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~~June 30, 2023


☐			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~~July 31, 2023			~~377,972,835~~307,265,404

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 and capital returns framework, 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,~~2022, 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,” “goal,” “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,~~changes in local, regional, national, and ~~reoccurrence~~international economic conditions, including as a result of any epidemics or pandemics, ~~(including, specifically,~~such as the coronavirus disease ~~2019~~ (COVID-19) ~~pandemic)~~pandemic 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 availability and effectiveness of vaccine programs and therapeutics~~any related ~~to the treatment of COVID-19;~~variants;

•the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or ~~services;~~services, including the prices received for natural gas purchased from third parties to sell and deliver to a U.S. LNG export facility;

•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 and from actions taken by foreign oil and gas producing nations, including the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members that participate in OPEC initiatives (OPEC+);

•the availability of capital resources;

•capital expenditures and other contractual obligations;

•currency exchange rates;

•weather conditions;

•the impact of changes in tax legislation;

•the availability of goods and services;

•the impact of political pressure and the influence of environmental groups and other stakeholders on decisions and policies related to the industries in which the Company and its affiliates operate;

•legislative, regulatory, or policy changes, 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~~benefits derived from 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~~contained in ~~Part I,~~ ~~Item 1—Financial Statements~~ ~~of this Quarterly~~the Company’s Annual Report on Form ~~10-Q) and~~10-K for the ~~associated disclosure implications;~~fiscal year ended December 31, 2022);

•other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, Item 7—Management’s Discussion 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;~~2022;

•other risks and uncertainties disclosed in the Company’s ~~first-quarter 2021~~second-quarter 2023 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

For the Six Months Ended

For the Quarter Ended

Oil, natural gas, and natural gas liquids production revenues(1)

Purchased oil and gas sales(1)

Gathering, processing, and transmission(1)

Purchased oil and gas costs(1)

(1) For transactions associated with Kinetik, refer to Note 6—Equity Method Interests for further detail.

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022

	(In millions)
NET INCOME INCLUDING NONCONTROLLING INTERESTS	$	462	$	1,067	$	788	$	3,013
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Pension and postretirement benefit plan	—		—		3		(1)
COMPREHENSIVE INCOME INCLUDING NONCONTROLLING INTERESTS	462		1,067		791		3,012
Comprehensive income attributable to noncontrolling interest – Egypt	81		141		165		260
Comprehensive income attributable to noncontrolling interest – Altus	—		—		—		14
Comprehensive loss attributable to Altus Preferred Unit limited partners	—		—		—		(70)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCK	$	381	$	926	$	626	$	2,808

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 Six Months Ended June 30,
		For the Three Months Ended March 31,					2023		2022
		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:
Unrealized derivative instrument losses (gains), net		(10)		103
Net income including noncontrolling interests						Net income including noncontrolling interests	$	788	$	3,013
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 (gains) losses, net						Unrealized derivative instrument (gains) losses, net	(80)		83
Gain on divestitures, net	Gain on divestitures, net	(2)		(25)		Gain on divestitures, net	(6)		(1,149)
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	64		47
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	342		566		Depreciation, depletion, and amortization	699		569
Asset retirement obligation accretion	Asset retirement obligation accretion	28		27		Asset retirement obligation accretion	57		58
Impairments	Impairments	0		4,472		Impairments	46		—
Provision for (benefit from) deferred income taxes	Provision for (benefit from) deferred income taxes	21		(33)		Provision for (benefit from) deferred income taxes	122		(60)
(Gain) loss on extinguishment of debt						(Gain) loss on extinguishment of debt	(9)		67

Other		(20)		(8)
Other, net						Other, net	(67)		(88)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	(168)		221		Receivables	100		(519)
Inventories	Inventories	(3)		30		Inventories	(45)		(18)
Drilling advances and other current assets	Drilling advances and other current assets	10		(26)		Drilling advances and other current assets	2		28
Deferred charges and other long-term assets	Deferred charges and other long-term assets	(10)		(7)		Deferred charges and other long-term assets	160		(11)
Accounts payable	Accounts payable	75		(80)		Accounts payable	(112)		206
Accrued expenses	Accrued expenses	(66)		(173)		Accrued expenses	(163)		202
Deferred credits and noncurrent liabilities	Deferred credits and noncurrent liabilities	(13)		14		Deferred credits and noncurrent liabilities	(221)		(2)
NET CASH PROVIDED BY OPERATING ACTIVITIES	NET CASH PROVIDED BY OPERATING ACTIVITIES	671		502		NET CASH PROVIDED BY OPERATING ACTIVITIES	1,335		2,426

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	(1,119)		(741)
Additions to Altus gathering, processing, and transmission (GPT) facilities		(1)		(19)

Leasehold and property acquisitions	Leasehold and property acquisitions	(2)		(1)		Leasehold and property acquisitions	(10)		(26)
Contributions to Altus equity method interests		(21)		(83)
Proceeds from sale of oil and gas properties						Proceeds from sale of oil and gas properties	28		751
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	(14)		(49)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES						NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(1,115)		16
CASH FLOWS FROM FINANCING ACTIVITIES:						CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) revolving credit facilities, net						Proceeds from (payments on) revolving credit facilities, net	196		(267)

Proceeds from sale of oil and gas properties		3		126
Other, net		7		(21)
NET CASH USED IN INVESTING ACTIVITIES		(267)		(509)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) Apache credit facility, net		(85)		250
Proceeds from Altus credit facility, net		33		72

Payments on Apache fixed-rate debt	Payments on Apache fixed-rate debt	(6)		0		Payments on Apache fixed-rate debt	(65)		(1,370)
Distributions to noncontrolling interest - Egypt		(40)		(32)
Distributions to Altus Preferred Unit limited partners		(11)		0
Distributions to noncontrolling interest – Egypt						Distributions to noncontrolling interest – Egypt	(100)		(159)
Treasury stock activity, net						Treasury stock activity, net	(188)		(552)
Dividends paid to APA common stockholders						Dividends paid to APA common stockholders	(155)		(86)
Other, net						Other, net	(11)		(28)
NET CASH USED IN FINANCING ACTIVITIES						NET CASH USED IN FINANCING ACTIVITIES	(323)		(2,462)

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 DECREASE IN CASH AND CASH EQUIVALENTS						NET DECREASE IN CASH AND CASH EQUIVALENTS	(103)		(20)
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	245		302
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	$	142	$	282

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	$	168	$	172
Income taxes paid, net of refunds	Income taxes paid, net of refunds	124		98		Income taxes paid, net of refunds	476		637

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

APA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

March 31,
2021
December 31,
2020
(In millions, except share data)
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
2,345 1,846
PROPERTY AND EQUIPMENT:
Oil and gas properties 42,054 41,819
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
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
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes 237 215
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
REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 12)
605 608
EQUITY (DEFICIT):
Common stock, $0.625 par, 860,000,000 shares authorized, 418,917,594 and 418,429,375 shares issued, respectively 262 262
Paid-in capital 11,727 11,735
Accumulated deficit (10,073) (10,461)
Treasury stock, at cost, 40,944,759 and 40,946,745 shares, respectively (3,189) (3,189)
Accumulated other comprehensive income 15 14
APA SHAREHOLDERS’ DEFICIT (1,258) (1,639)
Noncontrolling interest - Egypt 927 925
Noncontrolling interest - Altus 70 69
TOTAL DEFICIT (261) (645)
$ 13,127 $ 12,746


	June 30, 2023		December 31, 2022

	(In millions, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	142	$	245
Receivables, net of allowance of $103 and $117	1,364		1,466
Other current assets (Note 5)	1,093		997
	2,599		2,708
PROPERTY AND EQUIPMENT:
Oil and gas properties	43,384		42,356
Gathering, processing, and transmission facilities	447		449
Other	598		613
Less: Accumulated depreciation, depletion, and amortization	(35,061)		(34,406)
	9,368		9,012
OTHER ASSETS:
Equity method interests (Note 6)	695		624
Decommissioning security for sold Gulf of Mexico properties (Note 11)	57		217
Deferred charges and other	525		586
	$	13,244	$	13,147

LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	656	$	771
Current debt	2		2
Other current liabilities (Note 7)	1,972		2,143
	2,630		2,916
LONG-TERM DEBT (Note 9)	5,574		5,451
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes	449		314
Asset retirement obligation (Note 8)	1,984		1,940
Decommissioning contingency for sold Gulf of Mexico properties (Note 11)	472		738
Other	439		443
	3,344		3,435

