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 30, 2017March 31, 2023
ORor
¨

☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File NumberNumber: 1-4300
  apachelogoa06.jpg
APACHE CORPORATION
(exactExact name of registrant as specified in its charter)
    _______________________________________________________________________
Delaware41-0747868
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
No.)
One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (713) 296-6000

(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
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 ¨☐
Note: The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerý☐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 31, 2017April 30, 2023 (100% owned by APA Corporation)380,942,6291,000 

OMISSION OF CERTAIN INFORMATION
The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Quarterly Report on Form 10-Q with the reduced disclosure format.


 TABLE OF CONTENTS
 DESCRIPTION
Item  Page
 PART I - FINANCIAL INFORMATION  
1.
FINANCIAL STATEMENTS
 
1
 
STATEMENT OF CONSOLIDATED OPERATIONS
 
1
 
STATEMENT OF CONSOLIDATED CASH FLOWS
 
3
 
CONSOLIDATED BALANCE SHEET
 
4
 
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
 
5
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
6
2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
24
3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
36
4.
CONTROLS AND PROCEDURES
 
37
 PART II - OTHER INFORMATION  
1.
LEGAL PROCEEDINGS
 
38
1A.
RISK FACTORS
 
38
2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
38
3.
DEFAULTS UPON SENIOR SECURITIES
 
38
4.
MINE SAFETY DISCLOSURES
 
38
5.
OTHER INFORMATION
 
38
6.
EXHIBITS
 
39


TABLE OF CONTENTS
Forward-Looking Statements and Risk
ItemPage
PART I - FINANCIAL INFORMATION
1.
1
STATEMENT OF CONSOLIDATED OPERATIONS
1
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
2
STATEMENT OF CONSOLIDATED CASH FLOWS
3
CONSOLIDATED BALANCE SHEET
4
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTERESTS
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
2.
23
3.
31
4.
31
PART II - OTHER INFORMATION
1.
32
1A.
32
6.
33


FORWARD-LOOKING STATEMENTS AND RISKS
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended.amended (the Exchange Act). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding ourthe Company’s 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 ourthe Company’s examination of historical operating trends, the information that was used to prepare ourits estimate of proved reserves as of December 31, 2016,2022, and other data in ourthe Company’s 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”“continue,” “seek,” “guidance,” “goal,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology.terminology, but the absence of these words does not mean that a statement is not forward looking. Although we believethe Company believes that the expectations reflected in such forward-looking statements are reasonable weunder the circumstances, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from ourthe Company’s expectations include, but are not limited to, ourits assumptions about:
•changes in local, regional, national, and international economic conditions, including as a result of any epidemics or pandemics, such as the coronavirus disease (COVID-19) pandemic and any related variants;
•the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or services;services, including the prices received for natural gas purchased from third parties to sell and deliver to a U.S. LNG export facility;

our•the Company’s commodity hedging arrangements;

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

•production and reserve levels;

•drilling risks;

•economic and competitive conditions;conditions, including market and macro-economic disruptions resulting from the Russian war in Ukraine and from actions taken by foreign oil and gas producing nations, including the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members that participate in OPEC initiatives (OPEC+);

•the availability of capital resources;

•capital expenditureexpenditures and other contractual obligations;

•currency exchange rates;

•weather conditions;

•inflation rates;

•the impact of changes in tax legislation;
•the availability of goods and services;

•the impact of political pressure and the influence of environmental groups and other stakeholders on decisions and policies related to the industries in which the Company and its affiliates operate;
•legislative, regulatory, or policy changes;changes, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring, or water disposal;

•the Company’s performance on environmental, social, and governance measures;
•terrorism or cyber-attacks;cyberattacks;

•the occurrence of property acquisitions or divestitures;

•the integration of acquisitions;

•the Company’s ability to access the capital markets;
the securities or capital markets and related•market-related risks, such as general credit, liquidity, market, and interest-rate risks; and



•the benefits derived from the operating structure implemented pursuant to the Holding Company Reorganization (as defined in the Notes to the Company’s Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022);
•other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, Item 7—Management’s Discussion andNarrative Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in our most recently filedthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022;
•other risks and uncertainties disclosed in our third-quarter 2017APA Corporation’s first-quarter 2023 earnings release, release;
•other factors disclosed under Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q,10-Q; and
•other factors disclosed in the other filings that we makethe Company makes with the Securities and Exchange Commission.
Other factors or events that could cause the Company’s actual results to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all such factors or events. 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 thethese cautionary statements. We assume no dutyAll forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, the Company disclaims any obligation to update or revise our forward-lookingthese statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.




DEFINITIONS
All defined terms under Rule 4-10(a) of Regulation S-X shall have their statutorily prescribed meanings when used in this Quarterly Report on Form 10-Q. As used herein:
“3-D” means three-dimensional.
“4-D” means four-dimensional.
“b/d” means barrels of oil or NGLs per day.
“bbl” or “bbls” means barrel or barrels of oil or NGLs.
“bcf” means billion cubic feet of natural gas.
“bcf/d” means one bcf per day.
“boe” means barrel of oil equivalent, determined by using the ratio of one barrel of oil or NGLs to six Mcf of gas.
“boe/d” means boe per day.
“Btu” means a British thermal unit, a measure of heating value.
“Liquids” means oil and NGLs.
“LNG” means liquefied natural gas.
“Mb/d” means Mbbls per day.
“Mbbls” means thousand barrels of oil or NGLs.
“Mboe” means thousand boe.
“Mboe/d” means Mboe per day.
“Mcf” means thousand cubic feet of natural gas.
“Mcf/d” means Mcf per day.
“MMbbls” means million barrels of oil or NGLs.
“MMboe” means million boe.
“MMBtu” means million Btu.
“MMBtu/d” means MMBtu per day.
“MMcf” means million cubic feet of natural gas.
“MMcf/d” means MMcf per day.
“NGL” or “NGLs” means natural gas liquids, which are expressed in barrels.
“NYMEX” means New York Mercantile Exchange.
“oil” includes crude oil and condensate.
“PUD” means proved undeveloped.
“SEC” means the United States Securities and Exchange Commission.
“Tcf” means trillion cubic feet of natural gas.
“U.K.” means United Kingdom.
“U.S.” means United States.
With respect to information relating to the Company’s working interest in wells or acreage, “net” oil and gas wells or acreage is determined by multiplying gross wells or acreage by the Company’s working interest therein. Unless otherwise specified, all references to wells and acres are gross.
References to “Apache,” the “Company,” “we,” “us,” and “our” refer to Apache Corporation and its consolidated subsidiaries, unless otherwise specifically stated. References to “APA” refer to APA Corporation, the Company’s parent holding company, and its consolidated subsidiaries, including the Company, unless otherwise specifically stated.


PART I – FINANCIAL INFORMATION
ITEM 1 –1.    FINANCIAL STATEMENTS
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
For the Quarter Ended
March 31,
20232022
 (In millions)
REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues(1)
$1,706 $2,320 
Purchased oil and gas sales239 349 
Total revenues1,945 2,669 
Derivative instrument losses, net— (62)
Gain on divestitures, net1 1,176 
Other, net(32)45 
1,914 3,828 
OPERATING EXPENSES:
Lease operating expenses314 344 
Gathering, processing, and transmission(1)
73 81 
Purchased oil and gas costs216 351 
Taxes other than income50 70 
Exploration44 25 
General and administrative58 151 
Transaction, reorganization, and separation4 14 
Depreciation, depletion, and amortization308 291 
Asset retirement obligation accretion28 29 
Financing costs, net49 140 
1,144 1,496 
NET INCOME BEFORE INCOME TAXES770 2,332 
Current income tax provision346 392 
Deferred income tax provision (benefit)119 (41)
NET INCOME INCLUDING NONCONTROLLING INTERESTS305 1,981 
Net income attributable to noncontrolling interest – Sinopec84 119 
Net income attributable to noncontrolling interest – Altus— 14 
Net income attributable to noncontrolling interest – APA Corporation84 71 
Net loss attributable to Altus Preferred Unit limited partners— (70)
NET INCOME ATTRIBUTABLE TO APACHE CORPORATION$137 $1,847 
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
  (In millions, except per common share data)
REVENUES AND OTHER:        
Oil and gas production revenues        
Oil revenues $1,070
 $1,117
 $3,292
 $3,057
Gas revenues 238
 263
 726
 695
Natural gas liquids revenues 81
 59
 229
 160
  1,389
 1,439
 4,247
 3,912
Derivative instrument losses, net (110) —
 (69) —
Gain on divestitures 296
 5
 616
 21
Other —
 (6) 43
 (30)
  1,575
 1,438
 4,837
 3,903
OPERATING EXPENSES:        
Lease operating expenses 358
 382
 1,066
 1,119
Gathering and transportation 39
 51
 144
 155
Taxes other than income 46
 9
 117
 85
Exploration 231
 161
 431
 347
General and administrative 98
 102
 307
 298
Transaction, reorganization, and separation 20
 12
 14
 36
Depreciation, depletion, and amortization:        
Oil and gas property and equipment 524
 610
 1,598
 1,875
Other assets 35
 38
 109
 120
Asset retirement obligation accretion 30
 40
 103
 116
Impairments —
 836
 8
 1,009
Financing costs, net 101
 102
 300
 311
  1,482
 2,343
 4,197
 5,471
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 93
 (905) 640
 (1,568)
Current income tax provision 99
 150
 413
 284
Deferred income tax benefit (111) (529) (758) (755)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS INCLUDING NONCONTROLLING INTEREST 105
 (526) 985
 (1,097)
Net loss from discontinued operations, net of tax —
 (33) —
 (33)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST 105

(559)
985

(1,130)
Net income attributable to noncontrolling interest 42
 48
 137
 93
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $63
 $(607) $848
 $(1,223)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS:        
Net income (loss) from continuing operations attributable to common shareholders $63
 $(574) $848
 $(1,190)
Net loss from discontinued operations —
 (33) —
 (33)
Net income (loss) attributable to common shareholders $63
 $(607) $848
 $(1,223)
NET INCOME (LOSS) PER COMMON SHARE:        
Basic net income (loss) from continuing operations per share $0.16
 $(1.51) $2.23
 $(3.14)
Basic net loss from discontinued operations per share —
 (0.09) —
 (0.08)
Basic net income (loss) per share $0.16
 $(1.60) $2.23
 $(3.22)
DILUTED NET INCOME (LOSS) PER COMMON SHARE:        
Diluted net income (loss) from continuing operations per share $0.16
 $(1.51) $2.22
 $(3.14)
Diluted net loss from discontinued operations per share —
 (0.09) —
 (0.08)
Diluted net income (loss) per share $0.16
 $(1.60) $2.22
 $(3.22)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:        
Basic 381
 380
 381
 379
Diluted 383
 380
 383
 379
DIVIDENDS DECLARED PER COMMON SHARE $0.25
 $0.25
 $0.75
 $0.75
(1)    For revenues and gathering, processing, and transmission costs associated with Kinetik, refer to Note 7—Equity Method Interests for further detail.
The accompanying notes to consolidated financial statements
are an integral part of this statement.

1


APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
For the Quarter Ended
March 31,
 20232022
 (In millions)
NET INCOME INCLUDING NONCONTROLLING INTERESTS$305 $1,981 
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Pension and postretirement benefit plan3 (1)
COMPREHENSIVE INCOME INCLUDING NONCONTROLLING INTERESTS308 1,980 
Comprehensive income attributable to noncontrolling interest – Sinopec84 119 
Comprehensive income attributable to noncontrolling interest – Altus— 14 
Comprehensive income attributable to noncontrolling interest – APA Corporation84 71 
Comprehensive loss attributable to Altus Preferred Unit limited partners— (70)
COMPREHENSIVE INCOME ATTRIBUTABLE TO APACHE CORPORATION$140 $1,846 

  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
  (In millions)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST $105
 $(559) $985
 $(1,130)
OTHER COMPREHENSIVE INCOME:        
Currency translation adjustment 109
 —
 109
 —
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST 214
 (559) 1,094
 (1,130)
Comprehensive income attributable to noncontrolling interest 42
 48
 137
 93
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $172
 $(607) $957
 $(1,223)

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

2



APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
For the Three Months Ended
March 31,
 20232022
 (In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interests$305 $1,981 
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized derivative instrument losses, net— 57 
Gain on divestitures, net(1)(1,176)
Exploratory dry hole expense and unproved leasehold impairments32 9 
Depreciation, depletion, and amortization308 291 
Asset retirement obligation accretion28 29 
Provision for (benefit from) deferred income taxes119 (41)
(Gain) loss on extinguishment of debt(9)67 
Other, net14 (43)
Changes in operating assets and liabilities:
Receivables(59)(254)
Inventories(31)(43)
Drilling advances and other current assets(35)9 
Deferred charges and other long-term assets78 (13)
Accounts payable(83)(5)
Accounts receivable from/payable to APA Corporation16 (33)
Accrued expenses(316)18 
Deferred credits and noncurrent liabilities(78)3 
NET CASH PROVIDED BY OPERATING ACTIVITIES288 856 
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to upstream oil and gas property(484)(334)
Leasehold and property acquisitions(5)(20)
Notes receivable from APA Corporation104 — 
Proceeds from sale of oil and gas properties21 767 
Proceeds from sale of Kinetik shares— 224 
Deconsolidation of Altus cash and cash equivalents— (143)
Other, net(4)(4)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES(368)490 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Apache credit facility, net105 338 
Payments on note payable to APA Corporation, net— (21)
Payments on fixed-rate debt(65)(1,370)
Distributions to noncontrolling interest – Sinopec(17)(69)
Distributions to APA Corporation(17)(346)
Other, net6 (13)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES12 (1,481)
NET DECREASE IN CASH AND CASH EQUIVALENTS(68)(135)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR185 279 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$117 $144 
SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest$105 $128 
Income taxes paid, net of refunds286 305 
  For the Nine Months Ended September 30,
  2017 2016
  (In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income (loss) including noncontrolling interest $985
 $(1,130)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Loss from discontinued operations —
 33
Unrealized derivative instrument losses, net 42
 —
Gain on divestitures (616) (21)
Exploratory dry hole expense and unproved leasehold impairments 350
 260
Depreciation, depletion, and amortization 1,707
 1,995
Asset retirement obligation accretion 103
 116
Impairments 8
 1,009
Deferred income tax benefit (758) (755)
Other 167
 126
Changes in operating assets and liabilities:    
Receivables (70) 192
Inventories 17
 (2)
Drilling advances (72) (36)
Deferred charges and other (60) 40
Accounts payable 2
 (93)
Accrued expenses (65) (67)
Deferred credits and noncurrent liabilities 20
 (33)
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,760
 1,634
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Additions to oil and gas property (1,471) (1,281)
Leasehold and property acquisitions (142) (169)
Additions to gas gathering, transmission, and processing facilities (384) (33)
Proceeds from sale of Canadian assets, net of cash divested 661
 —
Proceeds from sale of oil and gas properties 743
 74
Other, net (30) 47
NET CASH USED IN INVESTING ACTIVITIES (623) (1,362)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payments on fixed-rate debt (70) (1)
Distributions to noncontrolling interest (212) (215)
Dividends paid (285) (284)
Other (5) (9)
NET CASH USED IN FINANCING ACTIVITIES (572) (509)
     
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 565
 (237)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF YEAR 1,377
 1,467
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $1,942
 $1,230
     
SUPPLEMENTARY CASH FLOW DATA:    
Interest paid, net of capitalized interest $341
 $345
Income taxes paid, net of refunds 315
 256
The accompanying notes to consolidated financial statements
are an integral part of this statement.

