Apache DEFA14A Additional proxy soliciting materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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APACHE CORPORATION

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2015 INVESTOR

UPDATE

GOVERNANCE AND

COMPENSATION

UPDATE

2

Strengthened North American profile while maintaining fiscal

responsibility after oil price decline

Oil Prices throughout 2014 (USD)

2014-2015: TRANSITIONAL YEARS FOR APACHE

Company

Highlights

Continued transition to becoming a premier North American onshore

resource E&P company through strategic divestment of material non-core

assets, driving down costs, drilling more productive wells, and continuing to

mature several resource plays

Divested or announced sales of over $8 billion of non-core assets since the

beginning of 2014

Increased North American onshore liquids production by 17% in 2014

Liquids production in 2014 averaged 387 Mboe/d, with crude oil

representing 83% of total liquids production

Nov ‘14:

Announced sale of

non-core southern

Louisiana and Anadarko

basin oil and gas assets

Jan –

May ‘15:

CEO transition period to complete strategic initiatives

Independent Chairperson role is adopted effective May 2

Feb ‘15:

Established

Executive

Termination

Policy

June ’14:

Completed sale of    

Gulf of Mexico

Deepwater

Developments for

$1.4 billion

Apr ‘15:

Completed sale of LNG 

projects in Australia and

Canada, delivering $3.7B

in cash

Jan ‘15:

New CEO and

CFO chosen by

Board

$47.76

JAN 14

APR 14

JUL 14

DEC 14

$106.77

$107.76

$95.14

Repurchased 21.0 million shares in 2014, reducing share count by 5.3%

2014 COMPENSATION PROGRAM OVERVIEW

3

Mr. Farris’

long-term compensation is separated into

equal thirds between TSR Shares, Performance Shares,

and RSUs

TSR shares are tied to performance relative to peers

over rolling three-year periods, are adjusted in relation

to performance, and vest equally over two years

following the performance period

Performance shares use the operational metrics in the

annual incentive bonus plan to measure performance

The Board implemented a set of detailed, objective

metrics to measure and reward annual performance

Annual bonus payouts are based on achievement of

corporate performance, which consists of corporate

objectives (weighted 70%) and management objectives

(weighted 30%)

CEO Farris did not receive a bonus for 2014

Annual Incentive Metrics

Weight

70%

Proforma Production Growth Per Share of 5%

15%

Replace 115% of 2014 production through E&D adds

15%

Maximize Cash Flow per Barrel Sold through Cost Mgmt

15%

15% After Tax Rate of Return on 2014 Drilling Program

15%

Health, Safety, Security, and Environmental

5%

Strategic Goals*

35%

30%

Management objectives

-

*Goals include Rationalize Apache’s interest in LNG; Sell non-core properties; Manage Australia

2014

long-term

projects

to

deliver

production;

and

Reduce

onshore

drilling

and

completion

costs

and increased EURs by 10% across North America horizontal drilling plays

Long-Term Compensation Components

Annual Incentive Bonus

66.7%

Performance-based Compensation

33.3%

Time-based Compensation

4

In response to shareholder feedback, the Board has continued to improve our compensation

program to best align it with investor interests and business performance

SIGNIFICANT PROGRAM CHANGES

Increased percentage of equity grants that are

performance related from 35% to 50% for CEO

Reduced maximum TSR payout from 250% to

200% of target

Formalized company policy on double-trigger

requirement for accelerated vesting

Added a new independent director to the

MD&C Committee

Eliminated all tax gross ups for executive-only

benefits

Pre-2013 Improvements

Continued to increase target percentage of

performance-based equity awards from 50% to

67% for CEO at beginning of 2014

Implemented TSR share program maximum

payout limits at target for performance periods

with negative absolute TSR

Ended granting of stock options for CEO

CEO Pay Mix

Pre-2013

2014

2014-2015 Improvements

35%

30%

35%

33%

67%

Time-based shares

Time-based options

Performance shares

2014-2015 LEADERSHIP TRANSITION

5

27 years with Apache

Corporation; 13 Years

as CEO

Retired on January 20,

2015

Agreed to remain as

Chairperson until May

1, 2015

Over 17 years with

Apache Corporation; 12

years in executive

positions of increasing

responsibility

Vice President of

Apache’s largest North

American region prior

to becoming COO for

North America

Became CEO on January 20, 2015

Bachelor of Science in Petroleum Engineering

from the Colorado School of Mines

Masters of Business Administration from

Southern Methodist University

G. Steven Farris Retires After 27 Years

John J. Christmann, IV Promoted to CEO

Farris will remain available to Apache for 36

months to fulfill several duties in the transition

John Lowe is now the Board’s independent 

Chairperson

COMPENSATION FOR A SMOOTH TRANSITION

6

Though Mr. Farris’

consulting and transition agreement is structured over three years, his overall payout

level is consistent with comparable companies:

*Equilar surveyed CEO separations, excluding Change in Control, within Fortune 300 and/or S&P 300 companies since 2010 for CEOs with a minimum tenure of four years

Components of Retirement Agreement

Current base salary ($1.75M) for 3 years

Payments of $2.63M for 3 years (equal to target bonus)

$1.4M cash severance payment

Continued vesting of equity

Potential

cash

payments

following

2015

–

2017,

equaling

market

value of shares under TSR program if targets are achieved

RSUs to be paid out under the 2014 Business Performance Share

program in 2016 and 2017

95% of components were governed under existing

agreements and practices, half of which were governed by

Mr. Farris’

1988 employment agreement, and half of which

were governed by Apache’s legacy severance practices

discontinued in February 2015

Remained as Chairperson of the Board until May 1 in

order to close key strategic divestments in Australia and

Canada

Australia and Canada LNG exits will help Apache re-

focus on its core assets in order to drive growth

Available to provide advisory and consulting services to

the company over the next three years

Subject to certain non-competition, non-solicitation,

confidentiality, non-disparagement, and non-disclosure

restrictions; agreed to release Apache from liability in

relation to time as employee

The consulting and transition agreement entered into by

Mr. Farris enables Apache to change leadership quickly,

efficiently, and without disruption

Average Total Separation

Payment*

Apache Total Separation

Payment

$26.9M

$27.2M

CEO’s

ongoing

compensation

falls

between

the

25

th

and

50

th

percentile

of

peer

group

Base

Salary

–

$1,100,000,

effective

January

20,

2015

(date

of

appointment);

37%

decrease

from

prior

CEO

Target

Bonus

–

130%

of

base

salary;

20%

decrease

from

prior

CEO

Long-Term

Compensation

–

Eligible

for

2015

program;

accounting

for

78%

of

total

compensation.

60%

of

target

annual awards will be comprised of performance shares.

Promotional

Award

–

One-time

award

of

50,000

restricted

stock

units

was

made

on

February

18,

2015;

Mr.

Christmann is required to hold 60% of the RSUs that vest each year until retirement or termination

Termination

Provisions

–

based

on

new

Executive

Termination

Policy

adopted

February

2015

CEO

Employment

is

“at

will”

–

all

employees,

including

CEO,

do

not

have

employment

contracts

CEO compensation at Apache will continue to be performance-based and representative of

shareholder interests

7

COMPENSATION FOR NEW CEO

Mr. Christmann’s compensation is market-based and closely aligns to

company performance

SOUND COMPENSATION AND GOVERNANCE PRACTICES

8

Significant Increase in Variable Awards for

CEO

96% favorable say-on-pay vote in 2014

Stock ownership requirements

Double-triggers for accelerated vesting

Anti-Hedging/Pledging Policy

Significant negative discretion exercised by

the compensation committee

No tax gross-ups for NEOs

No employment contracts going forward

No repricing of options without shareholder

approval

Elected first Independent Chairperson in

company’s 61-year history, effective May 

2015

Supported proxy access rights for

shareholders at investor-friendly 3%/3 year

ownership threshold

Majority vote standard for director elections

Special Meetings may be called with 15%

shareholder support

7 out of 11 directors joined the Board since

2011; Average Board tenure now 7 years

Responsiveness to shareholder feedback

No Poison Pill

The Board has implemented market-leading governance practices in direct response to our shareholders’

feedback, including supporting proxy access with 3%/3 year threshold

Please vote FOR

the Company’s 2014 non-binding advisory vote on executive compensation in light of the

Company’s strong compensation and governance practices as well as responsiveness to shareholder feedback

Compensation Practices

Corporate Governance

APPENDIX

9

APACHE CORPORATION

BUSINESS OVERVIEW

10

Apache is an independent energy company that currently explores for, develops, and produces natural

gas, crude oil, and natural

gas

liquids in the

US, Canada, Egypt, Australia, and the UK North Sea

Four Strategic

Goals Guide

Apache’s Long-

Term Growth

Rigorous Portfolio Management

Conservative Capital Structure

Rate of Return Focus

Continuous Improvement in Operating and Capital Efficiency

Apache Operates in

Five Regions

United States:

45% of production and 52% of proved reserves

Canada:

12% of production and 17% of proved reserves

UK North Sea:

11% of production and 6% of proved reserves

Egypt:

23% of production and 12% of proved reserves

Australia:

9% of production and 13% of proved reserves

Four Main Types of

Commodities are

Produced by

Apache

North America oil and liquids:

33% of production

International oil and liquids:

27% of production

North America natural gas:

24% of production

International natural gas:

16% of production

Regional

Revenue Mix From

Continuing Operations

Note: All data is for FY2014

North

America

50%

International

50%