EQUITY (DEFICIT):
Common stock, $0.625 par, 860,000,000 shares authorized, 420,584,819 and 419,869,987 shares issued, respectively	263		262
Paid-in capital	11,267		11,420
Accumulated deficit	(5,191)		(5,814)
Treasury stock, at cost, 113,319,877 and 108,310,838 shares, respectively	(5,647)		(5,459)
Accumulated other comprehensive income	17		14
APA SHAREHOLDERS’ EQUITY	709		423
Noncontrolling interest – Egypt	987		922

TOTAL EQUITY	1,696		1,345
	$	13,244	$	13,147

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)
(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)
For the Quarter Ended March 31, 2021
Balance at December 31, 2020 $ 608 $ 262 $ 11,735 $ (10,461) $ (3,189) $ 14 $ (1,639) $ 994 $ (645)
Net income attributable to common stock — — — 388 — — 388 — 388
Net income attributable to noncontrolling interest - Egypt — — — — — — — 42 42
Net income attributable to noncontrolling interest - Altus — — — — — — — 1 1
Net income attributable to Altus Preferred Unit limited partners 19 — — — — — — — —
Distributions payable to Altus Preferred Unit limited partners (11) — — — — — — — —
Distributions paid to Altus Preferred Unit limited partners (11) — — — — — — — —
Distributions to noncontrolling interest - Egypt — — — — — — — (40) (40)
Common dividends ($0.025 per share) — — (9) — — — (9) — (9)
Other — — 1 — — 1 2 — 2
Balance at March 31, 2021 $ 605 $ 262 $ 11,727 $ (10,073) $ (3,189) $ 15 $ (1,258) $ 997 $ (261)


	Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners(1)		Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		APA SHAREHOLDERS’ EQUITY (DEFICIT)		Noncontrolling Interests(1)		TOTAL EQUITY (DEFICIT)

	(In millions)
For the Quarter Ended June 30, 2022
Balance at March 31, 2022	$	—	$	262	$	11,600	$	(7,605)	$	(4,296)	$	21	$	(18)	$	870	$	852
Net income attributable to common stock	—		—		—		926		—		—		926		—		926
Net income attributable to noncontrolling interest – Egypt	—		—		—		—		—		—		—		141		141




Distributions to noncontrolling interest – Egypt	—		—		—		—		—		—		—		(90)		(90)
Common dividends declared ($0.125 per share)	—		—		(42)		—		—		—		(42)		—		(42)

Treasury stock activity, net	—		—		—		—		(291)		—		(291)		—		(291)
Other	—		—		9		—		—		—		9		—		9
Balance at June 30, 2022	$	—	$	262	$	11,567	$	(6,679)	$	(4,587)	$	21	$	584	$	921	$	1,505

For the Quarter Ended June 30, 2023
Balance at March 31, 2023	$	—	$	263	$	11,337	$	(5,572)	$	(5,601)	$	17	$	444	$	989	$	1,433
Net income attributable to common stock	—		—		—		381		—		—		381		—		381
Net income attributable to noncontrolling interest – Egypt	—		—		—		—		—		—		—		81		81




Distributions to noncontrolling interest – Egypt	—		—		—		—		—		—		—		(83)		(83)
Common dividends declared ($0.25 per share)	—		—		(77)		—		—		—		(77)		—		(77)
Treasury stock activity, net	—		—		—		—		(46)		—		(46)		—		(46)

Other	—		—		7		—		—		—		7		—		7
Balance at June 30, 2023	$	—	$	263	$	11,267	$	(5,191)	$	(5,647)	$	17	$	709	$	987	$	1,696

(1) As a result of the BCP Business Combination (as defined herein), the Company deconsolidated Altus (as defined herein) on February 22, 2022. Refer to Note 1—Summary of Significant Accounting Policies and Note 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

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTERESTS - Continued

(Unaudited)


	Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners(1)		Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		APA SHAREHOLDERS’ EQUITY (DEFICIT)		Noncontrolling Interests(1)		TOTAL EQUITY (DEFICIT)

	(In millions)
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	712	$	262	$	11,645	$	(9,488)	$	(4,036)	$	22	$	(1,595)	$	878	$	(717)
Net income attributable to common stock	—						2,809		—		—		2,809		—		2,809
Net income attributable to noncontrolling interest – Egypt	—		—		—		—		—		—		—		260		260
Net income attributable to noncontrolling interest – Altus	—		—		—		—		—		—		—		14		14
Net loss attributable to Altus Preferred Unit limited partners	(70)		—		—		—		—		—		—		—		—


Distributions to noncontrolling interest – Egypt	—		—		—		—		—		—		—		(159)		(159)
Common dividends declared ($0.25 per share)	—		—		(85)		—		—		—		(85)		—		(85)
Deconsolidation of Altus	(642)		—		—		—		—		—		—		(72)		(72)
Treasury stock activity, net	—		—		—		—		(551)		—		(551)		—		(551)
Other	—		—		7		—		—		(1)		6		—		6
Balance at June 30, 2022	$	—	$	262	$	11,567	$	(6,679)	$	(4,587)	$	21	$	584	$	921	$	1,505

For the Six Months Ended June 30, 2023
Balance at December 31, 2022	$	—	$	262	$	11,420	$	(5,814)	$	(5,459)	$	14	$	423	$	922	$	1,345
Net income attributable to common stock	—		—		—		623		—		—		623		—		623
Net income attributable to noncontrolling interest – Egypt	—		—		—		—		—		—		—		165		165




Distributions to noncontrolling interest – Egypt	—		—		—		—		—		—		—		(100)		(100)
Common dividends declared ($0.50 per share)	—		—		(155)		—		—		—		(155)		—		(155)

Treasury stock activity, net	—		—		—		—		(188)		—		(188)		—		(188)
Other	—		1		2		—		—		3		6		—		6
Balance at June 30, 2023	$	—	$	263	$	11,267	$	(5,191)	$	(5,647)	$	17	$	709	$	987	$	1,696

5The 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,~~2022, which contains a summary of the Company’s significant accounting policies and other disclosures.

On January 4, 2021, Apache Corporation announced plans to implement a holding company reorganization (the Holding Company Reorganization), which was thereafter completed on March 1, 2021. In connection with the Holding Company Reorganization, Apache Corporation became a direct, 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 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,~~June 30, 2023, 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.~~2022. The Company’s financial statements for prior periods may include reclassifications that were made to conform to the current-year presentation.

Principles of Consolidation

The 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.

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 Kinetik. The Company further determined that Kinetik 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, which is considered a related party of the Company. Investments in which the Company has significant influence, but not control, are accounted for under the equity method of accounting. These investments are recorded separately as “Equity method interests” in the Company’s consolidated balance sheet. The ~~Company’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 estimate of income taxes (refer to Note 10—Income Taxes), the estimation of the contingent liability representing Apache’s potential decommissioning obligations on sold properties in the Gulf of Mexico (refer to Note 11—Commitments and Contingencies), 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 ~~9—Debt and Financing Costs~~6—Equity Method Interests, and Note ~~12—Redeemable Noncontrolling Interest - Altus~~9—Debt and Financing Costs 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,~~three and six months ended June 30, 2023 and 2022, the Company recorded 0no asset impairments in connection with fair value assessments.

Revenue Recognition

There have been no significant changes to the Company’s contracts with customers during the six months ended June 30, 2023 and 2022.

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, including receivables for purchased oil and gas sales, in each case, net of allowance for credit losses, were $1.2 billion and $1.3 billion as of June 30, 2023 and December 31, 2022, respectively.

Oil and gas production revenues from non-customers represent income taxes paid to the Arab Republic of Egypt by Egyptian General Petroleum Corporation on behalf of the Company. Revenue and associated expenses related to such tax volumes are recorded as “Oil, natural gas, and natural gas liquids production revenues” and “Current income tax provision,” respectively, in the Company’s statement of consolidated operations.

Refer to Note 13—Business Segment Information for a disaggregation of oil, gas, and natural gas production revenue by product and reporting segment.

In accordance with the provisions of ASC 606, “Revenue from Contracts with Customers,” variable market prices for each short-term commodity sale are allocated entirely to each performance obligation as the terms of payment relate specifically to the Company’s efforts to satisfy its obligations. As such, the Company 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.

Inventories

Inventories consist principally of tubular goods and equipment and are stated at the lower of weighted-average cost or net realizable value. Oil produced but not sold, primarily in the North Sea, is also recorded to inventory and is stated at the lower of the cost to produce or net realizable value.

