10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 ________________________________________________________________
FORM 10-Q 
  ________________________________________________________________
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
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  ý    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  ý    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
 
ý
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  ý
Number of shares of registrant’s common stock outstanding as of April 30, 2016
378,533,597



 
TABLE OF CONTENTS
 
DESCRIPTION
Item
 
 
Page
 
PART I - FINANCIAL INFORMATION
 
 
1.
 
 
 
 
 
 
 
 
 
 
 
2.
 
3.
 
4.
 
 
PART II - OTHER INFORMATION
 
 
1.
 
1A.
 
2.
 
3.
 
4.
 
5.
 
6.
 


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, 2015, and other data in our possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” or “continue” or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, our assumptions about:
 
•
the market prices of oil, natural gas, NGLs, and other products or services;

•
our commodity hedging arrangements;

•
the integration of acquisitions;

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

•
production and reserve levels;

•
drilling risks;

•
economic and competitive conditions;

•
the availability of capital resources;

•
capital expenditure and other contractual obligations;

•
currency exchange rates;

•
weather conditions;

•
inflation rates;

•
the availability of goods and services;

•
legislative or regulatory changes;

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

•
terrorism or cyber attacks;

•
occurrence of property acquisitions or divestitures;

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

•
other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in our most recently filed Annual Report on Form 10-K, other risks and uncertainties in our first-quarter 2016 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.




PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
 
 
For the Quarter Ended March 31,
 
 
2016
 
2015
 
 
(In millions, except per common share data)
REVENUES AND OTHER:
 
 
 
 
Oil and gas production revenues
 
 
 
 
Oil revenues
 
$
795

 
$
1,280

Gas revenues
 
223

 
300

Natural gas liquids revenues
 
42

 
58

 
 
1,060

 
1,638

Other
 
(8
)
 
(8
)
 
 
1,052

 
1,630

OPERATING EXPENSES:
 
 
 
 
Depreciation, depletion, and amortization:
 
 
 
 
Oil and gas property and equipment
 
 
 
 
Recurring
 
552

 
999

Additional
 
488

 
7,220

Other assets
 
42

 
83

Asset retirement obligation accretion
 
38

 
36

Lease operating expenses
 
378

 
481

Gathering and transportation
 
52

 
56

Taxes other than income
 
11

 
74

General and administrative
 
93

 
82

Transaction, reorganization, and separation
 
15

 
54

Financing costs, net
 
90

 
69

 
 
1,759

 
9,154

NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
 
(707
)
 
(7,524
)
Current income tax provision (benefit)
 
35

 
(85
)
Deferred income tax benefit
 
(181
)
 
(2,935
)
NET LOSS FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST
 
(561
)
 
(4,504
)
Net loss from discontinued operations, net of tax
 
—

 
(132
)
NET LOSS INCLUDING NONCONTROLLING INTEREST
 
(561
)
 
(4,636
)
Net income (loss) attributable to noncontrolling interest
 
(72
)
 
15

NET LOSS ATTRIBUTABLE TO COMMON STOCK
 
$
(489
)
 
$
(4,651
)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
 
 
 
 
Net loss from continuing operations attributable to common shareholders
 
$
(489
)
 
$
(4,519
)
Net loss from discontinued operations
 
—

 
(132
)
Net loss attributable to common shareholders
 
$
(489
)
 
$
(4,651
)
NET LOSS PER COMMON SHARE:
 
 
 
 
Basic net loss from continuing operations per share
 
$
(1.29
)
 
$
(11.99
)
Basic net loss from discontinued operations per share
 
—

 
(0.35
)
Basic net loss per share
 
$
(1.29
)
 
$
(12.34
)
DILUTED NET LOSS PER COMMON SHARE:
 
 
 
 
Diluted net loss from continuing operations per share
 
$
(1.29
)
 
$
(11.99
)
Diluted net loss from discontinued operations per share
 
—

 
(0.35
)
Diluted net loss per share
 
$
(1.29
)
 
$
(12.34
)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
 
 
 
 
Basic
 
378

 
377

Diluted
 
378

 
377

DIVIDENDS DECLARED PER COMMON SHARE
 
$
0.25

 
$
0.25

The accompanying notes to consolidated financial statements
are an integral part of this statement.

1


APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
 
 
For the Three Months Ended March 31,
 
 
2016
 
2015
 
 
(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
Net loss including noncontrolling interest
 
$
(561
)
 
$
(4,636
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
Loss from discontinued operations
 
—

 
132

Depreciation, depletion, and amortization
 
1,082

 
8,302

Asset retirement obligation accretion
 
38

 
36

Benefit from deferred income taxes
 
(181
)
 
(2,935
)
Other
 
57

 
(3
)
Changes in operating assets and liabilities:
 
 
 
 
Receivables
 
135

 
247

Inventories
 
10

 
22

Drilling advances
 
(17
)
 
(169
)
Deferred charges and other
 
(79
)
 
(102
)
Accounts payable
 
(75
)
 
(190
)
Accrued expenses
 
(106
)
 
(204
)
Deferred credits and noncurrent liabilities
 
(27
)
 
77

NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES
 
276

 
577

NET CASH PROVIDED BY DISCONTINUED OPERATIONS
 
—

 
73

NET CASH PROVIDED BY OPERATING ACTIVITIES
 
276

 
650

 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
Additions to oil and gas property
 
