 2011

   $ 3,887   

Liabilities incurred

     210   

Liabilities acquired

     33   

Liabilities settled

     (227

Accretion expense

     112   

Revisions in estimated liabilities

     171   
  

 

 

 

Asset retirement obligation at June 30, 2012

     4,186   

Less current portion

     (447
  

 

 

 

Asset retirement obligation, long-term

   $ 3,739   
  

 

 

 

6. DEBT AND FINANCING COSTS

The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt at June 30, 2012, and December 31, 2011:

 

     June 30, 2012      December 31, 2011  
     Carrying
Amount
     Fair
Value
     Carrying
Amount
     Fair
Value
 
     (In millions)  

Money market lines of credit

   $ 68       $ 68       $ 31       $ 31   

Commercial paper

     393         393         —           —     

Notes and debentures

     9,777         11,441         7,185         8,673   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Debt

   $ 10,238       $ 11,902       $ 7,216       $ 8,704   
  

 

 

    

 

 

    

 

 

    

 

 

 

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 money market lines of credit and commercial paper 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).

 

11


In April 2012 the Company issued $400 million principal amount of senior unsecured 1.75-percent notes maturing April 15, 2017, $1.1 billion principal amount of senior unsecured 3.25-percent notes maturing April 15, 2022, and $1.5 billion principal amount of senior unsecured 4.75-percent notes maturing April 15, 2043. The notes are redeemable, as a whole or in part, at Apache’s option, subject to a make-whole premium. The Company used the proceeds to fund the cash portion of the purchase price paid to acquire Cordillera, repay the $400 million in aggregate principal amount of 6.25-percent notes that matured on April 15, 2012, and for general corporate purposes.

As of June 30, 2012, current debt included $500 million 5.25-percent notes due within the next 12 months and $68 million borrowed on uncommitted overdraft lines in Argentina. As of December 31, 2011, there was $31 million drawn on uncommitted overdraft lines in Argentina and $400 million 6.25-percent notes outstanding that were subsequently repaid in April 2012.

On June 4, 2012, the Company entered into a new Global Credit Facility consisting of a $1.7 billion revolving syndicated bank credit facility for the U.S., a $300 million revolving syndicated bank credit facility for Australia and a $300 million revolving syndicated bank credit facility for Canada, which replaced the Company’s existing syndicated bank credit facilities that were scheduled to mature in May 2013. The new facilities are scheduled to mature on June 4, 2017. There were no changes to the Company’s $1.0 billion U.S. credit facility that matures on August 12, 2016.

The credit facilities are subject to covenants, events of default and representations and warranties that are substantially similar to those in Apache’s $1.0 billion revolving credit facility dated August 12, 2011. The facilities will be used for general corporate purposes.

In June 2012, the Company increased the size of its commercial paper program from $2.95 billion to $3.0 billion. The commercial paper program is fully supported by available borrowing capacity under committed credit facilities, which expire in 2016 and 2017. As of June 30, 2012, the Company had $393 million in commercial paper outstanding, compared with no outstanding commercial paper as of December 31, 2011.

Financing Costs

Financing costs incurred during the periods comprised the following:

 

     For the Quarter  Ended
June 30,
    For the Six Months  Ended
June 30,
 
     2012     2011     2012     2011  
     (In millions)  

Interest expense

   $ 131      $ 109      $ 239      $ 217   

Amortization of deferred loan costs

     2        1        3        3   

Capitalized interest

     (85     (63     (151     (124

Interest income

     (3     (6     (6     (10
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing costs, net

   $ 45      $ 41      $ 85      $ 86   
  

 

 

   

 

 

   

 

 

   

 

 

 

7. INCOME TAXES

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, the Company recorded the income tax impact of a $521 million and $641 million non-cash write-down of its Canadian proved oil and gas properties as a discrete item in the first and second quarters of 2012, respectively.

In March 2011 the United Kingdom (U.K.) government first proposed a decrease in the tax relief attributable to decommissioning expenditures in the North Sea from 62 percent to a maximum of 50 percent. The related legislation was then introduced in Finance Bill 2012 and received Royal Assent and was enacted on July 17, 2012. As a result of the enacted legislation, the Company will record a non-recurring deferred tax charge estimated at approximately $40 million in the third quarter of 2012.

