SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


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

For the quarterly period ended March 31, ~~2021~~2022


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

For the transition period from _________ to _________


Delaware			86-1430562
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.625 par value

APA

Nasdaq Global Select Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

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 ☒


Number of shares of registrant’s common stock outstanding as of April 30, ~~2021~~2022			~~377,972,835~~338,232,412

PART I - FINANCIAL INFORMATION

PART II - OTHER INFORMATION

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 (the Exchange Act). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the 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 the Company’s examination of historical operating trends, the information that was used to prepare its estimate of proved reserves as of December 31, ~~2020,~~2021, and other data in the 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,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable under 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 the Company’s expectations include, but are not limited to, its assumptions about:

•the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically, the coronavirus disease 2019 (COVID-19) ~~pandemic)~~pandemic and any related variants) and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors, and suppliers, in response to such epidemics or pandemics;

•the mandate, availability, and effectiveness of vaccine programs and therapeutics related to the treatment of COVID-19;

•the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or services;

•the Company’s commodity hedging arrangements;

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

•production and reserve levels;

•economic and competitive ~~conditions;~~conditions, including market and macro-economic disruptions resulting from the Russian war in Ukraine;

•the availability of capital resources;

•capital expenditures and other contractual obligations;

•currency exchange rates;

•weather conditions;

•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, 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 cyberattacks;

•the occurrence of property acquisitions or divestitures;

•the integration of acquisitions;

•the Company’s ability to access the capital markets;

•market-related risks, such as general credit, liquidity, and interest-rate risks;

•the Company’s expectations with respect to the new operating structure implemented pursuant to the Holding Company Reorganization (as defined in the Notes to the Company’s Consolidated Financial Statements set forth in Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q) and the associated disclosure implications;

•other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in the Company’s Annual Report on Form 10-K ~~of Apache Corporation, the Company’s predecessor registrant,~~ for the fiscal year ended December 31, ~~2020;~~2021;

•other risks and uncertainties disclosed in the Company’s first-quarter ~~2021~~2022 earnings release;

•other factors disclosed under Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q; and

•other factors disclosed in the other filings that the 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 ~~the~~these cautionary statements. All 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 these statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.

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 ~~natural gas liquids~~NGLs per day.

“bbl” or “bbls” means barrel or barrels of oil or ~~natural gas liquids.~~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 ~~natural gas liquids.~~NGLs.

“LNG” means liquefied natural gas.

“Mb/d” means Mbbls per day.

“Mbbls” means thousand barrels of oil or ~~natural gas liquids.~~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 ~~natural gas liquids.~~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 ~~our~~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 ~~our~~the Company’s working interest therein. Unless otherwise specified, all references to wells and acres are gross.

References to “APA,” the “Company,” “we,” “us,” and “our” refer to APA Corporation and its consolidated subsidiaries, including Apache Corporation, unless otherwise specifically stated. References to “Apache” refer to Apache Corporation, the Company’s ~~wholly-owned~~wholly owned subsidiary, and its consolidated subsidiaries, unless otherwise specifically stated.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

For the Quarter Ended

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

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Unaudited)

For the Quarter Ended
March 31,
2021 2020
(In millions)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS $ 450 $ (4,622)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Share of equity method interests other comprehensive income (loss) 1 (1)
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS 451 (4,623)
Comprehensive income (loss) attributable to noncontrolling interest - Egypt 42 (151)
Comprehensive income (loss) attributable to noncontrolling interest - Altus 1 (9)
Comprehensive income attributable to Altus Preferred Unit limited partners 19 18
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $ 389 $ (4,481)


	For the Quarter Ended March 31,
	2022		2021

	(In millions)
NET INCOME INCLUDING NONCONTROLLING INTERESTS	$	1,946	$	450
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Share of equity method interests other comprehensive income	—		1
Pension and postretirement benefit plan	(1)		—
COMPREHENSIVE INCOME INCLUDING NONCONTROLLING INTERESTS	1,945		451
Comprehensive income attributable to noncontrolling interest - Egypt	119		42
Comprehensive income attributable to noncontrolling interest - Altus	14		1
Comprehensive income (loss) attributable to Altus Preferred Unit limited partners	(70)		19
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCK	$	1,882	$	389

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

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)


							For the Three Months Ended March 31,
		For the Three Months Ended March 31,					2022		2021
		2021		2020
		(In millions)					(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interests		$	450	$	(4,622)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income including noncontrolling interests						Net income including noncontrolling interests	$	1,946	$	450
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized derivative instrument losses (gains), net	Unrealized derivative instrument losses (gains), net	(10)		103		Unrealized derivative instrument losses (gains), net	57		(10)
Gain on divestitures, net	Gain on divestitures, net	(2)		(25)		Gain on divestitures, net	(1,176)		(2)
Exploratory dry hole expense and unproved leasehold impairments	Exploratory dry hole expense and unproved leasehold impairments	37		43		Exploratory dry hole expense and unproved leasehold impairments	9		37
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	342		566		Depreciation, depletion, and amortization	291		342
Asset retirement obligation accretion	Asset retirement obligation accretion	28		27		Asset retirement obligation accretion	29		28
Impairments		0		4,472

Provision for (benefit from) deferred income taxes	Provision for (benefit from) deferred income taxes	21		(33)		Provision for (benefit from) deferred income taxes	(40)		21
Loss on extinguishment of debt						Loss on extinguishment of debt	67		—

Other		(20)		(8)
Other, net						Other, net	(29)		(20)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	(168)		221		Receivables	(255)		(168)
Inventories	Inventories	(3)		30		Inventories	(43)		(3)
Drilling advances and other current assets	Drilling advances and other current assets	10		(26)		Drilling advances and other current assets	9		10
Deferred charges and other long-term assets	Deferred charges and other long-term assets	(10)		(7)		Deferred charges and other long-term assets	(13)		(10)
Accounts payable	Accounts payable	75		(80)		Accounts payable	18		75
Accrued expenses	Accrued expenses	(66)		(173)		Accrued expenses	18		(66)
Deferred credits and noncurrent liabilities	Deferred credits and noncurrent liabilities	(13)		14		Deferred credits and noncurrent liabilities	3		(13)
NET CASH PROVIDED BY OPERATING ACTIVITIES	NET CASH PROVIDED BY OPERATING ACTIVITIES	671		502		NET CASH PROVIDED BY OPERATING ACTIVITIES	891		671

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to upstream oil and gas property	Additions to upstream oil and gas property	(253)		(511)		Additions to upstream oil and gas property	(358)		(253)
Additions to Altus gathering, processing, and transmission (GPT) facilities	Additions to Altus gathering, processing, and transmission (GPT) facilities	(1)		(19)		Additions to Altus gathering, processing, and transmission (GPT) facilities	(1)		(1)
Leasehold and property acquisitions	Leasehold and property acquisitions	(2)		(1)		Leasehold and property acquisitions	(20)		(2)
Contributions to Altus equity method interests	Contributions to Altus equity method interests	(21)		(83)		Contributions to Altus equity method interests	(2)		(21)

Proceeds from sale of oil and gas properties	Proceeds from sale of oil and gas properties	3		126		Proceeds from sale of oil and gas properties	767		3
Proceeds from sale of Kinetik shares						Proceeds from sale of Kinetik shares	224		—
Deconsolidation of Altus cash and cash equivalents						Deconsolidation of Altus cash and cash equivalents	(143)		—
Other, net	Other, net	7		(21)		Other, net	(1)		7
NET CASH USED IN INVESTING ACTIVITIES		(267)		(509)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES						NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	466		(267)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) Apache credit facility, net	Proceeds from (payments on) Apache credit facility, net	(85)		250		Proceeds from (payments on) Apache credit facility, net	338		(85)
Proceeds from Altus credit facility, net	Proceeds from Altus credit facility, net	33		72		Proceeds from Altus credit facility, net	—		33

Payments on Apache fixed-rate debt	Payments on Apache fixed-rate debt	(6)		0		Payments on Apache fixed-rate debt	(1,370)		(6)
Distributions to noncontrolling interest - Egypt	Distributions to noncontrolling interest - Egypt	(40)		(32)		Distributions to noncontrolling interest - Egypt	(69)		(40)
Distributions to Altus Preferred Unit limited partners	Distributions to Altus Preferred Unit limited partners	(11)		0		Distributions to Altus Preferred Unit limited partners	(11)		(11)
Treasury stock activity, net						Treasury stock activity, net	(261)		—
Dividends paid to APA common stockholders						Dividends paid to APA common stockholders	(43)		(9)
Other, net						Other, net	(9)		(10)
NET CASH USED IN FINANCING ACTIVITIES						NET CASH USED IN FINANCING ACTIVITIES	(1,425)		(128)

Dividends paid		(9)		(94)
Other		(10)		(8)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(128)		188

NET INCREASE IN CASH AND CASH EQUIVALENTS		276		181
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(68)		276
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	262		247		CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	302		262
CASH AND CASH EQUIVALENTS AT END OF PERIOD	CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	538	$	428	CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	234	$	538

SUPPLEMENTARY CASH FLOW DATA:	SUPPLEMENTARY CASH FLOW DATA:					SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	Interest paid, net of capitalized interest	$	113	$	126	Interest paid, net of capitalized interest	$	125	$	113
Income taxes paid, net of refunds	Income taxes paid, net of refunds	124		98		Income taxes paid, net of refunds	305		124

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

APA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)


							March 31, 2022(1)		December 31, 2021(1)
		March 31, 2021		December 31, 2020
		(In millions, except share data)					(In millions, except share data)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents ($51 and $24 related to Altus VIE)		$	538	$	262
Receivables, net of allowance of $98 and $95		1,071		908
Other current assets (Note 5) ($12 and $5 related to Altus VIE)		736		676
Cash and cash equivalents ($132 related to Altus VIE)						Cash and cash equivalents ($132 related to Altus VIE)	$	234	$	302
Receivables, net of allowance of $111 and $109						Receivables, net of allowance of $111 and $109	1,630		1,394
Other current assets (Note 5) ($9 related to Altus VIE)						Other current assets (Note 5) ($9 related to Altus VIE)	729		684
		2,345		1,846			2,593		2,380
PROPERTY AND EQUIPMENT:	PROPERTY AND EQUIPMENT:					PROPERTY AND EQUIPMENT:
Oil and gas properties	Oil and gas properties	42,054		41,819		Oil and gas properties	40,553		40,749
Gathering, processing, and transmission facilities ($209 related to Altus VIE)						Gathering, processing, and transmission facilities ($209 related to Altus VIE)	464		673
Other ($3 related to Altus VIE)						Other ($3 related to Altus VIE)	1,123		1,126
Less: Accumulated depreciation, depletion, and amortization ($25 related to Altus VIE)						Less: Accumulated depreciation, depletion, and amortization ($25 related to Altus VIE)	(34,058)		(34,213)
							8,082		8,335
OTHER ASSETS:						OTHER ASSETS:
Equity method interests (Note 6) ($1,365 related to Altus VIE)						Equity method interests (Note 6) ($1,365 related to Altus VIE)	576		1,365
Decommissioning security for sold Gulf of Mexico properties (Note 11)						Decommissioning security for sold Gulf of Mexico properties (Note 11)	640		640
Deferred charges and other ($6 related to Altus VIE)						Deferred charges and other ($6 related to Altus VIE)	585		583
							$	12,476	$	13,303

Gathering, processing, and transmission facilities ($206 and $206 related to Altus VIE)		671		670
Other ($3 and $3 related to Altus VIE)		1,139		1,140
LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY (DEFICIT)						LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY (DEFICIT)
CURRENT LIABILITIES:						CURRENT LIABILITIES:
Accounts payable ($12 related to Altus VIE)						Accounts payable ($12 related to Altus VIE)	$	735	$	731
Current debt						Current debt	125		215
Other current liabilities (Note 7) ($15 related to Altus VIE)						Other current liabilities (Note 7) ($15 related to Altus VIE)	1,254		1,171
							2,114		2,117
Less: Accumulated depreciation, depletion, and amortization ($16 and $13 related to Altus VIE)		(35,146)		(34,810)
		8,718		8,819
OTHER ASSETS:
Equity method interests (Note 6) ($1,567 and $1,555 related to Altus VIE)		1,567		1,555
Deferred charges and other ($6 and $5 related to Altus VIE)		497		526
		$	13,127	$	12,746

LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY
CURRENT LIABILITIES:
Accounts payable		$	524	$	444
Current debt		2		2
Other current liabilities (Note 7) ($8 and $4 related to Altus VIE)		812		862
		1,338		1,308
LONG-TERM DEBT (Note 9) ($657 and $624 related to Altus VIE)		8,713		8,770
LONG-TERM DEBT (Note 9) ($657 related to Altus VIE)						LONG-TERM DEBT (Note 9) ($657 related to Altus VIE)	5,764		7,295
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:	DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:					DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes	Income taxes	237		215		Income taxes	106		148
Asset retirement obligation (Note 8) ($65 and $64 related to Altus VIE)		1,914		1,888
Other ($161 and $144 related to Altus VIE)		581		602
		2,732		2,705
Asset retirement obligation (Note 8) ($68 related to Altus VIE)						Asset retirement obligation (Note 8) ($68 related to Altus VIE)	2,043		2,089
Decommissioning contingency for sold Gulf of Mexico properties (Note 11)						Decommissioning contingency for sold Gulf of Mexico properties (Note 11)	1,086		1,086
Other ($67 related to Altus VIE)						Other ($67 related to Altus VIE)	511		573
							3,746		3,896
REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 12)	REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 12)	605		608		REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 12)	—		712
EQUITY (DEFICIT):	EQUITY (DEFICIT):					EQUITY (DEFICIT):
Common stock, $0.625 par, 860,000,000 shares authorized, 418,917,594 and 418,429,375 shares issued, respectively		262		262
Common stock, $0.625 par, 860,000,000 shares authorized, 419,678,357 and 419,078,606 shares issued, respectively						Common stock, $0.625 par, 860,000,000 shares authorized, 419,678,357 and 419,078,606 shares issued, respectively	262		262
Paid-in capital	Paid-in capital	11,727		11,735		Paid-in capital	11,600		11,645
Accumulated deficit	Accumulated deficit	(10,073)		(10,461)		Accumulated deficit	(7,605)		(9,488)
Treasury stock, at cost, 40,944,759 and 40,946,745 shares, respectively		(3,189)		(3,189)
Treasury stock, at cost, 79,375,295 and 72,147,841 shares, respectively						Treasury stock, at cost, 79,375,295 and 72,147,841 shares, respectively	(4,296)		(4,036)
Accumulated other comprehensive income	Accumulated other comprehensive income	15		14		Accumulated other comprehensive income	21		22
APA SHAREHOLDERS’ DEFICIT	APA SHAREHOLDERS’ DEFICIT	(1,258)		(1,639)		APA SHAREHOLDERS’ DEFICIT	(18)		(1,595)
Noncontrolling interest - Egypt	Noncontrolling interest - Egypt	927		925		Noncontrolling interest - Egypt	870		820
Noncontrolling interest - Altus	Noncontrolling interest - Altus	70		69		Noncontrolling interest - Altus	—		58
TOTAL DEFICIT		(261)		(645)
TOTAL EQUITY (DEFICIT)						TOTAL EQUITY (DEFICIT)	852		(717)
		$	13,127	$	12,746		$	12,476	$	13,303

(1) The Altus VIE amounts are disclosed as of December 31, 2021. All Altus balances were deconsolidated as of February 22, 2022. Refer to Note 1 —Summary of Significant Accounting Policies and Note 2—Acquisitions and Divesti tures for further detail.

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

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING ~~INTEREST~~INTERESTS

(Unaudited)


		Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners		Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		APA SHAREHOLDERS’ EQUITY (DEFICIT)		Noncontrolling Interests		TOTAL EQUITY (DEFICIT)			Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners(1)		Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		APA SHAREHOLDERS’ DEFICIT		Noncontrolling Interests(1)		TOTAL EQUITY (DEFICIT)
				(In millions)
For the Quarter Ended March 31, 2020
Balance at December 31, 2019		$	555	$	261	$	11,769	$	(5,601)	$	(3,190)	$	16	$	3,255	$	1,210	$	4,465
Net loss attributable to common stock		—		—		—		(4,480)		—		—		(4,480)		—		(4,480)
Net loss attributable to noncontrolling interest - Egypt		—		—		—		—		—		—		—		(151)		(151)
Net loss attributable to noncontrolling interest - Altus		—		—		—		—		—		—		—		(9)		(9)

Net income attributable to Altus Preferred Unit holders		18		—		—		—		—		—		—		—		—
Distributions to noncontrolling interest - Egypt		—		—		—		—		—		—		—		(32)		(32)
Common dividends ($0.025 per share)		—		—		(10)		—		—		—		(10)		—		(10)
Other		—		1		(12)		—		1		(1)		(11)		—		(11)
Balance at March 31, 2020		$	573	$	262	$	11,747	$	(10,081)	$	(3,189)	$	15	$	(1,246)	$	1,018	$	(228)
																					(In millions)
For the Quarter Ended March 31, 2021	For the Quarter Ended March 31, 2021																			For the Quarter Ended March 31, 2021
Balance at December 31, 2020	Balance at December 31, 2020	$	608	$	262	$	11,735	$	(10,461)	$	(3,189)	$	14	$	(1,639)	$	994	$	(645)	Balance at December 31, 2020	$	608	$	262	$	11,735	$	(10,461)	$	(3,189)	$	14	$	(1,639)	$	994	$	(645)
Net income attributable to common stock	Net income attributable to common stock	—		—		—		388		—		—		388		—		388		Net income attributable to common stock	—		—		—		388		—		—		388		—		388
Net income attributable to noncontrolling interest - Egypt	Net income attributable to noncontrolling interest - Egypt	—		—		—		—		—		—		—		42		42		Net income attributable to noncontrolling interest - Egypt	—		—		—		—		—		—		—		42		42
Net income attributable to noncontrolling interest - Altus	Net income attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		1		1		Net income attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		1		1

Net income attributable to Altus Preferred Unit limited partners		19		—		—		—		—		—		—		—		—
Net income attributable to Altus Preferred Unit holders																				Net income attributable to Altus Preferred Unit holders	19		—		—		—		—		—		—		—		—
Distributions paid to Altus Preferred Unit limited partners																				Distributions paid to Altus Preferred Unit limited partners	(11)		—		—		—		—		—		—		—		—
Distributions payable to Altus Preferred Unit limited partners	Distributions payable to Altus Preferred Unit limited partners	(11)		—		—		—		—		—		—		—		—		Distributions payable to Altus Preferred Unit limited partners	(11)		—		—		—		—		—		—		—		—
Distributions paid to Altus Preferred Unit limited partners		(11)		—		—		—		—		—		—		—		—
Distributions to noncontrolling interest - Egypt	Distributions to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(40)		(40)		Distributions to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(40)		(40)
Common dividends ($0.025 per share)		—		—		(9)		—		—		—		(9)		—		(9)
Common dividends declared ($0.025 per share)																				Common dividends declared ($0.025 per share)	—		—		(9)		—		—		—		(9)		—		(9)
Other	Other	—		—		1		—		—		1		2		—		2		Other	—		—		1		—		—		1		2		—		2
Balance at March 31, 2021	Balance at March 31, 2021	$	605	$	262	$	11,727	$	(10,073)	$	(3,189)	$	15	$	(1,258)	$	997	$	(261)	Balance at March 31, 2021	$	605	$	262	$	11,727	$	(10,073)	$	(3,189)	$	15	$	(1,258)	$	997	$	(261)

For the Quarter Ended March 31, 2022																				For the Quarter Ended March 31, 2022
Balance at December 31, 2021																				Balance at December 31, 2021	$	712	$	262	$	11,645	$	(9,488)	$	(4,036)	$	22	$	(1,595)	$	878	$	(717)
Net income attributable to common stock																				Net income attributable to common stock	—		—		—		1,883		—		—		1,883		—		1,883
Net income attributable to noncontrolling interest - Egypt																				Net income attributable to noncontrolling interest - Egypt	—		—		—		—		—		—		—		119		119
Net income attributable to noncontrolling interest - Altus																				Net income attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		14		14
Net loss attributable to Altus Preferred Unit limited partners																				Net loss attributable to Altus Preferred Unit limited partners	(70)		—		—		—		—		—		—		—		—

Distributions to noncontrolling interest - Egypt																				Distributions to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(69)		(69)
Common dividends declared ($0.125 per share)																				Common dividends declared ($0.125 per share)	—		—		(43)		—		—		—		(43)		—		(43)
Treasury stock activity, net																				Treasury stock activity, net	—		—		—		—		(260)		—		(260)		—		(260)
Deconsolidation of Altus																				Deconsolidation of Altus	(642)		—		—		—		—		—		—		(72)		(72)
Other																				Other	—		—		(2)		—		—		(1)		(3)		—		(3)
Balance at March 31, 2022																				Balance at March 31, 2022	$	—	$	262	$	11,600	$	(7,605)	$	(4,296)	$	21	$	(18)	$	870	$	852

(1) As a result of the BCP Business Combination, the Company deconsolidated Altus on February 22, 2022. Refer to Note 1—Summary of Significant Accounting Policies and Note 2—Acquisitions and Divestitures for further detail.

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

APA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These consolidated financial statements have been prepared by APA Corporation (APA or the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods, on a basis consistent with the annual audited financial statements, with the exception of any recently adopted accounting ~~pronouncements discussed below.~~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 (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 the Company’s Annual Report on Form 10-K ~~of Apache Corporation, the Company’s predecessor registrant,~~ for the fiscal year ended December 31, ~~2020,~~2021, which contains a summary of the Company’s significant accounting policies and other disclosures.

On ~~January 4,~~March 1, 2021, Apache Corporation, ~~announced plans to implement~~the Company’s predecessor registrant, consummated a holding company reorganization (the Holding Company Reorganization), pursuant to which ~~was thereafter completed on March 1, 2021. In connection with the Holding Company Reorganization,~~ Apache Corporation became a direct, ~~wholly-owned~~wholly owned subsidiary of APA Corporation, and all of Apache Corporation’s outstanding shares ~~were~~ automatically converted into equivalent corresponding shares of APA. Pursuant to the Holding Company Reorganization, APA became the successor issuer to Apache Corporation pursuant to Rule 12g-3(a) under the Exchange Act and replaced Apache Corporation as the public company trading on the Nasdaq Global Select Market under the ticker symbol “APA.” The ~~holding company structure~~Holding Company Reorganization modernized the Company’s operating and legal structure to more closely align with its growing international presence, making it more consistent with other companies that have subsidiaries operating around the globe.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of March 31, ~~2021,~~2022, the Company's significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in ~~Apache Corporation’s~~the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. The Company’s financial statements for prior periods include reclassifications that were made to conform to the current-year ~~presentation.~~presentation, if applicable.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of APA and its subsidiaries after elimination of intercompany balances and transactions.

The implementation of the Holding Company Reorganization was accounted for as a merger under common control. APA recognized the assets and liabilities of Apache at carryover basis. The consolidated financial statements of APA present comparative information for prior years on a combined basis, as if both APA and Apache were under common control for all periods presented.

The ~~accompanying consolidated financial statements include the accounts of APA 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 APA and are reflected separately in the Company’s financial statements.

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, which is reflected as a separate noncontrolling interest component of equity in the Company’s consolidated balance sheet. Additionally, prior to the BCP Business Combination defined below, third-party investors ~~own~~owned a minority interest of approximately 21 percent of Altus Midstream Company ~~(ALTM)~~(ALTM or Altus), which iswas reflected as a separate noncontrolling interest component of equity in the Company’s consolidated balance sheet. ALTM ~~qualifies~~qualified as a variable interest entity under GAAP, ~~for~~ which APA ~~consolidates~~consolidated because a ~~wholly-owned~~wholly owned subsidiary of APA ~~has~~had a controlling financial interest and was determined to be the primary beneficiary. Additionally, the assets of ALTM could only be used to settle obligations of ALTM. There was no recourse to the Company for ALTM’s liabilities.

