UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


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

For the transition period from _________ to _________

Commission File Number: 1-4300

APACHE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			41-0747868
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

(713) 296-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 ☐

Note: The registrant is a voluntary filer of reports required to be filed by certain companies under Sections 13 or 15(d) of the Securities Exchange Act of 1934.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated 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 ~~October 31, 2021~~April 30, 2022 (100% owned by APA Corporation)			1,000

OMISSION OF CERTAIN INFORMATION

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

TABLE OF CONTENTS


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	7		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	6
2.	2.	MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS	30	2.	MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS	28
3.	3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39	3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
4.	4.	CONTROLS AND PROCEDURES	39	4.	CONTROLS AND PROCEDURES	36

		PART II - OTHER INFORMATION			PART II - OTHER INFORMATION
1.	1.	LEGAL PROCEEDINGS	40	1.	LEGAL PROCEEDINGS	37
1A.	1A.	RISK FACTORS	40	1A.	RISK FACTORS	37
6.	6.	EXHIBITS	41	6.	EXHIBITS	38

FORWARD-LOOKING STATEMENTS AND RISKS

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Company’s future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on the Company’s examination of historical operating trends, the information that was used to prepare its estimate of proved reserves as of December 31, ~~2020,~~2021, and other data in the Company’s possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable under the circumstances, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, its assumptions about:

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

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

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

•the Company’s commodity hedging arrangements;

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

•production and reserve levels;

•drilling risks;

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

•the availability of capital resources;

•capital expenditures and other contractual obligations;

•currency exchange rates;

•weather conditions;

•inflation rates;

•the availability of goods and services;

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

•legislative, regulatory, or policy changes, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring, or water disposal;

•the Company’s performance on environmental, social, and governance measures;

•terrorism or cyberattacks;

•the occurrence of property acquisitions or divestitures;

•the integration of acquisitions;

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

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

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

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

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

•~~other factors disclosed under Part II, Item 1A—Risk Factors in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021;~~

•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.

DEFINITIONS

All defined terms under Rule 4-10(a) of Regulation S-X shall have their statutorily prescribed meanings when used in this Quarterly Report on Form 10-Q. As used herein:

“3-D” means three-dimensional.

“4-D” means four-dimensional.

“b/d” means barrels of oil or ~~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 “Apache,” the “Company,” “we,” “us,” and “our” refer to Apache Corporation and its consolidated subsidiaries, unless otherwise specifically stated. References to “APA” refer to APA Corporation, the Company’s parent holding company, and its consolidated subsidiaries, including the Company, unless otherwise specifically stated.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)


											For the Quarter Ended March 31,
		For the Quarter Ended September 30,				For the Nine Months Ended September 30,					2022		2021
		2021		2020		2021		2020
		(In millions)									(In millions)
REVENUES AND OTHER:	REVENUES AND OTHER:									REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues	Oil, natural gas, and natural gas liquids production revenues	$	1,685	$	1,046	$	4,630	$	2,979	Oil, natural gas, and natural gas liquids production revenues	$	2,320	$	1,431
Purchased oil and gas sales	Purchased oil and gas sales	374		74		1,056		237		Purchased oil and gas sales	349		440
Total revenues	Total revenues	2,059		1,120		5,686		3,216		Total revenues	2,669		1,871
Derivative instrument gains (losses), net	Derivative instrument gains (losses), net	—		16		45		(262)		Derivative instrument gains (losses), net	(62)		158
Gain (loss) on divestitures, net		(2)		(1)		65		24
Loss on previously sold Gulf of Mexico properties		(446)		—		(446)		—
Gain on divestitures, net										Gain on divestitures, net	1,176		2

Other, net	Other, net	40		9		175		41		Other, net	45		61
		1,651		1,144		5,525		3,019			3,828		2,092
OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Lease operating expenses	Lease operating expenses	316		259		891		858		Lease operating expenses	344		264
Gathering, processing, and transmission	Gathering, processing, and transmission	68		63		187		206		Gathering, processing, and transmission	81		58
Purchased oil and gas costs	Purchased oil and gas costs	396		75		1,152		207		Purchased oil and gas costs	351		494
Taxes other than income	Taxes other than income	54		34		149		90		Taxes other than income	70		44
Exploration	Exploration	21		58		86		187		Exploration	25		46
General and administrative	General and administrative	64		52		226		214		General and administrative	151		83
Transaction, reorganization, and separation	Transaction, reorganization, and separation	4		7		8		44		Transaction, reorganization, and separation	14		—
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	335		398		1,028		1,382		Depreciation, depletion, and amortization	291		342
Asset retirement obligation accretion	Asset retirement obligation accretion	29		27		85		81		Asset retirement obligation accretion	29		28
Impairments		18		—		18		4,492

Financing costs, net	Financing costs, net	192		99		393		168		Financing costs, net	140		107
		1,497		1,072		4,223		7,929			1,496		1,466
NET INCOME (LOSS) BEFORE INCOME TAXES		154		72		1,302		(4,910)
NET INCOME BEFORE INCOME TAXES										NET INCOME BEFORE INCOME TAXES	2,332		626
Current income tax provision	Current income tax provision	183		58		463		120		Current income tax provision	392		149
Deferred income tax benefit		(29)		(27)		(51)		(71)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS		—		41		890		(4,959)
Net income (loss) attributable to noncontrolling interest - Egypt		49		24		132		(138)
Net income (loss) attributable to noncontrolling interest - Altus		4		2		32		(7)
Net income attributable to Altus Preferred Unit limited partners		30		19		73		56
NET INCOME (LOSS) ATTRIBUTABLE TO APA CORPORATION		$	(83)	$	(4)	$	653	$	(4,870)
Deferred income tax provision (benefit)										Deferred income tax provision (benefit)	(41)		18
NET INCOME INCLUDING NONCONTROLLING INTERESTS										NET INCOME INCLUDING NONCONTROLLING INTERESTS	1,981		459
Net income attributable to noncontrolling interest - Sinopec										Net income attributable to noncontrolling interest - Sinopec	119		42
Net income attributable to noncontrolling interest - Altus										Net income attributable to noncontrolling interest - Altus	14		1
Net income attributable to noncontrolling interest - APA Corporation										Net income attributable to noncontrolling interest - APA Corporation	71		—
Net income (loss) attributable to Altus Preferred Unit limited partners										Net income (loss) attributable to Altus Preferred Unit limited partners	(70)		19
NET INCOME ATTRIBUTABLE TO APA CORPORATION										NET INCOME ATTRIBUTABLE TO APA CORPORATION	$	1,847	$	397

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

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Unaudited)

For the Quarter Ended
September 30,
For the Nine Months Ended
September 30,
2021 2020 2021 2020
(In millions)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS $ — $ 41 $ 890 $ (4,959)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Share of equity method interests other comprehensive income — 1 1 —
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS — 42 891 (4,959)
Comprehensive income (loss) attributable to noncontrolling interest - Egypt 49 24 132 (138)
Comprehensive income (loss) attributable to noncontrolling interest - Altus 4 2 32 (7)
Comprehensive income attributable to Altus Preferred Unit limited partners 30 19 73 56
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO APA CORPORATION $ (83) $ (3) $ 654 $ (4,870)


	For the Quarter Ended March 31,
	2022		2021

	(In millions)
NET INCOME INCLUDING NONCONTROLLING INTERESTS	$	1,981	$	459
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Share of equity method interests other comprehensive income	—		1
Pension and postretirement benefit plan	(1)		—
COMPREHENSIVE INCOME INCLUDING NONCONTROLLING INTERESTS	1,980		460
Comprehensive income attributable to noncontrolling interest - Sinopec	119		42
Comprehensive income attributable to noncontrolling interest - Altus	14		1
Comprehensive income attributable to noncontrolling interest - APA Corporation	71		—
Comprehensive income (loss) attributable to Altus Preferred Unit limited partners	(70)		19
COMPREHENSIVE INCOME ATTRIBUTABLE TO APA CORPORATION	$	1,846	$	398

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

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)

For the Nine Months Ended
September 30,
2021 2020
(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interests $ 890 $ (4,959)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized derivative instrument losses, net 18 142
Gain on divestitures, net (65) (24)
Exploratory dry hole expense and unproved leasehold impairments 57 138
Depreciation, depletion, and amortization 1,028 1,382
Asset retirement obligation accretion 85 81
Impairments 18 4,492
Deferred income tax benefit (51) (71)
Loss (gain) on extinguishment of debt 104 (152)
Loss on previously sold Gulf of Mexico properties 446 —
Other, net (42) 45
Changes in operating assets and liabilities:
Receivables (274) 202
Inventories (19) 16
Drilling advances and other current assets 20 (5)
Deferred charges and other long-term assets (46) (12)
Accounts payable 195 (211)
Accounts payable to APA Corporation 33 —
Accrued expenses 29 (211)
Deferred credits and noncurrent liabilities (8) 37
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,418 890
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to upstream oil and gas property (673) (1,075)
Additions to Altus gathering, processing, and transmission (GPT) facilities (2) (27)
Leasehold and property acquisitions (6) (3)
Contributions to Altus equity method interests (27) (286)
Proceeds from sale of oil and gas properties 239 132
Other, net 44 (17)
NET CASH USED IN INVESTING ACTIVITIES (425) (1,276)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Apache credit facility, net 290 87
Proceeds from Altus credit facility, net 33 184
Proceeds from note payable to APA Corporation, net 139 —
Fixed-rate debt borrowings — 1,238
Payments on fixed-rate debt (1,795) (980)
Distributions to noncontrolling interest - Egypt (203) (61)
Distributions to Altus Preferred Unit limited partners (34) (11)
Distributions to APA Corporation (311) —
Dividends paid (9) (113)
Other, net (17) (43)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,907) 301
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 86 (85)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 262 247
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 348 $ 162
SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest $ 365 $ 341
Income taxes paid, net of refunds 415 153


	For the Three Months Ended March 31,
	2022		2021

	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interests	$	1,981	$	459
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized derivative instrument losses (gains), net	57		(10)
Gain on divestitures, net	(1,176)		(2)
Exploratory dry hole expense and unproved leasehold impairments	9		37
Depreciation, depletion, and amortization	291		342
Asset retirement obligation accretion	29		28

Provision for (benefit from) deferred income taxes	(41)		18
Loss on extinguishment of debt	67		—

Other, net	(43)		(25)
Changes in operating assets and liabilities:
Receivables	(254)		(166)
Inventories	(43)		(3)
Drilling advances and other current assets	9		12
Deferred charges and other long-term assets	(13)		(13)
Accounts payable	(5)		73
Accounts payable to APA Corporation	(33)		15
Accrued expenses	18		(64)
Deferred credits and noncurrent liabilities	3		(10)
NET CASH PROVIDED BY OPERATING ACTIVITIES	856		691
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to upstream oil and gas property	(334)		(237)
Additions to Altus gathering, processing, and transmission (GPT) facilities	(1)		(1)
Leasehold and property acquisitions	(20)		(2)
Contributions to Altus equity method interests	(2)		(21)

Proceeds from sale of oil and gas properties	767		3
Proceeds from sale of Kinetik shares	224		—
Deconsolidation of Altus cash and cash equivalents	(143)		—
Other, net	(1)		7
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	490		(251)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) Apache credit facility, net	338		(85)
Proceeds from Altus credit facility, net	—		33
Payments on note payable to APA Corporation, net	(21)		—

Payments on fixed-rate debt	(1,370)		(6)
Distributions to noncontrolling interest - Sinopec	(69)		(40)
Distributions to Altus Preferred Unit limited partners	(11)		(11)
Distributions to APA Corporation	(346)		(292)
Dividends paid	—		(9)
Other, net	(2)		(11)
NET CASH USED IN FINANCING ACTIVITIES	(1,481)		(421)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(135)		19
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	279		262
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	144	$	281

SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	128	$	113
Income taxes paid, net of refunds	305		124

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

APACHE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)


							March 31, 2022(1)		December 31, 2021(1)
		September 30, 2021		December 31, 2020
		(In millions, except share data)					(In millions, except share data)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents ($109 and $24 related to Altus VIE)		$	348	$	262
Receivables, net of allowance of $99 and $95		1,167		908
Other current assets (Note 6) ($9 and $5 related to Altus VIE)		599		676
Cash and cash equivalents ($132 related to Altus VIE)						Cash and cash equivalents ($132 related to Altus VIE)	$	144	$	279
Receivables, net of allowance of $111 and $109						Receivables, net of allowance of $111 and $109	1,625		1,390
Other current assets (Note 6) ($9 related to Altus VIE)						Other current assets (Note 6) ($9 related to Altus VIE)	695		649
Accounts receivable from APA Corporation	Accounts receivable from APA Corporation	55		—		Accounts receivable from APA Corporation	96		77
		2,169		1,846			2,560		2,395
PROPERTY AND EQUIPMENT:	PROPERTY AND EQUIPMENT:					PROPERTY AND EQUIPMENT:
Oil and gas properties	Oil and gas properties	40,205		41,819		Oil and gas properties	40,223		40,474
Gathering, processing, and transmission facilities ($207 and $206 related to Altus VIE)		673		670
Other ($4 and $3 related to Altus VIE)		1,124		1,140
Less: Accumulated depreciation, depletion, and amortization ($22 and $13 related to Altus VIE)		(33,889)		(34,810)
Gathering, processing, and transmission facilities ($209 related to Altus VIE)						Gathering, processing, and transmission facilities ($209 related to Altus VIE)	464		673
Other ($3 related to Altus VIE)						Other ($3 related to Altus VIE)	1,123		1,126
Less: Accumulated depreciation, depletion, and amortization ($25 related to Altus VIE)						Less: Accumulated depreciation, depletion, and amortization ($25 related to Altus VIE)	(34,058)		(34,213)
		8,113		8,819			7,752		8,060
OTHER ASSETS:	OTHER ASSETS:					OTHER ASSETS:
Equity method interests (Note 7) ($1,538 and $1,555 related to Altus VIE)		1,538		1,555
Equity method interests (Note 7) ($1,365 related to Altus VIE)						Equity method interests (Note 7) ($1,365 related to Altus VIE)	576		1,365
Decommissioning security for sold Gulf of Mexico properties (Note 12)	Decommissioning security for sold Gulf of Mexico properties (Note 12)	740		—		Decommissioning security for sold Gulf of Mexico properties (Note 12)	640		640
Deferred charges and other ($8 and $5 related to Altus VIE)		514		526
Deferred charges and other ($6 related to Altus VIE)						Deferred charges and other ($6 related to Altus VIE)	583		581
Note receivable from APA Corporation (Note 2)	Note receivable from APA Corporation (Note 2)	1,352		—		Note receivable from APA Corporation (Note 2)	1,383		1,352
		$	14,426	$	12,746		$	13,494	$	14,393

LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY
LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY (DEFICIT)						LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY (DEFICIT)
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Accounts payable ($9 and $6 related to Altus VIE)		$	643	$	444
Accounts payable ($12 related to Altus VIE)						Accounts payable ($12 related to Altus VIE)	$	633	$	651
Note payable to APA Corporation	Note payable to APA Corporation	243		—		Note payable to APA Corporation	174		195
Current debt	Current debt	215		2		Current debt	125		215
Other current liabilities (Note 8) ($15 and $4 related to Altus VIE)		937		862
Other current liabilities (Note 8) ($15 related to Altus VIE)						Other current liabilities (Note 8) ($15 related to Altus VIE)	1,222		1,170
		2,038		1,308			2,154		2,231
LONG-TERM DEBT (Note 10) ($657 and $624 related to Altus VIE)		7,193		8,770
LONG-TERM DEBT (Note 10) ($657 related to Altus VIE)						LONG-TERM DEBT (Note 10) ($657 related to Altus VIE)	5,764		7,295
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:	DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:					DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes	Income taxes	169		215		Income taxes	105		148
Asset retirement obligation (Note 9) ($67 and $64 related to Altus VIE)		1,912		1,888
Asset retirement obligation (Note 9) ($68 related to Altus VIE)						Asset retirement obligation (Note 9) ($68 related to Altus VIE)	2,043		2,089
Decommissioning contingency for sold Gulf of Mexico properties (Note 12)	Decommissioning contingency for sold Gulf of Mexico properties (Note 12)	1,186		—		Decommissioning contingency for sold Gulf of Mexico properties (Note 12)	1,086		1,086
Other ($126 and $144 related to Altus VIE)		527		602
Other ($67 related to Altus VIE)						Other ($67 related to Altus VIE)	510		572
		3,794		2,705			3,744		3,895
REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 13)	REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 13)	635		608		REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 13)	—		712
EQUITY (DEFICIT):	EQUITY (DEFICIT):					EQUITY (DEFICIT):
Common stock, $0.625 par, 1,000 and 860,000,000 shares authorized, respectively, 1,000 and 418,429,375 shares issued, respectively		—		262
Common stock, $0.625 par, 1,000 and 1,000 shares authorized, respectively, 1,000 and 1,000 shares issued, respectively						Common stock, $0.625 par, 1,000 and 1,000 shares authorized, respectively, 1,000 and 1,000 shares issued, respectively	—		—
Paid-in capital	Paid-in capital	9,532		11,735		Paid-in capital	8,381		8,677
Accumulated deficit	Accumulated deficit	(9,726)		(10,461)		Accumulated deficit	(7,470)		(9,317)
Treasury stock, at cost, 0 and 40,946,745 shares, respectively		—		(3,189)

Accumulated other comprehensive income	Accumulated other comprehensive income	15		14		Accumulated other comprehensive income	21		22
DEFICIT ATTRIBUTABLE TO APA CORPORATION		(179)		(1,639)
Noncontrolling interest - Egypt		854		925
EQUITY (DEFICIT) ATTRIBUTABLE TO APA CORPORATION						EQUITY (DEFICIT) ATTRIBUTABLE TO APA CORPORATION	932		(618)
Noncontrolling interest - Sinopec						Noncontrolling interest - Sinopec	870		820
Noncontrolling interest - APA Corporation						Noncontrolling interest - APA Corporation	30		—
Noncontrolling interest - Altus	Noncontrolling interest - Altus	91		69		Noncontrolling interest - Altus	—		58
TOTAL EQUITY (DEFICIT)		766		(645)
TOTAL EQUITY						TOTAL EQUITY	1,832		260
		$	14,426	$	12,746		$	13,494	$	14,393

(1) The Altus VIE amounts are disclosed as of December 31, 2021. All Altus balances were deconsolidated as of February 22, 2022. Refer to Note 1—Summary of Significant Accounting Policies and Note 3—Acquisitions and Divestitures for further detail.