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. The Company is in Administrative Appeals with the United States Internal Revenue Service (IRS) regarding the 2004 through 2008 tax years and under audit for the 2009 and 2010 tax years. The Company is also under audit in various states and in most of the Company’s foreign jurisdictions as part of its normal course of business.

 

12


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. 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 for which 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.

Argentine Environmental Claims

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, in 2006 the Company acquired a subsidiary of Pioneer Natural Resources in Argentina (PNRA) that is involved in various administrative proceedings with environmental authorities in the Neuquén Province relating to permits for and discharges from operations in that province. In addition, PNRA was named in a suit initiated against oil companies operating in the Neuquén basin entitled Asociación de Superficiarios de la Patagonia v. YPF S.A., et. al., originally filed on August 21, 2003, in the Argentine National Supreme Court of Justice relating to various environmental and remediation claims. No material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

U.S. Royalty Litigation

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, two potential class action lawsuits are pending in respect of oil and gas royalties paid by the Company: Foster v. Apache Corporation, Civil Action No. CIV-10-0573-HE, in the United States District Court for the Western District of Oklahoma, and Joyce Holder Trust v. Apache Corporation, Civil Action No. 4:11-cv-03872, in the United States District Court for the Southern District of Texas, Houston Division. No material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

Louisiana Restoration

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, numerous surface owners have filed claims or sent demand letters to various oil and gas companies, including Apache, claiming that, under either expressed or implied lease terms or Louisiana law, they are liable for damage measured by the cost of restoration of leased premises to their original condition as well as damages for contamination and cleanup.

In the lawsuit captioned Ardoin Limited Partnership et al. v. Meridian Resources & Exploration et al., Case No. 10-18692, in the District Court of Cameron Parish, Louisiana, prior to trial the court granted Apache’s motions to dismiss the plaintiffs’ claims against Apache. Plaintiffs then settled with the other defendant in the case, BP America, Inc. (BP). BP has demanded that Apache indemnify it for the amount of its settlement with plaintiffs, which is not material to Apache. Apache has rejected BP’s indemnity claim and, further, Apache has demanded that Wagner Oil Company (which purchased Apache’s interest in the subject property) indemnify Apache from and against BP’s claim.

In the lawsuit filed on May 4, 2010, against Phoenix Exploration Company LP (Phoenix) captioned Belle Isle, L.L.C. v. Anadarko Petroleum Corporation et al., Docket No. 121742, in the District Court of St. Mary Parish, Louisiana, plaintiff’s experts have estimated the cost of remediation to be approximately $87 million, and plaintiffs claim additional damages for canal restoration, among other things, all of which is disputed by the Company. No other material change in the status of these matters has occurred since the filing of Apache’s most recent Annual Report on Form 10-K for its 2011 fiscal year.

 

13


Hurricane-Related Litigation

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, on May 27, 2011, in the case styled Comer et al. v. Murphy Oil USA, Inc. et al., Case No. 1:11-cv-220 HS0-JMR, in the United States District Court for the Southern District of Mississippi, the District Court has granted defendants’ motion to dismiss plaintiffs’ claims, and plaintiffs have appealed the decision to the United States Court of Appeals for the Fifth Circuit. No other material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

Australia Gas Pipeline Force Majeure

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, in 2008 Company subsidiaries reported a pipeline explosion that interrupted deliveries of natural gas in Australia to customers under various long-term contracts. No material change in the status of these matters has occurred since the filing of Apache’s most recent Annual Report on Form 10-K for its 2011 fiscal year except as follows:

 

   

The prosecution notice that was filed on May 28, 2009, by the Department of Mines and Petroleum against Apache Northwest Pty Ltd and its co-licensees was dismissed by the Magistrates Court of Western Australia on March 29, 2012.

 

   

The June 2009 report prepared by the inspectors appointed by the government of Western Australia under the Petroleum Pipelines Act to coordinate the final stages of the investigation into the Varanus Island gas explosion, as described in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, was published by the State government on May 24, 2012. Company subsidiaries disagree with the inspectors’ June 2009 conclusions. Two other government reports were not published by the State and are not referenced by the inspectors. The Magistrates Court in Australia subsequently ordered that both such reports could be released on the basis that the inspectors’ June 2009 report “came with some limitations” and the two other government reports “together were part and parcel if not the main reason or the only reason…certainly a significant contribution to the reason for the matter not proceeding to prosecution and trial.” In the first such report, the State’s senior investigator said in February 2009 that the prospects of a successful prosecution of Apache for failing to maintain the pipeline “would be slight.” In the second such report, the State’s lead corrosion expert concluded in July 2011 that Apache “had reasonable grounds to believe that the pipeline was in good repair” prior to the explosion.

