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 ~~September~~June 30, ~~2016~~2017



¨	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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth 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	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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



Number of shares of registrant’s common stock outstanding as of ~~October~~July 31, ~~2016~~2017	~~379,429,334~~380,934,131


	TABLE OF CONTENTS		TABLE OF CONTENTS
	DESCRIPTION		DESCRIPTION
Item		Page		Page
	PART I - FINANCIAL INFORMATION		PART I - FINANCIAL INFORMATION
1.	FINANCIAL STATEMENTS	1	FINANCIAL STATEMENTS	1
	STATEMENT OF CONSOLIDATED OPERATIONS	1	STATEMENT OF CONSOLIDATED OPERATIONS	1
	STATEMENT OF CONSOLIDATED CASH FLOWS	2	STATEMENT OF CONSOLIDATED CASH FLOWS	2
	CONSOLIDATED BALANCE SHEET	3	CONSOLIDATED BALANCE SHEET	3
	STATEMENT OF CONSOLIDATED CHANGES IN EQUITY	4	STATEMENT OF CONSOLIDATED CHANGES IN EQUITY	4
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	5	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	5
2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
4.	CONTROLS AND PROCEDURES	44	CONTROLS AND PROCEDURES	41
	PART II - OTHER INFORMATION		PART II - OTHER INFORMATION
1.	LEGAL PROCEEDINGS	45	LEGAL PROCEEDINGS	42
1A.	RISK FACTORS	45	RISK FACTORS	42
2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	45	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	42
3.	DEFAULTS UPON SENIOR SECURITIES	45	DEFAULTS UPON SENIOR SECURITIES	42
4.	MINE SAFETY DISCLOSURES	45	MINE SAFETY DISCLOSURES	42
5.	OTHER INFORMATION	45	OTHER INFORMATION	42
6.	EXHIBITS	46	EXHIBITS	42

Forward-Looking Statements and Risk

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on our examination of historical operating trends, the information that was used to prepare our estimate of proved reserves as of December 31, ~~2015,~~2016, 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,~~natural gas liquids (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, regulatory, or policy changes;

terrorism or ~~cyber attacks;~~cyber-attacks;

occurrence of property acquisitions or divestitures;

the integration of acquisitions;

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

other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, ~~and elsewhere in our most recently filed Annual Report on Form 10-K,~~ Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in our ~~Current~~most recently filed Annual Report on Form ~~8-K dated August 4, 2016,~~10-K, other risks and uncertainties in our ~~third-quarter 2016~~second-quarter 2017 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 September 30, For the Nine Months Ended September 30,
2016 2015* 2016 2015 *
(In millions, except per common share data)
REVENUES AND OTHER:
Oil and gas production revenues
Oil revenues $ 1,117
$ 1,238
$ 3,057
$ 4,149
Gas revenues 263
318
695
941
Natural gas liquids revenues 59
50
160
166
1,439
1,606
3,912
5,256
Other (6 ) (75 ) (30 ) (53 )
Gain (loss) on divestitures 5
(5 ) 21
204
1,438
1,526
3,903
5,407
OPERATING EXPENSES:
Lease operating expenses 382
450
1,119
1,398
Gathering and transportation 51
58
155
163
Taxes other than income 9
104
85
232
Exploration 161
223
347
706
General and administrative 102
89
298
284
Depreciation, depletion, and amortization:
Oil and gas property and equipment 610
793
1,875
2,247
Other assets 38
79
120
245
Asset retirement obligation accretion 40
37
116
109
Impairments 836
3,903
1,009
6,327
Transaction, reorganization, and separation 12
—
36
120
Financing costs, net 102
160
311
401
2,343
5,896
5,471
12,232
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (905 ) (4,370 ) (1,568 ) (6,825 )
Current income tax provision (benefit) 150
(270 ) 284
578
Deferred income tax provision (benefit) (529 ) 19
(755 ) (1,299 )
NET LOSS FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST (526 ) (4,119 ) (1,097 ) (6,104 )
Net loss from discontinued operations, net of tax (33 ) (17 ) (33 ) (135 )
NET LOSS INCLUDING NONCONTROLLING INTEREST (559 ) (4,136 ) (1,130 ) (6,239 )
Net income attributable to noncontrolling interest 48
7
93
98
NET LOSS ATTRIBUTABLE TO COMMON STOCK $ (607 ) $ (4,143 ) $ (1,223 ) $ (6,337 )
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Net loss from continuing operations attributable to common shareholders $ (574 ) $ (4,126 ) $ (1,190 ) $ (6,202 )
Net loss from discontinued operations (33 ) (17 ) (33 ) (135 )
Net loss attributable to common shareholders $ (607 ) $ (4,143 ) $ (1,223 ) $ (6,337 )
NET LOSS PER COMMON SHARE:
Basic net loss from continuing operations per share $ (1.51 ) $ (10.91 ) $ (3.14 ) $ (16.42 )
Basic net loss from discontinued operations per share (0.09 ) (0.04 ) (0.08 ) (0.36 )
Basic net loss per share $ (1.60 ) $ (10.95 ) $ (3.22 ) $ (16.78 )
DILUTED NET LOSS PER COMMON SHARE:
Diluted net loss from continuing operations per share $ (1.51 ) $ (10.91 ) $ (3.14 ) $ (16.42 )
Diluted net loss from discontinued operations per share (0.09 ) (0.04 ) (0.08 ) (0.36 )
Diluted net loss per share $ (1.60 ) $ (10.95 ) $ (3.22 ) $ (16.78 )
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic 380
378
379
378
Diluted 380
378
379
378
DIVIDENDS DECLARED PER COMMON SHARE $ 0.25
$ 0.25
$ 0.75
$ 0.75

*Financial information for 2015 has been recast to reflect retrospective application of the successful efforts method of accounting. See Note 1.



	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
	(In millions, except per common share data)
REVENUES AND OTHER:
Oil and gas production revenues
Oil revenues	$	1,050		$	1,118		$	2,222		$	1,940
Gas revenues	233			209			488			432
Natural gas liquids revenues	63			59			148			101
	1,346			1,386			2,858			2,473
Other	59			(21		)	84			(24		)
Gain (loss) on divestitures	(21		)	17			320			16
	1,384			1,382			3,262			2,465
OPERATING EXPENSES:
Lease operating expenses	372			359			708			737
Gathering and transportation	48			52			105			104
Taxes other than income	29			65			71			76
Exploration	108			91			200			186
General and administrative	106			103			209			196
Transaction, reorganization, and separation	4			9			(6		)	24
Depreciation, depletion, and amortization:
Oil and gas property and equipment	536			629			1,074			1,265
Other assets	36			40			74			82
Asset retirement obligation accretion	37			38			73			76
Impairments	—			173			8			173
Financing costs, net	99			104			199			209
	1,375			1,663			2,715			3,128
NET INCOME (LOSS) BEFORE INCOME TAXES	9			(281		)	547			(663		)
Current income tax provision	126			144			314			134
Deferred income tax benefit	(730		)	(225		)	(647		)	(226		)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST	613			(200		)	880			(571		)
Net income attributable to noncontrolling interest	41			44			95			45
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	572		$	(244	)	$	785		$	(616	)

NET INCOME (LOSS) PER COMMON SHARE:
Basic	$	1.50		$	(0.65	)	$	2.06		$	(1.63	)
Diluted	$	1.50		$	(0.65	)	$	2.05		$	(1.63	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	381			379			380			379
Diluted	383			379			383			379
DIVIDENDS DECLARED PER COMMON SHARE	$	0.25		$	0.25		$	0.50		$	0.50

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)

For the Nine Months Ended September 30,
2016 2015*
(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss including noncontrolling interest $ (1,130 ) $ (6,239 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss from discontinued operations 33
135
Gain on divestitures (21 ) (204 )
Exploratory dry hole expense and unproved leasehold impairments 260
584
Depreciation, depletion, and amortization 1,995
2,492
Asset retirement obligation accretion 116
109
Impairments 1,009
6,327
Deferred income tax benefit (755 ) (1,299 )
Other 126
80
Changes in operating assets and liabilities:
Receivables 192
585
Inventories (2 ) 54
Drilling advances (36 ) 125
Deferred charges and other 40
(117 )
Accounts payable (93 ) (463 )
Accrued expenses (67 ) 109
Deferred credits and noncurrent liabilities (33 ) 102
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES 1,634
2,380
NET CASH PROVIDED BY DISCONTINUED OPERATIONS —
113
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,634
2,493

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property (1,281 ) (3,562 )
Leasehold and property acquisitions (169 ) (254 )
Additions to gas gathering, transmission, and processing facilities (33 ) (113 )
Proceeds from sale of Kitimat LNG project —
854
Proceeds from sale of other oil and gas properties 74
148
Other, net 47
(99 )
NET CASH USED IN CONTINUING INVESTING ACTIVITIES (1,362 ) (3,026 )
NET CASH PROVIDED BY DISCONTINUED OPERATIONS —
4,372
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,362 ) 1,346

CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net —
(1,570 )
Payment of fixed-rate debt (1 ) (939 )
Distributions to noncontrolling interest (215 ) (97 )
Dividends paid (284 ) (283 )
Other (9 ) 26
NET CASH USED IN FINANCING ACTIVITIES (509 ) (2,863 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (237 ) 976
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,467
679
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,230
$ 1,655

SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest $ 345
$ 385
Income taxes paid, net of refunds 256
270

*Financial information for 2015 has been recast to reflect retrospective application of the successful efforts method of accounting. See Note 1.



	For the Six Months Ended June 30,
	2017			2016
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interest	$	880		$	(571	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Gain on divestitures	(320		)	(16		)
Exploratory dry hole expense and unproved leasehold impairments	152			139
Depreciation, depletion, and amortization	1,148			1,347
Asset retirement obligation accretion	73			76
Impairments	8			173
Deferred income tax benefit	(647		)	(226		)
Other	39			91
Changes in operating assets and liabilities:
Receivables	62			237
Inventories	20			1
Drilling advances	(20		)	(30		)
Deferred charges and other	(90		)	(65		)
Accounts payable	(37		)	(118		)
Accrued expenses	(86		)	(57		)
Deferred credits and noncurrent liabilities	24			2
NET CASH PROVIDED BY OPERATING ACTIVITIES	1,206			983

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property	(883		)	(925		)
Leasehold and property acquisitions	(67		)	(118		)
Additions to gas gathering, transmission, and processing facilities	(274		)	—
Proceeds from sale of Midale and House Mountain	228			—
Proceeds from sale of oil and gas properties	483			48
Other, net	(16		)	29
NET CASH USED IN INVESTING ACTIVITIES	(529		)	(966		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on fixed-rate debt	(70		)	—
Distributions to noncontrolling interest	(170		)	(93		)
Dividends paid	(190		)	(189		)
Other	43			(1		)
NET CASH USED IN FINANCING ACTIVITIES	(387		)	(283		)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	290			(266		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	1,377			1,467
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,667		$	1,201

SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	202		$	206
Income taxes paid, net of refunds	163			201

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

September 30, 2016 December 31, 2015*
(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,230
$ 1,467
Receivables, net of allowance 1,064
1,253
Inventories 513
570
Drilling advances 209
172
Prepaid assets and other 256
290
3,272
3,752
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of successful efforts accounting:
Proved properties 42,591
41,728
Unproved properties and properties under development, not being amortized 2,061
2,277
Gathering, transmission and processing facilities 886
1,052
Other 1,102
1,093
46,640
46,150
Less: Accumulated depreciation, depletion, and amortization (27,178 ) (25,312 )
19,462
20,838
OTHER ASSETS:
Deferred charges and other 415
910
$ 23,149
$ 25,500
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 557
$ 618
Other current liabilities (Note 5) 1,071
1,223
1,628
1,841
LONG-TERM DEBT 8,721
8,716
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes 1,783
2,529
Asset retirement obligation 2,742
2,562
Other 326
362
4,851
5,453
COMMITMENTS AND CONTINGENCIES (Note 9)

EQUITY:
Common stock, $0.625 par, 860,000,000 shares authorized, 412,602,756 and 411,218,105 shares issued, respectively 258
257
Paid-in capital 12,421
12,619
Accumulated deficit (3,203 ) (1,980 )
Treasury stock, at cost, 33,173,422 and 33,183,930 shares, respectively (2,888 ) (2,889 )
Accumulated other comprehensive loss (119 ) (119 )
APACHE SHAREHOLDERS’ EQUITY 6,469
7,888
Noncontrolling interest 1,480
1,602
TOTAL EQUITY 7,949
9,490
$ 23,149
$ 25,500

*Financial information for 2015 has been recast to reflect retrospective application of the successful efforts method of accounting. See Note 1.



	June 30, 2017			December 31, 2016
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,667		$	1,377
Receivables, net of allowance	1,015			1,128
Inventories	416			476
Drilling advances	99			81
Assets held for sale	1,231			—
Prepaid assets and other	219			179
	4,647			3,241
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of successful efforts accounting:
Proved properties	38,118			42,693
Unproved properties and properties under development	1,796			1,969
Gathering, transmission and processing facilities	1,254			976
Other	998			1,111
	42,166			46,749
Less: Accumulated depreciation, depletion, and amortization	(24,615		)	(27,882		)
	17,551			18,867
OTHER ASSETS:
Deferred charges and other	404			411
	$	22,602		$	22,519
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	533		$	585
Liabilities held for sale	939			—
Other current liabilities (Note 5)	1,401			1,258
	2,873			1,843
LONG-TERM DEBT	8,329			8,544
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes	1,058			1,710
Asset retirement obligation	1,811			2,432
Other	266			311
	3,135			4,453
COMMITMENTS AND CONTINGENCIES (Note 9)
EQUITY:
Common stock, $0.625 par, 860,000,000 shares authorized, 414,099,033 and 412,612,102 shares issued, respectively	259			258
Paid-in capital	12,246			12,364
Accumulated deficit	(2,607		)	(3,385		)
Treasury stock, at cost, 33,171,015 and 33,172,426 shares, respectively	(2,887		)	(2,887		)
Accumulated other comprehensive loss	(112		)	(112		)
APACHE SHAREHOLDERS’ EQUITY	6,899			6,238
Noncontrolling interest	1,366			1,441
TOTAL EQUITY	8,265			7,679
	$	22,602		$	22,519

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY

(Unaudited)

Common
Stock

Paid-In
Capital
Retained Earnings (Accumulated Deficit)
Treasury
Stock

Accumulated
Other
Comprehensive
Loss

APACHE
SHAREHOLDERS’
EQUITY

Non
Controlling
Interest

TOTAL
EQUITY
(In millions)
BALANCE AT DECEMBER 31, 2014 previously reported $ 256
$ 12,438
$ 16,249
$ (2,890 ) $ (116 ) $ 25,937
$ 2,200
$ 28,137
Effect of change in accounting principle —
152
(7,594 ) —
—
(7,442 ) (154 ) (7,596 )
BALANCE AT DECEMBER 31, 2014 as recast $ 256
$ 12,590
$ 8,655
$ (2,890 ) $ (116 ) $ 18,495
$ 2,046
$ 20,541
Net income (loss) —
—
(6,337 ) —
—
(6,337 ) 98
(6,239 )
Distributions to noncontrolling interest —
—
—
—
—
—
(97 ) (97 )
Common dividends ($0.75 per share) —
—
(283 ) —
—
(283 ) —
(283 )
Other 1
59
—
1
—
61
—
61
BALANCE AT SEPTEMBER 30, 2015 $ 257
$ 12,649
$ 2,035
$ (2,889 ) $ (116 ) $ 11,936
$ 2,047
$ 13,983

BALANCE AT DECEMBER 31, 2015 previously reported $ 257
$ 12,467
$ (7,153 ) $ (2,889 ) $ (116 ) $ 2,566
$ 1,662
$ 4,228
Effect of change in accounting principle —
152
5,173
—
(3 ) 5,322
(60 ) 5,262
BALANCE AT DECEMBER 31, 2015 as recast $ 257
$ 12,619
$ (1,980 ) $ (2,889 ) $ (119 ) $ 7,888
$ 1,602
$ 9,490
Net income (loss) —
—
(1,223 ) —
—
(1,223 ) 93
(1,130 )
Distributions to noncontrolling interest —
—
—
—
—
—
(215 ) (215 )
Common dividends ($0.75 per share) —
(284 ) —
—
—
(284 ) —
(284 )
Other 1
86
—
1
—
88
—
88
BALANCE AT SEPTEMBER 30, 2016 $ 258
$ 12,421
$ (3,203 ) $ (2,888 ) $ (119 ) $ 6,469
$ 1,480
$ 7,949

~~Financial information for prior periods has been recast to reflect retrospective application of the successful efforts method of accounting. See Note 1.~~



	Common Stock		Paid-In Capital			Accumulated Deficit			Treasury Stock			Accumulated Other Comprehensive Loss			APACHE SHAREHOLDERS’ EQUITY			Noncontrolling Interest			TOTAL EQUITY
	(In millions)
BALANCE AT DECEMBER 31, 2015	$	257	$	12,619		$	(1,980	)	$	(2,889	)	$	(119	)	$	7,888		$	1,602		$	9,490
Net income (loss)	—		—			(616		)	—			—			(616		)	45			(571		)
Distributions to noncontrolling interest	—		—			—			—			—			—			(93		)	(93		)
Common dividends ($0.50 per share)	—		(189		)	—			—			—			(189		)	—			(189		)
Other	1		57			—			1			—			59			—			59
BALANCE AT JUNE 30, 2016	$	258	$	12,487		$	(2,596	)	$	(2,888	)	$	(119	)	$	7,142		$	1,554		$	8,696

BALANCE AT DECEMBER 31, 2016	$	258	$	12,364		$	(3,385	)	$	(2,887	)	$	(112	)	$	6,238		$	1,441		$	7,679
Net income	—		—			785			—			—			785			95			880
Distributions to noncontrolling interest	—		—			—			—			—			—			(170		)	(170		)
Common dividends ($0.50 per share)	—		(190		)	—			—			—			(190		)	—			(190		)
Other	1		72			(7		)	—			—			66			—			66
BALANCE AT JUNE 30, 2017	$	259	$	12,246		$	(2,607	)	$	(2,887	)	$	(112	)	$	6,899		$	1,366		$	8,265

The accompanying notes to consolidated financial statements

are an integral part of this statement.

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These consolidated 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 presentation of the results for the interim ~~periods.~~periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring ~~nature and are on a basis consistent with the annual audited consolidated financial statements, except as described in Note 1 below.~~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 ~~for the quarter ended September 30, 2016,~~ should be read along with Apache’s ~~Current~~Annual Report on Form ~~8-K dated August 4, 2016,~~10-K for the fiscal year ended December 31, ~~2015,~~2016, which contains a summary of the Company’s significant accounting policies and other disclosures.


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 3—Acquisitions and Divestitures.

~~Recast Financial Information for Change in Accounting Principle~~

In the second quarter of 2016, Apache voluntarily changed its method of accounting for its oil and gas exploration and development activities from the full cost method to the successful efforts method of accounting. As prescribed by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 250 “Accounting Changes and Error Corrections,” the financial information for prior periods has been recast to reflect retrospective application of the successful efforts method of accounting in accordance with ASC 932 “Extractive Activities—Oil and Gas.” Although the full cost method of accounting for oil and gas exploration and development activities continues to be an accepted alternative, the successful efforts method of accounting is the generally preferred method of the U.S. Securities and Exchange Commission (SEC) and is more widely used in the industry such that the change improves comparability of the Company’s financial statements to its peers. The Company believes the successful efforts method provides a more representational depiction of assets and operating results. The successful efforts method also provides for the Company’s investments in oil and gas properties to be assessed for impairment in accordance with ASC 360 “Property, Plant, and Equipment” rather than valuations based on prices and costs prescribed under the full cost method as of the balance sheet date. For more detailed information regarding the effects of the change to the successful efforts method, please refer to Note 2—Change in Accounting Principle. The Company has recast certain historical information for all periods presented, including the Statement of Consolidated Operations, Statement of Consolidated Cash Flows, Consolidated Balance Sheet, Statement of Consolidated Changes in Equity, and related information in Notes 1, 2, 3, 4, 5, 7, 8, 10, 11, and 12.

~~In the first quarter of 2016, the Company retrospectively adopted a new accounting standard update 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, consistent with debt discounts. For more information regarding this update, please refer to Note 7—Debt and Financing Costs.

As of ~~September~~June 30, ~~2016,~~2017, Apache’s significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies ~~to the~~of its consolidated financial statements contained in Apache’s ~~Current~~Annual Report on Form ~~8-K dated August 4, 2016,~~10-K for the fiscal year ended December 31, ~~2015.~~2016, with the exception of Accounting Standards Update (ASU) 2016-09, “Improvements to Employee Share-Based Payment Accounting” (see “Recently Adopted Accounting Pronouncement” section in this Note 1 below).

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, the estimates of fair value for long-lived assets and goodwill, and the estimate of income taxes. Actual results could differ from those estimates.