During the ~~first quarter of 2020,~~three and six months ended June 30, 2023, the Company recorded ~~asset~~$46 million of impairments ~~totaling $4.5 billion~~ in connection with ~~fair value assessments. Given~~valuations of drilling and operations equipment inventory upon the crude oil price collapse on lower demand and economic activity resulting from the coronavirus disease 2019 (COVID-19) global pandemic 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 as of March 31, 2020. The Company recognized proved property impairments totaling $3.9 billion, $354 million, and $7 millionCompany’s decision to suspend drilling operations in the ~~U.S., Egypt, and~~ North Sea, respectively, to reduce the carrying value of its oil and gas properties to the estimated fair values as a result of lower forecasted commodity prices, changes 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.”Sea.

~~During the first quarter of 2020, the Company also recognized impairments of $13 million for the early termination of drilling rig leases and $5 million for inventory revaluations, both in the U.S.~~

During the first quarter of 2020, the Company performed an interim impairment analysis 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 values 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.

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 and acquisitions, 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 (GPT) 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.

The Company assessed its long-lived infrastructure assets for impairment at March 31, 2020, and recorded an impairment of $68 million on its GPT facilities in Egypt 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.

~~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.~~

~~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~~2023 Activity

During the second quarter and first ~~quarter~~six months of ~~2021,~~2023, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of ~~$2 million. The~~approximately $4 million and $10 million, respectively.

During the second quarter and first six months of 2023, 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~~$7 million and $28 million, respectively, recognizing a gain of approximately $2$5 million and $6 million, respectively, upon closing of these ~~transactions during the first quarter of 2021.~~transactions.

~~2020~~2022 Activity

During the second quarter and first ~~quarter~~six months of ~~2020,~~2022, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $1$26 million. ~~The~~

During the second quarter and first six months of 2022, 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.~~$7 million and $15 million, respectively, recognizing a gain of approximately $1 million and $2 million, respectively, upon closing of these transactions.

During the first six months of 2022, the Company completed a transaction to sell certain non-core mineral rights in the Delaware Basin. The Company received total cash proceeds of approximately $726 million after certain post-closing adjustments and recognized an associated gain of approximately $560 million.

The 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 Kinetik common stock after the transaction closed.

As a result of the BCP Business Combination, the Company deconsolidated ALTM on February 22, 2022 and recognized a gain of approximately $6$609 million ~~upon closing~~that reflects the difference between the Company’s share of ~~these transactions during~~ALTM’s deconsolidated balance sheet of $193 million and the fair value of $802 million of its approximate 20 percent retained ownership in the combined entity.

During the first quarter of ~~2020.~~

~~Suriname Joint Venture Agreement~~

~~In December 2019,~~2022, the Company ~~entered into a joint venture agreement with Total S.A. to explore~~sold four million of its shares of Kinetik Class A Common Stock for cash proceeds of $224 million 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~~loss of $25 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.transaction fees. Refer to Note 6—Equity Method Interests for further detail.

3. CAPITALIZED EXPLORATORY WELL COSTS

The Company’s capitalized exploratory well costs were ~~$237~~$547 million and ~~$197~~$474 million ~~at March 31, 2021~~as of June 30, 2023 and December 31, ~~2020,~~2022, respectively. The increase is ~~primarily~~ attributable to additional drilling activity offshore Suriname and in ~~Suriname, partially offset by dry hole write-offs during the period.~~ 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,~~June 30, 2023, the Company had derivative positions with 10seven 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,~~June 30, 2023, the Company had the following open natural gas financial basis swap contracts:

Basis Swap Purchased Basis Swap Sold
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 NYMEX Henry Hub/IF Waha 43,800 $(0.45) — —
January—December 2022 NYMEX Henry Hub/IF HSC — — 43,800 $(0.08)

~~Embedded Derivatives~~

~~Altus Preferred Units Embedded Derivative~~

During the second quarter of 2019, Altus Midstream LP issued and sold Series A Cumulative redeemable Preferred Units (Preferred Units). Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further discussion of this derivative, refer to “Fair Value Measurements” below and ~~Note 12—Redeemable Noncontrolling Interest - Altu~~s.

~~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 arrangements under which the Company has the potential to receive payments calculated based on pricing differentials between Houston Ship Channel and Waha during calendar years 2020 and 2021. These features require bifurcation and measurement of the change in market values for each period. Unrealized gains or losses in the fair value of these features are recorded as “Derivative instrument losses, net” under “Revenues and Other” in the statement of consolidated operations. Any proceeds received will be deferred and reflected in income over the original tenure of the transportation agreement.


		Basis Swap Purchased		Basis Swap Sold
Production Period	Settlement Index	MMBtu (in 000’s)	Weighted Average Price Differential	MMBtu (in 000’s)	Weighted Average Price Differential
July—September 2023	NYMEX Henry Hub/IF Waha	1,840	$(1.62)	—	—
July—September 2023	NYMEX Henry Hub/IF HSC	—	—	1,840	$(0.19)
July—December 2023	NYMEX Henry Hub/IF Waha	36,800	$(1.15)	—	—
July—December 2023	NYMEX Henry Hub/IF HSC	—	—	36,800	$(0.08)
January—June 2024	NYMEX Henry Hub/IF Waha	16,380	$(1.15)	—	—
January—June 2024	NYMEX Henry Hub/IF HSC	—	—	16,380	$(0.10)

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)
June 30, 2023														June 30, 2023
Assets:														Assets:
Commodity derivative instruments														Commodity derivative instruments	$	—	$	36	$	—	$	36	$	—	$	36

December 31, 2022														December 31, 2022
Assets:	Assets:													Assets:
Commodity derivative instruments	Commodity derivative instruments	$	0	$	39	$	0	$	39	$	(1)	$	38	Commodity derivative instruments	$	—	$	5	$	—	$	5	$	—	$	5
Liabilities:	Liabilities:													Liabilities:
Commodity derivative instruments	Commodity derivative instruments	0		2		0		2		(1)		1		Commodity derivative instruments	—		50		—		50		—		50
Pipeline capacity embedded derivatives		0		52		0		52		0		52
Preferred Units embedded derivative		0		0		156		156		0		156

December 31, 2020
Assets:
Commodity derivative instruments		$	0	$	11	$	0	$	11	$	0	$	11
Liabilities:
Pipeline capacity embedded derivative		0		53		0		53		0		53
Preferred Units embedded derivative		0		0		139		139		0		139

(1)The derivative fair values are based on analysis of each contract on a gross basis, excluding the impact of netting agreements with ~~counterparties.~~counterparties and reclassifications between long-term and short-term balances.

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:


							June 30, 2023		December 31, 2022
		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	$	36	$	—
Other Assets: Deferred charges and other	Other Assets: Deferred charges and other	4		5		Other Assets: Deferred charges and other	—		5
Total derivative assets	Total derivative assets	$	38	$	11	Total derivative assets	$	36	$	5

Current Liabilities: Other current liabilities	Current Liabilities: Other current liabilities	$	1	$	0	Current Liabilities: Other current liabilities	$	—	$	50
Deferred Credits and Other Noncurrent Liabilities: Other		208		192

Total derivative liabilities	Total derivative liabilities	$	209	$	192	Total derivative liabilities	$	—	$	50

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 June 30,				For the Six Months Ended June 30,
		For the Quarter Ended March 31,					2023		2022		2023		2022
		2021		2020
		(In millions)				(In millions)
Realized:	Realized:							Realized:
Commodity derivative instruments	Commodity derivative instruments	$	148	$	1			Commodity derivative instruments	$	4	$	(4)	$	24	$	(9)
Foreign currency derivative instruments	Foreign currency derivative instruments	0		(1)				Foreign currency derivative instruments	—		(2)		—		(2)
Realized gain, net		148		0
Realized gains (losses), net								Realized gains (losses), net	4		(6)		24		(11)
Unrealized:	Unrealized:							Unrealized:
Commodity derivative instruments	Commodity derivative instruments	26		17				Commodity derivative instruments	47		(20)		80		(44)
Pipeline capacity embedded derivatives		1		(53)

Foreign currency derivative instruments	Foreign currency derivative instruments	0		(5)				Foreign currency derivative instruments	—		(6)		—		(8)
Preferred units embedded derivative		(17)		(62)
Unrealized gain (loss), net		10		(103)
Preferred Units embedded derivative								Preferred Units embedded derivative	—		—		—		(31)
Unrealized gains (losses), net								Unrealized gains (losses), net	47		(26)		80		(83)
Derivative instrument gains (losses), net	Derivative instrument gains (losses), net	$	158	$	(103)			Derivative instrument gains (losses), net	$	51	$	(32)	$	104	$	(94)

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 (gains) losses, ~~(gains),~~ net” inunder “Adjustments to reconcile net ~~loss~~income to net cash provided by operating activities.”