3




APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
  September 30, 2017 December 31, 2016
  (In millions)
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $1,846
 $1,377
Restricted cash 96
 —
Receivables, net of allowance 1,145
 1,128
Inventories 396
 476
Drilling advances 151
 81
Prepaid assets and other 135
 179
  3,769
 3,241
PROPERTY AND EQUIPMENT:    
Oil and gas, on the basis of successful efforts accounting:    
Proved properties 38,569
 42,693
Unproved properties and properties under development 1,810
 1,969
Gathering, transmission, and processing facilities 1,363
 976
Other 1,012
 1,111
  42,754
 46,749
Less: Accumulated depreciation, depletion, and amortization (25,099) (27,882)
  17,655
 18,867
OTHER ASSETS:    
Deferred charges and other 411
 411
  $21,835
 $22,519
LIABILITIES AND SHAREHOLDERS’ EQUITY    
CURRENT LIABILITIES:    
Accounts payable $583
 $585
Current debt 550
 —
Other current liabilities (Note 5) 1,332
 1,258
  2,465
 1,843
LONG-TERM DEBT 7,933
 8,544
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:    
Income taxes 948
 1,710
Asset retirement obligation 1,831
 2,432
Other 281
 311
  3,060
 4,453
COMMITMENTS AND CONTINGENCIES (Note 9) 
 
EQUITY:    
Common stock, $0.625 par, 860,000,000 shares authorized, 414,108,944 and 412,612,102 shares issued, respectively 259
 258
Paid-in capital 12,186
 12,364
Accumulated deficit (2,544) (3,385)
Treasury stock, at cost, 33,171,015 and 33,172,426 shares, respectively (2,887) (2,887)
Accumulated other comprehensive loss (3) (112)
APACHE SHAREHOLDERS’ EQUITY 7,011
 6,238
Noncontrolling interest 1,366
 1,441
TOTAL EQUITY 8,377
 7,679
  $21,835
 $22,519
March 31,
2023
December 31,
2022
(In millions, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$117 $185 
Receivables, net of allowance of $119 and $1171,483 1,424 
Other current assets (Note 6)
1,090 993 
2,690 2,602 
PROPERTY AND EQUIPMENT:
Oil and gas properties41,658 41,245 
Gathering, processing, and transmission facilities447 449 
Other614 613 
Less: Accumulated depreciation, depletion, and amortization(34,636)(34,350)
8,083 7,957 
OTHER ASSETS:
Equity method interests (Note 7)
605 624 
Decommissioning security for sold Gulf of Mexico properties (Note 12)
132 217 
Deferred charges and other553 571 
Noncurrent receivable from APA Corporation (Note 2)
— 869 
Notes receivable from APA Corporation (Note 2)
2,196 1,415 
$14,259 $14,255 
LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable$563 $646 
Accounts payable to APA Corporation (Note 2)
16 — 
Current debt2 2 
Other current liabilities (Note 8)
1,732 2,049 
2,313 2,697 
LONG-TERM DEBT (Note 10)
4,918 4,885 
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes441 314 
Asset retirement obligation (Note 9)
1,959 1,936 
Decommissioning contingency for sold Gulf of Mexico properties (Note 12)
656 738 
Other450 443 
3,506 3,431 
EQUITY (DEFICIT):
Common stock, $0.625 par, 1,000 and 1,000 shares authorized, respectively, 1,000 and 1,000 shares issued, respectively— — 
Paid-in capital8,031 8,025 
Accumulated deficit(5,644)(5,781)
Accumulated other comprehensive income17 14 
EQUITY ATTRIBUTABLE TO APA CORPORATION2,404 2,258 
Noncontrolling interest – Sinopec989 922 
Noncontrolling interest – APA Corporation129 62 
TOTAL EQUITY3,522 3,242 
$14,259 $14,255 

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

4


APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTERESTS
(Unaudited)
Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners(1)
Paid-In
Capital		Accumulated DeficitAccumulated
Other
Comprehensive
Income		PARENT COMPANY
EQUITY (DEFICIT)
Noncontrolling
Interests(1)
TOTAL
EQUITY
(In millions)
For the Quarter Ended March 31, 2022
Balance at December 31, 2021$712 $8,677 $(9,317)$22 $(618)$878 $260 
Net income attributable to Apache Corporation— — 1,847 — 1,847 — 1,847 
Net income attributable to noncontrolling interest – APA— — — — — 71 71 
Net income attributable to noncontrolling interest – Sinopec— — — — — 119 119 
Net income attributable to noncontrolling interest – Altus— — — — — 14 14 
Net loss attributable to Altus Preferred Unit limited partners(70)— — — — — — 
Distributions to noncontrolling interest – Sinopec— — — — — (69)(69)
Distributions to APA Corporation— (305)— — (305)(41)(346)
Deconsolidation of Altus(642)— — — — (72)(72)
Other— 9 — (1)8 — 8 
Balance at March 31, 2022$— $8,381 $(7,470)$21 $932 $900 $1,832 
For the Quarter Ended March 31, 2023
Balance at December 31, 2022$— $8,025 $(5,781)$14 $2,258 $984 $3,242 
Net income attributable to Apache Corporation— — 137 — 137 — 137 
Net income attributable to noncontrolling interest – APA— — — — — 84 84 
Net income attributable to noncontrolling interest – Sinopec— — — — — 84 84 
Distributions to noncontrolling interest – Sinopec— — — — — (17)(17)
Distributions to APA Corporation— — — — — (17)(17)
Other— 6 — 3 9 — 9 
Balance at March 31, 2023$— $8,031 $(5,644)$17 $2,404 $1,118 $3,522 
(1)    As a result of the BCP Business Combination (as defined herein), the Company deconsolidated Altus (as defined herein) on February 22, 2022. Refer to Note 1—Summary of Significant Accounting Policies and Note 3—Acquisitions and Divestitures for further detail.
  
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) —
 —
 (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
                 
BALANCE AT DECEMBER 31, 2016 $258
 $12,364
 $(3,385) $(2,887) $(112) $6,238
 $1,441
 $7,679
Net income —
 —
 848
 —
 —
 848
 137
 985
Distributions to noncontrolling interest —
 —
 —
 —
 —
 —
 (212) (212)
Common dividends ($0.75 per share) —
 (286) —
 —
 —
 (286) —
 (286)
Other 1
 108
 (7) —
 109
 211
 —
 211
BALANCE AT SEPTEMBER 30, 2017 $259
 $12,186
 $(2,544) $(2,887) $(3) $7,011
 $1,366
 $8,377
The accompanying notes to consolidated financial statements
are an integral part of this statement.

5



APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These 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). The Company files these consolidated financial statements with the SEC as a voluntary filer to comply with the terms of certain of the Company’s outstanding debt instruments. They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods, on a basis consistent with the annual audited financial statements.statements, with the exception of any recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP)(GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Apache’sthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2022, which contains a summary of the Company’s significant accounting policies and other disclosures.
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As of September 30, 2017, Apache’sMarch 31, 2023, the Company's significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies of its consolidated financial statementsthe Notes to Consolidated Financial Statements contained in Apache’sthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2022. The Company’s financial statements for prior periods may include reclassifications that were made to conform to the current-year presentation.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Apache and its subsidiaries after elimination of intercompany balances and transactions.
The Company’s undivided interests in oil and gas exploration and production ventures and partnerships are proportionately consolidated. The Company consolidates all other investments in which, either through direct or indirect ownership, it has more than a 50 percent voting interest or controls the financial and operating decisions. Noncontrolling interests represent third-party ownership in the net assets of a consolidated subsidiary of Apache and are reflected separately in the Company’s financial statements.
Apache has determined that one of its limited partnership subsidiaries, which has control over Apache’s Egyptian operations, qualified as a variable interest entity (VIE) under GAAP. Apache continues to consolidate this limited partnership subsidiary because the Company has concluded that it has a controlling financial interest in the Egyptian operations and was determined to be the primary beneficiary of the VIE. Sinopec International Petroleum Exploration and Production Corporation (Sinopec) owns a one-third minority participation in the Company’s consolidated Egypt oil and gas business as a noncontrolling interest. APA Corporation (APA) also owns a noncontrolling interest in Apache’s consolidated Egypt oil and gas business. Refer to Note 2—Transactions with Parent Affiliate for detail regarding APA’s noncontrolling interest. All noncontrolling interests are reflected as a separate component of equity in the Company’s consolidated balance sheet.
On February 22, 2022, Altus Midstream Company (ALTM) closed a previously announced transaction to combine with privately owned BCP Raptor Holdco LP (BCP and, together with BCP Raptor Holdco GP, LLC, the Contributed Entities) in an all-stock transaction, pursuant to the Contribution Agreement entered into by and among ALTM, Altus Midstream LP, New BCP Raptor Holdco, LLC (the Contributor), and BCP (the BCP Contribution Agreement). Pursuant to the BCP Contribution Agreement, the Contributor contributed all of the equity interests of the Contributed Entities (the Contributed Interests) to Altus Midstream LP, with each Contributed Entity becoming a wholly owned subsidiary of Altus Midstream LP (the BCP Business Combination). Upon closing the transaction, the combined entity was renamed Kinetik Holdings Inc. (Kinetik), and the Company determined that it was no longer the primary beneficiary of Kinetik. The Company further determined that Kinetik no longer qualified as a VIE under GAAP.As a result, the Company deconsolidated ALTM on February 22, 2022. Refer to Note 3—Acquisitions and Divestitures for further detail.
6

The stockholders agreement entered into by and among the Company, ALTM, BCP, and other related and affiliated entities provides that the Company, through one of its wholly owned subsidiaries, retains the ability to designate a director to the board of directors of Kinetik for so long as the Company and its affiliates beneficially own 10 percent or more of Kinetik’s outstanding common stock. Based on this board representation, combined with the exceptionCompany’s stock ownership, management determined it has significant influence over Kinetik, which is considered a related party of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-09, “Improvementsthe Company. Investments in which the Company has significant influence, but not control, are accounted for under the equity method of accounting. These investments are recorded separately as “Equity method interests” in the Company’s consolidated balance sheet. The Company elected the fair value option to Employee Share-Based Payment Accounting” and ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (see “Recently Adopted Accounting Pronouncements”account for its equity method interest in this Kinetik. Refer to Note 1 below).7—Equity Method Interests for further detail.
Use of Estimates
The preparationPreparation of financial statements in conformity with U.S. GAAP and disclosure of contingent assets and liabilities 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. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of the Company’s financial statements, and changes in these estimates are recorded when known.
Significant estimates with regard to these financial statements include the estimates of fair value for long-lived assets (refer to “Fair Value Measurements” and “Property and Equipment” sections in this Note 1 below), the fair value determination of acquired assets and liabilities (refer to Note 3—Acquisitions and Divestitures), the fair value of equity method interests (refer to “Equity Method Interests” within this Note 1 below and Note 7—Equity Method Interests), the assessment of asset retirement obligations (refer to Note 9—Asset Retirement Obligation), the estimate of income taxes (refer to Note 11—Income Taxes), the estimation of the contingent liability representing Apache’s potential decommissioning obligations on sold properties in the Gulf of Mexico (refer to Note 12—Commitments and Contingencies), and 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.therefrom.
Fair Value Measurements
Certain assets and liabilities are reported at fair value on a recurring basis in Apache’sthe Company’s consolidated balance sheet. 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 usesRefer to Note 5—Derivative Instruments and Hedging Activities, Note 7—Equity Method Interests, and Note 10—Debt and Financing Costs for further detail regarding the Company’s fair value measurements recorded on a nonrecurring basis when certain qualitative assessments of its assets indicate a potential impairment. Therecurring basis.
During the three months ended March 31, 2023 and 2022, the Company recorded no asset impairments in connection with fair value assessmentsassessments.
7

Accounts Receivable from / Accounts Payable to APA
Accounts receivable from or payable to APA represents the net result of Apache’s administrative and support services provided to APA and other miscellaneous cash management transactions to be settled between the two affiliated entities. Generally, cash in this amount will be transferred to Apache or paid to APA in subsequent periods, after current period transactions are processed and net results of operations are determined. However, from time to time, Apache may estimate and transfer the cash settlement amount in the third quartermonth the transactions are processed in order to minimize affiliate working capital balances or retain affiliate balances for cash management purposes. Refer to Note 2—Transactions with Parent Affiliate for more detail.
Revenue Recognition
There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2023 and 2022.
Payments under all contracts with customers are typically due and received within a short-term period of 2017. Forone year or less after physical delivery of the nine-month period ended September 30, 2017,product or service has been rendered. Receivables from contracts with customers, including receivables for purchased oil and gas sales, in each case, net of allowance for credit losses, were $1.4 billion and $1.3 billion as of March 31, 2023 and December 31, 2022, respectively.
Oil and gas production revenues from non-customers represent income taxes paid to the Arab Republic of Egypt by Egyptian General Petroleum Corporation on behalf of the Company. Revenue and associated expenses related to such tax volumes are recorded as “Oil, natural gas, and natural gas liquids production revenues” and “Current income tax provision,” respectively, in the Company’s statement of consolidated operations.
Refer to Note 13—Business Segment Information for a disaggregation of oil, gas, and natural gas production revenue by product and reporting segment.
In accordance with the provisions of ASC 606, “Revenue from Contracts with Customers,” variable market prices for each short-term commodity sale are allocated entirely to each performance obligation as the terms of payment relate specifically to the Company’s efforts to satisfy its obligations. As such, the Company recorded asset impairments totaling $8 million in connection with fair value assessments.
In 2016,has elected the U.K. government enacted Finance Bill 2016, providing tax reliefpractical expedients available under the standard 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) 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. During the first quarter of 2017, the Company fully impairednot disclose the aggregate remainingtransaction price allocated to unsatisfied, or partially unsatisfied, performance obligations as of the end of the reporting period.
Property and Equipment
The carrying value of the recoverable PRT decommissioning assetCompany’s property and equipment represents the cost incurred to acquire the property and equipment, including capitalized interest, net of $8 million that would have been realized from future abandonment activities. The recoverable value of the PRT decommissioning asset was estimated using the income approach. The expected future cash flows used in the determination wereany impairments. For business combinations and acquisitions, property and equipment cost is based on anticipated spending and timing of planned future abandonment activities for applicable fields, considering all available informationthe fair values at the date of review. Apache has classified this fair value measurement as Level 3 in the fair value hierarchy.


For the quarter ended September 30, 2016, the Company recorded asset impairments totaling $836 million in connection with fair value assessments including $355 million for proved oil and gas properties in Canada and $481 million for the impairment of the recoverable value of the PRT decommissioning asset. For the nine-month period ended September 30, 2016, the Company recorded asset impairments totaling $1.0 billion in connection with fair value assessments including $423 million for proved oil and gas properties in the U.S. and Canada, $481 million for the impairment of the recoverable value of the PRT decommissioning asset, and $105 million for the impairment of certain gas gathering, transmission, and processing (GTP) assets, which were written down to their fair values of $175 million.acquisition date.
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.
8

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 multiplies the percentage of estimated proved reserves produced each quarter by the carrying value of those reserves.associated proved oil and gas properties. The reserve base used to calculate depreciation for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. The reserve base used to calculate the depreciation for capitalized costs of exploratory wells and developmentwell costs is the sum of proved developed 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 - 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 the carrying value of proved oil and gas properties may not be impaired,recoverable, 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’sthe Company’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. If applicable, the Company utilizes 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 estimateda Level 3 fair value usingmeasurement.
Unproved leasehold impairments are typically recorded as a discount rate believed to be consistent with those applied by market participants. Apache has classified these fair value measurements as Level 3component of “Exploration” expense in the fair value hierarchy.


The following table represents non-cash impairmentsCompany’s statement of the carrying valueconsolidated operations. Gains and losses on divestitures of the Company’s provedoil and unproved property and equipment for the third quarters and first nine months of 2017 and 2016:
  Quarter Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
  (In millions)
Oil and Gas Property:        
Proved $—
 $355
 $—
 $423
Unproved 160
 114
 214
 222
Provedgas properties impaired during the second and third quarters of 2016 had aggregate fair values of $143 million and $163 million, respectively.
Onare recognized in the statement of consolidated operations unproved impairmentsupon closing of the transaction. Refer to Note 3—Acquisitions and Divestitures for more detail.
Gathering, Processing, and Transmission (GPT) Facilities
GPT facilities are recordeddepreciated on a straight-line basis over the estimated useful lives of the assets. The estimation of useful life takes into consideration anticipated production lives from the fields serviced by the GPT assets, whether Apache-operated or third party-operated, as well as potential development plans by the Company for undeveloped acreage within, or close to, those fields.
The Company assesses the carrying amount of its GPT facilities whenever events or changes in exploration expense,circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of these facilities is more than the sum of the undiscounted cash flows, an impairment loss is recognized for the excess of the carrying value over its fair value.

9

2.    TRANSACTIONS WITH PARENT AFFILIATE
Apache is a direct, wholly owned subsidiary of APA. Apache holds assets in the U.S., Egypt, and proved impairmentsthe U.K. and provides administrative and support operations for certain APA subsidiaries with interests in the U.S., Suriname, and the Dominican Republic.
On March 1, 2021, Apache sold to APA all of the equity in the three Apache subsidiaries through which Apache’s interests in Suriname and the Dominican Republic were held. The purchase price is payable pursuant to a senior promissory note made by APA payable to Apache, dated March 1, 2021. The note has a seven-year term, maturing on February 29, 2028, and bears interest at a rate of 4.5 percent per annum, payable semi-annually, subject to APA’s option to allow accrued interest to convert to principal (PIK) during the first 5.5 years of the note’s term (to August 31, 2026). The note is guaranteed by each of the three subsidiaries sold by Apache to APA. The Company recognized interest income on this note of $16 million and $15 million during the first quarters of 2023 and 2022, respectively. The interest income related to this note is reflected in “Financing costs, net” on the Company’s statement of consolidated operations. APA allowed interest accrued from March 1, 2021 through February 28, 2023, totaling $125 million, to PIK pursuant to the note. As of March 31, 2023 and December 31, 2022, there was $1.4 billion in principal outstanding under this note.
APA also made a senior promissory note payable to Apache, dated March 31, 2023, pursuant to which Apache may loan and APA may borrow, repay, and reborrow up to $1.5 billion in aggregate principal amount outstanding at any time. The note has a five-year term, maturing March 31, 2028. The note bears interest at a rate per annum of 6.0 percent, payable semi-annually; however, APA may allow accrued interest to convert to principal, subject to the aggregate maximum principal amount of the note. The note is intended to facilitate cash management of APA and Apache. As of March 31, 2023, there were $749 million in borrowings outstanding under this note.
These notes are recordedboth reflected in impairments.
Recently Adopted Accounting Pronouncements
Stock Compensation“Notes receivable from APA Corporation” on the Company’s consolidated balance sheet.
In March 2016, the FASB issued ASU 2016-09, “Improvementsfourth quarter of 2021, in conjunction with the ratification of a new merged concession agreement (MCA) with the Egyptian General Petroleum Corporation, Apache entered into an agreement with APA under which the historical value of existing concessions prior to Employee Share-Based Payment Accounting.” ASU 2016-09 simplifies several aspectsratifying the MCA was retained by Apache, with any excess value from the MCA terms being allocated to APA. Sinopec owns a one-third minority participation in the Company’s consolidated Egypt oil and gas business, and approximately 50 percent of accountingthe remaining net income and distributable cash flow for share-based payment transactions including income tax consequences, classificationthe Company’s Egyptian operations is being allocated to APA in 2023. Apache consolidates its Egyptian operations, with APA’s noncontrolling interest reflected as a separate component in the Company’s consolidated balance sheet. In the first quarters of awards as either equity or liabilities,2023 and the classification on the statement of cash flows. The guidance was effective for fiscal years beginning after December 15, 2016. The Company adopted ASU 2016-09 effective January 1, 2017.
Upon adoption, 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,2022, the Company recorded a cumulative-effect adjustmentnet income attributable to APA’s noncontrolling interest of $11$84 million representing an increaseand $71 million, respectively, and distributed $17 million and $41 million, respectively, of cash to APA in accumulated deficit,association with its noncontrolling interest.
In connection with the offsetCompany’s role as service provider, Apache is reimbursed by APA for employee costs, certain internal costs, and third-party costs paid by the Company. All reimbursements are based on actual costs incurred, and no market premium is applied by the Company to paid-in capital.APA. The Company incurred $6 million and $5 million in reimbursable corporate overhead charges in the first quarters of 2023 and 2022, respectively. The Company also collects third-party receivables on behalf of APA. As of March 31, 2023, the Company had accounts payable to APA in connection with these services totaling $16 million, which is reflected in “Accounts payable to APA Corporation” on the Company’s consolidated balance sheet. As of December 31, 2022, the Company had a receivable from APA totaling $869 million, which is reflected in “Noncurrent receivable from APA Corporation.” This balance was incorporated into the March 31, 2023 promissory note discussed above during the first quarter of 2023.
From time to time, the Company may, at its discretion, make distributions of capital to APA. No capital distributions were made during the first quarter of 2023. During the first quarter of 2017,2022, the Company recorded a $4made capital distributions totaling $305 million deferred tax asset related to this adjustment, with the offset to accumulated deficit.
ASU 2016-09 requires excess tax benefitsprimarily in support of dividend payments and deficiencies to be recognized prospectively as part of the provision for income taxes rather than paid-in capital. The adoption did not have a material impact on 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 statements of cash flows, which is how the Company has historically classified these amounts.
Restricted Cash
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” ASU 2016-18 requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2017, and is required to be adopted using a retrospective approach, with early adoption permitted. The Company adopted ASU 2016-18 in the third quarter of 2017. Other than the change in presentation within the statement of consolidated cash flows, the adoption of ASU 2016-18 did not have an impact on the Company’s consolidated financial statements.