Fair Value Measurements

Certain assets and liabilities are reported at fair value on a recurring basis in Apache’s consolidated balance sheet. ~~ASC~~Accounting Standards Codification (ASC) 820-10-35, “Fair Value Measurement” (ASC 820), provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable; hence, these valuations have the lowest priority.

The valuation techniques that may be used to measure fair value include a market approach, an income approach, and a cost approach. A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. An income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectations, including present value techniques, option-pricing models, and the excess earnings method. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

Apache also uses fair value measurements on a nonrecurring basis when certain qualitative assessments of its assets indicate a potential impairment. The Company recorded no asset impairments in connection with fair value assessments in the second quarter of 2017. For the ~~third quarter and nine-month~~six-month period ended ~~September~~June 30, ~~2016,~~2017, the Company recorded asset impairments totaling ~~$951~~$8 million ~~and $1.2 billion, respectively,~~ in connection with fair value assessments. For the third quarter and nine-month period ended September 30, 2016, impairments totaling $470 million and $645 million, respectively, were recorded for oil and gas properties in the U.S. and Canada, as discussed in further detail below in “Oil and Gas Property.”

~~During the second quarter of~~In 2016, the Company also recorded an impairment of $105 million for gas gathering, transmission, and processing (GTP) assets. The fair values of the impaired assets were determined using an income approach, which considered internal estimates of future throughput volumes, processing rates, and costs. These assumptions were applied to develop future cash flow projections that were then discounted to estimated fair value, using a discount rate believed to be consistent with those applied by market participants. Apache has classified these non-recurring fair value measurements as Level 3 in the fair value hierarchy. The resulting fair value of $175 million was reflected in GTP assets.

~~On September 15,~~U.K. government enacted Finance Bill 2016, ~~U.K. Finance Act 2016 received Royal Assent,~~ providing tax relief to exploration and production (E&P) companies operating in the U.K. North Sea. Under the enacted legislation, the U.K. ~~Petroleum Revenue Tax (PRT)~~PRT rate was reduced to zero from the previously enacted 35 percent rate in effect from January 1, 2016. PRT expense ceased prospectively from that date. ~~As a further result~~During the first quarter of ~~this change,~~2017, the Company ~~reduced~~fully impaired the aggregate remaining value of the recoverable PRT ~~benefits~~decommissioning asset of $8 million that would have been realized from future abandonment activities by $481 million ($289 million net of tax). This recoverable PRT benefit had an aggregate remaining value of $13 million as of September 30, 2016, which is recorded in “Deferred charges and other” on the consolidated balance sheet.activities. The recoverable value of the PRT ~~benefit~~decommissioning asset was estimated using the income approach. The expected future cash flows used in the determination were based on anticipated spending and timing of planned future abandonment activities for applicable fields, considering all available information at the date of review. Apache has classified this fair value measurement as Level 3 in the fair value hierarchy.

For the ~~nine-month period~~second quarter and six-month periods ended ~~September~~June 30, ~~2015,~~2016, the Company recorded asset impairments totaling ~~$6.8 billion~~$173 million in connection with fair value ~~assessments in the current low commodity price environment.~~assessments. Impairments totaling ~~$6.3 billion~~$68 million were recorded for proved oil and gas properties ~~which were written down to their fair values.~~in the U.S. and Canada, as discussed in further detail below in “Oil and Gas Property.” Also, for the ~~nine-month period~~second quarter and six-month periods ended ~~September~~June 30, ~~2015,~~2016, the Company recorded ~~$210~~$105 million for the impairment of certain ~~GTP~~gas gathering, transmission, and processing (GTP) assets, which were written down to their fair values ~~$163 million for the impairment~~ of ~~goodwill, $148 million for the impairment of an equity method investment, and $9 million for the impairment of inventory.~~

$175 million.

Oil and Gas Property

The Company follows the successful efforts method of accounting for its oil and gas property. Under this method of accounting, exploration costs such as exploratory geological and geophysical costs, delay rentals, and exploration overhead are expensed as incurred. All costs related to production, general corporate overhead, and similar activities are expensed as incurred. If an exploratory well provides evidence to justify potential development of reserves, drilling costs associated with the well are initially capitalized, or suspended, pending a determination as to whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. This determination may take longer than one year in certain areas depending on, among other things, the amount of hydrocarbons discovered, the outcome of planned geological and engineering studies, the need for additional appraisal drilling activities to determine whether the discovery is sufficient to support an economic development plan, and government sanctioning of development activities in certain international locations. At the end of each quarter, management reviews the status of all suspended exploratory well costs in light of ongoing exploration activities; in particular, whether the Company is making sufficient progress in its ongoing exploration and appraisal efforts or, in the case of discoveries requiring government sanctioning, whether development negotiations are underway and proceeding as planned. If management determines that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are ~~expensed as dry hole costs.~~expensed.

Acquisition costs of unproved properties are assessed for impairment at least annually and are transferred to proved oil and gas properties to the extent the costs are associated with successful exploration activities. Significant undeveloped leases are assessed individually for impairment based on the Company’s current exploration plans. Unproved oil and gas properties with individually insignificant lease acquisition costs are amortized on a group basis over the average lease term at rates that provide for full amortization of unsuccessful leases upon lease expiration or abandonment. Costs of expired or abandoned leases are charged to exploration expense, while costs of productive leases are transferred to proved oil and gas properties. Costs of maintaining and retaining unproved properties, as well as amortization of individually insignificant leases and impairment of unsuccessful leases, are included in exploration costs in the statement of consolidated operations.

Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of crude oil and natural gas, are capitalized. Depreciation of the cost of proved oil and gas properties is calculated using the unit-of-production (UOP) method. The UOP calculation ~~amortizes~~multiplies the ~~remaining historical capitalized costs~~percentage of ~~oil and gas properties based on~~estimated proved reserves produced each quarter by the ~~volumes produced.~~carrying value of those reserves. The reserve base used to calculate depreciation for ~~property~~leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. ~~With respect~~The reserve base to ~~lease~~calculate the depreciation for capitalized costs of exploratory wells and ~~well equipment costs, which include~~ development costs ~~and successful exploration drilling costs,~~is the ~~reserve base includes only~~sum of proved developed ~~reserves.~~reserves only. Estimated future dismantlement, restoration and abandonment costs, net of salvage values, are included in the depreciable cost.

Oil and gas properties are grouped for depreciation in accordance with ASC 932, “Extractive Activities - Oil and Gas.” The basis for grouping is a reasonable aggregation of properties with a common geological structural feature or stratigraphic condition, such as a reservoir or field.

When circumstances indicate that proved oil and gas properties may be impaired, the Company compares unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on Apache’s estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is generally estimated using the income approach described in the ASC ~~820 “Fair Value Measurement.”~~820. If applicable, the Company utilizes ~~accepted bids~~prices and other relevant information generated by market transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining fair value. The expected future cash flows used for impairment reviews and related fair value calculations are typically based on judgmental assessments of future production volumes, commodity prices, operating costs, and capital investment plans, considering all available information at the date of review. These assumptions are applied to develop future cash flow projections that are then discounted to estimated fair value, using a discount rate believed to be consistent with those applied by market participants. Apache has classified these fair value measurements as Level 3 in the fair value hierarchy.

The following table represents non-cash impairments of the carrying value of the Company’s proved and unproved property and equipment for the ~~third~~second quarters and first ~~nine~~six months of ~~2016~~2017 and ~~2015:~~2016:


	Quarter Ended September 30,				Nine Months Ended September 30,				Quarter Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In millions)								(In millions)
Oil and Gas Property:
Proved	$	355	$	3,536	$	423	$	5,797	$	—	$	68	$	—	$	68
Unproved	114		199		222		515		39		66		54		108

Proved properties impaired during the ~~second and third quarters of~~quarter ended June 30, 2016 had an aggregate fair ~~values~~value of $143 million and $163 million, respectively. Proved properties impaired during the first, second, and third quarters of 2015 had aggregate fair values of $1.2 billion, $516 million, and $1.9 billion, respectively.million.

On the statement of consolidated operations, unproved impairments are recorded in exploration expense, and proved impairments are recorded in impairments.

~~Gains and losses on significant divestitures are recognized in the statement of consolidated operations.~~

~~New Pronouncements Issued But Not Yet~~Recently Adopted

~~In August 2016, the FASB issued~~ Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 seeks to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the provisions of ASU 2016-15 and assessing the impact, if any, it may have on its statement of consolidated cash flows.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses.” The standard changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowance for losses. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for a fiscal year beginning after December 15, 2018, including interim periods within that fiscal year. The Company does not expect to adopt the guidance early. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is evaluating the new guidance and does not believe this standard will have a material impact on its consolidated financial statements.Pronouncement

In March 2016, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ASU 2016-09, ~~which seeks~~“Improvements to ~~simplify~~Employee Share-Based Payment Accounting.” ASU 2016-09 simplifies several aspects of 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 iswas effective for fiscal years beginning after December 15, 2016. ~~Early~~The Company adopted ASU 2016-09 effective January 1, 2017.

Upon adoption, ~~is permitted~~the Company elected to account for forfeitures as they occur rather than estimate expected forfeitures using a modified retrospective transition method. As a result of this election, the Company recorded a cumulative-effect adjustment of $11 million, representing an increase in accumulated deficit, with the offset to paid-in capital. During the first quarter of 2017, the Company recorded a $4 million deferred tax asset related to this adjustment, with the offset to accumulated deficit.

ASU 2016-09 requires excess tax benefits and ~~if an entity early adopts the guidance in an interim period, any adjustments must~~deficiencies to be ~~reflected~~recognized prospectively as part of the ~~beginning of the fiscal year that includes that interim period.~~provision for income taxes rather than paid-in capital. The ~~Company is evaluating the new guidance and does~~adoption did not ~~believe this standard will~~ have a material impact on ~~its~~the Company’s accounting of provision for income taxes. ASU 2016-09 also requires excess tax benefits to be presented as a component of operating cash flows rather than financing cash flows. The Company has adopted this requirement prospectively and accordingly, prior periods have not been adjusted. Excess tax benefits were not material for all periods presented.

Additionally, ASU 2016-09 requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated ~~financial statements.~~statements of cash flows, which is how the Company has historically classified these amounts.

New Pronouncements Issued But Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, ~~a new lease standard~~“Leases (Topic 842),” 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~~As part of the assessment to date, the Company has formed an implementation work team, is ~~currently~~reviewing software solutions, and began the process of evaluating contracts to determine the impact ~~of adopting~~ this ~~standard~~ASU will have on its consolidated financial statements.

At this time, the Company cannot reasonably estimate the financial impact this will have on its consolidated financial statements; however, the Company believes adoption and implementation of this ASU will significantly impact its balance sheet, resulting in an increase in both assets and liabilities relating to its leasing activities.

In May 2014, the FASB and the International Accounting Standards Board (IASB) issued a joint revenue recognition standard, ASU ~~2014-09.~~2014-09, “Revenue from Contracts with Customers (Topic 606).” The new standard removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The ~~guidance~~codification was amended through additional ASUs and, as amended, 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. Upon preliminary evaluation of contracts in each of the Company’s revenue streams, the Company does not expect the adoption of this

ASU to have a material impact on net earnings, however, the Company is analyzing whether the classification of certain items in revenue and expense will be impacted. The Company ~~is currently evaluating~~continues to evaluate the ~~level~~disclosure requirements, develop accounting policies, and assess changes to the relevant business processes and the control activities within them as a result of ~~effort needed to implement~~ the ~~standard,~~provisions of this ASU. The Company will adopt the ~~impact of adopting this~~new standard on ~~its consolidated financial statements, and whether to use the full retrospective approach or~~January 1, 2018, utilizing the modified retrospective approach.


2.	~~CHANGE IN ACCOUNTING PRINCIPLE~~ACQUISITIONS AND DIVESTITURES

~~During the second quarter~~

2017 Activity

Canada Divestitures

In July 2017, Apache announced three separate transactions to sell its subsidiary Apache Canada Ltd. (ACL) and its Canadian operations for aggregate cash proceeds of ~~2016, the~~approximately $713 million, subject to foreign exchange movements and customary closing adjustments. The sale of assets at Midale and House Mountain, located in Saskatchewan and Alberta, closed on June 30, 2017. The Company ~~voluntarily changed its method of accounting for oil~~recognized a $52 million loss in association with this sale. The two remaining transactions to sell ACL and ~~gas exploration and development activities from the full cost method~~Provost assets in Alberta are expected to ~~the successful efforts method. Accordingly, financial information for prior periods has been recast to reflect retrospective application~~close in August 2017.

As a result of the ~~successful efforts method. Under successful efforts, exploration expenditures such~~agreements to sell these assets, the remaining ACL assets and liabilities qualified as ~~exploratory dry holes, exploratory geological~~held for sale as of June 30, 2017. A summary of the associated assets and ~~geophysical costs, delay rentals, unproved impairments, and exploration overhead are charged against earnings, versus being capitalized under the full cost method~~liabilities classified as held for sale on Apache’s consolidated balance sheet as of ~~accounting. Successful efforts also provides~~June 30, 2017, is detailed below:



	June 30, 2017
	(In millions)
ASSETS
Current assets	$	105
Property, plant & equipment	1,126
Assets held for sale	$	1,231
LIABILITIES
Current liabilities, excluding asset retirement obligation	$	112
Asset retirement obligation	779
Other long-term liabilities	48
Liabilities held for sale	$	939

In connection with classifying these assets as held for the assessment of potential property impairments under ASC 360 by comparing the net carrying value of oil and gas properties with associated projected undiscounted pre-tax future net cash flows. If the expected undiscounted pre-tax future net cash flows are lower than the unamortized capitalized costs, the capitalized cost is reduced to fair value. Under the full cost method of accounting,sale, a write-down would be required if the net carrying value of oil and gas properties exceeds a full cost “ceiling,” using an unweighted arithmetic average of commodity prices in effect on the first day ofseparate impairment analysis was performed for each of the ~~previous 12 months. In addition, gains or losses, if applicable, are generally recognized~~assets within the disposal group. The analyses were based on the ~~dispositions of oil~~agreed-upon proceeds less costs to sell for the two transactions related to ACL and ~~gas property and equipment under the successful efforts method, as opposed to an adjustment to the~~Provost assets, a Level 1 fair value measurement. The net carrying value of the ~~remaining~~ assets ~~under~~held for sale in the ~~full cost method. Apache’s consolidated financial statements have been recast to reflect these differences.~~

~~The following tables present the effects~~impairment calculation included consideration of the ~~change~~currency translation loss of $109 million, which is recorded in “Accumulated Other Comprehensive Loss” on the Company’s consolidated balance sheet. The currency translation loss will be recognized as a component of the expected net gain on sale during the third quarter of 2017 upon closing of the transactions. The fair value of the net assets held for sale exceeded the underlying equity value of ACL and the carrying amount of Provost assets at the balance sheet date, and no impairment was recognized. ACL recorded pretax losses of $93 million and $129 million for the second quarter and first six months of 2017, respectively, compared to pretax losses of $62 million and $161 million, respectively, for the ~~successful efforts method~~comparable periods in 2016. The Company expects to recognize a small gain upon closing of the transactions during the third quarter of 2017.

U.S. Divestitures

During the first half of 2017, Apache completed the sale of certain non-core assets, primarily in the ~~statement~~Permian and Midcontinent/Gulf Coast regions, in multiple transactions for cash proceeds of ~~consolidated operations:~~

Changes to the Statement of Consolidated Operations
For the Quarter Ended September 30, 2016 Under Full Cost Changes As Reported Under Successful Efforts
(In millions, except per share data)
Oil revenues $ 1,058
$ 59
$ 1,117
Natural gas revenues 273
(10 ) 263
NGL revenues 59
—
59
Oil and gas production revenues 1,390
49
1,439
Other (5 ) (1 ) (6 )
Gain on divestiture 2
3
5
Exploration —
161
161
Depreciation, depletion, and amortization:
Oil and Gas Property and Equipment
Recurring 473
137
610
Additional 328
(328 ) —
Impairments 481
355
836
Financing costs, net 92
10
102
Current income tax provision 101
49
150
Deferred income tax provision (benefit) (407 ) (122 ) (529 )
NET LOSS FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST (315 ) (211 ) (526 )
Net income (loss) attributable to noncontrolling interest 37
11
48
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (352 ) (222 ) (574 )
Net income (loss) from discontinued operations (33 ) —
(33 )
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS (385 ) (222 ) (607 )

Per common share
Basic net loss from continuing operations per share $ (0.96 ) $ (0.55 ) $ (1.51 )
Basic net loss from discontinued operations per share (0.06 ) —
(0.09 )
Basic net loss per share $ (1.02 ) $ (0.55 ) $ (1.60 )

Diluted net loss from continuing operations per share $ (0.96 ) $ (0.55 ) $ (1.51 )
Diluted net loss from discontinued operations per share (0.06 ) —
(0.09 )
Diluted net loss per share $ (1.02 ) $ (0.55 ) $ (1.60 )
$522 million, subject to customary closing adjustments. A refundable deposit of $40 million was received in the fourth quarter of 2016 in connection with certain of these transactions. The Company recognized gains of approximately $372 million during the first half of 2017 in connection with these transactions.

Changes to the Statement of Consolidated Operations
For the Quarter Ended September 30, 2015 Under Full Cost Changes* As Reported Under Successful Efforts
(In millions, except per share data)
Oil revenues $ 1,213
$ 25
$ 1,238
Natural gas revenues 309
9
318
NGL revenues 50
—
50
Oil and gas production revenues 1,572
34
1,606
Other (76 ) 1
(75 )
Loss on divestiture —
(5 ) (5 )
Exploration —
223
223
General and administrative 86
3
89
Depreciation, depletion, and amortization:
Oil and Gas Property and Equipment
Recurring 829
(36 ) 793
Additional 5,721
(5,721 ) —
Impairments 367
3,536
3,903
Financing costs, net 107
53
160
Current income tax benefit (84 ) (186 ) (270 )
Deferred income tax provision (benefit) (707 ) 726
19
NET LOSS FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST (5,551 ) 1,432
(4,119 )
Net income attributable to noncontrolling interest 9
(2 ) 7
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (5,560 ) 1,434
(4,126 )
Net loss from discontinued operations (95 ) 78
(17 )
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS (5,655 ) 1,512
(4,143 )

Per common share
Basic net loss from continuing operations per share $ (14.70 ) $ 3.79
$ (10.91 )
Basic net loss from discontinued operations per share (0.25 ) 0.21
(0.04 )
Basic net loss per share $ (14.95 ) $ 4.00
$ (10.95 )

Diluted net loss from continuing operations per share $ (14.70 ) $ 3.79
$ (10.91 )
Diluted net loss from discontinued operations per share (0.25 ) 0.21
(0.04 )
Diluted net loss per share $ (14.95 ) $ 4.00
$ (10.95 )

Changes to the Statement of Consolidated Operations
For the Nine Months Ended September 30, 2016 Under Full Cost Changes* As Reported Under Successful Efforts
(In millions, except per share data)
Oil revenues $ 2,915
$ 142
$ 3,057
Natural gas revenues 715
(20 ) 695
NGL revenues 160
—
160
Oil and gas production revenues 3,790
122
3,912
Other (33 ) 3
(30 )
Gain on divestiture 5
16
21
Exploration —
347
347
Depreciation, depletion, and amortization:
Oil and Gas Property and Equipment
Recurring 1,532
343
1,875
Additional 1,486
(1,486 ) —
Impairments 587
422
1,009
Financing costs, net 272
39
311
Current income tax provision 162
122
284
Deferred income tax provision (benefit) (708 ) (47 ) (755 )
NET LOSS FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST (1,498 ) 401
(1,097 )
Net income (loss) attributable to noncontrolling interest (56 ) 149
93
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (1,442 ) 252
(1,190 )
Net income (loss) from discontinued operations (33 ) —
(33 )
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS (1,475 ) 252
(1,223 )

Per common share
Basic net loss from continuing operations per share $ (3.83 ) $ 0.69
$ (3.14 )
Basic net loss from discontinued operations per share (0.06 ) —
(0.08 )
Basic net loss per share $ (3.89 ) $ 0.69
$ (3.22 )

Diluted net loss from continuing operations per share $ (3.83 ) $ 0.69
$ (3.14 )
Diluted net loss from discontinued operations per share (0.06 ) —
(0.08 )
Diluted net loss per share $ (3.89 ) $ 0.69
$ (3.22 )