As part of the Company’s ordinary course of business, 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. 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:


							June 30, 2023		December 31, 2022
		March 31, 2021		December 31, 2020
		(In millions)					(In millions)
Inventories	Inventories	$	502	$	492	Inventories	$	488	$	427
Drilling advances	Drilling advances	111		113		Drilling advances	90		89

Prepaid assets and other	Prepaid assets and other	123		71		Prepaid assets and other	65		31
Current decommissioning security for sold Gulf of Mexico assets						Current decommissioning security for sold Gulf of Mexico assets	450		450
Total Other current assets	Total Other current assets	$	736	$	676	Total Other current assets	$	1,093	$	997

6. EQUITY METHOD INTERESTS

As of March 31, 2021 and December 31, 2020, the Company, through its ownership of Altus, had the following equity method interests in 4 Permian Basin long-haul pipeline entities, which are accounted for under the equity method of accounting. For each of the equity method interests, Altus has 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~~Kinetik Class A Common Stock held by the Company ~~and associated carrying values~~is treated as an interest in equity securities measured at fair value. The Company elected the fair value option 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~~measuring its equity method interest ~~balances were $37 million~~in Kinetik based on practical expedience, variances in reporting timelines, and ~~$38 million, respectively. These amounts represent differences~~cost-benefit considerations. The fair value of the Company’s interest in ~~Altus’ contributions to date~~Kinetik is determined using observable share prices on a major exchange, a Level 1 fair value measurement. Fair value adjustments are recorded as a component of “Other, net” under “Revenues and ~~Altus’ underlying equity~~other” in the ~~separate net assets within~~Company’s statement of consolidated operations.

The Company’s initial interest in Kinetik was measured at fair value based on the ~~financial statements~~Company’s ownership of approximately 12.9 million shares of Kinetik Class A Common stock as of February 22, 2022. In March 2022, the ~~respective entities. Unamortized basis differences will be amortized into net income over~~Company sold four million of its shares of Kinetik Class A Common Stock for a loss, including underwriters fees, of $25 million, which was recorded as a component of “Gain on divestitures, net” under “Revenues and other” in the ~~useful lives~~Company’s statement of consolidated operations. Refer to Note 2—Acquisitions and Divestitures for further detail. During the ~~underlying pipeline assets.~~second quarter of 2022, Kinetik issued a two-for-one split of its common stock, resulting in the Company owning approximately 17.7 million shares.

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

~~(1)~~Company has received approximately 2.1 million shares of Kinetik’s Class A Common Stock as paid-in-kind dividends through June 30, 2023. As of ~~March 31, 2021,~~June 30, 2023, the ~~amount~~Company’s ownership of ~~consolidated earnings, net~~19.8 million shares represented approximately 13 percent of ~~amortization basis differences, which represents undistributed earnings, was $3 million from Permian Highway Pipeline LLC.~~Kinetik’s outstanding Class A Common Stock.

1513

~~Summarized Combined Financial Information~~The Company recorded changes in the fair value of its equity method interest in Kinetik totaling gains of $90 million and $42 million in the second quarters of 2023 and 2022, respectively, and gains of $71 million and $66 million in the first six months of 2023 and 2022, respectively. These gains were recorded as a component of “Revenues and other” in the Company’s statement of consolidated operations.

The following table ~~presents summarized selected income statement data for Altus’ equity method interests (on a 100 percent basis):~~represents sales and costs associated with Kinetik:

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 Quarter Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022

	(In millions)
Natural gas and NGLs sales	$	29	$	—	$	43	$	—
Purchased oil and gas sales	7		—		7		—
	$	36	$	—	$	50	$	—

Gathering, processing, and transmission costs	$	29	$	26	$	55	$	36
Purchased oil and gas costs	26		—		28		—
	$	55	$	26	$	83	$	36

As of June 30, 2023, the Company has recorded accrued costs payable to Kinetik of approximately $39 million and receivables from Kinetik of approximately $22 million.

7. OTHER CURRENT LIABILITIES

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


							June 30, 2023		December 31, 2022
		March 31, 2021		December 31, 2020
		(In millions)					(In millions)
Accrued operating expenses	Accrued operating expenses	$	92	$	91	Accrued operating expenses	$	174	$	145
Accrued exploration and development	Accrued exploration and development	185		167		Accrued exploration and development	384		333

Accrued compensation and benefits	Accrued compensation and benefits	91		170		Accrued compensation and benefits	247		514
Accrued interest	Accrued interest	138		140		Accrued interest	95		97
Accrued income taxes	Accrued income taxes	41		25		Accrued income taxes	193		90
Current asset retirement obligation	Current asset retirement obligation	56		56		Current asset retirement obligation	55		55
Current operating lease liability	Current operating lease liability	106		116		Current operating lease liability	102		167

Current decommissioning contingency for sold Gulf of Mexico properties						Current decommissioning contingency for sold Gulf of Mexico properties	450		450
Other	Other	103		97		Other	272		292
Total Other current liabilities	Total Other current liabilities	$	812	$	862	Total Other current liabilities	$	1,972	$	2,143

8. ASSET RETIREMENT OBLIGATION

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


	~~March 31,~~June 30, ~~2021~~2023
	(In millions)
Asset retirement obligation, December 31, ~~2020~~2022	$	~~1,944~~1,995
Liabilities incurred	18

Liabilities settled	~~(3)~~(21)



Accretion expense	2857

Asset retirement obligation, ~~March 31, 2021~~June 30, 2023	~~1,970~~2,039
Less current portion	~~(56)~~(55)
Asset retirement obligation, long-term	$	~~1,914~~1,984

1614

9. DEBT AND FINANCING COSTS

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


							June 30, 2023		December 31, 2022
		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)	$	4,835	$	4,908
Altus credit facility(2)		657		624
Apache credit facility(2)		65		150

Syndicated credit facilities(2)						Syndicated credit facilities(2)	762		566
Apache finance lease obligations	Apache finance lease obligations	37		38		Apache finance lease obligations	33		34
Unamortized discount	Unamortized discount	(34)		(35)		Unamortized discount	(27)		(27)
Debt issuance costs	Debt issuance costs	(55)		(57)		Debt issuance costs	(27)		(28)
Total debt	Total debt	8,715		8,772		Total debt	5,576		5,453
Current maturities	Current maturities	(2)		(2)		Current maturities	(2)		(2)
Long-term debt	Long-term debt	$	8,713	$	8,770	Long-term debt	$	5,574	$	5,451

(1)The fair values of the Apache notes and debentures were ~~$8.0~~$4.1 billion and ~~$8.5~~$4.2 billion as of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, 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.

AsAt each of ~~March 31, 2021~~June 30, 2023 and December 31, ~~2020,~~2022, current debt included $2 million of finance lease obligations.

During the ~~quarter~~six months ended ~~March 31, 2021,~~June 30, 2023, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $7$74 million for an aggregate purchase price of $6$65 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $1$10 million. ~~NaN~~The Company recognized a $9 million gain ~~or loss was recognized~~ on these repurchases. The repurchases were partially financed by Apache’s borrowing under the Company’s US dollar-denominated revolving credit facility.

~~In March 2018,~~During the six months ended June 30, 2022, Apache closed cash tender offers for certain outstanding notes issued under its indentures, accepting for purchase $1.1 billion aggregate principal amount of notes. Apache paid holders an aggregate $1.2 billion in cash, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a $66 million loss on extinguishment of debt, including $11 million of unamortized debt discount and issuance costs in connection with the note purchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.

During the six months ended June 30, 2022, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $15 million for an aggregate purchase price of $16 million in cash, including accrued interest and broker fees, reflecting a premium to par of $1 million. The Company recognized a $1 million loss on these repurchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.

On January 18, 2022, Apache redeemed the outstanding $213 million principal amount of 3.25% senior notes due April 15, 2022, at a redemption price equal to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed by borrowing under Apache’s former revolving credit facility.

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

•One agreement is denominated in US dollars (the USD Agreement) and provides for an unsecured five-year revolving credit facility, with aggregate commitments ~~totaling $4.0 billion. In March 2019, the term~~ of ~~this facility was extended by one year~~US$1.8 billion (including a letter of credit subfacility of up to ~~March 2024 (subject to Apache’s remaining one-year extension option) pursuant to Apache’s exercise~~US$750 million, of ~~an extension option. Apache can~~which US$150 million currently is committed). The Company may increase commitments up to ~~$5.0~~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 two, one-year extension options.

•The second agreement is denominated in pounds sterling (the GBP Agreement) and provides for an unsecured five-year revolving credit facility, ~~includes~~with aggregate commitments of £1.5 billion for loans and letters of credit. This facility matures in April 2027, subject to the Company’s two, one-year extension options.