On February 22, 2022, 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 ALTM. The Company further determined that ALTM no longer qualified as a variable interest entity under GAAP.As a result, the Company deconsolidated ALTM on February 22, 2022. Refer to Note 2—Acquisitions and Divestitures for further detail.

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 Company’s stock ownership, management determined it has significant influence over Kinetik. 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’s proportionate share of~~Company elected the ~~results of operations generated by the~~fair value option to account for its equity method ~~interests are recorded as a component of “Other, net” under “Revenues and Other”~~interest in ~~the Company’s statement of consolidated operations.~~Kinetik. Refer to Note 6—Equity Method Interests for further detail.

Use of Estimates

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities ~~require~~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 2—Acquisitions and Divestitures), the fair value of equity method interests (refer to “Equity Method Interests” within this Note 1 below and Note 6—Equity Method Interests), the assessment of asset retirement obligations (refer to Note 8—Asset Retirement Obligation), the estimation of the contingent liability representing Apache’s potential obligation to decommission sold properties in the Gulf of Mexico (refer to Note 11—Commitments and Contingencies), the estimate of income taxes (refer to Note 10—Income Taxes), and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom.

Fair Value Measurements

Certain assets and liabilities are reported at fair value on a recurring basis in the Company’s consolidated balance sheet. ~~The Company determines fair value measurements in accordance with~~ Accounting Standards Codification (ASC) 820-10-35, “Fair Value Measurement” (ASC 820), ~~which~~ provides a hierarchy that prioritizes and defines the types of inputs used to ~~base~~measure fair ~~value measurements.~~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).

Refer to Note 4—Derivative Instruments and Hedging Activities, Note 6 —Equity Method Interests, Note 9—Debt and Financing Costs, and Note 12—Redeemable Noncontrolling Interest - Altus for further detail regarding the Company’s fair value measurements recorded on a recurring basis.

Fair value measurements are recorded on a nonrecurring basis when certain qualitative assessments of the Company’s assets indicate potential impairment. Asset impairments recorded in connection with fair value assessments were as follows:

For the Quarter Ended
March 31,
2021 2020
(In millions)
Oil and gas proved property $ 0 $ 4,299
Gathering, processing, and transmission facilities 0 68
Goodwill 0 87
Inventory and other 0 18
Total Impairments $ 0 $ 4,472

~~During the first quarter of 2021, the Company recorded 0 asset impairments in connection with fair value assessments.~~

During the ~~first quarter of 2020,~~quarters ended March 31, 2022 and 2021, the Company recorded no asset impairments ~~totaling $4.5 billion~~ in connection with fair value assessments. ~~Given~~

Revenue Recognition

There have been no significant changes to the ~~crude oil price collapse on lower demand~~Company’s contracts with customers during the three months ended March 31, 2022 and ~~economic activity resulting~~2021.

Payments under all contracts with customers are typically due and received within a short-term period of one year or less after physical delivery of the product or service has been rendered. Receivables from ~~the coronavirus disease 2019 (COVID-19) global pandemic~~contracts with customers, net of allowance for credit losses, were $1.5 billion and ~~related governmental actions, the Company assessed its oil and gas property and gathering, processing, and transmission (GPT) facilities for impairment based on the net book value of its assets~~$956 million as of March 31, ~~2020. The Company recognized proved property impairments totaling $3.9 billion, $354 million,~~2022 and ~~$7 million~~December 31, 2021, respectively. Refer to Note 14—Business Segment Information for a disaggregation of oil, gas, and natural gas production revenue by product and reporting segment.

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 ~~U.S., Egypt,~~Company’s statement of consolidated operations. Refer to Note 14—Business Segment Information for a disaggregation of revenue by product and ~~North Sea, respectively,~~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 ~~reduce~~each performance obligation as the ~~carrying value~~terms of ~~its oil and gas properties~~payment relate specifically to the ~~estimated fair values as a result of lower forecasted commodity prices, changes~~Company’s efforts to planned development activity, and increasing market uncertainty. Impairments totaling $68 million were similarly recorded for GPT facilities in Egypt. These impairments are discussed in further detail below in “Property and Equipment - Oil and Gas Property” and “Property and Equipment - Gathering, Processing, and Transmission Facilities.”

~~During the first quarter of 2020,~~satisfy its obligations. As such, the Company ~~also recognized impairments of $13 million for~~has elected the ~~early termination of drilling rig leases and $5 million for inventory revaluations, both in~~practical expedients available under the ~~U.S.~~

~~During~~standard to not disclose the ~~first quarter of 2020, the Company performed an interim impairment analysis~~aggregate transaction price allocated to unsatisfied, or partially unsatisfied, performance obligations as of the goodwill related to its Egypt reporting segment. Reductions in the estimated net present value of expected future cash flows from oil and gas properties resulted in fair values below the carrying valuesend of the ~~Company’s Egypt~~ reporting ~~unit. As a result of these assessments, the Company recognized non-cash impairments of the entire amount of recorded goodwill in the Egypt reporting unit of $87 million.~~period.

Property and Equipment

The carrying value of the Company’s property and equipment represents the cost incurred to acquire the property and equipment, including capitalized interest, net of any impairments. For business combinations, property and equipment cost is based on the fair values at the 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.

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 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 well 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—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 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 the 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 ASC 820. The expected future cash flows used for impairment reviews and related fair value calculations are typically based on judgmental assessments, a Level 3 fair value measurement.

The significant decline in crude oil and natural gas prices, as well as longer-term commodity price outlooks, related to reduced demand for oil and natural gas as a result of the COVID-19 pandemic and related governmental actions indicated possible impairment of the Company’s proved and unproved oil and gas properties in early 2020. In addition to estimating risk-adjusted reserves and future production volumes, estimated future commodity prices are the largest driver in variability of undiscounted pre-tax cash flows. Expected cash flows were estimated based on management’s views of published West Texas Intermediate (WTI), Brent, and Henry Hub forward pricing as of the balance sheet dates. Other significant assumptions and inputs used to calculate estimated future cash flows include estimates for future development activity, exploration plans and remaining lease terms. A 10 percent discount rate, based on a market-based weighted-average cost of capital estimate, was applied to the undiscounted cash flow estimate to value all of the Company’s asset groups that were subject to impairment charges in the first quarter of 2020.

~~The following table represents non-cash impairment charges of the carrying value of the Company’s proved and unproved properties:~~

For the Quarter Ended
March 31,
2021 2020
(In millions)
Proved Properties:
U.S. $ 0 $ 3,938
Egypt 0 354
North Sea 0 7
Total proved properties $ 0 $ 4,299
Unproved Properties:
U.S. $ 16 $ 17
Egypt 2 2
Total unproved properties $ 18 $ 19

~~Proved properties impaired during the first quarter of 2020 had an aggregate fair value of $1.9 billion as of March 31, 2020.~~

Unproved leasehold impairments are typically recorded as a component of “Exploration” expense in the Company’s statement of consolidated operations. Gains and losses on divestitures of the Company’s oil and gas properties are recognized in the statement of consolidated operations upon closing of the transaction. Refer to Note 2—Acquisitions and Divestitures for more detail.

Gathering, Processing, and Transmission Facilities

GPT facilities totaled $671 million and $670 million at March 31, 2021 and December 31, 2020, respectively, with accumulated depreciation for these assets totaling $342 million and $323 million for the respective periods. GPT facilities are depreciated 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 APA-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 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.

2. ACQUISITIONS AND DIVESTITURES

2022 Activity

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 Midstream 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 ALTM 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 of the Company’s share of ALTM’s deconsolidated balance sheet and the fair value of its approximate 20 percent retained ownership in the combined entity. A summary of components of the gain, including the ALTM balance sheet amounts deconsolidated at the time of close, is included below:


	As of February 22, 2022
	(In millions)

Fair value of Kinetik Class A Common Stock held by Company	$	802

ASSETS:
Cash and cash equivalents	$	143
Other current assets	29
Property and equipment, net	184
Equity method interests	1,367
Other noncurrent assets	12
Total assets deconsolidated	$	1,735

LIABILITIES:
Current liabilities	$	3
Long-term debt	657
Other noncurrent liabilities	168
Total liabilities deconsolidated	$	828

NONCONTROLLING INTERESTS:
Redeemable noncontrolling interest preferred unit limited partners	$	642
Noncontrolling interest-Altus	72
Total noncontrolling interests deconsolidated	$	714

Net effect of deconsolidating balance sheet	$	(193)

Gain on deconsolidation of ALTM	$	609

In March 2022, the Company sold 4000000 of its shares in Kinetik for cash proceeds of $224 million and recognized a loss of $25 million, including transaction fees. Refer to Note 6—Equity Method Interests for further detail. In connection with this secondary offering, the Company has agreed that within the next 24 months, it will invest a minimum of $100 million of these proceeds for new well drilling and completion activity at the Alpine High play in the Delaware Basin, where Kinetik has exclusive gas and NGL gathering and processing rights.

In March 2022, the Company completed the previously announced transaction to sell certain non-core mineral rights in the Delaware Basin for total cash proceeds of approximately $759 million after certain post-closing adjustments. The Company ~~assessed its long-lived infrastructure~~recognized a gain of approximately $590 million from the transaction. The Company also completed the sale of other non-core assets and leasehold in multiple transactions for ~~impairment at March 31, 2020, and recorded an impairment~~total cash proceeds of ~~$68~~$8 million. The Company recognized a gain of approximately $2 million ~~on its GPT facilities in Egypt~~upon closing of these transactions during the first quarter of 2020. The fair values of the impaired assets, which were determined to be $46 million, were estimated using the income approach, which considers internal estimates based on future throughput volumes from applicable development concessions in Egypt and estimated costs to operate. These assumptions were applied based on throughput assumptions developed in relation to the oil and gas proved property impairment assessment, as discussed above, to develop future cash flow projections that were then discounted to estimated fair value, using a 10 percent discount rate, based on a market-based weighted-average cost of capital estimate. The Company has classified these non-recurring fair value measurements as Level 3 in the fair value hierarchy.2022.

~~Revenue Recognition~~

~~There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2021 and 2020.~~

Payments under all contracts with customers are typically due and received within a short-term period of one year or less after physical delivery of the product or service has been rendered. Receivables from contracts with customers, net of allowance for credit losses, totaled $957 million and $670 million as of March 31, 2021 and December 31, 2020, respectively.

Oil and gas production revenues from non-customers were $106 million and $48 million during the first quarter of 2021 and 2020, respectively, and 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 14—Business Segment Information~~ ~~for a disaggregation of 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 has elected the practical expedients available under the standard to not disclose the aggregate transaction price allocated to unsatisfied, or partially unsatisfied, performance obligations as of the end of the reporting period.

~~Transaction, Reorganization, and Separation (TRS)~~

In recent years, the Company streamlined its portfolio through strategic divestitures and centralized certain operational activities in an effort to capture greater efficiencies and cost savings through shared services. In light of the continued streamlining of the Company’s asset portfolio through divestitures and strategic transactions, in late 2019 management initiated a comprehensive redesign of the Company’s organizational structure and operations. Efforts related to this reorganization were substantially completed during 2020. The Company incurred and paid a cumulative total of $79 million of reorganization costs through December 31, 2020.

The Company recorded $27 million of TRS costs during the first quarter of 2020. TRS costs incurred in the first three months of 2020 related to $25 million of separation costs associated with the reorganization and $2 million for transaction consulting fees.

~~2. ACQUISITIONS AND DIVESTITURES~~

2021 Activity

During the first quarter of 2021, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $2 million. The Company also completed the sale of certain non-core assets and leasehold, primarily in the Permian Basin, in multiple transactions for total cash proceeds of $3 million. The Company recognized a gain of approximately $2 million upon closing of these transactions during the first quarter of 2021.

~~2020 Activity~~

During the first quarter of 2020, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $1 million. The Company also completed the sale of certain non-core assets and leasehold, primarily in the Permian Basin, in multiple transactions for total cash proceeds of $45 million. The Company recognized a gain of approximately $6 million upon closing of these transactions during the first quarter of 2020.