North Sea GTP Divestiture

Changes to the Statement of Consolidated Operations
For the Nine Months Ended September 30, 2015 Under Full Cost Changes* As Reported Under Successful Efforts
(In millions, except per share data)
Oil revenues $ 4,092
$ 57
$ 4,149
Natural gas revenues 904
37
941
NGL revenues 166
—
166
Oil and gas production revenues 5,162
94
5,256
Other (59 ) 6
(53 )
Gain on divestiture —
204
204
Exploration —
706
706
General and administrative 279
5
284
Depreciation, depletion, and amortization:
Oil and Gas Property and Equipment
Recurring 2,751
(504 ) 2,247
Additional 18,757
(18,757 ) —
Impairments 367
5,960
6,327
Financing costs, net 240
161
401
Current income tax provision 496
82
578
Deferred income tax provision (benefit) (5,167 ) 3,868
(1,299 )
NET LOSS FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST (14,887 ) 8,783
(6,104 )
Net income attributable to noncontrolling interest 60
38
98
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS (14,947 ) 8,745
(6,202 )
Net loss from discontinued operations (959 ) 824
(135 )
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS (15,906 ) 9,569
(6,337 )

Per common share
Basic net loss from continuing operations per share $ (39.58 ) $ 23.16
$ (16.42 )
Basic net loss from discontinued operations per share (2.54 ) 2.18
(0.36 )
Basic net loss per share $ (42.12 ) $ 25.34
$ (16.78 )

Diluted net loss from continuing operations per share $ (39.58 ) $ 23.16
$ (16.42 )
Diluted net loss from discontinued operations per share (2.54 ) 2.18
(0.36 )
Diluted net loss per share $ (42.12 ) $ 25.34
$ (16.78 )

~~The following tables present~~During the ~~effects~~fourth quarter of ~~the change~~2016, Apache entered into an agreement to ~~the successful efforts method~~sell its 30.28 percent interest in the ~~statement of consolidated cash flows:~~

Changes to the Statement of Consolidated Cash Flows
For the Nine Months Ended September 30, 2016 Under Full Cost Changes* As Reported Under Successful Efforts
(In millions)
Net loss including noncontrolling interest $ (1,531 ) $ 401
$ (1,130 )
Gain on divestitures, net (5 ) (16 ) (21 )
Exploratory dry hole expense and unproved leasehold impairments —
260
260
Depreciation, depletion, and amortization 3,138
(1,143 ) 1,995
Impairments 587
422
1,009
Provision for (benefit from) deferred income taxes (708 ) (47 ) (755 )
Changes in operating assets and liabilities 3
(2 ) 1
Net cash provided by operating activities 1,759
(125 ) 1,634
Additions to oil and gas property (1,406 ) 125
(1,281 )
Net cash used in investing activities (1,487 ) 125
(1,362 )
NET INCREASE (DECREASE) IN CASH (237 ) —
(237 )
BEGINNING CASH BALANCE 1,467
—
1,467
ENDING CASH BALANCE 1,230
—
1,230

Changes to the Statement of Consolidated Cash Flows
For the Nine Months Ended September 30, 2015 Under Full Cost Changes* As Reported Under Successful Efforts
(In millions)
Net loss including noncontrolling interest $ (15,846 ) $ 9,607
$ (6,239 )
Loss from discontinued operations 959
(824 ) 135
Gain on divestitures, net —
(204 ) (204 )
Exploratory dry hole expense and unproved leasehold impairments —
584
584
Depreciation, depletion, and amortization 21,753
(19,261 ) 2,492
Impairments 367
5,960
6,327
Provision for (benefit from) deferred income taxes (5,167 ) 3,868
(1,299 )
Changes in operating assets and liabilities 317
78
395
Net cash provided by operating activities - continuing operations 2,572
(192 ) 2,380
Net cash provided by operating activities - discontinued operations 150
(37 ) 113
Additions to oil and gas property (3,844 ) 282
(3,562 )
Net cash used in investing activities - continuing operations (3,308 ) 282
(3,026 )
Net cash provided by investing activities - discontinued operations 4,335
37
4,372
NET INCREASE (DECREASE) IN CASH 886
90
976
BEGINNING CASH BALANCE 769
(90 ) 679
ENDING CASH BALANCE 1,655
—
1,655

~~The following tables present the effects of the change to the successful efforts method~~Scottish Area Gas Evacuation system (SAGE) and its 60.56 percent interest in the ~~consolidated balance sheet:~~

Changes to the Consolidated Balance Sheet
September 30, 2016 Under Full Cost Changes As Reported Under Successful Efforts
(In millions)
PROPERTY AND EQUIPMENT:
Property and equipment - cost $ 95,107
$ (48,467 ) $ 46,640
Less: Accumulated depreciation, depletion, and amortization (82,717 ) 55,539
(27,178 )
PROPERTY AND EQUIPMENT, NET 12,390
7,072
19,462
TOTAL ASSETS 16,077
7,072
23,149
Deferred income taxes 364
1,419
1,783
Paid-in capital 12,279
142
12,421
Accumulated deficit (8,628 ) 5,425
(3,203 )
Accumulated other comprehensive loss (116 ) (3 ) (119 )
Noncontrolling interest 1,391
89
1,480
TOTAL EQUITY 2,296
5,653
7,949

Changes to the Consolidated Balance Sheet
December 31, 2015 Under Full Cost Changes* As Reported Under Successful Efforts
(In millions)
PROPERTY AND EQUIPMENT:
Property and equipment - cost $ 93,825
$ (47,675 ) $ 46,150
Less: Accumulated depreciation, depletion, and amortization (79,706 ) 54,394
(25,312 )
PROPERTY AND EQUIPMENT, NET 14,119
6,719
20,838
TOTAL ASSETS 18,781
6,719
25,500
Deferred income taxes 1,072
1,457
2,529
Paid-in capital 12,467
152
12,619
Accumulated deficit ⁽¹⁾
(7,153 ) 5,173
(1,980 )
Accumulated other comprehensive loss (116 ) (3 ) (119 )
Noncontrolling interest 1,662
(60 ) 1,602
TOTAL EQUITY 4,228
5,262
9,490

*In conjunction with recasting the financial information for the adoption of the successful efforts method of accounting, we corrected certain immaterial errors

Beryl pipeline in the North Sea ~~pertaining~~ to Ancala Midstream Acquisitions Limited (Ancala). The transaction is subject to regulatory and third-party approvals, which are ongoing in 2017. The Company received a refundable deposit in connection with this transaction, which is recorded in “Other current liabilities” on the ~~improper calculation of deferred tax liabilities associated with capitalized interest under the full cost method.~~

⁽¹⁾consolidated balance sheet. The ~~cumulative effect of the change to the successful efforts method on retained earnings (accumulated deficit)~~refundable deposit was $142 million as of ~~January 1, 2015 was a decrease of $7.6 billion.~~


3.	~~ACQUISITIONS AND DIVESTITURES~~

~~2016 Activity~~

June 30, 2017.

Leasehold and Property Acquisitions

During the ~~third~~second quarter and first ~~nine~~six months of ~~2016,~~2017, Apache completed ~~$51~~$18 million and ~~$169~~$67 million, respectively, of leasehold and property acquisitions primarily in ~~our~~its North America onshore ~~and Egypt~~ regions.

~~Transaction, Reorganization, and Separation~~

~~During the third quarter and first nine months of~~ 2016 ~~Apache recorded $12 million and $36 million, respectively, in expense related to various asset transactions, company reorganization, and employee separation.~~

~~2015~~ Activity

~~Yara Pilbara Holdings Pty Limited Sale~~

In October 2015, Apache completed the sale of 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 Apache’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 sale 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 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 Kitimat LNG assets classified as held for sale as of December 31, 2014 were impaired $655 million in the fourth quarter of 2014. Apache recognized a $146 million gain on the sale of the upstream assets upon completion of the sale.

~~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 Wheatstone LNG assets and associated upstream assets were impaired $833 million in the fourth quarter of 2014 and classified as held for sale on the consolidated balance sheet as of December 31, 2014. An additional impairment of approximately $49 million was recognized in the first quarter of 2015. During the third quarter of 2016, Apache recognized an additional $23 million loss on the sale related to post-closing adjustments.

~~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 $139 million 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 September 30, For the Nine Months Ended September 30,
2016 2015 2016 2015
(In millions)
Revenues and other from discontinued operations $ —
$ —
$ —
$ 288
Impairment on Woodside sale $ —
$ —
$ —
$ (49 )
Loss on Woodside sale (23 ) —
(23 ) —
Loss on Consortium sale —
—
—
(139 )
Income from divested Australian operations —
—
—
28
Income tax benefit (expense) —
(17 ) —
25
Loss from Australian discontinued operations, net of tax $ (23 ) $ (17 ) $ (23 ) $ (135 )

Leasehold and Property Acquisitions

During the ~~third~~second quarter and first ~~nine~~six months of ~~2015,~~2016, Apache completed ~~$126~~$99 million and ~~$254~~$118 million, respectively, of leasehold and property acquisitions primarily in ~~our~~its North America onshore ~~regions.~~regions and Egypt.

~~Transaction, Reorganization,~~

3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Objectives and ~~Separation~~Strategies

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

Counterparty Risk

The use of derivative instruments exposes the Company to credit loss in the event of nonperformance by the counterparty. 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, 2017, Apache had derivative positions with 12 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.

Derivative Instruments

As of June 30, 2017, Apache had the following open crude oil derivative positions:



		Put Options ⁽¹⁾
Production Period	Settlement Index	Mbbls	Weighted Average Strike Price
July - December 2017	NYMEX WTI	16,928	$50.00
July - December 2017	Dated Brent	15,272	$51.00

(1) Apache paid a total premium of $100 million for these put option contracts, averaging $3.09 per barrel.

As of June 30, 2017, Apache had the following open natural gas derivative positions:



	Fixed-Price Swaps
Production Period	MMBtu (in 000’s)	Weighted Average Fixed Price⁽¹⁾⁽²⁾
July - December 2017	4,370	$3.46
January - March 2018	2,700	$3.60


(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.


(2)	Subsequent to June 30, 2017, Apache entered into fixed-price natural gas contracts settling against Nymex Henry Hub totaling 20,000 MMBtu/d at a weighted average price of $3.13 for the fourth quarter of 2017 and 120,000 MMBtu/d at a weighted average price of $3.33 for the first quarter of 2018.

Apache elected not to designate any of these derivatives as cash flow hedges. Changes in the fair value of these derivatives are recorded in “Other” under “Revenues and Other” in the Company’s statement of consolidated operations. Total unrealized gain in the second quarter and first ~~nine~~six months of ~~2015, Apache~~2017 was $41 million.

Unrealized gains and losses for derivative activity recorded ~~$120~~in the statement of consolidated operations is reflected in the statement of consolidated cash flows as a component of “Other” in “Adjustments to reconcile net income to net cash provided by operating activities.”

Fair Value Measurements

Apache’s commodity derivative instruments consist of put options and fixed-price swaps. The fair values of the Company’s derivatives are not actively quoted in the open market. The Company uses a market approach to estimate the fair values of its derivative instruments on a recurring basis, utilizing commodity futures pricing for the underlying commodities provided by a reputable third party, a Level 2 fair value measurement. The fair value of the Company’s derivative assets at June 30, 2017, was $141 million and is reflected in ~~expense related to various asset transactions, company reorganization,~~“Prepaid assets and ~~employee separation.~~other” in the Company’s consolidated balance sheet.

4. CAPITALIZED EXPLORATORY WELL COSTS

The Company’s capitalized exploratory well costs were ~~$283~~$274 million and ~~$245~~$264 million at ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015, respectively. Exploratory well costs that have been capitalized for a period greater than one year since the completion of drilling were $32 million and $61 million at September 30,~~ 2016, ~~and December 31, 2015,~~ respectively. The exploratory well costs that had been capitalized for a period greater than one year at December 31, 2015 were associated with the Aviat discovery in the North Sea and comprised exploration and appraisal activities. The wells associated with the Aviat discovery were reclassified as proved propertiesincrease is primarily attributable to additional drilling activities during the ~~nine months ended September 30, 2016. The amount of exploratory well costs capitalized for a~~ period, ~~greater than one year increased~~partially offset by ~~$32 million during the second quarter as a result of exploration drilling in Suriname.~~successful transfers and dry hole write-offs. No suspended exploratory well costs previously capitalized for greater than one year at December 31, ~~2015~~2016 were charged to dry hole expense during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. Projects with suspended exploratory well costs capitalized for a period greater than one year since the completion of drilling are those identified by management as exhibiting sufficient quantities of hydrocarbons to justify potential development. Management is actively pursuing efforts to assess whether reserves can be attributed to these projects.


5.	OTHER CURRENT LIABILITIES

The following table provides detail of ~~our~~the Company’s other current liabilities as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
	(In millions)				(In millions)
Accrued operating expenses	$	117	$	139	$	76	$	110
Accrued exploration and development	495		637		608		463
Accrued compensation and benefits	147		166		76		201
Accrued interest	109		144		146		145
Accrued income taxes	66		47		77		22
Current debt	1		1		150		—
Current asset retirement obligation	36		36		35		66
Refundable deposits					142		174
Other	100		53		91		77
Total other current liabilities	$	1,071	$	1,223	$	1,401	$	1,258


6.	ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2016:~~2017:


	(In millions)			(In millions)
Asset retirement obligation at December 31, 2015	$	2,598
Asset retirement obligation at December 31, 2016				$	2,498
Liabilities incurred	7			38
Liabilities acquired	34
Liabilities divested	(1		)	(29		)
Liabilities settled	(35		)	(21		)
Accretion expense	116			73
Revisions in estimated liabilities	59			66
Asset retirement obligation at September 30, 2016	2,778
Liabilities held for sale				(779		)
Asset retirement obligation at June 30, 2017				1,846
Less current portion	36			35
Asset retirement obligation, long-term	$	2,742		$	1,811


7.	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 impairments of the carrying value of the Company’s oil and gas properties, gains and losses on the sale of assets, statutory tax rate changes, and other significant or unusual items are recognized as discrete items in the quarter in which they occur.

In July 2017, Apache announced the sale of ACL and classified its investment in the subsidiary as held for sale as of June 30, 2017. For more information regarding this transaction, please refer to Note 2—Acquisitions and Divestitures. As a result of this transaction, Apache recorded a deferred tax asset associated with its investment in ACL and decreased its deferred tax liability associated with its investment in other foreign subsidiaries. This resulted in the Company recording a $674 million deferred income tax benefit in the second quarter of 2017.

Also during the second quarter of 2017, Apache’s effective income tax rate was primarily impacted by gains on the sale of oil and gas properties and an increase in the amount of valuation allowance on Canadian deferred tax assets. During the second quarter of 2016, Apache’s effective income tax rate was primarily impacted by an increase in the valuation allowance on Canadian deferred tax assets.

Apache’s 2017 year-to-date effective income tax rate is primarily impacted by the decrease in deferred taxes associated with its investments in foreign subsidiaries, gains on the sale of oil and gas properties, non-cash impairments of the Company’s PRT decommissioning asset, and an increase in the amount of valuation allowance on Canadian deferred tax assets. Apache’s 2016 year-to-date effective tax rate was primarily impacted by an increase in the valuation allowance on Canadian deferred tax assets.

Apache and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various state and foreign jurisdictions. The Company’s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority. In April 2017, the Internal Revenue Service (IRS) began their audit of the Company’s 2014 income tax year. 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.


8.	DEBT AND FINANCING COSTS

The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	September 30, 2016				December 31, 2015				June 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)								(In millions)
Commercial paper and committed bank facilities	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Notes and debentures	8,722		9,429		8,717		8,330		8,479		9,094		8,544		9,183
Total Debt	$	8,722	$	9,429	$	8,717	$	8,330	$	8,479	$	9,094	$	8,544	$	9,183

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~~When recorded, 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).

The following table presents the carrying value of the Company’s debt as of June 30, 2017 and December 31, 2016:



	June 30, 2017			December 31, 2016
	(In millions)
Debt before unamortized discount and debt issuance costs	$	8,580		$	8,650
Unamortized discount	(49		)	(50		)
Debt issuance costs	(52		)	(56		)
Total debt	8,479			8,544
Current maturities	(150		)	—
Long-term debt	$	8,329		$	8,544

As of ~~September~~June 30, ~~2016,~~2017, current debt included $150 million of 7.0% senior notes due February 1, 2018.

As of June 30, 2017, the Company had a ~~$3.5 billion five-year~~ revolving credit facility that matures in June ~~2020.~~2020, subject to Apache’s two, one-year extension options. The facility provides for aggregate commitments of $3.5 billion (including a $750 million letter of credit subfacility), with rights to increase commitments up to an aggregate $4.5 billion. 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 ~~September~~June 30, ~~2016,~~2017, the Company had no ~~debt outstanding under~~ commercial paper or borrowings under committed bank facilities ~~and~~or uncommitted bank ~~lines.~~lines outstanding.

As of ~~September~~June 30, ~~2016,~~2017, the Company had a ~~£900 million~~ letter of credit facility, ~~that~~which provides for £900 million in commitments and rights to increase commitments to £1.075 billion. This facility matures in February ~~2019.~~2020. The facility is available for letters of credit and loans to cash collateralize ~~letter~~letters of credit or obligations to provide letters of credit, in each case, to the extent letters of credit are unavailable under the facility. As of ~~September~~June 30, ~~2016, a letter~~2017, three letters of credit ~~for~~aggregating approximately ~~£96~~£147.5 million ~~was~~and no borrowings were outstanding under this facility.

In ~~April 2015,~~November 2016, the ~~FASB issued ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs,” which requires debt issuance costs~~Company initiated a program to ~~be presented as a direct deduction from the carrying value of the associated debt liability. The Company adopted this update~~purchase in the ~~first~~open market up to $250 million in aggregate principal amount of senior notes issued under its indentures. In the fourth quarter of 2016, ~~and applied the changes retrospectively for all periods presented. At December 31, 2015,~~ the Company ~~had debt issuance costs~~purchased and canceled $181 million aggregate principal amount of ~~$61~~its senior notes through open market repurchases for $182 million ~~classified as~~in cash, including accrued interest and $0.5 million of premium.

In January 2017, the Company purchased and canceled an additional $69 million aggregate principal amount of senior notes for $71 million in cash, including accrued interest and $1 million of premium, which completed the open market repurchase program. These repurchases resulted in a ~~long-term asset as a component of “deferred charges and other”~~$1 million net loss on ~~the balance sheet that have been netted against “long-term debt” in these unaudited interim financial statements. As of September 30, 2016, long-term debt is presented net~~extinguishment of debt, ~~issuance~~which is included in “Financing costs, net” in the Company’s consolidated statement of ~~$58 million.~~operations. The net loss includes an acceleration of related discount and deferred financing costs.

Financing Costs, Net

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


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,						For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(In millions)												(In millions)
Interest expense	$	116		$	120		$	348		$	371		$	115		$	116		$	231		$	232
Amortization of deferred loan costs	2			6			5			10			2			2			4			3
Capitalized interest	(13		)	(3		)	(36		)	(12		)	(13		)	(12		)	(27		)	(23		)
Loss on extinguishment of debt	—			39			—			39			—			—			1			—
Interest income	(3		)	(2		)	(6		)	(7		)	(5		)	(2		)	(10		)	(3		)
Financing costs, net	$	102		$	160		$	311		$	401		$	99		$	104		$	199		$	209


8.	~~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 impairments of the carrying value of the Company’s 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 third quarter of 2016, Apache’s effective income tax rate was primarily impacted by non-cash impairments of the carrying value of the Company’s oil and gas properties, non-cash impairments of the Company’s PRT decommissioning asset, the impact of the change in U.K. statutory income tax rate, and an increase in the amount of valuation allowances on U.S. and Canadian deferred tax assets.

On September 15, 2016, U.K. Finance Act 2016 received Royal Assent. Under the enacted legislation, the corporate income tax rate on North Sea oil and gas profits was reduced from 50 percent to 40 percent effective January 1, 2016. As a result of the enacted legislation in the third quarter of 2016, the Company recorded a deferred tax benefit of $235 million related to the remeasurement of the Company’s December 31, 2015 U.K. deferred income tax liability.

During the third quarter of 2015, Apache’s effective tax rate was primarily impacted by non-cash impairments of the carrying value of the Company’s oil and gas properties and an increase in the amount of valuation allowances on Canadian deferred tax assets, U.S. foreign tax credits, and U.S. net operating loss carryforwards.

Apache’s 2016 year-to-date effective tax rate was primarily impacted by non-cash impairments of the carrying value of the Company’s oil and gas properties, non-cash impairments of the Company’s PRT decommissioning asset, the impact of the change in U.K. statutory income tax rate, and an increase in the amount of valuation allowances on U.S. and Canadian deferred tax assets. Apache's 2015 year-to-date effective tax rate was primarily impacted by non-cash impairments of the carrying value of the Company’s oil and gas properties and an increase in the amount of valuation allowances on Canadian deferred tax assets, U.S. foreign tax credits, and U.S. net operating loss carryforwards, offset by a $414 million deferred tax benefit associated with a reduction in the U.K. statutory income tax rate from 62 percent to 50 percent.


9.	COMMITMENTS AND CONTINGENCIES

Legal Matters

Apache is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. As of ~~September~~June 30, ~~2016,~~2017, the Company has an accrued liability of approximately ~~$38~~$26 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 9—10—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.~~2016.

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 the fiscal year ended December 31, ~~2015.~~2016.

Louisiana Restoration

As more fully described in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015,~~2016, 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.