In connection with the Company’s entry into the USD Agreement and the GBP Agreement (each, a ~~letter~~New Agreement), Apache terminated US$4.0 billion of commitments under the Former Facility, borrowings then outstanding under the Former Facility were deemed outstanding under the USD Agreement, and letters of credit ~~subfacility of~~then outstanding under the Former Facility were deemed outstanding under a New Agreement, depending upon whether denominated in US dollars or pounds sterling. Apache may borrow under the USD Agreement up to ~~$3.0 billion,~~an aggregate principal amount of ~~which $2.08 billion was committed as~~US$300 million outstanding at any given time. Apache has guaranteed obligations under each New Agreement effective until the aggregate principal amount of ~~March 31, 2021. The facility~~indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is ~~for general corporate purposes.~~ less than US$1.0 billion.

As of ~~March 31, 2021,~~June 30, 2023, there were ~~$65~~$762 million of borrowings under the USD Agreement and an aggregate ~~£573 million and $20~~£590 million in letters of credit outstanding under ~~this facility.~~the GBP Agreement. As of June 30, 2023, there were no letters of credit outstanding under the USD Agreement. As of December 31, ~~2020,~~2022, there were ~~$150~~$566 million of borrowings and a $20 million letter of credit outstanding under the USD Agreement, and an aggregate ~~£633 million and $40~~£652 million in letters of credit outstanding under ~~this facility.~~the GBP Agreement. 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~~June 30, 2023 and December 31, ~~2020,~~2022, there were 0no outstanding borrowings under these facilities. As of June 30, 2023, there were £185 million and ~~£34~~$3 million in letters of credit outstanding under these facilities. As of December 31, 2022, there were £199 million and $17 million in letters of credit outstanding under these facilities.

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 31, 2021, there were $657 million of borrowings and a $2 million letter of credit outstanding under this facility. As of December 31, 2020, there were $624 million of borrowings and 0 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.

Financing Costs, Net

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


									For the Quarter Ended June 30,				For the Six Months Ended June 30,
		For the Quarter Ended March 31,					2023		2022		2023		2022
		2021		2020
		(In millions)				(In millions)
Interest expense	Interest expense	$	112	$	107			Interest expense	$	89	$	79	$	177	$	169
Amortization of debt issuance costs	Amortization of debt issuance costs	2		2				Amortization of debt issuance costs	1		5		2		7
Capitalized interest	Capitalized interest	(2)		(4)				Capitalized interest	(5)		(5)		(11)		(8)

(Gain) loss on extinguishment of debt								(Gain) loss on extinguishment of debt	—		—		(9)		67
Interest income	Interest income	(2)		(2)				Interest income	(3)		(3)		(5)		(7)
Financing costs, net	Financing costs, net	$	110	$	103			Financing costs, net	$	82	$	76	$	154	$	228

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~~second quarter of ~~2021,~~2023, 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. The Company’s 2023 year-to-date effective income tax rate was primarily impacted by a deferred tax expense related to the remeasurement of taxes in the U.K. as a result of the enactment of Finance Act 2023 on January 10, 2023, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets. During the ~~first~~second quarter of ~~2020,~~2022, the Company’s effective income tax rate was primarily impacted by ~~oil~~a decrease in the amount of valuation allowance against its U.S. deferred tax assets. The Company’s 2022 year-to-date 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 ~~gas impairments,~~ a ~~goodwill impairment, and an increase~~decrease in the amount of valuation allowance against its U.S. deferred tax assets.

On January 10, 2023, Finance Act 2023 was enacted, receiving Royal Assent, and included amendments to the Energy (Oil and Gas) Profits Levy Act of 2022, increasing the levy from a 25 percent rate to a 35 percent rate, effective for the period of January 1, 2023 through March 31, 2028. Under U.S. GAAP, the financial statement impact of new legislation is recorded in the period of enactment. Therefore, in the first quarter of 2023, the Company recorded a deferred tax expense of $174 million related to the remeasurement of the December 31, 2022 U.K. deferred tax liability.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA). The IRA includes a new 15 percent corporate alternative minimum tax (Corporate AMT) on applicable corporations with an average annual financial statement income that exceeds $1 billion for any three consecutive years preceding the tax year at issue. The Corporate AMT is effective for tax years beginning after December 31, 2022. The Company is continuing to evaluate the provisions of the IRA and awaits further guidance from the U.S. Treasury Department to properly assess the impact of these provisions on the Company. Under the existing guidance, the Company does not believe the IRA will have a material impact for 2023.

The Company has a full valuation allowance against its U.S. net deferred tax assets. The Company will continue to maintain a full valuation allowance on its U.S. net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given the Company’s current and anticipated future domestic earnings, the Company believes that there is a reasonable possibility that within the next 12 months sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the U.S. valuation allowance will no longer be needed. A release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense, which could be material, for the period the release is recorded.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various ~~state~~states 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,~~June 30, 2023, the Company has an accrued liability of approximately ~~$62~~$52 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~~With respect to material matters ~~that~~for which 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.~~2022.

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,~~2022, 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,~~2023, 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 court of appeals affirmed in part and reversed in part the trial court’s judgment thereby reinstating some of plaintiffs’ ~~appeal is pending.~~claims. The Texas Supreme Court granted the Company’s petition for review and heard oral argument in October 2022. On April 28, 2023, the Texas Supreme Court reversed the court of appeals’ decision and remanded the case back to the court of appeals for further proceedings. After plaintiffs’ request for rehearing, on July 21, 2023, the Texas Supreme Court reaffirmed its reversal of the court of appeals’ decision and remand of the case back to the court of appeals for further proceedings.

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, 4four 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.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. Without acknowledging or admitting any liability and solely to avoid the expense and uncertainty of future litigation, Apache has agreed to a settlement in the Flesch class action matter under which Apache will pay $7 million USD to resolve all claims against the Company asserted by the class. The ~~Company believes that Plaintiffs’ claims lack merit~~settlement is subject to court approval and ~~will not have a material adverse effect on~~is expected to be finalized by the ~~Company’s financial position, results~~end of ~~operation, or liquidity.~~2023.

California and Delaware Litigation

On July 17, 2017, in 3three separate actions, San Mateo ~~County, California,~~and Marin ~~County, California,~~Counties, 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 2two separate actions, the City of Santa Cruz and Santa Cruz County ~~and in a separate action on~~filed similar lawsuits against many of the same defendants. On January 22, 2018, the City of Richmond filed a similar ~~lawsuits against many of the same defendants.~~lawsuit. On November 14, 2018, the Pacific Coast Federation of Fishermen’s Associations, Inc. also filed a similar lawsuit against many of the same defendants. After removal of all such lawsuits to federal court, the district court remanded them back to state court. The remand decision, and 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.

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 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 appeal is pending.~~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.

~~Oklahoma Class Actions~~Kulp Minerals Lawsuit

~~The Company is~~On or about April 7, 2023, Apache was sued in a ~~party to 2~~ purported class ~~actions~~action in ~~Oklahoma~~New Mexico styled ~~Bigie Lee Rhea~~Kulp Minerals LLC v. Apache Corporation, Case No. ~~6:14-cv-00433-JH, and~~ ~~Albert Steven Allen v. Apache Corporation, Case No. CJ-2019-00219.~~D-506-CV-2023-00352 in the Fifth Judicial District. The ~~Rhea~~ case has been certified and includes a class of royalty owners seeking damages in excess of $250 million for alleged breach of the implied covenant to market relating to post-production deductions and alleged NGL uplift value. The ~~Allen~~Kulp Minerals case has not been certified and seeks to represent a group of owners ~~who have~~ allegedly ~~received~~owed statutory interest under New Mexico law as a result of purported late ~~royalty~~oil and ~~other payments under Oklahoma statutes.~~gas payments. The amount of this claim is not yet reasonably determinable. ~~While adverse judgments against the Company are possible, the~~The Company intends to vigorously defend ~~these lawsuits and claims.~~against the claims asserted in this lawsuit.