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

APACHE 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 PARENT COMPANY
DEFICIT Noncontrolling
Interests TOTAL
EQUITY (DEFICIT)
(In millions)
For the Quarter Ended September 30, 2020
Balance at June 30, 2020 $ 592 $ 262 $ 11,744 $ (10,467) $ (3,189) $ 15 $ (1,635) $ 999 $ (636)
Net loss attributable to APA Corporation — — — (4) — — (4) — (4)
Net income attributable to noncontrolling interest - Egypt — — — — — — — 24 24
Net income attributable to noncontrolling interest - Altus — — — — — — — 2 2
Net income attributable to Altus Preferred Unit holders 19 — — — — — — — —
Distributions payable to Altus Preferred Unit limited partners (11) — — — — — — — —
Distributions to noncontrolling interest - Egypt — — — — — — — (21) (21)
Common dividends declared ($0.025 per share) — — (10) — — — (10) — (10)
Other — — 7 — — 1 8 — 8
Balance at September 30, 2020 $ 600 $ 262 $ 11,741 $ (10,471) $ (3,189) $ 16 $ (1,641) $ 1,004 $ (637)
For the Quarter Ended September 30, 2021
Balance at June 30, 2021 $ 617 $ — $ 9,535 $ (9,642) $ — $ 15 $ (92) $ 1,040 $ 948
Net loss attributable to APA Corporation — — — (83) — — (83) — (83)
Net income attributable to noncontrolling interest - Egypt — — — — — — — 49 49
Net income attributable to noncontrolling interest - Altus — — — — — — — 4 4
Net income attributable to Altus Preferred Unit limited partners 30 — — — — — — — —
Distributions payable to Altus Preferred Unit limited partners (12) — — — — — — — —
Distributions to noncontrolling interest - Egypt — — — — — — — (143) (143)
Distributions to APA Corporation — — (9) — — — (9) — (9)
Other — — 6 (1) — — 5 (5) —
Balance at September 30, 2021 $ 635 $ — $ 9,532 $ (9,726) $ — $ 15 $ (179) $ 945 $ 766


	Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners(1)		Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		PARENT COMPANY EQUITY (DEFICIT)		Noncontrolling Interests(1)		TOTAL EQUITY (DEFICIT)
	(In millions)
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 APA Corporation	—		—		—		397		—		—		397		—		397
Net income attributable to noncontrolling interest - Sinopec	—		—		—		—		—		—		—		42		42
Net income attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		1		1
Net income attributable to Altus Preferred Unit holders	19		—		—		—		—		—		—		—		—
Distributions paid to Altus Preferred Unit limited partners	(11)		—		—		—		—		—		—		—		—
Distributions payable to Altus Preferred Unit limited partners	(11)		—		—		—		—		—		—		—		—
Distributions to noncontrolling interest - Sinopec	—		—		—		—		—		—		—		(40)		(40)
Common dividends declared ($0.025 per share)	—		—		(9)		—		—		—		(9)		—		(9)
APA Corporation share exchange	—		(262)		(2,927)		—		3,189		—		—		—		—
Holding Company Reorganization	—		—		757		82		—		—		839		—		839
Other	—		—		1		—		—		1		2		—		2
Balance at March 31, 2021	$	605	$	—	$	9,557	$	(9,982)	$	—	$	15	$	(410)	$	997	$	587

For the Quarter Ended March 31, 2022
Balance at December 31, 2021	$	712	$	—	$	8,677	$	(9,317)	$	—	$	22	$	(618)	$	878	$	260
Net income attributable to APA Corporation	—		—		—		1,847		—		—		1,847		—		1,847
Net income attributable to noncontrolling interest - APA	—		—		—		—		—		—		—		71		71
Net income attributable to noncontrolling interest - Sinopec	—		—		—		—		—		—		—		119		119
Net income attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		14		14
Net loss attributable to Altus Preferred Unit limited partners	(70)		—		—		—		—		—		—		—		—


Distributions to noncontrolling interest - Sinopec	—		—		—		—		—		—		—		(69)		(69)
Distributions to APA Corporation	—		—		(305)		—		—		—		(305)		(41)		(346)


Deconsolidation of Altus	(642)		—		—		—		—		—		—		(72)		(72)
Other	—		—		9		—		—		(1)		8		—		8
Balance at March 31, 2022	$	—	$	—	$	8,381	$	(7,470)	$	—	$	21	$	932	$	900	$	1,832

(1) As a result of the BCP Business Combination, the Company deconsolidated Altus on February 22, 2022. Refer to Note 1—Summary of Significant Accounting Policies and Note 3—Acquisitions and Divestitures for further detail.

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

~~APACHE CORPORATION AND SUBSIDIARIES~~

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

~~(Unaudited)~~

Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners Common
Stock Paid-In
Capital Accumulated Deficit Treasury
Stock Accumulated
Other
Comprehensive
Income PARENT
COMPANY
DEFICIT Noncontrolling
Interests TOTAL
EQUITY (DEFICIT)
(In millions)
For the Nine Months Ended September 30, 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 APA Corporation — — — (4,870) — — (4,870) — (4,870)
Net loss attributable to noncontrolling interest - Egypt — — — — — — — (138) (138)
Net loss attributable to noncontrolling interest - Altus — — — — — — — (7) (7)
Net income attributable to Altus Preferred Unit holders 56 — — — — — — — —
Distributions to Altus Preferred Unit limited partners (11) — — — — — — — —
Distributions to noncontrolling interest - Egypt — — — — — — — (61) (61)
Common dividends declared ($0.075 per share) — — (29) — — — (29) — (29)
Other — 1 1 — 1 — 3 — 3
Balance at September 30, 2020 $ 600 $ 262 $ 11,741 $ (10,471) $ (3,189) $ 16 $ (1,641) $ 1,004 $ (637)
For the Nine Months Ended September 30, 2021
Balance at December 31, 2020 $ 608 $ 262 $ 11,735 $ (10,461) $ (3,189) $ 14 $ (1,639) $ 994 $ (645)
Net income attributable to APA Corporation — — — 653 — — 653 — 653
Net income attributable to noncontrolling interest - Egypt — — — — — — — 132 132
Net income attributable to noncontrolling interest - Altus — — — — — — — 32 32
Net income attributable to Altus Preferred Unit limited partners 73 — — — — — — — —
Distributions payable to Altus Preferred Unit limited partners (12) — — — — — — — —
Distributions paid to Altus Preferred Unit limited partners (34) — — — — — — — —
Distributions to noncontrolling interest - Egypt — — — — — — — (203) (203)
Distributions to APA Corporation — — (19) — — — (19) — (19)
Common dividends declared ($0.1125 per share) — — (9) — — — (9) — (9)
APA Corporation share exchange — (262) (2,927) — 3,189 — — — —
Holding Company Reorganization — — 757 82 — — 839 — 839
Other — — (5) — — 1 (4) (10) (14)
Balance at September 30, 2021 $ 635 $ — $ 9,532 $ (9,726) $ — $ 15 $ (179) $ 945 $ 766

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

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These consolidated financial statements have been prepared by Apache Corporation (Apache or the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods, on a basis consistent with the annual audited financial statements, with the exception of any recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (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 for the fiscal year ended December 31, ~~2020,~~2021, which contains a summary of the Company’s significant accounting policies and other disclosures.

On ~~January 4,~~March 1, 2021, Apache ~~announced plans to implement~~Corporation, the Company’s predecessor registrant, consummated a holding company reorganization (the Holding Company Reorganization), pursuant to which ~~was thereafter completed on March 1, 2021. In connection with the Holding Company Reorganization,~~ Apache became a direct, ~~wholly-owned~~wholly owned subsidiary of APA Corporation (APA), and all of Apache’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 pursuant to Rule 12g-3(a) under the Exchange Act and replaced Apache as the public company trading on the Nasdaq Global Select Market under the ticker symbol “APA.” The Holding Company Reorganization modernized the Company’s operating and legal structure, making it more consistent with other companies that have affiliates operating around the globe. Refer to Note 2—Transactions with Parent Affiliate for more detail.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of ~~September 30, 2021,~~March 31, 2022, the Company's significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. The Company’s financial statements for prior periods include reclassifications that were made to conform to the current-year ~~presentation.~~presentation, if applicable.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Apache and its subsidiaries after elimination of intercompany balances and transactions. Apache’s consolidated financial statements reflect the impacts of the Holding Company Reorganization on a prospective basis, and results prior to completion of the Holding Company Reorganization have not been restated. Refer to Note 2—Transactions with Parent Affiliate for more detail.

The Company’s undivided interests in oil and gas exploration and production ventures and partnerships are proportionately consolidated. The Company consolidates all other investments in which, either through direct or indirect ownership, it has more than a 50 percent voting interest or controls the financial and operating decisions. Noncontrolling interests represent third-party ownership in the net assets of a consolidated subsidiary of Apache and are reflected separately in the Company’s financial statements.

In conjunction with the ratification of a new merged concession agreement with the Egyptian General Petroleum Corporation (EGPC) in December 2021, Apache modified partnership agreements for certain consolidated subsidiaries. Apache subsequently determined that one of its limited partnership subsidiaries, which has control over Apache’s Egyptian operations, qualified as a variable interest entity (VIE) under GAAP. Apache continues to consolidate this limited partnership subsidiary because the Company has concluded that it has a controlling financial interest in the Egyptian operations and was determined to be the primary beneficiary of the VIE. For all periods presented, Sinopec International Petroleum Exploration and Production Corporation (Sinopec) ~~owns~~has owned a one-third minority participation in the Company’s consolidated Egypt oil and gas business as a noncontrolling ~~interest, which is~~interest. Under the modified partnership agreements, APA owns a minority participation in the remaining two-thirds of its consolidated Egypt oil and gas business as a noncontrolling interest. Refer to Note 2—Transactions with Parent Affiliat e for detail regarding APA’s noncontrolling interest. All noncontrolling interests are 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~~VIE under GAAP, ~~for~~ which Apache ~~consolidates~~consolidated because a ~~wholly-owned~~wholly owned subsidiary of Apache ~~has~~had a controlling financial interest and was determined to be the primary beneficiary. Additionally, the assets of ALTM could only be used to settle obligations of ALTM. There was no recourse to the Company for ALTM’s liabilities.

On February 22, 2022, ALTM closed a previously announced transaction to combine with privately owned BCP Raptor Holdco LP (BCP and, together with BCP Raptor Holdco GP, LLC, the Contributed Entities) in an all-stock transaction, pursuant to the Contribution Agreement entered into by and among ALTM, Altus Midstream LP, New BCP Raptor Holdco, LLC (the Contributor), and BCP (the BCP Contribution Agreement). Pursuant to the BCP Contribution Agreement, the Contributor contributed all of the equity interests of the Contributed Entities (the Contributed Interests) to Altus Midstream LP, with each Contributed Entity becoming a wholly owned subsidiary of Altus Midstream LP (the BCP Business Combination). Upon closing the transaction, the combined entity was renamed Kinetik Holdings Inc. (Kinetik), and the Company determined that it was no longer the primary beneficiary of ALTM. The Company further determined that ALTM no longer qualified as a VIE under GAAP.As a result, the Company deconsolidated ALTM on February 22, 2022. Refer to Note 3—Acquisitions and Divestitures for further detail.

The stockholders agreement entered into by and among the Company, ALTM, BCP, and other related and affiliated entities provides that the Company, through one of its wholly owned subsidiaries, retains the ability to designate a director to the board of directors of Kinetik for so long as the Company and its affiliates beneficially own 10 percent or more of Kinetik’s outstanding common stock. Based on this board representation, combined with the Company’s stock ownership, management determined it has significant influence over Kinetik. Investments in which the Company has significant influence, but not control, are accounted for under the equity method of accounting. These investments are recorded separately as “Equity method interests” in the Company’s consolidated balance sheet. The ~~Company’s proportionate share of~~Company elected the ~~results of operations generated by the~~fair value option to account for its equity method ~~interests are recorded as a component of “Other, net” under “Revenues and Other”~~interest in ~~the Company’s statement of consolidated operations.~~Kinetik. Refer to Note 7—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 ~~as of~~at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of the Company’s financial statements and changes in these estimates are recorded when known.

Significant estimates with regard to these financial statements include the estimates of fair value for long-lived assets (refer to “Fair Value Measurements” and “Property and Equipment” sections in this Note 1 below), the fair value determination of acquired assets and liabilities (refer to Note 3—Acquisitions and Divestitures), the fair value of equity method interests (refer

to “Equity Method Interests” within this Note 1 below and Note 7—Equity Method Interests), the assessment of asset retirement obligations (refer to Note 9—Asset Retirement Obligation), the estimation of the contingent liability representing Apache’s potential obligation to decommission sold properties in the Gulf of Mexico (refer to Note 12 —12—Commitments and Contingencies), the estimate of income taxes (refer to Note 11—Income Taxes), and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom.

Fair Value Measurements

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

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

Refer to Note 5—Derivative Instruments and Hedging Activities, Note 10—Debt and Financing Costs, and Note 13—Redeemable Noncontrolling Interest - Altus for further detail regarding the Company’s fair value measurements recorded on a recurring basis.

~~Fair value measurements are~~During the quarters ended March 31, 2022 and 2021, the Company recorded ~~on a nonrecurring basis when certain qualitative assessments of the Company’s assets indicate potential impairment. Asset~~no asset impairments ~~recorded~~ in connection with fair value ~~assessments were as follows:~~

For the Quarter Ended
September 30,
For the Nine Months Ended
September 30,
2021 2020 2021 2020
(In millions)
Oil and gas proved property $ — $ — $ — $ 4,319
Gathering, processing, and transmission facilities — — — 68
Goodwill — — — 87
Inventory and other 18 — 18 18
Total Impairments $ 18 $ — $ 18 $ 4,492

During the third quarter and first nine months of 2021, the Company recorded $18 million of asset impairments in connection with inventory valuations and expected equipment dispositions in the North Sea.

~~During the first nine months of 2020, the Company recognized total asset impairments of $4.5 billion in connection with fair value~~ assessments. Given 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. The Company recognized proved property impairments of $3.9 billion, $374 million, and $7 million 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. Similarly, the Company recognized GPT facility impairments of $68 million in Egypt. These impairments are discussed in further detail below in “Property and Equipment - Oil and Gas Property” and “Property and Equipment - Gathering, Processing, and Transmission Facilities.”

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

The Company also 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.

Accounts Receivable from / Accounts Payable to APA

Accounts receivable from or payable to APA represents the net result of Apache’s administrative and support services provided to APA and other miscellaneous cash management transactions to be settled between the two affiliated entities. Generally, cash in this amount will be transferred to Apache or paid to APA in subsequent periods, after current period transactions are processed and net results of operations are determined. However, from time to time, Apache may estimate and transfer the cash settlement amount in the month the transactions are processed in order to minimize affiliate working capital balances. Refer to Note 2—Transactions with Parent Affiliate for more detail.

Revenue Recognition

There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2022 and 2021.

Payments under all contracts with customers are typically due and received within a short-term period of one year or less after physical delivery of the product or service has been rendered. Receivables from contracts with customers, net of allowance for credit losses, were $1.5 billion and $956 million as of March 31, 2022 and December 31, 2021, respectively. Refer to Note 15—Business Segment Information for a disaggregation of oil, gas, and natural gas production revenue by product and reporting segment.

Oil and gas production revenues from non-customers represent income taxes paid to the Arab Republic of Egypt by Egyptian General Petroleum Corporation on behalf of the Company. Revenue and associated expenses related to such tax volumes are recorded as “Oil, natural gas, and natural gas liquids production revenues” and “Current income tax provision,” respectively, in the Company’s statement of consolidated operations. Refer to Note 15—Business Segment Information for a disaggregation of revenue by product and reporting segment.

In accordance with the provisions of ASC 606, “Revenue from Contracts with Customers,” variable market prices for each short-term commodity sale are allocated entirely to each performance obligation as the terms of payment relate specifically to the Company’s efforts to satisfy its obligations. As such, the Company has elected the practical expedients available under the standard to not disclose the aggregate transaction price allocated to unsatisfied, or partially unsatisfied, performance obligations as of the end of the reporting period.

Property and Equipment

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

Oil and Gas Property

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

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

Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of crude oil and natural gas, are capitalized. Depreciation of the cost of proved oil and gas properties is calculated using the unit-of-production (UOP) method. The UOP calculation multiplies the percentage of estimated proved reserves produced each quarter by the carrying value of associated proved oil and gas properties. The reserve base used to calculate depreciation for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. The reserve base used to calculate the depreciation for capitalized well costs is the sum of proved developed reserves only. Estimated future dismantlement, restoration and abandonment costs, net of salvage values, are included in the depreciable cost.

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

When circumstances indicate that the carrying value of proved oil and gas properties may not be recoverable, the Company compares unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on the Company’s estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is generally estimated using the income approach described in ASC 820. The expected future cash flows used for impairment reviews and related fair value calculations are typically based on judgmental assessments, a Level 3 fair value measurement.

The significant decline in crude oil and natural gas prices, as well as longer-term commodity price outlooks, related to reduced demand for oil and natural gas as a result of the COVID-19 pandemic and related governmental actions indicated possible impairment of the Company’s proved and unproved oil and gas properties in early 2020. In addition to estimating risk-adjusted reserves and future production volumes, estimated future commodity prices are the largest driver in variability of undiscounted pre-tax cash flows. Expected cash flows were estimated based on management’s views of published West Texas Intermediate (WTI), Brent, and Henry Hub forward pricing as of the balance sheet dates. Other significant assumptions and inputs used to calculate estimated future cash flows include estimates for future development activity, exploration plans and remaining lease terms. A 10 percent discount rate, based on a market-based weighted-average cost of capital estimate, was applied to the undiscounted cash flow estimate to value all of the Company’s asset groups that were subject to impairment charges in the first and second quarters 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
September 30,
For the Nine Months Ended
September 30,
2021 2020 2021 2020
(In millions)
Proved Properties:
U.S. $ — $ — $ — $ 3,938
Egypt — — — 374
North Sea — — — 7
Total proved properties $ — $ — $ — $ 4,319
Unproved Properties:
U.S. $ 2 $ 34 $ 19 $ 80
Egypt 2 2 6 6
North Sea 1 — 1 —
Total unproved properties $ 5 $ 36 $ 26 $ 86

~~Proved properties impaired during the first nine months of 2020 had an aggregate fair value of $1.9 billion.~~

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 3—Acquisitions and Divestitures for more detail.

Gathering, Processing, and Transmission Facilities

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 Apache-operated or third party-operated, as well as potential development plans by the Company for undeveloped acreage within, or close to, those fields.

The Company assesses the carrying amount of its GPT facilities whenever events or changes in 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 as of 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 nine months ended September 30, 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, were $1.1 billion and $670 million as of September 30, 2021 and December 31, 2020, respectively. Refer to ~~Note 15—Business Segment Information~~ ~~for a disaggregation of oil, gas, and natural gas production revenue by product and reporting segment.~~

~~The following table presents the Company’s revenues generated from contracts with customers and non-customers:~~

For the Quarter Ended
September 30,
For the Nine Months Ended
September 30,
2021 2020 2021 2020
(In millions)
Production revenues from customers $ 1,562 $ 1,002 $ 4,294 $ 2,905
Production revenues from non-customers 123 44 336 74
Total production revenues $ 1,685 $ 1,046 $ 4,630 $ 2,979

~~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. An additional $4 million and $8 million of reorganization costs were incurred in the third quarter and first nine months of 2021, respectively, primarily related to ongoing consulting and separation activities in the Company’s international operations.