(583
)
 
(1,627
)
Leasehold and property acquisitions
 
(19
)
 
(91
)
Additions to gas gathering, transmission, and processing facilities
 
—

 
(63
)
Other, net
 
10

 
(72
)
NET CASH USED IN CONTINUING INVESTING ACTIVITIES
 
(592
)
 
(1,853
)
NET CASH USED IN DISCONTINUED OPERATIONS
 
—

 
(265
)
NET CASH USED IN INVESTING ACTIVITIES
 
(592
)
 
(2,118
)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
Commercial paper and bank credit facilities, net
 
—

 
1,028

Distributions to noncontrolling interest
 
(54
)
 
(21
)
Dividends paid
 
(95
)
 
(94
)
Other
 
2

 
15

NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES
 
(147
)
 
928

NET CASH PROVIDED BY DISCONTINUED OPERATIONS
 
—

 
—

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
 
(147
)
 
928

 
 
 
 
 
NET DECREASE IN CASH AND CASH EQUIVALENTS
 
(463
)
 
(540
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
 
1,467

 
769

CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
1,004

 
$
229

 
 
 
 
 
SUPPLEMENTARY CASH FLOW DATA:
 
 
 
 
Interest paid, net of capitalized interest
 
$
126

 
$
89

Income taxes paid, net of refunds
 
84

 
142

The accompanying notes to consolidated financial statements
are an integral part of this statement.

2


APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
 
 
March 31, 2016
 
December 31, 2015
 
 
(In millions)
ASSETS
 
 
 
 
CURRENT ASSETS:
 
 
 
 
Cash and cash equivalents
 
$
1,004

 
$
1,467

Receivables, net of allowance
 
1,120

 
1,253

Inventories
 
547

 
570

Drilling advances
 
190

 
172

Prepaid assets and other
 
361

 
290

 
 
3,222

 
3,752

PROPERTY AND EQUIPMENT:
 
 
 
 
Oil and gas, on the basis of full-cost accounting:
 
 
 
 
Proved properties
 
89,685

 
89,069

Unproved properties and properties under development, not being amortized
 
2,499

 
2,611

Gathering, transmission and processing facilities
 
1,048

 
1,052

Other
 
1,094

 
1,093

 
 
94,326

 
93,825

Less: Accumulated depreciation, depletion, and amortization
 
(80,784
)
 
(79,706
)
 
 
13,542

 
14,119

OTHER ASSETS:
 
 
 
 
Deferred charges and other
 
915

 
910

 
 
$
17,679

 
$
18,781

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
Accounts payable
 
$
571

 
$
618

Other current liabilities (Note 3)
 
1,027

 
1,223

 
 
1,598

 
1,841

LONG-TERM DEBT
 
8,718

 
8,716

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
 
 
 
 
Income taxes
 
891

 
1,072

Asset retirement obligation
 
2,586

 
2,562

Other
 
332

 
362

 
 
3,809

 
3,996

COMMITMENTS AND CONTINGENCIES (Note 7)
 

 

EQUITY:
 
 
 
 
Common stock, $0.625 par, 860,000,000 shares authorized, 411,708,123 and 411,218,105 shares issued, respectively
 
257

 
257

Paid-in capital
 
12,407

 
12,467

Accumulated deficit
 
(7,642
)
 
(7,153
)
Treasury stock, at cost, 33,175,728 and 33,183,930 shares, respectively
 
(2,888
)
 
(2,889
)
Accumulated other comprehensive loss
 
(116
)
 
(116
)
APACHE SHAREHOLDERS’ EQUITY
 
2,018

 
2,566

Noncontrolling interest
 
1,536

 
1,662

TOTAL EQUITY
 
3,554

 
4,228

 
 
$
17,679

 
$
18,781

The accompanying notes to consolidated financial statements
are an integral part of this statement.


3


APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
(Unaudited)
 
 
 
Common
Stock
 
Paid-In
Capital
 
Retained Earnings (Accumulated Deficit)
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
APACHE
SHAREHOLDERS’
EQUITY
 
Non
Controlling
Interest
 
TOTAL
EQUITY
 
 
(In millions)
BALANCE AT DECEMBER 31, 2014
 
$
256

 
$
12,438

 
$
16,249

 
$
(2,890
)
 
$
(116
)
 
$
25,937

 
$
2,200

 
$
28,137

Net income (loss)
 
—

 
—

 
(4,651
)
 
—

 
—

 
(4,651
)
 
15

 
(4,636
)
Distributions to noncontrolling interest
 
—

 
—

 
—

 
—

 
—

 
—

 
(21
)
 
(21
)
Common dividends ($0.25 per share)
 
—

 
—

 
(94
)
 
—

 
—

 
(94
)
 
—

 
(94
)
Common stock activity, net
 
—

 
18

 
—

 
—

 
—

 
18

 
—

 
18

Treasury stock activity, net
 
—

 
—

 
—

 
1

 
—

 
1

 
—

 
1

BALANCE AT MARCH 31, 2015
 
$
256

 
$
12,456

 
$
11,504

 
$
(2,889
)
 
$
(116
)
 
$
21,211

 
$
2,194

 
$
23,405

BALANCE AT DECEMBER 31, 2015
 
$
257

 
$
12,467

 
$
(7,153
)
 