~~Suriname Joint Venture Agreement~~

In December 2019, the Company entered into a joint venture agreement with Total S.A. to explore and develop Block 58 offshore Suriname. Under the terms of the agreement, the Company and Total S.A. each hold a 50 percent working interest in Block 58. Pursuant to the agreement, the Company operated the drilling of the first four wells, the Maka Central-1, Sapakara West-1, Kwaskwasi-1, and Keskesi East-1, and subsequently transferred operatorship of Block 58 to Total S.A. on January 1, 2021; however, the Company continued to operate the Keskesi exploration well until completion of drilling operations during the first quarter of 2021.

In connection with the agreement, the Company received $100 million from Total S.A. upon closing in the fourth quarter of 2019 and $79 million upon satisfying certain closing conditions in the first quarter of 2020 for reimbursement of 50 percent of all costs incurred on Block 58 as of December 31, 2019. All proceeds were applied against the carrying value of the Company’s Suriname properties and associated inventory. The Company recognized a $19 million gain in the first quarter of 2020 associated with the transaction.

The Company will also receive various other forms of consideration, including $5 billion of cash carry on the Company’s first $7.5 billion of appraisal and development capital, 25 percent cash carry on all of the Company’s appraisal and development capital beyond the first $7.5 billion, a $75 million cash payment upon achieving first oil production, and future contingent royalty payments from successful joint development projects.

3. CAPITALIZED EXPLORATORY WELL COSTS

The Company’s capitalized exploratory well costs were ~~$237~~$389 million and ~~$197~~$321 million atas of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The increase is primarily attributable to additional drilling activity in Suriname ~~partially offset by dry hole write-offs during the period.~~ and Egypt.

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.

4. 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 ~~also~~ utilizes 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.

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, the Company utilizes a diversified group of investment-grade rated counterparties, primarily financial institutions, for its derivative transactions. As of March 31, ~~2021,~~2022, the Company had derivative positions with 1012 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, the Company may not realize the benefit of some of its derivative instruments resulting from lower commodity prices or changes in ~~commodity prices,~~ currency exchange ~~rates, or interest~~ rates.

Derivative Instruments

Commodity Derivative Instruments

As of March 31, ~~2021, the Company had the following open crude oil derivative positions:~~

Fixed-Price Swaps
Production Period Settlement Index Mbbls
Weighted Average Fixed Price(1)(2)
April—June 2021 NYMEX WTI 5,642 $61.20
July—September 2021 NYMEX WTI 1,472 $60.18
October—December 2021 NYMEX WTI 1,012 $58.59
April—June 2021 Dated Brent 2,366 $64.20
July—September 2021 Dated Brent 414 $63.14
October—December 2021 Dated Brent 828 $61.44

~~(1)~~Subsequent to March 31, 2021, the Company entered into fixed-price crude oil contracts settling against NYMEX WTI totaling 6,000 Bbls/d at a weighted average price of $60.10 for the third quarter of 2021.

~~(2)~~Subsequent to March 31, 2021, the Company entered into fixed-price crude oil contracts settling against Platts Dated Brent totaling 19,714 Bbls/d at a weighted average price of $64.07 for the second quarter of 2021 and 13,500 Bbls/d at a weighted average price of $63.06 for the third quarter of 2021.

~~As of March 31, 2021, the Company had the following open crude oil financial basis swap contracts:~~

Production Period Settlement Index Mbbls Weighted Average Price Differential
May—June 2021 Midland-WTI/Cushing-WTI 3,782 $0.56
July—September 2021 Midland-WTI/Cushing-WTI 2,024 $0.61
October—December 2021 Midland-WTI/Cushing-WTI 1,012 $0.70

~~As of March 31, 2021,~~2022, the Company had the following open natural gas financial basis swap contracts:


			Basis Swap Purchased		Basis Swap Sold				Basis Swap Purchased		Basis Swap Sold
Production Period	Production Period	Settlement Index	MMBtu (in 000’s)	Weighted Average Price Differential	MMBtu (in 000’s)	Weighted Average Price Differential	Production Period	Settlement Index	MMBtu (in 000’s)	Weighted Average Price Differential	MMBtu (in 000’s)	Weighted Average Price Differential
April—December 2021		NYMEX Henry Hub/IF Waha	37,580	$(0.43)	—	—
April—December 2021		NYMEX Henry Hub/IF HSC	—	—	37,580	$(0.07)
January—December 2022	January—December 2022	NYMEX Henry Hub/IF Waha	43,800	$(0.45)	—	—	January—December 2022	NYMEX Henry Hub/IF Waha	33,000	$(0.45)	—	—
January—December 2022	January—December 2022	NYMEX Henry Hub/IF HSC	—	—	43,800	$(0.08)	January—December 2022	NYMEX Henry Hub/IF HSC	—	—	33,000	$(0.08)
July—December 2022							July—December 2022	NYMEX Henry Hub/IF Waha	20,240	$(0.97)	—	—
July—December 2022							July—December 2022	NYMEX Henry Hub/IF HSC	—	—	20,240	$(0.17)
October—December 2022							October—December 2022	NYMEX Henry Hub/IF Waha	920	$(1.19)	—	—
October—December 2022							October—December 2022	NYMEX Henry Hub/IF HSC	—	—	920	$(0.19)
January—March 2023							January—March 2023	NYMEX Henry Hub/IF Waha	3,150	$(1.06)	—	—
January—March 2023							January—March 2023	NYMEX Henry Hub/IF HSC	—	—	3,150	$(0.03)
January—June 2023							January—June 2023	NYMEX Henry Hub/IF Waha	4,525	$(1.54)	—	—
January—June 2023							January—June 2023	NYMEX Henry Hub/IF HSC	—	—	4,525	$(0.11)
January—December 2023							January—December 2023	NYMEX Henry Hub/IF Waha	73,000	$(1.15)	—	—
January—December 2023							January—December 2023	NYMEX Henry Hub/IF HSC	—	—	73,000	$(0.08)

Subsequent to March 31, 2022, the Company entered into basis swap contracts purchasing Nymex Henry Hub/Waha totaling 1,840,000 MMBtu with a weighted average strike price of $(1.62) and selling Nymex Henry Hub/HSC totaling 1,840,000 MMBtu with a weighted average strike price of $(0.19) for July to September 2023.

Foreign Currency Derivative Instruments

The Company has open foreign currency costless collar contracts in GBP/USD for £15 million per month for the calendar year 2022 with a weighted average floor and ceiling price of $1.39 and $1.29, respectively.

Embedded Derivatives

Altus Preferred Units Embedded Derivative

~~During the second quarter of 2019,~~The Altus ~~Midstream LP issued and sold Series A Cumulative redeemable~~ Preferred Units ~~(Preferred Units). Certain redemption features~~ embedded ~~within~~derivative was deconsolidated as of March 31, 2022 as part of the ~~Preferred Units require bifurcation~~BCP Business Combination. Refer to Note 2 —Acquisitions and ~~measurement at fair value. For further~~Divestitures for discussion of ~~this derivative, refer to “Fair Value Measurements” below~~the BCP Business Combination and ~~Note~~N ote 12—Redeemable Noncontrolling Interest - ~~Altu~~sAltus. for a description of the Altus Preferred Units and associated embedded derivative.

Pipeline Capacity Embedded Derivatives

During the fourth quarter of 2019 and first quarter of 2020, the Company entered into ~~separate~~ agreements to assign a portion of its contracted capacity under an existing transportation agreement to third parties. Embedded in these agreements ~~are~~were arrangements under which the Company ~~has the potential to receive~~received payments calculated based on pricing differentials between Houston Ship Channel and Waha during the calendar years 2020 and 2021. ~~These features require~~This feature required bifurcation and measurement of the change in market ~~values for each period.~~value throughout 2020 and 2021. Unrealized gains orand losses in the fair value of ~~these features are~~this feature were recorded as “Derivative instrument ~~losses,~~gains (losses), net” under “Revenues and Other” in the statement of consolidated ~~operations. Any proceeds received~~operations, and the balance at the end of December 31, 2021 will be ~~deferred and reflected in~~amortized into income over the original tenure of the ~~transportation agreement.~~host contract.

Fair Value Measurements

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


		Fair Value Measurements Using													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			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)
March 31, 2021
															(In millions)
March 31, 2022														March 31, 2022
Assets:	Assets:													Assets:
Commodity derivative instruments	Commodity derivative instruments	$	0	$	39	$	0	$	39	$	(1)	$	38	Commodity derivative instruments	$	—	$	—	$	—	$	—	$	5	$	5
Liabilities:	Liabilities:													Liabilities:
Commodity derivative instruments	Commodity derivative instruments	0		2		0		2		(1)		1		Commodity derivative instruments	—		34		—		34		5		39
Pipeline capacity embedded derivatives		0		52		0		52		0		52
Preferred Units embedded derivative		0		0		156		156		0		156
Foreign currency derivative instruments														Foreign currency derivative instruments	—		2		—		2		—		2

December 31, 2020
Assets:

December 31, 2021														December 31, 2021

Liabilities:														Liabilities:
Commodity derivative instruments	Commodity derivative instruments	$	0	$	11	$	0	$	11	$	0	$	11	Commodity derivative instruments	$	—	$	10	$	—	$	10	$	—	$	10
Liabilities:
Pipeline capacity embedded derivative	Pipeline capacity embedded derivative	0		53		0		53		0		53		Pipeline capacity embedded derivative	—		46		—		46		—		46
Preferred Units embedded derivative	Preferred Units embedded derivative	0		0		139		139		0		139		Preferred Units embedded derivative	—		—		57		57		—		57

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

The fair values of the Company’s derivative instruments ~~and pipeline capacity embedded derivatives~~ are not actively quoted in the open market. The Company primarily uses a market approach to estimate the fair values of these derivatives on a recurring basis, utilizing futures pricing for the underlying positions provided by a reputable third party, a Level 2 fair value measurement.

The fair value of the Preferred Units embedded derivative is calculated using an income approach, a Level 3 fair value measurement. The fair value determination is based on a range of factors, including expected future interest rates using the Black-Karasinski model, Altus’ imputed interest rate, interest rate volatility, the expected timing of periodic cash distributions, the estimated timing for the potential exercise of the exchange option, and anticipated dividend yields of the Preferred Units. As of the March 31, 2021 valuation date, the Company used the forward B-rated Energy Bond Yield curve to develop the following key unobservable inputs used to value this embedded derivative:

~~Quantitative Information About Level 3 Fair Value Measurements~~

~~Fair Value at March 31, 2021~~

~~Valuation Technique~~

~~Significant Unobservable Inputs~~

~~Range/Value~~

~~(In millions)~~

~~Preferred Units embedded derivative~~

~~156~~

~~Option Model~~

Altus’ Imputed
Interest Rate

~~7.15-12.51%~~

Interest Rate
Volatility

~~38.75%~~

A one percent increase in the imputed interest rate assumption would significantly increase the value of the embedded derivative as of March 31, 2021, while a one percent decrease would lead to a similar decrease in value as of March 31, 2021. The assumed expected timing until exercise of the exchange option at March 31, 2021 was 5.20 years.