The Company recorded $7 million and $44 million of TRS costs during the third quarter and first nine months of 2020, respectively. TRS costs incurred in the first nine months of 2020 relate to $41 million of separation costs associated with the reorganization, $2 million for transaction consulting fees, and $1 million of office closure costs.

2. TRANSACTIONS WITH PARENT AFFILIATE

The Company completed the Holding Company Reorganization on March 1, 2021 and sold to APA all of the equity in the 3 Apache subsidiaries through which Apache’s interests in Suriname and the Dominican Republic were held. The ~~reorganization~~Company accounted for the divestiture of its subsidiaries as a transfer to an affiliate entity under common control and no longer consolidates the subsidiaries for periods subsequent to the Holding Company Reorganization. The carrying value of the net assets transferred was $483 million, which included approximately $292 million of cash and cash equivalents, $163 million of oil and gas properties, and working capital items. The Company continues to hold its existing assets in the U.S., Egypt, and the U.K.

The Holding Company Reorganization gave rise to a note payable by APA to Apache. The note has a seven-year term, maturing on February 29, 2028, and bears interest at a rate of 4.5 percent per annum, payable semi-annually, subject to APA’s option to allow accrued interest to convert to principal (PIK) during the first 5.5 years of the note’s term (to August 31, 2026). The note is guaranteed by each of the 3 subsidiaries sold by Apache to APA.

~~The~~ During the first quarters of 2022 and 2021, the Company recognized interest income on this note of ~~approximately~~ $15 million and ~~$35~~$5 million, ~~on this note during the third quarter and first nine months of 2021,~~ respectively, which is reflected in “Financing costs, net” on the Company’s statement of consolidated operations. Apache has allowed interest accrued from March 1, 2021 through ~~August 31, 2021~~February 28, 2022 totaling $61 million to PIK pursuant to the note.

~~The Company accounted~~In the fourth quarter of 2021, in conjunction with the ratification of a new merged concession agreement (MCA) with the Egyptian General Petroleum Corporation (EGPC), Apache entered into an agreement with APA under which the historical value of existing concessions prior to ratifying the MCA was retained by Apache, with any excess value from the MCA terms being allocated to APA. Sinopec owns a one-third minority participation in the Company’s consolidated Egypt oil and gas business, and approximately 30 percent of the remaining net income and distributable cash flow for the ~~divestiture of~~Company’s Egyptian operations is being allocated to APA in 2022. Apache consolidates its ~~subsidiaries~~Egyptian operations, with APA’s noncontrolling interest reflected as a ~~transfer~~separate component in the Company’s consolidated balance sheet. In the first quarter of 2022, the Company recorded net income attributable to ~~an affiliate entity under common control~~APA’s noncontrolling interest of $71 million and no longer consolidates the subsidiaries for periods subsequent to the Holding Company Reorganization. The carrying value of the net assets transferred was $483 million, which included approximately $292distributed $41 million of ~~Cash and~~ cash ~~equivalents, $163 million of Oil and gas properties, and working capital items. The Company continues~~ to ~~hold~~APA in association with its ~~existing assets in the U.S., Egypt, and U.K., and its current economic interests in ALTM and its subsidiary, Altus Midstream LP.~~noncontrolling interest.

The Company continues to provide administrative and support operations to APA related to activities performed for the Suriname and Dominican Republic subsidiaries. The Company is reimbursed by APA for employee costs, certain internal costs, and third-party costs paid by the Company in connection with its role as service provider. All reimbursements are based on actual costs incurred, and no market premium is applied by the Company to APA. The Company incurred $5 million ~~and $12 million~~ in reimbursable corporate overhead charges for the ~~third~~first quarter ~~and first nine months~~ of ~~2021, respectively.~~2022.

In August 2021, Apache entered into ana promissory note with APA under which Apache may borrow up to $250 million from APA at APA’s discretion. The note has a term of one year, maturing on August 4, 2022, and bears interest at a variable rate per annum equal to the monthly, short-term applicable federal rate, payable semi-annually. As of ~~September 30, 2021,~~March 31, 2022, there was ~~$243~~$174 million outstanding under this note, which is reflected as “Note payable to APA Corporation” on the Company’s consolidated balance sheet.

From time to time, the Company may, at its discretion, make distributions of capital to APA Corporation. During the first quarter of 2022, the Company made capital distributions totaling $305 million primarily in support of dividend payments and capital transactions completed by APA during the period. No capital distributions were made in the first quarter of 2021.

3. ACQUISITIONS AND DIVESTITURES

~~2021~~2022 Activity

~~During~~The BCP Business Combination was completed on February 22, 2022. As consideration for the ~~second quarter~~contribution of ~~2021,~~the Contributed Interests, ALTM issued 50 million shares of Class C Common Stock (and Altus Midstream LP issued a corresponding number of common units) to BCP’s unitholders, which are principally funds affiliated with Blackstone and I Squared Capital. ALTM’s stockholders continued to hold their existing shares of Common Stock. As a result of the transaction, the Contributor, or its designees, collectively owned approximately 75 percent of the issued and outstanding shares of ALTM Common Stock. Apache Midstream LLC, a wholly owned subsidiary of APA, which owned approximately 79 percent of the issued and outstanding shares of ALTM Common Stock prior to the BCP Business Combination, owned approximately 20 percent of the issued and outstanding shares of ALTM Common Stock after the transaction closed.

As a result of the BCP Business Combination, the Company ~~completed the sale of certain non-core assets in the Permian Basin with a net carrying value of $157 million for cash proceeds of $174 million~~deconsolidated ALTM on February 22, 2022 and ~~the assumption of asset retirement obligations of $44 million. The Company has~~ recognized a gain of approximately ~~$63~~$609 million that reflects the difference of the Company’s share of ALTM’s deconsolidated balance sheet and the fair value of its approximate 20 percent retained ownership in the combined entity. A summary of components of the gain, including the ALTM balance sheet amounts deconsolidated at the time of close, is included below:


	As of February 22, 2022
	(In millions)

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

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

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

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

Net effect of deconsolidating balance sheet	$	(193)

Gain on deconsolidation of ALTM	$	609

In March 2022, the Company sold 4000000 of its shares in Kinetik for cash proceeds of $224 million and recognized a loss of $25 million, including transaction fees. Refer to Note 7—Equity Method Interests for further detail. In connection with this secondary offering, the ~~sale. The~~Company has agreed that within the next 24 months, it will invest a minimum of $100 million of these proceeds for new well drilling and completion activity at the Alpine High play in the Delaware Basin, where Kinetik has exclusive gas and NGL gathering and processing rights.

In March 2022, the Company completed the previously announced transaction ~~is subject~~ to ~~normal~~sell certain non-core mineral rights in the Delaware Basin for total cash proceeds of approximately $759 million after certain post-closing adjustments.

~~During~~ The Company recognized a gain of approximately $590 million from the ~~first nine months of 2021, the~~transaction. The Company also completed the sale of other non-core assets and leasehold ~~primarily in the Permian Basin,~~ in multiple transactions for total cash proceeds of ~~$65~~$8 million. The Company recognized a gain of approximately $2 million upon closing of these ~~transactions.~~transactions during the first quarter of 2022.

1211

2021 Activity

During the first ~~nine months~~quarter of 2021, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $6$2 million.

~~On October 21, 2021, ALTM announced that it will combine with privately-owned BCP Raptor Holdco LP (BCP) in an all-stock transaction. BCP is~~ The Company also completed the ~~parent company~~sale of ~~EagleClaw Midstream, which includes EagleClaw Midstream Ventures, the Caprock Midstream and Pinnacle Midstream businesses, and a 26.7 percent interest in the Permian Highway Pipeline.~~

As consideration for the transaction, ALTM will issue 50 million Class C common shares (and its subsidiary, Altus Midstream LP, will issue corresponding common units) to BCP’s unitholders, which are principally funds affiliated with Blackstone and I Squared Capital. The transaction is expected to close during the first quarter of 2022, following completion of customary closing conditions, including ALTM shareholder approval and regulatory reviews. Upon closing of the transaction, management will reevaluate whether Apache has a controlling financial interest and is the primary beneficiary of ALTM such that consolidation would continue to be required under the VIE model.

~~2020 Activity~~

~~During the first nine months of 2020, the Company completed~~certain non-core ~~asset~~assets and leasehold, ~~sales,~~ primarily in the Permian Basin, in multiple transactions for total cash proceeds of ~~$53~~$3 million. The Company recognized a gain of approximately $5$2 million upon closing of these ~~transactions.~~

~~The Company also completed leasehold and property acquisitions, primarily in~~transactions during the ~~Permian Basin, for total cash consideration~~first quarter of ~~$3 million.~~2021.

4. CAPITALIZED EXPLORATORY WELL COSTS

The Company’s capitalized exploratory well costs were ~~$54~~$59 million and ~~$197~~$46 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. The ~~decrease~~increase is primarily attributable to ~~the completion~~additional drilling activity, offset by successful transfer of ~~the Holding Company Reorganization in which the Company sold its interests in Suriname, including approximately $135 million of~~well costs. No suspended exploratory well costs ~~as of~~previously capitalized for greater than one year at December 31, ~~2020,~~2021 were charged to ~~APA. Refer to~~ ~~Note 2—Transactions with Parent Affiliate~~ ~~for more detail. The remaining exploratory well costs relate to North Sea offshore wells and Egypt onshore wells where additional drilling activity was offset by~~ dry hole ~~write-offs~~expense during the ~~period.~~three months ended March 31, 2022.

Projects with suspended exploratory well costs capitalized for a period greater than one year since the completion of drilling are those identified by management as exhibiting sufficient quantities of hydrocarbons to justify potential development. Management is actively pursuing efforts to assess whether proved reserves can be attributed to these projects.

5. 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.~~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 ~~by utilizing~~and foreign currency transactions. The Company utilizes various types of derivative financial ~~instruments. The Company has elected not~~instruments, including forward contracts, futures contracts, swaps, and options, to ~~designate any of its derivative contracts as~~manage fluctuations in cash ~~flow hedges.~~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 ~~September 30, 2021,~~March 31, 2022, the Company had derivative positions with 1112 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.~~prices or changes in currency exchange rates.

1312

Derivative Instruments

Commodity Derivative Instruments

As of ~~September 30, 2021, the Company had the following open crude oil derivative positions:~~

Fixed-Price Swaps
Production Period Settlement Index Mbbls Weighted Average Fixed Price
October—December 2021 NYMEX WTI 1,012 $58.59
October—December 2021 Dated Brent 828 $61.44

~~As of September 30, 2021, the Company had the following open crude oil financial basis swap contracts:~~

Production Period Settlement Index Mbbls Weighted Average Price Differential
October—December 2021 Midland-WTI/Cushing-WTI 1,012 $0.70

~~As of September 30, 2021,~~March 31, 2022, the Company had the following open natural gas financial basis swap contracts:


			Basis Swap Purchased		Basis Swap Sold				Basis Swap Purchased		Basis Swap Sold
Production Period	Production Period	Settlement Index	MMBtu (in 000’s)	Weighted Average Price Differential	MMBtu (in 000’s)	Weighted Average Price Differential	Production Period	Settlement Index	MMBtu (in 000’s)	Weighted Average Price Differential	MMBtu (in 000’s)	Weighted Average Price Differential
October—December 2021		NYMEX Henry Hub/IF Waha	11,050	$(0.42)	—	—
October—December 2021		NYMEX Henry Hub/IF HSC	—	—	11,050	$(0.07)
January—December 2022	January—December 2022	NYMEX Henry Hub/IF Waha	43,800	$(0.45)	—	—	January—December 2022	NYMEX Henry Hub/IF Waha	33,000	$(0.45)	—	—
January—December 2022	January—December 2022	NYMEX Henry Hub/IF HSC	—	—	43,800	$(0.08)	January—December 2022	NYMEX Henry Hub/IF HSC	—	—	33,000	$(0.08)
July—December 2022							July—December 2022	NYMEX Henry Hub/IF Waha	20,240	$(0.97)	—	—
July—December 2022							July—December 2022	NYMEX Henry Hub/IF HSC	—	—	20,240	$(0.17)
October—December 2022							October—December 2022	NYMEX Henry Hub/IF Waha	920	$(1.19)	—	—
October—December 2022							October—December 2022	NYMEX Henry Hub/IF HSC	—	—	920	$(0.19)
January—March 2023							January—March 2023	NYMEX Henry Hub/IF Waha	3,150	$(1.06)	—	—
January—March 2023							January—March 2023	NYMEX Henry Hub/IF HSC	—	—	3,150	$(0.03)
January—June 2023							January—June 2023	NYMEX Henry Hub/IF Waha	4,525	$(1.54)	—	—
January—June 2023							January—June 2023	NYMEX Henry Hub/IF HSC	—	—	4,525	$(0.11)
January—December 2023	January—December 2023	NYMEX Henry Hub/IF Waha	29,200	$(0.40)	—	—	January—December 2023	NYMEX Henry Hub/IF Waha	73,000	$(1.15)	—	—
January—December 2023	January—December 2023	NYMEX Henry Hub/IF HSC	—	—	29,200	$0.02	January—December 2023	NYMEX Henry Hub/IF HSC	—	—	73,000	$(0.08)

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

Foreign Currency Derivative Instruments

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

Embedded Derivatives

Altus Preferred Units Embedded Derivative

~~During the second quarter of 2019,~~The Altus ~~Midstream LP, a subsidiary of ALTM, issued and sold Series A Cumulative Redeemable~~ Preferred Units ~~(Preferred Units). Certain redemption features~~ embedded ~~within~~derivative was deconsolidated as of March 31, 2022 as part of the ~~Preferred Units require bifurcation~~BCP Business Combination. Refer to Note 3 —Acquisitions and ~~measurement at fair value. For further~~Divestitures for discussion of ~~this derivative, refer to “Fair Value Measurements” below~~the BCP Business Combination and Note 13—Redeemable Noncontrolling Interest - Altus. for a description of the Altus Preferred Units and associated embedded derivative.

Pipeline Capacity Embedded Derivatives

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

1413

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)
September 30, 2021
															(In millions)
March 31, 2022														March 31, 2022
Assets:														Assets:
Commodity derivative instruments														Commodity derivative instruments	$	—	$	—	$	—	$	—	$	5	$	5
Liabilities:														Liabilities:
Commodity derivative instruments														Commodity derivative instruments	—		34		—		34		5		39
Foreign currency derivative instruments														Foreign currency derivative instruments	—		2		—		2		—		2

December 31, 2021														December 31, 2021

Liabilities:	Liabilities:													Liabilities:
Commodity derivative instruments	Commodity derivative instruments	—		32		—		32		—		32		Commodity derivative instruments	$	—	$	10	$	—	$	10	$	—	$	10
Pipeline capacity embedded derivatives		—		47		—		47		—		47
Preferred Units embedded derivative		—		—		120		120		—		120

December 31, 2020
Assets:
Commodity derivative instruments		$	—	$	11	$	—	$	11	$	—	$	11
Liabilities:
Pipeline capacity embedded derivative	Pipeline capacity embedded derivative	—		53		—		53		—		53		Pipeline capacity embedded derivative	—		46		—		46		—		46
Preferred Units embedded derivative	Preferred Units embedded derivative	—		—		139		139		—		139		Preferred Units embedded derivative	—		—		57		57		—		57

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

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

The fair value of the Preferred Units embedded derivative is calculated using the income approach, a Level 3 fair value measurement, and 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 feature, and anticipated dividend yields of the Preferred Units. As of the September 30, 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 as of~~

~~September 30, 2021~~

~~Valuation Technique~~

~~Significant Unobservable Inputs~~

~~Range/Value~~

~~(In millions)~~

~~Preferred Units embedded derivative~~

~~120~~

~~Option Model~~

Altus’ Imputed
Interest Rate

~~5.53-11.54%~~

Interest Rate
Volatility

~~38.03%~~

A one percent increase in the imputed interest rate assumption would significantly increase the value of the embedded derivative as of September 30, 2021, while a one percent decrease would lead to a similar decrease in value as of September 30, 2021. The assumed expected timing until exercise of the exchange option as of September 30, 2021 was 4.70 years.

Derivative Activity Recorded in the Consolidated Balance Sheet

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


							March 31, 2022		December 31, 2021
		September 30, 2021		December 31, 2020
		(In millions)					(In millions)
Current Assets: Other current assets	Current Assets: Other current assets	$	—	$	6	Current Assets: Other current assets	$	4	$	—
Other Assets: Deferred charges and other	Other Assets: Deferred charges and other	—		5		Other Assets: Deferred charges and other	1		—
Total derivative assets	Total derivative assets	$	—	$	11	Total derivative assets	$	5	$	—

Current Liabilities: Other current liabilities	Current Liabilities: Other current liabilities	$	31	$	—	Current Liabilities: Other current liabilities	$	20	$	4
Deferred Credits and Other Noncurrent Liabilities: Other	Deferred Credits and Other Noncurrent Liabilities: Other	168		192		Deferred Credits and Other Noncurrent Liabilities: Other	21		109
Total derivative liabilities	Total derivative liabilities	$	199	$	192	Total derivative liabilities	$	41	$	113

Derivative Activity Recorded in the Statement of Consolidated Operations

The following table summarizes the effect of derivative instruments on the Company’s statement of consolidated operations:


											For the Quarter Ended March 31,
		For the Quarter Ended September 30,				For the Nine Months Ended September 30,					2022		2021
		2021		2020		2021		2020
		(In millions)									(In millions)
Realized:	Realized:									Realized:
Commodity derivative instruments	Commodity derivative instruments	$	(37)	$	(83)	$	63	$	(119)	Commodity derivative instruments	$	(5)	$	148
Foreign currency derivative instruments		—		—		—		(1)

Realized gain (loss), net	Realized gain (loss), net	(37)		(83)		63		(120)		Realized gain (loss), net	(5)		148
Unrealized:	Unrealized:									Unrealized:
Commodity derivative instruments	Commodity derivative instruments	29		91		(43)		(3)		Commodity derivative instruments	(24)		26
Pipeline capacity embedded derivatives	Pipeline capacity embedded derivatives	3		8		6		(62)		Pipeline capacity embedded derivatives	—		1
Foreign currency derivative instruments	Foreign currency derivative instruments	—		3		—		(1)		Foreign currency derivative instruments	(2)		—
Preferred units embedded derivative		5		(3)		19		(76)
Unrealized loss, net		37		99		(18)		(142)
Preferred Units embedded derivative										Preferred Units embedded derivative	(31)		(17)
Unrealized gain (loss), net										Unrealized gain (loss), net	(57)		10
Derivative instrument gains (losses), net	Derivative instrument gains (losses), net	$	—	$	16	$	45	$	(262)	Derivative instrument gains (losses), net	$	(62)	$	158

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

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

6. OTHER CURRENT ASSETS

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


							March 31, 2022		December 31, 2021
		September 30, 2021		December 31, 2020
		(In millions)					(In millions)
Inventories	Inventories	$	441	$	492	Inventories	$	495	$	438
Drilling advances	Drilling advances	102		113		Drilling advances	70		55

Prepaid assets and other	Prepaid assets and other	56		71		Prepaid assets and other	30		56
Current decommissioning security for sold Gulf of Mexico assets						Current decommissioning security for sold Gulf of Mexico assets	100		100
Total Other current assets	Total Other current assets	$	599	$	676	Total Other current assets	$	695	$	649

7. EQUITY METHOD INTERESTS

The Kinetik Class A Common Stock held by the Company is treated as an interest in equity securities measured at fair value. The Company elected the fair value option based on practical expedience, variances in reporting timelines, and cost-benefit considerations for measuring its equity method interest in Kinetik. The fair value of the Company’s interest in Kinetik is determined using Level 1 inputs based on observable prices on a major exchange. The initial interest in Kinetik was measured at fair value based on the Company’s ownership of approximately 12.9 million shares of Kinetik Class A Common stock as of February 22, 2022. In March 2022, the Company sold 4000000 of its shares of Kinetik Class A Common Stock for a loss, including underwriters fees, of $25 million, which was recorded as a component of “Gain on divestitures, net” under “Revenues and other” in the Company’s statement of consolidated operations. Refer to Note 3–Acquisitions and Divestitures for further detail.