$
(2,889
)
 
$
(116
)
 
$
2,566

 
$
1,662

 
$
4,228

Net loss
 
—

 
—

 
(489
)
 
—

 
—

 
(489
)
 
(72
)
 
(561
)
Distributions to noncontrolling interest
 
—

 
—

 
—

 
—

 
—

 
—

 
(54
)
 
(54
)
Common dividends ($0.25 per share)
 
—

 
(95
)
 
—

 
—

 
—

 
(95
)
 
—

 
(95
)
Other
 
—

 
35

 
—

 
1

 
—

 
36

 
—

 
36

BALANCE AT MARCH 31, 2016
 
$
257

 
$
12,407

 
$
(7,642
)
 
$
(2,888
)
 
$
(116
)
 
$
2,018

 
$
1,536

 
$
3,554

The accompanying notes to consolidated financial statements
are an integral part of this statement.


4


APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These financial statements have been prepared by Apache Corporation (Apache or the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which contains a summary of the Company’s significant accounting policies and other disclosures.
The Company’s financial statements for prior periods include reclassifications that were made to conform to the current-period presentation. During the second quarter of 2015, Apache completed the sale of its Australian LNG business and oil and gas assets. Results of operations and consolidated cash flows for the divested Australia assets are reflected as discontinued operations in the Company’s financial statements for all periods presented. For more information regarding these divestitures, please refer to Note 2—Acquisitions and Divestitures. In the first quarter of 2016, the Company retrospectively adopted a new accounting standard update for all periods presented which requires debt issuance costs to be presented as a direct deduction from the carrying value of the associated debt liability, consistent with debt discounts. For more information regarding this update, please refer to Note 5—Debt and Financing Costs.
 
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As of March 31, 2016, Apache’s significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies to the consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
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, the assessment of asset retirement obligations, and the estimate of income taxes. Actual results could differ from those estimates.
Oil and Gas Property
The Company follows the full-cost method of accounting for its oil and gas property. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, including salaries, benefits and other internal costs directly identified with these activities, and oil and gas property acquisitions are capitalized. The net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for designated cash flow hedges. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. For a discussion of the calculation of estimated future net cash flows, please refer to Note 14—Supplemental Oil and Gas Disclosures to the consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
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. The following tables present non-cash write-downs of the carrying value of the Company’s proved oil and gas properties by country for the first quarters of 2016 and 2015:

5


 
 
For the Quarter Ended March 31, 2016
 
For the Quarter Ended March 31, 2015
 
 
Before tax
 
After tax
 
Before tax
 
After tax
 
 
(In millions)
U.S.
 
$
—

 
$
—

 
$
5,235

 
$
3,377

Canada
 
—

 
—

 
1,353

 
1,011

North Sea
 
325

 
162

 
632

 
316

Egypt
 
163

 
163

 
—

 
—

Total write-downs
 
$
488

 
$
325

 
$
7,220

 
$
4,704

 
 
New Pronouncements Issued But Not Yet Adopted
In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, which seeks to simplify accounting for share-based payment transactions including income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The new standard requires the Company to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The guidance is effective for fiscal years beginning after December 15, 2016.  Early adoption is permitted and if an entity early adopts the guidance in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, a new lease standard requiring lessees to recognize lease assets and lease liabilities for most leases classified as operating leases under previous U.S. GAAP. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company will be required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.
In May 2014, the FASB and the International Accounting Standards Board (IASB) issued a joint revenue recognition standard, ASU 2014-09. The new standard removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The guidance requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, which provides further clarification on the principal versus agent evaluation. The guidance is effective for annual and interim periods beginning after December 15, 2017. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Company is currently evaluating the level of effort needed to implement the standard, the impact of adopting this standard on its consolidated financial statements, and whether to use the full retrospective approach or the modified retrospective approach.

6


2.
ACQUISITIONS AND DIVESTITURES
2015 Activity
Yara Pilbara Holdings Pty Limited Sale
In October 2015, Apache's subsidiaries sold its 49 percent interest in Yara Pilbara Holdings Pty Limited (YPHPL) for total cash proceeds of $391 million. The investment in YPHPL was accounted for under the equity method of accounting, with the balance recorded as a component of “Deferred charges and other” in the Company's consolidated balance sheet and the results of operations recorded as a component of “Other” under “Revenue and other” in the Company’s statement of consolidated operations. As of September 30, 2015, Apache recognized an impairment of $148 million on the YPHPL equity investment based on negotiated sales proceeds. No additional gain or loss was recorded upon completion of the sale.
Canada Divestiture
In April 2015, Apache's subsidiaries completed the sale of its 50 percent interest in the Kitimat LNG project and related upstream acreage in the Horn River and Liard natural gas basins to Woodside Petroleum Limited (Woodside). Proceeds at closing were $854 million, of which approximately $344 million were associated with LNG assets and $510 million were associated with upstream assets. The proceeds are subject to post-closing adjustments. For additional details related to post-closing adjustments, please see Note 7—Commitments and Contingencies.
The Kitimat LNG assets were impaired in the fourth quarter of 2014, and no material gain or loss was recognized for the LNG assets upon completion of the sale. No gain or loss was recognized on the sale of the upstream assets. In accordance with full cost accounting rules, sales of oil and gas properties are accounted for as adjustments of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves.
Australia Divestitures
Woodside Sale In April 2015, Apache's subsidiaries completed the sale of its interest in the Wheatstone LNG project and associated upstream oil and gas assets to Woodside. Proceeds at closing were $2.8 billion, of which approximately $1.4 billion were associated with LNG assets and $1.4 billion were associated with the upstream assets. The proceeds are subject to post-closing adjustments. For additional details related to post-closing adjustments, please see Note 7—Commitments and Contingencies.
The Wheatstone LNG assets were impaired in the fourth quarter of 2014 and no material gain or loss was recognized on the disposal of the LNG project. A loss of approximately $922 million was recognized on the sale of the Australian upstream assets.
Consortium Sale In June 2015, Apache's subsidiaries completed the sale of the Company's Australian subsidiary Apache Energy Limited (AEL) to a consortium of private equity funds managed by Macquarie Capital Group Limited and Brookfield Asset Management Inc. Total proceeds of $1.9 billion included customary, post-closing adjustments for the period between the effective date, October 1, 2014, and closing. A loss of approximately $1.3 billion was recognized for the sale of AEL.