Derivative Activity Recorded in the Consolidated Balance Sheet

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


							March 31, 2022		December 31, 2021
		March 31, 2021		December 31, 2020
		(In millions)					(In millions)
Current Assets: Other current assets	Current Assets: Other current assets	$	34	$	6	Current Assets: Other current assets	$	4	$	—
Other Assets: Deferred charges and other	Other Assets: Deferred charges and other	4		5		Other Assets: Deferred charges and other	1		—
Total derivative assets	Total derivative assets	$	38	$	11	Total derivative assets	$	5	$	—

Current Liabilities: Other current liabilities	Current Liabilities: Other current liabilities	$	1	$	0	Current Liabilities: Other current liabilities	$	20	$	4
Deferred Credits and Other Noncurrent Liabilities: Other	Deferred Credits and Other Noncurrent Liabilities: Other	208		192		Deferred Credits and Other Noncurrent Liabilities: Other	21		109
Total derivative liabilities	Total derivative liabilities	$	209	$	192	Total derivative liabilities	$	41	$	113

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,
		For the Quarter Ended March 31,					2022		2021
		2021		2020
		(In millions)				(In millions)
Realized:	Realized:							Realized:
Commodity derivative instruments	Commodity derivative instruments	$	148	$	1			Commodity derivative instruments	$	(5)	$	148
Foreign currency derivative instruments		0		(1)
Realized gain, net		148		0

Realized gain (loss), net								Realized gain (loss), net	(5)		148
Unrealized:	Unrealized:							Unrealized:
Commodity derivative instruments	Commodity derivative instruments	26		17				Commodity derivative instruments	(24)		26
Pipeline capacity embedded derivatives	Pipeline capacity embedded derivatives	1		(53)				Pipeline capacity embedded derivatives	—		1
Foreign currency derivative instruments	Foreign currency derivative instruments	0		(5)				Foreign currency derivative instruments	(2)		—
Preferred units embedded derivative		(17)		(62)
Preferred Units embedded derivative								Preferred Units embedded derivative	(31)		(17)
Unrealized gain (loss), net	Unrealized gain (loss), net	10		(103)				Unrealized gain (loss), net	(57)		10
Derivative instrument gains (losses), net	Derivative instrument gains (losses), net	$	158	$	(103)			Derivative instrument gains (losses), net	$	(62)	$	158

Derivative instrument gains and losses are recorded in “Derivative instrument gains (losses), net” under “Revenues and Other” in the Company’s statement of consolidated operations. Unrealized gains (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 (gains), net” in “Adjustments to reconcile net ~~loss~~income (loss) to net cash provided by operating activities.”

~~As part of the Company’s ordinary course of business, the~~The Company seeks to maintain a balance between “first of month” and “gas daily pricing” for its U.S. natural gas portfolio and sales activities in a given ~~month.~~month as part of its ordinary course of business. This is typically implemented through a combination of physical and financial contracts that settle monthly. In January 2021, the Company entered into financial contracts that increased its exposure to “gas daily pricing” and reduced its exposure to “first of month” pricing for February 2021. The Company realized a gain of $147 million in connection with these contracts in the first quarter of 2021 as a result of extreme daily gas price volatility across Texas in February resulting from Winter Storm Uri.

5. OTHER CURRENT ASSETS

The following table provides detail of the Company’s other current assets:


							March 31, 2022		December 31, 2021
		March 31, 2021		December 31, 2020
		(In millions)					(In millions)
Inventories	Inventories	$	502	$	492	Inventories	$	529	$	473
Drilling advances	Drilling advances	111		113		Drilling advances	70		55

Prepaid assets and other	Prepaid assets and other	123		71		Prepaid assets and other	30		56
Current decommissioning security for sold Gulf of Mexico assets						Current decommissioning security for sold Gulf of Mexico assets	100		100
Total Other current assets	Total Other current assets	$	736	$	676	Total Other current assets	$	729	$	684

6. 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 based on practical expedience, variances in reporting timelines, and cost-benefit considerations for measuring its equity method interest in Kinetik. The fair value of the Company’s interest in Kinetik is determined using Level 1 inputs based on observable prices on a major exchange. The 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 February 22, 2022. In March 2022, the Company sold 4000000 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 other” in the Company’s statement of consolidated operations. Refer to Note 2 –Acquisitions and Divestitures for further detail.

As of March 31, ~~2021~~2022, the Company holds approximately 8.9 million shares of Kinetik Class A Common Stock, or approximately 13 percent of Kinetik’s outstanding ALTM Common Stock. At March 31, 2022, a fair value adjustment gain of $24 million was recorded based on the Company’s remaining Class A share ownership. The fair value adjustment was recorded as a component of “Other, net” under “Revenues and ~~December~~other” in the Company’s statement of consolidated operations.

The following table presents the activity in the Company’s equity method interest in Kinetik for the quarter ended March 31, ~~2020,~~2022:


		Kinetik Holdings Inc

	(In millions)
Balance at December 31, 2021		$	—
Initial interest upon closing the BCP Business Combination		802
Sale of Class A shares		(250)
Fair value adjustment as of March 31, 2022		24
Balance at March 31, 2022		$	576

As of March 31, 2022, the Company has recorded gathering, processing and transportation costs payable to Kinetik of approximately $10 million related to midstream services provided by Kinetik to the Company since the close of the transaction on February 22, 2022.

Prior to the deconsolidation of Altus on February 22, 2022, the Company, through its ownership of Altus, had the following equity method interests in 4 Permian Basin long-haul pipeline entities, which ~~are~~were accounted for under the equity method of ~~accounting.~~accounting at December 31, 2021. For each of the equity method interests, Altus ~~has~~had the ability to exercise significant influence based on certain governance provisions and its participation in activities and decisions that impact the management and economic performance of the equity method interests. The table below presents the ownership percentages held by the Company and associated carrying values for each entity:

Interest
March 31,
2021
December 31,
2020
(In millions)
Gulf Coast Express Pipeline, LLC 16.0% $ 281 $ 284
EPIC Crude Holdings, LP 15.0% 172 176
Permian Highway Pipeline, LLC 26.7% 639 615
Shin Oak Pipeline (Breviloba, LLC) 33.0% 475 480
Total Altus equity method interests $ 1,567 $ 1,555

As of March 31, 2021 and December 31, 2020, unamortized basis differences included in the equity method interest balances were $37 million and $38 million, respectively. These amounts represent differences in Altus’ contributions to date and Altus’ underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences will be amortized into net income over the useful lives of the underlying pipeline assets.


	Interest		December 31, 2021

		(In millions)
Gulf Coast Express Pipeline, LLC	16.0%		$	274
EPIC Crude Holdings, LP	15.0%		—
Permian Highway Pipeline, LLC	26.7%		630
Shin Oak Pipeline (Breviloba, LLC)	33.0%		461
Total Altus equity method interests			$	1,365

The following table presents the activity in Altus’ equity method interests for the three months ended March 31, ~~2021:~~

Gulf Coast Express
Pipeline LLC EPIC Crude
Holdings, LP Permian Highway
Pipeline LLC Breviloba, LLC Total
(In millions)
Balance at December 31, 2020 $ 284 $ 176 $ 615 $ 480 $ 1,555
Capital contributions 0 0 21 0 21
Distributions (12) 0 (8) (11) (31)
Equity income (loss), net(1)
9 (5) 11 6 21
Accumulated other comprehensive income 0 1 0 0 1
Balance at March 31, 2021 $ 281 $ 172 $ 639 $ 475 $ 1,567
2022:

~~(1)~~
~~As of March 31, 2021, the amount of consolidated earnings, net of amortization basis differences, which represents undistributed earnings, was $3 million from Permian Highway Pipeline LLC.~~


	Gulf Coast Express Pipeline LLC		EPIC Crude Holdings, LP		Permian Highway Pipeline LLC		Breviloba, LLC		Total

	(In millions)






Balance at December 31, 2021	$	274	$	—	$	630	$	461	$	1,365
Capital contributions	—		2		—		—		2
Distributions	(5)		—		(9)		(7)		(21)

Equity income (loss), net	8		(2)		10		5		21

Deconsolidation of Altus	(277)		—		(631)		(459)		(1,367)
Balance at March 31, 2022	$	—	$	—	$	—	$	—	$	—

Summarized Combined Financial Information

The following table presents summarized selected income statement data for Altus’ equity method interests (on a 100 percent basis):

For the Three Months Ended
March 31,
2021 2020
(In millions)
Operating revenues $ 254 $ 176
Operating income 112 86
Net income 89 77
Other comprehensive income (loss) 4 (8)


		For the Three Months Ended March 31,
		2021

	(In millions)
Operating revenues		$	254
Operating income		112
Net income		89
Other comprehensive income		4

7. OTHER CURRENT LIABILITIES

The following table provides detail of the Company’s other current liabilities:


							March 31, 2022		December 31, 2021
		March 31, 2021		December 31, 2020
		(In millions)					(In millions)
Accrued operating expenses	Accrued operating expenses	$	92	$	91	Accrued operating expenses	$	127	$	129
Accrued exploration and development	Accrued exploration and development	185		167		Accrued exploration and development	253		207

Accrued compensation and benefits	Accrued compensation and benefits	91		170		Accrued compensation and benefits	242		292
Accrued interest	Accrued interest	138		140		Accrued interest	69		107
Accrued income taxes	Accrued income taxes	41		25		Accrued income taxes	103		28
Current asset retirement obligation	Current asset retirement obligation	56		56		Current asset retirement obligation	40		41
Current operating lease liability	Current operating lease liability	106		116		Current operating lease liability	110		99

Current portion of derivatives at fair value						Current portion of derivatives at fair value	20		4
Current decommissioning contingency for sold Gulf of Mexico properties						Current decommissioning contingency for sold Gulf of Mexico properties	100		100
Other	Other	103		97		Other	190		164
Total Other current liabilities	Total Other current liabilities	$	812	$	862	Total Other current liabilities	$	1,254	$	1,171

8. ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability:


	March 31, ~~2021~~2022
	(In millions)
Asset retirement obligation, December 31, ~~2020~~2021	$	~~1,944~~2,130
~~Liabilities incurred~~	1
Liabilities settled	~~(3)~~(7)


Deconsolidation of Altus	(69)
Accretion expense	2829

Asset retirement obligation, March 31, ~~2021~~2022	~~1,970~~2,083
Less current portion	~~(56)~~(40)
Asset retirement obligation, long-term	$	~~1,914~~2,043

9. DEBT AND FINANCING COSTS

The following table presents the carrying values of the Company’s debt:


							March 31, 2022		December 31, 2021
		March 31, 2021		December 31, 2020
		(In millions)					(In millions)
Apache notes and debentures before unamortized discount and debt issuance costs(1)	Apache notes and debentures before unamortized discount and debt issuance costs(1)	$	8,045	$	8,052	Apache notes and debentures before unamortized discount and debt issuance costs(1)	$	5,032	$	6,344
Altus credit facility(2)	Altus credit facility(2)	657		624		Altus credit facility(2)	—		657
Apache credit facility(2)	Apache credit facility(2)	65		150		Apache credit facility(2)	880		542
Apache finance lease obligations	Apache finance lease obligations	37		38		Apache finance lease obligations	35		36
Unamortized discount	Unamortized discount	(34)		(35)		Unamortized discount	(28)		(30)
Debt issuance costs	Debt issuance costs	(55)		(57)		Debt issuance costs	(30)		(39)
Total debt	Total debt	8,715		8,772		Total debt	5,889		7,510
Current maturities	Current maturities	(2)		(2)		Current maturities	(125)		(215)
Long-term debt	Long-term debt	$	8,713	$	8,770	Long-term debt	$	5,764	$	7,295

(1)The fair values of the Apache notes and debentures were ~~$8.0~~$5.1 billion and ~~$8.5~~$7.1 billion as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

The Company 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.

As of March 31, ~~2021 and December 31, 2020,~~2022, current debt included $123 million carrying value of 2.63% senior notes due January 15, 2023 and $2 million of finance lease obligations. As of December 31, 2021, current debt included $213 million carrying value of 3.25% senior notes due April 15, 2022 and $2 million of finance lease obligations.

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.

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.

During the quarter ended March 31, 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% of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed by borrowing under Apache’s revolving credit facility.

During the quarter ended March 31, 2021, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $7 million for an aggregate purchase price of $6 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $1 million. NaN gain or loss was recognized on these repurchases.

In March 2018, Apache entered into a revolving credit facility with commitments totaling $4.0 ~~billion. In March 2019,~~billion that Apache terminated in April 2022 when the term of this facility was extended by one year to March 2024 (subject to Apache’s remaining one-year extension option) pursuant to Apache’s exercise of an extension option. Apache can increase commitments up to $5.0 billion by addingCompany entered into two new ~~lenders or obtaining the consent of any increasing existing lenders. The facility includes a letter of~~syndicated credit ~~subfacility of up to $3.0 billion, of which $2.08 billion was committed as of March 31, 2021. The facility is for general corporate purposes.~~facilities described in “Subsequent Event” below. As of March 31, ~~2021,~~2022, there were ~~$65~~$880 million of borrowings and an aggregate ~~£573~~£748 million and $20 million in letters of credit outstanding under ~~this~~Apache’s 2018 facility. As of December 31, ~~2020,~~2021, there were ~~$150~~$542 million of borrowings and an aggregate ~~£633~~£748 million and ~~$40~~$20 million in letters of credit outstanding under ~~this~~Apache’s 2018 facility. The outstanding letters of credit denominated in pounds were issued to support North Sea decommissioning obligations, the terms of which required such support after Standard & Poor’s reduced Apache’s credit rating from BBB to BB+ on March 26, 2020.