The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet to the amounts shown in the statement of consolidated cash flows:
  September 30, 2017 December 31, 2016
  (In millions)
Cash and cash equivalents $1,846
 $1,377
Restricted cash 96
 —
Total cash, cash equivalents, and restricted cash shown in the statement of consolidated cash flows $1,942
 $1,377
For information regarding the restricted cash balance, please refer to Note 2—Acquisitions and Divestitures.
New Pronouncements Issued But Not Yet Adopted
In February 2016, the FASB issued ASU 2016-02, “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, and 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. Early adoption is permitted; however, the Company does not intend to early adopt. As part of the assessment to date, the Company has formed an implementation work team and is continuing to evaluate contracts to determine the impact this 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, “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 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. The guidance is effective for annual and interim periods beginning after December 15, 2017. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Company continues to make progress on evaluating the accounting implications of this ASU and its assessment of contracts with customers is largely complete. Based on the Company’s evaluation to date, it 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 continues to evaluate the disclosure requirements, develop accounting policies, and assess changes to the relevant business processes and the control activities within them as a result of the provisions of this ASU. The Company will adopt the new standard on January 1, 2018, utilizing the modified retrospective approach.


2.ACQUISITIONS AND DIVESTITURES

2017 Activity
Canada Divestitures
During the third quarter, Apache announced the sale of its subsidiary Apache Canada Ltd. (ACL) and complete exit of its Canadian operations. On June 30, 2017, Apachecapital transactions completed the sale of its Canadian assets at Midale and House Mountain, located in Saskatchewan and Alberta, for aggregate cash proceeds of approximately $228 million. The Company recognized a $52 million lossby APA during the second quarter of 2017 in association with this sale.period.
In August of 2017, Apache completed the sale of its remaining Canadian operations for aggregate cash proceeds of approximately $478 million. The Company recognized a $74 million gain upon closing of these transactions in the third quarter of 2017. The Company has classified $96 million of proceeds as “Restricted cash” on the Company’s consolidated balance sheet, pending the Alberta Energy Regulator’s clearance of the transfer of Provost area licenses from ACL to the buyer.
A summary of the assets and liabilities at closing of the August transactions is detailed below:3.    ACQUISITIONS AND DIVESTITURES
  (In millions)
ASSETS  
Current assets $110
Property, plant & equipment 1,132
Total Assets $1,242
LIABILITIES  
Current liabilities, excluding asset retirement obligation $120
Asset retirement obligation 780
Other long-term liabilities 46
Total Liabilities $946
The net carrying value of the assets disposed included a currency translation loss of $109 million, which was recorded in “Accumulated Other Comprehensive Loss” on the Company’s consolidated balance sheet at December 31, 2016. The currency translation loss was recognized as a reduction of the net gain on sale during the third quarter of 2017 upon closing of the transactions.
Apache’s Canadian operations recorded pretax losses of $12 million and $141 million for the third quarter and first nine months of 2017, respectively, compared to pretax losses of $483 million and $644 million, respectively, for the comparable periods in 2016.

U.S. Divestitures2023 Activity
During the first nine months of 2017, Apache completed the sale of certain non-core assets, primarily leasehold acreage in the Permian and Midcontinent/Gulf Coast regions, in multiple transactions for cash proceeds of $783 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. The2023, the Company recognized gains of approximately $594 million during the first nine months of 2017 in connection with these transactions.

North Sea GTP Divestiture
During the fourth quarter of 2016, Apache entered into an agreement to sell its 30.28 percent interest in the Scottish Area Gas Evacuation system (SAGE) and its 60.56 percent interest in the Beryl pipeline in the North Sea 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 consolidated balance sheet. The refundable deposit was $149 million as of September 30, 2017.
Leasehold and Property Acquisitions
During the third quarter and first nine months of 2017, Apache purchased $75 million and $142 million, respectively, ofcompleted leasehold and property acquisitions, primarily in its North America onshore regions.the Permian Basin, for total cash consideration of approximately $5 million.

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2016 Activity
Leasehold and Property Acquisitions
During the thirdfirst quarter and first nine months of 2016, Apache purchased $51 million and $169 million, respectively, of leasehold and property acquisitions primarily in its North America onshore regions and Egypt.
Discontinued Operations
Apache sold its operations in Argentina and Australia in 2014 and 2015, respectively. The results of operations related to the Argentina and Australia dispositions and the losses on disposals were classified as discontinued operations in the Company’s financial statements. During 2016,2023, the Company incurred additional losses oncompleted the sale of non-core assets and leasehold in multiple transactions for total cash proceeds of $21 million, recognizing a gain of approximately $1 million upon closing of these dispositions. The components of the Company’s loss from discontinued operations were as follows:transactions.
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
  (In millions)
Loss from Australia divestiture $—
 $(23) $—
 $(23)
Loss from Argentina divestiture —
 (10) —
 (10)
Loss from discontinued operations, net of tax $—
 $(33) $—
 $(33)
Transaction, Reorganization, and Separation2022 Activity
During the thirdfirst quarter of 2022, the Company completed a transaction to sell certain non-core mineral rights in the Delaware Basin. The Company received total cash proceeds of approximately $726 million after certain post-closing adjustments and recognized an associated gain of approximately $560 million. The Company also completed the sale of other non-core assets and leasehold in multiple transactions for total cash proceeds of $8 million. The Company recognized a gain of approximately $2 million upon closing of these transactions during the first nine monthsquarter of 2017,2022.
The BCP Business Combination was completed on February 22, 2022. As consideration for the contribution of the Contributed Interests, ALTM issued 50 million shares of Class C Common Stock (and Altus Midstream LP issued a corresponding number of common units) to BCP’s unitholders, which are principally funds affiliated with Blackstone and I Squared Capital. ALTM’s stockholders continued to hold their existing shares of common stock. As a result of the transaction, the Contributor, or its designees, collectively owned approximately 75 percent of the issued and outstanding shares of ALTM common stock. Apache recorded $20Midstream LLC, a wholly owned subsidiary of APA, which owned approximately 79 percent of the issued and outstanding shares of ALTM common stock prior to the BCP Business Combination, owned approximately 20 percent of the issued and outstanding shares of Kinetik common stock after the transaction closed.

As a result of the BCP Business Combination, the Company deconsolidated ALTM on February 22, 2022 and recognized a gain of approximately $609 million that reflects the difference between the Company’s share of ALTM’s deconsolidated balance sheet of $193 million and $14the fair value of $802 million respectively, in expense related to asset divestituresof its approximate 20 percent retained ownership in the U.S. and Canada and employee separation. combined entity.
During the thirdfirst quarter and first nine months of 2016, Apache recorded $122022, the Company sold four million of its shares of Kinetik Class A Common Stock for cash proceeds of $224 million and $36recognized a loss of $25 million, respectively, in expense relatedincluding transaction fees. Refer to various asset divestitures, company reorganization, and employee separation.Note 7—Equity Method Interests for further detail.



3.   DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Objectives and Strategies
The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production. Apache manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production. The Company utilizes various types of derivative financial instruments to manage fluctuations in cash flows resulting from changes in commodity prices. The Company’s derivatives are not designated as cash flow hedges, therefore, changes in fair value are recognized currently in earnings.
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 September 30, 2017, Apache had derivative positions with 14 counterparties. The Company monitors counterparty creditworthiness on an ongoing basis; however, it cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, the Company may be limited in its ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, Apache may not realize the benefit of some of its derivative instruments resulting from lower commodity prices.
Derivative Instruments
As of September 30, 2017, Apache had the following open crude oil derivative positions:
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Put Options(1)(2)
Production Period Settlement Index Mbbls Weighted Average Strike Price
October—December 2017 NYMEX WTI 8,464 $50.00
October—December 2017 Dated Brent 7,636 $51.00
(1)The remaining unamortized premium paid as of September 30, 2017, was $50 million.
(2)Subsequent to September 30, 2017, Apache entered into put option contracts settling against Dated Brent totaling 3,650 Mbbls with a strike price of $50 for the calendar year 2018.

    Fixed-Price Swaps 
Collars(3)
 
Call Options(4)
Production Period Settlement Index Mbbls Weighted Average Fixed Price Mbbls Weighted Average Floor Price Weighted Average Ceiling Price Mbbls Strike Price
January—June 2018 NYMEX WTI 2,715 $51.23 2,715 $45.00 $56.45 — —
January—June 2018 Dated Brent 2,172 $54.57 2,172 $50.00 $58.77 — —
January—December 2018 NYMEX WTI — — 6,023 $45.00 $57.02 6,023 $60.00
(3)Subsequent to September 30, 2017, Apache entered into crude oil contracts settling against NYMEX WTI totaling 730 Mbbls with a floor and ceiling of $45.00 and $56.90, respectively, for the calendar year 2018.
(4)The remaining unamortized premium paid as of September 30, 2017, was $9 million.


As of September 30, 2017, Apache had the following open natural gas derivative positions:
    
Fixed-Price Swaps(1)
Production Period Settlement Index 
MMBtu
(in 000’s)
 Weighted Average Fixed Price
October—December 2017 NYMEX Henry Hub 4,370 $3.32
January—March 2018 NYMEX Henry Hub 13,500 $3.39
January—June 2018 NYMEX Henry Hub 22,625 $3.17
April—June 2018 NYMEX Henry Hub 16,835 $2.92
July—December 2018 NYMEX Henry Hub 18,400 $2.97
(1)Subsequent to September 30, 2017, Apache entered into fixed-price natural gas swaps settling against NYMEX Henry Hub totaling 15,180,000 MMBtu with a weighted average fixed-price of $2.95 for the second half of 2018.
As of September 30, 2017, Apache had the following open natural gas financial basis swap contracts:
Production Period Settlement Index 
MMBtu
(in 000’s)
 Weighted Average Price Differential
January—March 2018 NYMEX Henry Hub/Waha 9,450 $(0.43)
July—December 2018 NYMEX Henry Hub/Waha 33,120 $(0.53)
October—December 2018 NYMEX Henry Hub/Waha 1,380 $(0.51)
January—March 2019 NYMEX Henry Hub/Waha 1,350 $(0.54)
January—June 2019 NYMEX Henry Hub/Waha 32,580 $(0.53)
January—December 2019 NYMEX Henry Hub/Waha 14,600 $(0.45)
Fair Value Measurements
Apache’s commodity derivative instruments consist of variable-to-fixed price commodity swaps, options, and collars. 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 following table presents the Company’s derivative assets and liabilities measured at fair value on a recurring basis:
  Fair Value Measurements Using      
  Quoted Price in Active Markets (Level 1) Significant Other Inputs (Level 2) 
Significant Unobservable Inputs
(Level 3)
 Total Fair Value 
Netting(1)
 Carrying Amount
  (In millions)
September 30, 2017            
Assets:            
Commodity Derivative Instruments $—
 $24
 $—
 $24
 $(7) $17
Liabilities:            
Commodity Derivative Instruments —
 7
 —
 7
 (7) —
December 31, 2016            
Assets:            
Commodity Derivative Instruments $—
 $—
 $—
 $—
 $—
 $—
Liabilities:            
Commodity Derivative Instruments —
 —
 —
 —
 —
 —
(1)The derivative fair values are based on analysis of each contract on a gross basis, excluding the impact of netting agreements with counterparties.


All derivative instruments are reflected as either assets or liabilities at fair value in the consolidated balance sheet. These fair values are recorded by netting asset and liability positions where counterparty master netting arrangements contain provisions for net settlement. The carrying value of the Company’s derivative assets and liabilities and their locations on the consolidated balance sheet are as follows:
  September 30, 2017 December 31, 2016
  (In millions)
Current Assets: Prepaid assets and other $13
 $—
Other Assets: Deferred charges and other 4
 —
Total Assets $17
 $—
Derivative Activity Recorded in the Statement of Consolidated Operations
The following table summarizes the effect of derivative instruments on the Company’s statement of consolidated operations:
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
  (In millions)
Realized gain (loss):        
Derivative settlements, realized gain $23
 $—
 $23
 $—
Amortization of put premium, realized loss (50) —
 (50) —
Unrealized loss (83) —
 (42) —
Derivative instrument losses, net $(110) $—
 $(69) $—
Unrealized gains and losses for derivative activity recorded in the statement of consolidated operations is reflected in the statement of consolidated cash flows separately as a component of “Unrealized derivative instrument losses, net” in “Adjustments to reconcile net income (loss) to net cash provided by operating activities.”


4.    CAPITALIZED EXPLORATORY WELL COSTS
The Company’s capitalized exploratory well costs were $369$74 million and $264$50 million at September 30, 2017as of March 31, 2023 and December 31, 2016,2022, respectively. The increase is primarily attributable to additional drilling activitiesactivity in the U.S. during the period,Egypt, partially offset by successful transfers and dry hole write-offs. Notransfer of well costs during the quarter. Approximately $5 million of suspended exploratory well costs previously capitalized for greater than one year at December 31, 20162022 were charged to dry hole expense during the ninethree months ended September 30, 2017. March 31, 2023.
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 proved reserves can be attributed to these projects.
5.OTHER CURRENT LIABILITIES
5.    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Objectives and Strategies
The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production, as well as fluctuations in exchange rates in connection with transactions denominated in foreign currencies. The Company manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production and foreign currency transactions. The Company may utilize various types of derivative financial instruments, including forward contracts, futures contracts, swaps, and options, to manage fluctuations in cash flows resulting from changes in commodity prices or foreign currency values.
In December 2022, counterparty agreements for Apache’s commodity derivative instruments were transferred from Apache to APA Corporation. Apache had no outstanding derivative positions as of March 31, 2023 or December 31, 2022.
Derivative Activity Recorded in the Statement of Consolidated Operations
The following table summarizes the effect of derivative instruments on the Company’s statement of consolidated operations:
 
For the Quarter Ended
March 31,
20232022
 (In millions)
Realized:
Commodity derivative instruments$— $(5)
Realized losses, net— (5)
Unrealized:
Commodity derivative instruments— (24)
Foreign currency derivative instruments— (2)
Preferred Units embedded derivative— (31)
Unrealized losses, net— (57)
Derivative instrument losses, net$— $(62)
Derivative instrument gains and losses were recorded in “Derivative instrument losses, net” under “Revenues and Other” in the Company’s statement of consolidated operations. Unrealized losses for derivative activity recorded in the statement of consolidated operations are reflected in the statement of consolidated cash flows separately as “Unrealized derivative instrument losses, net” under “Adjustments to reconcile net income to net cash provided by operating activities.”
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6.    OTHER CURRENT ASSETS
The following table provides detail of the Company’s other current liabilitiesassets:
March 31,
2023
December 31,
2022
 (In millions)
Inventories$487 $425 
Drilling advances64 64 
Prepaid assets and other89 54 
Current decommissioning security for sold Gulf of Mexico assets450 450 
Total Other current assets$1,090 $993 
7.    EQUITY METHOD INTERESTS
The Kinetik Class A Common Stock held by the Company is treated as an interest in equity securities measured at fair value. The Company elected the fair value option for measuring its equity method interest in Kinetik based on practical expedience, variances in reporting timelines, and cost-benefit considerations. The fair value of the Company’s interest in Kinetik is determined using observable share prices on a major exchange, a Level 1 fair value measurement. Fair value adjustments and dividends received are recorded as a component of “Other, net” under “Revenues and other” in the Company’s statement of consolidated operations.
The Company’s initial interest in Kinetik was measured at fair value based on the Company’s ownership of approximately 12.9 million shares of Kinetik Class A Common stock as of September 30, 2017February 22, 2022. In March 2022, the Company sold four million of its shares of Kinetik Class A Common Stock for a loss, including underwriters fees, of $25 million, which was recorded as a component of “Gain on divestitures, net” under “Revenues and Decemberother” in the Company’s statement of consolidated operations. Refer to Note 3—Acquisitions and Divestitures for further detail.
During the second quarter of 2022, Kinetik issued a two-for-one split of its common stock. As of March 31, 2016:2023, the Company’s ownership of 19.3 million shares represented approximately 13 percent of Kinetik’s outstanding Class A Common Stock.
During the first quarters of 2023 and 2022, the Company recorded changes in the fair value of its equity method interest in Kinetik totaling a loss of $19 million and a gain of $24 million, respectively, which were recorded as a component of “Revenues and other” in the Company’s statement of consolidated operations.
During the first quarters of 2023 and 2022, the Company recorded GPT costs for midstream services provided by Kinetik subsequent to the close of the BCP Business Combination transaction totaling $24 million and $10 million, respectively. As of March 31, 2023, the Company has recorded accrued GPT costs payable to Kinetik of approximately $17 million. In addition, the Company sold natural gas and NGLs to Kinetik during the first quarter of 2023 totaling $7 million. As of March 31, 2023, the Company has recorded receivables from Kinetik of approximately $4 million.