As of ~~September 30, 2021~~March 31, 2022, the Company holds approximately 8.9 million shares of Kinetik Class A Common Stock, or approximately 13 percent of Kinetik’s outstanding ALTM Common Stock. At March 31, 2022, a fair value adjustment gain of

$24 million was recorded based on the Company’s remaining Class A share ownership. The fair value adjustment was recorded as a component of “Other, net” under “Revenues and ~~December~~other” in the Company’s statement of consolidated operations.

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


		Kinetik Holdings Inc

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

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

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

Interest
September 30,
2021
December 31,
2020
(In millions)
Gulf Coast Express Pipeline, LLC 16.0% $ 277 $ 284
EPIC Crude Holdings, LP 15.0% 165 176
Permian Highway Pipeline, LLC 26.7% 632 615
Shin Oak Pipeline (Breviloba, LLC) 33.0% 464 480
Total Altus equity method interests $ 1,538 $ 1,555

As of September 30, 2021 and December 31, 2020, unamortized basis differences included in the equity method interest balances were $37 million and $38 million, respectively. These amounts represent differences in Altus’ contributions to date and Altus’ underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences will be amortized into net income over the useful lives of the underlying pipeline assets.


	Interest	December 31, 2021
		(In millions)
Gulf Coast Express Pipeline, LLC	16.0%	$	274
EPIC Crude Holdings, LP	15.0%	—
Permian Highway Pipeline, LLC	26.7%	630
Shin Oak Pipeline (Breviloba, LLC)	33.0%	461
Total Altus equity method interests		$	1,365

The following table presents the activity in Altus’ equity method interests for the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:


		Gulf Coast Express Pipeline LLC		EPIC Crude Holdings, LP		Permian Highway Pipeline LLC		Breviloba, LLC		Total			Gulf Coast Express Pipeline LLC		EPIC Crude Holdings, LP		Permian Highway Pipeline LLC		Breviloba, LLC		Total
		(In millions)
													(In millions)

Balance at December 31, 2020		$	284	$	176	$	615	$	480	$	1,555

Balance at December 31, 2021												Balance at December 31, 2021	$	274	$	—	$	630	$	461	$	1,365
Capital contributions	Capital contributions	—		2		25		—		27		Capital contributions	—		2		—		—		2
Distributions	Distributions	(37)		—		(52)		(39)		(128)		Distributions	(5)		—		(9)		(7)		(21)

Equity income (loss), net	Equity income (loss), net	30		(14)		44		23		83		Equity income (loss), net	8		(2)		10		5		21
Accumulated other comprehensive income		—		1		—		—		1
Balance at September 30, 2021		$	277	$	165	$	632	$	464	$	1,538

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

Summarized Combined Financial Information

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

For the Nine Months Ended
September 30,
2021 2020
(In millions)
Operating revenues $ 812 $ 531
Operating income 401 267
Net income 340 217
Other comprehensive income (loss) 4 (1)


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

8. OTHER CURRENT LIABILITIES

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


							March 31, 2022		December 31, 2021
		September 30, 2021		December 31, 2020
		(In millions)					(In millions)
Accrued operating expenses	Accrued operating expenses	$	135	$	91	Accrued operating expenses	$	127	$	129
Accrued exploration and development	Accrued exploration and development	167		167		Accrued exploration and development	221		206
Accrued compensation and benefits	Accrued compensation and benefits	180		170		Accrued compensation and benefits	242		292
Accrued interest	Accrued interest	92		140		Accrued interest	69		107
Accrued income taxes	Accrued income taxes	54		25		Accrued income taxes	103		28
Current asset retirement obligation	Current asset retirement obligation	56		56		Current asset retirement obligation	40		41
Current operating lease liability	Current operating lease liability	87		116		Current operating lease liability	109		99
Current portion of derivatives at fair value	Current portion of derivatives at fair value	31		—		Current portion of derivatives at fair value	20		4
Current decommissioning contingency for sold Gulf of Mexico properties						Current decommissioning contingency for sold Gulf of Mexico properties	100		100
Other	Other	135		97		Other	191		164
Total Other current liabilities	Total Other current liabilities	$	937	$	862	Total Other current liabilities	$	1,222	$	1,170

9. ASSET RETIREMENT OBLIGATION

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


	~~September 30,~~March 31, ~~2021~~2022
	(In millions)
Asset retirement obligation, December 31, ~~2020~~2021	$	~~1,944~~2,130
~~Liabilities incurred~~	3
Liabilities settled	~~(20)~~(7)
~~Liabilities divested~~Deconsolidation of Altus	~~(44)~~(69)


Accretion expense	8529

Asset retirement obligation, ~~September 30, 2021~~March 31, 2022	~~1,968~~2,083
Less current portion	~~(56)~~(40)
Asset retirement obligation, long-term	$	~~1,912~~2,043

10. DEBT AND FINANCING COSTS

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


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Notes and debentures before unamortized discount and debt issuance costs(1)	Notes and debentures before unamortized discount and debt issuance costs(1)	$	6,344	$	8,052	Notes and debentures before unamortized discount and debt issuance costs(1)	$	5,032	$	6,344
Altus credit facility(2)	Altus credit facility(2)	657		624		Altus credit facility(2)	—		657
Apache credit facility(2)	Apache credit facility(2)	440		150		Apache credit facility(2)	880		542
Finance lease obligations	Finance lease obligations	36		38		Finance lease obligations	35		36
Unamortized discount	Unamortized discount	(29)		(35)		Unamortized discount	(28)		(30)
Debt issuance costs	Debt issuance costs	(40)		(57)		Debt issuance costs	(30)		(39)
Total debt	Total debt	7,408		8,772		Total debt	5,889		7,510
Current maturities	Current maturities	(215)		(2)		Current maturities	(125)		(215)
Long-term debt	Long-term debt	$	7,193	$	8,770	Long-term debt	$	5,764	$	7,295

(1) The fair values of the Company’s notes and debentures were ~~$7.0~~$5.1 billion and ~~$8.5~~$7.1 billion as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Apache uses a market approach to determine the fair values of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).

(2) The carrying value of borrowings on credit facilities approximates fair value because interest rates are variable and reflective of market rates.

As of ~~September 30,~~March 31, 2022, current debt included $123 million carrying value of 2.63% senior notes due January 15, 2023 and $2 million of finance lease obligations. As of December 31, 2021, current debt included $213 million ~~net of discount,~~carrying value of 3.25% senior notes due April 15, 2022 and $2 million of finance lease obligations. ~~As of December 31, 2020, current debt included $2 million of finance lease obligations.~~

During the quarter ended ~~September 30, 2021,~~March 31, 2022, Apache closed cash tender offers for certain outstanding notes ~~and accepted~~issued under its indentures, accepting for purchase ~~$1.7~~$1.1 billion aggregate principal amount of ~~certain~~ notes. Apache paid holders an aggregate ~~$1.8~~$1.2 billion in cash, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a ~~$105~~$66 million loss on extinguishment of debt, including ~~$98~~$11 million of unamortized debt discount and issuance costs in connection with the note purchases.

During the ~~nine months~~quarter ended ~~September 30,~~March 31, 2022, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $15 million for an aggregate purchase price of $16 million in cash, including accrued interest and broker fees, reflecting a premium to par of $1 million. The Company recognized a $1 million loss on these repurchases.

During the quarter ended March 31, 2022, Apache redeemed the outstanding $213 million principal amount of 3.25% senior notes due April 15, 2022, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed by borrowing under Apache’s revolving credit facility.

During the quarter ended March 31, 2021, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of ~~$22~~$7 million for an aggregate purchase price of ~~$20~~$6 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $2$1 million. ~~The Company~~NaN gain or loss was recognized ~~a $1 million net gain~~ on ~~extinguishment of debt as part of~~ these ~~transactions.~~repurchases.

~~The Company~~Apache intends to reduce debt outstanding under its indentures from time to time.

In March 2018, ~~the Company~~Apache entered into a revolving credit facility with commitments totaling $4.0 billion. In March 2019, the term of this facility was extended by one year to March 2024 (subject to Apache’s remaining one-year extension option) pursuant to Apache’s exercise of an extension option. The Company can increase commitments up to $5.0 billion, ~~by adding~~that Apache terminated in April 2022 when its parent corporation entered into two new ~~lenders or obtaining the consent of any increasing existing lenders. The facility includes a letter of~~syndicated credit ~~subfacility of up to $3.0 billion, of which $2.08 billion was committed as of September 30, 2021. The facility is for general corporate purposes.~~facilities described in “Subsequent Event” below. As of ~~September 30, 2021,~~March 31, 2022, there were ~~$440~~$880 million of borrowings and an aggregate ~~£478~~£748 million and $20 million in letters of credit outstanding under ~~this~~Apache’s 2018 facility. As of December 31, ~~2020,~~2021, there were ~~$150~~$542 million of borrowings and an aggregate ~~£633~~£748 million and ~~$40~~$20 million in letters of credit outstanding under ~~this~~Apache’s 2018 facility. The outstanding letters of credit denominated in pounds were issued to support North Sea decommissioning obligations, the terms of which required such support after Standard & Poor’s reduced ~~the Company’s~~Apache’s credit rating from BBB to BB+ on March 26, 2020.

There were no borrowings outstanding under the Company’s commercial paper program as of September 30, 2021 and December 31, 2020. The Company did not use its commercial paper program during the first six months of 2021 and terminated the program during the third quarter of 2021.

Apache, from time to time, has and uses uncommitted credit and letter of credit facilities for working capital and credit support purposes. As of ~~September 30,~~March 31, 2022 and December 31, 2021, there were no outstanding borrowings ~~and £118~~under these facilities. As of March 31, 2022, there were £117 million and $17 million in letters of credit outstanding under these facilities. As of December 31, ~~2020,~~2021, there were ~~no borrowings and £34~~£117 million and $17 million in letters of credit outstanding under these facilities.

In November 2018, Altus Midstream LP entered into a revolving credit facility for general corporate purposes that matures in November 2023 (subject to Altus Midstream LP’s 2, one-year extension options). The agreement for this facility, as amended, provides aggregate commitments from a syndicate of banks of $800 million. All aggregate commitments include a letter of credit subfacility of up to $100 million and a swingline loan subfacility of up to $100 million. Altus Midstream LP may increase commitments up to an aggregate $1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders. As of September 30, 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 no 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 September 30,				For the Nine Months Ended September 30,					For the Quarter Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Interest expense	Interest expense	$	102	$	113	$	324	$	327	Interest expense	$	90	$	112
Amortization of debt issuance costs	Amortization of debt issuance costs	1		2		6		6		Amortization of debt issuance costs	2		2
Capitalized interest		—		(3)		—		(9)
Loss (gain) on extinguishment of debt		105		(12)		104		(152)

Loss on extinguishment of debt										Loss on extinguishment of debt	67		—
Interest income	Interest income	(1)		(1)		(6)		(4)		Interest income	(4)		(2)
Interest income from APA Corporation, net	Interest income from APA Corporation, net	(15)		—		(35)		—		Interest income from APA Corporation, net	(15)		(5)
Financing costs, net	Financing costs, net	$	192	$	99	$	393	$	168	Financing costs, net	$	140	$	107

Subsequent Event

On April 29, 2022, Apache entered into 2 unsecured guaranties of obligations under 2 unsecured syndicated credit agreements then entered into by APA Corporation (APA), of which Apache is a wholly owned subsidiary. APA’s new credit agreements are for general corporate purposes and replaced and refinanced Apache’s 2018 syndicated credit agreement (the Former Facility). Apache and certain other subsidiaries of APA may borrow and obtain letters of credit under APA’s new credit agreements, as further described below.

APA’s first new credit agreement is denominated in US dollars (the USD Agreement) and provides for an unsecured five-year revolving credit facility, with aggregate commitments of US$1.8 billion (including a letter of credit subfacility of up to US$750 million, of which US$150 million currently is committed). APA may increase commitments up to an aggregate US$2.3 billion by adding new lenders or obtaining the consent of any increasing existing lenders. This facility matures in April 2027, subject to APA’s 2, one-year extension options.

APA’s second new credit agreement is denominated in pounds sterling (the GBP Agreement) and provides for an unsecured five-year revolving credit facility, with aggregate commitments of £1.5 billion for loans and letters of credit. This facility matures in April 2027, subject to APA’s 2, one-year extension options.

In connection with APA’s entry into the USD Agreement and the GBP Agreement (each, a New Agreement), Apache terminated US$4.0 billion of commitments under the Former Facility. Apache has guaranteed obligations under each New Agreement effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than US$1.0 billion.

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

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

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

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

11. INCOME TAXES

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 ~~third~~first quarter of 2022, the Company’s effective income tax rate was primarily impacted by the gain associated with deconsolidation of Altus, the gain on sale of certain non-core mineral rights in the Delaware Basin, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets.During the first quarter of 2021, the Company’s effective income tax rate was primarily impacted by a loss on offshore decommissioning contingency and an increase in the amount of valuation allowance against its U.S. deferred tax assets. During the third quarter of 2020, the Company’s effective income tax rate was primarily impacted by an increase in the amount of valuation allowance against its U.S. deferred tax assets. The Company’s 2021 year-to-date effective income tax rate was primarily impacted by a loss contingency in connection with decommissioning of previously sold Gulf of Mexico properties and a decrease in the amount of valuation allowance against its U.S. deferred tax assets. The Company’s 2020 year-to-date effective income tax rate was primarily impacted by oil and gas asset impairments, a goodwill impairment, and an increase in the amount of valuation allowance against its U.S. deferred tax assets.

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

12. COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls, which also may include controls related to the potential impacts of climate change. As of ~~September 30, 2021,~~March 31, 2022, the Company has an accrued liability of approximately ~~$68~~$73 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. The Company’s estimates are based on information known about the matters and its experience in contesting, litigating, and settling similar matters. Although actual amounts could differ from management’s estimate, none of the actions are believed by management to involve future amounts that would be material to the Company’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that the Company believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and a range of potential exposure, unless an estimate cannot be made at this time. It is management’s opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

For additional information on Legal Matters described below, refer to Note 11—Commitments and Contingencies to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Argentine Environmental Claims

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

~~No material change in~~its subsidiaries completed the ~~status~~sale of all of the Company’s subsidiaries’ operations and properties in Argentina to YPF Sociedad ~~Anónima~~Anonima (YPF). As part of that sale, YPF assumed responsibility for all of the past, present, and future litigation in Argentina involving Company subsidiaries, except that Company subsidiaries have agreed to indemnify YPF for certain environmental, tax, and royalty obligations capped at an aggregate of $100 million. The indemnity is subject to specific agreed conditions precedent, thresholds, contingencies, limitations, claim deadlines, loss sharing, and other terms and conditions. On April 11, 2014, YPF provided its first notice of claims pursuant to the indemnity. Company subsidiaries have not paid any amounts under the indemnity but will continue to review and consider claims presented by YPF. Further, Company subsidiaries retain the right to enforce certain Argentina-related indemnification obligations against Pioneer Natural Resources Company ~~indemnities matter has occurred since~~(Pioneer) in an amount up to $45 million pursuant to the ~~filing~~terms and conditions of ~~the Company’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 the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, Louisiana surface owners often file lawsuits or assert claims against oil and gas companies, including the Company, claiming that operators and working interest owners in the chain of title are liable for environmental damages on the leased premises, including damages measured by the cost of restoration of the leased premises to its original condition, regardless of the value of the underlying property. From time to time, restoration lawsuits and claims are resolved by the Company for amounts that are not material to the Company, while new lawsuits and claims are asserted against the Company. With respect to each of the pending lawsuits and claims, the amount claimed is not currently determinable or is not material. Further, the overall exposure related to these lawsuits and claims is not currently determinable. While adverse judgments against the Company are possible, the Company intends to actively defend these lawsuits and claims.

Starting in November of 2013 and continuing into ~~2021,~~2022, several parishes in Louisiana have pending lawsuits against many oil and gas producers, including the Company. These cases were all removed to federal courts in Louisiana. 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 area of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. The trial court entered final judgment in favor of the Company, ruling that the plaintiffs take nothing by their claims and awarding the Company its attorneys’ fees and costs incurred in defending the lawsuit. The court of appeals affirmed in part and reversed in part the trial court’s judgment thereby reinstating some of plaintiff’s claims. Further appeal is pending.

Australian Operations Divestiture Dispute

Pursuant to a Sale and Purchase Agreement dated April 9, 2015 (Quadrant SPA), the Company and its subsidiaries divested their remaining Australian operations to Quadrant Energy Pty Ltd (Quadrant). Closing occurred on June 5, 2015. In April 2017, the Company filed suit against Quadrant for breach of the Quadrant SPA. In its suit, the Company seeks approximately AUD $80 million. In December 2017, Quadrant filed a defense of equitable set-off to the Company’s claim and a counterclaim seeking approximately AUD $200 million in the aggregate. The Company believes that Quadrant’s claims lack merit and will not have a material adverse effect on the Company’s financial position, results of operation, or liquidity.