Apache’s $3.5 billion commercial paper program, which is subject to market availability, facilitates Apache borrowing funds for up to 270 days. As a result of downgrades in Apache’s credit ratings during 2020, the Company does not expect that Apache’s commercial paper program will be cost competitive with its other financing alternatives and does not anticipate Apache using it under such circumstances. As of March 31, 2021 and December 31, 2020, 0 commercial paper was outstanding.

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, ~~2021~~2022 and December 31, ~~2020,~~2021, there were 0no outstanding borrowings ~~and £34~~under these facilities. As of March 31, 2022, there were £117 million and $17 million in letters of credit outstanding under these facilities.

In November 2018, Altus Midstream LP entered into a revolving credit facility for general corporate purposes that matures in November 2023 (subject to Altus Midstream LP’s 2, one-year extension options). The agreement for this facility, as amended, provides aggregate commitments from a syndicate of banks of $800 million. All aggregate commitments include a letter of credit subfacility of up to $100 million and a swingline loan subfacility of up to $100 million. Altus Midstream LP may increase commitments up to an aggregate $1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders. As of ~~March~~December 31, 2021, there were ~~$657~~£117 million ~~of borrowings~~ and ~~a $2~~$17 million ~~letter of credit outstanding under this facility. As of December 31, 2020, there were $624 million of borrowings and 0~~in letters of credit outstanding under ~~this facility. The Altus Midstream LP credit facility is unsecured and is not guaranteed by Apache, APA Corporation, or any of its subsidiaries.~~these facilities.

Financing Costs, Net

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

For the Quarter Ended

On April 29, 2022, the Company entered into 2 syndicated credit agreements for general corporate purposes that replaced and refinanced Apache’s 2018 syndicated credit agreement (the Former Facility).

One new 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). The Company 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 the Company’s 2, one-year extension options.

The second new 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 the Company’s 2, one-year extension options.

In connection with the Company’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. 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.

Borrowers under each New Agreement may include the Company and certain subsidiaries organized under the laws of, resident of, or domiciled in, the United States, Canada, England and Wales, the United Kingdom, or the Cayman Islands. Apache may borrow under the USD Agreement up to an aggregate principal amount of US$300 million outstanding at any given time.

Letters of credit are available under each New Agreement for credit support needs of the Company and its subsidiaries, including in respect of North Sea decommissioning obligations. Letters of credit under each New Agreement may be denominated in US dollars, pounds sterling, Canadian dollars, and any other foreign currency consented to by an issuing bank.

As of April 29, 2022, an aggregate US$680 million in borrowings under the Former Facility were deemed borrowings by the Company outstanding under the USD Agreement. As of April 29, 2022, (i) a letter of credit for US$20 million originally issued under the Former Facility is deemed issued and outstanding under the USD Agreement and (ii) letters of credit aggregating £748 million originally issued under the Former Facility are deemed issued and outstanding under the GBP Agreement.

Borrowers under each New Agreement may borrow, prepay, and reborrow loans and obtain letters of credit, and the Company may obtain letters of credit for the account of its subsidiaries, in each case subject to representations and warranties, covenants, and events of default substantially similar to those in the Former Facility. The New Agreements do not permit lenders to accelerate maturity or refuse to lend based on unspecified material adverse changes and do not have borrowing restrictions or prepayment obligations in the event of a decline in credit ratings.

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Non-cash impairments on 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.

During the first quarter of 2022, the Company’s effective income tax rate was primarily impacted by the gain associated with deconsolidation of Altus, the gain on sale of certain non-core mineral rights in the Delaware Basin, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets.During the first quarter of 2021, the Company’s effective income tax rate was primarily impacted by a decrease in the amount of valuation allowance against its U.S. deferred tax assets. During the first quarter of 2020, the Company’s effective income tax rate was primarily impacted by oil and gas impairments, a goodwill impairment, and an increase in the amount of valuation allowance against its U.S. deferred tax assets.

The Company is subject to U.S. federal income tax as well as income or capital taxes in various state and foreign jurisdictions. The Company’s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority. The Company is currently under audit by the Internal Revenue Service for the 2014-2017 tax years and is also under audit in various states and foreign jurisdictions as part of its normal course of business.

11. COMMITMENTS AND CONTINGENCIES

The 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 March 31, ~~2021,~~2022, the Company has an accrued liability of approximately ~~$62~~$73 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. The 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 the Company’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that the 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 Legal Matters described below, refer to Note 11—Commitments and Contingencies to the consolidated financial statements contained in ~~Apache Corporation’s~~the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Argentine Environmental Claims

On March 12, 2014, the Company and ~~Argentina Tariff~~

~~No material change in~~its subsidiaries completed the ~~status~~sale of all of the Company’s subsidiaries’ operations and properties in Argentina to YPF Sociedad ~~Anónima~~Anonima (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 matter has occurred since~~(Pioneer) in an amount up to $45 million pursuant to the ~~filing~~terms and conditions of ~~Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.~~stock purchase agreements entered in 2006 between Company subsidiaries and subsidiaries of Pioneer.

Louisiana Restoration

As more fully described in ~~Apache Corporation’s~~the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, Louisiana surface owners often file lawsuits or assert claims against oil and gas companies, including the Company, claiming that operators and working interest owners in the chain of title are liable for environmental damages on the leased premises, including damages measured by the cost of restoration of the leased premises to its original condition, regardless of the value of the underlying property. From time to time, restoration lawsuits and claims are resolved by the Company for amounts that are not material to the Company, while new lawsuits and claims are asserted against the Company. With respect to each of the pending lawsuits and claims, the amount claimed is not currently determinable or is not material. Further, the overall exposure related to these lawsuits and claims is not currently determinable. While adverse judgments against the Company are possible, the Company intends to actively defend these lawsuits and claims.

Starting in November of 2013 and continuing into ~~2020,~~2022, several parishes in Louisiana have pending lawsuits against many oil and gas producers, including the Company. These cases were all removed to federal courts in Louisiana. ~~Some of the cases have been remanded to state court with the remand orders being appealed.~~ 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 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 adverse judgments against the Company might be possible, the Company intends to vigorously oppose these claims.

Apollo Exploration Lawsuit

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 alleged damages in excess of $200 million (having previously claimed in excess of $1.1 billion) relating to purchase and sale agreements, mineral leases, and ~~areas~~area of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. The ~~Court~~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 ~~plaintiffs’~~court of appeals affirmed in part and reversed in part the trial court’s judgment thereby reinstating some of plaintiff’s claims. Further appeal is pending.

Australian Operations Divestiture Dispute

Pursuant to a Sale and Purchase Agreement dated April 9, 2015 (Quadrant SPA), the Company and its subsidiaries divested their remaining 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, 4 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 ~~purported~~ class seeks approximately $60 million USD and punitive damages. The Company believes that Plaintiffs’ claims lack merit and will not have a material adverse effect on the Company’s financial position, results of operation, or liquidity.

California and Delaware Litigation

On July 17, 2017, in 3 separate actions, San Mateo County, California, Marin County, California, and the City of Imperial Beach, California, all filed suit individually and on behalf of the people of the state of California against over 30 oil and gas companies alleging damages as a result of global warming. Plaintiffs seek unspecified damages and abatement under various tort theories. On December 20, 2017, in 2 separate actions, the City of Santa Cruz and Santa Cruz County and in a separate action on January 22, 2018, the City of Richmond, filed similar lawsuits against many of the same defendants. On November 14, 2018, the Pacific Coast Federation of Fishermen’s Associations, Inc. also filed a similar lawsuit against many of the same defendants. After removal of all such lawsuits to federal court, the district court remanded them back to state court. The 9th Circuit Court of Appeals’ affirmance of this remand decision was appealed to the U.S. Supreme Court. That appeal was decided by the U.S. Supreme Court ruling in a similar case, BP p.l.c. v. Mayor and City Council of Baltimore. As a result, the California cases were sent back to the 9th Circuit for further appellate review of the decision to remand the cases to state court. The 9th Circuit has since, once again, affirmed the district court’s remand to state court.The defendants are appealing this latest remand decision to the U.S. Supreme Court. Further activity in the cases has been stayed pending further appellate review.

On September 10, 2020, the State of Delaware filed suit, individually and on behalf of 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. After removal of this lawsuit to federal court, the district court remanded it back to state court.The remand order is being appealed to the 3rd Circuit Court of Appeals. Further activity in the case has been stayed pending this appellate review.

The Company believes that it is not subject to jurisdiction 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 lawsuit.

In a case styled Apache Corporation v. Castex Offshore, ~~Inc,~~Inc., et. al., Cause No. 2015-48580, in the 113th Judicial District Court of Harris County, Texas, Castex filed claims for alleged damages of approximately $200 million, relating to overspend on the Belle Isle Gas Facility upgrade, and the drilling of ~~five~~5 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 ~~Company’s~~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. Further appeal is pending.

Oklahoma Class Actions

The Company is a party to 2 purported class actions in Oklahoma styled Bigie Lee Rhea v. Apache Corporation, Case No. 6:14-cv-00433-JH, and Albert Steven Allen v. Apache Corporation, Case No. CJ-2019-00219. ~~The~~

In the Rhea case, ~~has been~~which was certified, ~~and includes~~ a class of royalty owners ~~seeking~~sought damages ~~in excess~~ of ~~$250~~approximately $200 million for alleged breach of the implied covenant to market relating to post-production deductions and alleged NGL uplift value. With no admission of liability or wrongdoing, but only to avoid the expense and uncertainty of future litigation, Apache has entered into a settlement agreement in the Rhea case to resolve all claims made against it by the class. The settlement agreement is subject to court approval and a full fairness hearing will be held in the coming months. The settlement will not have a material effect on the Company’s financial position, results of operations, or liquidity.

The Allen case has not been certified and seeks to represent a group of owners who have allegedly received late royalty and other payments under Oklahoma statutes. The amount of this claim is not yet reasonably determinable. While adverse judgments against the Company are possible, the Company intends to vigorously defend these lawsuits and claims.

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 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, (1) alleges that the Company intentionally used unrealistic assumptions regarding the amount and composition of available oil and gas in Alpine High; (2) alleges that 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) alleges that these statements and omissions artificially inflated the value of the Company’s operations in the Permian Basin; and (4) alleges that, as a result, the Company’s public statements were materially false and misleading. ~~On March 4, 2021, another lawsuit, captioned~~ ~~Brian Schwegel v. Apache Corporation, et al., was filed in the United States District Court for the Southern District of Texas (Houston Division) alleging identical allegations.~~ The Company believes that ~~all~~ plaintiffs’ claims lack merit and intends to vigorously defend ~~these lawsuits.~~this lawsuit.

On March 16, 2021, a case captioned William Wessels, Derivatively and on behalf of APA Corporation v. John J. Christmann IV et al. was filed in the 334th District Court of Harris County, Texas. The case purports to be a derivative action 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 the plaintiff’s claims lack merit and intend to vigorously defend this lawsuit.

Environmental Matters

As of March 31, ~~2021,~~2022, the Company had an undiscounted reserve for environmental remediation of approximately $2 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 ~~responding~~has responded to the information request. The EPA has ~~not commenced~~referred the notice for civil enforcement ~~proceedings, and~~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 ~~responding~~has responded to the information request. The EPA has ~~not commenced~~referred the notice for civil enforcement ~~proceedings, and~~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 March 31, ~~2021~~2022 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.