Shareholder and Derivative Lawsuits

On February 23, 2021, a case captioned Plymouth County Retirement System v. Apache Corporation, et al. was filed in the United States District Court for the 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 (1) 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~~certain 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,~~January 18, 2023, a case captioned Jerry Hight, Derivatively and on behalf of APA Corporation v. John J. Christmann IV et al. was filed in the 61st District Court of Harris County, Texas. Then, on February 21, 2023, a case captioned Steve Silverman, Derivatively and on behalf of Nominal Defendant APA Corp. v. John J. Christmann IV, et al. was filed in federal district court for the Southern District of Texas. Then, on April 20, 2023, a case captioned William Wessels, Derivatively and on behalf of APA Corporation v. John J. Christmann IV et al. was filed in the ~~334th~~151st District Court of Harris County, Texas. ~~The~~Then, on July 21, 2023, a case ~~purports~~captioned Yang-Li-Yu, Derivatively and on behalf of Nominal Defendant APA Corp. v. John J. Christmann IV, et al. was filed in federal district court for the Southern District of Texas. These cases purport to be a derivative ~~action~~actions brought against senior management and Company directors over many of the same allegations included in the Plymouth County Retirement System matter and asserts claims of (1) breach of fiduciary duty; (2) waste of corporate assets; and (3) unjust enrichment. The defendants believe ~~the plaintiff’s~~that plaintiffs’ claims lack merit and intend to vigorously defend ~~this lawsuit.~~these lawsuits.

Environmental Matters

As of ~~March 31, 2021,~~June 30, 2023, the Company had an undiscounted reserve for environmental remediation of approximately $2$1 million.

On September 11, 2020, the Company received a Notice of Violation and Finding of Violation, and accompanying Clean Air Act Information Request, from the U.S. Environmental Protection Agency (EPA) following site inspections in April 2019 at several of the Company’s oil and natural gas production facilities in Lea and Eddy Counties, New Mexico. The notice and information request involve alleged emissions control and reporting violations. The Company is cooperating with the EPA and ~~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 was recently served with two lawsuits filed in Lea County, New Mexico: William O. Stephens v. Apache Corporation; No. D-506-CV-2023-00632, in the Fifth Judicial District and Merchant Livestock Company v. Apache Corporation, Exxon Corporation, et al.; No. D-506-CV-2023-00664, in the Fifth Judicial District. Each lawsuit alleges property damage and environmental impacts from previous oil and gas operations that require remediation. The Company disputes that it is responsible for the damages claimed and/or relief sought and intends to vigorously defend each lawsuit. At this time, the Company is unable to reasonably estimate whether either lawsuit, individually, will result in damages that are 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~~June 30, 2023 that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity. There can be no assurance, however, that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered on the Company’s properties.

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~~two 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 bonds (Bonds) and ~~the remaining~~five 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, and by subsequent letter dated March 1, 2023, 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 notifications to BSEE. Apache expects to receive similar orders on the other Legacy GOM Assets included in GOM Shelf’s notification letters. Apache has also received orders to decommission other Legacy GOM Assets that were not included in GOM Shelf’s notification letters. Further, Apache anticipates that GOM Shelf may send additional such ~~AROs, then~~notices to BSEE in the ~~Company expects~~future and that it may ~~be required by the relevant governmental authorities~~receive additional orders from BSEE requiring it to ~~perform such AROs,~~decommission other Legacy GOM Assets.

As of June 30, 2023, Apache has incurred $464 million in ~~which case~~decommissioning costs related to several Legacy GOM Assets. GOM Shelf did not, and has confirmed that it will ~~apply~~not, reimburse Apache for these decommissioning costs. As a result, Apache has sought and will continue to seek reimbursement from its security for these costs, of which $276 million had been reimbursed from Trust A as of June 30, 2023. If GOM Shelf does not reimburse Apache for further decommissioning costs incurred with respect to Legacy GOM Assets, then Apache will continue to seek reimbursement from Trust A, to the extent of available funds, and thereafter, will seek reimbursement from the Bonds ~~remaining~~and the Letters of Credit until all 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 required to perform or fund, or if GOM Shelf’s net cash flow from its remaining producing properties after the Trust A funds, Bonds, and Letters of Credit are exhausted is insufficient to repay any loans made by Apache under the ~~Company~~Standby Loan Agreement, then Apache may be forced to effectively use its available cash to ~~cover~~fund the deficit.

As of June 30, 2023, Apache estimates that its potential liability to fund the remaining decommissioning of Legacy GOM Assets it may be ordered to perform or fund ranges from $922 million to $1.1 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 $922 million as of June 30, 2023, representing the estimated costs of decommissioning it ~~incurs~~may be required to perform or fund on Legacy GOM Assets. Of the total liability recorded, $472 million is reflected under the caption “Decommissioning contingency for ~~performing such AROs.~~

~~12. REDEEMABLE NONCONTROLLING INTEREST - ALTUS~~

~~Preferred Units Issuance~~

~~On June 12, 2019, Altus Midstream LP issued~~sold Gulf of Mexico properties,” and ~~sold Preferred Units for an aggregate issue price of $625~~$450 million is reflected under “Other current liabilities” 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 carrying amount of the Preferred Units are recorded as “Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners” classified as temporary equity on~~ the Company’s consolidated balance ~~sheet based~~sheet. Changes in significant assumptions impacting Apache’s estimated liability, including expected decommissioning rig spread rates, lift boat rates, and planned abandonment logistics could result in a liability in excess of the amount accrued.

As of June 30, 2023, the Company has also recorded a $507 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, $57 million is reflected under the caption “Decommissioning security for sold Gulf of Mexico properties,” and $450 million is reflected under “Other current assets.”

On June 21, 2023, the two sureties that issued bonds directly to Apache and two sureties that issued bonds to the issuing bank on the ~~terms~~Letters of Credit filed suit against Apache in a case styled Zurich American Insurance Company, HCC International Insurance Company PLC, Philadelphia Indemnity Insurance Company and Everest Reinsurance Company (Insurers) v. Apache Corporation, Cause No. 2023-38238 in the ~~Preferred Units, including~~281st Judicial District Court, Harris County Texas. Insurers are seeking to prevent Apache from drawing on the ~~redemption rights with respect thereto.~~Bonds and Letters of Credit and further allege that they are discharged from their reimbursement obligations related to decommissioning costs and are entitled to other relief. On July 20, 2023, the 281st Judicial District Court denied the Insurers’ request for a temporary injunction. Apache believes that Insurers’ claims lack merit, intends to vigorously defend these claims, and will vigorously pursue counterclaims.

Altus applies 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 recorded, if applicable. The amount of such adjustment is determined based upon the accreted value method to reflect the passage of time until the Preferred Units are exchangeable at the option of the holder. Pursuant to this method, the net transaction price is accreted using the effective interest method to the Redemption Price calculated at the seventh anniversary of the Closing. The total adjustment is limited to an amount such that the carrying amount of the Preferred Unit redeemable noncontrolling interest at each period end is 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:~~

Units
Outstanding
Financial
Position(1)
(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
Cash distributions to Altus Preferred Unit limited partners — (23)
Allocation of Altus Midstream LP net income N/A 76
Redeemable noncontrolling interest — Preferred Unit at: December 31, 2020 660,694 608
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 N/A 19
Redeemable noncontrolling interest — Preferred Unit at: March 31, 2021 660,694 605
Preferred Units embedded derivative 156
$ 761

~~(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.~~

~~13.~~12. CAPITAL STOCK

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 stock plans along with all of 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 June 30,
	2023					2022
	Income		Shares	Per Share		Income		Shares	Per Share

	(In millions, except per share amounts)
Basic:
Income attributable to common stock	$	381	308	$	1.24	$	926	341	$	2.72
Effect of Dilutive Securities:
Stock options and other	$	—	1	$	(0.01)	$	—	1	$	(0.01)

Diluted:
Income attributable to common stock	$	381	309	$	1.23	$	926	342	$	2.71
	For the Six Months Ended June 30,
	2023					2022
	Income		Shares	Per Share		Income		Shares	Per Share

	(In millions, except per share amounts)
Basic:
Income attributable to common stock	$	623	310	$	2.01	$	2,809	344	$	8.18
Effect of Dilutive Securities:
Stock options and other	$	—	—	$	—	$	—	—	$	(0.03)

Diluted:
Income attributable to common stock	$	623	310	$	2.01	$	2,809	344	$	8.15

The Company uses 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. The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive ~~totaling 4.0~~of 2.1 million and ~~5.5~~2.0 million ~~for~~during the ~~quarter ended March 31, 2021~~second quarters of 2023 and ~~2020,~~2022, respectively, and 2.2 million and 2.7 million during the first six months of 2023 and 2022, respectively.

Stock Repurchase Program

~~In 2013 and 2014,~~During 2018, the Company’s Board of Directors authorized the purchase of up to 40 million shares of the Company’s common ~~stock, and during~~stock. 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. During the third quarter of 2022, the Company's Board of Directors further authorized the purchase of an additional 40 million shares of the Company's common stock.