On ~~or about September 29, 2016, in~~July 24, 2013, a ~~case~~lawsuit captioned ~~The Parish~~Board of ~~St. Bernard~~Commissioners of the Southeast Louisiana Flood Protection Authority – East v. ~~Atlantic Richfield~~Tennessee Gas Pipeline Company et ~~al, Docket~~al., Case No. ~~16-1228,~~2013-6911 was filed in the 34^th ~~Judicial~~Civil District Court for the Parish of ~~St Bernard,~~Orleans, State of Louisiana, in which plaintiff ~~asserts~~on behalf of itself and as the board governing the levee districts of Orleans, Lake Borgne Basin, and East Jefferson alleged that Louisiana coastal ~~zone claims against the Company and various other~~lands have been damaged as a result of oil and gas ~~producers.~~industry activity, including a network of canals for access and pipelines. The defendants removed the case from state court to federal court and, on February 13, 2015, the federal court entered judgment in favor of defendants dismissing all of plaintiff’s claims ~~by St. Bernard Parish are similar~~with prejudice. Plaintiff appealed the lower court’s dismissal to the 5^th Circuit Court of Appeals and additionally challenged the defendants’ right to remove the case to federal court. On March 3, 2017, the 5^th Circuit Court of Appeals affirmed the propriety of federal jurisdiction based in part on Apache’s argument that plaintiff’s state-based claims required a resolution of substantial questions of federal law and also affirmed the dismissal of the action. The Plaintiff has now filed ~~previously~~a Petition for a Writ of Certiorari with the United States Supreme Court.

Starting in November of 2013 and continuing into 2017, several Parishes in Louisiana have pending lawsuits ~~filed by the Parish of Plaquemines~~ against ~~the Company and other~~many oil and gas producers, including Apache. These cases are pending in federal and state courts in Louisiana. In these cases, 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;~~Parishes, as plaintiffs, allege that defendants’ oil and ~~Parish of Plaquemines v. HHE Energy Company et al.,~~ ~~Docket No. 60-983). In Cameron Parish~~gas exploration, production, and transportation operations in ~~the Parish’s 38~~^th ~~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. 10-19580; and~~ ~~Parish of Cameron v. Auster Oil and Gas, Inc., et al, Docket No. 10-19582) and~~specified fields were conducted in ~~Vermillion Parish (captioned~~ ~~Keith Stutes, District Attorney for the 15th Judicial District~~violation of the State and Local Coastal Resources Management Act of ~~Louisiana v. Gulfport Energy Corporation et al., Docket No. 102156, in~~1978, as amended, and applicable regulations, rules, orders, and ordinances promulgated or adopted thereunder by the ~~15th Judicial District Court,~~ Parish ~~of Vermilion,~~or the State of ~~Louisiana). The cases in Vermillion Parish~~Louisiana. Plaintiffs allege that defendants caused substantial damage to land and in Cameron Parish have all been removed to the United States District Court for the Western District of Louisiana, subject to any effort by the plaintiffs to remand the proceedings to state court. The Louisiana Attorney general and Louisiana Department of Natural Resources have intervenedwater bodies located in the coastal zone ~~cases.~~of Louisiana. Plaintiffs seek, among other things, unspecified damages for alleged violations of applicable state law within the coastal zone, the payment of costs necessary to clear, re-vegetate, detoxify, and otherwise restore the subject coastal zone as near as practicable to its original condition, and actual restoration of the coastal zone to its original condition. While an adverse judgment against Apache might be possible, Apache intends to vigorously oppose these 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 the fiscal year ended December 31, ~~2015.~~2016.

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 the fiscal year ended December 31, ~~2015.~~2016.

Escheat Audits

There has been no material change with respect to the review of the books and records of the Company and its subsidiaries and related entities by the State of Delaware, Department of Finance (Unclaimed Property), to determine compliance with the Delaware Escheat Laws, since the filing of Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015.~~

~~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 commenced on May 30,~~ 2016. Apache Corporation, Apache Energy Limited (now known as Quadrant Energy Australia Limited), and Apache Northwest Pty Ltd (now known as Quadrant Northwest Pty Ltd) reached a settlement on confidential terms with each of the plaintiffs and related entities. All other remaining defendants then reached a settlement on confidential terms with each of the plaintiffs and related entities.

Environmental Matters

As of ~~September~~June 30, ~~2016,~~2017, the Company had an undiscounted reserve for environmental remediation of approximately ~~$55 million.~~$45 million, of which $41 million relates to Canadian operations classified as held for sale. The Company is not aware of any environmental claims existing as of ~~September~~June 30, ~~2016,~~2017, 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.

~~Apache Canada Ltd. (ACL)~~ACL reported a produced water release from a water injection pipeline in a remote area of the Belloy Field that occurred on or about May 4, 2016 and a hydrogen sulfide and oil emulsion leak in the Zama area on or about September 17, 2016. The causes of these incidents remain under investigation. With respect to previous releases of produced water that occurred in the Zama area between October 3 and October 25, 2013 and in the Belloy Field onaffected areas have been or ~~about January 20, 2014, the Company has resolved all of the charges associated with these releases with the Crown and paid a fine of $350,000.~~are currently being remediated. The Company does not expect the economic impact of any 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 the fiscal year ended December 31, ~~2015.~~2016.

In addition to the matters for which we have already accrued, on July 17, 2017, in three separate actions, San Mateo County, California, Marin County, California, and the City of Imperial Beach, California, all filed suit individually and on behalf of the people of the state of California against over 30 oil, gas, and coal companies alleging damages as a result of global warming. Plaintiffs seek unspecified damages and abatement under various tort theories. Apache believes that the claims made against it are baseless and intends to vigorously defend these lawsuits.

Australian Operations Divestiture Dispute

By a Sale and Purchase Agreement dated April 9, 2015 ~~(“SPA”)~~(SPA), the Company and its subsidiaries divested their remaining Australian operations to Viraciti Energy Pty Ltd, which has since been renamed Quadrant Energy Pty Ltd ~~(“Quadrant”)~~(Quadrant). Closing occurred on June 5, 2015. By letter dated June 6, 2016, Quadrant provided the Company with a one-year placeholder notice of claim under the SPA concerning tax and other issues totaling approximately $200 million in the aggregate. The Company is in the process of reviewing the issues raised by Quadrant and believes at this time that these matters will not have a material adverse effect on the Company’s financial position, results of operation, or liquidity.

~~LNG Divestiture Dispute~~

A number of disputes had arisen between the Company and Woodside Energy Ltd. (and all relevant Australian and Canadian subsidiaries) arising from Woodside’s purchase of the Wheatstone and Kitimat LNG projects and accompanying upstream oil and gas reserves from the Company and its subsidiaries. These disputes resulted in various lawsuits being filed in both the Supreme Court of Western Australia (Case Nos. 2315 of 2015, 2798 of 2015, 1504 of 2016, 1520 of 2016, and 1521 of 2016) and the Court of Queen’s Bench of Alberta, Calgary (Case No. 1601-12909) concerning or arising out of certain provisions of the Wheatstone and Kitimat sale and purchase agreements. In addition, certain other disputes under the parties’ sale and purchase agreements had been referred to the ICC International Centre for ADR for a third party expert determination. With respect to each of the matters pending in Western Australia, Alberta, and before the ICC, the Company and Woodside have reached a settlement on confidential terms such that the matters will be discontinued and/or dismissed and mutual releases have been provided by the Company and Woodside related to the foregoing matters in dispute. The amount of the settlement has been included in the Company’s accrued liabilities for legal contingencies as of September 30, 2016.


10.	CAPITAL STOCK

Net ~~Loss~~Income (Loss) per Common Share

A reconciliation of the components of basic and diluted net ~~loss~~income (loss) per common share for the quarters ended June 30, 2017 and ~~nine months ended September 30,~~ 2016, ~~and 2015~~ is presented in the table below.

For the Quarter Ended September 30,
2016 2015
Loss Shares Per Share Loss Shares Per Share
(In millions, except per share amounts)
Basic:
Loss from continuing operations $ (574 ) 380
$ (1.51 ) $ (4,126 ) 378
$ (10.91 )
Loss from discontinued operations (33 ) 380
(0.09 ) (17 ) 378
(0.04 )
Loss attributable to common stock $ (607 ) 380
$ (1.60 ) $ (4,143 ) 378
$ (10.95 )
Effect of Dilutive Securities:
Stock options and other $ —
—
$ —
$ —
—
$ —
Diluted:
Loss from continuing operations $ (574 ) 380
$ (1.51 ) $ (4,126 ) 378
$ (10.91 )
Loss from discontinued operations (33 ) 380
(0.09 ) (17 ) 378
(0.04 )
Loss attributable to common stock $ (607 ) 380
$ (1.60 ) $ (4,143 ) 378
$ (10.95 )



	For the Quarter Ended June 30,
	2017					2016
	Income		Shares	Per Share		Loss			Shares	Per Share
	(In millions, except per share amounts)
Basic:
Income (loss) attributable to common stock	$	572	381	$	1.50	$	(244	)	379	$	(0.65	)
Effect of Dilutive Securities:
Stock options and other	$	—	2	$	—	$	—		—	$	—
Diluted:
Income (loss) attributable to common stock	$	572	383	$	1.50	$	(244	)	379	$	(0.65	)

For the Nine Months Ended September 30,
2016 2015
Loss Shares Per Share Loss Shares Per Share
(In millions, except per share amounts)
Basic:
Loss from continuing operations $ (1,190 ) 379
$ (3.14 ) $ (6,202 ) 378
$ (16.42 )
Loss from discontinued operations (33 ) 379
(0.08 ) (135 ) 378
(0.36 )
Loss attributable to common stock $ (1,223 ) 379
$ (3.22 ) $ (6,337 ) 378
$ (16.78 )
Effect of Dilutive Securities:
Stock options and other —
—
—
—

Diluted:
Loss from continuing operations $ (1,190 ) 379
$ (3.14 ) $ (6,202 ) 378
$ (16.42 )
Loss from discontinued operations (33 ) 379
(0.08 ) (135 ) 378
(0.36 )
Loss attributable to common stock $ (1,223 ) 379
$ (3.22 ) $ (6,337 ) 378
$ (16.78 )



	For the Six Months Ended June 30,
	2017						2016
	Income		Shares	Per Share			Loss			Shares	Per Share
	(In millions, except per share amounts)
Basic:
Income (loss) attributable to common stock	$	785	380	$	2.06		$	(616	)	379	$	(1.63	)
Effect of Dilutive Securities:
Stock options and other	$	—	3	$	(0.01	)	$	—		—	$	—
Diluted:
Income (loss) attributable to common stock	$	785	383	$	2.05		$	(616	)	379	$	(1.63	)

The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling ~~4.7~~8.5 million and ~~10.4~~6.3 million for the quarters ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively, and ~~6.5~~8.6 million and ~~8.9~~7.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, respectively.

Common Stock Dividends

For each of the quarters ended ~~September~~June 30, ~~2016,~~2017, and ~~2015,~~2016, Apache paid $95 million in dividends on its common stock. For the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, the Company paid ~~$284~~$190 million and ~~$283~~$189 million, respectively.

Stock Repurchase Program

Apache’s Board of Directors has authorized the purchase of up to 40 million shares of the Company’s common stock. Shares may be purchased either in the open market or through privately negotiated transactions. The Company initiated the buyback program on June 10, 2013, and through ~~December 31, 2015,~~June 30, 2017, 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.~~2017.


11.	BUSINESS SEGMENT INFORMATION

Apache is engaged in a single line of business. Both domestically and internationally, the Company explores for, develops, and produces natural gas, crude oil, and natural gas liquids. At ~~September~~June 30, ~~2016,~~2017, the Company had production in four reporting segments: the United States, Canada, Egypt, and offshore the United Kingdom in the North Sea (North Sea). Apache also ~~pursues~~has exploration interests in ~~other areas~~Suriname that may, over time, result in a reportable ~~discoveries~~discovery and development ~~opportunities.~~opportunity. Financial information for each ~~country~~area is presented below:


	United States			Canada			Egypt⁽¹⁾		North Sea			Other International			Total⁽⁴⁾			United States			Canada			Egypt⁽¹⁾		North Sea		Other International			Total
	(In millions)																	(In millions)
For the Quarter Ended September 30, 2016
For the Quarter Ended June 30, 2017
Oil and Gas Production Revenues																		$	491		$	93		$	521	$	241	$	—		$	1,346
Operating Income (Loss)⁽²⁾																		$	(17	)	$	(18	)	$	213	$	4	$	(2	)	$	180
Other Income (Expense):
Loss on divestitures, net																															(21		)
Other																															59
General and administrative																															(106		)
Transaction, reorganization, and separation																															(4		)
Financing costs, net																															(99		)
Income Before Income Taxes																															$	9

For the Six Months Ended June 30, 2017
Oil and Gas Production Revenues	$	524		$	87		$	581	$	247		$	—		$	1,439		$	1,043		$	195		$	1,112	$	508	$	—		$	2,858
Operating Income (Loss)⁽²⁾	$	(17	)	$	(466	)	$	263	$	(455	)	$	(13	)	$	(688	)	$	43		$	(31	)	$	514	$	42	$	(23	)	$	545
Other Income (Expense):
Gain on divestitures, net															5																320
Other															(6		)														84
General and administrative															(102		)														(209		)
Transaction, reorganization, and separation															(12		)														6
Financing costs, net															(102		)														(199		)
Loss From Continuing Operations Before Income Taxes															$	(905	)
For the Nine Months Ended September 30, 2016
Oil and Gas Production Revenues	$	1,453		$	243		$	1,515	$	701		$	—		$	3,912
Operating Income (Loss)⁽²⁾	$	(283	)	$	(586	)	$	525	$	(557	)	$	(13	)	$	(914	)
Other Income (Expense):
Gain on divestitures, net															21
Other															(30		)
General and administrative															(298		)
Transaction, reorganization, and separation															(36		)
Financing costs, net															(311		)
Loss From Continuing Operations Before Income Taxes															$	(1,568	)
Income Before Income Taxes																															$	547
Total Assets	$	12,299		$	1,630		$	5,320	$	3,851		$	49		$	23,149		$	12,530		$	1,476		$	4,778	$	3,772	$	46		$	22,602


	United States			Canada			Egypt⁽¹⁾		North Sea			Other International			Total⁽⁴⁾			United States			Canada			Egypt⁽¹⁾		North Sea			Other International			Total
	(In millions)																	(In millions)
For the Quarter Ended September 30, 2015
Oil and Gas Production Revenues	$	639		$	116		$	534	$	317		$	—		$	1,606
Operating Income (Loss)⁽³⁾	$	(3,582	)	$	(292	)	$	67	$	(86	)	$	(148	)	$	(4,041	)
Other Income (Expense):
Loss on divestitures, net															(5		)
Other															(75		)
General and administrative															(89		)
Transaction, reorganization, and separation															—
Financing costs, net															(160		)
Loss From Continuing Operations Before Income Taxes															$	(4,370	)
For the Nine Months Ended September 30, 2015
For the Quarter Ended June 30, 2016
Oil and Gas Production Revenues	$	2,066		$	387		$	1,790	$	1,013		$	—		$	5,256		$	520		$	73		$	542	$	251		$	—		$	1,386
Operating Income (Loss)⁽³⁾	$	(5,967	)	$	(464	)	$	569	$	(160	)	$	(149	)	$	(6,171	)	$	(109	)	$	(57	)	$	220	$	(115	)	$	—		$	(61	)
Other Income (Expense):
Gain on divestitures, net															204																	17
Other															(53		)															(21		)
General and administrative															(284		)															(103		)
Transaction, reorganization, and separation															(120		)															(9		)
Financing costs, net															(401		)															(104		)
Loss From Continuing Operations Before Income Taxes															$	(6,825	)
Loss Before Income Taxes																																$	(281	)

For the Six Months Ended June 30, 2016
Oil and Gas Production Revenues																		$	929		$	156		$	934	$	454		$	—		$	2,473
Operating Income (Loss)⁽³⁾																		$	(267	)	$	(118	)	$	261	$	(101	)	$	(1	)	$	(226	)
Other Income (Expense):
Gain on divestitures, net																																16
Other																																(24		)
General and administrative																																(196		)
Transaction, reorganization, and separation																																(24		)
Financing costs, net																																(209		)
Loss Before Income Taxes																																$	(663	)
Total Assets	$	15,278		$	3,627		$	7,535	$	4,359		$	440		$	31,239		$	12,383		$	2,070		$	5,520	$	4,326		$	47		$	24,346


(1)	Includes a noncontrolling interest in Egypt.

(2)

Operating ~~Income (Loss)~~income (loss) consists of oil and gas production revenues less lease operating expenses, gathering and transportation costs, taxes other than income, exploration costs, depreciation, depletion, and amortization, asset retirement obligation accretion, and impairments. The operating income (loss) of U.S. and Canada includes leasehold impairments totaling $38 million and $1 million, respectively, for the second quarter of 2017. The operating income (loss) of U.S., Canada, and North Sea includes leasehold and other asset impairments totaling ~~$47~~$52 million, ~~$423~~$2 million, and ~~$481~~$8 million, respectively, for the ~~third~~first six months of 2017.

(3)

The operating income (loss) of U.S., Canada, and North Sea includes leasehold, property, and other asset impairments totaling $125 million, $9 million, and $105 million, respectively, for the second quarter of 2016. The operating income (loss) of U.S., Canada, and North Sea includes leasehold, property, and other asset impairments totaling ~~$212~~$166 million, ~~$433~~$10 million, and ~~$586~~$105 million, respectively, for the first ~~nine~~six months of 2016.

~~(3)~~

The operating income (loss) of U.S., Canada, Egypt, North Sea, and Other International includes asset impairments totaling $3.5 billion, $237 million, $78 million, $105 million, and $148 million, respectively, for the third quarter of 2015. The operating income (loss) of U.S., Canada, Egypt, North Sea, and Other International include asset impairments totaling $5.9 billion, $291 million, $91 million, $372 million, and $148 million, respectively, for the first nine months of 2015.