Upon closing of the sale of substantially all Australian operations, the associated results of operations for the divested Australian assets and the losses on disposal were classified as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q. Sales and other operating revenues and loss from discontinued operations related to the Australia dispositions were as follows:
 
 
 
For the Quarter Ended March 31,
 
 
2016
 
2015
 
 
(In millions)
Revenues and other from discontinued operations
 
$
—

 
$
187

Income from divested Australian operations
 
$
—

 
$
35

Income tax expense
 
—

 
(167
)
Loss from Australian discontinued operations, net of tax
 
$
—

 
$
(132
)

7


Leasehold and Property Acquisitions
During the first quarter of 2015, Apache completed $91 million of leasehold and property acquisitions primarily in our North America onshore regions.
Transaction, Reorganization, and Separation
During the first quarter of 2015, Apache recorded $54 million in expense related to various asset transactions, company reorganization, and employee separation.

3.
OTHER CURRENT LIABILITIES
The following table provides detail of our other current liabilities as of March 31, 2016 and December 31, 2015:
 
 
March 31, 2016
 
December 31, 2015
 
 
(In millions)
Accrued operating expenses
 
$
125

 
$
139

Accrued exploration and development
 
537

 
637

Accrued compensation and benefits
 
75

 
166

Accrued interest
 
108

 
144

Accrued income taxes
 
81

 
47

Current debt
 
1

 
1

Current asset retirement obligation
 
36

 
36

Other
 
64

 
53

Total Other current liabilities
 
$
1,027

 
$
1,223

 
4.
ASSET RETIREMENT OBLIGATION
The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the three-month period ended March 31, 2016:
 
 
 
 
 
 
(In millions)
Asset retirement obligation at December 31, 2015
 
$
2,598

Liabilities incurred
 
1

Liabilities settled
 
(15
)
Accretion expense
 
38

Asset retirement obligation at March 31, 2016
 
2,622

Less current portion
 
36

Asset retirement obligation, long-term
 
$
2,586


5.
DEBT AND FINANCING COSTS
The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt as of March 31, 2016 and December 31, 2015:
 
 
 
March 31, 2016
 
December 31, 2015
 
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
 
 
(In millions)
Commercial paper and committed bank facilities
 
$
—

 
$
—

 
$
—

 
$
—

Notes and debentures
 
8,719

 
8,561

 
8,717

 
8,330

Total Debt
 
$
8,719

 
$
8,561

 
$
8,717

 
$
8,330


8


The Company’s debt is recorded at the carrying amount, net of related unamortized discount and debt issuance costs, on its consolidated balance sheet. The carrying amount of the Company’s commercial paper, committed bank facilities, and uncommitted bank 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 March 31, 2016, the Company had a $3.5 billion five-year revolving credit facility which matures in June 2020. Proceeds from borrowings may be used for general corporate purposes. Apache’s available borrowing capacity under this facility supports its $3.5 billion commercial paper program. The commercial paper program, which is subject to market availability, facilitates Apache borrowing funds for up to 270 days at competitive interest rates. As of March 31, 2016, the Company had no debt outstanding under commercial paper, committed bank facilities, and uncommitted bank lines.

As of March 31, 2016, the Company had a £900 million three-year letter of credit facility which matures in February 2019. The facility is available for letters of credit and loans to cash collateralize letter of credit obligations to the extent letters of credit are unavailable under the facility.