 

   

In the case captioned Alcoa of Australia Limited vs. 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.

Breton Lawsuit

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, on October 4, 2011, plaintiffs filed suit 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, either negligently or intentionally, 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. No material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

Escheat Audits

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, 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. No material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

 

14


Burrup-Related Gas Supply Lawsuits

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, on May 19, 2011, a lawsuit captioned Oswal v. Apache Corporation, Cause No. 2011-30302, in the District Court of Harris County, Texas, was filed in which plaintiff Pankaj Oswal, in his personal capacity and as trustee for the Burrup Trust, asserts claims against the Company under the Australian Trade Practices Act. No material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

Also as more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, this lawsuit is one of a number of legal actions involving the Burrup Fertilisers Pty Ltd ammonia plant in Western Australia. In one of these legal actions—a 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—Oswal’s wife, Radhika Oswal, was granted leave on April 20, 2012, to join Apache Fertilisers Pty Ltd as a defendant.

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, as more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, a Company subsidiary purchased Tap, which then modified its agreement to supply gas to the ammonia plant and resolved both Tap’s claims against Burrup Fertilisers and Burrup Fertilisers’ counterclaims against Tap in the Tap action.

Environmental Matters

As of June 30, 2012, the Company had an undiscounted reserve for environmental remediation of approximately $104 million. The Company is not aware of any environmental claims existing as of June 30, 2012, 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.

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, Apache Canada Ltd. asserted a claim against BP Canada arising out of the acquisition of certain Canadian properties under the parties’ Partnership Interest and Share Purchase and Sale Agreement dated July 20, 2010. The parties have resolved the matter on commercial terms with no material impact on the Company’s financial position, results of operations, or liquidity.

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2011 fiscal year, on May 25, 2011, a panel of the Bureau of Ocean Energy Management (BOEM) published a report dated May 23, 2011, and titled “OCS G-2580, Vermilion Block 380 Platform A, Incidents of Noncompliance.” The report concerned the BOEM’s investigation of a fire on the Vermillion 380 A platform located in the Gulf of Mexico. At the time of the incident, Mariner Energy Resources, Inc. (Mariner) operated the platform. A small amount of hydrocarbons spilled from the platform into the surrounding water as a result of the incident, and 13 workers were rescued after evacuating the platform. The BOEM concluded in its investigation that the fire was caused by Mariner’s failure to adequately maintain or operate the platform’s heater-treater in a safe condition. The BOEM also identified other safety deficiencies on the platform. On December 27, 2011, the BOEM issued several Incidents of Non-Compliance, which may provide the basis for the assessment of civil penalties against Mariner. The Company has decided to contest several of the Incidents of Non-Compliance and filed a Notice of Appeal with the BOEM on April 24, 2012. Effective November 10, 2010, Mariner was acquired by Apache. No material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2011 fiscal year.

 

15


9. CAPITAL STOCK

Net Income per Common Share

A reconciliation of the components of basic and diluted net income per common share for the quarters and six-month periods ended June 30, 2012 and 2011 is presented in the table below.

 

     For the Quarter Ended June 30,  
     2012      2011  
     Income      Shares      Per Share      Income      Shares      Per Share  
     (In millions, except per share amounts)  

Basic:

                 

Income attributable to common stock

   $ 337         389       $ 0.87       $ 1,240         384       $ 3.23   
        

 

 

          

 

 

 

Effect of Dilutive Securities:

                 

Mandatory Convertible Preferred Stock

     —           —              19         12      

Stock options and other

     —           1            —           1      
  

 

 

    

 

 

       

 

 

    

 

 

    

Diluted:

                 

Income attributable to common stock, including assumed conversions

   $ 337         390       $ 0.86       $ 1,259         397       $ 3.17   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     For the Six Months Ended June 30,  
     2012      2011  
     Income      Shares      Per Share      Income      Shares      Per Share  
     (In millions, except per share amounts)  

Basic:

                 

Income attributable to common stock

   $ 1,115         387       $ 2.88       $ 2,355         383       $ 6.14   
        

 

 