Canadian Operations Divestiture Dispute

Pursuant to a Sale and Purchase Agreement dated July 6, 2017 (Paramount SPA), the Company and its subsidiaries divested their remaining Canadian operations to Paramount Resources LTD (Paramount). Closing occurred on August 16, 2017. On September 11, 2019, 4 ex-employees of Apache Canada LTD on behalf of themselves and individuals employed by Apache Canada LTD on July 6, 2017, filed an Amended Statement of Claim in a matter styled Stephen Flesch et. al. v Apache Corporation et. al., No. 1901-09160 Court of Queen’s Bench of Alberta against the Company and others seeking class certification and a finding that the Paramount SPA amounted to a Change of Control of the Company, entitling them to accelerated vesting under the Company’s equity plans. In the suit, the ~~purported~~ class seeks approximately $60 million USD and punitive damages. The Company believes that Plaintiffs’ claims lack merit and will not have a material adverse effect on the Company’s financial position, results of operation, or liquidity.

California and Delaware Litigation

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

On September 10, 2020, the State of Delaware filed suit, individually and on behalf of the people of the State of Delaware, against over 25 oil and gas companies alleging damages as a result of global warming. Plaintiffs seek unspecified damages and abatement under various tort theories.

After removal of this lawsuit to federal court, the district court remanded it back to state court. The remand order is being appealed to the 3rd Circuit Court of Appeals. Further activity in the case has been stayed pending this appellate review.

The Company believes that it is not subject to jurisdiction of the California courts and that claims made against it in the California and Delaware litigation are baseless. The Company intends to challenge jurisdiction in California and to vigorously defend the Delaware lawsuit.

Castex 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 5 sidetracks on the Potomac #3 well. After a jury trial, a verdict of approximately $60 million, plus fees, costs, and interest was entered against the Company. The Fourteenth Court of Appeals of Texas reversed the judgment, in part, reducing the judgment to approximately $13.5 million, plus fees, costs, and interest against the Company. Further appeal is pending.

Oklahoma Class Actions

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

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

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

Shareholder and Derivative Lawsuits

On February 23, 2021, a case captioned Plymouth County Retirement System v. Apache Corporation, et al. was filed in the United States District Court for the Southern District of Texas (Houston Division) against the Company and certain current and former officers. The complaint, which is a shareholder lawsuit styled as a class action, (1) alleges that the Company intentionally used unrealistic assumptions regarding the amount and composition of available oil and gas in Alpine High; (2) alleges that the Company did not have the proper infrastructure in place to safely and/or economically drill and/or transport those resources even if they existed in the amounts purported; (3) alleges that these statements and omissions artificially inflated the value of the Company’s operations in the Permian Basin; and (4) alleges that, as a result, the Company’s public statements were materially false and misleading. ~~On March 4, 2021, another lawsuit, captioned~~ ~~Brian Schwegel v. Apache Corporation, et al., was filed in the United States District Court for the Southern District of Texas (Houston Division) alleging identical allegations.~~ The Company believes that ~~all~~ plaintiffs’ claims lack merit and intends to vigorously defend ~~these lawsuits.~~this lawsuit.

On March 16, 2021, a case captioned William Wessels, Derivatively and on behalf of APA Corporation v. John J. Christmann IV et al. was filed in the 334th District Court of Harris County, Texas. The case purports to be a derivative action brought against senior management and Company directors over many of the same allegations included in the Plymouth County Retirement System matter and asserts claims of (1) breach of fiduciary duty; (2) waste of corporate assets; and (3) unjust enrichment. The defendants believe the plaintiff’s claims lack merit and intend to vigorously defend this lawsuit.

Environmental Matters

As of ~~September 30, 2021,~~March 31, 2022, the Company had an undiscounted reserve for environmental remediation of approximately $2 million.

On September 11, 2020, the Company received a Notice of Violation and Finding of Violation, and accompanying Clean Air Act Information Request, from the U.S. Environmental Protection Agency (EPA) following site inspections in April 2019 at several of the Company’s oil and natural gas production facilities in Lea and Eddy Counties, New Mexico. The notice and information request involve alleged emissions control and reporting violations. The Company is cooperating with the EPA and has responded to the information request. The EPA has referred the notice for civil enforcement proceedings; however, at this time the Company is unable to reasonably estimate whether such proceedings will result in monetary sanctions and, if so, whether they would be more or less than $100,000, exclusive of interest and costs.

On December 29, 2020, the Company received a Notice of Violation and Opportunity to Confer, and accompanying Clean Air Act Information Request, from the EPA following helicopter flyovers in September 2019 of several of the Company’s oil and natural gas production facilities in Reeves County, Texas. The notice and information request involve alleged emissions control and reporting violations. The Company is cooperating with the EPA and has responded to the information request. The EPA has referred the notice for civil enforcement proceedings; however, at this time the Company is unable to reasonably estimate whether such proceedings will result in monetary sanctions and, if so, whether they would be more or less than $100,000, exclusive of interest and costs.

The Company is not aware of any environmental claims existing as of ~~September 30, 2021~~March 31, 2022 that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity. There can be no assurance, however, that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered on the Company’s properties.

Potential ~~Obligation to Decommission~~Decommissioning Obligations on Sold Properties

In 2013, Apache sold its Gulf of Mexico (GOM) Shelf operations and properties and its GOM operating subsidiary, GOM Shelf LLC (GOM Shelf) to Fieldwood Energy LLC (Fieldwood). Under the terms of the purchase agreement, Apache received cash consideration of $3.75 billion and Fieldwood assumed the obligation to decommission the properties held by GOM Shelf and the properties acquired from Apache and its other subsidiaries (collectively, the Legacy GOM Assets). In respect of such abandonment obligations, Fieldwood posted letters of credit in favor of Apache (Letters of Credit) and established trust accounts (Trust A and Trust B) of which Apache was a beneficiary and which were funded by 2 net profits interests (NPIs) depending on future oil 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 Apache agreed, inter alia, to (i) accept bonds in exchange for certain of the Letters of Credit and (ii) amend the Trust A trust agreement and one of the NPIs to consolidate the trusts into a single Trust (Trust A) funded by both remaining NPIs. Currently, Apache holds 2 bonds (Bonds) and 5 Letters of Credit to secure Fieldwood’s asset retirement obligations on the Legacy GOM Assets as and when Apache is required to perform or pay for decommissioning any Legacy GOM Asset over the remaining life of the Legacy GOM Assets.

On August 3, 2020, Fieldwood again filed for protection under Chapter 11 of the U.S. Bankruptcy Code. On June 25, 2021, the United States Bankruptcy Court for the Southern District of Texas (Houston Division) entered an order confirming Fieldwood’s bankruptcy plan. On August 27, 2021, Fieldwood’s bankruptcy plan became effective. Pursuant to the plan, the Legacy GOM Assets were separated into a standalone company, which was subsequently merged into GOM Shelf. Under GOM Shelf’s limited liability company agreement, the proceeds of production of the Legacy GOM Assets will be used to fund decommissioning of Legacy GOM Assets.

InBy letter dated April 5, 2022, replacing two prior letters dated September 8, 2021 and February 22, 2022, respectively, GOM Shelf notified the Bureau of Safety and Environmental Enforcement (BSEE) that it was unable to fund ~~its~~the decommissioning obligations that it is currently obligated to perform on certain of the Legacy GOM ~~Assets that GOM Shelf is currently required to perform.~~Assets. As a result, Apache and other current and former owners in these assets have received orders from BSEE to decommission certain of the Legacy GOM Assets included in GOM Shelf’s notification to BSEE. Apache expects to receive such orders on the other Legacy GOM ~~Properties~~Assets included in GOM Shelf’s notification letter. Further, Apache anticipates that GOM Shelf may send additional such notices to BSEE in the future and that it may receive additional orders from BSEE requiring it to decommission other Legacy GOM Assets.

~~As and when~~If Apache incurs costs to decommission any Legacy GOM Asset and GOM Shelf does not reimburse Apache for such costs, then Apache will obtain reimbursement from Trust A, the Bonds, and the Letters of Credit until such funds and securities are fully utilized. In addition, after such sources have been exhausted, Apache has agreed to provide a standby loan to GOM Shelf of up to $400 million to perform decommissioning (Standby Loan Agreement), with such standby loan secured by a first and prior lien on the Legacy GOM Assets.

If the combination of GOM Shelf’s net cash flow from its producing properties, the Trust A funds, the Bonds, and the remaining Letters of Credit are insufficient to fully fund decommissioning of any Legacy GOM Assets that Apache may be ordered by BSEE to perform, or if GOM Shelf’s net cash flow from its remaining producing properties after the Trust A funds, Bonds, and Letters of Credit are exhausted is insufficient to repay any loans made by Apache under the Standby Loan Agreement, then Apache may be forced to effectively use its available cash to fund the deficit.

As of ~~September 30, 2021,~~March 31, 2022, Apache estimates that its potential liability to fund decommissioning of Legacy GOM ~~Legacy~~ Assets it may be ordered to perform ranges from $1.2 billion to $1.4 billion on an undiscounted basis. Management does not believe any specific estimate within this range is a better estimate than any other. Accordingly, ~~in the third quarter of 2021,~~ the Company has recorded a contingent liability of $1.2 billion as of March 31, 2022, representing the estimated costs of decommissioning it may be required to perform on Legacy GOM ~~Legacy Assets~~Assets. Of the total liability recorded, $1.1 billion is reflected under the caption “Decommissioning contingency for sold Gulf of Mexico ~~properties”~~properties,” and $100 million is reflected under “Other current liabilities” in the Company’s consolidated balance sheet. The Company has also recorded a $740 million asset, which represents the amount the Company expects to be reimbursed from the Trust A funds, the Bonds, and the Letters of Credit for decommissioning it may be required to perform on Legacy GOM ~~Legacy Assets~~Assets. Of the total asset recorded, $640 million is reflected under the caption “Decommissioning security for sold Gulf of Mexico ~~properties”. A “Loss on previously sold Gulf of Mexico properties” in the amount of $446~~properties,” and $100 million ~~was recognized in the third quarter of 2021 to reflect the net impact to the Company’s statement of consolidated operations.~~is reflected under “Other current assets.” Changes in significant assumptions impacting Apache’s estimated liability, including expected decommissioning rig spread rates, lift boat rates, and planned abandonment logistics could result in a liability in excess of the amount accrued. In addition, significant changes in the market price of oil, gas, and ~~natural gas liquids~~NGLs could further impact Apache’s estimate of its contingent liability to decommission Legacy GOM ~~Legacy~~ Assets.

13. REDEEMABLE NONCONTROLLING INTEREST -— ALTUS

Preferred Units Issuance

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

Classification

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

Measurement

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

Activity related to the Preferred Units is as follows:

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 —
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 — (34)
Dividends payable to Altus Preferred Unit limited partners — (12)
Allocation of Altus Midstream LP net income N/A 60
Accreted value adjustment N/A 13
Redeemable noncontrolling interest — Preferred Unit at: September 30, 2021 660,694 635
Preferred Units embedded derivative(2)
120
$ 755


	Units Outstanding	Financial Position
	(In millions, except unit data)
Redeemable noncontrolling interest — Preferred Units at: December 31, 2020	660,694	$	608
Cash distributions to Altus Preferred Unit limited partners	—	(46)
Distributions payable to Altus Preferred Unit limited partners	—	(12)
Allocation of Altus Midstream LP net income	N/A	80
Accreted value adjustment	N/A	82
Redeemable noncontrolling interest — Preferred Units at: December 31, 2021	660,694	712



Allocation of Altus Midstream LP net income	N/A	12
Accreted value adjustment(1)	N/A	(82)
Redeemable noncontrolling interest — Preferred Units at: February 22, 2022	660,694	642
Preferred Units embedded derivative		89
Deconsolidation of Altus		(731)
		$	—

(1) ~~The Preferred Units are redeemable at Altus Midstream LP’s option at a redemption price (the Redemption Price), which as~~Includes the reversal of ~~September 30, 2021 is calculated as~~previously recorded accreted value adjustments of $53 million due to the ~~greater~~deconsolidation of (i) an 11.5 percent internal rate of return and (ii) a 1.3 times multiple of invested capital. As of September 30, 2021, the Redemption Price would have been based on a 1.3 times multiple of invested capital, which was $813 million, less certain cash distributions. This was greater than using an 11.5 percent internal rate of return, which would equate to a redemption value of $730 million.

~~(2) Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value. Refer to~~ ~~Note 5—Derivative Instruments and Hedging Activities~~ ~~for discussion of the fair value changes in the embedded derivative liability during the period.~~Altus.

N/A - not applicable.

14. CAPITAL STOCK AND EQUITY

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. As a result of the Holding Company Reorganization and subsequent activity, Apache recorded various intercompany activities during the first quarter ended March 31, 2021 as capital transactions, which are reflected in Apache’s Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling ~~Interest.~~Interests. Refer to Note 2—Transactions with Parent Affiliate for more detail.

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. Subsequent to the Holding Company Reorganization, stock-based compensation associated with APA equity awards granted and outstanding to Apache employees are reflected as capital contributions from APA to Apache.

Net Income (Loss) per Common Share

Net income (loss) per share for Apache is no longer required, as its shares are not publicly traded, and Apache is now a direct, ~~wholly-owned~~wholly owned subsidiary of APA.

Distributions to APA Corporation and Common Stock Dividends

During the ~~third~~ quarter ~~and the first nine months~~ ended ~~September 30, 2020,~~March 31, 2022, the Company paid $9$305 million ~~and $113 million, respectively,~~ in ~~dividends~~capital distributions to its parent, APA, which is included as “Distributions to APA Corporation” on ~~its common stock.~~the Company’s statement of consolidated cash flows. During the ~~first~~ quarter ~~of 2020, the Company’s Board of Directors approved a reduction in the Company’s quarterly dividend from $0.25 per share to $0.025 per share, effective for all dividends payable after~~ended March ~~12, 2020.~~

~~During the first quarter of~~31, 2021, prior to completion of the Holding Company Reorganization, the Company paid $9 million in dividends on its common stock. During the nine months ended September 30, 2021, the Company paid $19 million in capital distributions to its parent, APA, which is reflected as “Distributions to APA Corporation” on the Company’s statement of consolidated cash flows.

15. BUSINESS SEGMENT INFORMATION

As of ~~September 30, 2021,~~March 31, 2022, the Company is engaged in exploration and production (Upstream) activities across 3 operating segments: Egypt, North Sea, and the U.S. The Company’s Upstream business explores for, develops, and produces crude oil, natural gas, and natural gas liquids. ~~The~~Prior to the deconsolidation of Altus on February 22, 2022, the Company’s Midstream business iswas operated by Altus Midstream Company, which ~~owns, develops,~~owned, developed, and ~~operates~~operated a midstream energy asset network in the Permian Basin of West Texas. Financial information for each segment is presented below:


		Egypt		North Sea		U.S.		Altus Midstream				Intersegment Eliminations & Other(4)				Total(3)					Egypt(1)			North Sea			U.S.			Altus Midstream		Intersegment Eliminations & Other		Total(4)
		Upstream																Upstream
For the Quarter Ended September 30, 2021		(In millions)
For the Quarter Ended March 31, 2022																		For the Quarter Ended March 31, 2022			(In millions)
Revenues:	Revenues:																	Revenues:
Oil revenues	Oil revenues	$	465	$	233	$	484			$	—			$	—				$	1,182	Oil revenues		$	790		$	328		$		599	$	—	$	—	$	1,717
Natural gas revenues	Natural gas revenues	63		42		188		—				—				293		Natural gas revenues			98			99			183			—		—		380
Natural gas liquids revenues	Natural gas liquids revenues	2		6		202		—				—				210		Natural gas liquids revenues			3			16			207			—		(3)		223
Oil, natural gas, and natural gas liquids production revenues	Oil, natural gas, and natural gas liquids production revenues	530		281		874		—				—				1,685		Oil, natural gas, and natural gas liquids production revenues			891			443			989			—		(3)		2,320
Purchased oil and gas sales	Purchased oil and gas sales	—		—		374		—				—				374		Purchased oil and gas sales			—			—			344			5		—		349
Midstream service affiliate revenues		—		—		—		35				(35)				—
Midstream service revenues																		Midstream service revenues			—			—			—			16		(16)		—
		530		281		1,248		35				(35)				2,059					891			443			1,333			21		(19)		2,669
Operating Expenses:	Operating Expenses:																	Operating Expenses:
Lease operating expenses	Lease operating expenses	117		101		98		—				—				316		Lease operating expenses			131			96			118			—		(1)		344
Gathering, processing, and transmission	Gathering, processing, and transmission	4		8		82		9				(35)				68		Gathering, processing, and transmission			5			12			77			5		(18)		81
Purchased oil and gas costs	Purchased oil and gas costs	—		—		396		—				—				396		Purchased oil and gas costs			—			—			351			—		—		351
Taxes other than income	Taxes other than income	—		—		52		2				—				54		Taxes other than income			—			—			67			3		—		70
Exploration	Exploration	14		4		3		—				—				21		Exploration			15			5			4			—		1		25
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	128		61		143		3				—				335		Depreciation, depletion, and amortization			97			62			130			2		—		291
Asset retirement obligation accretion	Asset retirement obligation accretion	—		20		8		1				—				29		Asset retirement obligation accretion			—			20			8			1		—		29
Impairments		—		18		—		—				—				18
		263		212		782		15				(35)				1,237
Operating Income(1)		$	267	$	69	$	466	$	20			$	—			822
																					248			195			755			11		(18)		1,191
Operating Income (Loss)(2)																		Operating Income (Loss)(2)			$	643		$	248		$	578		$	10	$	(1)	1,478

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

Loss on offshore decommissioning contingency																(446)
Loss on divestitures, net																(2)
Gain on divestitures, net																		Gain on divestitures, net																1,176
Other, net	Other, net															40		Other, net																45
General and administrative	General and administrative															(64)		General and administrative																(151)
Transaction, reorganization, and separation	Transaction, reorganization, and separation															(4)		Transaction, reorganization, and separation																(14)
Financing costs, net	Financing costs, net															(192)		Financing costs, net																(140)
Income Before Income Taxes	Income Before Income Taxes															$	154	Income Before Income Taxes																$	2,332

Total Assets(3)																		Total Assets(3)			$	2,966		$	2,169		$	8,359		$	—	$	—	$	13,494

