This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Partnership’s (as defined below in the Notes to Consolidated Financial Statements) future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on the Partnership’s examination of historical operating trends, the information that was used to prepare the Partnership’s estimate of proved reserves as of December 31, 2020, and other data in its possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology.terminology, but the absence of these words does not mean a statement is not forward looking. Although the Partnership 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 Partnership’s expectations include, but are not limited to, the Partnership’s assumptions about:

Apache Offshore Investment Partnership, a Delaware general partnership (the Investment Partnership), was formed on October 31, 1983, consisting of Apache Corporation, a Delaware corporation (Apache or the Managing Partner), as Managing Partner, and public investors (the Investing Partners). The Investment Partnership invested its entire capital in Apache Offshore Petroleum Limited Partnership, a Delaware limited partnership (the Operating Partnership). The primary business of the Investment Partnership is to serve as the sole limited partner of the Operating Partnership. The accompanying financial statements include the accounts of both the Investment Partnership and the Operating Partnership. The term “Partnership,” as used herein, refers to the Investment Partnership or the Operating Partnership, as the case may be.

These financial statements have been prepared by the Partnership, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which contains a summary of the Partnership’s significant accounting policies and other disclosures.

As of March 31,June 30, 2021, the Partnership’s significant accounting policies are consistent with those discussed in Note 2 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The receivable from/payable to Apache represents the net result of the Investing Partners’ revenue received and expenditures paid in the current month. Generally, cash in this amount will be paid by Apache to the Partnership or transferred to Apache in the month after the Partnership’s transactions are processed and the net results of operations are determined.

The following table describes the changes to the Partnership’s asset retirement obligation liability for the first threesix months of 2021:

The Partnership did not use derivative financial instruments or otherwise engage in hedging activities during the threesix months ended March 31,June 30, 2021 and 2020.

On March 22, 2019, Apache, as the Managing Partner of the Investment Partnership, gave notice of its intention to withdraw as Managing Partner of the Investment Partnership. The notice described the withdrawal process and certain notice periods required by that process. No party assumed the role of Managing Partner within the 120-day notice period specified by the notice of intention to withdraw. Consequently, Apache will oversee the process of winding up and liquidating the business and affairs of the Investment Partnership. Apache has not made a decision as to when it will complete the process to withdraw as Managing Partner.

On April 26, 2019, the Managing Partner determined that, during the withdrawal and dissolution process, it would be inconsistent with the Managing Partner’s fiduciary duties to purchase (or to cause the Investment Partnership to purchase) outstanding units of partnership interests (Units) from the holders thereof pursuant to the right of presentment provided for in Sections 6.9 through 6.14 of the Partnership Agreement of the Investment Partnership (the Partnership Agreement). As a result of this determination by the Managing Partner, pursuant to Section 6.12 of the Partnership Agreement, the right of presentment has been terminated and Sections 6.9 through 6.14 have “become null and void and of no further force or effect” as provided in Section 6.12.

Prior to terminating the right of presentment, the Investment Partnership had not made a repurchase under the right of presentment since 2008.

The Partnership reported a net loss of $63,840$51,227 ($6550 per Investing Partner Unit) for the firstsecond quarter of 2021 compared to a net loss of $21,657$128,766 ($25106 per Investing Partner Unit) in the second quarter of 2020. For the first six months of 2021, the Partnership reported a net loss of $115,067 ($115 per Investing Partner Unit) compared to a net loss of $150,423 ($131 per Investing Partner Unit) in the first quartersix months of 2020.

The Partnership’s crude oil sales for the firstsecond quarter of 2021 totaled $225,221,$177,023, increasing 10125 percent compared to $204,469$78,665 in the firstsecond quarter of 2020. The Partnership’s average realized oil price in the firstsecond quarter of 2021 increased $7.71$35.56 per barrel from the firstsecond quarter of 2020, increasing sales by $35,360.$109,758. Crude oil volumes decreased to 4832 barrels per day in the firstsecond quarter of 2021, compared to 5034 barrels per day in the same prior year period, primarily from natural declines at South Timbalier 295.the result of equipment related downtime during the second quarter of 2021. The decrease in production reduced oil sales by $14,608.$11,400.