Potential ~~Asset Retirement~~Decommissioning Obligations on Sold Properties

In 2013, ~~the Company~~Apache sold its Gulf of Mexico (GOM) Shelf operations and properties ~~(Legacy~~and its GOM ~~Assets)~~operating subsidiary, GOM Shelf LLC (GOM Shelf) to Fieldwood Energy LLC (Fieldwood). Under the terms of the purchase agreement, ~~the Company~~Apache received cash consideration of $3.75 billion and Fieldwood assumed ~~$1.5 billion of discounted asset abandonment liabilities as of~~ the ~~disposition date.~~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 ~~liabilities,~~obligations, Fieldwood posted letters of credit in favor of ~~the Company~~Apache (Letters of Credit) and established trust accounts (Trust A and Trust B) of which Apache was a ~~trust account (Trust A),~~beneficiary and which iswere funded by ~~a 10 percent~~2 net profits ~~interest~~interests (NPIs) depending on future oil ~~prices and of which the Company is the beneficiary.~~prices. On February 14, 2018, Fieldwood filed for protection under Chapter 11 of the U.S. Bankruptcy Code. In connection with the 2018 bankruptcy, Fieldwood confirmed a plan under which ~~the Company~~Apache agreed, inter alia, to (i) accept bonds in exchange for certain of the Letters of ~~Credit.~~Credit and (ii) amend the Trust A trust agreement and one of the NPIs to consolidate the trusts into a single Trust (Trust A) funded by both remaining NPIs. Currently, ~~the Company~~Apache holds ~~two~~2 bonds (Bonds) and ~~the remaining~~5 Letters of Credit to secure Fieldwood’s asset retirement obligations ~~(AROs)~~ on the Legacy GOM Assets as and when ~~such abandonment and decommissioning obligations are~~Apache is required to ~~be performed~~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. ~~Fieldwood has submitted a~~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 ~~of reorganization, and~~became effective. Pursuant to the ~~Company has been engaged in discussions with Fieldwood and other interested parties regarding such plan. If approved by the bankruptcy court, the submitted~~ plan, ~~would separate~~ the Legacy GOM Assets were separated into a standalone company, ~~and~~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 ~~for~~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, respectively, GOM Shelf notified the ~~AROs. If~~Bureau of Safety and Environmental Enforcement (BSEE) that it was unable to fund the ~~proceeds~~decommissioning obligations that it is currently obligated to perform on certain of ~~production are insufficient for~~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 notification to BSEE. Apache expects to receive such ~~AROs, then~~orders on the ~~Company expects~~other Legacy GOM Assets included in GOM Shelf’s notification letter. Further, Apache anticipates that GOM Shelf may send additional such notices to BSEE in the future and that it may ~~be required by the relevant governmental authorities~~receive additional orders from BSEE requiring it to ~~perform~~decommission other Legacy GOM Assets.

If Apache incurs costs to decommission any Legacy GOM Asset and GOM Shelf does not reimburse Apache for such ~~AROs, in which case it~~costs, then Apache will ~~apply~~obtain reimbursement from Trust A, the Bonds, ~~remaining~~and the Letters of Credit until such funds and ~~Trust A to pay for the AROs.~~securities are fully utilized. In addition, after such sources have been exhausted, ~~the Company~~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 Legacy GOM Assets.

If the ~~foregoing~~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 ordered by BSEE to perform, 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 ~~Company~~Standby Loan Agreement, then Apache may be forced to effectively use its available cash to ~~cover~~fund the deficit.

As of March 31, 2022, Apache estimates that its potential liability to fund decommissioning of Legacy GOM Assets it may be ordered to perform ranges from $1.2 billion to $1.4 billion on an undiscounted basis. Management does not believe any ~~additional~~specific estimate within this range is a better estimate than any other. Accordingly, the Company has recorded a contingent liability of $1.2 billion as of March 31, 2022, representing the estimated costs of decommissioning it ~~incurs~~may be required to perform on Legacy GOM Assets. Of the total liability recorded, $1.1 billion is reflected under the caption “Decommissioning contingency for ~~performing such AROs.~~sold Gulf of Mexico properties,” and $100 million is reflected under “Other current liabilities” in the Company’s consolidated balance sheet. The Company has also recorded a $740 million asset, which represents the amount the Company expects to be reimbursed from the Trust A funds, the Bonds, and the Letters of Credit for decommissioning it may be required to perform on Legacy GOM Assets. Of the total asset recorded, $640 million is reflected under the caption “Decommissioning security for sold Gulf of Mexico properties,” and $100 million is reflected under “Other current assets.” 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. In addition, significant changes in the market price of oil, gas, and NGLs could further impact Apache’s estimate of its contingent liability to decommission Legacy GOM Assets.

12. REDEEMABLE NONCONTROLLING INTEREST -— ALTUS

Preferred Units Issuance

On June 12, 2019, Altus Midstream LP issued and sold Preferred Units for an aggregate issue price of $625 million in a private offering exempt from the registration requirements of the Securities Act (the Closing). Altus Midstream LP received approximately $611 million in cash proceeds from the sale after deducting transaction costs and discounts to certain purchasers.

~~The~~Prior to the deconsolidation of Altus on February 22, 2022, at December 31, 2021, the carrying amount of the Preferred Units ~~are~~was recorded as “Redeemable Noncontrolling Interest -— Altus Preferred Unit Limited Partners” classified as temporary equity on the Company’s consolidated balance sheet based on the terms of the Preferred Units, including the redemption rights with respect thereto.

Altus ~~applies~~applied a two-step approach to subsequent measurement of the redeemable noncontrolling interest related to the Preferred Units by first allocating a portion of the net income of Altus Midstream LP in accordance with the terms of the partnership agreement. An additional adjustment to the carrying value of the Preferred Unit redeemable noncontrolling interest at each period end ~~may be~~was recorded, if applicable. The amount of such adjustment iswas determined based upon the accreted value method to reflect the passage of time until the Preferred Units ~~are~~were exchangeable at the option of the holder. Pursuant to this method, the net transaction price iswas accreted using the effective interest method to the Redemption Price calculated at the seventh anniversary of the Closing. The total adjustment iswas limited to an amount such that the carrying amount of the Preferred Unit redeemable noncontrolling interest at each period end iswas equal to the greater of (a) the sum of (i) the carrying amount of the Preferred Units, plus (ii) the fair value of the embedded derivative liability and (b) the accreted value of the net transaction price.

Activity related to the Preferred Units is as follows:

Accreted value adjustment(1)

(1) Includes the reversal of previously recorded accreted value adjustments of $53 million due to the deconsolidation of Altus.

~~(1)~~The Preferred Units are redeemable at Altus Midstream LP’s option at a redemption price (the Redemption Price), which as of March 31, 2021 is calculated as the greater of (i) an 11.5 percent internal rate of return and (ii) a 1.3 times multiple of invested capital. As of March 31, 2021, the Redemption Price would have been based on a 1.3 times multiple of invested capital, which was $813 million. This was greater than using an 11.5 percent internal rate of return, which would equate to a redemption value of $713 million.

N/A - not applicable.

Upon consummation of the Holding Company Reorganization, each outstanding share of Apache common stock automatically converted into a share of APA common stock on a 1-for-one basis. As a result, each stockholder of Apache now owns the same number of shares of APA common stock that such stockholder owned of Apache common stock immediately prior to the Holding Company Reorganization.

Additionally, in connection with the Holding Company Reorganization, Apache transferred to APA, and APA assumed, sponsorship of all of ~~Apache's~~Apache’s stock plans along with all of ~~Apache's~~Apache’s rights and obligations under each plan.

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

The following table presents a reconciliation of the components of basic and diluted net income ~~(loss)~~ per common share in the consolidated financial statements:

For the Quarter Ended March 31,
2021 2020
Income Shares Per Share Loss Shares Per Share
(In millions, except per share amounts)
Basic:
Income (loss) attributable to common stock $ 388 378 $ 1.02 $ (4,480) 378 $ (11.86)
Effect of Dilutive Securities:
Stock options and other $ 0 1 $ 0 $ 0 0 $ 0
Diluted:
Income (loss) attributable to common stock $ 388 379 $ 1.02 $ (4,480) 378 $ (11.86)


	For the Quarter Ended March 31,
	2022					2021
	Income		Shares	Per Share		Income		Shares	Per Share

	(In millions, except per share amounts)
Basic:
Income attributable to common stock	$	1,883	346	$	5.44	$	388	378	$	1.02
Effect of Dilutive Securities:
Stock options and other	$	—	1	$	(0.01)	$	—	1	$	—

Diluted:
Income attributable to common stock	$	1,883	347	$	5.43	$	388	379	$	1.02

Prior to the deconsolidation of Altus on February 22, 2022, the Company ~~uses~~used the “if-converted method” to determine the potential dilutive effect of an assumed exchange of the outstanding Preferred Units of Altus Midstream LP for shares of Altus Midstream Company’s common stock. The impact to net income ~~and loss~~ attributable to common stock on an assumed conversion of the Preferred Units was anti-dilutive for the quarter ended March 31, ~~2021 and 2020.~~2021. The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive ~~totaling~~of 2.9 million and 4.0 million during the first quarters of 2022 and ~~5.5 million for the quarter ended March 31,~~ 2021, ~~and 2020,~~ respectively.

Stock Repurchase Program

~~In 2013 and 2014, the Company’s~~During 2018, Apache’s Board of Directors authorized the purchase of up to 40 million shares of the Company’s common ~~stock, and during~~stock. No shares were purchased under this authorization through December 31, 2020. During the fourth quarter of ~~2018,~~2021, the Company’s Board of Directors authorized the purchase of ~~up to~~an additional 40 million ~~additional~~ shares of the Company’s common stock. Shares may be purchased either in the open market or through privately held negotiated transactions. ~~The~~

In the first quarter of 2022, the Company ~~initiated the buyback program on June 10, 2013, and, through March 31, 2021, had~~ repurchased ~~a total of 40~~7.2 million shares at an average price of ~~$79.18~~$36.08 per ~~share.~~share, and as of March 31, 2022, the Company had remaining authorization to repurchase up to 41.6 million shares. The Company is not obligated to acquire any ~~specific number of shares and~~additional shares. The Company did ~~0t purchase~~not repurchase any shares during the ~~three months ended March 31,~~first quarter of 2021.

Common Stock Dividends

~~For~~During the ~~quarter~~quarters ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company paid $9$43 million and ~~$94~~$9 million, respectively, in dividends on its common stock. In

During the ~~first~~third quarter of ~~2020,~~2021, the Company’s Board of Directors approved ~~a reduction~~an increase in its quarterly dividend from $0.025 per share to $0.0625 per share and, in the ~~Company’s quarterly dividend~~fourth quarter of 2021, approved a further increase to $0.125 per ~~share from $0.25 to $0.025, effective for all dividends payable after March 12, 2020.~~share.