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  September 30, 2017 December 31, 2016
  (In millions)
Accrued operating expenses $73
 $110
Accrued exploration and development 691
 463
Accrued compensation and benefits 99
 201
Accrued interest 108
 145
Accrued income taxes 68
 22
Current asset retirement obligation 35
 66
Refundable deposits 149
 174
Other 109
 77
Total other current liabilities $1,332
 $1,258

8.    OTHER CURRENT LIABILITIES
6.ASSET RETIREMENT OBLIGATION
The following table provides detail of the Company’s other current liabilities:
March 31,
2023
December 31,
2022
 (In millions)
Accrued operating expenses$151 $139 
Accrued exploration and development324 300 
Accrued compensation and benefits216 514 
Accrued interest66 96 
Accrued income taxes136 90 
Current asset retirement obligation55 55 
Current operating lease liability142 167 
Current decommissioning contingency for sold Gulf of Mexico properties433 450 
Other209 238 
Total Other current liabilities$1,732 $2,049 
9.    ASSET RETIREMENT OBLIGATION
The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the nine-month period ended September 30, 2017:liability:
  (In millions)
Asset retirement obligation at December 31, 2016 $2,498
Liabilities incurred 39
Liabilities divested (810)
Liabilities settled (30)
Accretion expense 103
Revisions in estimated liabilities 66
Asset retirement obligation at September 30, 2017 1,866
Less current portion 35
Asset retirement obligation, long-term $1,831


7.INCOME TAXES
March 31,
2023
(In millions)
Asset retirement obligation, December 31, 2022$1,991 
Liabilities incurred5 
Liabilities settled(10)
Accretion expense28 
Asset retirement obligation, March 31, 20232,014 
Less current portion(55)
Asset retirement obligation, long-term$1,959 
10.    DEBT AND FINANCING COSTS
The following table presents the carrying values of the Company’s debt:
March 31,
2023
December 31,
2022
(In millions)
Notes and debentures before unamortized discount and debt issuance costs(1)
$4,835 $4,908 
Syndicated credit facilities(2)
105 — 
Finance lease obligations34 34 
Unamortized discount(27)(27)
Debt issuance costs(27)(28)
Total debt4,920 4,887 
Current maturities(2)(2)
Long-term debt$4,918 $4,885 
(1)    The fair values of the Company’s notes and debentures were $4.2 billion at each of March 31, 2023 and December 31, 2022.
Apache uses a market approach to determine the fair values of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).
(2)    The carrying value of borrowings on credit facilities approximates fair value because interest rates are variable and reflective of market rates.
At each of March 31, 2023 and December 31, 2022, current debt included $2 million of finance lease obligations.
During the quarter ended March 31, 2023, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $74 million for an aggregate purchase price of $65 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $10 million. The Company recognized a $9 million gain on these repurchases. The repurchases were partially financed by Apache’s borrowing under the US dollar-denominated revolving credit facility of APA Corporation described below.
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During the quarter ended March 31, 2022, Apache closed cash tender offers for certain outstanding notes issued under its indentures, accepting for purchase $1.1 billion aggregate principal amount of notes. Apache paid holders an aggregate $1.2 billion in cash, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a $66 million loss on extinguishment of debt, including $11 million of unamortized debt discount and issuance costs in connection with the note purchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.
During the quarter ended March 31, 2022, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $15 million for an aggregate purchase price of $16 million in cash, including accrued interest and broker fees, reflecting a premium to par of $1 million. The Company recognized a $1 million loss on these repurchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.
On January 18, 2022, Apache redeemed the outstanding $213 million principal amount of 3.25% senior notes due April 15, 2022, at a redemption price equal to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed by borrowing under Apache’s former revolving credit facility.
Apache intends to reduce debt outstanding under its indentures from time to time.
On April 29, 2022, Apache entered into two unsecured guaranties of obligations under two unsecured syndicated credit agreements then entered into by APA, of which Apache is a wholly owned subsidiary. APA’s new credit agreements are for general corporate purposes and replaced and refinanced Apache’s 2018 unsecured syndicated credit agreement (the Former Facility).
•One credit agreement is denominated in US dollars (the USD Agreement) and provides for an unsecured five-year revolving credit facility, with aggregate commitments of US$1.8 billion (including a letter of credit subfacility of up to US$750 million, of which US$150 million currently is committed). APA may increase commitments up to an aggregate US$2.3 billion by adding new lenders or obtaining the consent of any increasing existing lenders. This facility matures in April 2027, subject to APA’s two, one-year extension options.
•The second credit agreement is denominated in pounds sterling (the GBP Agreement) and provides for an unsecured five-year revolving credit facility, with aggregate commitments of £1.5 billion for loans and letters of credit. This facility matures in April 2027, subject to APA’s two, one-year extension options.
In connection with APA’s entry into the USD Agreement and the GBP Agreement (each, a New Agreement), Apache terminated US$4.0 billion of commitments under the Former Facility, borrowings then outstanding under the Former Facility were deemed outstanding under APA’s USD Agreement, and letters of credit then outstanding under the Former Facility were deemed outstanding under a New Agreement, depending upon whether denominated in US dollars or pounds sterling. Apache has guaranteed obligations under each New Agreement effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than US$1.0 billion.
Apache may borrow under APA’s USD Agreement up to an aggregate principal amount of US$300 million outstanding at any given time. As of March 31, 2023, there were $105 million of borrowings by Apache outstanding under the USD Agreement. As of December 31, 2022, there were no borrowings by Apache outstanding under the USD Agreement.
Apache, from time to time, has and uses uncommitted credit and letter of credit facilities for working capital and credit support purposes. As of March 31, 2023 and December 31, 2022, there were no outstanding borrowings under these facilities. As of March 31, 2023, there were £261 million and $17 million in letters of credit outstanding under these facilities. As of December 31, 2022, there were £199 million and $17 million in letters of credit outstanding under these facilities.
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Financing Costs, Net
The following table presents the components of the Company’s financing costs, net:
 
For the Quarter Ended
March 31,
 20232022
 (In millions)
Interest expense$75 $90 
Amortization of debt issuance costs1 2 
(Gain) loss on extinguishment of debt(9)67 
Interest income(2)(4)
Interest income from APA Corporation, net(16)(15)
Financing costs, net$49 $140 
11.    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 ofon 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 August 2017, Apache completedDuring the sale of ACL. 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 realizable capital loss on the sale of ACL, and a decrease in the Company’s deferred tax liability associated with its investment in foreign subsidiaries. In the third and second quarters of 2017, the Company recorded a $2 million deferred income tax expense and a $674 million deferred income tax benefit, respectively, in connection with these transactions.
Apache’s thirdfirst quarter of 20172023, the Company’s effective income tax rate was primarily impacted by gains on the sale of oil and gas properties and a $30 million current tax benefit associated with U.S. federal income tax credits. 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 millionexpense related to the remeasurement of taxes in the Company’s December 31, 2015 U.K. deferred income tax liability.
Apache’s 2017 year-to-date effective income tax rate is primarily impacted byas a result of the enactment of Finance Act 2023 on January 10, 2023, and a decrease in the amount of valuation allowance against its U.S. deferred taxes associated with its investments in foreign subsidiaries, gains ontax assets. During the salefirst quarter of oil and gas properties, non-cash impairments of2022, the Company’s PRT decommissioning asset, and the current tax benefit associated with U.S. federal income tax credits. Apache’s 2016 year-to-date effective income tax rate was primarily impacted by non-cash impairmentsthe gain associated with deconsolidation of Altus, the carrying valuegain on sale of certain non-core mineral rights in the Company’s oilDelaware Basin, 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 increasea decrease in the amount of valuation allowances onallowance against its U.S. and Canadian deferred tax assets.
ApacheOn January 10, 2023, Finance Act 2023 was enacted, receiving Royal Assent, and included amendments to the Energy (Oil and Gas) Profits Levy Act of 2022, increasing the levy from a 25 percent rate to a 35 percent rate, effective for the period of January 1, 2023 through March 31, 2028. Under U.S. GAAP, the financial statement impact of new legislation is recorded in the period of enactment. Therefore, in the first quarter of 2023, the Company recorded a deferred tax expense of $174 million related to the remeasurement of the December 31, 2022 U.K. deferred tax liability.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA). The IRA includes a new 15 percent corporate alternative minimum tax (Corporate AMT) on applicable corporations with an average annual financial statement income that exceeds $1 billion for any three consecutive years preceding the tax year at issue. The Corporate AMT is effective for tax years beginning after December 31, 2022. The Company is continuing to evaluate the provisions of the IRA and awaits further guidance from the U.S. Treasury Department to properly assess the impact of these provisions on the Company. Under the existing guidance, the Company does not believe the IRA will have a material impact for 2023.
The Company recorded a full valuation allowance against its U.S. net deferred tax assets. The Company will continue to maintain a full valuation allowance on its U.S. net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given the Company’s current and anticipated future domestic earnings, the Company believes that there is a reasonable possibility that within the next 12 months sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the U.S. valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense, which could be material, for the period the release is recorded.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various statestates 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 30, 2017 and December 31, 2016:
16
  September 30, 2017 December 31, 2016
  
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
  (In millions)
Commercial paper and committed bank facilities $—
 $—
 $—
 $—
Notes and debentures 8,483
 9,094
 8,544
 9,183
Total Debt $8,483
 $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. 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 September 30, 2017 and December 31, 2016:

  September 30, 2017 December 31, 2016
  (In millions)
Debt before unamortized discount and debt issuance costs $8,580
 $8,650
Unamortized discount (48) (50)
Debt issuance costs (49) (56)
Total debt 8,483
 8,544
Current maturities (550) —
Long-term debt $7,933
 $8,544
12.    COMMITMENTS AND CONTINGENCIES

As of September 30, 2017, current debt included $150 million of 7.0% senior notes due February 1, 2018 and $400 million of 6.9% senior notes due September 15, 2018.

As of September 30, 2017, the Company had a revolving credit facility that matures in June 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 30, 2017, the Company had no commercial paper or borrowings under committed bank facilities or uncommitted bank lines outstanding.

As of September 30, 2017, the Company had a letter of credit facility, which provides for £900 million in commitments and rights to increase commitments to £1.075 billion. This facility matures in February 2020. The facility is available for letters of credit and 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 30, 2017, three letters of credit aggregating approximately £147.5 million and no borrowings were outstanding under this facility.

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, 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, which is included in “Financing costs, net” in the Company’s consolidated statement of operations. The net loss includes an acceleration of related discount and deferred financing costs.

In August 2017, the Company assumed the obligations of Apache Finance Canada Corporation (AFCC) in respect of $300 million 7.75% notes due in 2029 which AFCC issued and the Company guaranteed pursuant to the governing indenture. The assumption was permitted by the indenture and effected pursuant to a supplemental indenture thereto. As a result of the assumption, the Company is the obligor under the notes and indenture, and AFCC is released from its obligations thereunder. The $300 million 7.75% notes historically have been included in the Company’s long-term debt; accordingly, the assumption did not change the Company’s long-term debt or total debt.
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,
  2017 2016 2017 2016
  (In millions)
Interest expense $113
 $116
 $344
 $348
Amortization of deferred loan costs 3
 2
 7
 5
Capitalized interest (12) (13) (39) (36)
Loss on extinguishment of debt —
 —
 1
 —
Interest income (3) (3) (13) (6)
Financing costs, net $101
 $102
 $300
 $311



9.COMMITMENTS AND CONTINGENCIES
Legal Matters
ApacheThe Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls.controls, which also may include controls related to the potential impacts of climate change. As of September 30, 2017,March 31, 2023, the Company has an accrued liability of approximately $37$64 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. Apache’sThe Company’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’sthe Company’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that Apachethe Company 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 seerefer to Note 10—11—Commitments and Contingencies to the consolidated financial statements contained in Apache’sthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2022.
Argentine Environmental Claims
On March 12, 2014, the Company and Argentina Tariff
No material change inits subsidiaries completed the statussale of all of the Company’s subsidiaries’ operations and properties in Argentina to YPF Sociedad AnónimaAnonima (YPF). As part of that sale, YPF assumed responsibility for all of the past, present, and future litigation in Argentina involving Company subsidiaries, except that Company subsidiaries have agreed to indemnify YPF for certain environmental, tax, and royalty obligations capped at an aggregate of $100 million. The indemnity is subject to specific agreed conditions precedent, thresholds, contingencies, limitations, claim deadlines, loss sharing, and other terms and conditions. On April 11, 2014, YPF provided its first notice of claims pursuant to the indemnity. Company subsidiaries have not paid any amounts under the indemnity but will continue to review and consider claims presented by YPF. Further, Company subsidiaries retain the right to enforce certain Argentina-related indemnification obligations against Pioneer Natural Resources Company indemnities matters has occurred since(Pioneer) in an amount up to $45 million pursuant to the filingterms and conditions of Apache’sstock purchase agreements entered in 2006 between Company subsidiaries and subsidiaries of Pioneer.
Louisiana Restoration
As more fully described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
2022, Louisiana Restoration
As more fully described in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, numerous surface owners have filedoften file lawsuits or assert claims or sent demand letters to variousagainst oil and gas companies, including Apache,the Company, claiming that under either express or implied lease terms or Louisiana law,operators and working interest owners in the companieschain of title are liable for damageenvironmental damages on the leased premises, including damages measured by the cost of restoration of the leased premises to theirits original condition, as well as damages for contamination and cleanup.
On July 24, 2013, a lawsuit captioned Board of Commissionersregardless of the Southeast Louisiana Flood Protection Authority – East v. Tennessee Gas Pipelinevalue of the underlying property. From time to time, restoration lawsuits and claims are resolved by the Company et al., Case No. 2013-6911 was filed in the Civil District Court for the Parish of Orleans, State of Louisiana, in which plaintiff on behalf of itself and as the board governing the levee districts of Orleans, Lake Borgne Basin, and East Jefferson allegedamounts that Louisiana coastal lands have been damaged as a result of oil and gas 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 with prejudice. Plaintiff appealed the lower court’s dismissalare not material to the 5th Circuit Court of AppealsCompany, while new lawsuits and additionally challengedclaims are asserted against the defendants’ rightCompany. With respect to remove the case to federal court. On March 3, 2017, the 5th 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 dismissaleach of the action. The Plaintiff filed a Petition for a Writ of Certiorari withpending lawsuits and claims, the United States Supreme Court. On October 30, 2017,amount claimed is not currently determinable or is not material. Further, the United States Supreme Court denied reviewoverall exposure related to these lawsuits and declinedclaims is not currently determinable. While adverse judgments against the Company are possible, the Company intends to consider the plaintiff’s Petition of Certiorari.actively defend these lawsuits and claims.
Starting in November of 2013 and continuing into 2017,2023, several Parishesparishes in Louisiana have pending lawsuits against many oil and gas producers, including Apache. These cases are pending in federal and state courts in Louisiana.the Company. In these cases, the Parishes, as plaintiffs, allege that defendants’ oil and gas exploration, production, and transportation operations in specified fields were conducted in violation of the State and Local Coastal Resources Management Act of 1978, as amended, and applicable regulations, rules, orders, and ordinances promulgated or adopted thereunder by the Parish or the State of Louisiana. Plaintiffs allege that defendants caused substantial damage to land and water bodies located in the coastal zone 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 judgmentjudgments against Apachethe Company might be possible, Apachethe Company 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, 2016.
17




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 $500in excess of $200 million (having previously claimed in excess of $1.1 billion) relating to certain purchase and sale agreements, mineral leases, and areasarea of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. The trial court entered final judgment in favor of the Company, ruling that the plaintiffs take nothing by their claims and awarding the Company its attorneys’ fees and costs incurred in defending the lawsuit. The court of appeals affirmed in part and reversed in part the trial court’s judgment thereby reinstating some of plaintiff’s claims. The Texas Supreme Court recently granted twothe Company’s petition for review and heard oral argument in October 2022. On April 28, 2023, the Texas Supreme Court reversed the court of Apache’s motionsappeals’ decision and remanded the case back to the court of appeals for summary judgment further limitingproceedings.
Australian Operations Divestiture Dispute
Pursuant to a Sale and Purchase Agreement dated April 9, 2015 (Quadrant SPA), the plaintiffs’ theoriesCompany and potentialits subsidiaries divested Australian operations to Quadrant Energy Pty Ltd (Quadrant). Closing occurred on June 5, 2015. In April 2017, the Company filed suit against Quadrant for breach of the Quadrant SPA. In its suit, the Company seeks approximately AUD $80 million. In December 2017, Quadrant filed a defense of equitable set-off to the Company’s claim and a counterclaim seeking approximately AUD $200 million in the aggregate. The Company believes that Quadrant’s claims lack merit and will not have a material adverse effect on the Company’s financial position, results of operation, or liquidity.
Canadian Operations Divestiture Dispute
Pursuant to a Sale and Purchase Agreement dated July 6, 2017 (Paramount SPA), the Company and its subsidiaries divested their remaining Canadian operations to Paramount Resources LTD (Paramount). Closing occurred on August 16, 2017. On September 11, 2019, four ex-employees of Apache Canada LTD on behalf of themselves and individuals employed by Apache Canada LTD on July 6, 2017, filed an Amended Statement of Claim in a matter styled Stephen Flesch et. al. v Apache Corporation et. al., No. 1901-09160 Court of Queen’s Bench of Alberta against the Company and others seeking class certification and a finding that the Paramount SPA amounted to a Change of Control of the Company, entitling them to accelerated vesting under the Company’s equity plans. In the suit, the class seeks approximately $60 million USD and punitive damages. ApacheThe Company believes that plaintiffs’ claims lack merit and further that plaintiffs’ alleged damages, even as amended, are grossly inflated. Apache will vigorously opposenot have a material adverse effect on the claims. No other material changeCompany’s financial position, results of operation, or liquidity.
California and Delaware Litigation
On July 17, 2017, in three separate actions, San Mateo and Marin Counties, and the statusCity of these matters has occurred since the filing of Apache’s Annual ReportImperial Beach, California, all filed suit individually and on Form 10-K for the fiscal year ended December 31, 2016.
Escheat Audits
There has been no material change with respect to the reviewbehalf of the books and recordspeople of the Companystate of California against over 30 oil and its subsidiariesgas companies alleging damages as a result of global warming. Plaintiffs seek unspecified damages and related entities byabatement under various tort theories. On December 20, 2017, in two separate actions, the City of Santa Cruz and Santa Cruz County filed similar lawsuits against many of the same defendants. On January 22, 2018, the City of Richmond filed a similar lawsuit. On November 14, 2018, the Pacific Coast Federation of Fishermen’s Associations, Inc. also filed a similar lawsuit against many of the same defendants.
On September 10, 2020, the State of Delaware Departmentfiled suit, individually and on behalf of Finance (Unclaimed Property),the people of the State of Delaware, against over 25 oil and gas companies alleging damages as a result of global warming. Plaintiffs seek unspecified damages and abatement under various tort theories.
The Company believes that it is not subject to determine compliance withjurisdiction of the California courts and that claims made against it in the California and Delaware litigation are baseless. The Company intends to challenge jurisdiction in California and to vigorously defend the Delaware Escheat Laws, sincelawsuit.
Castex Lawsuit
In a case styled Apache Corporation v. Castex Offshore, Inc., et. al., Cause No. 2015-48580, in the filing113th Judicial District Court of Apache’s Annual ReportHarris County, Texas, Castex filed claims for alleged damages of approximately $200 million, relating to overspend on Form 10-Kthe Belle Isle Gas Facility upgrade, and the drilling of five sidetracks on the Potomac #3 well. After a jury trial, a verdict of approximately $60 million, plus fees, costs, and interest was entered against the Company. The Fourteenth Court of Appeals of Texas reversed the judgment, in part, reducing the judgment to approximately $13.5 million, plus fees, costs, and interest against the Company.
18