Egypt North Sea U.S. Altus Midstream
Intersegment
Eliminations
& Other(4)
Total(3)
Upstream
For the Nine Months Ended September 30, 2021 (In millions)
Revenues:
Oil revenues $ 1,299 $ 690 $ 1,325 $ — $ — $ 3,314
Natural gas revenues 198 100 533 — — 831
Natural gas liquids revenues 6 16 463 — — 485
Oil, natural gas, and natural gas liquids production revenues 1,503 806 2,321 — — 4,630
Purchased oil and gas sales — — 1,050 6 — 1,056
Midstream service affiliate revenues — — — 99 (99) —
1,503 806 3,371 105 (99) 5,686
Operating Expenses:
Lease operating expenses 335 274 283 — (1) 891
Gathering, processing, and transmission 8 28 225 24 (98) 187
Purchased oil and gas costs — — 1,147 5 — 1,152
Taxes other than income — — 139 10 — 149
Exploration 36 27 21 — 2 86
Depreciation, depletion, and amortization 395 208 416 9 — 1,028
Asset retirement obligation accretion — 59 23 3 — 85
Impairments — 18 — — — 18
774 614 2,254 51 (97) 3,596
Operating Income (Loss)(1)
$ 729 $ 192 $ 1,117 $ 54 $ (2) 2,090
Other Income (Expense):
Derivative instrument gains, net 45
Loss on offshore decommissioning contingency (446)
Gain on divestitures, net 65
Other, net 175
General and administrative (226)
Transaction, reorganization, and separation (8)
Financing costs, net (393)
Income Before Income Taxes $ 1,302
Total Assets(2)
$ 2,887 $ 2,080 $ 7,606 $ 1,853 $ — $ 14,426

Egypt North Sea U.S. Altus Midstream
Intersegment
Eliminations
& Other
Total(3)
Upstream
For the Quarter Ended September 30, 2020 (In millions)
Revenues:
Oil revenues $ 303 $ 179 $ 303 $ — $ — $ 785
Natural gas revenues 74 13 77 — — 164
Natural gas liquids revenues 2 5 90 — — 97
Oil, natural gas, and natural gas liquids production revenues 379 197 470 — — 1,046
Purchased oil and gas sales — — 73 1 — 74
Midstream service affiliate revenues — — — 39 (39) —
379 197 543 40 (39) 1,120
Operating Expenses:
Lease operating expenses 102 79 79 — (1) 259
Gathering, processing, and transmission 8 10 74 9 (38) 63
Purchased oil and gas costs — — 74 1 — 75
Taxes other than income — — 30 4 — 34
Exploration 10 10 34 — 4 58
Depreciation, depletion, and amortization 144 90 161 3 — 398
Asset retirement obligation accretion — 18 8 1 — 27
264 207 460 18 (35) 914
Operating Income (Loss)(1)
$ 115 $ (10) $ 83 $ 22 $ (4) 206
Other Income (Expense):
Derivative instrument gains, net 16
Loss on divestitures, net (1)
Other, net 9
General and administrative (52)
Transaction, reorganization, and separation (7)
Financing costs, net (99)
Income Before Income Taxes $ 72


		Egypt		North Sea		U.S.		Altus Midstream				Intersegment Eliminations & Other				Total(3)					Egypt(1)			North Sea			U.S.			Altus Midstream		Intersegment Eliminations & Other		Total(4)
		Upstream																Upstream
For the Nine Months Ended September 30, 2020		(In millions)
For the Quarter Ended March 31, 2021																		For the Quarter Ended March 31, 2021			(In millions)
Revenues:	Revenues:																	Revenues:
Oil revenues	Oil revenues	$	823	$	578	$	929			$	—			$	—				$	2,330	Oil revenues		$	402		$	241		$		348	$	—	$	—	$	991
Natural gas revenues	Natural gas revenues	209		39		169		—				—				417		Natural gas revenues			70			31			211			—		—		312
Natural gas liquids revenues	Natural gas liquids revenues	6		15		211		—				—				232		Natural gas liquids revenues			2			6			120			—		—		128
Oil, natural gas, and natural gas liquids production revenues	Oil, natural gas, and natural gas liquids production revenues	1,038		632		1,309		—				—				2,979		Oil, natural gas, and natural gas liquids production revenues			474			278			679			—		—		1,431
Purchased oil and gas sales	Purchased oil and gas sales	—		—		235		2				—				237		Purchased oil and gas sales			—			—			437			3		—		440
Midstream service affiliate revenues		—		—		—		111				(111)				—
Midstream service revenues																		Midstream service revenues			—			—			—			32		(32)		—
		1,038		632		1,544		113				(111)				3,216					474			278			1,116			35		(32)		1,871
Operating Expenses:	Operating Expenses:																	Operating Expenses:
Lease operating expenses	Lease operating expenses	312		234		313		—				(1)				858		Lease operating expenses			104			75			86			—		(1)		264
Gathering, processing, and transmission	Gathering, processing, and transmission	31		37		219		29				(110)				206		Gathering, processing, and transmission			1			12			69			7		(31)		58
Purchased oil and gas costs	Purchased oil and gas costs	—		—		205		2				—				207		Purchased oil and gas costs			—			—			492			2		—		494
Taxes other than income	Taxes other than income	—		—		79		11				—				90		Taxes other than income			—			—			40			4		—		44
Exploration	Exploration	51		26		100		—				10				187		Exploration			8			20			16			—		2		46
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	463		278		632		9				—				1,382		Depreciation, depletion, and amortization			130			84			125			3		—		342
Asset retirement obligation accretion	Asset retirement obligation accretion	—		54		24		3				—				81		Asset retirement obligation accretion			—			19			8			1		—		28
Impairments		529		7		3,956		—				—				4,492

		1,386		636		5,528		54				(101)				7,503					243			210			836			17		(30)		1,276
Operating Income (Loss)~~(1)~~(2)	Operating Income (Loss)~~(1)~~(2)	$	(348)	$	(4)	$	(3,984)	$	59			$	(10)			(4,287)		Operating Income (Loss)~~(1)~~(2)			$	231		$	68		$	280		$	18	$	(2)	$	595

Other Income (Expense):	Other Income (Expense):																	Other Income (Expense):
Derivative instrument losses, net																(262)
Gain on divestitures																24
Derivative instrument gains, net																		Derivative instrument gains, net																158
Gain on divestitures, net																		Gain on divestitures, net																2
Other, net	Other, net															41		Other, net																61
General and administrative	General and administrative															(214)		General and administrative																(83)
Transaction, reorganization, and separation																(44)

Financing costs, net	Financing costs, net															(168)		Financing costs, net																(107)
Loss Before Income Taxes																$	(4,910)
Income Before Income Taxes																		Income Before Income Taxes																$	626

Total Assets(2)		$	3,052	$	2,238	$	5,708	$	1,741			$	136			$	12,875

Total Assets(3)																		Total Assets(3)			$	3,020		$	2,167		$	6,959		$	1,828	$	1	$	13,975

(1) Includes revenue from non-customers for the quarters ended March 31, 2022 and 2021 of:


	For the Quarter Ended March 31,
	2022		2021
	(In millions)
Oil	$	250	$	93
Natural gas	31		12
Natural gas liquids	1		1

(2)Operating income of U.S., and Egypt ~~and North Sea~~ includes leasehold ~~and other asset~~ impairments of ~~$2 million, $2~~$3 million and ~~$19 million, respectively, for the third quarter of 2021.~~

~~Operating income of U.S., Egypt, and North Sea includes leasehold and other asset impairments of $19 million, $6 million, and $19~~$1 million, respectively, for the first ~~nine months~~quarter of ~~2021.~~

2022. Operating ~~loss~~income of U.S. and Egypt includes leasehold and other asset impairments of ~~$34~~$16 million and $2 million, respectively, for the ~~third~~first quarter of ~~2020.~~2021.

~~Operating loss of U.S., Egypt, and North Sea includes leasehold and other asset impairments of $4.0 billion, $535 million, and $7 million, respectively, for the first nine months of 2020.~~

~~(2)~~ (3)Intercompany balances are excluded from total assets.

~~(3)~~ (4)Includes noncontrolling interests ~~in Egypt~~of Sinopec, Altus, and ~~Altus.~~

~~(4) On March 1, 2021, the Company sold its Suriname and Dominican Republic operations to~~ APA. ~~Refer to~~ ~~Note 2—Transactions with Parent Affiliate~~ ~~for more details on the transaction.~~

2927

ITEM 2. MANAGEMENT’S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

The following discussion relates to Apache Corporation (Apache or the Company) and its consolidated subsidiaries and should be read together with the Company’s Consolidated Financial Statements and accompanying notes included in Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q, as well as related information set forth in the Company’s Consolidated Financial Statements, accompanying Notes to Consolidated Financial Statements, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

On ~~January 4,~~March 1, 2021, ~~the Company announced plans to implement~~Apache Corporation consummated a holding company reorganization (the Holding Company Reorganization), pursuant to which ~~was thereafter completed on March 1, 2021. In connection with the Holding Company Reorganization, the Company~~Apache Corporation became a direct, ~~wholly-owned~~wholly owned subsidiary of APA Corporation (APA), and all of the Company’s outstanding shares ~~were~~ automatically converted into equivalent corresponding shares of APA. Pursuant to the Holding Company Reorganization, APA became the successor issuer to the Company pursuant to Rule 12g-3(a) under the Exchange Act and replaced the Company as the public company trading on the Nasdaq Global Select Market under the ticker symbol “APA.” The Holding Company Reorganization modernized the Company’s operating and legal structure, making it more consistent with other companies that have affiliates operating around the globe. Refer to Note 2—Transactions with Parent Affiliate for more detail.

Overview

Apache, a direct, ~~wholly-owned~~wholly owned subsidiary of APA, is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids (NGLs). The Company’s upstream business currently has exploration and production operations in three geographic areas: the U.S., Egypt, and offshore the U.K. in the North Sea (North Sea). ~~The~~Prior to the BCP Business Combination defined below, the Company’s midstream business iswas operated by Altus Midstream Company ~~(Nasdaq: ALTM)~~(ALTM) through its subsidiary Altus Midstream LP (collectively, Altus). Altus ~~owns, develops,~~owned, developed, and ~~operates~~operated a midstream energy asset network in the Permian Basin of West Texas.

The Company’s mission is to grow in an innovative, safe, environmentally responsible, and profitable manner for the long-term benefit of its stakeholders. The Company is focused on rigorous portfolio management, disciplined financial structure, and optimization of returns.

The global economy and the energy industry have been deeply impacted by the effects of the conflict in Ukraine and coronavirus disease 2019 (COVID-19) pandemic and related governmental actions. ~~Uncertainty~~Uncertainties in the global supply chain, commodity prices, and financial markets ~~during 2020 and 2021~~ continue to impact oil supply and demand. Despite these uncertainties, the Company remains committed to its longer-term objectives: (1) to maintain a balanced asset portfolio; (2) to invest for long-term returns over production growth; and (3) to budget conservatively to generate cash flow in excess of its upstream exploration, appraisal, and development capital program that can be directed ~~on a priority basis~~ to debt ~~reduction.~~reduction, share repurchases, and other return of capital to its stakeholders. The Company continues to aggressively manage its cost structure regardless of the oil price environment and closely monitors hydrocarbon pricing fundamentals to reallocate capital as part of its ongoing planning process.

In the ~~third~~first quarter of ~~2021,~~2022, the Company reported a net ~~loss~~income of ~~$83 million~~$1.8 billion compared to a net ~~loss~~income of $4$397 million in the ~~third~~first quarter of ~~2020. The increase~~2021. Net income for the first quarter of 2022 benefited from higher revenue attributable to a new merged concession agreement in net loss compared to the prior-year period is primarily the result of a non-cash $446 million loss on previously sold Gulf of Mexico properties, which represents the Company’s estimate of decommissioning Apache may be required to perform or pay for on assets sold to Fieldwood in 2013 in excess of securities available to the Company to recover costs incurred with respect to such decommissioning. For additional details of this loss, please refer to ~~Note 12—Commitments and Contingencies~~ ~~in the Notes to Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. Absent this charge, the quarter benefited from~~Egypt, significantly improved commodity prices, ~~that had collapsed~~and a gain of $1.2 billion associated with asset divestitures. The increase in realized prices was primarily driven by effects of the ~~prior year when the COVID-19 pandemic negatively affected~~conflict in Ukraine on global commodity prices, uncertainties around spare capacity and energy security globally, and increased economic activity ~~and~~compared to the oil markets. In response to lower commodity prices, the Company materially reduced its upstream capital investment budget and drilling activity during 2020. Daily production decreased 13 percent from an average of 445 Mboe/d in the thirdfirst quarter of ~~2020 to an average of 389 Mboe/d in the third quarter of~~ 2021.

The Company generated ~~$2.4 billion~~$856 million of cash from operating activities during the first ~~nine~~three months of ~~2021,~~2022, a ~~172~~24 percent increase from the first ~~nine~~three months of ~~2020,~~2021, driven by higher revenue attributable to the new merged concession agreement in Egypt and higher commodity ~~prices and associated revenues.~~prices. Since year-end 2021, the Company has reduced its total outstanding debt and redeemable preferred interests by ~~$1.1~~$1.6 billion and it$712 million, respectively, through the deconsolidation of ALTM and the retirement of outstanding notes and debentures. The Company had ~~$348~~$144 million of cash on hand at ~~the end of the third quarter of 2021.~~March 31, 2022.

Following this progress and considering the ongoing constructive price environment, the Company has adjusted its cash allocation approach. The capital investment program will be increased to a level intended to sustain or slightly grow global production volumes. This will be primarily accomplished through a gradual ramp in activity over the next few quarters, primarily in Egypt, but also in the Company’s U.S. ~~Onshore.~~onshore assets.

3028

Operational Highlights

Key operational highlights for the quarter include:

United States

•~~Equivalent~~Daily boe production from the Company’s U.S. assets accounted for 6152 percent of its total production during the ~~third~~first quarter of ~~2021. After halting all drilling~~2022. The Company averaged three rigs in the U.S. during the quarter and ~~completion activity for most of 2020, in early 2021 the Company re-activated one~~has recently added a fourth rig in the ~~Permian Basin and one rig in the Austin Chalk. A second rig was added in the Permian Basin in late June 2021.~~Delaware Basin. The Company ~~was also active in completing its backlog~~anticipates that the current level of ~~Permian wells previously drilled but not completed. During~~activity will enable it to return U.S. oil production to a modest rate of growth by the third quarter, the Company placed nine wells online in the Permian Basin. One additional well was drilled in the Austin Chalk, where the results are continuing to be evaluated, and a drilling rig was recently added to advance the characterizationsecond half of ~~the Company’s acreage position in the play.~~2022.

•On ~~October 11, 2021, APA~~February 22, 2022, ALTM closed a previously announced ~~that it has ended routine flaring in its U.S. onshore operations, achieving one of its announced 2021 environmental, social and governance (ESG) goals, three months ahead of schedule.~~

•~~On October 21, 2021, ALTM announced that it will~~transaction to combine with ~~privately-owned~~privately owned BCP Raptor Holdco LP ~~(BCP)~~(BCP and, together with BCP Raptor Holdco GP, LLC, the Contributed Entities) in an all-stock ~~transaction.~~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). Upon closing the transaction, the combined entity was renamed Kinetik Holdings Inc. (Kinetik). As consideration for the ~~transaction,~~contribution of the Contributed Interests, ALTM ~~will issue~~issued 50 million shares of Class C ~~common shares~~Common Stock (and ~~its subsidiary,~~ Altus Midstream LP ~~will issue~~issued a corresponding number of common units) to BCP’s ~~unitholders,~~unitholders.

ALTM’s stockholders continued to hold their existing shares of ALTM Common Stock. Apache Midstream LLC, a wholly owned subsidiary of APA, which ~~are principally funds affiliated with Blackstone and I Squared Capital. Upon closing~~owned approximately 79 percent of the ~~transaction, APA will own~~issued and outstanding shares of ALTM Common Stock prior to the BCP Business Combination, owned approximately 20 percent of the issued and outstanding ~~common stock~~shares of ALTM Common Stock after the transaction closed. The Company deconsolidated ALTM upon closing the transaction and recognized a gain of approximately $609 million that reflects the difference of the Company’s share of ALTM’s deconsolidated balance sheet and the fair value of its 20 percent retained ownership in the combined entity. ~~The~~

Subsequent to the close of the transaction, ~~is expected~~in March 2022, the Company sold four million of its shares in Kinetik for $224 million, reducing the Company’s retained ownership percentage in Kinetik to ~~close during the first quarter of 2022 following completion of customary closing conditions, including ALTM shareholder approval and regulatory reviews.~~

~~International~~approximately 13 percent.

•In ~~May 2021,~~March 2022, the Company ~~reached an agreement in principle with~~completed the ~~Egyptian Ministry of Petroleum and the Egyptian General Petroleum Corporation (EGPC)~~previously announced transaction to modernize the terms of the majority of the production-sharing contracts. The changes simplify the contractual relationship with EGPC and include provisions to create a single cost recovery pool, adjust cost oil and gas and profit oil and gas participation, facilitate recovery of prior investment, update day-to-day operational governance, and refresh the term length of both exploration and development leases. The Apache entity that will become the sole contractor is owned two-thirds by Apache and one-third by Sinopec. The final draft of this agreement has been completed and is scheduled to move to the Egyptian Parliament and Presidentsell certain non-core mineral rights in the ~~fall~~Delaware Basin for ~~approvals to complete~~total cash proceeds of approximately $759 million after certain post-closing adjustments. The Company recognized a gain of approximately $590 million from the ~~process.~~transaction.

International

•In Egypt, the Company averaged 811 drilling rigs and ~~completed 12~~drilled 15 productive wells during the ~~third~~first quarter of ~~2021. Third-quarter~~2022. First quarter 2022 gross equivalent production in the Company’s Egypt assets decreased 151 percent from the ~~third~~first quarter of ~~2020, given reduced drilling activity over~~2021, while net production increased 26 percent, primarily a function of improved cost recovery under the ~~preceding year.~~new merged concession agreement ratified at the end of 2021. The Company continues to build and enhance its drilling inventory in Egypt, supplemented with recent seismic acquisitions and new play concept evaluations on both new and existing acreage. ~~Upon ratification of the new agreement referenced above, the~~The Company ~~expects~~plans to ~~further~~ increase drilling and workover ~~activity.~~activity as a result of the merged concession agreement.

•The Company averaged ~~two rigs~~one rig in the North Sea during the ~~third~~first quarter of ~~2021.~~2022. Production was ~~significantly~~ impacted by ~~compressor~~unplanned inspection downtime ~~extended~~at the Forties Echo platform ~~turnaround work, and third-party pipeline outages~~ during the first ~~nine months~~quarter of ~~the year.~~2022.