~~(4)~~	~~Amounts for 2015 have been restated to exclude Australia discontinued operations.~~


12.	SUPPLEMENTAL GUARANTOR INFORMATION

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

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

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended ~~September~~June 30, ~~2016~~2017


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations		Consolidated			Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations		Consolidated
	(In millions)														(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	274		$	—		$	1,165		$	—	$	1,439		$	248		$	—		$	1,098		$	—	$	1,346
Equity in net income (loss) of affiliates	(493		)	(205		)	—			698		—			(34		)	(26		)	—			60		—
Other	5			7			(18		)	—		(6		)	62			8			(11		)	—		59
Gain (loss) on divestiture	3			—			2			—		5			34			—			(55		)	—		(21		)
	(211		)	(198		)	1,149			698		1,438			310			(18		)	1,032			60		1,384
OPERATING EXPENSES:
Lease operating expenses	74			—			308			—		382			79			—			293			—		372
Gathering and transportation	6			—			45			—		51			7			—			41			—		48
Taxes other than income	23			—			(14		)	—		9			24			—			5			—		29
Exploration	58			—			103			—		161			54			—			54			—		108
General and administrative	87			—			15			—		102			91			—			15			—		106
Transaction, reorganization, and separation															4			—			—			—		4
Depreciation, depletion, and amortization	154			—			494			—		648			130			—			442			—		572
Asset retirement obligation accretion	5			—			35			—		40			5			—			32			—		37
Impairments	—			—			836			—		836
Transaction, reorganization, and separation	12			—			—			—		12
Financing costs, net	63			6			33			—		102			60			6			33			—		99
	482			6			1,855			—		2,343			454			6			915			—		1,375
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(693		)	(204		)	(706		)	698		(905		)
NET INCOME (LOSS) BEFORE INCOME TAXES															(144		)	(24		)	117			60		9
Provision (benefit) for income taxes	(119		)	1			(261		)	—		(379		)	(716		)	2			110			—		(604		)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST	(574		)	(205		)	(445		)	698		(526		)
Net loss from discontinued operations, net of tax	(33		)	—			—			—		(33		)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST	(607		)	(205		)	(445		)	698		(559		)	572			(26		)	7			60		613
Net income attributable to noncontrolling interest	—			—			48			—		48			—			—			41			—		41
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(607	)	$	(205	)	$	(493	)	$	698	$	(607	)	$	572		$	(26	)	$	(34	)	$	60	$	572

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended ~~September~~June 30, ~~2015~~2016


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations		Consolidated			Apache Corporation			Apache Finance Canada		All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations		Consolidated
	(In millions)														(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	344		$	—		$	1,262		$	—	$	1,606		$	270		$	—	$	1,116		$	—	$	1,386
Equity in net income (loss) of affiliates	(2,247		)	(92		)	—			2,339		—			(76		)	6		—			70		—
Other	(62		)	14			(27		)	—		(75		)	(22		)	9		(8		)	—		(21		)
Gain (loss) on divestiture	(7		)	—			2			—		(5		)	(1		)	—		18			—		17
	(1,972		)	(78		)	1,237			2,339		1,526			171			15		1,126			70		1,382
OPERATING EXPENSES:
Lease operating expenses	97			—			353			—		450			66			—		293			—		359
Gathering and transportation	9			—			49			—		58			10			—		42			—		52
Taxes other than income	30			—			74			—		104			22			—		43			—		65
Exploration	139			—			84			—		223			76			—		15			—		91
General and administrative	76			—			13			—		89			86			—		17			—		103
Transaction, reorganization, and separation															9			—		—			—		9
Depreciation, depletion, and amortization	257			—			615			—		872			159			—		510			—		669
Asset retirement obligation accretion	4			—			33			—		37			5			—		33			—		38
Impairments	2,177			—			1,726			—		3,903			61			—		112			—		173
Financing costs, net	160			10			(10		)	—		160			64			7		33			—		104
	2,949			10			2,937			—		5,896			558			7		1,098			—		1,663
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(4,921		)	(88		)	(1,700		)	2,339		(4,370		)
NET INCOME (LOSS) BEFORE INCOME TAXES															(387		)	8		28			70		(281		)
Provision (benefit) for income taxes	(785		)	4			530			—		(251		)	(143		)	2		60			—		(81		)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST	(4,136		)	(92		)	(2,230		)	2,339		(4,119		)
Net income (loss) from discontinued operations, net of tax	(7		)	—			(10		)	—		(17		)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST	(4,143		)	(92		)	(2,240		)	2,339		(4,136		)	(244		)	6		(32		)	70		(200		)
Net income attributable to noncontrolling interest	—			—			7			—		7			—			—		44			—		44
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(4,143	)	$	(92	)	$	(2,247	)	$	2,339	$	(4,143	)	$	(244	)	$	6	$	(76	)	$	70	$	(244	)

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations		Consolidated			Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations			Consolidated
	(In millions)														(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	761		$	—		$	3,151		$	—	$	3,912		$	532		$	—		$	2,326		$	—		$	2,858
Equity in net income (loss) of affiliates	(677		)	(225		)	—			902		—			188			(27		)	—			(161		)	—
Other	11			28			(69		)	—		(30		)	70			16			(2		)	—			84
Gain (loss) on divestiture	1			—			20			—		21
Gain on divestitures															175			—			145			—			320
	96			(197		)	3,102			902		3,903			965			(11		)	2,469			(161		)	3,262
OPERATING EXPENSES:
Lease operating expenses	218			—			901			—		1,119			160			—			548			—			708
Gathering and transportation	25			—			130			—		155			14			—			91			—			105
Taxes other than income	66			—			19			—		85			47			—			24			—			71
Exploration	184			—			163			—		347			82			—			118			—			200
General and administrative	250			—			48			—		298			181			—			28			—			209
Transaction, reorganization, and separation															(6		)	—			—			—			(6		)
Depreciation, depletion, and amortization	469			—			1,526			—		1,995			265			—			883			—			1,148
Asset retirement obligation accretion	14			—			102			—		116			11			—			62			—			73
Impairments	61			—			948			—		1,009			—			—			8			—			8
Transaction, reorganization, and separation	36			—			—			—		36
Financing costs, net	188			23			100			—		311			120			12			67			—			199
	1,511			23			3,937			—		5,471			874			12			1,829			—			2,715
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(1,415		)	(220		)	(835		)	902		(1,568		)
NET INCOME (LOSS) BEFORE INCOME TAXES															91			(23		)	640			(161		)	547
Provision (benefit) for income taxes	(225		)	5			(251		)	—		(471		)	(694		)	4			357			—			(333		)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST	(1,190		)	(225		)	(584		)	902		(1,097		)
Net loss from discontinued operations, net of tax	(33		)	—			—			—		(33		)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST	(1,223		)	(225		)	(584		)	902		(1,130		)	785			(27		)	283			(161		)	880
Net income attributable to noncontrolling interest	—			—			93			—		93			—			—			95			—			95
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(1,223	)	$	(225	)	$	(677	)	$	902	$	(1,223	)	$	785		$	(27	)	$	188		$	(161	)	$	785

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2015~~2016


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations		Consolidated			Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations		Consolidated
	(In millions)														(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	1,143		$	—		$	4,113		$	—	$	5,256		$	487		$	—		$	1,986		$	—	$	2,473
Equity in net income (loss) of affiliates	(3,664		)	(154		)	—			3,818		—			(184		)	(20		)	—			204		—
Other	(107		)	40			(5		)	19		(53		)	6			21			(51		)	—		(24		)
Gain (loss) on divestiture	(36		)	—			240			—		204
Gain (loss) on divestitures															(2		)	—			18			—		16
	(2,664		)	(114		)	4,348			3,837		5,407			307			1			1,953			204		2,465
OPERATING EXPENSES:
Lease operating expenses	329			—			1,069			—		1,398			144			—			593			—		737
Gathering and transportation	25			—			138			—		163			19			—			85			—		104
Taxes other than income	97			—			135			—		232			43			—			33			—		76
Exploration	399			—			307			—		706			126			—			60			—		186
General and administrative	214			—			51			19		284			163			—			33			—		196
Transaction, reorganization, and separation															24			—			—			—		24
Depreciation, depletion, and amortization	751			—			1,741			—		2,492			315			—			1,032			—		1,347
Asset retirement obligation accretion	11			—			98			—		109			9			—			67			—		76
Impairments	3,543			—			2,784			—		6,327			61			—			112			—		173
Transaction, reorganization, and separation	120			—			—			—		120
Financing costs, net	375			31			(5		)	—		401			125			17			67			—		209
	5,864			31			6,318			19		12,232			1,029			17			2,082			—		3,128
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(8,528		)	(145		)	(1,970		)	3,818		(6,825		)
NET INCOME (LOSS) BEFORE INCOME TAXES															(722		)	(16		)	(129		)	204		(663		)
Provision (benefit) for income taxes	(2,370		)	9			1,640			—		(721		)	(106		)	4			10			—		(92		)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST	(6,158		)	(154		)	(3,610		)	3,818		(6,104		)
Net income (loss) from discontinued operations, net of tax	(179		)	—			44			—		(135		)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST	(6,337		)	(154		)	(3,566		)	3,818		(6,239		)	(616		)	(20		)	(139		)	204		(571		)
Net income attributable to noncontrolling interest	—			—			98			—		98			—			—			45			—		45
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	(6,337	)	$	(154	)	$	(3,664	)	$	3,818	$	(6,337	)	$	(616	)	$	(20	)	$	(184	)	$	204	$	(616	)

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations			Consolidated			Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations			Consolidated
	(In millions)															(In millions)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	269		$	(1	)	$	1,366		$	—		$	1,634		$	(280	)	$	(13	)	$	1,499		$	—		$	1,206
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property	(929		)	—			(352		)	—			(1,281		)	(235		)	—			(648		)	—			(883		)
Leasehold and property acquisitions	(98		)	—			(71		)	—			(169		)	(58		)	—			(9		)	—			(67		)
Additions to gas gathering, transmission, and processing facilities	(32		)	—			(1		)	—			(33		)	—			—			(274		)	—			(274		)
Proceeds from sale of other oil and gas properties	54			—			20			—			74
Proceeds from sale of Midale and House Mountain																—			—			228			—			228
Proceeds from sale of oil and gas properties																—			—			483			—			483
Investment in subsidiaries, net	824			—			—			(824		)	—			668			—			—			(668		)	—
Other	(7		)	—			54			—			47			(9		)	—			(7		)	—			(16		)
NET CASH USED IN INVESTING ACTIVITIES	(188		)	—			(350		)	(824		)	(1,362		)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES																366			—			(227		)	(668		)	(529		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany borrowings	—			(23		)	(801		)	824			—			—			259			(927		)	668			—
Payment of fixed-rate debt	—			—			(1		)	—			(1		)	(70		)	—			—			—			(70		)
Distributions to noncontrolling interest	—			—			(215		)	—			(215		)	—			—			(170		)	—			(170		)
Common stock activity, net	—			24			(24		)	—			—			—			—			—			—			—
Dividends paid	(284		)	—			—			—			(284		)	(190		)	—			—			—			(190		)
Other	2			—			(11		)	—			(9		)	—			—			43			—			43
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(282		)	1			(1,052		)	824			(509		)	(260		)	259			(1,054		)	668			(387		)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(201		)	—			(36		)	—			(237		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS																(174		)	246			218			—			290
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	378			—			1,089			—			1,467			344			—			1,033			—			1,377
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	177		$	—		$	1,053		$	—		$	1,230		$	170		$	246		$	1,251		$	—		$	1,667

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2015~~2016

Apache
Corporation

Apache
Finance
Canada

All Other
Subsidiaries
of Apache
Corporation

Reclassifications
& Eliminations
Consolidated
(In millions)
CASH PROVIDED BY (USED IN) CONTINUING OPERATING ACTIVITIES $ (135 ) $ (25 ) $ 2,540
$ —
$ 2,380
CASH PROVIDED BY DISCONTINUED OPERATIONS —
—
113
—
113
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (135 ) (25 ) 2,653
—
2,493
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property (1,320 ) —
(2,242 ) —
(3,562 )
Leasehold and property acquisitions (243 ) —
(11 ) —
(254 )
Additions to gas gathering, transmission, and processing facilities (25 ) —
(88 ) —
(113 )
Proceeds from sale Kitimat LNG —
—
854
—
854
Proceeds from sale of other oil and gas properties 8
—
140
—
148
Investment in subsidiaries, net 274
—
—
(274 ) —
Other (16 ) —
(83 ) —
(99 )
NET CASH USED IN CONTINUING INVESTING ACTIVITIES (1,322 ) —
(1,430 ) (274 ) (3,026 )
NET CASH PROVIDED BY DISCONTINUED OPERATIONS —
—
4,372
—
4,372
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,322 ) —
2,942
(274 ) 1,346
CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net (1,570 ) —
—
—
(1,570 )
Payment of fixed-rate debt (939 ) —
—
—
(939 )
Intercompany borrowings 4,431
(10 ) (4,695 ) 274
—
Distributions to noncontrolling interest —
—
(97 ) —
(97 )
Dividends paid (283 ) —
—
—
(283 )
Other 2
35
(11 ) —
26
NET CASH PROVIDED BY (USED IN) CONTINUING FINANCING ACTIVITIES 1,641
25
(4,803 ) 274
(2,863 )
NET CASH USED IN DISCONTINUED OPERATIONS —
—
—
—
—
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,641
25
(4,803 ) 274
(2,863 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 184
—
792
—
976
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 267
—
412
—
679
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 451
$ —
$ 1,204
$ —
$ 1,655



	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations			Consolidated
	(In millions)
CASH PROVIDED BY OPERATING ACTIVITIES	$	110		$	—		$	873		$	—		$	983
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property	(53		)	—			(872		)	—			(925		)
Leasehold and property acquisitions	(53		)	—			(65		)	—			(118		)
Investment in subsidiaries, net	(39		)	—			—			39			—
Other	(3		)	—			80			—			77
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(148		)	—			(857		)	39			(966		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany borrowings	—			1			38			(39		)	—
Distributions to noncontrolling interest	—			—			(93		)	—			(93		)
Dividends paid	(189		)	—			—			—			(189		)
Other	1			(1		)	(1		)	—			(1		)
NET CASH USED IN FINANCING ACTIVITIES	(188		)	—			(56		)	(39		)	(283		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(226		)	—			(40		)	—			(266		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	378			—			1,089			—			1,467
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	152		$	—		$	1,049		$	—		$	1,201

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

~~September~~June 30, ~~2016~~2017


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated		Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)													(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	177		$	—		$	1,053	$	—		$	1,230	$	170		$	246		$	1,251	$	—		$	1,667
Receivables, net of allowance	311			—			753		—			1,064		300			—			715		—			1,015
Inventories	32			—			481		—			513		24			—			392		—			416
Drilling advances	5			—			204		—			209		5			—			94		—			99
Deferred tax asset	(28		)	—			28		—			—
Assets held for sale														—			—			1,231		—			1,231
Prepaid assets and other	191			—			65		—			256		178			—			41		—			219
Intercompany receivable	5,418			—			—		(5,418		)	—		5,453			—			—		(5,453		)	—
	6,106			—			2,584		(5,418		)	3,272		6,130			246			3,724		(5,453		)	4,647
PROPERTY AND EQUIPMENT, NET	7,069			—			12,393		—			19,462		7,232			—			10,319		—			17,551
OTHER ASSETS:
Intercompany receivable	—			—			12,034		(12,034		)	—		—			—			12,876		(12,876		)	—
Equity in affiliates	15,415			(1,289		)	703		(14,829		)	—		15,705			(1,252		)	691		(15,144		)	—
Deferred charges and other	95			1,000			320		(1,000		)	415		105			1,000			299		(1,000		)	404
	$	28,685		$	(289	)	$	28,034	$	(33,281	)	$	23,149	$	29,172		$	(6	)	$	27,909	$	(34,473	)	$	22,602
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	338		$	(13	)	$	232	$	—		$	557	$	371		$	—		$	162	$	—		$	533
Liabilities held for sale														—			—			939		—			939
Other current liabilities	468			8			595		—			1,071		699			4			698		—			1,401
Intercompany payable	—			—			5,418		(5,418		)	—		—			247			5,206		(5,453		)	—
	806			(5		)	6,245		(5,418		)	1,628		1,070			251			7,005		(5,453		)	2,873
LONG-TERM DEBT	8,424			297			—		—			8,721		8,032			297			—		—			8,329
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Intercompany payable	12,034			—			—		(12,034		)	—		12,876			—			—		(12,876		)	—
Income taxes	(230		)	5			2,008		—			1,783		(968		)	5			2,021		—			1,058
Asset retirement obligation	280			—			2,462		—			2,742		355			—			1,456		—			1,811
Other	902			—			424		(1,000		)	326		908			2			356		(1,000		)	266
	12,986			5			4,894		(13,034		)	4,851		13,171			7			3,833		(13,876		)	3,135
COMMITMENTS AND CONTINGENCIES
APACHE SHAREHOLDERS’ EQUITY	6,469			(586		)	15,415		(14,829		)	6,469		6,899			(561		)	15,705		(15,144		)	6,899
Noncontrolling interest	—			—			1,480		—			1,480		—			—			1,366		—			1,366
TOTAL EQUITY	6,469			(586		)	16,895		(14,829		)	7,949		6,899			(561		)	17,071		(15,144		)	8,265
	$	28,685		$	(289	)	$	28,034	$	(33,281	)	$	23,149	$	29,172		$	(6	)	$	27,909	$	(34,473	)	$	22,602

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, ~~2015~~2016


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated		Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)													(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	378		$	—		$	1,089	$	—		$	1,467	$	344		$	—		$	1,033	$	—		$	1,377
Receivables, net of allowance	314			—			939		—			1,253		358			—			770		—			1,128
Inventories	34			—			536		—			570		29			—			447		—			476
Drilling advances	16			—			156		—			172		4			—			77		—			81
Prepaid assets and other	102			—			188		—			290		134			—			45		—			179
Intercompany receivable	5,212			—			—		(5,212		)	—		5,038			—			—		(5,038		)	—
	6,056			—			2,908		(5,212		)	3,752		5,907			—			2,372		(5,038		)	3,241
PROPERTY AND EQUIPMENT, NET	6,546			—			14,292		—			20,838		7,014			—			11,853		—			18,867
OTHER ASSETS:
Intercompany receivable	—			—			10,744		(10,744		)	—		—			—			12,152		(12,152		)	—
Equity in affiliates	16,092			(807		)	446		(15,731		)	—		15,517			(1,240		)	706		(14,983		)	—
Deferred charges and other	96			1,001			813		(1,000		)	910		97			1,000			314		(1,000		)	411
	$	28,790		$	194		$	29,203	$	(32,687	)	$	25,500	$	28,535		$	(240	)	$	27,397	$	(33,173	)	$	22,519
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	409		$	—		$	209	$	—		$	618	$	371		$	(12	)	$	226	$	—		$	585
Other current liabilities	539			3			681		—			1,223		653			3			602		—			1,258
Intercompany payable	—			—			5,212		(5,212		)	—		—			—			5,038		(5,038		)	—
	948			3			6,102		(5,212		)	1,841		1,024			(9		)	5,866		(5,038		)	1,843
LONG-TERM DEBT	8,418			298			—		—			8,716		8,247			297			—		—			8,544
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Intercompany payable	10,744			—			—		(10,744		)	—		12,152			—			—		(12,152		)	—
Income taxes	(412		)	4			2,937		—			2,529		(271		)	5			1,976		—			1,710
Asset retirement obligation	271			—			2,291		—			2,562		257			—			2,175		—			2,432
Other	933			250			179		(1,000		)	362		888			1			422		(1,000		)	311
	11,536			254			5,407		(11,744		)	5,453		13,026			6			4,573		(13,152		)	4,453
COMMITMENTS AND CONTINGENCIES
APACHE SHAREHOLDERS’ EQUITY	7,888			(361		)	16,092		(15,731		)	7,888		6,238			(534		)	15,517		(14,983		)	6,238
Noncontrolling interest	—			—			1,602		—			1,602		—			—			1,441		—			1,441
TOTAL EQUITY	7,888			(361		)	17,694		(15,731		)	9,490		6,238			(534		)	16,958		(14,983		)	7,679
	$	28,790		$	194		$	29,203	$	(32,687	)	$	25,500	$	28,535		$	(240	)	$	27,397	$	(33,173	)	$	22,519


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to Apache Corporation and its consolidated subsidiaries and should be read in conjunction with ~~our~~the Company’s consolidated financial statements and accompanying notes included under Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q, as well as ~~our~~the Company’s consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in ~~our Current~~the Company’s Annual Report on Form ~~8-K dated August 4, 2016,~~10-K for the fiscal year ended December 31, 2015. Financial information for prior periods has been recast to reflect the retrospective application of the successful efforts method of accounting, as discussed under Note 1 in Part I, Item 1, of this Quarterly Report on Form 10-Q. Results of operations and consolidated cash flows for the divested Australia assets are reflected as discontinued operations in all periods presented in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.

Overview

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

Over the past several years, Apache has structured its business to adapt and thrive in a lower-for-longer price environment. The Company reacted quickly to the changing dynamics in commodity markets, stressing the importance of properly aligning cost structure with commodity prices, as well as achieving and maintaining cash flow neutrality. Apache completed a series of transactions that simplified its portfolio, reduced operating costs, overhead, and capital commitments, and strengthened its balance sheet. Apache entered 2017 with an asset base, an organization, and a strategic focus expected to deliver highly competitive, returns-focused organic growth for many years to come.

Apache has transitioned away from a longer-cycle, internationally focused investment program and expanded and enhanced its organic, unconventional acreage footprint and technical capabilities. This positioned the Company to execute its strategy of driving returns-focused growth in the U.S. while delivering strong and sustainable cash flow from its core businesses in Egypt and the North Sea.

Apache reported ~~a third~~second quarter ~~loss~~net income of ~~$607~~$572 million, or ~~$1.60~~$1.50 per common share, compared to a loss of ~~$4.1 billion,~~$244 million, or ~~$10.95~~$0.65 per common share, in the ~~third~~second quarter ~~2015. Apache’s~~of 2016. The increase in net ~~loss~~income compared to the prior-year quarter is primarily the result of income tax benefits related to the sale of our operations in Canada, as well as impairment charges incurred in the prior period. Revenue gains from significant increases in realized commodity prices mitigated the impact of production declines. Daily production in the second quarter of 2017 averaged 460 thousand barrels of oil equivalent per ~~common share for both periods was directly impacted by asset impairments resulting~~day (Mboe/d), a decrease of 14 percent from the comparative prior-year quarter due to natural decline. This decline is a result of Apache’s decision to curtail drilling activity over the past two years until costs aligned with lower commodity prices, as well as the Company’s significant ~~drop~~allocation of capital investments toward the Alpine High development and associated infrastructure, which achieved first production in ~~crude oil prices beginning in late 2014.~~May 2017.