In the second quarter of 2023, the Company repurchased 1.3 million shares at an average price of $33.72 per share. For the six months ended June 30, 2023, the Company repurchased 5 million shares at an average price of $37.53 per share, and as of June 30, 2023, the Company had remaining authorization to repurchase up to 48 million shares. The repurchases were partially financed by APA’s borrowing under its US dollar-denominated revolving credit facility. In the second quarter of 2022, the Company repurchased 7.0 million shares at an average price of $41.60 per share. For the six months ended June 30, 2022, the Company repurchased 14.2 million shares at an average price of $38.79 per share. The Company is not obligated to acquire any additional shares. Shares may be purchased either in the open market or through privately ~~held~~ negotiated transactions. The Company initiated the buyback program on June 10, 2013, and, through March 31, 2021, had repurchased a total of 40 million shares at an average price of $79.18 per share. The Company is not obligated to acquire any specific number of shares and did 0t purchase any shares during the three months ended March 31, 2021.

Common Stock ~~Dividends~~Dividend

For the ~~quarter~~quarters ended ~~March 31, 2021~~June 30, 2023 and ~~2020,~~2022, the Company paid $9$77 million and ~~$94~~$43 million, respectively, in dividends on its common stock. InFor the ~~first~~six months ended June 30, 2023 and 2022, the Company paid $155 million and $86 million, respectively, in dividends on its common stock.

During the third quarter of ~~2020,~~2022, the Company’s Board of Directors approved ~~a reduction in the Company’s~~an increase to its quarterly dividend from $0.125 to $0.25 per ~~share from $0.25 to $0.025, effective for all dividends payable after March 12, 2020.~~share.

~~14.~~13. BUSINESS SEGMENT INFORMATION

As of ~~March 31, 2021,~~June 30, 2023, the ~~Company is~~Company’s consolidated subsidiaries are engaged in exploration and production (Upstream) activities across 3three 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,~~ALTM, 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 the Dominican Republic and 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)


	Egypt(1)		North Sea		U.S.		Altus Midstream		Intersegment Eliminations & Other		Total(4)
	Upstream

For the Six Months Ended June 30, 2023	(In millions)
Revenues:
Oil revenues	$	1,247	$	517	$	998	$	—	$	—	$	2,762
Natural gas revenues	183		99		140		—		—		422
Natural gas liquids revenues	—		14		223		—		—		237
Oil, natural gas, and natural gas liquids production revenues	1,430		630		1,361		—		—		3,421
Purchased oil and gas sales	—		—		383		—		—		383

	1,430		630		1,744		—		—		3,804
Operating Expenses:
Lease operating expenses	218		176		288		—		—		682
Gathering, processing, and transmission	13		23		120		—		—		156
Purchased oil and gas costs	—		—		347		—		—		347
Taxes other than income	—		—		102		—		—		102
Exploration	66		9		6		—		14		95
Depreciation, depletion, and amortization	249		119		331		—		—		699
Asset retirement obligation accretion	—		37		20		—		—		57
Impairments	—		46		—		—		—		46
	546		410		1,214		—		14		2,184
Operating Income (Loss)(2)	$	884	$	220	$	530	$	—	$	(14)	1,620

Other Income (Expense):
Derivative instrument gains, net											104

Gain on divestitures, net											6
Other, net											77
General and administrative											(137)
Transaction, reorganization, and separation											(6)
Financing costs, net											(154)
Income Before Income Taxes											$	1,510

Total Assets(3)	$	3,365	$	1,719	$	7,640	$	—	$	520	$	13,244

Operating Income (Loss)(2)


	Egypt(1)		North Sea		U.S.		Altus Midstream		Intersegment Eliminations & Other		Total(4)
	Upstream

For the Six Months Ended June 30, 2022	(In millions)
Revenues:
Oil revenues	$	1,692	$	635	$	1,253	$	—	$	—	$	3,580
Natural gas revenues	186		163		464		—		—		813
Natural gas liquids revenues	6		28		421		—		(3)		452
Oil, natural gas, and natural gas liquids production revenues	1,884		826		2,138		—		(3)		4,845
Purchased oil and gas sales	—		—		866		5		—		871
Midstream service affiliate revenues	—		—		—		16		(16)		—
	1,884		826		3,004		21		(19)		5,716
Operating Expenses:
Lease operating expenses	262		214		228		—		(1)		703
Gathering, processing, and transmission	10		24		154		5		(18)		175
Purchased oil and gas costs	—		—		879		—		—		879
Taxes other than income	—		—		145		3		—		148
Exploration	27		7		5		—		59		98
Depreciation, depletion, and amortization	188		116		263		2		—		569
Asset retirement obligation accretion	—		40		17		1		—		58

	487		401		1,691		11		40		2,630
Operating Income (Loss)(2)	$	1,397	$	425	$	1,313	$	10	$	(59)	3,086

Other Income (Expense):
Derivative instrument losses, net											(94)

Gain on divestitures, net											1,149
Other, net											109
General and administrative											(245)
Transaction, reorganization, and separation											(17)
Financing costs, net											(228)
Income Before Income Taxes											$	3,760


Total Assets(3)	$	3,107	$	2,103	$	7,156	$	—	$	558	$	12,924

(1)Includes ~~a noncontrolling interest in Egypt~~revenue from non-customers for the quarters and ~~Altus.~~six months ended June 30, 2023 and 2022 of:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022

	(In millions)
Oil	$	165	$	302	$	337	$	552
Natural gas	24		30		50		61
Natural gas liquids	—		1		—		2

(2)~~The operating~~Operating income ~~(loss)~~of U.S. and North Sea includes leasehold impairments of $3 million and $3 million, respectively, for the second quarter of 2023.
Operating income of U.S. and Egypt includes leasehold impairments of $1 million and ~~other asset~~$1 million, respectively, for the second quarter of 2022. Operating income of U.S. and North Sea includes leasehold impairments ~~totaling $16~~of $5 million and $6 million, respectively, for the first six months of 2023. Operating income of U.S. and Egypt includes leasehold impairments of $4 million and $2 million, respectively, for the first ~~quarter~~six months of 2021. The operating income (loss) of U.S., Egypt, and North Sea includes leasehold and other asset impairments totaling $4.0 billion, $511 million, and $7 million, respectively, for the first quarter of 2020.2022.

(3)Intercompany balances are excluded from total assets.

(4)Includes noncontrolling interests in Egypt and in Altus prior to deconsolidation.


		For the Quarter Ended March 31,				For the Quarter Ended June 30,			For the Six Months Ended June 30,
		2021	Increase (Decrease)		2020			2023	Increase (Decrease)	2022	2023	Increase (Decrease)	2022
Oil Volume – b/d
Oil Volume (b/d)							Oil Volume (b/d)
United States	United States	67,690	(33)	%	101,614		United States	75,993	17%	64,759	73,952	10%	67,184
Egypt(1)(2)	Egypt(1)(2)	72,170	(1)	%	73,178		Egypt(1)(2)	87,790	3%	85,502	87,792	3%	85,261
North Sea	North Sea	43,524	(21)	%	55,262		North Sea	35,048	8%	32,493	36,268	7%	33,860
Total	Total	183,384	(20)	%	230,054		Total	198,831	9%	182,754	198,012	6%	186,305

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	450,200	(2)%	457,459	445,887	(5)%	467,493
Egypt(1)(2)	Egypt(1)(2)	278,149	9	%	254,579		Egypt(1)(2)	337,413	(3)%	346,424	346,829	(5)%	366,390
North Sea	North Sea	49,840	(26)	%	67,278		North Sea	37,194	(13)%	42,802	38,769	(5)%	40,645
Total	Total	835,506	(9)	%	919,699		Total	824,807	(3)%	846,685	831,485	(5)%	874,528

NGL Volume – b/d
NGL Volume (b/d)							NGL Volume (b/d)
United States	United States	57,815	(29)	%	81,381		United States	61,760	4%	59,267	58,947	(3)%	60,482
Egypt(1)(2)	Egypt(1)(2)	583	(36)	%	918		Egypt(1)(2)	—	NM	297	—	NM	394
North Sea	North Sea	1,368	(36)	%	2,135		North Sea	872	(27)%	1,195	1,062	(21)%	1,345
Total	Total	59,766	(29)	%	84,434		Total	62,632	3%	60,759	60,009	(4)%	62,221

BOE per day(3)	BOE per day(3)						BOE per day(3)
United States	United States	210,091	(26)	%	282,636		United States	212,786	6%	200,269	207,213	1%	205,582
Egypt(1)(2)	Egypt(1)(2)	119,111	2	%	116,525		Egypt(1)(2)	144,026	0%	143,536	145,597	(1)%	146,720
North Sea(4)	North Sea(4)	53,199	(22)	%	68,610		North Sea(4)	42,118	3%	40,822	43,792	4%	41,979
Total	Total	382,401	(18)	%	467,771		Total	398,930	4%	384,627	396,602	1%	394,281