          

 

 

 

Effect of Dilutive Securities:

                 

Mandatory Convertible Preferred Stock

     38         14            38         12      

Stock options and other

     —           2            —           2      
  

 

 

    

 

 

       

 

 

    

 

 

    

Diluted:

                 

Income attributable to common stock, including assumed conversions

   $ 1,153         403       $ 2.86       $ 2,393         397       $ 6.03   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling 4.4 million and 1.5 million for the quarters ending June 30, 2012 and 2011, and 3.7 million and 1.1 million for the six months ended June 30, 2012 and 2011, respectively. For the quarter ended June 30, 2012, 14.4 million shares related to the assumed conversion of the Mandatory Convertible Preferred Stock were also anti-dilutive.

Issuance of Common and Preferred Shares

On April 30, 2012, in conjunction with Apache’s acquisition of Cordillera, the Company issued 6,272,667 shares of common stock to the sellers.

Common and Preferred Stock Dividends

For the quarter and six months ended June 30, 2012, Apache paid $65 million and $123 million, respectively, in dividends on its common stock. For the quarter and six months ended June 30, 2011, Apache paid $58 million and $115 million, respectively.

For the quarter and six months ended June 30, 2012, Apache paid a total of $19 million and $38 million, respectively, in dividends on its Series D Preferred Stock. For the quarter and six months ended June 30, 2011, Apache paid a total of $19 million and $38 million, respectively.

 

16


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 June 30, 2012, the Company had production in six countries: the United States, Canada, Egypt, Australia, offshore the U.K. in the North Sea, and Argentina. 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
States
     Canada     Egypt      Australia      North Sea      Argentina      Other
International
    Total  
     (In millions)  

For the Quarter Ended June 30, 2012

                     

Oil and Gas Production Revenues

   $ 1,442       $ 295      $ 1,011       $ 388       $ 694       $ 126       $ —        $ 3,956   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating Income (Loss) (1)

   $ 526       $ (671   $ 672       $ 202       $ 251       $ 15       $ (7   $ 988   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

Other Income (Expense):

                     

Other

                        16   

General and administrative

                        (132

Merger, acquisitions & transition

                        (16

Financing costs, net

                        (45
                     

 

 

 

Income Before Income Taxes

                      $ 811   
                     

 

 

 

For the Six Months Ended June 30, 2012

                     

Oil and Gas Production Revenues

   $ 2,992       $ 648      $ 2,260       $ 814       $ 1,436       $ 263       $ —        $ 8,413   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating Income (Loss) (1)

   $ 1,197       $ (1,158   $ 1,599       $ 453       $ 515       $ 44       $ (7   $ 2,643   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

Other Income (Expense):

                     

Other

                        95   

General and administrative

                        (260

Merger, acquisitions & transition

                        (22

Financing costs, net

                        (85
                     

 

 

 

Income Before Income Taxes

                      $ 2,371   
                     

 

 

 

Total Assets

   $ 28,453       $ 7,932      $ 6,916       $ 5,487       $ 6,541       $ 1,810       $ 78      $ 57,217   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

For the Quarter Ended June 30, 2011

                     

Oil and Gas Production Revenues

   $ 1,560       $ 433      $ 1,201       $ 470       $ 572       $ 119       $ —        $ 4,355   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating Income (Loss) (1)

   $ 738       $ 104      $ 893       $ 311       $ 257       $ 21       $ (26   $ 2,298   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

Other Income (Expense):

                     

Other

                        (17

General and administrative

                        (103

Merger, acquisitions & transition

                        (6

Financing costs, net

                        (41
                     

 

 

 

Income Before Income Taxes

                      $ 2,131   
                     

 

 

 

For the Six Months Ended June 30, 2011

                     

Oil and Gas Production Revenues

   $ 2,937       $ 835      $ 2,401       $ 842       $ 1,002       $ 216       $ —        $ 8,233   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Operating Income (Loss) (1)

   $ 1,368       $ 182      $ 1,787       $ 536       $ 462       $ 31       $ (26   $ 4,340   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

Other Income (Expense):

                     

Other

                        30   

General and administrative

                        (215

Merger, acquisitions & transition

                        (11

Financing costs, net

                        (86
                     

 

 

 

Income Before Income Taxes

                      $ 4,058   
                     

 

 

 

Total Assets

   $ 22,142       $ 8,680      $ 6,677       $ 4,272       $ 2,999       $ 1,686       $ 73      $ 46,529   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

 

(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. Canada’s operating loss for the first quarter and second quarter of 2012 includes additional depletion of $521 million and $641 million, respectively, to write-down the carrying value of oil and gas properties.