Kulp Minerals Lawsuit
On or about April 7, 2023, Apache was sued in a purported class action in New Mexico styled Kulp Minerals LLC v. Apache Corporation, Case No. D-506-CV-2023-00352 in the Fifth Judicial District. The Kulp Minerals case has not been certified and seeks to represent a group of owners allegedly owed statutory interest under New Mexico law as a result of purported late oil and gas payments. The amount of this claim is not yet reasonably determinable. The Company intends to vigorously defend against the claims asserted in this lawsuit.
Shareholder and Derivative Lawsuits
On February 23, 2021, a case captioned Plymouth County Retirement System v. Apache Corporation, et al. was filed in the United States District Court for the fiscal year ended December 31, 2016.Southern District of Texas (Houston Division) against the Company and certain current and former officers. The complaint, which is a shareholder lawsuit styled as a class action, alleges that (1) the Company intentionally used unrealistic assumptions regarding the amount and composition of available oil and gas in Alpine High; (2) the Company did not have the proper infrastructure in place to safely and/or economically drill and/or transport those resources even if they existed in the amounts purported; (3) certain statements and omissions artificially inflated the value of the Company’s operations in the Permian Basin; and (4) as a result, the Company’s public statements were materially false and misleading. The Company believes that plaintiffs’ claims lack merit and intends to vigorously defend this lawsuit.
On January 18, 2023, a case captioned Jerry Hight, Derivatively and on behalf of APA Corporation v. John J. Christmann IV et al. was filed in the 61st District Court of Harris County, Texas. Then, on February 21, 2023, a case captioned Steve Silverman, Derivatively and on behalf of Nominal Defendant APA Corp. v. John J. Christmann IV, et al. was filed in federal district court for the Southern District of Texas. Then, on April 20, 2023, a case captioned William Wessels, Derivatively and on behalf of APA Corporation v. John J. Christmann IV et al. was filed in the 151st District Court of Harris County, Texas. These cases purport to be derivative actions brought against senior management and Company directors over many of the same allegations included in the Plymouth County Retirement System matter and asserts claims of (1) breach of fiduciary duty; (2) waste of corporate assets; and (3) unjust enrichment. The defendants believe that plaintiffs’ claims lack merit and intend to vigorously defend these lawsuits.
Environmental Matters
As of September 30, 2017,March 31, 2023, the Company had an undiscounted reserve for environmental remediation of approximately $4$1 million.
On September 11, 2020, the Company received a Notice of Violation and Finding of Violation, and accompanying Clean Air Act Information Request, from the U.S. Environmental Protection Agency (EPA) following site inspections in April 2019 at several of the Company’s oil and natural gas production facilities in Lea and Eddy Counties, New Mexico. The notice and information request involve alleged emissions control and reporting violations. The Company is cooperating with the EPA and has responded to the information request. The EPA has referred the notice for civil enforcement proceedings; however, at this time the Company is unable to reasonably estimate whether such proceedings will result in monetary sanctions and, if so, whether they would be more or less than $100,000, exclusive of interest and costs.
On December 29, 2020, the Company received a Notice of Violation and Opportunity to Confer, and accompanying Clean Air Act Information Request, from the EPA following helicopter flyovers in September 2019 of several of the Company’s oil and natural gas production facilities in Reeves County, Texas. The notice and information request involve alleged emissions control and reporting violations. The Company is cooperating with the EPA and has responded to the information request. The EPA has referred the notice for civil enforcement proceedings; however, at this time the Company is unable to reasonably estimate whether such proceedings will result in monetary sanctions and, if so, whether they would be more or less than $100,000, exclusive of interest and costs.
The Company is not aware of any environmental claims existing as of September 30, 2017,March 31, 2023 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.
ACL, a former
19

Potential Decommissioning Obligations on Sold Properties
In 2013, Apache sold its Gulf of Mexico (GOM) Shelf operations and properties and its GOM operating subsidiary, GOM Shelf LLC (GOM Shelf) to Fieldwood Energy LLC (Fieldwood). Under the terms of the Company, previously reported produced water spillspurchase agreement, Apache received cash consideration of $3.75 billion and Fieldwood assumed the obligation to decommission the properties held by GOM Shelf and the properties acquired from Apache and its other subsidiaries (collectively, the Legacy GOM Assets). In respect of such abandonment obligations, Fieldwood posted letters of credit in favor of Apache (Letters of Credit) and established trust accounts (Trust A and Trust B) of which Apache was a remote areabeneficiary and which were funded by two net profits interests (NPIs) depending on future oil prices. On February 14, 2018, Fieldwood filed for protection under Chapter 11 of the Bellow FieldU.S. Bankruptcy Code. In connection with the 2018 bankruptcy, Fieldwood confirmed a plan under which Apache agreed, inter alia, to (i) accept bonds in exchange for certain of the Letters of Credit and (ii) amend the Trust A trust agreement and one of the NPIs to consolidate the trusts into a hydrogen sulfidesingle Trust (Trust A) funded by both remaining NPIs. Currently, Apache holds two bonds (Bonds) and oil emulsion leakfive Letters of Credit to secure Fieldwood’s asset retirement obligations on the Legacy GOM Assets as and when Apache is required to perform or pay for decommissioning any Legacy GOM Asset over the remaining life of the Legacy GOM Assets.
On August 3, 2020, Fieldwood again filed for protection under Chapter 11 of the U.S. Bankruptcy Code. On June 25, 2021, the United States Bankruptcy Court for the Southern District of Texas (Houston Division) entered an order confirming Fieldwood’s bankruptcy plan. On August 27, 2021, Fieldwood’s bankruptcy plan became effective. Pursuant to the plan, the Legacy GOM Assets were separated into a standalone company, which was subsequently merged into GOM Shelf. Under GOM Shelf’s limited liability company agreement, the proceeds of production of the Legacy GOM Assets will be used to fund decommissioning of Legacy GOM Assets.
By letter dated April 5, 2022, replacing two prior letters dated September 8, 2021 and February 22, 2022, and by subsequent letter dated March 1, 2023, GOM Shelf notified the Bureau of Safety and Environmental Enforcement (BSEE) that it was unable to fund the decommissioning obligations that it is currently obligated to perform on certain of the Legacy GOM Assets. As a result, Apache and other current and former owners in these assets have received orders from BSEE to decommission certain of the Legacy GOM Assets included in GOM Shelf’s notifications to BSEE. Apache expects to receive similar orders on the other Legacy GOM Assets included in GOM Shelf’s notification letters. Apache has also received orders to decommission other Legacy GOM Assets that were not included in GOM Shelf’s notification letters. Further, Apache anticipates that GOM Shelf may send additional such notices to BSEE in the Zama area. The Company sold ACLfuture and that it may receive additional orders from BSEE requiring it to decommission other Legacy GOM Assets.
As of March 31, 2023, Apache has incurred $291 million in decommissioning costs related to several Legacy GOM Assets. GOM Shelf did not, and has confirmed that it will not, reimburse Apache for these decommissioning costs. As a transaction that was completed inresult, Apache has sought and will continue to seek reimbursement from its security for these costs, of which $195 million had been reimbursed from Trust A as of March 31, 2023. If GOM Shelf does not reimburse Apache for further decommissioning costs incurred with respect to Legacy GOM Assets, then Apache will continue to seek reimbursement from Trust A, to the third quarterextent of 2017. The Canadian environmental litigationavailable funds, and liabilities remained with ACLthereafter, will seek reimbursement from the Bonds and the Letters of Credit until all such funds and securities are now the responsibility of the acquirer.
fully utilized. In addition, after such sources have been exhausted, Apache has agreed to provide a standby loan to GOM Shelf of up to $400 million to perform decommissioning (Standby Loan Agreement), with such standby loan secured by a first and prior lien on the matters for whichLegacy GOM Assets.
If the combination of GOM Shelf’s net cash flow from its producing properties, the Trust A funds, the Bonds, and the remaining Letters of Credit are insufficient to fully fund decommissioning of any Legacy GOM Assets that Apache may be required to perform or fund, or if GOM Shelf’s net cash flow from its remaining producing properties after the Trust A funds, Bonds, and Letters of Credit are exhausted is insufficient to repay any loans made by Apache under the Standby Loan Agreement, then Apache may be forced to effectively use its available cash to fund the deficit.
As of March 31, 2023, Apache estimates that its potential liability to fund the remaining decommissioning of Legacy GOM Assets it may be ordered to perform or fund ranges from $1.1 billion to $1.3 billion on an undiscounted basis. Management does not believe any specific estimate within this range is a better estimate than any other. Accordingly, the Company has already accrued,recorded a contingent liability of $1.1 billion as of March 31, 2023, representing the estimated costs of decommissioning it may be required to perform or fund on July 17, 2017,Legacy GOM Assets. Of the total liability recorded, $656 million is reflected under the caption “Decommissioning contingency for sold Gulf of Mexico properties,” and $433 million is reflected under “Other current liabilities” in three separate actions, San Mateo County, California, Marin County, California,the Company’s consolidated balance sheet. Changes in significant assumptions impacting Apache’s estimated liability, including expected decommissioning rig spread rates, lift boat rates, and planned abandonment logistics could result in a liability in excess of the amount accrued.
20

As of March 31, 2023, the Company has also recorded a $582 million asset, which represents the amount the Company expects to be reimbursed from the Trust A funds, the Bonds, and the CityLetters of Imperial Beach, California, all filed suit individually andCredit for decommissioning it may be required to perform on behalf ofLegacy GOM Assets. 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), 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). Closing occurred on June 5, 2015. By letter dated June 6, 2016, Quadrant provided the Company with a placeholder notice of claimtotal asset recorded, $132 million is reflected under the SPA concerning taxcaption “Decommissioning security for sold Gulf of Mexico properties,” and other issues totaling approximately $200$450 million inis reflected under “Other current assets.”
13.    BUSINESS SEGMENT INFORMATION
As of March 31, 2023, the aggregate. The Company believes that these claims lack merit and intends to vigorously defend against them. Moreover, on September 22, 2017, subsidiaries of the Company filed suit against Quadrant for breaching the SPA and wrongfully withholding tax refunds owed under the SPA. This claim totals approximately $80 million AUD.


10.CAPITAL STOCK
Net Income (Loss) per Common Share
A reconciliation of the components of basic and diluted net income (loss) per common share for the quarters and nine months ended September 30, 2017 and 2016, is presented in the table below.
  For the Quarter Ended September 30,
  2017 2016
  Income Shares Per Share Loss Shares Per Share
  (In millions, except per share amounts)
Basic:            
Income (loss) from continuing operations $63
 381
 $0.16
 $(574) 380
 $(1.51)
Loss from discontinued operations —
 381
 —
 (33) 380
 (0.09)
Income (loss) attributable to common stock $63
 381
 $0.16
 $(607) 380
 $(1.60)
Effect of Dilutive Securities:            
Stock options and other $—
 2
 $—
 $—
 —
 $—
Diluted:            
Income (loss) from continuing operations $63
 383
 $0.16
 $(574) 380
 $(1.51)
Loss from discontinued operations —
 383
 —
 (33) 380
 (0.09)
Income (loss) attributable to common stock $63
 383
 $0.16
 $(607) 380
 $(1.60)
  For the Nine Months Ended September 30,
  2017 2016
  Income Shares Per Share Loss Shares Per Share
  (In millions, except per share amounts)
Basic:            
Income (loss) from continuing operations $848
 381
 $2.23
 $(1,190) 379
 $(3.14)
Loss from discontinued operations —
 381
 —
 (33) 379
 (0.08)
Income (loss) attributable to common stock $848
 381
 $2.23
 $(1,223) 379
 $(3.22)
Effect of Dilutive Securities:            
Stock options and other $—
 2
 $(0.01) $—
 —
 $—
Diluted:            
Income (loss) from continuing operations $848
 383
 $2.22
 $(1,190) 379
 $(3.14)
Loss from discontinued operations —
 383
 —
 (33) 379
 (0.08)
Income (loss) attributable to common stock $848
 383
 $2.22
 $(1,223) 379
 $(3.22)

The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling 8.4 million and 4.7 million for the quarters ended September 30, 2017 and 2016, respectively, and 7.5 million and 6.5 million for the nine months ended September 30, 2017 and 2016, respectively.
Common Stock Dividends
For each of the quarters ended September 30, 2017, and 2016, Apache paid $95 million in dividends on its common stock. For the nine months ended September 30, 2017 and 2016, the Company paid $285 million and $284 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 September 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 2017.


11.ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table describes changes to the Company’s accumulated other comprehensive loss by component for the nine-month period ended September 30, 2017:
  Currency Translation Adjustment Pension and Postretirement Benefit Plan Total
  (In millions)
Accumulated other comprehensive loss at December 31, 2016 $(109) $(3) $(112)
Currency translation adjustment divested(1)
 109
 —
 109
Accumulated other comprehensive loss at September 30, 2017 $—
 $(3) $(3)
(1)Currency translation adjustments resulting from translating the Canadian subsidiaries’ financial statements into U.S. dollar equivalents, prior to adoption of the U.S. dollar as their functional currency, were reported separately and accumulated in other comprehensive loss. This currency translation loss was recognized as a reduction of the net gain on divestiture during the third quarter of 2017 in connection with the Canada divestitures. For more information regarding these divestitures, please refer to Note 2—Acquisitions and Divestitures.
12.BUSINESS SEGMENT INFORMATION
Apache is engaged in a single line of business. Both domesticallyexploration and internationally,production (Upstream) activities across three operating segments: Egypt, North Sea, and the CompanyU.S. The Company’s Upstream business explores for, develops, and produces crude oil, natural gas, crude oil, and natural gas liquids. At September 30, 2017,Prior to the Company had production in three reporting segments:deconsolidation of Altus on February 22, 2022, the United States, Egypt,Company’s Midstream business was operated by ALTM, which owned, developed, and offshore the United Kingdomoperated a midstream energy asset network in the North Sea (North Sea). Apache also has exploration interests in Suriname that may, over time, result in a reportable discovery and development opportunity.Permian Basin of West Texas. Financial information for each areasegment is presented below:
Egypt(1)
North SeaU.S.Altus Midstream
Intersegment
Eliminations
& Other
Total(4)
Upstream
For the Quarter Ended March 31, 2023(In millions)
Revenues:
Oil revenues$629 $282 $439 $— $— $1,350 
Natural gas revenues93 60 85 — — 238 
Natural gas liquids revenues— 10 108 — — 118 
Oil, natural gas, and natural gas liquids production revenues722 352 632 — — 1,706 
Purchased oil and gas sales— — 239 — — 239 
722 352 871 — — 1,945 
Operating Expenses:
Lease operating expenses97 77 140 — — 314 
Gathering, processing, and transmission7 11 55 — — 73 
Purchased oil and gas costs— — 216 — — 216 
Taxes other than income— — 50 — — 50 
Exploration36 5 3 — — 44 
Depreciation, depletion, and amortization123 58 127 — — 308 
Asset retirement obligation accretion— 18 10 — — 28 
263 169 601 — — 1,033 
Operating Income(2)
$459 $183 $270 $— $— 912 
Other Income (Expense):
Gain on divestitures, net1 
Other, net(32)
General and administrative(58)
Transaction, reorganization, and separation(4)
Financing costs, net(49)
Income Before Income Taxes$770 
Total Assets(3)
$3,334 $1,836 $9,089 $— $— $14,259 

21

Egypt(1)
North SeaU.S.Altus Midstream
Intersegment
Eliminations
& Other
Total(4)
 
United
States
 
Canada(1)
 
Egypt(2)
 North Sea 
Other
International
 TotalUpstream
 (In millions)
For the Quarter Ended September 30, 2017            
Oil and Gas Production Revenues $550
 $36
 $543
 $260
 $—
 $1,389
Operating Income (Loss)(3)
 $(114) $(1) $226
 $16
 $(1) $126
For the Quarter Ended March 31, 2022For the Quarter Ended March 31, 2022(In millions)
Revenues:Revenues:
Oil revenuesOil revenues$790 $328 $599 $— $— $1,717 
Natural gas revenuesNatural gas revenues98 99 183 — — 380 
Natural gas liquids revenuesNatural gas liquids revenues3 16 207 — (3)223 
Oil, natural gas, and natural gas liquids production revenuesOil, natural gas, and natural gas liquids production revenues891 443 989 — (3)2,320 
Purchased oil and gas salesPurchased oil and gas sales— — 344 5 — 349 
Midstream service affiliate revenuesMidstream service affiliate revenues— — — 16 (16)— 
891 443 1,333 21 (19)2,669 
Operating Expenses:Operating Expenses:
Lease operating expensesLease operating expenses131 96 118 — (1)344 
Gathering, processing, and transmissionGathering, processing, and transmission5 12 77 5 (18)81 
Purchased oil and gas costsPurchased oil and gas costs— — 351 — — 351 
Taxes other than incomeTaxes other than income— — 67 3 — 70 
ExplorationExploration15 5 4 — 1 25 
Depreciation, depletion, and amortizationDepreciation, depletion, and amortization97 62 130 2 — 291 
Asset retirement obligation accretionAsset retirement obligation accretion— 20 8 1 — 29 
248 195 755 11 (18)1,191 
Operating Income (Loss)(2)
Operating Income (Loss)(2)
$643 $248 $578 $10 $(1)1,478 
Other Income (Expense):            Other Income (Expense):
Derivative instrument losses, netDerivative instrument losses, net(62)
Gain on divestitures, net           296
Gain on divestitures, net1,176 
Derivative instrument losses, net           (110)
Other, netOther, net45 
General and administrative           (98)General and administrative(151)
Transaction, reorganization, and separation           (20)Transaction, reorganization, and separation(14)
Financing costs, net           (101)Financing costs, net(140)
Income Before Income Taxes           $93
Income Before Income Taxes$2,332 
            