3129

Results of Operations

Oil, Natural Gas, and Natural Gas Liquids Production Revenues

Revenue

The Company’s ~~oil and gas~~ production revenues and respective contribution to total revenues by country were as follows:


		For the Quarter Ended September 30,								For the Nine Months Ended September 30,									For the Quarter Ended March 31,
		2021				2020				2021				2020					2022				2021
		$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution		$ Value		% Contribution			$ Value		% Contribution		$ Value		% Contribution
		($ in millions)																	($ in millions)
Oil Revenues:	Oil Revenues:																	Oil Revenues:
United States	United States	$	484	41	%	$	303	39	%	$	1,325	40	%	$	929	40	%	United States	$	599	35	%	$	348	35	%
Egypt(1)	Egypt(1)	465		39	%	303		38	%	1,299		39	%	823		35	%	Egypt(1)	790		46	%	402		41	%
North Sea	North Sea	233		20	%	179		23	%	690		21	%	578		25	%	North Sea	328		19	%	241		24	%
Total(1)	Total(1)	$	1,182	100	%	$	785	100	%	$	3,314	100	%	$	2,330	100	%	Total(1)	$	1,717	100	%	$	991	100	%

Natural Gas Revenues:	Natural Gas Revenues:																	Natural Gas Revenues:
United States	United States	$	188	64	%	$	77	47	%	$	533	64	%	$	169	41	%	United States	$	183	48	%	$	211	68	%
Egypt(1)	Egypt(1)	63		22	%	74		45	%	198		24	%	209		50	%	Egypt(1)	98		26	%	70		22	%
North Sea	North Sea	42		14	%	13		8	%	100		12	%	39		9	%	North Sea	99		26	%	31		10	%
Total(1)	Total(1)	$	293	100	%	$	164	100	%	$	831	100	%	$	417	100	%	Total(1)	$	380	100	%	$	312	100	%

NGL Revenues:	NGL Revenues:																	NGL Revenues:
United States	United States	$	202	96	%	$	90	93	%	$	463	95	%	$	211	91	%	United States	$	204	91	%	$	120	94	%
Egypt(1)	Egypt(1)	2		1	%	2		2	%	6		1	%	6		3	%	Egypt(1)	3		2	%	2		1	%
North Sea	North Sea	6		3	%	5		5	%	16		4	%	15		6	%	North Sea	16		7	%	6		5	%
Total(1)	Total(1)	$	210	100	%	$	97	100	%	$	485	100	%	$	232	100	%	Total(1)	$	223	100	%	$	128	100	%

Oil and Gas Revenues:	Oil and Gas Revenues:																	Oil and Gas Revenues:
United States	United States	$	874	52	%	$	470	45	%	$	2,321	50	%	$	1,309	44	%	United States	$	986	43	%	$	679	47	%
Egypt(1)	Egypt(1)	530		31	%	379		36	%	1,503		33	%	1,038		35	%	Egypt(1)	891		38	%	474		33	%
North Sea	North Sea	281		17	%	197		19	%	806		17	%	632		21	%	North Sea	443		19	%	278		20	%
Total(1)	Total(1)	$	1,685	100	%	$	1,046	100	%	$	4,630	100	%	$	2,979	100	%	Total(1)	$	2,320	100	%	$	1,431	100	%

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

3230

Production

The Company’s production volumes by country were as follows:


		For the Quarter Ended September 30,			For the Nine Months Ended, September 30,				For the Quarter Ended March 31,
		2021	Increase (Decrease)	2020	2021	Increase (Decrease)	2020		2022	Increase (Decrease)	2021
Oil Volume (b/d)	Oil Volume (b/d)							Oil Volume (b/d)
United States	United States	75,526	(9)%	83,178	75,384	(19)%	93,051	United States	69,636	3%	67,690
Egypt(1)(2)	Egypt(1)(2)	69,830	(12)%	79,194	71,052	(8)%	77,410	Egypt(1)(2)	85,018	18%	72,170
North Sea	North Sea	33,783	(31)%	48,755	36,398	(28)%	50,339	North Sea	35,242	(19)%	43,524
Total	Total	179,139	(15)%	211,127	182,834	(17)%	220,800	Total	189,896	4%	183,384

Natural Gas Volume (Mcf/d)	Natural Gas Volume (Mcf/d)							Natural Gas Volume (Mcf/d)
United States	United States	546,058	(9)%	597,686	531,695	(7)%	571,325	United States	477,637	(6)%	507,517
Egypt(1)(2)	Egypt(1)(2)	243,294	(15)%	286,744	259,108	(5)%	273,676	Egypt(1)(2)	386,577	39%	278,149
North Sea	North Sea	33,752	(36)%	53,137	40,061	(31)%	57,659	North Sea	38,466	(23)%	49,840
Total	Total	823,104	(12)%	937,567	830,864	(8)%	902,660	Total	902,680	8%	835,506

NGL Volume (b/d)	NGL Volume (b/d)							NGL Volume (b/d)
United States	United States	70,962	(6)%	75,266	65,805	(13)%	75,468	United States	61,711	7%	57,815
Egypt(1)(2)	Egypt(1)(2)	496	(19)%	611	544	(33)%	812	Egypt(1)(2)	491	(16)%	583
North Sea	North Sea	1,200	(39)%	1,976	1,220	(37)%	1,948	North Sea	1,498	10%	1,368
Total	Total	72,658	(7)%	77,853	67,569	(14)%	78,228	Total	63,700	7%	59,766

BOE per day(3)	BOE per day(3)							BOE per day(3)
United States	United States	237,498	(8)%	258,058	229,805	(13)%	263,740	United States	210,953	—%	210,091
Egypt(1)(2)	Egypt(1)(2)	110,875	(13)%	127,595	114,780	(7)%	123,834	Egypt(1)(2)	149,938	26%	119,111
North Sea(4)	North Sea(4)	40,608	(32)%	59,588	44,295	(28)%	61,897	North Sea(4)	43,151	(19)%	53,199
Total	Total	388,981	(13)%	445,241	388,880	(13)%	449,471	Total	404,042	6%	382,401

(1) Gross oil, natural gas, and NGL production in Egypt were as follows:


		For the Quarter Ended September 30,		For the Nine Months Ended September 30,			For the Quarter Ended March 31,
		2021	2020	2021	2020		2022	2021
Oil (b/d)	Oil (b/d)	134,128	159,941	134,976	171,778	Oil (b/d)	134,397	135,320
Natural Gas (Mcf/d)	Natural Gas (Mcf/d)	564,354	649,566	581,859	648,995	Natural Gas (Mcf/d)	597,812	603,269
NGL (b/d)	NGL (b/d)	776	1,175	846	1,534	NGL (b/d)	735	897

(2) Includes net production volumes per day attributable to a noncontrolling ~~interest~~interests in Egypt of:


		For the Quarter Ended September 30,		For the Nine Months Ended September 30,			For the Quarter Ended March 31,
		2021	2020	2021	2020		2022	2021
Oil (b/d)	Oil (b/d)	23,309	26,459	23,716	25,891	Oil (b/d)	45,332	24,088
Natural Gas (Mcf/d)	Natural Gas (Mcf/d)	81,309	95,776	86,564	91,374	Natural Gas (Mcf/d)	206,079	92,936
NGL (b/d)	NGL (b/d)	165	204	181	271	NGL (b/d)	262	194

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

(4) Average sales volumes from the North Sea for the ~~third~~first quarter of 2022 and 2021 ~~and 2020~~ were ~~40,581~~43,668 boe/d and ~~57,099~~54,544 boe/d, ~~respectively, and 45,637 boe/d and 61,771 boe/d for the first nine months of 2021 and 2020,~~ respectively. Sales volumes may vary from production volumes as a result of the timing of ~~liftings in the Beryl field.~~liftings.

3331

Pricing

The Company’s average selling prices by country were as follows:


		For the Quarter Ended September 30,					For the Nine Months Ended, September 30,						For the Quarter Ended March 31,
		2021		Increase (Decrease)	2020		2021		Increase (Decrease)	2020			2022		Increase (Decrease)	2021
Average Oil Price - Per barrel	Average Oil Price - Per barrel											Average Oil Price - Per barrel
United States	United States	$	69.69	76%	$	39.60	$	64.38	77%	$	36.45	United States	$	95.58	67%	$	57.16
Egypt	Egypt	72.37		74%	41.51		66.97		73%	38.79		Egypt	103.22		67%	61.89
North Sea	North Sea	74.94		78%	42.10		66.93		59%	41.99		North Sea	102.20		71%	59.67
Total	Total	71.72		75%	40.88		65.90		71%	38.53		Total	100.23		68%	59.62

Average Natural Gas Price - Per Mcf	Average Natural Gas Price - Per Mcf											Average Natural Gas Price - Per Mcf
United States	United States	$	3.75	168%	$	1.40	$	3.67	240%	$	1.08	United States	$	4.25	(8)%	$	4.61
Egypt	Egypt	2.82		—%	2.82		2.80		—%	2.79		Egypt	2.83		1%	2.79
North Sea	North Sea	13.40		419%	2.58		9.13		271%	2.46		North Sea	32.35		367%	6.93
Total	Total	3.87		104%	1.90		3.66		117%	1.69		Total	4.70		14%	4.14

Average NGL Price - Per barrel	Average NGL Price - Per barrel											Average NGL Price - Per barrel
United States	United States	$	30.85	136%	$	13.06	$	25.75	152%	$	10.20	United States	$	36.67	60%	$	22.99
Egypt	Egypt	52.02		101%	25.88		44.73		70%	26.24		Egypt	77.81		74%	44.74
North Sea	North Sea	56.64		109%	27.08		48.32		69%	28.54		North Sea	74.64		54%	48.59
Total	Total	31.42		133%	13.51		26.32		143%	10.83		Total	38.33		61%	23.79

~~Third-Quarter 2021~~First-Quarter 2022 compared to ~~Third-Quarter 2020~~First-Quarter 2021

Crude Oil Crude oil revenues for the ~~third~~first quarter of ~~2021~~2022 totaled ~~$1.2~~$1.7 billion, a ~~$397~~$726 million increase from the comparative ~~2020~~2021 quarter. A 7568 percent increase in average realized prices increased ~~third-quarter 2021~~first-quarter 2022 oil revenues by ~~$592~~$675 million compared to the prior-year quarter, while 154 percent ~~lower~~higher average daily production ~~decreased~~increased revenues by ~~$195~~$51 million. Crude oil revenues accounted for 70 percent of total oil and gas production revenues and 46 percent of worldwide production in the third quarter of 2021. The Company’s worldwide oil production decreased 32.0 Mb/d to 179.1 Mb/d during the third quarter of 2021 from the comparative prior-year period, primarily a result of natural production decline across all countries and extended operational downtime and platform turnaround work in the North Sea.

~~Natural Gas~~ Gas revenues for the third quarter of 2021 totaled $293 million, a $129 million increase from the comparative 2020 quarter. A 104 percent increase in average realized prices increased third-quarter 2021 natural gas revenues by $170 million compared to the prior-year quarter, while 12 percent lower average daily production decreased revenues by $41 million. Natural gas revenues accounted for 17 percent of total oil and gas production revenues and 35 percent of worldwide production during the third quarter of 2021. The Company’s worldwide natural gas production decreased 114.5 MMcf/d to 823 MMcf/d during the third quarter of 2021 from the comparative prior-year period, primarily a result of production decline across all countries and extended operational downtime in the North Sea, offset by increased completion activity in the U.S.

~~NGL~~ NGL revenues for the third quarter of 2021 totaled $210 million, a $113 million increase from the comparative 2020 quarter. A 133 percent increase in average realized prices increased third-quarter 2021 NGL revenues by $128 million compared to the prior-year quarter, while 7 percent lower average daily production decreased revenues by $15 million. NGL revenues accounted for 13 percent of total oil and gas production revenues and 19 percent of worldwide production during the third quarter of 2021. The Company’s worldwide NGL production decreased 5.2 Mb/d to 72.7 Mb/d during the third quarter of 2021 from the comparative prior-year period, primarily a result of production decline across all countries.

~~Year-to-Date 2021 compared to Year-to-Date 2020~~

~~Crude Oil~~ Crude oil revenues for the first nine months of 2021 totaled $3.3 billion, a $1.0 billion increase from the comparative 2020 period. A 71 percent increase in average realized prices increased oil revenues for the 2021 period by $1.7 billion compared to the prior-year period, while 17 percent lower average daily production decreased revenues by $671 million compared to the prior-year period. Crude oil revenues accounted for 7274 percent of total oil and gas production revenues and 47 percent of worldwide production ~~for~~in the first ~~nine months~~quarter of ~~2021. Crude oil prices realized during the first nine months of 2021 averaged $65.90 per barrel, compared to $38.53 per barrel in the comparative prior-year period.~~2022. The Company’s worldwide oil production ~~decreased 38.0~~increased 6.5 Mb/d to ~~182.8~~189.9 Mb/d induring the first ~~nine months~~quarter of ~~2021 compared to~~2022 from the comparative prior-year period, primarily a ~~result~~function of improved cost recovery under the merged concession agreement in Egypt ratified at the end of 2021 and increased drilling and recompletion activity in the U.S. These increases were partially offset by operational downtime in the North Sea and natural production decline across all ~~countries, and extended operational downtime and platform turnaround work in the North Sea.~~assets.

Natural Gas Gas revenues for the first ~~nine months~~quarter of ~~2021~~2022 totaled ~~$831~~$380 million, a ~~$414~~$68 million increase from the comparative ~~2020 period.~~2021 quarter. A ~~117~~14 percent increase in average realized prices increased first-quarter 2022 natural gas revenues ~~for the 2021 period~~ by ~~$489~~$42 million compared to the prior-year ~~period,~~quarter, while 8 percent ~~lower~~higher average daily production ~~decreased~~increased revenues by ~~$75 million compared to the prior-year period.~~$26 million. Natural gas revenues accounted for 1816 percent of total oil and gas production revenues and 3637 percent of worldwide production ~~for the first nine months of 2021. Natural gas prices realized~~ during the first ~~nine months~~quarter of 2021 averaged $3.66 per Mcf, compared to $1.69 per Mcf in the comparative prior-year period. Gas prices for the U.S. during the first nine months of 2021 also reflect the extreme price volatility during the month of February due to the Texas freeze event.2022. The Company’s worldwide natural gas production ~~decreased 72~~increased 67.2 MMcf/d to ~~831~~903 MMcf/d induring the first ~~nine months~~quarter of ~~2021 compared to~~2022 from the comparative prior-year period, primarily a result of increased drilling and recompletion activity in the U.S. and increased net production in Egypt resulting from improved cost recovery under the merged concession agreement ratified at the end of 2021. These increases were partially offset by operational downtime in the North Sea and natural production decline across all ~~countries, impacts of winter storms in the U.S., and extended operational downtime and platform turnaround work in the North Sea.~~assets.

NGLNGL revenues for the first ~~nine months~~quarter of ~~2021~~2022 totaled ~~$485~~$223 million, a ~~$253~~$95 million increase from the comparative ~~2020 period.~~2021 quarter. A ~~143~~61 percent increase in average realized prices increased first-quarter 2022 NGL revenues ~~for the 2021 period~~ by ~~$332~~$78 million compared to the prior-year ~~period,~~quarter, while 147 percent ~~lower~~higher average daily production ~~decreased~~increased revenues by ~~$79 million compared to the prior-year period.~~$17 million. NGL revenues accounted for 10 percent of total oil and gas production revenues and 1716 percent of worldwide production ~~for the first nine months of 2021. NGL prices realized~~ during the first ~~nine months~~quarter of ~~2021 averaged $26.32 per barrel, compared to $10.83 per barrel in the comparative prior-year period.~~2022. The Company’s worldwide NGL production ~~decreased 10.7~~increased 3.9 Mb/d to ~~67.6~~63.7 Mb/d induring the first ~~nine months~~quarter of ~~2021 compared to~~2022 from the comparative prior-year period, primarily a result of ~~production decline across all countries~~increased drilling and ~~the impacts of winter storms~~recompletion activity in the U.S.

Altus Midstream Revenues

Prior to the deconsolidation of Altus on February 22, 2022, Altus Midstream services revenues generated through its fee-based contractual arrangements with the Company totaled ~~$35~~$16 million and ~~$39 million during the third quarters of 2021 and 2020, respectively, and $99 million and $111~~$32 million during the first ~~nine months~~quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. These ~~affiliated~~ revenues ~~are~~were eliminated upon consolidation. ~~Changes in revenue compared to the prior periods were primarily driven by lower natural gas throughput volumes processed by Altus for the Company’s Alpine High production.~~

Purchased Oil and Gas Sales

Purchased oil and gas sales represent volumes primarily attributable to transport, fuel, and physical in-basin gas purchases that were sold by the Company to fulfill natural gas takeaway obligations. Sales related to these purchased volumes totaled ~~$374~~$349 million and ~~$74 million during the third quarters of 2021 and 2020, respectively, and $1.1 billion and $237~~$440 million during the first ~~nine months~~quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. Purchased oil and gas sales were offset by associated purchase costs of ~~$396~~$351 million and ~~$75 million during the third quarters of 2021 and 2020, respectively, and $1.2 billion and $207~~$494 million during the first ~~nine months~~quarters of 2022 and 2021, ~~and 2020,~~ respectively. ~~When compared to the prior-year periods, gross~~Gross purchased oil and gas sales values and the associated net losses were higher in the ~~third~~first quarter ~~and first nine months~~ of 2021 ~~increased as a result of production shortfalls following reduced capital investment and drilling activity in 2020. The year-to-date net loss was exacerbated by~~due to extreme price volatility during the month of February due to Winter Storm Uri in Texas.

Operating Expenses

The Company’s operating expenses were as follows:


		For the Quarter Ended September 30,				For the Nine Months Ended September 30,					For the Quarter Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Lease operating expenses	Lease operating expenses	$	316	$	259	$	891	$	858	Lease operating expenses	$	344	$	264
Gathering, processing, and transmission	Gathering, processing, and transmission	68		63		187		206		Gathering, processing, and transmission	81		58
Purchased oil and gas costs	Purchased oil and gas costs	396		75		1,152		207		Purchased oil and gas costs	351		494
Taxes other than income	Taxes other than income	54		34		149		90		Taxes other than income	70		44
Exploration	Exploration	21		58		86		187		Exploration	25		46
General and administrative	General and administrative	64		52		226		214		General and administrative	151		83
Transaction, reorganization, and separation	Transaction, reorganization, and separation	4		7		8		44		Transaction, reorganization, and separation	14		—
Depreciation, depletion, and amortization:	Depreciation, depletion, and amortization:									Depreciation, depletion, and amortization:
Oil and gas property and equipment	Oil and gas property and equipment	306		366		940		1,284		Oil and gas property and equipment	278		312
Gathering, processing, and transmission assets	Gathering, processing, and transmission assets	18		19		56		58		Gathering, processing, and transmission assets	5		19
Other assets	Other assets	11		13		32		40		Other assets	8		11
Asset retirement obligation accretion	Asset retirement obligation accretion	29		27		85		81		Asset retirement obligation accretion	29		28
Impairments		18		—		18		4,492

Financing costs, net	Financing costs, net	192		99		393		168		Financing costs, net	140		107
Total Operating Expenses	Total Operating Expenses	$	1,497	$	1,072	$	4,223	$	7,929	Total Operating Expenses	$	1,496	$	1,466

Lease Operating Expenses (LOE)

LOE increased ~~$57 million and $33~~$80 million in the ~~third~~first quarter ~~and the first nine months~~ of ~~2021, respectively,~~2022 from the comparative prior-year ~~periods.~~period. On a per-unit basis, LOE increased ~~39 percent and 20~~24 percent in the ~~third~~first quarter ~~and the first nine months~~ of ~~2021, respectively,~~2022 from the comparative prior-year ~~periods.~~period. The increase was driven by overall higher ~~turnaround~~labor costs and ~~maintenance~~operating costs trending with higher oil and gas prices and global inflation. LOE costs for the first quarter of 2022 were also impacted by mark-to-market adjustments for cash-based stock compensation expense resulting from an increase in the ~~North Sea, strengthening foreign exchange rates against~~Company’s stock price and anticipated achievement of performance and financial objectives as defined in the ~~U.S. dollar,~~stock award plans. These increases were coupled with increased workover activity in the U.S. in the ~~third~~first quarter of ~~2021, and per-unit operating costs trending with higher oil and gas prices.~~2022.