~~In the third quarter, Apache~~The Company generated ~~$651 million~~$1.2 billion in cash from operating activities during the first six months of 2017, a ~~decrease of eight~~23 percent increase from the comparative prior-year period. In addition, the Company generated $711 million of cash proceeds from non-core asset divestments, with an additional $485 million of proceeds from our announced Canadian divestitures expected in the third quarter of last year, despite lower commodity prices, as we realize the benefits of action taken to reduce overhead service costs in both operating and capital areas. We operated near cash flow neutrality after paying dividends and after increasing capital expenditures. As a result, wequarter. Apache ended the quarter with ~~$1.2~~$1.7 billion of cash, ~~basically unchanged~~an increase of $290 million from ~~last quarter.~~

~~At the start of the downturn in late 2014, we established the following guiding principles, which have served us well:~~

•~~Establish a strong financial position and protect it by living within cash flow;~~

•~~Dramatically reduce development spending until price and cost come into better equilibrium; and~~

•~~Prepare the portfolio for long-term returns, growth, and shareholder value.~~

~~We ended the quarter with $237 million less cash than~~ year-end ~~2015 but $460 million more than year-end 2014. In addition to cash on hand,~~2016. Apache also has $3.5 billion in available committed borrowing capacity. ~~Long-term debt has remained essentially flat since year-end 2015~~This financial capacity provides for a capital program commensurate with prevailing commodity prices and ~~is down 22 percent from year-end 2014.~~

~~Lease operating expenses for the third quarter were 15 percent lower than the third quarter of 2015 and 20 percent lower on~~ a year-to-date basis. In addition, our year-to-date production decreased only 5 percent from the first nine months of 2015, despite significant reductions in capital spending in the last two years. Our ability to maintain production at these levels despite such a large drop in capital reinvestments has been positively impacted by several efforts undertaken by Apache during the downturn: reduction of our cost structure; implementation of a more rigorous and integrated capital allocation and planning process; upgrades to, and expansion of, our drilling inventory; and improvements of our capital efficiency, including reduction in service costs.

During this time, Apache also remained focused on its mission to grow the company for the long-term benefit of its shareholders, by investing a percentage of its reduced 2016 capital spending program in strategic testing and acreage acquisitions as opposed to focusing only on more near-term production growth. As a result, Apache recently announced it discovered a significant new resource play, the “Alpine High.” This significant new discovery is a reflection of the company’s strategic focus on ~~organic growth and its internal technical abilities.~~

~~Apache allocated additional capital to accelerate development of its Alpine High play and increased planned capital spending for~~long-term returns without stressing the year to $2 billion in order to bring production on-line in the second half of 2017. We remain committed to achieving “cash flow neutrality” in 2016, and we believe we remain on track to exit the year with no significant change in net debt (debt less cash and cash equivalents) relative to year-end 2015. A combination of asset disposal proceeds and a significant U.S. tax refund, both anticipated in the fourth quarter, should enable us to achieve our targeted cash balance ~~of $1.5 billion at year-end 2016.~~

sheet or diluting shareholders.

Operating Highlights

Significant operating activities for the quarter include the following:

~~Overall~~

Equivalent production decline from third quarter 2015 levels was 6 percent as a result of significant reduction in capital investments in 2015 and the first nine months of 2016 when compared to prior-year levels.

Liquids production for the third quarter 2016 averaged 336 thousand barrels of oil equivalent per day (Mboe/d), with crude oil representing 81 percent of total liquids production. Liquids production decreased 5 percent from the third quarter of 2015.North America

North America

During the third quarter, Apache announced the discovery of a new resource play, the “Alpine High.” The Alpine High acreage lies in the southern portion of the Delaware Basin, primarily in Reeves County, Texas. The Company has estimated significant hydrocarbons in place on its acreage position of approximately 320,000 contiguous net acres (at an average cost of approximately $1,300 per acre). Apache has already identified numerous drilling locations in the Barnett and Woodford formations, which are expected to deliver a combination of liquids rich gas and oil. The Company has 10 wells in the play currently producing in limited quantities because of infrastructure constraints. The Company is also exploring additional formations in this stacked play; including the oil-prone Bone Springs and Wolfcamp formations.

~~Onshore~~ equivalent production was down 1216 percent for the quarter relative to the ~~2015 period. The decrease~~2016 period, in ~~production is driven by a~~line with our expectations given the significant reduction in ~~North American onshore exploration and development~~ capital ~~spending during 2015 and~~investments over the ~~first nine months of 2016.~~past two years.

~~Third quarter~~Second-quarter equivalent production from the Permian Basin region, which accounts for more than half of ~~our~~Apache’s total ~~onshore~~ North American production, decreased 612 percent from the ~~third~~second quarter of ~~2015~~2016 as a result of ~~significantly~~ fewer wells placed on production during ~~2016.~~the previous two years. Second-quarter production was relatively flat with the prior sequential quarter, a reflection of increased activity during 2017.

Drilling and infrastructure development activities continue at Alpine High; specifically:


◦	First production from the Alpine High play was achieved in early May 2017, with net gas production now exceeding 60 million cubic feet of natural gas per day (MMcf/d), which is projected to increase to more than 100 MMcf/d by the end of September.


◦	During the first half of 2017, Apache invested $270 million in midstream facilities at Alpine High, with development ongoing.


◦	Well optimization work and appraisal drilling continued during the quarter. The Company drilled 4 appraisal wells in the oil window of the Wolfcamp/Bone Springs formations, where we continue to expand our inventory of drilling locations.

In July 2017, Apache announced three separate transactions to sell its subsidiary Apache Canada Ltd. (ACL) and its Canadian operations for aggregate cash proceeds of approximately $713 million, subject to foreign exchange movements and customary closing adjustments. The sale of assets at Midale and House Mountain, located in Saskatchewan and Alberta, closed on June 30, 2017 for $228 million of cash proceeds, with the two remaining transactions to sell ACL and Provost assets in Alberta expected to close in August 2017. The sale of Apache’s Canadian operations further streamlines our portfolio, enables us to allocate a higher percentage of capital to the Permian Basin, and eliminates approximately $800 million of asset retirement obligations from the Company’s balance sheet.

International ~~and Offshore~~

InThe Egypt weregion averaged 513 rigs and ~~placed 9~~drilled and completed 25 gross operated wells ~~on production~~ during the ~~quarter. Gross~~second quarter of 2017 including two high-rate exploration wells in the Matruh Basin, de-risking additional exploration prospects in the area. Net equivalent production ~~declined 3 percent compared with the third quarter of 2015, driven by well depletion and overall reduction in activity. On a net basis, equivalent production increased 9~~decreased 8 percent from the ~~third~~second quarter of ~~2015 primarily as~~2016 despite a decline of only 4 percent in gross production, a result of tax barrel impacts as a function of ~~our~~the Company’s production sharing contracts.

The North Sea region average daily production decreased 1523 percent ~~for~~from the ~~third~~second quarter of 2016, ~~from~~primarily the ~~third~~result of scheduled maintenance activities commencing during the second quarter of ~~last year primarily as a result of planned downtime~~2017 and natural well decline in the Forties and Bacchus fields. The Callater discovery came online in late May 2017, with facilities tieback ahead of schedule and additional drilling activities and well testing ongoing.

Results of Operations

Oil and Gas Revenues

The table below presents revenues by geographic region and each region’s percent contribution to revenues for ~~2016~~2017 and ~~2015.~~2016.


	For the Quarter Ended September 30,								For the Nine Months Ended September 30,								For the Quarter Ended June 30,								For the Six Months Ended June 30,
	2016				2015				2016				2015				2017				2016				2017				2016
	$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution
	($ in millions)																($ in millions)
Total Oil Revenues:
United States	$	377	34	%	$	492	40	%	$	1,099	36	%	$	1,629	39	%	$	355	34	%	$	409	37	%	$	752	34	%	$	722	37	%
Canada	47		4	%	55		4	%	132		4	%	190		5	%	47		4	%	46		4	%	96		4	%	85		5	%
North America	424		38	%	547		44	%	1,231		40	%	1,819		44	%	402		38	%	455		41	%	848		38	%	807		42	%
Egypt⁽¹⁾	476		43	%	426		35	%	1,209		40	%	1,444		35	%	423		40	%	437		39	%	909		41	%	733		38	%
North Sea	217		19	%	265		21	%	617		20	%	886		21	%	225		22	%	226		20	%	465		21	%	400		20	%
International ⁽¹⁾	693		62	%	691		56	%	1,826		60	%	2,330		56	%	648		62	%	663		59	%	1,374		62	%	1,133		58	%
Total ⁽¹⁾	$	1,117	100	%	$	1,238	100	%	$	3,057	100	%	$	4,149	100	%	$	1,050	100	%	$	1,118	100	%	$	2,222	100	%	$	1,940	100	%
Total Natural Gas Revenues:
United States	$	98	37	%	$	105	33	%	$	222	32	%	$	298	32	%	$	84	36	%	$	62	30	%	$	169	35	%	$	124	29	%
Canada	36		14	%	59		19	%	100		14	%	187		20	%	40		17	%	23		11	%	85		17	%	64		15	%
North America	134		51	%	164		52	%	322		46	%	485		52	%	124		53	%	85		41	%	254		52	%	188		44	%
Egypt ⁽¹⁾	103		39	%	106		33	%	298		43	%	337		36	%	95		41	%	102		49	%	197		40	%	195		45	%
North Sea	26		10	%	48		15	%	75		11	%	119		12	%	14		6	%	22		10	%	37		8	%	49		11	%
International ⁽¹⁾	129		49	%	154		48	%	373		54	%	456		48	%	109		47	%	124		59	%	234		48	%	244		56	%
Total ⁽¹⁾	$	263	100	%	$	318	100	%	$	695	100	%	$	941	100	%	$	233	100	%	$	209	100	%	$	488	100	%	$	432	100	%
Total Natural Gas Liquids (NGL) Revenues:
United States	$	49	83	%	$	42	84	%	$	132	82	%	$	139	84	%	$	52	83	%	$	49	83	%	$	122	82	%	$	83	82	%
Canada	4		7	%	2		4	%	11		7	%	10		6	%	6		9	%	4		7	%	14		10	%	7		7	%
North America	53		90	%	44		88	%	143		89	%	149		90	%	58		92	%	53		90	%	136		92	%	90		89	%
Egypt ⁽¹⁾	2		3	%	2		4	%	8		5	%	9		5	%	3		5	%	3		5	%	6		4	%	6		6	%
North Sea	4		7	%	4		8	%	9		6	%	8		5	%	2		3	%	3		5	%	6		4	%	5		5	%
International ⁽¹⁾	6		10	%	6		12	%	17		11	%	17		10	%	5		8	%	6		10	%	12		8	%	11		11	%
Total ⁽¹⁾	$	59	100	%	$	50	100	%	$	160	100	%	$	166	100	%	$	63	100	%	$	59	100	%	$	148	100	%	$	101	100	%
Total Oil and Gas Revenues:
United States	$	524	36	%	$	639	40	%	$	1,453	37	%	$	2,066	39	%	$	491	36	%	$	520	38	%	$	1,043	36	%	$	929	38	%
Canada	87		6	%	116		7	%	243		6	%	387		8	%	93		7	%	73		5	%	195		7	%	156		6	%
North America	611		42	%	755		47	%	1,696		43	%	2,453		47	%	584		43	%	593		43	%	1,238		43	%	1,085		44	%
Egypt ⁽¹⁾	581		41	%	534		33	%	1,515		39	%	1,790		34	%	521		39	%	542		39	%	1,112		39	%	934		38	%
North Sea	247		17	%	317		20	%	701		18	%	1,013		19	%	241		18	%	251		18	%	508		18	%	454		18	%
International ⁽¹⁾	828		58	%	851		53	%	2,216		57	%	2,803		53	%	762		57	%	793		57	%	1,620		57	%	1,388		56	%
Total ⁽¹⁾	$	1,439	100	%	$	1,606	100	%	$	3,912	100	%	$	5,256	100	%	$	1,346	100	%	$	1,386	100	%	$	2,858	100	%	$	2,473	100	%
Discontinued Operations:
Oil Revenues	$	—			$	—			$	—			$	138
Natural Gas Revenues	—				—				—				140
NGL Revenues	—				—				—				—
Total	$	—			$	—			$	—			$	278


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

Production

The table below presents the ~~third-quarter~~second-quarter and year-to-date ~~2016~~2017 and ~~2015~~2016 production and the relative increase or decrease from the prior period.


	For the Quarter Ended September 30,				For the Nine Months Ended September 30,				For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2016	Increase (Decrease)		2015	2016	Increase (Decrease)		2015	2017	Increase (Decrease)		2016	2017	Increase (Decrease)		2016
Oil Volume – b/d
United States	98,269	(18	)%	120,412	106,924	(14	)%	124,894	86,071	(19	)%	106,741	88,386	(21	)%	111,300
Canada	12,619	(15	)%	14,795	13,331	(16	)%	15,812	11,638	(10	)%	12,917	11,647	(15	)%	13,690
North America	110,888	(18	)%	135,207	120,255	(15	)%	140,706	97,709	(18	)%	119,658	100,033	(20	)%	124,990
Egypt⁽¹⁾⁽²⁾	110,809	14	%	97,173	105,118	6	%	98,712	96,961	(9	)%	106,223	99,327	(3	)%	102,241
North Sea	49,192	(16	)%	58,330	55,071	(8	)%	59,622	48,091	(19	)%	59,124	48,933	(16	)%	58,043
International	160,001	3	%	155,503	160,189	1	%	158,334	145,052	(12	)%	165,347	148,260	(8	)%	160,284
Total	270,889	(7	)%	290,710	280,444	(6	)%	299,040	242,761	(15	)%	285,005	248,293	(13	)%	285,274
Natural Gas Volume – Mcf/d
United States	395,062	(11	)%	445,239	404,282	(9	)%	442,650	364,052	(11	)%	408,126	365,481	(11	)%	408,943
Canada	233,635	(13	)%	270,027	248,912	(11	)%	280,120	205,408	(17	)%	246,830	210,484	(18	)%	256,635
North America	628,697	(12	)%	715,266	653,194	(10	)%	722,770	569,460	(13	)%	654,956	575,965	(13	)%	665,578
Egypt⁽¹⁾⁽²⁾	405,863	2	%	399,434	403,832	(5	)%	424,746	383,296	(6	)%	408,013	395,179	(2	)%	402,806
North Sea	69,509	(15	)%	81,392	66,884	6	%	62,848	34,348	(43	)%	60,318	39,111	(40	)%	65,556
International	475,372	(1	)%	480,826	470,716	(3	)%	487,594	417,644	(11	)%	468,331	434,290	(7	)%	468,362
Total	1,104,069	(8	)%	1,196,092	1,123,910	(7	)%	1,210,364	987,104	(12	)%	1,123,287	1,010,255	(11	)%	1,133,940
NGL Volume – b/d
United States	56,355	3	%	54,951	55,897	7	%	52,401	47,029	(15	)%	55,632	47,511	(15	)%	55,666
Canada	6,039	(6	)%	6,440	5,879	(3	)%	6,041	4,365	(14	)%	5,092	4,592	(21	)%	5,797
North America	62,394	2	%	61,391	61,776	6	%	58,442	51,394	(15	)%	60,724	52,103	(15	)%	61,463
Egypt⁽¹⁾⁽²⁾	1,124	2	%	1,099	1,120	(4	)%	1,169	880	(7	)%	950	917	(18	)%	1,119
North Sea	1,697	18	%	1,440	1,557	48	%	1,053	741	(53	)%	1,563	955	(36	)%	1,486
International	2,821	11	%	2,539	2,677	20	%	2,222	1,621	(35	)%	2,513	1,872	(28	)%	2,605
Total	65,215	2	%	63,930	64,453	6	%	60,664	53,015	(16	)%	63,237	53,975	(16	)%	64,068
BOE per day⁽³⁾
United States	220,468	(12	)%	249,569	230,202	(8	)%	251,069	193,775	(16	)%	230,393	196,811	(16	)%	235,123
Canada	57,597	(13	)%	66,239	60,695	(11	)%	68,541	50,238	(15	)%	59,148	51,319	(18	)%	62,260
North America	278,065	(12	)%	315,808	290,897	(9	)%	319,610	244,013	(16	)%	289,541	248,130	(17	)%	297,383
Egypt⁽²⁾	179,575	9	%	164,845	173,544	2	%	170,672	161,724	(8	)%	175,175	166,107	(3	)%	170,494
North Sea⁽⁴⁾	62,475	(15	)%	73,335	67,775	(5	)%	71,149	54,556	(23	)%	70,740	56,407	(20	)%	70,455
International	242,050	2	%	238,180	241,319	—		241,821	216,280	(12	)%	245,915	222,514	(8	)%	240,949
Total	520,115	(6	)%	553,988	532,216	(5	)%	561,431	460,293	(14	)%	535,456	470,644	(13	)%	538,332
Discontinued Operations:
Oil (b/d)	—			—	—			10,175
Natural Gas (Mcf/d)	—			—	—			125,831
NGL (b/d)	—			—	—			—
BOE/d	—			—	—			31,146


(1)	Gross oil, natural gas, and NGL production in Egypt for the ~~third~~second quarter and ~~nine-month~~six-month period of ~~2016~~2017 and ~~2015~~2016 were as follows:


	For the Quarter Ended September 30,		For the Nine Months Ended September 30,		For the Quarter Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015	2017	2016	2017	2016
Oil (b/d)	210,755	214,097	210,939	205,127	195,293	212,218	194,559	211,032
Natural Gas (Mcf/d)	826,548	873,418	828,950	865,553	825,947	814,283	811,608	830,165
NGL (b/d)	1,853	2,406	1,918	2,426	1,545	1,757	1,509	1,951


(2)	Includes production volumes per day attributable to a noncontrolling interest in Egypt for the ~~third~~second quarter and ~~nine-months~~six-month period of ~~2016~~2017 and ~~2015~~2016 of:


	For the Quarter Ended September 30,		For the Nine Months Ended September 30,		For the Quarter Ended June 30,		For the Six Months Ended June 30,
	2016	2015	2016	2015	2017	2016	2017	2016
Oil (b/d)	36,839	30,671	34,964	31,530	32,562	35,357	33,232	34,017
Natural Gas (Mcf/d)	135,233	125,657	134,591	127,186	128,696	136,029	132,197	134,266
NGL (b/d)	374	334	373	360	293	317	306	373


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


(4)	Average sales volumes from the North Sea for the ~~third~~second quarter and ~~nine-month period~~first six months of ~~2016 were 65,171~~2017 was 57,905 boe/d and ~~67,222~~58,347 boe/d, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings in the Beryl field.

Pricing

The table below presents ~~third-quarter~~second-quarter and year-to-date ~~2016~~2017 and ~~2015~~2016 pricing and the relative increase or decrease from the prior ~~periods.~~period.


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,						For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2016		Increase (Decrease)		2015		2016		Increase (Decrease)		2015		2017		Increase (Decrease)		2016		2017		Increase (Decrease)		2016
Average Oil Price - Per barrel
United States	$	41.83	(6	)%	$	44.47	$	37.53	(21	)%	$	47.78	$	45.18	8	%	$	41.95	$	46.99	32	%	$	35.61
Canada	40.17		—		40.07		36.04		(18	)%	44.00		44.52		13	%	39.39		45.70		34	%	34.11
North America	41.65		(5	)%	43.99		37.36		(21	)%	47.36		45.10		9	%	41.45		46.84		33	%	35.34
Egypt	46.54		(2	)%	47.63		41.97		(22	)%	53.59		47.98		6	%	45.42		50.57		28	%	39.47
North Sea	45.47		(8	)%	49.46		41.28		(24	)%	54.42		48.21		6	%	45.56		50.51		27	%	39.64
International	46.20		(4	)%	48.31		41.74		(23	)%	53.90		48.06		6	%	45.47		50.55		28	%	39.53
Total	44.35		(4	)%	46.30		39.86		(22	)%	50.82		46.89		9	%	43.14		49.06		31	%	37.37
Average Natural Gas Price - Per Mcf
United States	$	2.66	4	%	$	2.57	$	2.00	(19	)%	$	2.47	$	2.53	49	%	$	1.70	$	2.55	53	%	$	1.67
Canada	1.71		(28	)%	2.39		1.47		(40	)%	2.44		2.14		112	%	1.01		2.24		65	%	1.36
North America	2.31		(8	)%	2.50		1.80		(27	)%	2.46		2.39		66	%	1.44		2.44		57	%	1.55
Egypt	2.75		(4	)%	2.86		2.69		(7	)%	2.90		2.73		—		2.72		2.75		4	%	2.65
North Sea	4.14		(35	)%	6.41		4.12		(41	)%	6.95		4.54		15	%	3.95		5.27		28	%	4.11
International	2.96		(14	)%	3.46		2.89		(15	)%	3.42		2.88		—		2.88		2.98		4	%	2.86
Total	2.59		(10	)%	2.89		2.26		(21	)%	2.85		2.60		27	%	2.04		2.67		28	%	2.09
Average NGL Price - Per barrel
United States	$	9.59	17	%	$	8.20	$	8.65	(11	)%	$	9.70	$	12.26	26	%	$	9.74	$	14.21	74	%	$	8.17
Canada	6.10		89	%	3.23		6.61		8	%	6.12		15.99		87	%	8.54		16.53		140	%	6.88
North America	9.25		20	%	7.68		8.46		(9	)%	9.33		12.58		30	%	9.64		14.42		79	%	8.05
Egypt	28.12		4	%	26.94		27.54		(10	)%	30.49		31.11		12	%	27.68		35.74		31	%	27.24
North Sea	24.45		(5	)%	25.61		21.82		(18	)%	26.76		22.92		3	%	22.25		32.85		62	%	20.29
International	25.91		(1	)%	26.18		24.21		(16	)%	28.72		27.37		13	%	24.30		34.26		47	%	23.28
Total	9.97		19	%	8.41		9.11		(9	)%	10.04		13.03		27	%	10.22		15.10		74	%	8.67
Discontinued Operations:
Oil price ($/Bbl)	$	—			$	—	$	—			$	49.76
Natural Gas price ($/Mcf)	—				—		—				4.07
NGL price ($/Bbl)	—				—		—				—

~~Third-Quarter 2016~~Second-Quarter 2017 compared to ~~Third-Quarter 2015~~Second-Quarter 2016

Crude Oil RevenuesCrude oil revenues for the ~~third~~second quarter of ~~2016~~2017 totaled $1.1 billion, a ~~$121~~$68 million decrease from the comparative ~~2015~~2016 quarter. A 715 percent decrease in average daily production reduced ~~third-quarter 2016~~second-quarter 2017 revenues by ~~$69~~$147 million compared to the prior-year quarter, while 49 percent ~~lower~~higher average realized prices ~~decreased~~increased revenues by ~~$52~~$79 million. Crude oil accounted for 78 percent of oil and gas production revenues and 5253 percent of worldwide production in the ~~third~~second quarter of ~~2016.~~2017. Crude oil prices realized in the ~~third~~second quarter of ~~2016~~2017 averaged ~~$44.35~~$46.89 per barrel, compared with ~~$46.30~~$43.14 per barrel in the comparative prior-year quarter.