For the Nine Months Ended September 30, 2017            
Oil and Gas Production Revenues $1,593
 $231
 $1,655
 $768
 $—
 $4,247
Operating Income (Loss)(3)
 $(71) $(33) $740
 $59
 $(24) $671
Other Income (Expense):            
Gain on divestitures, net           616
Derivative instrument losses, net           (69)
Other           43
General and administrative           (307)
Transaction, reorganization, and separation           (14)
Financing costs, net           (300)
Income Before Income Taxes           $640
Total Assets $13,105
 $—
 $4,906
 $3,770
 $54
 $21,835
            
Total Assets(3)
Total Assets(3)
$2,966 $2,169 $8,359 $— $— $13,494 

(1)    Includes revenue from non-customers for the quarters ended March 31, 2023 and 2022 of:

For the Quarter Ended March 31,
 20232022
(In millions)
Oil$172 $250 
Natural gas26 31 
Natural gas liquids— 1 
(2)Operating income of U.S. and North Sea includes leasehold impairments of $2 million and $3 million, respectively, for the first quarter of 2023.
Operating income of U.S. and Egypt includes leasehold impairments of $3 million, and $1 million, respectively, for the first quarter of 2022.
(3)Intercompany balances are excluded from total assets.
(4)Includes noncontrolling interests of Sinopec, Altus prior to deconsolidation, and APA.
22
  
United
States
 
Canada(1)
 
Egypt(2)
 North Sea 
Other
International
 Total
  (In millions)
For the Quarter Ended September 30, 2016            
Oil and Gas Production Revenues $524
 $87
 $581
 $247
 $—
 $1,439
Operating Income (Loss)(4)
 $(17) $(466) $263
 $(455) $(13) $(688)
Other Income (Expense):            
Gain on divestitures, net           5
Other           (6)
General and administrative           (102)
Transaction, reorganization, and separation           (12)
Financing costs, net           (102)
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)(4)
 $(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)
Total Assets $12,299
 $1,630
 $5,320
 $3,851
 $49
 $23,149
(1)During the third quarter of 2017, Apache completed the sale of its Canadian operations. For more information regarding this divestiture, please refer to Note 2—Acquisitions and Divestitures.
(2)Includes a noncontrolling interest in Egypt.
(3)Operating 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. includes leasehold impairments totaling $160 million for the third quarter of 2017. The operating income (loss) of U.S., Canada, and North Sea includes leasehold and other asset impairments totaling $212 million, $2 million, and $8 million, respectively, for the first nine months of 2017.
(4)The operating income (loss) of U.S., Canada, and North Sea includes leasehold, property, and other asset impairments totaling $46 million, $423 million, and $481 million, respectively, for the third quarter of 2016. The operating income (loss) of U.S., Canada, and North Sea includes leasehold, property, and other asset impairments totaling $212 million, $433 million, and $586 million, respectively, for the first nine months of 2016.



ITEM 2.    MANAGEMENT’S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion relates to Apache Corporation (Apache or the Company) and its consolidated subsidiaries and should be read in conjunctiontogether with the Company’s consolidated financial statementsConsolidated Financial Statements and accompanying notes included underin Part I, Item 1, “Financial Statements”1—Financial Statements of this Quarterly Report on Form 10-Q, as well as related information set forth in the Company’s consolidated financial statements,Consolidated Financial Statements, accompanying notesNotes to Consolidated Financial Statements, and Management’s Discussion andNarrative Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2022.
Overview
Apache, a direct, wholly owned subsidiary of APA Corporation a Delaware corporation formed in 1954,(APA), is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids.liquids (NGLs). The CompanyCompany’s upstream business currently has exploration and production operations in three geographic areas: the United States (U.S.)U.S., Egypt, and offshore the United Kingdom (U.K.)U.K. in the North Sea (North Sea). Apache also has exploration interestsPrior to the BCP Business Combination (as defined in Suriname that may, over time, result in a reportable discovery and development opportunity.
During the quarter, Apache completed its strategic exit from Canada that was enabled by its Alpine High discovery. We believe this portfolio shift is a significant upgradeNotes to the Company’s portfolioConsolidated Financial Statements set forth in Part I, Item 1—Financial Statements of assets, as the Alpine High discovery offers higher returns and significantly more long-term growth potential. Apache’s U.S. assets are complemented by its international assets in Egypt and the North Sea, each of which adds tothis Quarterly Report on Form 10-Q), the Company’s deep inventorymidstream business was operated by Altus Midstream Company (ALTM) through its subsidiary Altus Midstream LP (collectively, Altus). Altus owned, developed, and operated a midstream energy asset network in the Permian Basin of explorationWest Texas.
The Company’s mission is to grow in an innovative, safe, environmentally responsible, and development opportunitiesprofitable manner for the long-term benefit of its stakeholders. The Company is focused on rigorous portfolio management, disciplined financial structure, and optimization of returns.
Early in 2020, impacts of the coronavirus disease 2019 (COVID-19) pandemic and related governmental actions began to exert significant downward pressure on crude oil and natural gas prices. Since that time, commodity prices worldwide have largely rebounded; however, uncertainties in the global supply chain and financial markets, including the impact of inflation, rising interest rates, the conflict in Ukraine, and actions taken by foreign oil and gas producing nations, including OPEC+, continue to impact oil supply and demand and contribute to commodity price volatility. Despite these uncertainties, the Company remains committed to its longer-term objectives: (1) to maintain a balanced asset portfolio; (2) to invest for long-term returns over production growth; and (3) to budget conservatively to generate cash flowsflow in excess of currentits upstream exploration, appraisal, and development capital investments, facilitatingprogram that can be directed to debt reduction, share repurchases, and other return of capital to its shareholders. The Company continues to aggressively manage its cost structure regardless of the Company’s abilityoil price environment and closely monitors hydrocarbon pricing fundamentals to develop Alpine High while maintaining financial flexibility.reallocate capital as part of its ongoing planning process.
ApacheIn the first quarter of 2023, the Company reported third-quarter net income of $63$137 million or $0.16 per common share, compared to a lossnet income of $607 million, or $1.60 per common share,$1.9 billion in the thirdfirst quarter of 2016. The increase2022. Results from the first quarter of 2022 included approximately $1.2 billion of transaction gains recognized for divesting certain non-core mineral rights in the Delaware Basin and completing the BCP Business Combination. In addition, net income for the first quarter of 2023 was impacted by lower revenues attributable to lower realized commodity prices when compared to the prior-year quarter is primarily the result of gains on divestitures in the current-year quarter, as well as lower impairment charges in the current period. Revenue gains from significant increases in realized commodity prices partially mitigated the impact of production declines.
Daily production in the third quarter of 2017 averaged 448 thousand barrels of oil equivalent per day (Mboe/d), a decrease of 14 percent from the comparative prior-year quarter driven by the sale of the Company’s Canadian operations. Excluding production from Canada, Apache’s worldwide equivalent daily production decreased 8 percent due to natural decline. The production decline was driven by strategic decisions to curtail capital investments in the two preceding years in order to allow costs to re-align with the lower commodity price environment and to allocate a significant portion of this year’s capital investments to the development of the Alpine High field and infrastructure.
During the first nine months of 2017, the Company generated $1.8 billion in$288 million of cash from operating activities an 8during the first three months of 2023, 66 percent increase fromlower than the comparative prior-year period,first three months of 2022. The Company’s lower operating cash flows for the first three months of 2023 were driven by lower commodity prices and $1.4 billionassociated revenues and the timing of working capital items. The Company had $117 million of cash proceeds from non-core asset divestments. Apache exited the quarter with $1.9 billion of cash, cash equivalents, and restricted cash, an increase of $565 million from year-end 2016. In addition, the Company reduced debt from year-end levels and has $3.5 billion of available committed borrowing capacity. In response to continued commodity price volatility, the Company entered commodity derivatives to secure deployment of high priority investments without compromising its financial strength or flexibility. We continuously monitor changes in our operating environment and have the ability, due to our dynamic capital allocation process, to adjust our capital investment program to levels that maximize value for our shareholders over the long-term.on hand at March 31, 2023.
Operating
Operational Highlights
Significant operating activitiesKey operational highlights for the quarter include the following:include:
North AmericaUnited States
North America equivalent production decreased 17 percent for the quarter relative to the 2016 period, reflecting Apache’s exit from Canada. Excluding Canada, Apache’s North America equivalent production decreased 6 percent, in line with the Company’s expectations given the significant reduction in capital investments over the preceding two years and the allocation of a significant portion of our 2017 capital investments to infrastructure at Alpine High.
Third-quarter equivalent•Daily boe production from the PermianCompany’s U.S. assets accounted for 49 percent of its total production during the first quarter of 2023. The Company averaged five drilling rigs in the U.S. during the quarter, including two rigs in the Southern Midland Basin region, which accountsand three rigs in the Delaware Basin. The Company’s core Midland Basin development program continues to represent a key growth area for more than halfthe U.S. assets.
23

International
•In Egypt, the Company averaged 17 drilling rigs and drilled 19 new productive wells during the first quarter of Apache’s total North American2023. First quarter 2023 gross equivalent production increasedin the Company’s Egypt assets decreased 1 percent from the thirdfirst quarter of 2016, which was driven by our Alpine High discovery2022, and strong performancenet production decreased 2 percent. The Company increased drilling and workover activity throughout the past year with a heavier focus on oil prospects. As a result, gross and net oil production for the first three months of 2023 increased approximately 5 percent and 3 percent, respectively, when compared to the first three months of 2022.
•The Company averaged two rigs in the Midland Basin. Third-quarter production increased 11 percent fromNorth Sea during the prior sequential quarter, a reflection of increased activity and the startup of Alpine High production.


Drilling and infrastructure development activities continue at Alpine High; specifically:
◦First production from the Alpine High play was achieved in early May 2017. Net production averaged approximately 13.3 Mboe/d during the third quarter, and we anticipate production of 25 Mboe/d by the end of the year.
◦During the first nine months of 2017, Apache invested $389 million in midstream facilities at Alpine High, with development ongoing.
◦Three processing facilities are currently operating with a combined gross inlet capacity of 200 million cubic feet of natural gas per day (MMcf/d). Infrastructure buildout for two additional central processing facilities has been slightly delayed by a quarter as a result of Hurricane Harvey-related damage to Houston-area manufacturing facilities that are providing key infrastructure equipment.
In 2017, Apache announced three separate transactions to sell its subsidiary Apache Canada Ltd. (ACL) and exit its Canadian operations. The sale of assets at Midale and House Mountain, located in Saskatchewan and Alberta, closed on June 30, 2017 for approximately $228 million of cash proceeds. The two remaining transactions to sell ACL and Provost assets in Alberta closed in August 2017 for approximately $478 million of cash proceeds. The sale of Apache’s Canadian operations further streamlines its portfolio, enabling the Company to allocate a higher percentage of capital to the Permian Basin.
International
The Egypt region net equivalent production decreased 12 percent from the third quarter of 2016 despite a decline2023. Production increased at Beryl and Forties during the first quarter of only 3 percent in gross production, a function2023 following the completion of the Company’s production-sharing contracts. In August 2017, the Company received final award of two new concessions totaling 1.6 million net acres. Atmaintenance activities at the end of September 2017,2022 and improved facility operating efficiency compared to the prior year. The Company began acquiring high resolution 3D seismicwill release the Ocean Patriot semi-submersible drilling rig around mid-year 2023, once it completes its scheduled drilling campaign in the West Kalabsha concession and plans to expand this seismic activity to cover the majority of its acreage.
The North Sea, region average daily production decreased 5 percent fromand thereafter, the third quarter of 2016, primarily the result of extended turnaround activities in the third quarter of 2017 and natural well decline. The Callater discovery, which came online in late May 2017, has two wells producing with a third offset well expectedassociated investment capital will be reallocated to commence production later in the fourth quarter of 2017.

other areas.


24

Results of Operations
Oil, Natural Gas, and Natural Gas Liquids Production Revenues
Revenue
The table below presentsCompany’s production revenues and respective contribution to total revenues by geographic region and each region’s percent contributioncountry were as follows:
 
For the Quarter Ended
March 31,
 20232022
$ Value%
Contribution		$ Value%
Contribution
 ($ in millions)
Oil Revenues:
United States$439 33 %$599 35 %
Egypt(1)
629 46 %790 46 %
North Sea282 21 %328 19 %
Total(1)
$1,350 100 %$1,717 100 %
Natural Gas Revenues:
United States$85 36 %$183 48 %
Egypt(1)
93 39 %98 26 %
North Sea60 25 %99 26 %
Total(1)
$238 100 %$380 100 %
NGL Revenues:
United States$108 92 %$204 91 %
Egypt(1)
— — %3 2 %
North Sea10 8 %16 7 %
Total(1)
$118 100 %$223 100 %
Oil and Gas Revenues:
United States$632 37 %$986 43 %
Egypt(1)
722 42 %891 38 %
North Sea352 21 %443 19 %
Total(1)
$1,706 100 %$2,320 100 %
(1)    Includes revenues attributable to revenues for 2017 and 2016.a noncontrolling interest in Egypt.

25
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
  
$
Value
 
%
Contribution
 
$
Value
 
%
Contribution
 
$
Value
 
%
Contribution
 
$
Value
 
%
Contribution
  ($ in millions)
Total Oil Revenues:                
United States $381
 36% $377
 34% $1,133
 35% $1,099
 36%
Canada 14
 1% 47
 4% 110
 3% 132
 4%
North America 395
 37% 424
 38% 1,243
 38% 1,231
 40%
Egypt (1)
 442
 41% 476
 43% 1,351
 41% 1,209
 40%
North Sea 233
 22% 217
 19% 698
 21% 617
 20%
International (1)
 675
 63% 693
 62% 2,049
 62% 1,826
 60%
Total (1)
 $1,070
 100% $1,117
 100% $3,292
 100% $3,057
 100%
Total Natural Gas Revenues:                
United States $97
 41% $98
 37% $266
 37% $222
 32%
Canada 19
 8% 36
 14% 104
 14% 100
 14%
North America 116
 49% 134
 51% 370
 51% 322
 46%
Egypt (1)
 98
 41% 103
 39% 295
 41% 298
 43%
North Sea 24
 10% 26
 10% 61
 8% 75
 11%
International (1)
 122
 51% 129
 49% 356
 49% 373
 54%
Total (1)
 $238
 100% $263
 100% $726
 100% $695
 100%
Total Natural Gas Liquids (NGL) Revenues:                
United States $72
 89% $49
 83% $194
 85% $132
 82%
Canada 3
 4% 4
 7% 17
 7% 11
 7%
North America 75
 93% 53
 90% 211
 92% 143
 89%
Egypt (1)
 3
 4% 2
 3% 9
 4% 8
 5%
North Sea 3
 3% 4
 7% 9
 4% 9
 6%
International (1)
 6
 7% 6
 10% 18
 8% 17
 11%
Total (1)
 $81
 100% $59
 100% $229
 100% $160
 100%
Total Oil and Gas Revenues:                
United States $550
 40% $524
 36% $1,593
 38% $1,453
 37%
Canada 36
 2% 87
 6% 231
 5% 243
 6%
North America 586
 42% 611
 42% 1,824
 43% 1,696
 43%
Egypt (1)
 543
 39% 581
 41% 1,655
 39% 1,515
 39%
North Sea 260
 19% 247
 17% 768
 18% 701
 18%
International (1)
 803
 58% 828
 58% 2,423
 57% 2,216
 57%
Total (1)
 $1,389
 100% $1,439
 100% $4,247
 100% $3,912
 100%


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





Production
The Company’s production volumes by country were as follows:
 
For the Quarter Ended
March 31,
2023Increase
(Decrease)		2022
Oil Volume (b/d)
United States64,913 (7)%69,636 
Egypt(1)(2)
87,795 3%85,018 
North Sea37,502 6%35,242 
Total190,210 —%189,896 
Natural Gas Volume (Mcf/d)
United States412,045 (14)%477,637 
Egypt(1)(2)
356,350 (8)%386,577 
North Sea40,360 5%38,466 
Total808,755 (10)%902,680 
NGL Volume (b/d)
United States51,239 (17)%61,711 
Egypt(1)(2)
— NM491 
North Sea1,255 (16)%1,498 
Total52,494 (18)%63,700 
BOE per day(3)
United States184,827 (12)%210,953 
Egypt(1)(2)
147,186 (2)%149,938 
North Sea(4)
45,483 5%43,151 
Total377,496 (7)%404,042 
(1)    Gross oil, natural gas, and NGL production in Egypt were as follows:
For the Quarter Ended March 31,
 20232022
Oil (b/d)140,764 134,397 
Natural Gas (Mcf/d)545,049 597,812 
NGL (b/d)— 735 
(2)    Includes net production volumes per day attributable to noncontrolling interests in Egypt of:
For the Quarter Ended March 31,
 20232022
Oil (b/d)58,559 45,332 
Natural Gas (Mcf/d)237,686 206,079 
NGL (b/d)— 262 
(3)    The table below presentsshows production on a boe basis 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 third-quarter and year-to-date 2017 and 2016 production andprice ratio between the relative increase or decreasetwo products.
(4)    Average sales volumes from the prior period.North Sea for the first quarters of 2023 and 2022 were 46,632 boe/d and 43,668 boe/d, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings.
NM — Not Meaningful

26
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 
Increase
(Decrease)
 2016 2017 
Increase
(Decrease)
 2016
Oil Volume – b/d            
United States 90,883
 (8)% 98,269
 89,228
 (17)% 106,924
Canada 3,441
 (73)% 12,619
 8,881
 (33)% 13,331
North America 94,324
 (15)% 110,888
 98,109
 (18)% 120,255
Egypt(1)(2)
 93,749
 (15)% 110,809
 97,447
 (7)% 105,118
North Sea 49,945
 2 % 49,192
 49,274
 (11)% 55,071
International 143,694
 (10)% 160,001
 146,721
 (8)% 160,189
Total 238,018
 (12)% 270,889
 244,830
 (13)% 280,444
Natural Gas Volume – Mcf/d            
United States 404,486
 2 % 395,062
 378,625
 (6)% 404,282
Canada 107,524
 (54)% 233,635
 175,787
 (29)% 248,912
North America 512,010
 (19)% 628,697
 554,412
 (15)% 653,194
Egypt(1)(2)
 378,426
 (7)% 405,863
 389,533
 (4)% 403,832
North Sea 50,057
 (28)% 69,509
 42,800
 (36)% 66,884
International 428,483
 (10)% 475,372
 432,333
 (8)% 470,716
Total 940,493
 (15)% 1,104,069
 986,745
 (12)% 1,123,910
NGL Volume – b/d            
United States 49,149
 (13)% 56,355
 48,063
 (14)% 55,897
Canada 2,183
 (64)% 6,039
 3,780
 (36)% 5,879
North America 51,332
 (18)% 62,394
 51,843
 (16)% 61,776
Egypt(1)(2)
 916
 (19)% 1,124
 917
 (18)% 1,120
North Sea 1,219
 (28)% 1,697
 1,044
 (33)% 1,557
International 2,135
 (24)% 2,821
 1,961
 (27)% 2,677
Total 53,467
 (18)% 65,215
 53,804
 (17)% 64,453
BOE per day(3)
            
United States 207,447
 (6)% 220,468
 200,396
 (13)% 230,202
Canada 23,544
 (59)% 57,597
 41,959
 (31)% 60,695
North America 230,991
 (17)% 278,065
 242,355
 (17)% 290,897
Egypt(2)
 157,737
 (12)% 179,575
 163,286
 (6)% 173,544
North Sea(4)
 59,507
 (5)% 62,475
 57,451
 (15)% 67,775
International 217,244
 (10)% 242,050
 220,737
 (9)% 241,319
Total 448,235
 (14)% 520,115
 463,092
 (13)% 532,216
(1)Gross oil, natural gas, and NGL production in Egypt for the third quarter and nine-month period of 2017 and 2016 were as follows:

  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
Oil (b/d) 201,151
 210,755
 196,781
 210,939
Natural Gas (Mcf/d) 818,350
 826,548
 813,880
 828,950
NGL (b/d) 1,526
 1,853
 1,514
 1,918
(2)Includes production volumes per day attributable to a noncontrolling interest in Egypt for the third quarter and nine-month period of 2017 and 2016 of:
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
Oil (b/d) 31,275
 36,839
 32,573
 34,964
Natural Gas (Mcf/d) 126,459
 135,233
 130,263
 134,591
NGL (b/d) 305
 374
 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 were 57,207 boe/d and 65,171 boe/d for the third quarter of 2017 and 2016, respectively, and 57,963 boe/d and 67,222 boe/d for the first nine months of 2017 and 2016, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings in the Beryl field.