 

17


11. SUPPLEMENTAL GUARANTOR INFORMATION

In December 1999, Apache Finance Canada Corporation (Apache Finance Canada), a wholly owned subsidiary of Apache, issued approximately $300 million of publicly traded notes due in 2029. In May 2003, Apache Finance Canada issued an additional $350 million of publicly traded notes due in 2015. Both 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 has been fully consolidated in Apache’s consolidated financial statements. As such, these condensed consolidating financial statements should be read in conjunction with the financial statements of Apache Corporation and subsidiaries and notes thereto, of which this note is an integral part.

 

18


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended June 30, 2012

 

     Apache
Corporation
     Apache
Finance
Canada
    All Other
Subsidiaries
of Apache
Corporation
     Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

REVENUES AND OTHER:

            

Oil and gas production revenues

   $ 982       $ —        $ 2,974       $  —        $ 3,956   

Equity in net income (loss) of affiliates

     217         (227     59         (49     —     

Other

     —           17        —           (1     16   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
     1,199         (210     3,033         (50     3,972   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

OPERATING EXPENSES:

            

Depreciation, depletion and amortization

     356         —          1,576         —          1,932   

Asset retirement obligation accretion

     18         —          39         —          57   

Lease operating expenses

     216         —          488         —          704   

Gathering and transportation

     11         —          61         —          72   

Taxes other than income

     44         —          159         —          203   

General and administrative

     102         —          31         (1     132   

Merger, acquisitions & transition

     14         —          2         —          16   

Financing costs, net

     7         14        24         —          45   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
     768         14        2,380         (1     3,161   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

     431         (224     653         (49     811   

Provision (benefit) for income taxes

     75         (56     436         —          455   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

NET INCOME (LOSS)

     356         (168     217         (49     356   

Preferred stock dividends

     19         —          —           —          19   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $ 337       $ (168   $ 217       $ (49   $ 337   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $ 390       $ (168   $ 217       $ (49   $ 390   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

19


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended June 30, 2011

 

     Apache
Corporation
     Apache
Finance
Canada
    All Other
Subsidiaries
of Apache
Corporation
    Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

REVENUES AND OTHER:

           

Oil and gas production revenues

   $ 1,127       $ —        $ 3,228      $ —        $ 4,355   

Equity in net income (loss) of affiliates

     972         (11     (20     (941     —     

Other

     4         (19     (1     (1     (17
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     2,103         (30     3,207        (942     4,338   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

           

Depreciation, depletion and amortization

     315         —          714        —          1,029   

Asset retirement obligation accretion

     17         —          21        —          38   

Lease operating expenses

     213         —          449        —          662   

Gathering and transportation

     12         —          61        —          73   

Taxes other than income

     50         —          205        —          255   

General and administrative

     84         —          20        (1     103   

Merger, acquisitions & transition

     5         —          1        —          6   

Financing costs, net

     34         14        (7     —          41   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     730         14        1,464        (1     2,207   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

     1,373         (44     1,743        (941     2,131   

Provision (benefit) for income taxes

     114         (13     771        —          872   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS)

     1,259         (31     972        (941     1,259   

Preferred stock dividends

     19         —          —          —          19   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

     1,240         (31     972        (941     1,240   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $  1,485       $ (31   $ 972      $ (941   $  1,485   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

20


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2012

 

     Apache
Corporation
    Apache
Finance
Canada
    All Other
Subsidiaries
of Apache
Corporation
     Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

REVENUES AND OTHER:

           

Oil and gas production revenues

   $ 2,040      $ —        $ 6,373       $ —        $ 8,413   

Equity in net income (loss) of affiliates

     772        (401     105         (476     —     

Other

     (1     34        64         (2     95   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
     2,811        (367     6,542         (478     8,508   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

OPERATING EXPENSES:

           