The Partnership’s depreciation, depletion and amortization (DD&A), expressed as a percentage of oil and gas sales, waswere approximately 3830 percent and 35 percent for the second quarter and first threesix months of 2021, respectively, compared to approximately 2834 percent and 30 percent for the second quarter and first threesix months of 2020. The higher depletion percentage was primarily the result of higher sales revenue for the quarter and lower estimated future gross revenues from proved oil and gas reserves, which are based on an unweighted arithmetic average of commodity prices in effect for the first day of each of the previous 12 months, held flat for the life of expected production.2020, respectively.

Under the full cost method of accounting, the Partnership is required to review the carrying value of its proved oil and gas properties each quarter. Under these rules, capitalized costs of oil and gas properties, net of accumulated DD&A, may not exceed the present value of estimated future net cash flows from proved oil and gas reserves discounted at 10 percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. The Partnership had no write-downs of the carrying value of its oil and gas properties during the first threesix months of 2021 and 2020.

Lease operating expenses (LOE) for the second quarter of 2021 totaled $109,017, up 10 percent from the same prior year period, primarily the result of increased direct operating costs at South Timbalier 295. LOE for the first threesix months of 2021 totaled $135,057,$244,074, up 2518 percent from the same prior year period, primarily the result of increased repair and maintenance work incurred during the periodfirst quarter of 2021 related to weather events. Gathering and transportation costs for the delivery of oil and gas totaled $4,246$2,646 in the first three monthssecond quarter of 2021, a decrease of 1529 percent from the firstsecond quarter of 2020. Gathering and transportation costs decreased 21 percent in the first six months of 2021 compared to the same prior year period. Administrative expenses for the second quarter and first threesix months of 2021 were 127 percent and 10 percent lower compared to the same prior year period.periods, respectively.

The Partnership’s primary capital resource is net cash provided by operating activities. During the first threesix months of 2021, the Partnership had $23,809generated $88,830 of net cash inflow from operating activities, compared to $194,290$424,170 of net cash outflow in the first threesix months of 2020. The increase in operating cash flows was primarily the result of significantly reduced plugging and abandonment spending at Ship Shoal 258/259 compared toas the same prior year period.abandonment activities on the lease have nearly been completed as of the end of the second quarter of 2021.

The Partnership’s primary needs for cash are for operating expenses, recompletion expenditures, and future dismantlement and abandonment costs. To the extent there is discretion, the Partnership allocates available capital to investment in the Partnership’s properties so as to maximize production and resultant cash flow. The Partnership had no outstanding debt or lease commitments at March 31,June 30, 2021. The Partnership did not have any contractual obligations as of March 31,June 30, 2021, other than the liability for dismantlement and abandonment costs of its oil and gas properties. The Partnership has recorded a separate liability for this asset retirement obligation as discussed in the Notes to the Financial Statements included in the Partnership’s Annualunder Part I, Item I of this Quarterly Report on Form 10-K for the fiscal year ended December 31, 2020.10-Q.

On March 22, 2019, Apache, as the Managing Partner of the Investment Partnership, gave notice of its intention to withdraw as Managing Partner of the Investment Partnership. The notice described the withdrawal process and certain notice periods required by that process. No party assumed the role of Managing Partner within the 120-day notice period specified by the notice of intention to withdraw. Consequently, Apache will oversee the process of winding up and liquidating the business and affairs of the Investment Partnership. Apache has not made a decision as to when it will complete the process to withdraw as Managing Partner.

Prior to terminating the right of presentment, the Investment Partnership had not made a repurchase under the right of presentment since 2008.

John J. Christmann IV, the Managing Partner’s Chief Executive Officer and President (in his capacity as principal executive officer), and Stephen J. Riney, the Managing Partner’s Executive Vice President and Chief Financial Officer (in his capacity as principal financial officer), evaluated the effectiveness of the Partnership’s disclosure controls and procedures as of March 31,June 30, 2021, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Partnership’s disclosure controls and procedures were effective, providing effective means to ensure that the information it is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and communicated to the Partnership’s management, including the Managing Partner’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

There was no change in the Partnership’s internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or is reasonably likely to materially affect, the Partnership’s internal controls over financial reporting.