Pricing

The Company’s average selling prices by country were as follows:
The table below presents third-quarter and year-to-date 2017 and 2016 pricing and the relative increase or decrease from the prior period.
 
For the Quarter Ended
March 31,
2023Increase
(Decrease)		2022
Average Oil Price – Per barrel
United States$75.16 (21)%$95.58 
Egypt79.58 (23)%103.22 
North Sea81.57 (20)%102.20 
Total78.48 (22)%100.23 
Average Natural Gas Price – Per Mcf
United States$2.28 (46)%$4.25 
Egypt2.89 2%2.83 
North Sea17.58 (46)%32.35 
Total3.28 (30)%4.70 
Average NGL Price – Per barrel
United States$23.61 (36)%$36.67 
Egypt— NM77.81 
North Sea56.92 (24)%74.64 
Total24.76 (35)%38.33 
NM — Not Meaningful
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 Increase
(Decrease)		 2016 2017 Increase
(Decrease)		 2016
Average Oil Price - Per barrel            
United States $45.68
 9 % $41.83
 $46.54
 24% $37.53
Canada 42.23
 5 % 40.17
 45.25
 26% 36.04
North America 45.56
 9 % 41.65
 46.42
 24% 37.36
Egypt 51.23
 10 % 46.54
 50.78
 21% 41.97
North Sea 53.11
 17 % 45.47
 51.35
 24% 41.28
International 51.87
 12 % 46.20
 50.97
 22% 41.74
Total 49.34
 11 % 44.35
 49.15
 23% 39.86
Average Natural Gas Price - Per Mcf            
United States $2.62
 (2)% $2.66
 $2.58
 29% $2.00
Canada 1.90
 11 % 1.71
 2.17
 48% 1.47
North America 2.47
 7 % 2.31
 2.45
 36% 1.80
Egypt 2.81
 2 % 2.75
 2.77
 3% 2.69
North Sea 5.27
 27 % 4.14
 5.27
 28% 4.12
International 3.10
 5 % 2.96
 3.02
 4% 2.89
Total 2.75
 6 % 2.59
 2.70
 19% 2.26
Average NGL Price - Per barrel            
United States $15.77
 64 % $9.59
 $14.75
 71% $8.65
Canada 15.80
 159 % 6.10
 16.39
 148% 6.61
North America 15.77
 70 % 9.25
 14.87
 76% 8.46
Egypt 36.47
 30 % 28.12
 35.98
 31% 27.54
North Sea 26.92
 10 % 24.45
 30.51
 40% 21.82
International 31.02
 20 % 25.91
 33.07
 37% 24.21
Total 16.38
 64 % 9.97
 15.53
 70% 9.11

Third-Quarter 2017First-Quarter 2023 compared to Third-Quarter 2016First-Quarter 2022
Crude Oil Revenues Crude oil revenues for the thirdfirst quarter of 20172023 totaled $1.1$1.4 billion, a $47$367 million decrease from the comparative 20162022 quarter. A 1222 percent decrease in average daily production reduced third-quarter 2017realized prices decreased first-quarter 2023 oil revenues by $172$372 million compared to the prior-year quarter, while 11 percenta slightly higher average realized pricesdaily production increased revenues by $125$5 million. Crude oil revenues accounted for 7779 percent of Apache’stotal oil and gas production revenues and 5350 percent of its equivalentworldwide production in the thirdfirst quarter of 2017.2023. Crude oil prices realized in the thirdfirst quarter of 20172023 averaged $49.34$78.48 per barrel, compared with $44.35$100.23 per barrel in the comparative prior-year quarter.
WorldwideThe Company’s worldwide oil production decreased 32.9increased 0.3 Mb/d to 238.0190.2 Mb/d induring the thirdfirst quarter of 20172023 from the comparative prior-year period, primarily the result of the Canada divestitures and natural decline. Decreases were slightly offset by a 2 percent increase in the North Sea region, a result of the Callater field coming online in late May 2017.increased drilling activity and recompletions, partially offset by natural production decline across all assets.
Natural Gas Revenues Gas revenues for the thirdfirst quarter of 20172023 totaled $238 million, a $25$142 million decrease from the comparative 20162022 quarter. A 1530 percent decrease in average daily production reduced third-quarterrealized prices decreased first-quarter 2023 natural gas revenues by $42$115 million compared to the prior-year quarter, while 610 percent higherlower average realized prices increaseddaily production decreased revenues by $17$27 million. Natural gas revenues accounted for 1714 percent of Apache’s oil and gas production revenues and 35 percent of its equivalent production during the third quarter of 2017.


Worldwide natural gas production decreased 164 MMcf/d to 940 MMcf/d in the third quarter of 2017 from the comparative prior-year period, primarily the result of the Canada divestitures and maintenance activity in the North Sea. Decreases were slightly offset by a 2 percent increase in the U.S., primarily on drilling activity at Alpine High.
NGL Revenues NGL revenues for the third quarter of 2017 totaled $81 million, a $22 million increase from the comparative 2016 quarter. An 18 percent decrease in average daily production reduced third-quarter 2017 revenues by approximately $17 million, while 64 percent higher average realized prices increased revenues by $39 million. NGLs accounted for 6 percent of Apache’s oil and gas production revenues and 12 percent of its equivalent production during the third quarter of 2017.
Worldwide production of NGLs decreased 11.7 Mb/d to 53.5 Mb/d in the third quarter of 2017 from the comparative prior-year period, primarily the result of the Canada divestitures and natural decline in all regions.
Year-to-Date 2017 compared to Year-to-Date 2016
Crude Oil Revenues Crude oil revenues for the first nine months of 2017 totaled $3.3 billion, a $235 million increase from the comparative 2016 period. A 13 percent decrease in average daily production reduced 2017 oil revenues by $478 million compared to the prior-year period, while 23 percent higher average realized prices increased revenues by $713 million. Crude oil accounted for 78 percent of Apache’s oil and gas production revenues and 53 percent of its equivalent production for the first nine months of 2017. Crude oil prices realized in the first nine months of 2017 averaged $49.15 per barrel, compared with $39.86 per barrel in the comparative prior-year period.
Worldwide production decreased 35.6 Mb/d to 244.8 Mb/d in the first nine months of 2017 from the comparative prior-year period, primarily the result of the Canada divestitures and natural decline in all regions.
Natural Gas Revenues Gas revenues for the first nine months of 2017 totaled $726 million, a $31 million increase from the comparative 2016 period. A 12 percent decrease in average daily production reduced 2017 natural gas revenues by $104 million compared to the prior-year period, while 19 percent higher average realized prices increased revenues by $135 million. Natural gas accounted for 17 percent of Apache’stotal oil and gas production revenues and 36 percent of its equivalentworldwide production during the first nine monthsquarter of 2017.
Worldwide2023. The Company’s worldwide natural gas production decreased 13793.9 MMcf/d to 987808.8 MMcf/d induring the first nine monthsquarter of 20172023 from the comparative prior-year period, primarily thea result of the Canada divestitures, maintenance activities in the North Sea,natural production decline across all assets, partially offset by increased drilling activity and natural decline in all regions.recompletions.
NGL Revenues NGL revenues for the first nine monthsquarter of 20172023 totaled $229$118 million, a $69$105 million increasedecrease from the comparative 2016 period.2022 quarter. A 1735 percent decrease in average production reduced 2017realized prices decreased first-quarter 2023 NGL revenues by $45$79 million compared to the prior-year period,quarter, while 7018 percent higherlower average realized prices increaseddaily production decreased revenues by $114$26 million. NGLsNGL revenues accounted for 57 percent of Apache’stotal oil and gas production revenues and 1114 percent of its equivalentworldwide production forduring the first nine monthsquarter of 2017.
Worldwide2023. The Company’s worldwide NGL production of NGLs decreased 10.611.2 Mb/d to 53.852.5 Mb/d induring the first nine monthsquarter of 20172023 from the comparative prior-year period, primarily thea result of natural production decline, partially offset by increased drilling activity and recompletions.
27

Altus Midstream Revenues
Prior to the Canada divestituresBCP Business Combination and associated deconsolidation of Altus on February 22, 2022, Altus Midstream’s services revenues generated through its fee-based contractual arrangements with the Company totaled $16 million during the first quarter of 2022. These revenues were eliminated upon consolidation.
Purchased Oil and Gas Sales
Purchased oil and gas sales represent volumes primarily attributable to transport, fuel, and physical in-basin gas purchases that were sold by the Company to fulfill natural declinegas takeaway obligations. Sales related to these purchased volumes totaled $239 million and $349 million during the first quarters of 2023 and 2022, respectively. Purchased oil and gas sales were offset by associated purchase costs of $216 million and $351 million during the first quarters of 2023 and 2022, respectively. Gross purchased oil and gas sales values were lower in all regions.

the first quarter primarily due to lower average natural gas prices in the first quarter of 2023 compared to the prior-year period.

Operating Expenses
The table below presents a comparison of Apache’sCompany’s operating expenses on an absolute dollar basis and a boe basis. 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.were as follows:
 
For the Quarter Ended
March 31,
 20232022
 (In millions)
Lease operating expenses$314 $344 
Gathering, processing, and transmission73 81 
Purchased oil and gas costs216 351 
Taxes other than income50 70 
Exploration44 25 
General and administrative58 151 
Transaction, reorganization, and separation4 14 
Depreciation, depletion, and amortization:
Oil and gas property and equipment301 278 
Gathering, processing, and transmission assets2 5 
Other assets5 8 
Asset retirement obligation accretion28 29 
Financing costs, net49 140 
Total Operating Expenses$1,144 $1,496 
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016 2017 2016 2017 2016
  (In millions) (Per boe) (In millions) (Per boe)
Lease operating expenses(1)
 $358
 $382
 $8.74
 $7.94
 $1,066
 $1,119
 $8.42
 $7.68
Gathering and transportation(1)
 39
 51
 0.91
 1.08
 144
 155
 1.13
 1.06
Taxes other than income 46
 9
 1.12
 0.19
 117
 85
 0.93
 0.58
Exploration 231
 161
 5.60
 3.36
 431
 347
 3.41
 2.38
General and administrative 98
 102
 2.39
 2.13
 307
 298
 2.43
 2.04
Transaction, reorganization, and separation 20
 12
 0.48
 0.25
 14
 36
 0.11
 0.24
Depreciation, depletion, and amortization:                
Oil and gas property and equipment(1)
 524
 610
 12.76
 12.67
 1,598
 1,875
 12.63
 12.87
Other assets 35
 38
 0.83
 0.79
 109
 120
 0.86
 0.82
Asset retirement obligation accretion 30
 40
 0.75
 0.83
 103
 116
 0.82
 0.79
Impairments —
 836
 —
 17.47
 8
 1,009
 0.06
 6.92
Financing costs, net 101
 102
 2.45
 2.13
 300
 311
 2.38
 2.13
(1) For expenses impacted by the timing of 2017 liftings in the North Sea, per-boe calculations are based on sales volumes rather than production volumes.
Lease Operating Expenses (LOE)
LOE decreased $24$30 million or 6 percent, forin the thirdfirst quarter of 2017, and decreased $53 million, or 5 percent for2023 from the first nine months of 2017, on an absolute dollar basis relative to the comparable periods of 2016.comparative prior-year period. On a per-unit basis, LOE increased 10decreased 7 percent to $8.74 per boe forin the thirdfirst quarter of 2017,2023 from the comparative prior-year period. The decrease was primarily driven by the impact from changes in foreign currency exchange rates against the US dollar and 10 percent to $8.42 per boemark-to-market adjustments for cash-based stock compensation expense resulting from changes in APA’s stock price. These decreases were partially offset by overall higher labor costs, chemical and other operating costs trending with global inflation and increased workover activity in the U.S.
28

Gathering, Processing, and Transmission (GPT)
The Company’s GPT expenses were as follows:
For the Quarter Ended
March 31,
20232022
(In millions)
Third-party processing and transmission costs$49 $66 
Midstream service costs – ALTM— 18 
Midstream service costs – Kinetik24 10 
Upstream processing and transmission costs73 94 
Midstream operating expenses— 5 
Intersegment eliminations— (18)
Total Gathering, processing, and transmission$73 $81 
GPT costs decreased $8 million in the first nine monthsquarter of 2017,2023 from the comparative prior-year period, the result of lower upstream processing and transmission costs, partially offset by impacts of the BCP Business Combination. Upstream processing and transmission costs decreased $21 million in the first quarter of 2023 from the comparative prior-year period, primarily driven by a decrease in production volumes when compared to the prior-year period. Costs for services provided by ALTM in the first quarter of 2022 and prior to the BCP Business Combination totaling $18 million were eliminated in the Company’s consolidated financial statements and reflected as “Intersegment eliminations” in the table above. Subsequent to the BCP Business Combination and the Company’s deconsolidation of Altus on February 22, 2022, these midstream services continue to be provided by Kinetik Holdings Inc. (Kinetik) but are no longer eliminated. Midstream services provided by Kinetik totaled $24 million and $10 million in the first quarters of 2023 and 2022, respectively.
Purchased Oil and Gas Costs
Purchased oil and gas costs totaled $216 million during the first quarter of 2023 compared to $351 million during the first quarter of 2022. Purchased oil and gas costs were offset by associated purchase sales of $239 million during the first quarter of 2023 compared to $349 million during the first quarter of 2022, as discussed above.
Taxes Other Than Income
Taxes other than income decreased $20 million from the first quarter of 2022 primarily from lower severance taxes driven by lower commodity prices as compared to the prior-year periods. period.
Exploration Expenses
The per-barrel increaseCompany’s exploration expenses were as follows:
For the Quarter Ended
March 31,
20232022
(In millions)
Unproved leasehold impairments$5 $4 
Dry hole expense27 5 
Geological and geophysical expense1 1 
Exploration overhead and other11 15 
Total Exploration$44 $25 
Exploration expenses for both comparative periods isthe first quarter of 2023 increased $19 million from the first quarter of 2022 primarily the result of a declinehigher dry hole expenses in production in all regions and generally rising costs commensurate with higher commodity prices.
Gathering and Transportation Gathering and transportation costs totaled $39 million and $144 million in the third quarter and first nine months of 2017, respectively,Egypt, partially offset by a decrease of $12 million from the third quarter of 2016in geological and a decrease of $11 million from the first nine months of 2016. The decrease was directly related to the Canadian divestitures.
Taxes other than Income Taxes other than income totaled $46 million and $117 million for the third quarter and first nine months of 2017, respectively, an increase of $37 million and $32 million from the third quarter and first nine months of 2016, respectively. Third-quarter 2017 expense consists primarily of severance and ad valorem taxes, which combined increased $4 million on higher commodity prices during the third quarter compared to the prior year quarter. For the first nine months of 2017, severance taxgeophysical expense and ad valorem tax expense increased $12exploration overhead.
General and Administrative (G&A) Expenses
G&A expenses decreased $93 million and $5 million, respectively, compared to the first nine months of 2016. In addition, in the third quarter and first nine months of 2016, Apache recognized a $33 million benefit related to the U.K. Petroleum Revenue Tax (PRT). The U.K. PRT rate, historically assessed on qualifying fields in the U.K. North Sea, was reduced to zero during 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 quarter and first nine months of 2017 increased $70 million and $84 million, respectively, compared to the 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,
  2017 2016 2017 2016
  (In millions)
Unproved leasehold impairments $160
 $114
 $214
 $222
Dry hole expense 38
 7
 136
 38
Geological and geophysical expense 12
 21
 24
 30
Exploration overhead and other 21
 19
 57
 57
  $231
 $161
 $431
 $347
Unproved leasehold impairments in the third quarter of 2017 increased $46 million compared to2022. The decrease in expenses for the thirdfirst quarter of 2016, primarily relate to legacy acreage and a reallocation of capital budgets in the U.S. For the first nine months of 2017, unproved leasehold impairments decreased $8 million2023 compared to the prior-year period was primarily a result of stabilizing commoditydriven by lower cash-based stock compensation expense resulting from changes in APA’s stock price.
29

Transaction, Reorganization, and leasehold prices. Dry hole expense increased $31Separation (TRS) Costs
TRS costs decreased $10 million and $98 million for the third quarter and first nine months of 2017, respectively, from the comparative prior-year periods primarily related to unsuccessful international offshore exploration.
General and Administrative (G&A) Expenses G&A expense for the thirdfirst quarter of 2017 was $4 million lower than2022. The decrease in costs during the thirdfirst quarter of 2016. For the first nine months of 2017, G&A expense increased $9 million2023 compared to the prior-year period was primarily related to non-cash stock-based compensation expense and other corporate costs.
Transaction, Reorganization, and Separation (TRS) Costs The Company recorded TRS expensea result of $20 million and $14 million fortransaction costs from the third quarter and first nine months of 2017, respectively, related to asset divestituresBCP Business Combination in the U.S. and Canada and employee separation. The Company recorded TRS expensefirst quarter of $12 million and $36 million in the third quarter and first nine months of 2016, respectively, related to various asset divestitures, company reorganization, and employee separation.2022.
Depreciation, Depletion, and Amortization (DD&A)Oil and gas property
DD&A expense of $524 million inexpenses on the third quarter of 2017 decreased $86 million compared to the third quarter of 2016. For the first nine months of 2017, oil and gas property DD&A expense decreased $277 million compared to the prior-year period. The Company’s oil and gas property DD&A rateproperties increased $0.09 per boe and decreased $0.24 per boe in the third quarter and first nine months of 2017, respectively, compared to the comparable prior-year periods. The primary factor driving lower absolute dollar expense was a decrease in production volumes$23 million from the comparative prior-year periods.
Impairments The Company did not record any asset impairments in connection with fair value assessments in the third quarter of 2017. During the first quarter of 2017,2022. The Company’s DD&A rate on its oil and gas properties increased $0.82 per boe from the Company recorded asset impairmentsfirst quarter of 2022 driven by general cost inflation. The increase on an absolute basis was also impacted by an increase in connection with fair value assessments totaling $8 million for a U.K. PRT decommissioning asset that is no longer expected to be realizable from future abandonment activitiescapital investment activity in Egypt and acquisitions in the North Sea. The Company recorded $836 million and $1.0 billion of impairments in connection with fair value assessments inU.S. over the third quarter and first nine months of 2016, respectively. 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 in Part 1, Item 1 of this Quarterly Report on Form 10-Q.past year.