Gathering, Processing, and Transmission (GPT)

The Company’s GPT expenses were as follows:


		For the Quarter Ended September 30,				For the Nine Months Ended, September 30,					For the Quarter Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Third-party processing and transmission costs	Third-party processing and transmission costs	$	59	$	54	$	163	$	177	Third-party processing and transmission costs	$	66	$	51
Midstream service affiliate costs		35		38		98		110
Midstream service costs - ALTM										Midstream service costs - ALTM	18		31
Midstream service costs - Kinetik										Midstream service costs - Kinetik	10		—
Upstream processing and transmission costs	Upstream processing and transmission costs	94		92		261		287		Upstream processing and transmission costs	94		82
Midstream operating expenses	Midstream operating expenses	9		9		24		29		Midstream operating expenses	5		7
Intersegment eliminations	Intersegment eliminations	(35)		(38)		(98)		(110)		Intersegment eliminations	(18)		(31)
Total Gathering, processing, and transmission	Total Gathering, processing, and transmission	$	68	$	63	$	187	$	206	Total Gathering, processing, and transmission	$	81	$	58

GPT costs increased ~~$5 million and decreased $19~~$23 million in the ~~third~~first quarter ~~and the first nine months 2021, respectively,~~of 2022 from the comparative prior-year ~~periods.~~period. Third-party processing and transmission costs increased ~~$5 million and decreased $14~~$15 million in the ~~third~~first quarter ~~and the first nine months~~ of ~~2021, respectively,~~2022 from the comparative prior-year ~~periods.~~period. The increase in third-party costs for the ~~third~~first quarter of ~~2021~~2022 was primarily driven by an increase in average transportation rates during the quarter. ~~The overall decrease in third-party~~Total midstream service costs, ~~for~~which reflect midstream services provided to the ~~first nine months of 2021 was primarily driven~~Company by ~~a decrease in contracted pricing~~ALTM and lower processed volumes. Midstream service affiliate costs decreased $3 million and $12 million in the third quarter and the first nine months of 2021, respectively, from the comparative prior-year periods. The overall decreaseits successor, Kinetik, were relatively flat in the first ~~nine months~~quarter of ~~2021 was primarily driven~~2022 compared to the same prior-year period. Costs for services provided by ~~lower throughput of rich natural gas volumes at Alpine High. Midstream operating expenses, primarily incurred by Altus Midstream, remained flat~~ALTM in the ~~third~~first quarter of ~~2021~~2022 and ~~decreased $5~~prior to the BCP Business Combination totaling $18 million were eliminated in the Company’s consolidated financial statements and reflected as “Intersegment eliminations” in the table above. Subsequent to the BCP Business Combination and the Company’s deconsolidation of Altus on February 22, 2022, these midstream services continue to be provided by Kinetik but are no longer eliminated. Midstream services provided by Kinetik totaled $10 million in the first ~~nine months~~quarter of ~~2021,~~2022 and will continue to result in higher GPT costs in future periods as compared to periods preceding the ~~respective prior-year periods, driven by increased operational efficiency and continued cost cutting efforts.~~

ALTM deconsolidation.

Purchased Oil and Gas Costs

Purchased oil and gas costs totaled ~~$396 million and $1.2 billion during the third quarter and the first nine months of 2021, respectively, compared to $75 million and $207~~$351 million during the ~~third~~first quarter ~~and~~of 2022 compared to $494 million during the first ~~nine months~~quarter of ~~2020, respectively.~~2021. Purchased oil and gas costs were offset by associated purchase sales of ~~$374 million and $1.1 billion during the third quarter and the first nine months of 2021, respectively, compared to $74 million and $237~~$349 million during the ~~third~~first quarter ~~and~~of 2022 compared to $440 million during the first ~~nine months~~quarter of ~~2020, respectively,~~2021, as further discussed above.

Taxes Other Than Income

Taxes other than income increased ~~$20 million and $59~~$26 million from the ~~third~~first quarter ~~and the first nine months~~ of ~~2020, respectively,~~2021, primarily from higher severance taxes driven by higher commodity prices as compared to the same prior-year ~~periods.~~period.

Exploration Expenses

The Company’s exploration expenses were as follows:


		For the Quarter Ended September 30,				For the Nine Months Ended, September 30,					For the Quarter Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Unproved leasehold impairments	Unproved leasehold impairments	$	5	$	36	$	26	$	86	Unproved leasehold impairments	$	4	$	18
Dry hole expense	Dry hole expense	6		5		31		52		Dry hole expense	5		19
Geological and geophysical expense	Geological and geophysical expense	4		7		6		14		Geological and geophysical expense	1		2
Exploration overhead and other	Exploration overhead and other	6		10		23		35		Exploration overhead and other	15		7
Total Exploration	Total Exploration	$	21	$	58	$	86	$	187	Total Exploration	$	25	$	46

Exploration expenses decreased ~~$37 million and $101~~$21 million from the ~~third~~first quarter ~~and the first nine months~~ of ~~2020, respectively,~~2021 primarily the result of ~~higher~~lower unproved leasehold impairments ~~during the prior-year periods, due to~~and lower ~~oil and gas prices in the comparative periods. For the first nine months of 2021, the Company also had lower overhead and~~ dry hole expenses as compared to the same prior-year period. These decreases were offset by higher overhead and geological and geophysical expenses resulting from ~~decreased~~a slight increase in exploration activities and related labor costs compared to the prior year.

General and Administrative (G&A) Expenses

G&A expenses increased ~~$12~~$68 million in the first quarter of 2022 from the ~~third quarter and the first nine months of 2020,~~comparative prior-year period, primarily driven by higher cash-based stock compensation expense resulting from an increase in ~~APA’s~~the Company’s stock price ~~partially offset by lower overhead driven by organizational redesign efforts~~and anticipated achievement of performance and financial objectives as defined in the stock award plans. Higher overall wage increases across the Company also impacted G&A expenses during ~~2019 and 2020.~~the first quarter of 2022 compared to the prior year period.

Transaction, Reorganization, and Separation (TRS) Costs

TRS costs ~~decreased $3 million and $36~~increased $14 million from the ~~third~~first quarter ~~and~~of 2021 primarily as a result of transaction costs from the ~~first nine months of 2020, respectively, driven by costs associated with the Company’s reorganization efforts incurred primarily in the prior year.~~

In recent years, the Company has streamlined its portfolio through strategic divestitures and centralized certain operational activities in an effort to capture greater efficiencies and cost savings through shared services. During the second half of 2019, management initiated a comprehensive redesign of the Company’s organizational structure and operations that it believes will better position the Company to be competitive for the long-term and further reduce recurring costs. Reorganization efforts were substantially completed during 2020.BCP Business Combination.

Depreciation, Depletion, and Amortization (DD&A)

DD&A expenses on the Company’s oil and gas properties decreased ~~$60 million and $344~~$34 million from the ~~third~~first quarter ~~and the first nine months~~ of ~~2020, respectively.~~2021. The Company’s DD&A rate on its oil and gas properties decreased ~~$0.45 per boe and $1.61~~$1.40 per boe from the ~~third~~first quarter ~~and the first nine months~~ of ~~2020, respectively.~~2021. The decrease on an absolute basis was driven by lower production volumes and lower asset property balances associated with proved property impairments recorded during the first quarter of 2020. DD&A expense on the Company’s GPT assets remained essentially flat compared to the third quarter and the first nine months of 2020.

~~Impairments~~

The Company recognized $4.5 billion in asset impairments in connection with fair value assessments during the first nine months of 2020. During the first half of 2020, the Company recognized impairments totaling $4.3 billion related to proved oil and gas properties in the U.S., Egypt, and the North Sea, $68 million related to GPT facilitiesdepletion rates in Egypt, ~~$87 million related to goodwill valuations in Egypt, and $18 million related to inventory and other miscellaneous assets, including charges for the early termination of drilling rig leases.~~partially offset by higher production volumes.

Financing Costs, Net

The Company’s Financing costs were as follows:


		For the Quarter Ended September 30,				For the Nine Months Ended, September 30,					For the Quarter Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Interest expense	Interest expense	$	102	$	113	$	324	$	327	Interest expense	$	90	$	112
Amortization of debt issuance costs	Amortization of debt issuance costs	1		2		6		6		Amortization of debt issuance costs	2		2
Capitalized interest	Capitalized interest	—		(3)		—		(9)		Capitalized interest	—		—
Loss (gain) on extinguishment of debt		105		(12)		104		(152)
Loss on extinguishment of debt										Loss on extinguishment of debt	67		—
Interest income	Interest income	(1)		(1)		(6)		(4)		Interest income	(4)		(2)
Interest income from APA Corporation, net	Interest income from APA Corporation, net	(15)		—		(35)		—		Interest income from APA Corporation, net	(15)		(5)
Total Financing costs, net	Total Financing costs, net	$	192	$	99	$	393	$	168	Total Financing costs, net	$	140	$	107

Net financing costs increased ~~$93 million and $225~~$33 million from the ~~third~~first quarter ~~and the first nine months~~ of ~~2020, respectively,~~2021 primarily driven by a ~~$105~~$67 million loss on extinguishment of debt recognized in the ~~third~~first quarter of ~~2021, and a $152 million gain on extinguishment of debt during the first nine months of 2020. This increase was partially~~2022, offset by lower overall interest ~~income from APA Corporation as a result of the note receivable from APA~~expense related to the ~~Holding Company Reorganization. Refer to~~ ~~Note 2—Transactions with Parent Affiliate~~ inreduction of fixed-rate debt during 2021 and the ~~Notes to Consolidated Financial Statements in Part I, Item 1~~first quarter of ~~this Quarterly Report on Form 10-Q for further information.~~2022.

Provision for Income Taxes

During the ~~third~~first quarter of ~~2021,~~2022, the Company’s effective income tax rate was primarily impacted by ~~a loss~~the gain associated with the deconsolidation of Altus, the gain on ~~offshore decommissioning contingency and an increase~~sale of certain non-core mineral rights in the amount of valuation allowance against its U.S. deferred tax assets. During the third quarter of 2020, the Company’s effective income tax rate was primarily impacted by an increase in the amount of valuation allowance against its U.S. deferred tax assets. The Company’s 2021 year-to-date effective income tax rate was primarily impacted by a loss contingency in connection with decommissioning of previously sold Gulf of Mexico propertiesDelaware Basin, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets. ~~The~~During the first quarter of 2021, the Company’s ~~2020 year-to-date~~ effective income tax rate was primarily impacted by ~~oil and gas asset impairments,~~ a ~~goodwill impairment, and an increase~~decrease in the amount of valuation allowance against its U.S. deferred tax assets.

The Company recorded a full valuation allowance against its U.S. net deferred tax assets. The Company will continue to maintain a full valuation allowance on its U.S. net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance.

Critical Accounting Estimates

3835

~~Critical Accounting Estimates~~

The Company prepares its financial statements and accompanying notes in conformity with accounting principles generally accepted in the ~~United States of America,~~U.S., which require management to make estimates and assumptions about future events that affect reported ~~amounts. Estimations are considered~~amounts in the financial statements and the accompanying notes. The Company identifies certain accounting policies involving estimation as critical accounting estimates based on, among other things, ~~its~~their impact on the portrayal of the Company’s financial condition, results of operations, or liquidity, as well as the degree of difficulty, subjectivity, and complexity in ~~its~~their deployment. Critical accounting estimates address accounting matters that are inherently uncertain due to unknown future resolution of such matters. Management routinely discusses the development, selection, and disclosure of each critical accounting ~~estimates. With the exception~~estimate. For a discussion of the Company’s most critical accounting ~~estimate listed below, there have been no significant changes to~~estimates, please see the Company’s ~~estimates and assumptions during the nine months ended September 30, 2021 and 2020.~~

~~Offshore Decommissioning Contingency~~

The Company has potential exposure to future obligations related to divested properties. For information regarding a potential obligation to decommission sold properties estimated and recorded in the third quarter of 2021, please refer to “Potential Obligation to Decommission Sold Properties” within ~~Note 1~~2—~~Commitments and Contingencies~~ ~~in the Notes to Consolidated Financial Statements in Part I, Item 1 of this Quarterly~~Annual Report on Form ~~10-Q. Changes~~10-K for the fiscal year ended December 31, 2021. Some of the more significant estimates include reserve estimates, oil and gas exploration costs, offshore decommissioning contingency, impairment of equity method interests, long-lived asset impairments, asset retirement obligations, and income taxes.

New Accounting Pronouncements

There were no material changes in ~~significant assumptions impacting~~recently issued or adopted accounting standards from those disclosed in the Company’s ~~estimated liability, including expected decommissioning rig spread rates, lift boat rates, and planned abandonment logistics could result in a liability in excess of~~Annual Report on Form 10-K for the amount accrued. In addition, significant changes in the market price of oil, gas, and natural gas liquids could further impact Apache’s estimate of its contingent liability to decommission GOM Legacy Assets.fiscal year ended December 31, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Omitted.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

John J. Christmann IV, the Company’s Chief Executive Officer and President, in his capacity as principal executive officer, and Stephen J. Riney, the Company’s Executive Vice President and Chief Financial Officer, in his capacity as principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of ~~September 30, 2021,~~March 31, 2022, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Company’s disclosure controls and procedures were effective, providing effective means to ensure that the information the Company is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

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

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended ~~September 30, 2021~~March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

3936

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Part I, Item 3—Legal Proceedings of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 and Note 12—Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q (which is hereby incorporated by reference herein), for a description of material legal proceedings.

ITEM 1A. RISK FACTORS

Refer to Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020 and Part II, Item 1A—Risk Factors of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31,~~ 2021.

Given the nature of ~~their respective businesses,~~its business, APA Corporation ~~and Altus Midstream Company~~ may be subject to different or additional risks than those applicable to the Company. For a description of these risks, refer to the ~~applicable~~ disclosures in APA Corporation’s Quarterly ~~Reports~~Report on Form 10-Q for the quarterly ~~periods~~period ended March 31, ~~2021, June 30, 2021,~~2022 and ~~September 30, 2021 and Altus Midstream Company’s~~APA Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020 and Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2021, June 30, 2021, and September 30,~~ 2021.

4037

ITEM 6. EXHIBITS

2.1

–

Agreement and Plan of Merger, dated as of March 1, 2021, by and among Registrant, APA Corporation, 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. 001-4300).

2.1

–

3.1

–

Amended and Restated Certificate of Incorporation of Registrant, dated March 1, 2021, as attached as Annex A to the Certificate of Merger of APA Merger Sub, Inc. with and into Registrant, filed with the Secretary of State of the State of Delaware on March 1, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-4300).

3.1

–

3.2

–

Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant, dated June 7, 2021, filed with the Secretary of State of the State of Delaware on June 10, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed June 14, 2021, SEC File No. 001-4300).

3.2

–

3.3

–

Amended and Restated Bylaws of Registrant, dated March 1, 2021 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-4300).

3.3

–

Amended and Restated Bylaws of Registrant, dated March 1, 2021 (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-4300).

10.1

–

Guaranty [USD Facility], dated as of April 29, 2022, made by Apache Corporation in favor of each of the lenders, issuing banks, and agents party to the Credit Agreement, dated as of April 29, 2022, among APA Corporation, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents party thereto (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed May 2, 2022, SEC File No. 001-4300).

10.2

–

Credit Agreement [USD Facility], dated as of April 29, 2022, among APA Corporation, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, Royal Bank of Canada, HSBC Bank USA, National Association, MUFG Bank, Ltd., Wells Fargo Bank, National Association, Goldman Sachs Bank USA, The Toronto-Dominion Bank, New York Branch, The Bank of Nova Scotia, Houston Branch, Truist Bank, and Mizuho Bank, Ltd., as Co-Documentation Agents (incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed May 2, 2022, SEC File No. 001-4300).

10.3

–

Guaranty [GBP Facility], dated as of April 29, 2022, made by Apache Corporation in favor of each of the lenders, issuing banks, and agents party to the Credit Agreement, dated as of April 29, 2022, among APA Corporation, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents party thereto (incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed May 2, 2022, SEC File No. 001-4300).

10.4

–

Credit Agreement [GBP Facility], dated as of April 29, 2022, among APA Corporation, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, The Toronto-Dominion Bank, London Branch, as Syndication Agent, Bank of America, N.A., Royal Bank of Canada, HSBC Bank USA, National Association, MUFG Bank, Ltd., Wells Fargo Bank, N.A. London Branch, Goldman Sachs Bank USA, The Bank of Nova Scotia, Houston Branch, Truist Bank, and Mizuho Bank, Ltd., as Co-Documentation Agents (incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed May 2, 2022, SEC File No. 001-4300).

*31.1

–

Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.

*31.1

–

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.

*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.

*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 September 30, 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

–

The following financial statements from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, 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.SCH

–

Inline XBRL Taxonomy Schema Document.

*101.CAL

–

Inline XBRL Calculation Linkbase Document.

*101.CAL

–

Inline XBRL Calculation Linkbase Document.

*101.DEF

–

Inline XBRL Definition Linkbase Document.

*101.DEF

–

Inline XBRL Definition Linkbase Document.

*101.LAB

–

Inline XBRL Label Linkbase Document.

*101.LAB

–

Inline XBRL Label Linkbase Document.

*101.PRE

–

Inline XBRL Presentation Linkbase Document.

*101.PRE

–

Inline XBRL Presentation Linkbase Document.

*104

–

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*104

–

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

4138

SIGNATURES

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


		APACHE CORPORATION

Dated:	~~November 4, 2021~~May 5, 2022	/s/ STEPHEN J. RINEY
		Stephen J. Riney
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Dated:	~~November 4, 2021~~May 5, 2022	/s/ REBECCA A. HOYT
		Rebecca A. Hoyt
		Senior Vice President, Chief Accounting Officer, and Controller
		(Principal Accounting Officer)

4239


	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	—
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	—	(34)
Dividends payable to Altus Preferred Unit limited partners	—	(12)
Allocation of Altus Midstream LP net income	N/A	60
Accreted value adjustment	N/A	13
Redeemable noncontrolling interest — Preferred Unit at: September 30, 2021	660,694	635
Preferred Units embedded derivative(2)		120
		$	755