Worldwide oil production decreased ~~19.8~~42.2 Mb/d to ~~270.9~~242.8 Mb/d in the second quarter of 2017 from the comparative prior-year period, primarily athe result of natural decline in all regions and reduced drilling activity in response to ~~lower~~ commodity ~~prices. Decreases from natural decline were partially offset by higher net production in Egypt as a function of our production sharing contracts.~~

price weakness.

Natural Gas Revenues Gas revenues for the ~~third~~second quarter of ~~2016~~2017 totaled ~~$263~~$233 million, a ~~$55~~$24 million ~~decrease~~increase from the comparative ~~2015~~2016 quarter. ~~An 8~~A 12 percent decrease in average daily production reduced ~~third-quarter~~second-quarter revenues by ~~$22~~$32 million compared to the prior-year quarter, while 1027 percent ~~lower~~higher average realized prices ~~decreased~~increased revenues by ~~$33~~$56 million. Natural gas accounted for 1817 percent of ~~our~~Apache’s oil and gas production revenues and 3536 percent of ~~our~~its equivalent production during the ~~third~~second quarter of ~~2016.~~2017.

~~Our worldwide~~

Worldwide natural gas production decreased ~~92.0~~136 MMcf/d to ~~1,104~~987 MMcf/d in the ~~third~~second quarter of ~~2016~~2017 from the comparative prior-year period, primarily the result of ~~reduced drilling~~natural decline in all regions and maintenance activity in ~~response to lower commodity prices.~~the North Sea.

NGL Revenues NGL revenues for the ~~third~~second quarter of ~~2016~~2017 totaled ~~$59~~$63 million, a $9$4 million increase from the comparative ~~2015~~2016 quarter. A 216 percent ~~increase~~decrease in average daily production ~~increased third-quarter 2016~~reduced second-quarter 2017 revenues by approximately $1$12 million, while 1927 percent higher average realized prices increased revenues by $8$16 million. NGLs accounted for 45 percent of ~~our~~Apache’s oil and gas production revenues and 1311 percent of ~~our~~its equivalent production during the ~~third~~second quarter of ~~2016.~~2017.

Worldwide production of NGLs ~~increased 1.3~~decreased 10.2 Mb/d to ~~65.2~~53.0 Mb/d in the ~~third~~second quarter of ~~2016,~~2017 from the comparative prior-year period, primarily the result of ~~new production from completion activity~~natural decline in ~~our North American onshore areas, gas processing plant downtime in the prior year period, and changes to existing gas processing arrangements.~~all regions.

Year-to-Date ~~2016~~2017 compared to Year-to-Date ~~2015~~2016

Crude Oil RevenuesCrude oil revenues for the first ~~nine~~six months of ~~2016~~2017 totaled ~~$3.1~~$2.2 billion, a ~~$1.1 billion decrease~~$282 million increase from the comparative ~~2015~~2016 period. A 613 percent decrease in average daily production reduced ~~2016~~2017 oil revenues by ~~$197~~$305 million compared to the prior-year period, while 2231 percent ~~lower~~higher average realized prices ~~decreased~~increased revenues by ~~$895~~$587 million. Crude oil accounted for 78 percent of oil and gas production revenues and 53 percent of worldwide production for the first ~~nine~~six months of ~~2016,~~2017, compared to 79 percent and 53 percent, respectively, for the ~~2015~~2016 period. Crude oil prices realized in the first ~~nine~~six months of ~~2016~~2017 averaged ~~$39.86~~$49.06 per barrel, compared with ~~$50.82~~$37.37 per barrel in the comparative prior-year period.

Worldwide production decreased ~~18.6~~37.0 Mb/d to ~~280.4~~248.3 Mb/d in the first ~~nine~~six months of ~~2016~~2017 from the comparative prior-year period, primarily athe result of natural decline in all regions and reduced drilling activity in response to ~~lower~~ commodity ~~prices.~~price weakness.

Natural Gas Revenues Gas revenues for the first ~~nine~~six months of ~~2016~~2017 totaled ~~$695~~$488 million, a ~~$246~~$56 million ~~decrease~~increase from the comparative ~~2015~~2016 period. ~~A 7~~An 11 percent decrease in average daily production reduced ~~2016~~2017 natural gas revenues by ~~$51~~$63 million compared to the prior-year period, while 2128 percent ~~lower~~higher average realized prices ~~decreased~~increased revenues by ~~$195~~$119 million. Natural gas accounted for 1817 percent of ~~our~~Apache’s oil and gas production revenues and 3536 percent of ~~our~~its equivalent production ~~for~~during the first ~~nine~~six months of ~~2016,~~2017, compared to 1817 percent and 3635 percent, respectively, for the ~~2015~~2016 period.

Our worldwide natural gas production decreased ~~86.5~~124 MMcf/d to ~~1,124~~1,010 MMcf/d in the first ~~nine~~six months of ~~2016~~2017 from the comparative prior-year period, primarily the result of ~~reduced drilling activity~~natural decline in ~~response to lower commodity prices.~~all regions.

NGL RevenuesNGL revenues for the first ~~nine~~six months of ~~2016~~2017 totaled ~~$160~~$148 million, a $6$47 million ~~decrease~~increase from the comparative ~~2015~~2016 period. A 616 percent ~~increase~~decrease in average production ~~increased 2016~~reduced 2017 NGL revenues by $9$28 million compared to the prior-year period, while 974 percent ~~lower~~higher average realized prices ~~decreased~~increased revenues by ~~$15~~$75 million. NGLs accounted for ~~nearly 4~~5 percent of Apache’s oil and gas production revenues and 1211 percent of ~~our~~its equivalent production for the first ~~nine~~six months of ~~2016,~~2017, compared to 34 percent and 1112 percent, respectively, for the ~~2015~~2016 period.

Worldwide production of NGLs ~~increased 3.8~~decreased 10.1 Mb/d to ~~64.5~~54.0 Mb/d in the first ~~nine~~six months of ~~2016~~2017 from the comparative prior-year period, primarily ~~as a~~the result of ~~North American onshore production growth from drilling and recompletion activity and also new production~~natural decline in ~~North Sea’s Beryl field.~~all regions.

Operating Expenses

The table below presents a comparison of ~~our~~Apache’s expenses on an absolute dollar basis and a boe basis. ~~Our~~Apache’s discussion may reference expenses on a boe basis, on an absolute dollar basis or both, depending on their relevance. Operating expenses include costs attributable to a noncontrolling interest in ~~Egypt but, for the quarter and nine months ended September 30, 2015, exclude discontinued operations in Australia.~~Egypt.


	For the Quarter Ended September 30,								For the Nine Months Ended September 30,								For the Quarter Ended June 30,								For the Six Months Ended June 30,
	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016		2017			2016		2017			2016
	(In millions)				(Per boe)				(In millions)				(Per boe)				(In millions)				(Per boe)				(In millions)					(Per boe)
Lease operating expenses⁽¹⁾	$	382	$	450	$	7.94	$	8.84	$	1,119	$	1,398	$	7.68	$	9.12	$	372	$	359	$	8.81	$	7.38	$	708		$	737	$	8.27		$	7.52
Gathering and transportation⁽¹⁾	51		58		1.09		1.12		155		163		1.07		1.06		48		52		1.19		1.05		105			104		1.24			1.06
Taxes other than income	9		104		0.19		2.04		85		232		0.58		1.52		29		65		0.68		1.33		71			76		0.83			0.78
Exploration	161		223		3.36		4.37		347		706		2.38		4.60		108		91		2.58		1.87		200			186		2.35			1.90
General and administrative	102		89		2.13		1.75		298		284		2.04		1.85		106		103		2.53		2.10		209			196		2.45			2.00
Transaction, reorganization, and separation																	4		9		0.08		0.17		(6		)	24		(0.07		)	0.24
Depreciation, depletion, and amortization:
Oil and gas property and equipment⁽¹⁾	610		793		12.67		15.57		1,875		2,247		12.87		14.67		536		629		12.72		12.92		1,074			1,265		12.56			12.91
Other assets	38		79		0.79		1.54		120		245		0.82		1.60		36		40		0.86		0.83		74			82		0.87			0.84
Asset retirement obligation accretion	40		37		0.83		0.71		116		109		0.79		0.71		37		38		0.87		0.78		73			76		0.85			0.77
Impairments	836		3,903		17.47		76.58		1,009		6,327		6.92		41.28		—		173		—		3.56		8			173		0.09			1.77
Transaction, reorganization, and separation	12		—		0.25		0.02		36		120		0.24		0.79
Financing costs, net	102		160		2.13		3.13		311		401		2.13		2.61		99		104		2.37		2.15		199			209		2.34			2.13

(1) For expenses impacted by the timing of ~~2016~~2017 liftings in the North Sea, per-boe calculations are based on sales volumes rather than production volumes.

Lease Operating Expenses (LOE) LOE ~~decreased $68~~increased $13 million, or 154 percent, for the ~~third~~second quarter of ~~2016,~~2017, and ~~$279~~decreased $29 million, or 204 percent for the first ~~nine-months~~six months of ~~2016,~~2017, on an absolute dollar basis relative to the comparable periods of ~~2015.~~2016. On a per-unit basis, LOE ~~decreased 10~~increased 19 percent to ~~$7.94~~$8.81 per boe for the ~~third~~second quarter of ~~2016,~~2017, and 1610 percent to ~~$7.68~~$8.27 per boe for the first ~~nine~~six months of ~~2016,~~2017, as compared to the prior-year periods. ~~These reductions reflect~~The per barrel increase for both comparative periods is primarily the ~~impact~~result of ~~our continued focus on cost reductions consistent with~~workovers in North America and planned maintenance in the ~~current price environment.~~North Sea during the second quarter of 2017.

Gathering and Transportation Gathering and transportation costs totaled ~~$51~~$48 million and ~~$155~~$105 million ~~respectively,~~ in the ~~third~~second quarter and first ~~nine~~six months of ~~2016,~~2017, respectively, a decrease of ~~$7 million and $8~~$4 million from the ~~third~~second quarter of 2016 and an increase of $1 million from the first ~~nine~~six months of ~~2015, respectively. The decrease was driven primarily by a decrease in volumes and rate changes in Canada and Egypt, partially offset by rate changes in the Permian Basin.~~2016.

Taxes other than Income Taxes other than income totaled $9$29 million and ~~$85~~$71 million for the ~~third~~second quarter and first ~~nine~~six months of ~~2016,~~2017, respectively, a decrease of ~~$95~~$36 million and ~~$147~~$5 million from the ~~third~~second quarter and first ~~nine~~six months of ~~2015,~~2016, respectively.

~~In the third quarter of this year, the rate of the U.K.~~ The North Sea Petroleum Revenue Tax (PRT), rate, historically assessed on qualifying fields in the U.K. North Sea, was reduced to zero ~~percent effective January 1, 2016. As a result, PRT tax expense decreased $83 million and $91 million~~during 2016, driving the reduction for the ~~third~~second quarter and first ~~nine~~six months of ~~2016, respectively, from the comparative prior-year periods.~~

2017. Severance tax expense and ad valorem tax expense ~~decreased $4~~increased $1 million and $4$2 million, respectively, on ~~lower oil production and~~higher commodity prices during the ~~third~~second quarter compared to the prior year quarter. For the first ~~nine~~six months of ~~2016,~~2017, severance tax expense and ad valorem tax expense ~~decreased $25~~increased $9 million and ~~$16~~$3 million, respectively, compared to the first ~~nine~~six months of ~~2015.~~2016.

Exploration Expense Exploration expense includes unproved leasehold impairments, exploration dry hole expense, geological and geophysical expenses, and the costs of maintaining and retaining unproved leasehold properties. Exploration expenses in the ~~third~~second quarter and first ~~nine~~six months of ~~2016 decreased $62~~2017 increased $17 million and ~~$359~~$14 million ~~respectively, from~~compared to the ~~comparative~~ prior-year periods.

The following table presents a summary of exploration expense:


	For the Quarter Ended September 30,				For the Nine Months Ended September 30,				For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015		2017		2016		2017		2016
	(In millions)								(In millions)
Unproved leasehold impairments	$	114	$	199	$	222	$	515	$	39	$	66	$	54	$	108
Dry hole expense	7		—		38		69		46		2		98		31
Geological and geophysical expense	21		8		30		55		6		4		12		9
Exploration overhead and other	19		16		57		67		17		19		36		38
	$	161	$	223	$	347	$	706	$	108	$	91	$	200	$	186

Unproved leasehold impairments in the second quarter and first six months of 2017 decreased $27 million and $54 million, respectively, from the comparative prior-year periods, primarily a result of stabilizing commodity and leasehold prices. Dry hole expense increased $44 million and $67 million for the second quarter and first six months of 2017, respectively, from the comparative prior-year periods on activity primarily in the U.S., North Sea, and Suriname.

General and Administrative (G&A) Expenses G&A ~~expenses~~expense for the ~~third~~second quarter and first ~~nine~~six months of ~~2016~~2017 were ~~$13~~$3 million and ~~$14~~$13 million higher, respectively, than the comparative ~~2015~~2016 periods. ~~For the first nine months of 2016, the~~The increase in G&A expense was primarily related to non-cash stock-based compensation expense and other corporate costs.

Transaction, Reorganization, and Separation (TRS) Costs The Company recorded TRS expense of $4 million during the second quarter of 2017, but recorded a total net benefit of $6 million for the first six months of 2017. The net benefit was primarily a result of a decrease in the market value of stock ~~based compensation expense.~~awards outstanding for former employees. During 2016, the Company recorded an expense of $9 million and $24 million in the second quarter and first six months of 2016, respectively, in connection with employee separation, the consolidation of office space, and other reorganization efforts.

Depreciation, Depletion, and Amortization (DD&A) Oil and gas property DD&A expense of ~~$610~~$536 million in the ~~third~~second quarter of ~~2016~~2017 decreased ~~$183~~$93 million compared to the ~~third~~second quarter of ~~2015.~~2016. For the first ~~nine~~six months of ~~2016,~~2017, oil and gas property DD&A expense decreased ~~$372~~$191 million compared to the prior-year period. The Company’s oil and gas property DD&A rate decreased ~~$2.90~~$0.20 per boe and ~~$1.80~~$0.35 per boe in the ~~third~~second quarter and first ~~nine~~six months of ~~2016,~~2017, respectively, compared to the comparable prior-year periods. The primary factor driving ~~both~~ lower absolute dollar expense ~~and lower DD&A per boe rates~~ was a decrease in production volumes from the ~~reduction~~comparative prior-year periods.

Impairments The Company did not record any asset impairments in connection with fair value assessments in the ~~Company’s oil and gas properties as a result~~second quarter of ~~impairments to proved properties in 2015.~~

~~Impairments~~2017. During the ~~third~~first quarter of ~~2016,~~2017, the Company recorded asset impairments in connection with fair value assessments totaling ~~$836 million, comprising $355~~$8 million for ~~proved oil and gas properties in Canada and $481 million for~~a U.K. PRT ~~benefits~~decommissioning asset that ~~are~~is no longer expected to be realizable from future abandonment activities in the North Sea. ~~Additionally, during~~During each of the second quarter and first six months of 2016, the Company recorded ~~$68~~$173 million ~~for impairments of proved oil and gas properties in the U.S. and Canada and $105 million for certain GTP assets. The Company recorded $3.9 billion and $6.3 billion~~ of impairments in ~~the third quarter and first nine months of 2015, respectively.~~connection with fair value assessments. For more information regarding asset impairments, please refer to “Fair Value Measurements” within Note 1—Summary of Significant Accounting Policies in the Notes to Consolidated Financial ~~Statements.~~Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

~~Transaction, Reorganization, and Separation~~ The Company incurred $12 million and $36 million for the third quarter and first nine months of 2016, respectively, related to reorganization costs. The costs incurred for the year include approximately $29 million for employee separation and $7 million for consolidation of office space and other reorganization efforts.

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


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,						For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015			2017			2016			2017			2016
	(In millions)												(In millions)
Interest expense	$	116		$	120		$	348		$	371		$	115		$	116		$	231		$	232
Amortization of deferred loan costs	2			6			5			10			2			2			4			3
Capitalized interest	(13		)	(3		)	(36		)	(12		)	(13		)	(12		)	(27		)	(23		)
Loss on extinguishment of debt	—			39			—			39			—			—			1			—
Interest income	(3		)	(2		)	(6		)	(7		)	(5		)	(2		)	(10		)	(3		)
Financing costs, net	$	102		$	160		$	311		$	401		$	99		$	104		$	199		$	209

Net financing costs decreased ~~$58~~$5 million and ~~$90~~$10 million in the ~~third~~second quarter and first ~~nine~~six months of ~~2016,~~2017, respectively, compared to the same prior-year ~~period~~periods on higher capitalized interest ~~lower~~and interest ~~expense, and a $39 million loss on extinguishment of debt incurred in the third quarter of 2015.~~

income.

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

In July 2017, Apache announced the sale of ACL and classified its investment in the subsidiary as held for sale as of June 30, 2017. For more information regarding this transaction, please refer to Note 2—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q. As a result of this transaction, Apache recorded a deferred tax asset associated with its investment in ACL and decreased its deferred tax liability associated with its investment in other foreign subsidiaries. This resulted in the Company recording a $674 million deferred income tax benefit in the second quarter of 2017.

Also during the second quarter of 2017, Apache’s effective income tax rate was primarily impacted by gains on the sale of oil and gas properties and an increase in the amount of valuation allowance on Canadian deferred tax assets. During the ~~third~~second quarter of 2016, Apache’s effective income tax rate was primarily impacted by an increase in the valuation allowance on Canadian deferred tax assets.

Apache’s 2017 year-to-date effective income tax rate is primarily impacted by ~~non-cash impairments~~the decrease in deferred taxes associated with its investments in foreign subsidiaries, gains on the sale of ~~the carrying value of the Company’s~~ oil and gas properties, non-cash impairments of the Company’s PRT decommissioning asset, ~~the impact of the change in U.K. statutory income tax rate,~~ and an increase in the amount of valuation ~~allowances~~allowance on ~~U.S. and~~ Canadian deferred tax assets.

During the third quarter of 2015, Apache’s effective tax rate was impacted primarily by non-cash impairments of the carrying value of the Company’s oil and gas properties and an increase in the amount of valuation allowances on Canadian deferred tax assets, U.S. foreign tax credits and U.S. net operating loss carryforwards.

Apache’s 2016 year-to-date effective tax rate was primarily impacted ~~primarily~~ by non-cash impairments of the carrying value of the Company’s oil and gas properties, non-cash impairments of the Company’s PRT decommissioning asset, the impact of the change in U.K. statutory income tax rate, and an increase in the ~~amount of~~ valuation ~~allowances~~allowance on ~~U.S. and~~ Canadian deferred tax assets. ~~Apache’s 2015 year-to-date effective~~

Apache and its subsidiaries are subject to U.S. federal income tax ~~rate was impacted primarily~~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 ~~non-cash impairments of~~ the ~~carrying value~~relevant taxing authority. In April 2017, the Internal Revenue Service (IRS) began their audit of the Company’s oil and gas properties and an increase in the amount of valuation allowances on Canadian deferred tax assets, U.S. foreign tax credits, and U.S. net operating loss carryforwards, offset by a $414 million deferred tax benefit associated with a reduction in the U.K. statutory2014 income tax ~~rate from 62 percent to 50 percent.~~year. 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.

Capital Resources and Liquidity

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

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

Apache’s long-term operating cash flows are dependent on reserve replacement and the level of costs required for ongoing operations. Cash investments are required to fund activity necessary to offset the inherent declines in production and proved crude oil and natural gas reserves. Future success in maintaining and growing reserves and production is highly dependent on the success of ~~our~~Apache’s drilling program and ~~our~~its ability to add reserves economically. ~~Deterioration~~Changes in commodity prices also ~~impacts~~impact estimated quantities of proved reserves. In the first ~~nine~~six months of ~~2016, we~~2017, Apache recognized ~~negative~~positive reserve revisions of approximately 122 percent of ~~our~~its year-end ~~2015~~2016 estimated proved reserves as a result of ~~lower~~higher prices. ~~If realized prices for the remainder of 2016 approximate commodity future prices as of September 30, 2016, the Company does not expect additional negative revisions for the remainder of the year.~~

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

For additional information, please see Part I, Items 1 and 2, “Business and Properties,” and Item 1A, “Risk Factors,” in ~~our~~the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

Sources and Uses of Cash

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


	For the Nine Months Ended September 30,					For the Six Months Ended June 30,
	2016			2015		2017		2016
	(In millions)					(In millions)
Sources of Cash and Cash Equivalents:
Net cash provided by continuing operating activities	$	1,634		$	2,380
Proceeds from asset divestitures	74			5,695
Net cash provided by operating activities						$	1,206	$	983
Proceeds from sale of oil and gas properties						711		48
Other	38			—		27		28
	1,746			8,075		1,944		1,059
Uses of Cash and Cash Equivalents:
Capital expenditures ⁽¹⁾	$	1,314		$	3,675	$	1,157	$	925
Leasehold and property acquisitions	169			254		67		118
Net cash used by Australia discontinued operations	—			208
Net commercial paper and bank loan repayments	—			1,570
Payment of fixed-rate debt	1			939
Payments on fixed-rate debt						70		—
Dividends paid	284			283		190		189
Distributions to noncontrolling interest	215			97		170		93
Other	—			73
	1,983			7,099		1,654		1,325
Increase (decrease) in cash and cash equivalents	$	(237	)	$	976	$	290	$	(266	)


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

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

Net cash provided by ~~continuing~~ operating activities for the first ~~nine~~six months of ~~2016~~2017 totaled ~~$1.6~~$1.2 billion, ~~a decrease~~an increase of ~~$746~~$223 million from the first ~~nine~~six months of ~~2015.~~2016. The ~~decrease~~increase primarily reflects ~~lower~~higher commodity ~~prices.~~prices compared to the prior-year period.

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

Asset Divestitures The Company ~~had~~recorded proceeds from asset divestitures totaling ~~$74~~$711 million and ~~$5.7 billion~~$48 million in the first ~~nine~~six months of ~~2016~~2017 and ~~2015,~~2016, respectively. For more information regarding ~~our~~the Company’s acquisitions and divestitures, please see Note 3—2—Acquisitions and ~~Divestitures.~~Divestitures in the Notes to Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Capital Expenditures Worldwide exploration and development (E&D) cash expenditures for the first ~~nine~~six months of ~~2016~~2017 totaled ~~$1.3 billion,~~$883 million, compared to ~~$3.6 billion~~$925 million for the first ~~nine~~six months of ~~2015. This reduction is a direct result of our proactive measures to adjust our capital budget to reflect lower commodity prices and operating cash flows.~~2016. Apache operated an average of 1434 drilling rigs during the ~~third~~second quarter of ~~2016.~~2017.

Apache also completed leasehold and property acquisitions totaling ~~$169~~$67 million and ~~$254~~$118 million during the first ~~nine~~six months of 2017 and 2016, ~~and 2015,~~ respectively. ~~Our 2016 acquisition investments continue to focus on adding new leasehold positions to our North American onshore portfolio.~~

Apache’s investment in gas gathering, transmission, and processing (GTP) facilities totaled ~~$33 million and $113~~$274 million in the first ~~nine~~six months of ~~2016 and 2015, respectively.~~2017. Expenditures in ~~2016~~2017 primarily comprise investments in infrastructure for the Alpine High play. No meaningful GTP expenses were incurred during 2016.

Dividends For the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015,~~2016, the Company paid ~~$284~~$190 million and ~~$283~~$189 million, respectively, in dividends on its common stock.

Liquidity

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


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
	(In millions)				(In millions)
Cash and cash equivalents	$	1,230	$	1,467	$	1,667	$	1,377
Total debt	8,722		8,717		8,479		8,544
Equity	7,949		9,490		8,265		7,679
Available committed borrowing capacity	3,500		3,500		3,500		3,500

Cash and cash equivalents The Company had ~~$1.2~~$1.7 billion in cash and cash equivalents as of ~~September~~June 30, ~~2016,~~2017, compared to ~~$1.5~~$1.4 billion at December 31, ~~2015.~~2016. At ~~September~~June 30, ~~2016,~~2017, approximately ~~$1.0~~$1.5 billion of the cash was held by foreign subsidiaries. The cash held by foreign subsidiaries should not be subject to additional U.S. income taxes if repatriated. The majority of the cash is invested in highly liquid, investment grade securities with maturities of three months or less at the time of purchase.

Debt As of ~~September~~June 30, ~~2016,~~2017, outstanding debt, which consisted of notes and debentures, totaled ~~$8.7~~$8.5 billion. AsCurrent debt as of ~~September~~June 30, ~~2016, Apache had $483,000~~2017, included $150 million of 7.0% senior notes due ~~March~~February 1, 2018.

In November 2016, the Company initiated a program to purchase in the open market up to $250 million in aggregate principal amount of senior notes issued under its indentures. In the fourth quarter of 2016, the Company purchased and canceled $181 million aggregate principal amount of its senior notes through open market repurchases for $182 million in cash, including accrued interest and $0.5 million of premium.

In January 2017, ~~classified as short-term~~the Company purchased and canceled an additional $69 million aggregate principal amount of senior notes for $71 million in cash, including accrued interest and $1 million of premium, which completed the open market repurchase program. These repurchases resulted in a $1 million net loss on extinguishment of debt, onwhich is included in “Financing costs, net” in the Company’s consolidated ~~balance sheet.~~statement of operations. The net loss includes an acceleration of related discount and deferred financing costs.

Available committed borrowing capacity In June 2015, the Company entered into a five-year revolving credit facility ~~with~~which matures in June 2020, subject to Apache’s two, one-year extension options. The facility provides for aggregate commitments of $3.5 billion ~~in commitments~~(including a $750 million letter of credit subfacility) and rights to increase commitments to $4.5 billion. Proceeds from borrowings may be used for general corporate purposes. Apache’s available borrowing capacity under this facility supports its commercial paper program, currently $3.5 billion. 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 ~~September~~June 30, ~~2016,~~2017, the Company had no ~~debt outstanding under~~ commercial paper or borrowings under committed bank facilities ~~and~~or uncommitted bank ~~lines.~~lines outstanding.

In February 2016, the Company entered into a ~~three-year~~ letter of credit facility providing £900 million in commitments ~~with options~~and rights to increase commitments to £1.075 billion and extend the term by one year. 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. The facility’s representations and warranties, covenants, and events of default are substantially similar to those in the Company’s $3.5 billion revolving credit facility. Commissions are payable on outstanding letters of credit and borrowings bear interest (at a base rate or LIBOR), plus a margin. Letter of credit commissions, the interest margin, and the facility fee vary depending on the Company’s senior unsecured long-term debt rating.billion. This facility matures in February 2020 and is available for the Company’s letter of credit needs, particularly those which may arise in respect of abandonment obligations assumed in various North Sea acquisitions. The facility also is available for loans to cash collateralize letters of credit or obligations to provide letters of credit, in each case, to the extent letters of credit are unavailable under the facility. As of ~~September~~June 30, ~~2016, a letter~~2017, three letters of credit ~~for~~aggregating approximately ~~£96~~£147.5 million ~~was~~and no borrowings were outstanding under this facility.

The Company was in compliance with the terms of ~~all~~these credit facilities as of ~~September~~June 30, ~~2016.~~2017.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices ~~we receive~~the Company receives for ~~our~~its crude oil, natural gas, and NGLs, which have historically been very volatile because of unpredictable events such as economic growth or retraction, weather, political climate, and global supply and demand. ~~Our~~The Company’s average crude oil realizations have ~~decreased 4~~increased 9 percent to ~~$44.35~~$46.89 per barrel in the ~~third~~second quarter of ~~2016~~2017 from ~~$46.30~~$43.14 per barrel in the comparable period of ~~2015. Our~~2016. The Company’s average natural gas price realizations have ~~decreased 10~~increased 27 percent to ~~$2.59~~$2.60 per Mcf in the ~~third~~second quarter of ~~2016~~2017 from ~~$2.89~~$2.04 per Mcf in the comparable period of ~~2015.~~2016. Based on average daily production for the second quarter of 2017, a $1.00 per barrel change in the weighted average realized oil price would have increased or decreased revenues for the quarter by approximately $22 million, and a $0.10 per Mcf change in the weighted average realized price of natural gas would have increased or decreased revenues for the quarter by approximately $9 million.

WeApache periodically ~~enter~~enters into derivative positions on a portion of ~~our~~its projected oil and natural gas production through a variety of financial and physical arrangements intended to manage fluctuations in cash flows resulting from changes in commodity prices. Apache periodically uses futures contracts, swaps, and options to mitigate commodity price risk. Apache does not hold or issue derivative instruments for trading purposes. As of ~~September~~June 30, ~~2016, Apache~~2017, the Company had no open ~~commodity~~natural gas derivatives not designated as cash flow hedges in an asset position with a fair value of $2 million. A 10 percent increase in gas prices would decrease the asset by approximately $2 million, while a 10 percent decrease in prices would increase the asset by approximately $2 million. As of June 30, 2017, the Company had open oil derivatives not designated as cash flow hedges in an asset position with a fair value of $139 million. A 10 percent increase in oil prices would decrease the asset by approximately $76 million, while a 10 percent decrease in prices would increase the asset by approximately $117 million. These fair value changes assume volatility based on prevailing market parameters at June 30, 2017. See Note 3—Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q for notional volumes and terms associated with the Company’s derivative ~~positions.~~contracts.

Foreign Currency Risk

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

Foreign currency gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated at the end of each month. Currency gains and losses are included as either a component of “Other” under “Revenues and Other” or, as is the case when ~~we re-measure our~~the Company re-measures its foreign tax liabilities, as a component of the Company’s provision for income tax expense on the statement of consolidated operations. A foreign currency net gain or loss of ~~$118~~$85 million would result from a 10 percent weakening or strengthening, respectively, in the Canadian dollar and British pound as of ~~September~~June 30, ~~2016.~~2017.

ITEM 4 – CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

John J. Christmann IV, the Company’s Chief Executive Officer and President, in his capacity as principal executive officer, and Stephen J. Riney, the Company’s Executive Vice President and Chief Financial Officer, in his capacity as principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2016,~~2017, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Company’s disclosure controls and procedures were effective, providing effective means to ensure that information we are required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

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

Changes in Internal Control ~~over~~Over Financial Reporting

InThere were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, ~~2016, Apache modified certain policies, procedures, and related internal controls~~2017 that were impacted by the change in accounting principle from the full cost method to the successful efforts method of accounting. There was no other change in our internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q thathave materially affected, or isare reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

PART II - OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

Please refer to ~~both~~ Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015~~2016 (filed with the SEC on February ~~26, 2016)~~24, 2017) and Note 9—Commitments and Contingencies in the notes to the consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, for a description of material legal proceedings.


ITEM 1A.	RISK FACTORS

Please refer to Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2015,~~2016, and Part I, Item 3—Quantitative and Qualitative Disclosures About Market Risk of this Quarterly Report on Form 10-Q. There have been no material changes to our risk factors since our annual report on Form 10-K for the fiscal year ended December 31, 2016.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None


ITEM 4.	MINE SAFETY DISCLOSURES

None


ITEM 5.	OTHER INFORMATION

None


ITEM 6.	EXHIBITS


3.1	–	Restated Certificate of Incorporation of Registrant, dated September 19, 2013, as filed with the Secretary of State of Delaware on September 19, 2013 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed September 20, 2013, SEC File No. 001-4300).	–	Restated Certificate of Incorporation of Registrant, dated September 19, 2013, as filed with the Secretary of State of Delaware on September 19, 2013 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed September 20, 2013, SEC File No. 001-4300).
3.2	–	Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated May 14, 2015, as filed with the Secretary of State of Delaware on May 14, 2015 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed May 20, 2015, SEC File No. 001-4300).	–	Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated May 14, 2015, as filed with the Secretary of State of Delaware on May 14, 2015 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed May 20, 2015, SEC File No. 001-4300).
3.3	–	Bylaws of Registrant, as amended February 3, 2016 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed February 9, 2016, SEC File No. 001-4300).	–	Bylaws of Registrant, as amended May 11, 2017 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed May 16, 2017, SEC File No. 001-4300).
*10.1	–	Form of Restricted Stock Unit Award Agreement dated September 14, 2016.	–	Apache Corporation Non-Employee Directors’ Compensation Plan, as amended and restated July 13, 2017.
*31.1	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.
*31.2	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.
*32.1	–	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.	–	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.
*101.INS	–	XBRL Instance Document.	–	XBRL Instance Document.
*101.SCH	–	XBRL Taxonomy Schema Document.	–	XBRL Taxonomy Schema Document.
*101.CAL	–	XBRL Calculation Linkbase Document.	–	XBRL Calculation Linkbase Document.
*101.DEF	–	XBRL Definition Linkbase Document.	–	XBRL Definition Linkbase Document.
*101.LAB	–	XBRL Label Linkbase Document.	–	XBRL Label Linkbase Document.
*101.PRE	–	XBRL Presentation Linkbase Document.	–	XBRL Presentation Linkbase Document.



*	Filed herewith

SIGNATURES

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



		APACHE CORPORATION

Dated:	~~November~~August 3, ~~2016~~2017	/s/ STEPHEN J. RINEY
		Stephen J. Riney
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Dated:	~~November~~August 3, ~~2016~~2017	/s/ REBECCA A. HOYT
		Rebecca A. Hoyt
		Senior Vice President, Chief Accounting Officer, and Controller
		(Principal Accounting Officer)

4743



	For the Nine Months Ended September 30,
	2016			2015*
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss including noncontrolling interest	$	(1,130	)	$	(6,239	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss from discontinued operations	33			135
Gain on divestitures	(21		)	(204		)
Exploratory dry hole expense and unproved leasehold impairments	260			584
Depreciation, depletion, and amortization	1,995			2,492
Asset retirement obligation accretion	116			109
Impairments	1,009			6,327
Deferred income tax benefit	(755		)	(1,299		)
Other	126			80
Changes in operating assets and liabilities:
Receivables	192			585
Inventories	(2		)	54
Drilling advances	(36		)	125
Deferred charges and other	40			(117		)
Accounts payable	(93		)	(463		)
Accrued expenses	(67		)	109
Deferred credits and noncurrent liabilities	(33		)	102
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES	1,634			2,380
NET CASH PROVIDED BY DISCONTINUED OPERATIONS	—			113
NET CASH PROVIDED BY OPERATING ACTIVITIES	1,634			2,493

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property	(1,281		)	(3,562		)
Leasehold and property acquisitions	(169		)	(254		)
Additions to gas gathering, transmission, and processing facilities	(33		)	(113		)
Proceeds from sale of Kitimat LNG project	—			854
Proceeds from sale of other oil and gas properties	74			148
Other, net	47			(99		)
NET CASH USED IN CONTINUING INVESTING ACTIVITIES	(1,362		)	(3,026		)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS	—			4,372
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(1,362		)	1,346

CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net	—			(1,570		)
Payment of fixed-rate debt	(1		)	(939		)
Distributions to noncontrolling interest	(215		)	(97		)
Dividends paid	(284		)	(283		)
Other	(9		)	26
NET CASH USED IN FINANCING ACTIVITIES	(509		)	(2,863		)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(237		)	976
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	1,467			679
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,230		$	1,655

SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	345		$	385
Income taxes paid, net of refunds	256			270



	September 30, 2016			December 31, 2015*
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,230		$	1,467
Receivables, net of allowance	1,064			1,253
Inventories	513			570
Drilling advances	209			172
Prepaid assets and other	256			290
	3,272			3,752
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of successful efforts accounting:
Proved properties	42,591			41,728
Unproved properties and properties under development, not being amortized	2,061			2,277
Gathering, transmission and processing facilities	886			1,052
Other	1,102			1,093
	46,640			46,150
Less: Accumulated depreciation, depletion, and amortization	(27,178		)	(25,312		)
	19,462			20,838
OTHER ASSETS:
Deferred charges and other	415			910
	$	23,149		$	25,500
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	557		$	618
Other current liabilities (Note 5)	1,071			1,223
	1,628			1,841
LONG-TERM DEBT	8,721			8,716
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes	1,783			2,529
Asset retirement obligation	2,742			2,562
Other	326			362
	4,851			5,453
COMMITMENTS AND CONTINGENCIES (Note 9)
EQUITY:
Common stock, $0.625 par, 860,000,000 shares authorized, 412,602,756 and 411,218,105 shares issued, respectively	258			257
Paid-in capital	12,421			12,619
Accumulated deficit	(3,203		)	(1,980		)
Treasury stock, at cost, 33,173,422 and 33,183,930 shares, respectively	(2,888		)	(2,889		)
Accumulated other comprehensive loss	(119		)	(119		)
APACHE SHAREHOLDERS’ EQUITY	6,469			7,888
Noncontrolling interest	1,480			1,602
TOTAL EQUITY	7,949			9,490
	$	23,149		$	25,500



	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 previously reported	$	256	$	12,438		$	16,249		$	(2,890	)	$	(116	)	$	25,937		$	2,200		$	28,137
Effect of change in accounting principle	—		152			(7,594		)	—			—			(7,442		)	(154		)	(7,596		)
BALANCE AT DECEMBER 31, 2014 as recast	$	256	$	12,590		$	8,655		$	(2,890	)	$	(116	)	$	18,495		$	2,046		$	20,541
Net income (loss)	—		—			(6,337		)	—			—			(6,337		)	98			(6,239		)
Distributions to noncontrolling interest	—		—			—			—			—			—			(97		)	(97		)
Common dividends ($0.75 per share)	—		—			(283		)	—			—			(283		)	—			(283		)
Other	1		59			—			1			—			61			—			61
BALANCE AT SEPTEMBER 30, 2015	$	257	$	12,649		$	2,035		$	(2,889	)	$	(116	)	$	11,936		$	2,047		$	13,983

BALANCE AT DECEMBER 31, 2015 previously reported	$	257	$	12,467		$	(7,153	)	$	(2,889	)	$	(116	)	$	2,566		$	1,662		$	4,228
Effect of change in accounting principle	—		152			5,173			—			(3		)	5,322			(60		)	5,262
BALANCE AT DECEMBER 31, 2015 as recast	$	257	$	12,619		$	(1,980	)	$	(2,889	)	$	(119	)	$	7,888		$	1,602		$	9,490
Net income (loss)	—		—			(1,223		)	—			—			(1,223		)	93			(1,130		)
Distributions to noncontrolling interest	—		—			—			—			—			—			(215		)	(215		)
Common dividends ($0.75 per share)	—		(284		)	—			—			—			(284		)	—			(284		)
Other	1		86			—			1			—			88			—			88
BALANCE AT SEPTEMBER 30, 2016	$	258	$	12,421		$	(3,203	)	$	(2,888	)	$	(119	)	$	6,469		$	1,480		$	7,949



	Changes to the Statement of Consolidated Operations
For the Quarter Ended September 30, 2016	Under Full Cost			Changes			As Reported Under Successful Efforts
	(In millions, except per share data)
Oil revenues	$	1,058		$	59		$	1,117
Natural gas revenues	273			(10		)	263
NGL revenues	59			—			59
Oil and gas production revenues	1,390			49			1,439
Other	(5		)	(1		)	(6		)
Gain on divestiture	2			3			5
Exploration	—			161			161
Depreciation, depletion, and amortization:
Oil and Gas Property and Equipment
Recurring	473			137			610
Additional	328			(328		)	—
Impairments	481			355			836
Financing costs, net	92			10			102
Current income tax provision	101			49			150
Deferred income tax provision (benefit)	(407		)	(122		)	(529		)
NET LOSS FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST	(315		)	(211		)	(526		)
Net income (loss) attributable to noncontrolling interest	37			11			48
NET LOSS FROM CONTINUING OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS	(352		)	(222		)	(574		)
Net income (loss) from discontinued operations	(33		)	—			(33		)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	(385		)	(222		)	(607		)

Per common share
Basic net loss from continuing operations per share	$	(0.96	)	$	(0.55	)	$	(1.51	)
Basic net loss from discontinued operations per share	(0.06		)	—			(0.09		)
Basic net loss per share	$	(1.02	)	$	(0.55	)	$	(1.60	)

Diluted net loss from continuing operations per share	$	(0.96	)	$	(0.55	)	$	(1.51	)
Diluted net loss from discontinued operations per share	(0.06		)	—			(0.09		)
Diluted net loss per share	$	(1.02	)	$	(0.55	)	$	(1.60	)