In April 2015, the FASB issued ASU 2015-03 "Simplifying the Presentation of Debt Issuance Costs," which requires debt issuance costs to be presented as a direct deduction from the carrying value of the associated debt liability. The Company adopted this update in the first quarter of 2016 and applied the changes retrospectively for all periods presented. At December 31, 2015, the Company had debt issuance costs of $61 million classified as a long-term asset as a component of "deferred charges and other" on the balance sheet that have been netted against "long-term debt" in these unaudited interim financial statements. As of March 31, 2016, long-term debt is presented net of debt issuance costs of $59 million.
Financing Costs, Net
The following table presents the components of Apache’s financing costs, net:
 
 
 
For the Quarter Ended March 31,
 
 
2016
 
2015
 
 
(In millions)
Interest expense
 
$
116

 
$
128

Amortization of deferred loan costs
 
1

 
2

Capitalized interest
 
(26
)
 
(58
)
Interest income
 
(1
)
 
(3
)
Financing costs, net
 
$
90

 
$
69


6.
INCOME TAXES
The Company estimates its annual effective income tax rate for continuing operations in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Non-cash write-downs of the carrying value of the Company’s proved oil and gas properties, statutory tax rate changes, and other significant or unusual items are recognized as discrete items in the quarter in which they occur.
During the first quarter of 2016, Apache’s effective income tax rate was primarily impacted by an increase in the valuation allowances on U.S. and Canadian deferred tax assets. During the first quarter of 2015, Apache’s effective tax rate was primarily impacted by a $619 million discrete deferred tax benefit associated with a reduction in the U.K. statutory income tax rate from 62 percent to 50 percent.

9


7.
COMMITMENTS AND CONTINGENCIES
Legal Matters
Apache is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. As of March 31, 2016, the Company has an accrued liability of approximately $14 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. Apache’s estimates are based on information known about the matters and its experience in contesting, litigating, and settling similar matters. Although actual amounts could differ from management’s estimate, none of the actions are believed by management to involve future amounts that would be material to Apache’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that Apache believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and a range of potential exposure, unless an estimate cannot be made at this time. It is management’s opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.
For additional information on each of the Legal Matters described below, please see Note 8—Commitments and Contingencies to the consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
Argentine Environmental Claims and Argentina Tariff
No material change in the status of the YPF Sociedad Anónima and Pioneer Natural Resources Company indemnities matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2015 fiscal year.
Louisiana Restoration 
As more fully described in Apache’s Annual Report on Form 10-K for its 2015 fiscal year, numerous surface owners have filed claims or sent demand letters to various oil and gas companies, including Apache, claiming that, under either express or implied lease terms or Louisiana law, the companies 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 respect of three lawsuits filed by the Parish of Plaquemines against the Company and other oil and gas producers in the 25th Judicial District Court for the Parish of Plaquemines, State of Louisiana (captioned Parish of Plaquemines v. Rozel Operating Company et al., Docket No. 60-996; Parish of Plaquemines v. Apache Oil Corporation et al., Docket No. 61-000; and Parish of Plaquemines v. HHE Energy Company et al., Docket No. 60-983), in April 2016 the Plaquemines Parish Council reversed course and decided not to dismiss the lawsuits. The Louisiana Attorney General has announced his intention to intervene in the three Plaquemines Parish proceedings and in the Cameron Parish proceedings in the Parish’s 38th Judicial District Court, captioned Parish of Cameron v. BEPCO, L.P., et al., Docket No. 10-19572; Parish of Cameron v. BP America Production Company et al., Docket No. 10-19576; Parish of Cameron v. Apache Corporation (of Delaware) et al., Docket No. 10-19579; Parish of Cameron v. Atlantic Richfield Company et al., Docket No. 10-19577; Parish of Cameron v. Alpine Exploration Companies, Inc., et al., Docket No. 19580; and Parish of Cameron v. Auster Oil and Gas, Inc., et al, Docket No. 10-19582.
No other material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2015 fiscal year.

Apollo Exploration Lawsuit
In a fourth amended petition filed on March 21, 2016, in a case captioned Apollo Exploration, LLC, Cogent Exploration, Ltd. Co. & SellmoCo, LLC v. Apache Corporation, Cause No. CV50538 in the 385th Judicial District Court, Midland County, Texas, plaintiffs have reduced their alleged damages to approximately $500 million (having previously claimed in excess of $1.1 billion) relating to certain purchase and sale agreements, mineral leases, and areas of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. Apache believes that plaintiffs’ claims lack merit, and further that plaintiffs’ alleged damages, even as amended, are grossly inflated. Apache will vigorously oppose the claims. No other material change in the status of these matters has occurred since the filing of Apache's Annual Report on Form 10-K for its 2015 fiscal year.



10


Escheat Audits
There has been no other material change with respect to the review of the books and records of the Company and its subsidiaries and related entities by the State of Delaware, Department of Finance (Unclaimed Property), to determine compliance with the Delaware Escheat Laws, since the filing of Apache’s Annual Report on Form 10-K for its 2015 fiscal year.
Burrup-Related Gas Supply Lawsuits
In the cases captioned Radhika Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al., No. SCI 2011 4653 and Pankaj Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al., No. SCI 2012 01995, in the Supreme Court of Victoria, trial is set to commence on May 30, 2016. 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 2015 fiscal year.
Environmental Matters
As of March 31, 2016, the Company had an undiscounted reserve for environmental remediation of approximately $56 million. The Company is not aware of any environmental claims existing as of March 31, 2016, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity. There can be no assurance, however, that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered on the Company’s properties.