Depreciation, depletion and amortization

     648        —          3,024         —          3,672   

Asset retirement obligation accretion

     37        —          75         —          112   

Lease operating expenses

     431        —          946         —          1,377   

Gathering and transportation

     23        —          126         —          149   

Taxes other than income

     94        —          366         —          460   

General and administrative

     205        —          57         (2     260   

Merger, acquisitions & transition

     16        —          6         —          22   

Financing costs, net

     51        28        6         —          85   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 
     1,505        28        4,606         (2     6,137   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

     1,306        (395     1,936         (476     2,371   

Provision (benefit) for income taxes

     153        (99     1,164         —          1,218   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

NET INCOME (LOSS)

     1,153        (296     772         (476     1,153   

Preferred stock dividends

     38        —          —           —          38   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $ 1,115      $ (296   $ 772       $ (476   $ 1,115   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $  1,135      $ (296   $ 772       $ (476   $  1,135   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

21


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2011

 

     Apache
Corporation
     Apache
Finance
Canada
    All Other
Subsidiaries
of Apache
Corporation
    Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

REVENUES AND OTHER:

           

Oil and gas production revenues

   $ 2,133       $ —        $ 6,100      $ —        $ 8,233   

Equity in net income (loss) of affiliates

     1,866         (25     (48     (1,793     —     

Other

     5         (39     66        (2     30   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     4,004         (64     6,118        (1,795     8,263   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

           

Depreciation, depletion and amortization

     615         —          1,350        —          1,965   

Asset retirement obligation accretion

     34         —          41        —          75   

Lease operating expenses

     404         —          881        —          1,285   

Gathering and transportation

     24         —          125        —          149   

Taxes other than income

     91         —          328        —          419   

General and administrative

     173         —          44        (2     215   

Merger, acquisitions & transition

     10         —          1        —          11   

Financing costs, net

     71         28        (13     —          86   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
     1,422         28        2,757        (2     4,205   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

     2,582         (92     3,361        (1,793     4,058   

Provision (benefit) for income taxes

     189         (19     1,495        —          1,665   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS)

     2,393         (73     1,866        (1,793     2,393   

Preferred stock dividends

     38         —          —          —          38   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $ 2,355       $ (73   $ 1,866      $ (1,793   $ 2,355   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $  2,296       $ (73   $  1,866      $ (1,793   $  2,296   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

22


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2012

 

     Apache
Corporation
    Apache
Finance
Canada
    All Other
Subsidiaries
of Apache
Corporation
    Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

   $ 908      $ (59   $ 3,950      $ —        $ 4,799   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

          

Additions to oil and gas property

     (1,328     —          (2,428     —          (3,756

Additions to gas gathering, transmission and processing facilities

     (25     —          (417     —          (442

Acquisition of Cordillera

     (2,607     —          —          —          (2,607

Equity investment in Burrup Holdings Limited

     —          —          (439     —          (439

Acquisitions, other

     (1     —          (64     —          (65

Proceeds from sale of oil and gas properties

     5        —          4        —          9   

Investment in subsidiaries, net

     612        —          —          (612     —     

Other

     (456     —          170        —          (286
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (3,800     —          (3,174     (612     (7,586
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

          

Commercial paper, credit facility and bank notes, net

     393        —          38        —          431   

Intercompany borrowings

     —          —          (587     587        —     

Fixed rate debt borrowings

     2,991        —          —          —          2,991   

Payments on fixed rate debt

     (400     —          —          —          (400

Dividends paid

     (161     —          —          —          (161

Common stock activity

     17        55        (80     25        17   

Treasury stock activity, net

     2        —          —          —          2   

Other

     18        —          (45     —          (27
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     2,860        55        (674     612        2,853   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (32     (4     102        —          66   

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

     41        5        249        —          295   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 9      $ 1      $ 351      $ —        $ 361   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

23


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2011

 

     Apache
Corporation
    Apache
Finance
Canada
    All Other
Subsidiaries
of Apache
Corporation
    Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

   $ 1,078      $ (29   $ 3,675      $ —        $ 4,724   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

          

Additions to oil and gas property

     (864     —          (2,306     —          (3,170

Additions to gas gathering, transmission and processing facilities

     —          —          (269     —          (269

Acquisitions, other

     —          —          (78     —          (78

Proceeds from sales of oil and gas properties

     6        —          186        —          192   

Investment in subsidiaries, net

     198        —          —          (198     —     

Other

     (34     —          (18     —          (52
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (694     —          (2,485     (198     (3,377
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

          