		For the Quarter Ended March 31,		For the Quarter Ended June 30,			For the Six Months Ended June 30,
		2021	2020			2023		2022	2023	2022
Oil (b/d)	Oil (b/d)	135,320	183,627		Oil (b/d)	140,652		141,432	140,708	137,934
Natural Gas (Mcf/d)	Natural Gas (Mcf/d)	603,269	655,410		Natural Gas (Mcf/d)	517,291		555,694	531,093	576,637
NGL (b/d)	NGL (b/d)	897	1,782		NGL (b/d)	—		464	—	599


		For the Quarter Ended March 31,		For the Quarter Ended June 30,			For the Six Months Ended June 30,
		2021	2020			2023		2022	2023	2022
Oil (b/d)	Oil (b/d)	24,088	24,598		Oil (b/d)	29,298		28,516	29,296	28,423
Natural Gas (Mcf/d)	Natural Gas (Mcf/d)	92,936	85,672		Natural Gas (Mcf/d)	112,609		115,534	115,738	122,112
NGL (b/d)	NGL (b/d)	194	306		NGL (b/d)	—		99	—	131


		For the Quarter Ended March 31,						For the Quarter Ended June 30,				For the Six Months Ended June 30,
		2021		Increase (Decrease)		2020				2023		Increase (Decrease)	2022		2023		Increase (Decrease)	2022
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	$	73.99	(33)%	$	110.98	$	74.56	(28)%	$	103.05
Egypt	Egypt	61.89		24	%	49.97			Egypt	77.39		(33)%	115.97		78.48		(28)%	109.65
North Sea	North Sea	59.67		20	%	49.66			North Sea	79.27		(30)%	113.77		80.51		(25)%	107.47
Total	Total	59.62		23	%	48.31			Total	76.38		(33)%	113.79		77.37		(28)%	106.87

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	$	1.24	(82)%	$	6.75	$	1.73	(68)%	$	5.48
Egypt	Egypt	2.79		(1)	%	2.83			Egypt	2.95		6%	2.78		2.92		4%	2.80
North Sea	North Sea	6.93		119	%	3.17			North Sea	11.29		(38)%	18.15		14.47		(41)%	24.72
Total	Total	4.14		182	%	1.47			Total	2.39		(58)%	5.65		2.81		(46)%	5.16

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	$	18.26	(54)%	$	39.79	$	20.88	(45)%	$	38.20
Egypt	Egypt	44.74		41	%	31.70			Egypt	—		NM	75.14		—		NM	76.80
North Sea	North Sea	48.59		33	%	36.53			North Sea	39.24		(45)%	71.71		49.52		(32)%	73.29
Total	Total	23.79		126	%	10.51			Total	18.69		(54)%	40.97		21.62		(45)%	39.63


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)
April 1 to April 30, 2023	—	$	—	—	48,968,089
May 1 to May 31, 2023	1,348,347	33.72		1,348,347	47,619,742
June 1 to June 30, 2023	—	—		—	47,619,742
Total	1,348,347	$	33.72


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	7
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	27
3.	3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37	3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41
4.	4.	CONTROLS AND PROCEDURES	38	4.	CONTROLS AND PROCEDURES	42

		PART II - OTHER INFORMATION			PART II - OTHER INFORMATION
1.	1.	LEGAL PROCEEDINGS	40	1.	LEGAL PROCEEDINGS	44
1A.	1A.	RISK FACTORS	40	1A.	RISK FACTORS	44
2.	2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40	2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	44

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


	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


	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


	Units Outstanding	Financial Position(1)
	(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
Cash distributions to Altus Preferred Unit limited partners	—	(23)
Allocation of Altus Midstream LP net income	N/A	76
Redeemable noncontrolling interest — Preferred Unit at: December 31, 2020	660,694	608

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	N/A	19
Redeemable noncontrolling interest — Preferred Unit at: March 31, 2021	660,694	605
Preferred Units embedded derivative		156
		$	761


2.1	–	Agreement and Plan of Merger, dated as of March 1, 2021, by and among Apache Corporation, Registrant, and APA Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
3.1	–	Amended and Restated Certificate of Incorporation of Registrant, dated March 1, 2021, as filed with the Secretary of State of the State of Delaware on March 1, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
3.2	–	Amended and Restated Bylaws of Registrant, dated March 1, 2021 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K dated March 1, 2021, SEC File No. 001-40144).
10.1	–	Assignment and Assumption Agreement, dated as of March 1, 2021, by and between Registrant and Apache Corporation (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.2	–	APA Corporation Income Continuance Plan, as amended and restated effective as of March 1, 2021 (incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.3	–	APA Corporation Executive Termination Policy, as amended and restated effective as of March 1, 2021 (incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.4	–	First Amendment to the APA Corporation 2007 Omnibus Equity Compensation Plan, dated March 1, 2021 (incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.5	–	Second Amendment to the APA Corporation 2011 Omnibus Equity Compensation Plan, dated March 1, 2021 (incorporated by reference to Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.6	–	Second Amendment to the APA Corporation 2016 Omnibus Equity Compensation Plan, dated March 1, 2021 (incorporated by reference to Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.7	–	Amendment of Restricted Stock Unit Award Agreement, dated March 1, 2021 (incorporated by reference to Exhibit 10.7 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.8	–	Amendment of Performance Share Grant Agreement, dated March 1, 2021 (incorporated by reference to Exhibit 10.8 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.9	–	Amendment of Stock Option Grant Agreement, dated March 1, 2021 (incorporated by reference to Exhibit 10.9 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.10	–	Amendment to Apache Corporation 401(k) Savings Plan, dated March 1, 2021 (incorporated by reference to Exhibit 10.10 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.11	–	Amendment to Apache Corporation Non-Qualified Retirement/Savings Plan, dated March 1, 2021 (incorporated by reference to Exhibit 10.11 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
10.12	–	Amendment to Apache Corporation Non-Qualified Restorative Retirement Savings Plan, dated March 1, 2021 (incorporated by reference to Exhibit 10.12 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
*31.1	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.
*31.2	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.
*32.1	–	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.
*101	–	The following financial statements from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL: (i) Statement of Consolidated Operations, (ii) Statement of Consolidated Comprehensive Income (Loss), (iii) Statement of Consolidated Cash Flows, (iv) Consolidated Balance Sheet, (v) Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling Interest and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
*101.SCH	–	Inline XBRL Taxonomy Schema Document.
*101.CAL	–	Inline XBRL Calculation Linkbase Document.
*101.DEF	–	Inline XBRL Definition Linkbase Document.
*101.LAB	–	Inline XBRL Label Linkbase Document.
*101.PRE	–	Inline XBRL Presentation Linkbase Document.
*104	–	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


3.1	–	Amended and Restated Certificate of Incorporation of Registrant, dated March 1, 2021, as filed with the Secretary of State of the State of Delaware on March 1, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K12B filed March 1, 2021, SEC File No. 001-40144).
3.2	–	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant, dated May 24, 2023, as filed with the Secretary of State of the State of Delaware on May 24, 2023 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed May 25, 2023, SEC File No. 001-40144).
3.3	–	Amended and Restated Bylaws of Registrant, dated February 2, 2023 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed February 8, 2023, SEC File No. 001-40144).
*31.1	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.
*31.2	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.
**32.1	–	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.
*101	–	The following financial statements from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL: (i) Statement of Consolidated Operations, (ii) Statement of Consolidated Comprehensive Income (Loss), (iii) Statement of Consolidated Cash Flows, (iv) Consolidated Balance Sheet, (v) Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling Interests and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
*101.SCH	–	Inline XBRL Taxonomy Schema Document.
*101.CAL	–	Inline XBRL Calculation Linkbase Document.
*101.DEF	–	Inline XBRL Definition Linkbase Document.
*101.LAB	–	Inline XBRL Label Linkbase Document.
*101.PRE	–	Inline XBRL Presentation Linkbase Document.
*104	–	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


		APA CORPORATION

Dated:	~~May 6, 2021~~August 3, 2023	/s/ STEPHEN J. RINEY
		Stephen J. Riney
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Dated:	~~May 6, 2021~~August 3, 2023	/s/ REBECCA A. HOYT
		Rebecca A. Hoyt
		Senior Vice President, Chief Accounting Officer, and Controller
		(Principal Accounting Officer)