With respect to the summons and information containing charges relating to a leak of produced water in the Zama area that occurred on or between October 3 and October 25, 2013, and the summons and information containing charges relating to a leak of produced water in the Belloy Field operating area that occurred on or about January 20, 2014, the Company does not expect the economic impact of these incidents to 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 Annual Report on Form 10-K for its 2015 fiscal year.
LNG Divestiture Dispute

In respect of the purchase by Woodside of the Wheatstone and Kitimat LNG projects and accompanying upstream oil and gas reserves from the Company and its subsidiaries, several court proceedings are pending in the Supreme Court of Western Australia (Case Nos. 2315 of 2015, 2798 of 2015, 1504 of 2016, 1520 of 2016, and 1521 of 2016) concerning or arising out of the Wheatstone sale and purchase agreement, including whether certain amounts are due and owing Apache from Woodside and whether certain of Woodside’s purchase price adjustment claims are time-barred. In addition, Woodside is attempting to commence third party expert determination proceedings at the ICC International Centre for ADR in respect of certain aspects of its purchase price adjustment claims. The Company believes that under the terms of the sale and purchase agreements, Woodside’s requests for payment of purchase price adjustments lack merit and further that Woodside must reimburse Apache certain costs relating to Wheatstone and Kitimat; therefore, the Company has not recorded a liability associated with this dispute. No other material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2015 fiscal year.



11


8.
CAPITAL STOCK
Net Loss per Common Share
A reconciliation of the components of basic and diluted net loss per common share for the quarters ended March 31, 2016 and 2015 is presented in the table below.
 
 
 
For the Quarter Ended March 31,
 
 
2016
 
2015
 
 
Loss
 
Shares
 
Per Share
 
Loss
 
Shares
 
Per Share
 
 
(In millions, except per share amounts)
Basic:
 
 
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations
 
$
(489
)
 
378

 
$
(1.29
)
 
$
(4,519
)
 
377

 
$
(11.99
)
Loss from discontinued operations
 
—

 
378

 
—

 
(132
)
 
377

 
(0.35
)
Loss attributable to common stock
 
$
(489
)
 
378

 
$
(1.29
)
 
$
(4,651
)
 
377

 
$
(12.34
)
Effect of Dilutive Securities:
 
 
 
 
 
 
 
 
 
 
 
 
Stock options and other
 
$
—

 
—

 
$
—

 
$
—

 
—

 
$
—

Diluted:
 
 
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations
 
$
(489
)
 
378

 
$
(1.29
)
 
$
(4,519
)
 
377

 
$
(11.99
)
Loss from discontinued operations
 
—

 
378

 
—

 
(132
)
 
377

 
(0.35
)
Loss attributable to common stock
 
$
(489
)
 
378

 
$
(1.29
)
 
$
(4,651
)
 
377

 
$
(12.34
)
 
The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling 7.1 million and 9.1 million for the quarters ended March 31, 2016 and 2015, respectively.
Common Stock Dividends
For the quarters ended March 31, 2016, and 2015, Apache paid $95 million and $94 million, respectively, in dividends on its common stock.
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 negotiated transactions. The Company initiated the buyback program on June 10, 2013, and through December 31, 2015, had repurchased a total of 32.2 million shares at an average price of $88.96 per share. The Company is not obligated to acquire any specific number of shares and has not purchased any shares during 2016.


12


9.
BUSINESS SEGMENT INFORMATION
Apache is engaged in a single line of business. Both domestically and internationally, the Company explores for, develops, and produces natural gas, crude oil, and natural gas liquids. At March 31, 2016, the Company had production in four geographic areas: the United States, Canada, Egypt, and offshore the United Kingdom in the North Sea (North Sea). Apache also pursues exploration interests in other areas that may, over time, result in reportable discoveries and development opportunities. Financial information for each country is presented below:
 
 
 
United
States
 
Canada
 
Egypt(1)
 
North Sea
 
Other
International
 
Total(3)
 
 
(In millions)
For the Quarter Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas Production Revenues
 
$
409

 
$
83

 
$
365

 
$
203

 
$
—

 
$
1,060

Operating Income (Loss)(2)
 
$
58

 
$
(41
)
 
$
(206
)
 
$
(312
)
 
$
—

 
$
(501
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
 
 
 
(8
)
General and administrative
 
 
 
 
 
 
 
 
 
 
 
(93
)
Transaction, reorganization, and separation
 
 
 
 
 
 
 
 
 
 
 
(15
)
Financing costs, net
 
 
 
 
 
 
 
 
 
 
 
(90
)
Loss From Continuing Operations Before Income Taxes
 
 
 
 
 
 
 
 
 
 
 
$
(707
)
Total Assets
 
$
6,990

 
$
1,380

 
$
5,592

 
$
3,653

 
$
64

 
$
17,679

 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
Oil and Gas Production Revenues
 
$
660

 
$
133

 
$
532

 
$
313

 
$
—

 
$
1,638

Operating Income (Loss)(2)
 
$
(5,320
)
 
$
(1,430
)
 
$
102

 
$
(663
)
 
$
—

 
$
(7,311
)
Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
 
 
 
 
 
 
(8
)
General and administrative
 
 
 
 
 
 
 
 
 
 
 
(82
)
Transaction, reorganization, and separation
 
 
 
 
 
 
 
 
 
 
 
(54
)
Financing costs, net
 
 
 
 
 
 
 
 
 
 
 
(69
)
Loss From Continuing Operations Before Income Taxes
 
 
 
 
 
 
 
 
 
 
 
$
(7,524
)
Total Assets
 
$
21,577

 
$
5,288

 
$
7,247

 
$
5,376

 
$
118

 
$
39,606

(1)
Includes a noncontrolling interest in Egypt.
(2)
Operating Income (Loss) consists of oil and gas production revenues less depreciation, depletion, and amortization, asset retirement obligation accretion, lease operating expenses, gathering and transportation costs, and taxes other than income. The operating income (loss) of North Sea and Egypt for the first quarter of 2016 includes non-cash write-downs of each region’s carrying value of oil and gas properties of $325 million and $163 million, respectively. The operating income (loss) of U.S., Canada, and North Sea for the first quarter of 2015 includes non-cash write-downs of each region’s carrying value of oil and gas properties of $5.2 billion, $1.4 billion, and $632 million, respectively.
(3)
Amounts for 2015 have been restated to exclude Australia discontinued operations.