Financing Costs, Net
The Company’s Financing costs incurred during the period comprised the following:were as follows:
  For the Quarter Ended September 30, For the Nine Months Ended September 30,
  2017 2016 2017 2016
  (In millions)
Interest expense $113
 $116
 $344
 $348
Amortization of deferred loan costs 3
 2
 7
 5
Capitalized interest (12) (13) (39) (36)
Loss on extinguishment of debt —
 —
 1
 —
Interest income (3) (3) (13) (6)
Financing costs, net $101
 $102
 $300
 $311
 
For the Quarter Ended
March 31,
 20232022
 (In millions)
Interest expense$75 $90 
Amortization of debt issuance costs1 2 
(Gain) loss on extinguishment of debt(9)67 
Interest income(2)(4)
Interest income from APA Corporation, net(16)(15)
Total Financing costs, net$49 $140 
Net financing costs decreased $1$91 million and $11 million in the third quarter and first nine months of 2017, respectively. The $11 million decrease infrom the first nine monthsquarter of 2017 was2022, primarily the result of higher capitalized interestlosses incurred on the extinguishment of debt during the first quarter of 2022 and interest income.gains on extinguishment of debt in the first quarter of 2023.
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 ofon 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 August 2017, Apache completedDuring the salefirst quarter of ACL. 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 realizable capital loss on the sale of ACL, and a decrease in2023, the Company’s deferred tax liability associated with its investment in foreign subsidiaries. In the third and second quarters of 2017, the Company recorded a $2 million deferred income tax expense and a $674 million deferred income tax benefit, respectively, in connection with these transactions.
Apache’s third quarter of 2017 effective income tax rate was primarily impacted by gains on the sale of oil and gas properties and a $30 million current tax benefit associated with U.S. federal income tax credits. 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 millionexpense related to the remeasurement of taxes in the Company’s December 31, 2015 U.K. deferred income tax liability.
Apache’s 2017 year-to-date effective income tax rate is primarily impacted byas a result of the enactment of Finance Act 2023 on January 10, 2023, and a decrease in the amount of valuation allowance against its U.S. deferred taxes associated with its investments in foreign subsidiaries, gains ontax assets. During the salefirst quarter of oil and gas properties, non-cash impairments of2022, the Company’s PRT decommissioning asset, and the current tax benefit associated with U.S. federal income tax credits. Apache’s 2016 year-to-date effective income tax rate was primarily impacted by non-cash impairmentsthe gain associated with deconsolidation of Altus, the carrying valuegain on sale of certain non-core mineral rights in the Company’s oilDelaware Basin, 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 increasea decrease in the amount of valuation allowances onallowance against its U.S. and Canadian deferred tax assets.
ApacheOn January 10, 2023, Finance Act 2023 was enacted, receiving Royal Assent, and included amendments to the Energy (Oil and Gas) Profits Levy Act of 2022, increasing the levy from a 25 percent rate to a 35 percent rate, effective for the period of January 1, 2023 through March 31, 2028. Under U.S. GAAP, the financial statement impact of new legislation is recorded in the period of enactment. Therefore, in the first quarter of 2023, the Company recorded a deferred tax expense of $174 million related to the remeasurement of the December 31, 2022 U.K. deferred tax liability.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA). The IRA includes a new 15 percent corporate alternative minimum tax (Corporate AMT) on applicable corporations with an average annual financial statement income that exceeds $1 billion for any three consecutive years preceding the tax year at issue. The Corporate AMT is effective for tax years beginning after December 31, 2022. The Company is continuing to evaluate the provisions of the IRA and awaits further guidance from the U.S. Treasury Department to properly assess the impact of these provisions on the Company. Under the existing guidance, the Company does not believe the IRA will have a material impact for 2023.
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The Company recorded a full valuation allowance against its U.S. net deferred tax assets. The Company will continue to maintain a full valuation allowance on its U.S. net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given the Company’s current and anticipated future domestic earnings, the Company believes that there is a reasonable possibility that within the next 12 months sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the U.S. valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense, which could be material, for the period the release is recorded.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various statestates 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,
Critical Accounting Estimates
The Company prepares its financial statements and accompanying notes in conformity with accounting principles generally accepted in the Internal Revenue Service (IRS) beganU.S., which require management to make estimates and assumptions about future events that affect reported amounts in the financial statements and the accompanying notes. The Company identifies certain accounting policies involving estimation as critical accounting estimates based on, among other things, their auditimpact on the portrayal of the Company’s 2014 income tax year. The Company is also under auditfinancial condition, results of operations, or liquidity, as well as the degree of difficulty, subjectivity, and complexity in various statestheir deployment. Critical accounting estimates address accounting matters that are inherently uncertain due to unknown future resolution of such matters. Management routinely discusses the development, selection, and in mostdisclosure of each critical accounting estimate. For a discussion of the Company’s foreign jurisdictions as part of its normal course of business.





Capital Resources and Liquidity
Operating cash flows aremost critical accounting estimates, please see the Company’s primary sourceAnnual Report on Form 10-K for the fiscal year ended December 31, 2022. Some of liquidity. The 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 volatilemore significant estimates include reserve estimates, oil and natural gas prices, as well asexploration costs, offshore decommissioning contingency, long-lived asset impairments, asset retirement obligations, and sales volumes. Significantincome taxes.
New Accounting Pronouncements
There were no material changes in commodity prices impact Apache’s revenues, earnings, and cash flows. These changes potentially impact 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 Apache’s drilling program and its ability to add reserves economically. Changes in commodity prices also impact estimated quantities of proved reserves. In the first nine months of 2017, Apache recognized positive reserve revisions of approximately 2 percent of its year-end 2016 estimated proved reserves as a result of higher prices.
Apache believes the liquidity and capital resource alternatives available to the Company, combined with proactive measures to adjust its capital budget to reflect volatile commodity prices and anticipated operating cash flows, will be adequate to fund short-term and long-term operations, including 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,”recently issued or adopted accounting standards from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2022.
Sources and Uses of Cash
The following table presents the sources and uses of the Company’s cash, cash equivalents, and restricted cash for the periods presented.
  For the Nine Months Ended September 30,
  2017 2016
  (In millions)
Sources of Cash, Cash Equivalents, and Restricted Cash:    
Net cash provided by operating activities $1,760
 $1,634
Proceeds from sale of oil and gas properties 1,404
 74
Other —
 38
  3,164
 1,746
Uses of Cash and Cash Equivalents:    
Capital expenditures(1)
 $1,855
 $1,314
Leasehold and property acquisitions 142
 169
Payments on fixed-rate debt 70
 1
Dividends paid 285
 284
Distributions to noncontrolling interest 212
 215
Other 35
 —
  2,599
 1,983
Increase (decrease) in cash, cash equivalents, and restricted cash $565
 $(237)

(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 Operating Activities Operating cash flows are 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 operating activities for the first nine months of 2017 totaled $1.8 billion, an increase of $126 million from the first nine months of 2016. The increase primarily reflects higher commodity 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 Item 1, Financial Statements of this Quarterly Report on Form 10-Q.
Asset Divestitures The Company recorded proceeds from asset divestitures totaling $1.4 billion and $74 million in the first nine months of 2017 and 2016, respectively. For more information regarding the Company’s acquisitions and divestitures, please see 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.
Capital Expenditures Worldwide exploration and development (E&D) cash expenditures for the first nine months of 2017 totaled $1.5 billion, compared to $1.3 billion for the first nine months of 2016. Apache operated an average of 36 drilling rigs during the third quarter of 2017.
Apache also completed leasehold and property acquisitions totaling $142 million and $169 million during the first nine months of 2017 and 2016, respectively.
Apache’s investment in gas gathering, transmission, and processing (GTP) facilities totaled $384 million and $33 million during the first nine months of 2017 and 2016, respectively. Expenditures in 2017 primarily comprise investments in infrastructure for the Alpine High play.
Dividends For the nine-month periods ended September 30, 2017 and 2016, the Company paid $285 million and $284 million, respectively, in dividends on its common stock.


Liquidity
The following table presents a summary of the Company’s key financial indicators at the dates presented:
  September 30, 2017 December 31, 2016
  (In millions)
Cash and cash equivalents $1,846
 $1,377
Total debt 8,483
 8,544
Equity 8,377
 7,679
Available committed borrowing capacity 3,500
 3,500
Cash and cash equivalents The Company had $1.8 billion in cash and cash equivalents as of September 30, 2017, compared to $1.4 billion at December 31, 2016. At September 30, 2017, approximately $1.3 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. The Company also had $96 million of restricted cash at September 30, 2017, expected to be released in the fourth quarter of 2017.
Debt As of September 30, 2017, outstanding debt, which consisted of notes and debentures, totaled $8.5 billion. Current debt as of September 30, 2017, included $150 million of 7.0% senior notes due February 1, 2018 and $400 million of 6.9% senior notes due September 15, 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, 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, which is included in “Financing costs, net” in the Company’s consolidated statement of operations. The net loss includes an acceleration of related discount and deferred financing costs.

In August 2017, the Company assumed the obligations of Apache Finance Canada Corporation (AFCC) in respect of $300 million 7.75% notes due in 2029 which AFCC issued and the Company guaranteed pursuant to the governing indenture. The assumption was permitted by the indenture and effected pursuant to a supplemental indenture thereto. As a result of the assumption, the Company is the obligor under the notes and indenture, and AFCC is released from its obligations thereunder. The $300 million 7.75% notes historically have been included in the Company’s long-term debt; accordingly, the assumption did not change the Company’s long-term debt or total debt.
Available committed borrowing capacity In June 2015, the Company entered into a five-year revolving credit facility which matures in June 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) 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 30, 2017, the Company had no commercial paper or borrowings under committed bank facilities or uncommitted bank lines outstanding.
In February 2016, the Company entered into a letter of credit facility providing £900 million in commitments and rights to increase commitments to £1.075 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 30, 2017, three letters of credit aggregating approximately £147.5 million and no borrowings were outstanding under this facility.
The Company was in compliance with the terms of these credit facilities as of September 30, 2017.



ITEM 3 –3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity RiskOmitted.
The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices the Company receives for 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. The Company’s average crude oil realizations have increased 11 percent to $49.34 per barrel in the third quarter of 2017 from $44.35 per barrel in the comparable period of 2016. The Company’s average natural gas price realizations have increased 6 percent to $2.75 per Mcf in the third quarter of 2017 from $2.59 per Mcf in the comparable period of 2016. Based on average daily production for the third 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.
Apache periodically enters into derivative positions on a portion of 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 does not hold or issue derivative instruments for trading purposes. As of September 30, 2017, the Company had open natural gas derivatives not designated as cash flow hedges in an asset position with a fair value of $6 million. A 10 percent increase in gas prices would move the derivatives to a liability position of $17 million, while a 10 percent decrease in prices would increase the asset by approximately $17 million. As of September 30, 2017, the Company had open oil derivatives not designated as cash flow hedges in an asset position with a fair value of $11 million. A 10 percent increase in oil prices would move the derivatives to a liability position of $50 million, while a 10 percent decrease in prices would increase the asset by approximately $84 million. These fair value changes assume volatility based on prevailing market parameters at September 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 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. 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 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 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 $6 million would result from a 10 percent weakening or strengthening, respectively, in the British pound as of September 30, 2017.


ITEM 4 –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 ourthe Company’s disclosure controls and procedures as of September 30, 2017,March 31, 2023, 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 the information we arethe Company is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the SEC’sCommission’s rules and forms and accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
WeThe Company periodically reviewreviews the design and effectiveness of ourits disclosure controls, including compliance with various laws and regulations that apply to ourits operations, both inside and outside the United States. We makeThe Company makes modifications to improve the design and effectiveness of our disclosure controls, and may take other corrective action, if ourthe Company’s reviews identify deficiencies or weaknesses in ourits controls.
Changes in Internal Control Over Financial Reporting
There were no changes in ourthe Company’s internal controlcontrols over financial reporting that occurred during the quarter ended September 30, 2017March 31, 2023 that have materially affected, or are reasonably likely to materially affect, ourthe Company’s internal controlcontrols over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS
Please referITEM 1.    LEGAL PROCEEDINGS
Refer to Part I, Item 33—Legal Proceedings of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (filed with the SEC on February 24, 2017)2022 and Note 9—12—Commitments and Contingencies in the notesNotes to the consolidated financial statementsConsolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q (which is hereby incorporated by reference herein), for a description of material legal proceedings.

ITEM 1A.RISK FACTORS
Please referITEM 1A.    RISK FACTORS
There have been no material changes to the risk factors disclosed in Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and Part I, Item 3—Quantitative and Qualitative Disclosures About Market Risk2022.
Given the nature of thisits business, APA Corporation may be subject to different or additional risks than those applicable to the Company. For a description of these risks, refer to the disclosures in APA Corporation’s Quarterly Report on Form 10-Q. There have been no material changes to our risk factors since our annual report10-Q for the quarterly period ended March 31, 2023 and APA Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2022.


ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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 September 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 additional shares during 2017.

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ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None


ITEM 4.MINE SAFETY DISCLOSURES
None

ITEM 5.OTHER INFORMATION
None



ITEM 6.EXHIBITS
ITEM 6.    EXHIBITS
3.1–
Amended and Restated Certificate of Incorporation of Registrant, dated March 1, 2021, as attached as Annex A to the Certificate of Merger of APA Merger Sub, Inc. with and into Registrant, filed with the Secretary of State of the State of Delaware on March 1, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-4300).
3.2–
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant, dated June 7, 2021, filed with the Secretary of State of the State of Delaware on June 10, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed June 14, 2021, SEC File No. 001-4300).
3.3–
Amended and Restated Bylaws of Registrant, dated March 1, 2021 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-4300).
*31.1–
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.
*31.2–
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.
**32.1–
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.
*101–The following financial statements from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) Statement of Consolidated Operations, (ii) Statement of Consolidated Comprehensive Income (Loss), (iii) Statement of Consolidated Cash Flows, (iv) Consolidated Balance Sheet, (v) Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling Interests and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
*101.SCH–Inline XBRL Taxonomy Schema Document.
*101.CAL–Inline XBRL Calculation Linkbase Document.
*101.DEF–Inline XBRL Definition Linkbase Document.
*101.LAB–Inline XBRL Label Linkbase Document.
*101.PRE–Inline XBRL Presentation Linkbase Document.
*104–Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*    Filed herewith
**    Furnished herewith
33
3.1–
Restated Certificate of Incorporation of Registrant, dated September 19, 2013, as filed with the Secretary of State of Delaware on September 19, 2013 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed September 20, 2013, SEC File No. 001-4300).
3.2–
Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated May 14, 2015, as filed with the Secretary of State of Delaware on May 14, 2015 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed May 20, 2015, SEC File No. 001-4300).
3.3–
Bylaws of Registrant, as amended May 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).
*4.1–
Supplemental Indenture, dated as of August 14, 2017, among Apache Finance Canada Corporation, Apache Corporation, and The Bank of New York Mellon Trust Company, N.A. (as successor to JPMorgan Chase Bank, N.A., formerly The Chase Manhattan Bank), as trustee.
*31.1–
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.
*31.2–
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.
*32.1–
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.
*101.INS–XBRL Instance Document.
*101.SCH–XBRL Taxonomy Schema Document.
*101.CAL–XBRL Calculation Linkbase Document.
*101.DEF–XBRL Definition Linkbase Document.
*101.LAB–XBRL Label Linkbase Document.
*101.PRE–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 2, 2017May 4, 2023/s/ STEPHEN J. RINEY
Stephen J. Riney
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Dated:November 2, 2017May 4, 2023/s/ REBECCA A. HOYT
Rebecca A. Hoyt
Senior Vice President, Chief Accounting Officer, and Controller
(Principal Accounting Officer)



40
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