Commercial paper, credit facility and bank notes, net

     (309     —          20        —          (289

Intercompany borrowings

     —          (1     (189     190        —     

Dividends paid

     (153     —          —          —          (153

Common stock activity

     38        30        (38     8        38   

Treasury stock activity, net

     4        —          —          —          4   

Other

     38        —          (12     —          26   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     (382     29        (219     198        (374
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

     2        —          971        —          973   

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

     6        —          128        —          134   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 8      $ —        $ 1,099      $ —        $ 1,107   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

24


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2012

 

     Apache
Corporation
     Apache
Finance
Canada
     All Other
Subsidiaries
of Apache
Corporation
    Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

ASSETS

            

CURRENT ASSETS:

            

Cash and cash equivalents

   $ 9       $ 1       $ 351      $ —        $ 361   

Receivables, net of allowance

     667         —           1,958        —          2,625   

Inventories

     64         —           681        —          745   

Drilling advances

     18         —           338        —          356   

Derivative instruments

     118         —           114        —          232   

Prepaid assets and other

     4,409         —           (4,089     —          320   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     5,285         1         (647     —          4,639   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

PROPERTY AND EQUIPMENT, NET

     16,780         —           33,355        —          50,135   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

OTHER ASSETS:

            

Intercompany receivable, net

     3,344         —           (1,626     (1,718     —     

Equity in affiliates

     20,831         950         98        (21,879     —     

Goodwill, net

     —           —           1,114        —          1,114   

Deferred charges and other

     189         1,002         1,138        (1,000     1,329   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
   $ 46,429       $ 1,953       $ 33,432      $ (24,597   $ 57,217   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

            

CURRENT LIABILITIES:

            

Accounts payable

   $ 592       $ 1       $ 2,186      $ (1,718   $ 1,061   

Current debt

     500         —           68        —          568   

Asset retirement obligation

     434         —           13        —          447   

Derivative instruments

     19         —           22        —          41   

Other current liabilities

     772         2         2,230        —          3,004   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     2,317         3         4,519        (1,718     5,121   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

LONG-TERM DEBT

     9,022         647         1        —          9,670   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:

            

Income taxes

     2,848         5         4,530        —          7,383   

Asset retirement obligation

     981         —           2,758        —          3,739   

Other

     588         250         793        (1,000     631   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     4,417         255         8,081        (1,000     11,753   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY

     30,673         1,048         20,831        (21,879     30,673   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
   $ 46,429       $ 1,953       $ 33,432      $ (24,597   $ 57,217   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

25


APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

 

     Apache
Corporation
     Apache
Finance
Canada
     All Other
Subsidiaries
of Apache
Corporation
    Reclassifications
& Eliminations
    Consolidated  
     (In millions)  

ASSETS

            

CURRENT ASSETS:

            

Cash and cash equivalents

   $ 41       $ 5       $ 249      $ —        $ 295   

Receivables, net of allowance

     773         —           2,306        —          3,079   

Inventories

     51         —           604        —          655   

Drilling advances

     11         —           218        —          229   

Derivative instruments

     113         —           191        —          304   

Prepaid assets and other

     3,859         —           (3,618     —          241   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     4,848         5         (50     —          4,803   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

PROPERTY AND EQUIPMENT, NET

     12,262         —           33,186        —          45,448   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

OTHER ASSETS:

            

Intercompany receivable, net

     3,931         —           (1,908     (2,023     —     

Equity in affiliates

     20,214         1,372         99        (21,685     —     

Goodwill, net

     —           —           1,114        —          1,114   

Deferred charges and other

     158         1,002         526        (1,000     686   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
   $ 41,413       $ 2,379       $ 32,967      $ (24,708   $ 52,051   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

            

CURRENT LIABILITIES:

            

Accounts payable

   $ 609       $ 1       $ 2,461      $ (2,023   $ 1,048   

Current debt

     400         —           31        —          431   

Asset retirement obligation

     434         —           13        —          447   

Derivative instruments

     76         —           37        —          113   

Other current liabilities

     614         5         2,305        —          2,924   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     2,133         6         4,847        (2,023     4,963   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

LONG-TERM DEBT

     6,137         647         1        —          6,785   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:

            

Income taxes

     2,622         5         4,570        —          7,197   

Asset retirement obligation

     936         —           2,504        —          3,440   

Other

     592         250         831        (1,000     673   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     4,150         255         7,905        (1,000     11,310