13


10.
SUPPLEMENTAL GUARANTOR INFORMATION
In December 1999, Apache Finance Canada issued approximately $300 million of publicly-traded notes due in 2029. The notes are fully and unconditionally guaranteed by Apache. The following condensed consolidating financial statements are provided as an alternative to filing separate financial statements.
Apache Finance Canada is 100 percent owned by Apache Corporation. As such, these condensed consolidating financial statements should be read in conjunction with Apache’s consolidated financial statements and the notes thereto, of which this note is an integral part.

14


APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended March 31, 2016
 
 
Apache
Corporation
 
Apache
Finance
Canada
 
All Other
Subsidiaries
of Apache
Corporation
 
Reclassifications
& Eliminations
 
Consolidated
 
 
(In millions)
REVENUES AND OTHER:
 
 
 
 
 
 
 
 
 
 
Oil and gas production revenues
 
$
217

 
$
—

 
$
843

 
$
—

 
$
1,060

Equity in net income of affiliates
 
(414
)
 
(47
)
 
—

 
461

 
—

Other
 
151

 
12

 
(171
)
 
—

 
(8
)
 
 
(46
)
 
(35
)
 
672

 
461

 
1,052

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Depreciation, depletion, and amortization
 
428

 
—

 
654

 
—

 
1,082

Asset retirement obligation accretion
 
4

 
—

 
34

 
—

 
38

Lease operating expenses
 
78

 
—

 
300

 
—

 
378

Gathering and transportation
 
8

 
—

 
44

 
—

 
52

Taxes other than income
 
21

 
—

 
(10
)
 
—

 
11

General and administrative
 
77

 
—

 
16

 
—

 
93

Transaction, reorganization, and separation
 
15

 
—

 
—

 
—

 
15

Financing costs, net
 
67

 
10

 
13

 
—

 
90

 
 
698

 
10

 
1,051

 
—

 
1,759

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
 
(744
)
 
(45
)
 
(379
)
 
461

 
(707
)
Provision (benefit) for income taxes
 
(12
)
 
2

 
(136
)
 
—

 
(146
)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST
 
(732
)
 
(47
)
 
(243
)
 
461

 
(561
)
Net income (loss) from discontinued operations, net of tax
 
—

 
—

 
—

 
—

 
—

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST
 
(732
)
 
(47
)
 
(243
)
 
461

 
(561
)
Net loss attributable to noncontrolling interest
 
—

 
—

 
(72
)
 
—

 
(72
)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK
 
$
(732
)
 
$
(47
)
 
$
(171
)
 
$
461

 
$
(489
)


15


APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended March 31, 2015
 
 
Apache
Corporation
 
Apache
Finance
Canada
 
All Other
Subsidiaries
of Apache
Corporation
 
Reclassifications
& Eliminations
 
Consolidated
 
 
(In millions)
REVENUES AND OTHER:
 
 
 
 
 
 
 
 
 
 
Oil and gas production revenues
 
$
365

 
$
—

 
$
1,273

 
$
—

 
$
1,638

Equity in net income (loss) of affiliates
 
(1,085
)
 
(654
)
 
1

 
1,738

 
—

Other
 
(40
)
 
14

 
18

 
—

 
(8
)
 
 
(760
)
 
(640
)
 
1,292

 
1,738

 
1,630

OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Depreciation, depletion, and amortization
 
5,499

 
—

 
2,803

 
—

 
8,302

Asset retirement obligation accretion
 
4

 
—

 
32

 
—

 
36

Lease operating expenses
 
124

 
—

 
357

 
—

 
481

Gathering and transportation
 
9

 
—

 
47

 
—

 
56

Taxes other than income
 
34

 
—

 
40

 
—

 
74

General and administrative
 
64

 
—

 
18

 
—

 
82

Transaction, reorganization, and separation
 
54

 
—

 
—

 
—

 
54

Financing costs, net
 
52

 
10

 
7

 
—

 
69

 
 
5,840

 
10

 
3,304

 
—

 
9,154

NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
 
(6,600
)
 
(650
)
 
(2,012
)
 
1,738

 
(7,524
)
Provision (benefit) for income taxes
 
(1,949
)
 
3

 
(1,074
)
 
—

 
(3,020
)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST
 
(4,651
)
 
(653
)
 
(938
)
 
1,738

 
(4,504
)
Net loss from discontinued operations, net of tax
 
—

 
—

 
(132
)
 
—

 
(132
)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST
 
(4,651
)
 
(653
)
 
(1,070
)
 
1,738

 
(4,636
)
Net income attributable to noncontrolling interest
 
—

 
—

 
15

 
—

 
15

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK
 
$
(4,651
)
 