14. BUSINESS SEGMENT INFORMATION

As of March 31, ~~2021,~~2022, the Company is engaged in exploration and production (Upstream) activities across 3 operating segments: Egypt, North Sea, and the U.S. The Company’s Upstream business explores for, develops, and produces crude oil, natural gas, and natural gas liquids. ~~APA’s~~Prior to the deconsolidation of Altus on February 22, 2022, the Company’s Midstream business iswas operated by Altus Midstream Company, which ~~owns, develops,~~owned, developed, and ~~operates~~operated a midstream energy asset network in the Permian Basin of West Texas. ~~APA~~The Company also has active exploration and planned appraisal operations ongoing in Suriname, as well as interests in other international locations that may, over time, result in reportable discoveries and development opportunities. Financial information for each segment is presented below:

Operating Income (Loss)(2)


		For the Quarter Ended March 31,				For the Quarter Ended March 31,
		2021	Increase (Decrease)		2020			2022	Increase (Decrease)	2021
Oil Volume – b/d
Oil Volume (b/d)							Oil Volume (b/d)
United States	United States	67,690	(33)	%	101,614		United States	69,636	3%	67,690
Egypt(1)(2)	Egypt(1)(2)	72,170	(1)	%	73,178		Egypt(1)(2)	85,018	18%	72,170
North Sea	North Sea	43,524	(21)	%	55,262		North Sea	35,242	(19)%	43,524
Total	Total	183,384	(20)	%	230,054		Total	189,896	4%	183,384

Natural Gas Volume – Mcf/d
Natural Gas Volume (Mcf/d)							Natural Gas Volume (Mcf/d)
United States	United States	507,517	(15)	%	597,842		United States	477,637	(6)%	507,517
Egypt(1)(2)	Egypt(1)(2)	278,149	9	%	254,579		Egypt(1)(2)	386,577	39%	278,149
North Sea	North Sea	49,840	(26)	%	67,278		North Sea	38,466	(23)%	49,840
Total	Total	835,506	(9)	%	919,699		Total	902,680	8%	835,506

NGL Volume – b/d
NGL Volume (b/d)							NGL Volume (b/d)
United States	United States	57,815	(29)	%	81,381		United States	61,711	7%	57,815
Egypt(1)(2)	Egypt(1)(2)	583	(36)	%	918		Egypt(1)(2)	491	(16)%	583
North Sea	North Sea	1,368	(36)	%	2,135		North Sea	1,498	10%	1,368
Total	Total	59,766	(29)	%	84,434		Total	63,700	7%	59,766

BOE per day(3)	BOE per day(3)						BOE per day(3)
United States	United States	210,091	(26)	%	282,636		United States	210,953	—%	210,091
Egypt(1)(2)	Egypt(1)(2)	119,111	2	%	116,525		Egypt(1)(2)	149,938	26%	119,111
North Sea(4)	North Sea(4)	53,199	(22)	%	68,610		North Sea(4)	43,151	(19)%	53,199
Total	Total	382,401	(18)	%	467,771		Total	404,042	6%	382,401


		For the Quarter Ended March 31,		For the Quarter Ended March 31,
		2021	2020			2022	2021
Oil (b/d)	Oil (b/d)	135,320	183,627		Oil (b/d)	134,397	135,320
Natural Gas (Mcf/d)	Natural Gas (Mcf/d)	603,269	655,410		Natural Gas (Mcf/d)	597,812	603,269
NGL (b/d)	NGL (b/d)	897	1,782		NGL (b/d)	735	897


		For the Quarter Ended March 31,		For the Quarter Ended March 31,
		2021	2020			2022	2021
Oil (b/d)	Oil (b/d)	24,088	24,598		Oil (b/d)	28,328	24,088
Natural Gas (Mcf/d)	Natural Gas (Mcf/d)	92,936	85,672		Natural Gas (Mcf/d)	128,764	92,936
NGL (b/d)	NGL (b/d)	194	306		NGL (b/d)	164	194


		For the Quarter Ended March 31,						For the Quarter Ended March 31,
		2021		Increase (Decrease)		2020				2022		Increase (Decrease)	2021
Average Oil Price - Per barrel	Average Oil Price - Per barrel								Average Oil Price - Per barrel
United States	United States	$	57.16	23	%	$	46.32		United States	$	95.58	67%	$	57.16
Egypt	Egypt	61.89		24	%	49.97			Egypt	103.22		67%	61.89
North Sea	North Sea	59.67		20	%	49.66			North Sea	102.20		71%	59.67
Total	Total	59.62		23	%	48.31			Total	100.23		68%	59.62

Average Natural Gas Price - Per Mcf	Average Natural Gas Price - Per Mcf								Average Natural Gas Price - Per Mcf
United States	United States	$	4.61	559	%	$	0.70		United States	$	4.25	(8)%	$	4.61
Egypt	Egypt	2.79		(1)	%	2.83			Egypt	2.83		1%	2.79
North Sea	North Sea	6.93		119	%	3.17			North Sea	32.35		367%	6.93
Total	Total	4.14		182	%	1.47			Total	4.70		14%	4.14

Average NGL Price - Per barrel	Average NGL Price - Per barrel								Average NGL Price - Per barrel
United States	United States	$	22.99	140	%	$	9.59		United States	$	36.67	60%	$	22.99
Egypt	Egypt	44.74		41	%	31.70			Egypt	77.81		74%	44.74
North Sea	North Sea	48.59		33	%	36.53			North Sea	74.64		54%	48.59
Total	Total	23.79		126	%	10.51			Total	38.33		61%	23.79


Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1)
January 1 to January 31, 2022	600,000	$	26.96	600,000	48,195,790
February 1 to February 28, 2022	1,000,000	31.71		1,000,000	47,195,790
March 1 to March 31, 2022	5,629,450	37.83		5,629,450	41,566,340
Total	7,229,450	$	36.08


Item	Item		Page	Item		Page

		PART I - FINANCIAL INFORMATION			PART I - FINANCIAL INFORMATION
1.	1.	FINANCIAL STATEMENTS	1	1.	FINANCIAL STATEMENTS	1
		STATEMENT OF CONSOLIDATED OPERATIONS	1		STATEMENT OF CONSOLIDATED OPERATIONS	1
		STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)	2		STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)	2
		STATEMENT OF CONSOLIDATED CASH FLOWS	3		STATEMENT OF CONSOLIDATED CASH FLOWS	3
		CONSOLIDATED BALANCE SHEET	4		CONSOLIDATED BALANCE SHEET	4
		STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTEREST	5		STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTERESTS	5
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	6		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	6
2.	2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	26	2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
3.	3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37	3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	43
4.	4.	CONTROLS AND PROCEDURES	38	4.	CONTROLS AND PROCEDURES	44

		PART II - OTHER INFORMATION			PART II - OTHER INFORMATION
1.	1.	LEGAL PROCEEDINGS	40	1.	LEGAL PROCEEDINGS	45
1A.	1A.	RISK FACTORS	40	1A.	RISK FACTORS	45
2.	2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40	2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	45

6.	6.	EXHIBITS	41	6.	EXHIBITS	46


		Fixed-Price Swaps
Production Period	Settlement Index	Mbbls	Weighted Average Fixed Price(1)(2)
April—June 2021	NYMEX WTI	5,642	$61.20
July—September 2021	NYMEX WTI	1,472	$60.18
October—December 2021	NYMEX WTI	1,012	$58.59
April—June 2021	Dated Brent	2,366	$64.20
July—September 2021	Dated Brent	414	$63.14
October—December 2021	Dated Brent	828	$61.44


		Units Outstanding	Financial Position(1)			Units Outstanding	Financial Position
		(In millions, except unit data)
Redeemable noncontrolling interest — Preferred Unit at: December 31, 2019		638,163	$	555
Distribution of in-kind additional Preferred Units		22,531	0
						(In millions, except unit data)
Redeemable noncontrolling interest — Preferred Units at: December 31, 2020					Redeemable noncontrolling interest — Preferred Units at: December 31, 2020	660,694	$	608
Cash distributions to Altus Preferred Unit limited partners	Cash distributions to Altus Preferred Unit limited partners	—	(23)		Cash distributions to Altus Preferred Unit limited partners	—	(46)
Distributions payable to Altus Preferred Unit limited partners					Distributions payable to Altus Preferred Unit limited partners	—	(12)
Allocation of Altus Midstream LP net income	Allocation of Altus Midstream LP net income	N/A	76		Allocation of Altus Midstream LP net income	N/A	80
Redeemable noncontrolling interest — Preferred Unit at: December 31, 2020		660,694	608
Accreted value adjustment					Accreted value adjustment	N/A	82
Redeemable noncontrolling interest — Preferred Units at: December 31, 2021					Redeemable noncontrolling interest — Preferred Units at: December 31, 2021	660,694	712

Cash distributions to Altus Preferred Unit limited partners		—	(11)
Dividends payable to Altus Preferred Unit limited partners		—	(11)
Allocation of Altus Midstream LP net income	Allocation of Altus Midstream LP net income	N/A	19		Allocation of Altus Midstream LP net income	N/A	12
Redeemable noncontrolling interest — Preferred Unit at: March 31, 2021		660,694	605
Accreted value adjustment(1)					Accreted value adjustment(1)	N/A	(82)
Redeemable noncontrolling interest — Preferred Units at: February 22, 2022					Redeemable noncontrolling interest — Preferred Units at: February 22, 2022	660,694	642
Preferred Units embedded derivative	Preferred Units embedded derivative		156		Preferred Units embedded derivative		89
Deconsolidation of Altus					Deconsolidation of Altus		(731)
			$	761			$	—


		Egypt		North Sea		U.S.		Altus Midstream				Intersegment Eliminations & Other				Total(1)					Egypt(1)			North Sea			U.S.			Altus Midstream		Intersegment Eliminations & Other		Total(4)
		Upstream																Upstream
For the Quarter Ended March 31, 2021		(In millions)
For the Quarter Ended March 31, 2022																		For the Quarter Ended March 31, 2022			(In millions)
Revenues:	Revenues:																	Revenues:
Oil revenues	Oil revenues	$	402	$	241	$	348			$	0			$	0				$	991	Oil revenues		$	790		$	328		$		599	$	—	$	—	$	1,717
Natural gas revenues	Natural gas revenues	70		31		211		0				0				312		Natural gas revenues			98			99			183			—		—		380
Natural gas liquids revenues	Natural gas liquids revenues	2		6		120		0				0				128		Natural gas liquids revenues			3			16			207			—		(3)		223
Oil, natural gas, and natural gas liquids production revenues	Oil, natural gas, and natural gas liquids production revenues	474		278		679		0				—				1,431		Oil, natural gas, and natural gas liquids production revenues			891			443			989			—		(3)		2,320
Purchased oil and gas sales	Purchased oil and gas sales	0		0		437		3				0				440		Purchased oil and gas sales			—			—			344			5		—		349
Midstream service affiliate revenues		—		—		—		32				(32)				0
Midstream service revenues																		Midstream service revenues			—			—			—			16		(16)		—
		474		278		1,116		35				(32)				1,871					891			443			1,333			21		(19)		2,669
Operating Expenses:	Operating Expenses:																	Operating Expenses:
Lease operating expenses	Lease operating expenses	104		75		86		0				(1)				264		Lease operating expenses			131			96			118			—		(1)		344
Gathering, processing, and transmission	Gathering, processing, and transmission	1		12		69		7				(31)				58		Gathering, processing, and transmission			5			12			77			5		(18)		81
Purchased oil and gas costs	Purchased oil and gas costs	0		0		492		2				0				494		Purchased oil and gas costs			—			—			351			—		—		351
Taxes other than income	Taxes other than income	0		0		40		4				0				44		Taxes other than income			—			—			67			3		—		70
Exploration	Exploration	8		20		16		0				5				49		Exploration			15			5			4			—		18		42
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	130		84		125		3				0				342		Depreciation, depletion, and amortization			97			62			130			2		—		291
Asset retirement obligation accretion	Asset retirement obligation accretion	0		19		8		1				0				28		Asset retirement obligation accretion			—			20			8			1		—		29
Impairments		0		0		0		0				0				0

		243		210		836		17				(27)				1,279					248			195			755			11		(1)		1,208
Operating Income (Loss)(2)	Operating Income (Loss)(2)	$	231	$	68	$	280	$	18			$	(5)			592		Operating Income (Loss)(2)			$	643		$	248		$	578		$	10	$	(18)	1,461

Other Income (Expense):	Other Income (Expense):																	Other Income (Expense):
Derivative instrument gains, net																158
Derivative instrument loss, net																		Derivative instrument loss, net																(62)

Gain on divestitures, net	Gain on divestitures, net															2		Gain on divestitures, net																1,176
Other																61
Other, net																		Other, net																45
General and administrative	General and administrative															(83)		General and administrative																(156)

Transaction, reorganization, and separation																		Transaction, reorganization, and separation																(14)
Financing costs, net	Financing costs, net															(110)		Financing costs, net																(152)
Income Before Income Taxes	Income Before Income Taxes															$	620	Income Before Income Taxes																$	2,298

Total Assets(3)	Total Assets(3)	$	3,020	$	2,167	$	5,633	$	1,828			$	479			$	13,127	Total Assets(3)			$	2,966		$	2,169		$	6,878		$	—	$	463	$	12,476


		APA CORPORATION

Dated:	May ~~6, 2021~~5, 2022	/s/ STEPHEN J. RINEY
		Stephen J. Riney
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Dated:	May ~~6, 2021~~5, 2022	/s/ REBECCA A. HOYT
		Rebecca A. Hoyt
		Senior Vice President, Chief Accounting Officer, and Controller
		(Principal Accounting Officer)