$
(653
)
 
$
(1,085
)
 
$
1,738

 
$
(4,651
)


16


APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2016
 
 
 
Apache
Corporation
 
Apache
Finance
Canada
 
All Other
Subsidiaries
of Apache
Corporation
 
Reclassifications
& Eliminations
 
Consolidated
 
 
(In millions)
CASH PROVIDED BY OPERATING ACTIVITIES
 
81

 
11

 
184

 
—

 
276

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Additions to oil and gas property
 
(118
)
 
—

 
(465
)
 
—

 
(583
)
Leasehold and property acquisitions
 
(19
)
 
—

 
—

 
—

 
(19
)
Additions to gas gathering, transmission, and processing facilities
 
1

 
—

 
(1
)
 
—

 
—

Investment in subsidiaries, net
 
(6
)
 
—

 
—

 
6

 
—

Other
 
(34
)
 
—

 
44

 
—

 
10

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
 
(176
)
 
—

 
(422
)
 
6

 
(592
)
 
 
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Intercompany borrowings
 
—

 
(7
)
 
13

 
(6
)
 
—

Distributions to noncontrolling interest
 
—

 
—

 
(54
)
 
—

 
(54
)
Dividends paid
 
(95
)
 
—

 
—

 
—

 
(95
)
Other
 
1

 
(4
)
 
5

 
—

 
2

NET CASH USED IN FINANCING ACTIVITIES
 
(94
)
 
(11
)
 
(36
)
 
(6
)
 
(147
)
 
 
 
 
 
 
 
 
 
 
 
NET DECREASE IN CASH AND CASH EQUIVALENTS
 
(189
)
 
—

 
(274
)
 
—

 
(463
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
 
378

 
—

 
1,089

 
—

 
1,467

CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
189

 
$
—

 
$
815

 
$
—

 
$
1,004


17


APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2015
 
 
Apache
Corporation
 
Apache
Finance
Canada
 
All Other
Subsidiaries
of Apache
Corporation
 
Reclassifications
& Eliminations
 
Consolidated
 
 
(In millions)
CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES
 
$
(396
)
 
$
(3
)
 
$
976

 
$
—

 
$
577

CASH PROVIDED BY DISCONTINUED OPERATIONS
 
—

 
—

 
73

 
—

 
73

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
 
(396
)
 
(3
)
 
1,049

 
—

 
650

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Additions to oil and gas property
 
(771
)
 
—

 
(856
)
 
—

 
(1,627
)
Leasehold and property acquisitions
 
(92
)
 
—

 
1

 
—

 
(91
)
Additions to gas gathering, transmission, and processing facilities
 
(22
)
 
—

 
(41
)
 
—

 
(63
)
Investment in subsidiaries, net
 
105

 
—

 
—

 
(105
)
 
—

Other
 
(18
)
 
—

 
(54
)
 
—

 
(72
)
NET CASH USED IN CONTINUING INVESTING ACTIVITIES
 
(798
)
 
—

 
(950
)
 
(105
)
 
(1,853
)
NET CASH USED IN DISCONTINUED OPERATIONS
 
—

 
—

 
(265
)
 
—

 
(265
)
NET CASH USED IN INVESTING ACTIVITIES
 
(798
)
 
—

 
(1,215
)
 
(105
)
 
(2,118
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Commercial paper and bank credit facilities, net
 
1,028

 
—

 
—

 
—

 
1,028

Intercompany borrowings
 
—

 
(1
)
 
(104
)
 
105

 
—

Distributions to noncontrolling interest
 
—

 
—

 
(21
)
 
—

 
(21
)
Dividends paid
 
(94
)
 
—

 
—

 
—

 
(94
)
Other
 
2

 
4

 
9

 
—

 
15

NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES
 
936

 
3

 
(116
)
 
105

 
928

NET CASH USED IN DISCONTINUED OPERATIONS
 
—

 
—

 
—

 
—

 
—

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
 
936

 
3

 
(116
)
 
105

 
928

NET DECREASE IN CASH AND CASH EQUIVALENTS
 
(258
)
 
—

 
(282
)
 
—

 
(540
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
 
267

 
—

 
502

 
—

 
769

CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
9

 
$
—

 
$
220

 
$
—

 
$
229


18


APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2016
 
 
Apache
Corporation
 
Apache
Finance
Canada
 
All Other
Subsidiaries
of Apache
Corporation
 
Reclassifications
& Eliminations
 
Consolidated
 
 
(In millions)
ASSETS
 
 
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
189

 
$
—

 
$
815

 
$
—

 
$
1,004

Receivables, net of allowance
 
314

 
—

 
806

 
—

 
1,120

Inventories
 
34

 
—

 
513

 
—

 
547

Drilling advances
 
15

 
—

 
175

 
—

 
190

Deferred tax asset
 
(28
)
 
—

 
28

 
—

 
—

Prepaid assets and other
 
199

 
—

 
162

 
—

 
361

Intercompany receivable
 
5,330

 
—

 
—

 
(5,330
)
 
—

 
 
6,053

 
—

 
2,499

 
(5,330
)
 
3,222

PROPERTY AND EQUIPMENT, NET
 
—

 
—

 
13,542

 
—

 
13,542

OTHER ASSETS: