þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 41-0747868 | |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
1
For
the Six Months Ended
June 30, |
||||||||
2010 | 2009 | |||||||
(In thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$ | 1,565,204 | $ | (1,312,220 | ) | |||
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
|
||||||||
Depreciation, depletion and amortization
|
1,368,249 | 3,972,137 | ||||||
Asset retirement obligation accretion
|
48,762 | 53,221 | ||||||
Provision for (benefit from) deferred income taxes
|
353,449 | (575,229 | ) | |||||
Other
|
66,939 | 104,734 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Receivables
|
(103,847 | ) | (173,502 | ) | ||||
Inventories
|
(6,812 | ) | (4,049 | ) | ||||
Drilling advances
|
21,827 | (89,751 | ) | |||||
Deferred charges and other
|
729 | 5,871 | ||||||
Accounts payable
|
49,573 | (176,572 | ) | |||||
Accrued expenses
|
(291,931 | ) | (376,981 | ) | ||||
Deferred credits and noncurrent liabilities
|
13,299 | (60,930 | ) | |||||
|
||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
3,085,441 | 1,366,729 | ||||||
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Additions to oil and gas property
|
(1,937,613 | ) | (2,117,415 | ) | ||||
Additions to gas gathering, transmission and processing facilities
|
(256,728 | ) | (164,723 | ) | ||||
Acquisition of Marathon properties
|
| (181,133 | ) | |||||
Acquisition of Devon properties
|
(1,017,238 | ) | | |||||
Short-term investments
|
| 791,999 | ||||||
Restricted cash
|
| 13,880 | ||||||
Other, net
|
(6,904 | ) | (85,399 | ) | ||||
|
||||||||
NET CASH USED IN INVESTING ACTIVITIES
|
(3,218,483 | ) | (1,742,791 | ) | ||||
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Commercial paper, credit facility and bank notes, net
|
(55,384 | ) | 147,666 | |||||
Payments on fixed-rate notes
|
| (100,000 | ) | |||||
Dividends paid
|
(101,065 | ) | (103,331 | ) | ||||
Common stock activity
|
21,346 | 9,971 | ||||||
Treasury stock activity, net
|
3,591 | 2,669 | ||||||
Cost of debt and equity transactions
|
(289 | ) | (403 | ) | ||||
Other
|
22,073 | 9,597 | ||||||
|
||||||||
NET CASH USED IN FINANCING ACTIVITIES
|
(109,728 | ) | (33,831 | ) | ||||
|
||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(242,770 | ) | (409,893 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
2,048,117 | 1,181,450 | ||||||
|
||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 1,805,347 | $ | 771,557 | ||||
|
||||||||
|
||||||||
SUPPLEMENTARY CASH FLOW DATA:
|
||||||||
Interest paid, net of capitalized interest
|
$ | 113,099 | $ | 122,120 | ||||
Income taxes paid, net of refunds
|
595,472 | 188,251 |
2
3
4
5
6
7
8
Fixed-Price Swaps | Collars | |||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||
Production | Average | Average | Average | |||||||||||||||||
Period | Mbbls | Fixed Price (1) | Mbbls | Floor Price (1) | Ceiling Price (1) | |||||||||||||||
|
||||||||||||||||||||
2010
|
1,840 | $ | 70.10 | 5,474 | $ | 67.37 | $ | 84.51 | ||||||||||||
2011
|
3,650 | 70.12 | 8,575 | 69.09 | 90.12 | |||||||||||||||
2012
|
3,292 | 70.99 | 5,482 | 72.17 | 95.34 | |||||||||||||||
2013
|
1,451 | 72.01 | 2,416 | 78.02 | 103.06 | |||||||||||||||
2014
|
76 | 74.50 | | | |
(1) | Crude oil prices represent a weighted average of several contracts entered into on a per barrel basis. Crude oil contracts are primarily settled against NYMEX WTI Cushing Index. |
9
Fixed-Price Swaps | Collars | |||||||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||||||
Production | MMBtu | GJ | Average | MMBtu | GJ | Average | Average | |||||||||||||||||||||
Period | (in 000s) | (in 000s) | Fixed Price (1) | (in 000s) | (in 000s) | Floor Price (1) | Ceiling Price (1) | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
2010
|
45,540 | | $ | 5.72 | 14,720 | | $ | 5.41 | $ | 6.91 | ||||||||||||||||||
2010
|
| 27,600 | C$ | 5.37 | | | | | ||||||||||||||||||||
2011
|
46,538 | | $ | 6.13 | 9,125 | | $ | 5.00 | $ | 8.85 | ||||||||||||||||||
2011
|
| 51,100 | C$ | 6.26 | | 3,650 | C$ | 6.50 | C$ | 7.10 | ||||||||||||||||||
2012
|
19,215 | | $ | 6.51 | 21,960 | | $ | 5.54 | $ | 7.30 | ||||||||||||||||||
2012
|
| 43,920 | C$ | 6.61 | | 7,320 | C$ | 6.50 | C$ | 7.27 | ||||||||||||||||||
2013
|
1,825 | | $ | 7.05 | 6,825 | | $ | 5.35 | $ | 6.67 | ||||||||||||||||||
2014
|
755 | | $ | 7.23 | | | | |
(1) | U.S. natural gas prices represent a weighted average of several contracts entered into on a per million British thermal units (MMBtu) basis and are settled primarily against NYMEX Henry Hub and various Inside FERC indices. The Canadian natural gas prices represent a weighted average of AECO Index prices and are shown in Canadian dollars. The Canadian gas contracts are entered into on a per gigajoule (GJ) basis and are settled against AECO Index. |
Weighted | ||||||||
MMBtu | Average | |||||||
Production Period | (in 000s) | Price Differential (1) | ||||||
|
||||||||
2010
|
21,160 | $ | (0.54 | ) | ||||
2011
|
18,250 | $ | (0.30 | ) | ||||
2012
|
10,980 | $ | (0.36 | ) |
(1) | Natural gas financial basis swap contracts represent a weighted average differential between prices primarily against Inside FERC PEPL and NYMEX Henry Hub prices. |
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
|
||||||||
Current Assets: Prepaid assets and other
|
$ | 145 | $ | 13 | ||||
Other Assets: Deferred charges and other
|
155 | 51 | ||||||
|
||||||||
Total Derivative Assets
|
$ | 300 | $ | 64 | ||||
|
||||||||
|
||||||||
Current Liabilities: Other
|
$ | 36 | $ | 128 | ||||
Noncurrent Liabilities: Other
|
65 | 202 | ||||||
|
||||||||
Total Derivative Liabilities
|
$ | 101 | $ | 330 | ||||
|
10
Gain (Loss) on Derivatives |
For the Quarter
Ended |
For the Six Months
Ended |
||||||||||||||||||
Recognized In Income | June 30, | June 30, | ||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||
(In millions) | ||||||||||||||||||||
Gain (loss) reclassified from accumulated
other comprehensive income (loss)
|
Oil and Gas Production | |||||||||||||||||||
into operations (effective portion)
|
Revenues | $ | 52 | $ | 52 | $ | 51 | $ | 108 | |||||||||||
Gain (loss) derivatives recognized in
operations (ineffective portion and
basis)
|
Revenues and Other: Other | $ | | $ | (1 | ) | $ | (1 | ) | $ | (4 | ) |
For the Six Months Ended June 30, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Before
tax |
After
tax |
Before
tax |
After
tax |
|||||||||||||
(In millions) | ||||||||||||||||
Unrealized gain (loss) on derivatives at beginning of period
|
$ | (267 | ) | $ | (170 | ) | $ | 212 | $ | 138 | ||||||
Realized amounts reclassified into earnings
|
(51 | ) | (33 | ) | (108 | ) | (73 | ) | ||||||||
Net change in derivative fair value
|
514 | 346 | (196 | ) | (122 | ) | ||||||||||
Ineffectiveness reclassified into earnings
|
1 | 1 | 1 | | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Unrealized gain (loss) on derivatives at end of period
|
$ | 197 | $ | 144 | $ | (91 | ) | $ | (57 | ) | ||||||
|
11
For the Quarter Ended | For the Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
|
||||||||||||||||
Interest expense
|
$ | 75 | $ | 77 | $ | 151 | $ | 156 | ||||||||
Amortization of deferred loan costs
|
1 | 1 | 3 | 3 | ||||||||||||
Capitalized interest
|
(18 | ) | (15 | ) | (35 | ) | (31 | ) | ||||||||
Interest income
|
(2 | ) | (2 | ) | (4 | ) | (8 | ) | ||||||||
|
||||||||||||||||
Financing costs, net
|
$ | 56 | $ | 61 | $ | 115 | $ | 120 | ||||||||
|
12
For the Quarter Ended June 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Income | Shares | Per Share | Income | Shares | Per Share | |||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income attributable to common stock
|
$ | 860 | 338 | $ | 2.55 | $ | 443 | 336 | $ | 1.32 | ||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Effect of Dilutive Securities:
|
||||||||||||||||||||||||
Stock options and other
|
| 1 | | 1 | ||||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income attributable to common stock,
including assumed conversions
|
$ | 860 | 339 | $ | 2.53 | $ | 443 | 337 | $ | 1.31 | ||||||||||||||
|
For the Six Months Ended June 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Income | Shares | Per Share | Loss | Shares | Per Share | |||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income
(loss) attributable to common stock
|
$ | 1,565 | 337 | $ | 4.64 | $ | (1,315 | ) | 335 | $ | (3.92 | ) | ||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Effect of Dilutive Securities:
|
||||||||||||||||||||||||
Stock options and other
|
| 2 | | | ||||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income (loss) attributable to
common stock,
including assumed conversions
|
$ | 1,565 | 339 | $ | 4.61 | $ | (1,315 | ) | 335 | $ | (3.92 | ) | ||||||||||||
|
13
| On May 7, 2008, the Stock Option Plan Committee of the Companys Board of Directors, pursuant to the Companys 2007 Omnibus Equity Compensation Plan, approved the 2008 Share Appreciation Program, with a target to increase Apaches share price to $216 by the end of 2012 and an interim goal of $162 to be achieved by the end of 2010. Any awards under the plan would be payable in five equal annual installments. As of June 30, 2010, neither share price threshold had been met. | ||
| On May 5, 2005, the Companys stockholders approved the 2005 Share Appreciation Plan, with a target to increase Apaches share price to $108 by the end of 2008 and an interim goal of $81 to be achieved by the end of 2007. Awards under the plan were payable in four equal annual installments to eligible employees remaining with the Company. Apaches share price exceeded the interim $81 threshold for the 10-day requirement on June 14, 2007. The final installment was awarded in June 2010. Apaches share price exceeded the $108 threshold for the 10-day requirement as of February 29, 2008. The third installment was awarded in March 2010. |
14
15
16
Fair Value Measurements Using | ||||||||||||||||||||||||
Quoted Price in | Significant | Total | ||||||||||||||||||||||
Active Markets | Significant Other | Unobservable Inputs | Fair | Carrying | ||||||||||||||||||||
(Level 1) | Inputs (Level 2) | (Level 3) | Value | Netting (1) | Amount | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
June 30, 2010
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Commodity Derivative Instruments
|
$ | | $ | 346 | $ | | $ | 346 | $ | (46 | ) | $ | 300 | |||||||||||
|
||||||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||
Commodity Derivative Instruments
|
| 147 | | 147 | (46 | ) | 101 | |||||||||||||||||
|
||||||||||||||||||||||||
December 31, 2009
|
||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||
Commodity Derivative Instruments
|
$ | | $ | 75 | $ | | $ | 75 | $ | (11 | ) | $ | 64 | |||||||||||
|
||||||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||
Commodity Derivative Instruments
|
| 341 | | 341 | (11 | ) | 330 |
(1) | The derivative fair values above are based on analysis of each contract as required by ASC 820. Derivative assets and liabilities with the same counterparty are presented here on a gross basis, even where the legal right of offset exists. See Note 4 Derivative Instruments and Hedging Activities of this Form 10-Q for a discussion of net amounts recorded on the consolidated balance sheet at June 30, 2010 and December 31, 2009. |
June 30, 2010 | December 31, 2009 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(In millions) | ||||||||||||||||
|
||||||||||||||||
Total Debt, Net of Unamortized Discount
|
$ | 5,012 | $ | 5,774 | $ | 5,067 | $ | 5,635 |
17
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Comprehensive Income (Loss)
|
||||||||||||||||
Net income (Loss)
|
$ | 860 | $ | 445 | $ | 1,565 | $ | (1,312 | ) | |||||||
Other Comprehensive Income (Loss)
|
||||||||||||||||
Commodity hedges
|
103 | (323 | ) | 464 | (303 | ) | ||||||||||
Income tax related to commodity hedges
|
(39 | ) | 113 | (150 | ) | 108 | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 924 | $ | 235 | $ | 1,879 | $ | (1,507 | ) | |||||||
|
18
United | Other | |||||||||||||||||||||||||||||||
States | Canada | Egypt | Australia | U.K. | Argentina | International | Total | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
For the Quarter Ended
June 30, 2010
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues
|
$ | 962 | $ | 240 | $ | 806 | $ | 452 | $ | 421 | $ | 88 | $ | | $ | 2,969 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating Income
(1)
|
$ | 452 | $ | 71 | $ | 548 | $ | 285 | $ | 165 | $ | 18 | $ | | $ | 1,539 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Other Income (Expense):
|
||||||||||||||||||||||||||||||||
Other
|
3 | |||||||||||||||||||||||||||||||
General and administrative
|
(92 | ) | ||||||||||||||||||||||||||||||
Financing costs, net
|
(56 | ) | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Income Before Income Taxes
|
$ | 1,394 | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
For the Six Months Ended
June 30, 2010
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues
|
$ | 1,954 | $ | 493 | $ | 1,547 | $ | 676 | $ | 812 | $ | 180 | $ | | $ | 5,662 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating Income
(1)
|
$ | 963 | $ | 166 | $ | 1,041 | $ | 386 | $ | 313 | $ | 43 | $ | | $ | 2,912 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Other Income (Expense):
|
||||||||||||||||||||||||||||||||
Other
|
(17 | ) | ||||||||||||||||||||||||||||||
General and administrative
|
(179 | ) | ||||||||||||||||||||||||||||||
Financing costs, net
|
(115 | ) | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Income Before Income Taxes
|
$ | 2,601 | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total Assets
|
$ | 12,473 | $ | 4,243 | $ | 5,910 | $ | 3,737 | $ | 2,526 | $ | 1,488 | $ | 55 | $ | 30,432 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
For the Quarter Ended
June 30, 2009
|
||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues
|
$ | 707 | $ | 215 | $ | 655 | $ | 87 | $ | 322 | $ | 88 | $ | | $ | 2,074 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating Income
(1)
|
$ | 243 | $ | 63 | $ | 441 | $ | 13 | $ | 140 | $ | 20 | $ | | $ | 920 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Other Income (Expense):
|
||||||||||||||||||||||||||||||||
Other
|
19 | |||||||||||||||||||||||||||||||
General and administrative
|
(91 | ) | ||||||||||||||||||||||||||||||
Financing costs, net
|
(61 | ) | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Income Before Income Taxes
|
$ | 787 | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
For the Six Months Ended
June 30, 2009
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Oil and Gas Production Revenues
|
$ | 1,303 | $ | 425 | $ | 1,075 | $ | 130 | $ | 565 | $ | 180 | $ | | $ | 3,678 | ||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Operating Income (Loss)
(1)
|
$ | (857 | ) | $ | (1,495 | ) | $ | 664 | $ | | $ | 228 | $ | 40 | $ | | $ | (1,420 | ) | |||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Other Income (Expense):
|
||||||||||||||||||||||||||||||||
Other
|
49 | |||||||||||||||||||||||||||||||
General and administrative
|
(176 | ) | ||||||||||||||||||||||||||||||
Financing costs, net
|
(120 | ) | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Loss Before Income Taxes
|
$ | (1,667 | ) | |||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total Assets
|
$ | 10,438 | $ | 4,435 | $ | 5,103 | $ | 3,005 | $ | 2,025 | $ | 1,396 | $ | | $ | 26,402 | ||||||||||||||||
|
(1) | Operating Income (Loss) consists of oil and gas production revenues less depreciation, depletion and amortization, asset retirement obligation accretion, lease operating expenses, gathering and transportation costs, and taxes other than income. The U.S. and Canada operating losses for the six-month period of 2009 include additional depletion of $1.2 billion and $1.6 billion, respectively, to write-down the carrying value of oil and gas properties in the first quarter of 2009. |
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(1)
See
Results of Operations Non-GAAP Measures Adjusted Earnings
for a
description of Adjusted Earnings, which is not a U.S. Generally Accepted Accounting
Principles (GAAP) measure, and reconciliation to this measure from Income (Loss)
Attributable to Common Stock, which is presented in accordance with GAAP.
Table of Contents
Table of Contents
Third party review and certification of blowout
preventers/shear rams;
Professional engineer certification of well plan and cement
procedures; and
Chief Executive Officer certification that the operator is in compliance with and is
conducting all operations in accordance with all operating
regulations found at 30 CFR 250.
Detailed response plans for a blowout event including relief well rig availability and
timing to contract a rig, move it onsite and drill a relief well;
Calculation of Worst Case Discharge (WCD) scenario including all models, calculations
and assumptions used to calculate daily discharge rate; and
Measures that operator would propose to enhance the ability to prevent or reduce the
likelihood of a blowout.
Table of Contents
Table of Contents
Discovered 57 new fields;
Drilled 869 new wells;
Acquired 17,300-square kilometers of three-dimensional (3D) seismic;
Designed and constructed gathering facilities and two new gas processing trains for
Qasr field gas production;
Installed a major strategic gas pipeline compression project on Egypts northern gas
pipeline;
Built a third processing train at the Qarun Concession;
Implemented 13 waterflood secondary oil recovery projects; and
Completed the first phase of Kalabsha facilities in the Faghur Basin.
Table of Contents
For the Quarter Ended June 30,
For the Six Months Ended June 30,
2010
2009
2010
2009
$
%
$
%
$
%
$
%
Value
Contribution
Value
Contribution
Value
Contribution
Value
Contribution
($ in millions)
$
962
32
%
$
707
34
%
$
1,954
35
%
$
1,303
35
%
240
8
%
215
10
%
493
9
%
425
12
%
1,202
40
%
922
44
%
2,447
44
%
1,728
47
%
806
28
%
655
32
%
1,547
27
%
1,075
29
%
452
15
%
87
4
%
676
12
%
130
4
%
421
14
%
322
16
%
812
14
%
565
15
%
88
3
%
88
4
%
180
3
%
180
5
%
1,767
60
%
1,152
56
%
3,215
56
%
1,950
53
%
$
2,969
100
%
$
2,074
100
%
$
5,662
100
%
$
3,678
100
%
$
604
27
%
$
459
31
%
$
1,198
29
%
$
792
32
%
94
4
%
79
5
%
191
5
%
136
5
%
698
31
%
538
36
%
1,389
34
%
928
37
%
682
30
%
523
35
%
1,307
31
%
840
34
%
411
19
%
60
4
%
594
14
%
83
3
%
417
18
%
319
22
%
804
19
%
560
22
%
50
2
%
51
3
%
101
2
%
103
4
%
1,560
69
%
953
64
%
2,806
66
%
1,586
63
%
$
2,258
100
%
$
1,491
100
%
$
4,195
100
%
$
2,514
100
%
$
314
48
%
$
234
42
%
$
680
50
%
$
486
43
%
139
21
%
131
23
%
289
21
%
281
25
%
453
69
%
365
65
%
969
71
%
767
68
%
124
19
%
132
23
%
240
17
%
235
22
%
41
6
%
27
5
%
82
6
%
47
4
%
4
1
%
3
1
%
8
1
%
5
31
5
%
33
6
%
62
5
%
68
6
%
200
31
%
195
35
%
392
29
%
355
32
%
$
653
100
%
$
560
100
%
$
1,361
100
%
$
1,122
100
%
$
44
76
%
$
14
61
%
$
76
72
%
$
25
60
%
7
12
%
5
22
%
13
12
%
8
19
%
51
88
%
19
83
%
89
84
%
33
79
%
7
12
%
4
17
%
17
16
%
9
21
%
$
58
100
%
$
23
100
%
$
106
100
%
$
42
100
%
(1)
Included in oil and gas production revenues were a gain of $52.5 million and
$51.3 million for the 2010 second quarter and six-month period, respectively, and a gain of
$51.6 million and $107.7 million for the 2009 second quarter and six-month period,
respectively, from financial derivative hedging activities.
(2)
Included in oil revenues were a loss of $11.9 million and $26.3 million for the 2010
second quarter and six-month period, respectively, and a gain of $13.1 million and $51.6
million for the 2009 second quarter and six-month period, respectively, from financial
derivative hedging activities.
(3)
Included in natural gas revenues were a gain of $64.4 million and $77.6 million for
the 2010 second quarter and six-month period, respectively, and a gain of $38.5 million and
$56.1 million for the 2009 second quarter and six-month period, respectively, from financial
derivative hedging activities.
Table of Contents
For the Quarter Ended June 30,
For the Six Months Ended June 30,
Increase
Increase
2010
2009
(Decrease)
2010
2009
(Decrease)
89,529
88,530
1
%
89,144
87,642
2
%
14,561
15,833
(8
)%
14,447
16,090
(10
)%
104,090
104,363
103,591
103,732
98,495
95,359
3
%
94,642
89,475
6
%
60,680
10,478
479
%
43,978
9,164
380
%
58,141
59,688
(3
)%
57,995
60,089
(3
)%
9,874
11,948
(17
)%
9,897
12,192
(19
)%
227,190
177,473
28
%
206,512
170,920
21
%
331,280
281,836
18
%
310,103
274,652
13
%
674,886
662,834
2
%
673,361
637,894
6
%
339,611
373,796
(9
)%
326,646
365,551
(11
)%
1,014,497
1,036,630
(2
)%
1,000,007
1,003,445
388,367
376,737
3
%
375,249
347,443
8
%
203,147
161,069
26
%
205,209
151,607
35
%
2,516
2,645
(5
)%
2,540
2,663
(5
)%
183,028
192,542
(5
)%
168,953
192,250
(12
)%
777,058
732,993
6
%
751,951
693,963
8
%
1,791,555
1,769,623
1
%
1,751,958
1,697,408
3
%
Volume b/d:
11,878
5,483
117
%
9,374
5,198
80
%
1,996
2,052
(3
)%
1,866
2,082
(10
)%
13,874
7,535
84
%
11,240
7,280
54
%
3,118
3,091
1
%
3,204
3,114
3
%
16,992
10,626
60
%
14,444
10,394
39
%
213,889
204,485
5
%
210,746
199,156
6
%
73,159
80,185
(9
)%
70,753
79,097
(11
)%
287,048
284,670
1
%
281,499
278,253
1
%
163,223
158,148
3
%
157,184
147,382
7
%
94,538
37,323
153
%
78,179
34,431
127
%
58,560
60,129
(3
)%
58,418
60,533
(3
)%
43,497
47,130
(8
)%
41,260
47,348
(13
)%
359,818
302,730
19
%
335,041
289,694
16
%
646,866
587,400
10
%
616,540
567,947
9
%
(1)
Approximately nine and 11 percent of worldwide oil production was subject to
financial derivative hedges for the second quarter and six-month period of 2010, respectively,
and eight percent for the 2009 second quarter and six-month periods.
(2)
Approximately 23 and 24 percent of worldwide natural gas production was subject to
financial derivative hedges for the second quarter and six-month period of 2010, respectively,
and eight percent for the 2009 second quarter and six-month periods.
(3)
The table shows reserves on a barrel of oil equivalent basis (boe) 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.
Table of Contents
For the Quarter Ended June 30,
For the Six Months Ended June 30,
Increase
Increase
2010
2009
(Decrease)
2010
2009
(Decrease)
$
74.20
$
57.00
30
%
$
74.26
$
49.95
49
%
70.87
55.17
28
%
73.10
46.49
57
%
73.73
56.72
30
%
74.10
49.41
50
%
76.08
60.30
26
%
76.27
51.90
47
%
74.42
63.01
18
%
74.58
49.74
50
%
78.78
58.77
34
%
76.58
51.51
49
%
55.41
46.17
20
%
56.60
46.73
21
%
75.43
58.99
28
%
75.05
51.28
46
%
74.89
58.15
29
%
74.74
50.57
48
%
$
5.11
$
3.88
32
%
$
5.58
$
4.21
33
%
4.51
3.86
17
%
4.88
4.26
15
%
4.91
3.88
27
%
5.35
4.23
26
%
3.51
3.85
(9
)%
3.54
3.73
(5
)%
2.22
1.82
22
%
2.22
1.71
30
%
17.15
12.24
40
%
17.73
9.82
81
%
1.88
1.89
(1
)%
2.01
1.94
4
%
2.83
2.92
(3
)%
2.88
2.82
2
%
4.01
3.48
15
%
4.29
3.65
18
%
$
40.48
$
27.36
48
%
$
44.63
$
25.90
72
%
35.76
24.23
48
%
37.97
22.40
70
%
39.80
26.50
50
%
43.52
24.90
75
%
25.68
15.91
61
%
30.23
16.51
83
%
37.21
23.42
59
%
40.58
22.39
81
%
(1)
Reflects a per barrel decrease of $.39 and $.47 from financial derivative
hedging activities for the 2010 second quarter and six-month period, respectively, and an
increase of $.51 and $1.04 from financial derivative hedging activities for the 2009 second
quarter and six-month period, respectively.
(2)
Reflects a per Mcf increase of $.39 and $.24 from financial derivative
hedging activities for the 2010 second quarter and six-month period, respectively, and an
increase of $.24 and $.18 from financial derivative hedging activities for the 2009 second
quarter and six-month period, respectively.
Table of Contents
Table of Contents
For the Quarter Ended June 30,
For the Quarter Ended June 30,
2010
2009
2010
2009
(In millions)
(Per boe)
$
676
$
527
$
11.49
$
9.86
53
46
.91
.87
25
27
.42
.50
446
405
7.58
7.58
43
34
.73
.62
187
116
3.17
2.17
92
91
1.56
1.70
56
61
.95
1.14
$
1,578
$
1,307
$
26.81
$
24.44
Recurring DD&A
(In millions)
$
527
67
82
$
676
Per boe
$
7.58
0.22
0.22
0.13
0.12
0.12
0.10
0.08
0.06
0.06
(0.35
)
(0.76
)
$
7.58
Table of Contents
For the Quarter Ended
June 30,
2010
2009
(In millions)
$
11
$
8
16
13
6
6
9
6
1
1
$
43
$
34
For the Quarter Ended
June 30,
2010
2009
(In millions)
$
130
$
73
28
18
17
13
3
4
9
8
$
187
$
116
Table of Contents
For the Quarter Ended
June 30,
2010
2009
(In millions)
$
75
$
77
1
1
(18
)
(15
)
(2
)
(2
)
$
56
$
61
Table of Contents
For the Six Months Ended June 30,
For the Six Months Ended June 30,
2010
2009
2010
2009
(In millions)
(Per boe)
$
1,263
$
1,063
$
11.32
$
10.34
2,818
27.41
105
91
.94
.89
49
53
.44
.52
886
803
7.94
7.81
83
67
.75
.65
364
203
3.26
1.98
179
176
1.60
1.71
115
120
1.03
1.16
$
3,044
$
5,394
$
27.28
$
52.47
Table of Contents
Recurring DD&A
(In millions)
$
1,063
104
96
$
1,263
Per boe
$
7.81
0.33
0.18
0.15
0.10
0.10
0.08
0.06
0.05
0.05
(0.29
)
(0.68
)
$
7.94
Table of Contents
For the Six Months Ended
June 30,
2010
2009
(In millions)
$
21
$
16
33
24
12
13
15
12
2
2
$
83
$
67
For the Six Months Ended
June 30,
2010
2009
(In millions)
$
253
$
123
60
35
35
21
1
8
15
16
$
364
$
203
For the Six Months Ended
June 30,
2010
2009
(In millions)
$
151
$
156
3
3
(35
)
(31
)
(4
)
(8
)
$
115
$
120
Table of Contents
For the Quarter
For the Six Months
Ended June 30,
Ended June 30,
2010
2009
2010
2009
(In millions, except per share data)
$
860
$
443
$
1,565
$
(1,315
)
(31
)
31
(25
)
26
1,982
$
829
$
474
$
1,540
$
693
$
2.45
$
1.41
$
4.57
$
2.07
$
2.44
$
1.41
$
4.54
$
2.05
337,618
335,637
337,273
335,372
339,377
337,365
339,282
337,198
(1)
Additional depletion (non-cash write-down of the carrying value of proved
property) recorded in 2009 was $2,818 million pre-tax, for which a deferred tax benefit of
$837 million was recognized. The tax effect of the write-down of the carrying value of
proved property (additional depletion) in 2009 was calculated utilizing the statutory rates
in effect in each country where a write-down occurred.
Table of Contents
For the Six Months Ended
June 30,
2010
2009
(In millions)
$
3,085
$
1,367
792
148
14
25
13
22
9
3,132
2,343
$
2,195
$
2,283
1,017
181
100
101
103
55
7
86
3,375
2,753
$
(243
)
$
(410
)
(1)
The table presents capital expenditures on a cash basis; therefore, the
amounts differ from those discussed elsewhere in this document, which include accruals.
Table of Contents
For the Six Months
Ended
June 30,
2010
2009
(In millions)
$
618
$
569
365
210
983
779
305
389
295
285
230
216
94
82
14
4
938
976
1,921
1,755
72
56
90
95
90
13
1
1
253
165
315
94
35
31
2,524
2,045
1,033
243
$
3,557
$
2,288
Table of Contents
June 30,
December 31,
2010
2009
(In millions of dollars, except as indicated)
$
1,805
$
2,048
5,012
5,067
17,676
15,779
2,300
2,300
6
%
7
%
22
%
24
%
Table of Contents
Table of Contents
Table of Contents
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Table of Contents
the market prices of oil, natural gas, NGLs and other products or services;
approval of the Mariner Merger by Mariner stockholders and the timing of the closing of
the Merger;
the satisfaction of the closing conditions of the Mariner Merger and the BP Acquisition;
Table of Contents
negative effects from the pendency of the Mariner Merger;
the retention of key employees of Mariner;
the integration of Mariner following completion of the Merger;
the diversion of managements time on issues related to the Mariner Merger and the
BP Acquisition;
the integration of the BP Properties following completion of the BP Acquisition;
the affect on the BP Acquisition and/or our liabilities in the event one or more BP
entities becomes the subject of a bankruptcy case;
the affect on our common stock due to a failure to complete the BP Acquisition;
regulatory approvals and third party consents required for the consummation of the BP Acquisition by Apache may not be received in a timely manner;
preferential purchase rights may be exercised with respect to certain of the BP Properties;
increased scrutiny from regulatory agencies due to the BP Acquisition;
the significant transaction and BP Acquisition related costs associated with the BP
Acquisition;
our 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;
the availability of capital resources;
capital expenditure and other contractual obligations;
currency exchange rates;
weather conditions;
inflation rates;
the availability of goods and services;
legislative or regulatory changes;
terrorism;
occurrence of property acquisitions or divestitures;
the securities or capital markets and related risks such as general credit, liquidity,
market and interest-rate risks; and
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
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Item 7A Quantitative and Qualitative Disclosures About Market Risk and elsewhere in our
most recently filed Form 10-K, other risks and uncertainties detailed in our first-quarter
2010 earnings release, and other filings that we make with the Securities and Exchange
Commission.
Table of Contents
ITEM 4
CONTROLS AND PROCEDURES
Table of Contents
ITEM 1.
LEGAL PROCEEDINGS
Please refer to both Part I, Item 3 of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2009 (filed with the SEC on March 1, 2010) and Part I, Item 1 of
each of our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2010
and June 30, 2010, for a description of material legal proceedings.
ITEM 1A.
RISK FACTORS
Please refer to the risk factors as previously disclosed in the Companys Annual Report
on Form 10-K for the year ended December 31, 2009 and our Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 2010. For the quarter ending June 30, 2010,
Apache notes the following additional risk factors:
Our operations involve a high degree of operational risk, particularly risk of personal
injury, damage or loss of equipment and environmental accidents.
Our operations are subject to hazards and risks inherent in the drilling, production and
transportation of crude oil and natural gas, including:
drilling well blowouts, explosions and cratering;
pipeline ruptures and spills;
fires;
formations with abnormal pressures;
equipment malfunctions; and
hurricanes, which could affect our operations in areas such as the Gulf Coast
and deepwater Gulf of Mexico, and other natural disasters.
Failure or loss of equipment, as the result of equipment malfunctions or natural
disasters such as hurricanes, could result in property damages, personal injury,
environmental pollution and other damages for which we could be liable. Litigation
arising from a catastrophic occurrence, such as a well blowout, explosion or fire at a
location where our equipment and services are used, may result in substantial claims for
damages. Ineffective containment of a drilling well blowout or pipeline rupture could
result in extensive environmental pollution and substantial remediation expenses. If a
significant amount of our production is interrupted, our containment efforts prove to be
ineffective or litigation arises as the result of a catastrophic occurrence, our cash
flow and, in turn, our results of operations could be materially and adversely affected.
Risks Relating to the Mariner Merger
Uncertainty about the effect of the Merger on Mariner Energy, Inc.s (Mariner) employees
may have an adverse effect on Mariner and consequently Apache.
The uncertainty created by the pending Merger may impair Mariners ability to attract,
retain and motivate key personnel until the Merger is completed as current and
prospective employees may experience uncertainty about their future roles with Apache.
If key employees of Mariner depart because of issues relating to the uncertainty and
difficulty of integration or a desire not to become Apache employees, Apaches ability
to realize the anticipated benefits of the Merger could be reduced or delayed.
The pendency of the Merger could adversely affect Apache.
We may not realize the benefits we anticipated from the Merger.
Certain costs relating to the Merger, including certain investment banking, financing,
legal and accounting fees and expenses, must be paid even if the Merger is not
completed.
Table of Contents
Time demands and commitments related to the Merger may distract management and other
employees from current day-to-day responsibilities, preventing Apache from realizing
benefits from other existing opportunities.
The Devon and Mariner transactions will increase our exposure to Gulf of Mexico
operations.
Our recent acquisition of oil and gas assets on the Gulf of Mexico shelf from Devon
Energy Corporation has increased our exposure to Gulf of Mexico operations. Following
the completion of the Mariner Merger, an even larger percentage of our exploration and
production operations will be related to offshore Gulf of Mexico properties. Greater
offshore concentration proportionately increases risks from delays or higher costs
common to offshore activity, including severe weather, availability of specialized
equipment and compliance with environmental and other laws and regulations.
A drilling moratorium in the U.S. Gulf of Mexico, or other regulatory initiatives in
response to the current oil spill in the Gulf of Mexico, could adversely affect Apaches
and Mariners business.
As has been widely reported, on April 20, 2010, a fire and explosion occurred onboard
the semisubmersible drilling rig Deepwater Horizon, leading to the oil spill currently
affecting the Gulf of Mexico. In response to this incident, the Minerals Management
Service (now known as the Bureau of Ocean Energy Management, Regulation and Enforcement,
or BOEM) of the U.S. Department of the Interior issued a notice on May 30, 2010
implementing a six-month moratorium on certain drilling activities in the U.S. Gulf of
Mexico. Implementation of the moratorium was blocked by a U.S. district court, which
was subsequently affirmed on appeal, but on July 12, 2010, the BOEM issued a new
moratorium that applies to deep-water drilling operations that use subsea blowout
preventers or surface blowout preventers on floating facilities. The new moratorium
will last until November 30, 2010, or until such earlier time that the BOEM determines
that deep-water drilling operations can proceed safely. The BOEM is also expected to
issue new safety and environmental guidelines or regulations for drilling in the U.S.
Gulf of Mexico, and potentially in other geographic regions, and may take other steps
that could increase the costs of exploration and production, reduce the area of
operations and result in permitting delays. This incident could also result in drilling
suspensions or other regulatory initiatives in other areas of the U.S. and abroad.
Although it is difficult to predict the ultimate impact of the moratorium or any new
guidelines, regulations or legislation, a prolonged suspension of drilling activity in
the U.S. Gulf of Mexico and other areas, new regulations and increased liability for
companies operating in this sector could adversely affect Apaches and Mariners
operations in the U.S. Gulf of Mexico as well as in other offshore locations.
Risks Related to the BP Acquisition
The Mariner and BP transactions will expose us to additional risks and
uncertainties with respect to the acquired businesses and their operations.
Although the acquired Mariner and BP businesses will generally be subject to risks
similar to those to which we are subject in our existing businesses, the Mariner and BP
transactions may increase these risks. For example, the increase in the scale of our
operations may increase our operational risks. Recent publicity associated with the oil
spill in the Gulf of Mexico resulting from the fire and explosion onboard the Deepwater
Horizon, which was under contract to BP, may cause regulatory agencies to scrutinize our
operations more closely, as the acquirer of certain of BPs operations. This additional
scrutiny may adversely affect our operations.
We may have difficulty combining the operations of both Mariner and the BP
Properties, and the anticipated benefits of these transactions may not be achieved.
Achieving the anticipated benefits of the Mariner and BP transactions will depend
in part upon whether we can successfully integrate the operations of Mariner and the BP
Properties with ours. Our ability to integrate the operations of Mariner and the BP
Properties successfully will depend on our
ability to monitor operations, coordinate exploration and development activities,
control costs, attract, retain and assimilate qualified personnel and maintain
compliance with regulatory requirements. The difficulties of integrating the operations
of Mariner and the BP Properties may be increased by the necessity of combining
organizations with distinct cultures and widely dispersed operations. The integration
of operations following these transactions will require the dedication of management and
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other personnel, which may distract their attention from the day-to-day business of the
combined enterprise and prevent us from realizing benefits from other opportunities.
Completing the integration process may be more expensive than anticipated, and we cannot
assure you that we will be able to effect the integration of these operations smoothly
or efficiently or that the anticipated benefits of the transactions will be achieved.
Several significant matters in the BP Acquisition will not be resolved before
closing.
Because of the relatively short time period between signing the BP Purchase
Agreements and the expected closing of the BP Acquisition, several significant matters
commonly resolved prior to closing such an acquisition have been reserved for after
closing. For example, title review with respect to most of the BP Properties will not
be completed until after closing. In addition, we will not have sufficient time before
closing to conduct a full assessment of any environmental and legal liabilities with
respect to the BP Properties. As a result, we may discover title defects or adverse
environmental or other conditions after we have closed the BP Acquisition and after
expiration of the time periods specified in the BP Purchase Agreements during which we
may be able to seek, in certain cases, indemnification from or cure of the defect or
adverse conditions by BP for such matters. In addition, not all environmental or other
conditions that may be identified will be the subject of contractual
remedies, however, such contractual remedies may not be adequate for any liabilities we
incur.
The reserves, production, revenue and direct operating expense estimates with
respect to the BP Properties may differ materially from the actual amounts.
The reserves and production estimates with respect to the BP Properties mentioned
in this Form 10-Q are based on our analysis of historical production data,
assumptions regarding capital expenditures and anticipated production declines. These
estimates of reserves and production are based on estimates of our engineers without
review by an independent petroleum engineering firm. Data used to make these estimates
were furnished by BP or obtained from publicly available sources. We cannot assure you
that these estimates of proved reserves and production are accurate. After such data is
reviewed by an independent petroleum engineering firm, the BP Acquisition reserves and
production may differ materially from the amounts indicated in this Form 10-Q. In addition, the preliminary revenue and direct operating expense estimates
with respect to the BP Properties were provided by BP, are unaudited, and have not been
reviewed by our independent accountants. We cannot assure you that these preliminary
estimates are accurate, and when we file separate financial statements and pro forma
financial information following consummation of the BP Acquisition, such amounts may
differ materially from the amounts indicated in this Form 10-Q.
The BP Acquisition and/or our liabilities could be adversely affected in the event
one or more of the BP entities become the subject of a bankruptcy case.
In light of the extensive costs and liabilities related to the current oil spill in
the Gulf of Mexico, there has been public speculation as to whether one or more of the
BP entities will become the subject of a case or proceeding under Title 11 of the United
States Code or any other relevant insolvency law or similar law (which we collectively
refer to as Insolvency Laws). In the event that one or more of the BP entities were
to become the subject of such a case or proceeding, a court may find that the BP
Purchase Agreements are executory contracts, in which case such BP entities may, subject
to relevant Insolvency Laws, have the right to reject the agreements and refuse to
perform their future obligations under them. In this event, our ability to enforce our
rights under the BP Purchase Agreements could be adversely affected. Furthermore, if
any of the BP entities were to become the subject of such a case or proceeding, and we
were unable to consummate the BP Acquisition, we may not be able to collect all or a
portion of the full $5.0 billion we have deposited with BP plc pending completion of the
acquisition.
Additionally, in a case or proceeding under relevant Insolvency Laws, a court may
find that the sale of the BP Properties constitutes a constructive fraudulent conveyance
that should be set aside. While the tests for determining whether a transfer of assets
constitutes a constructive fraudulent conveyance vary among jurisdictions, such a
determination generally requires that the seller received less than a
reasonably equivalent value in exchange for such transfer or obligation and the seller
was insolvent at the time of the transaction, or was rendered insolvent or left with
unreasonably small capital to meet its anticipated business needs as a result of the
transaction. The applicable time periods for such a finding also vary among
jurisdictions, but generally range from two to six years. If a court were to make such
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a determination in a proceeding under relevant Insolvency Laws, our rights under the BP
Purchase Agreements, and our rights to the BP Properties, could be adversely affected.
We will incur significant transaction and BP Acquisition-related costs in
connection with the financing of the BP Acquisition, and may be unable to complete
alternative financing before closing the BP Acquisition.
We expect to incur, until the closing of the BP Acquisition, significant
non-recurring costs associated with the financing of the BP Acquisition, including
obtaining and maintaining the committed Bridge Facility that assures our ability to pay
the consideration for the BP Acquisition. In addition, we will be subject to numerous
market risks in connection with our plan to raise alternative financing to fund the
purchase price of the BP Acquisition prior to closing, including risks related to
general economic conditions and changes in the costs of capital. In the event less than all of the BP
Acquisition purchase price, or applicable portions thereof, is available to us when due
and payable, we will be required to draw under the Bridge Facility in order to complete
the BP Acquisition.
The failure to complete the BP Acquisition could adversely affect the market price
of our common stock and otherwise have an adverse effect on us.
There are a number of conditions to the completion of the BP Acquisition contained
in the BP Purchase Agreements that must be satisfied for the transactions to close, and
there can be no assurance that the conditions will be satisfied. If we do not complete
the acquisition under one or more of the BP Purchase Agreements, the market price of our
common stock will likely fall to the extent that the market price reflects an
expectation that all of the transactions will be completed. Further, a failed
transaction may result in negative publicity and/or negative impression of us in the
investment community and may affect our relationships with creditors and other business
partners.
If the BP Acquisition is not completed, we also must pay costs related to the BP
Acquisition including, among others, legal, accounting and financial advisory, as well
as certain fees and expenses with respect to the committed Bridge Facility whether the
BP Acquisition is completed or not. We also could be subject to litigation related to
the failure to complete the BP Acquisition or other factors, which may adversely affect
our business, financial results and stock price. In addition, if the BP Acquisition is
not completed, we intend to use the net proceeds in connection with our offerings of common stock, depositary shares and the subsequent debt financing we expect to undertake,
for general corporate purposes. However, we would be subject to significant earnings
per share dilution and significantly increased leverage as a result.
Our ability to declare and pay dividends is subject to limitations.
The payment of future dividends on our capital stock is subject to the discretion
of our board of directors, which considers, among other factors, our operating results,
overall financial condition, credit-risk considerations and capital requirements, as
well as general business and market conditions. Our board of directors is not required
to declare dividends on our common stock and may decide not to
declare dividends.
The instrument governing our revolving credit facility limits, the Bridge Facility
limits, and any indentures and other financing agreements that we enter into in the
future may limit, our ability to pay cash dividends on our capital stock, including the
common stock. In the event that any of our indentures or other
financing agreements in the future restrict our ability to pay dividends in cash on the
mandatory convertible preferred stock, we may be unable to pay dividends in cash on the
common stock unless we can refinance amounts outstanding under
those agreements.
In addition, under Delaware law, dividends on capital stock may only be paid from
surplus, which is defined as the amount by which our total assets exceeds the sum of
our total liabilities, including contingent liabilities, and the amount of our capital;
if there is no surplus, cash dividends on capital
stock may only be paid from our net profits for the then current and/or the preceding
fiscal year. Further, even if we are permitted under our contractual obligations and
Delaware law to pay cash dividends on common stock, we may not have sufficient cash to
pay dividends in cash on our common stock.
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ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4.
[REMOVED AND RESERVED]
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
Table of Contents
Amendment to Apache Corporation 401(k) Plan, dated July 14, 2010.
Non-Qualified Retirement/Savings Plan of Apache Corporation, as amended and restated July
14, 2010, except as otherwise specified.
Apache Corporation 2007 Omnibus Equity Compensation Plan, as amended and restated July 13,
2010, effective December 31, 2009.
Apache Corporation Income Continuance Plan, as amended and restated July 14, 2010, effective
January 1, 2009.
Apache Corporation Deferred Delivery Plan, as amended and restated July 13, 2010, effective
January 1, 2009.
Apache Corporation Outside Directors Retirement Plan, as amended and restated July 14,
2010, effective January 1, 2009.
Statement of computation of ratio of earnings to fixed charges and
combined fixed charges and preferred stock dividends.
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
Exchange Act) by Principal Executive Officer.
Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the
Exchange Act) by Principal Financial Officer.
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by
Principal Executive Officer and Principal Financial Officer.
The following materials from the Apache Corporations Quarterly Report on
Form 10-Q for the quarter ended June 30, 2010, formatted in XBRL (Extensible
Business Reporting Language): (i) Statement of Consolidated Operations, (ii)
Statement of Consolidated Cash Flows, (iii) Consolidated Balance Sheet, (iv)
Statement of Consolidated Shareholders Equity, and (v) Notes to Consolidated
Financial Statements, tagged as blocks of text.
Management contracts or compensatory plans or
arrangements required to be filed herewith pursuant
to Item 15 hereof.
*
Filed herewith
**
Furnished herewith
Table of Contents
APACHE CORPORATION
/ s / ROGER B. PLANK
President
(Principal Financial Officer)
/ s / REBECCA A. HOYT
Vice President and Controller
(Principal Accounting Officer)
Devon Energy Corporation (Devon)
|
All individuals hired on June 10, 2010 from Devon and related companies in connection with Apaches acquisition of certain property on such date. | |
|
||
Mariner Energy, Inc. (Mariner)
|
All individuals who became Covered Employees on the date of the merger between Apache and Mariner are New Employees. A New Employee shall be eligible to make Participant Contributions from any Compensation paid after the date of the merger. The Company Matching Contribution for 2010 for a New Employee shall be based solely on his Compensation paid after the date of the merger and his Participant Contributions after the date of the merger, with the following exception. A New Employee who makes the maximum possible Participant Contribution allowable under Code §402(g) during 2010, and who is an Employee on the last business day of 2010, will receive a Company Matching Contribution equal to the greater of (a) the amount determined under the preceding sentence and (b) the total match he would have received in both this Plan and the Mariner Energy, Inc. Employee Capital Accumulation Plan if he contributed the same amount from each paycheck during 2010, minus the match allocated to him in the Mariner Energy, Inc. Employee Capital Accumulation Plan. |
APACHE CORPORATION
|
||||
By: | /s/ Roger B. Plank | |||
Roger B. Plank
President |
||||
ARTICLE I DEFINITIONS
|
1 | |||
|
||||
1.01 Account
|
1 | |||
1.02 Affiliated Entity
|
1 | |||
1.03 Apache
|
1 | |||
1.04 Beneficiary
|
1 | |||
1.05 Change of Control
|
1 | |||
1.06 Code
|
1 | |||
1.07 Committee
|
1 | |||
1.08 Company
|
1 | |||
1.09 Company Deferrals
|
1 | |||
1.10 Compensation
|
2 | |||
1.11 Employee
|
3 | |||
1.12 Enrollment Agreement
|
3 | |||
1.13 ERISA
|
3 | |||
1.14 Participant
|
3 | |||
1.15 Participant Deferrals
|
3 | |||
1.16 Payment Processing Date
|
3 | |||
1.17 Plan
|
3 | |||
1.18 Plan Year
|
3 | |||
1.19 Retirement Plan
|
3 | |||
1.20 Savings Plan
|
3 | |||
1.21 Separation from Service and Separate from Service
|
3 | |||
1.22 Spouse
|
3 | |||
1.23 Trust
|
4 | |||
1.24 Trust Agreement
|
4 | |||
1.25 Trustee
|
4 | |||
|
||||
ARTICLE II ELIGIBILITY AND PARTICIPATION
|
4 | |||
|
||||
2.01 Eligibility and Participation
|
4 | |||
2.02 Enrollment
|
4 | |||
2.03 Failure of Eligibility
|
4 | |||
|
||||
ARTICLE III CONTRIBUTION DEFERRALS
|
4 | |||
|
||||
3.01 Participant Deferrals
|
4 | |||
3.02 Company Deferrals
|
6 | |||
|
||||
ARTICLE IV CREDITING OF ACCOUNTS
|
7 | |||
|
||||
4.01 Accounts
|
7 | |||
4.02 Investments
|
7 | |||
|
||||
ARTICLE V DISTRIBUTIONS
|
7 | |||
|
||||
5.01 Vesting and Forfeitures
|
7 | |||
5.02 Rehires
|
8 | |||
5.03 Distribution Overview
|
9 | |||
5.04 Distributions after Separation from Service and
In-Service Withdrawals
|
9 | |||
5.05 Payments after a Participant Dies
|
11 | |||
5.06 Change of Control
|
12 | |||
5.07 Hardship Withdrawals
|
13 | |||
5.08 Divorce
|
13 | |||
5.09 Administrative Delays in Payments
|
14 | |||
5.10 Noncompliance with Code §409A
|
14 | |||
5.11 Cash Payment and Withholding
|
15 | |||
|
||||
ARTICLE VI ADMINISTRATION
|
15 | |||
|
||||
6.01 The Committee Plan Administrator
|
15 | |||
6.02 Committee Duties
|
15 | |||
6.03 Organization of Committee
|
15 | |||
6.04 Indemnification
|
16 | |||
6.05 Agent for Process
|
16 | |||
6.06 Determination of Committee Final
|
16 | |||
6.07 No Bonding
|
16 | |||
|
||||
ARTICLE VII TRUST
|
16 | |||
|
||||
7.01 Trust Agreement
|
16 | |||
7.02 Expenses of Trust
|
16 | |||
|
||||
ARTICLE VIII AMENDMENT AND TERMINATION
|
16 | |||
|
||||
8.01 Termination of Plan
|
16 | |||
8.02 Amendment
|
16 | |||
|
||||
ARTICLE IX MISCELLANEOUS
|
17 | |||
|
||||
9.01 Funding of Benefits No Fiduciary Relationship
|
17 | |||
9.02 Right to Terminate Employment
|
17 | |||
9.03 Inalienability of Benefits
|
17 | |||
9.04 Claims Procedure
|
17 | |||
9.05 Disposition of Unclaimed Distributions
|
19 | |||
9.06 Distributions due Infants or Incompetents
|
19 | |||
9.07 Use and Form of Words
|
19 | |||
9.08 Headings
|
19 | |||
9.09 Governing Law
|
19 |
1.01 | Account | |
Account means the account maintained for each Participant to which is credited all Participant Deferrals made by a Participant, all Company Deferrals on behalf of a Participant, and all adjustments thereto. Each Account is divided into a variety of subaccounts, as detailed in Article V. | ||
1.02 | Affiliated Entity | |
Affiliated Entity means any legal entity that is treated as a single employer with Apache pursuant to Code §414(b), §414(c), §414(m), or §414(o). | ||
1.03 | Apache | |
Apache means Apache Corporation or any successor thereto. | ||
1.04 | Beneficiary | |
Beneficiary means a Participants beneficiary, as determined in section 5.05. | ||
1.05 | Change of Control | |
Change of Control means an event described in Code §409A(a)(2)(A)(v) that pertains to Apache. | ||
1.06 | Code | |
Code means the Internal Revenue Code of 1986, as amended. | ||
1.07 | Committee | |
Committee means the administrative committee provided for in section 6.01. | ||
1.08 | Company | |
Company means Apache and any Affiliated Entity that, with approval of the Board of Directors of Apache, has adopted the Plan. | ||
1.09 | Company Deferrals | |
Company Deferrals means the allocations to a Participants Account made pursuant to section 3.02. |
Page 1 of 19
1.10 | Compensation | |
Compensation generally means regular compensation paid by the Company. |
(a) | Inclusions . Specifically, Compensation includes: |
(i) | regular salary or wages, | ||
(ii) | overtime pay, and | ||
(iii) | the regular annual bonus (i.e., incentive compensation), to the extent that it is payable in cash, and any other bonus designated by the Committee. |
(b) | Exclusions . Compensation excludes: |
(i) | commissions, | ||
(ii) | severance pay, | ||
(iii) | moving expenses, | ||
(iv) | any gross-up of moving expenses to account for increased income taxes, | ||
(v) | foreign service premiums paid as an inducement to work outside of the United States, | ||
(vi) | Company contributions under the Retirement Plan | ||
(vii) | Company contributions under the Savings Plan, | ||
(viii) | other contingent compensation, | ||
(ix) | contributions to any other fringe benefit plan (including, but not limited to, overriding royalty payments or any other exploration-related payments), | ||
(x) | any amounts relating to the granting of a stock option by the Company or an Affiliated Entity, the exercise of such a stock option, or the sale or deemed sale of any shares thereby acquired, | ||
(xi) | any bonus other than a bonus described in paragraph (a)(iii), | ||
(xii) | payments from any benefit plan, such as any stock appreciation right or payments from a Share Appreciation Plan, any payment from the Deferred Delivery Plan or the Executive Restricted Stock Plan, and payments pursuant to grants made under the Omnibus Equity Compensation Plan of 2007, and | ||
(xiii) | any benefit accrued under, or any payment from, any nonqualified plan of deferred compensation. |
(c) | Timing Rules . |
(i) | Participant Deferrals . For purposes of calculating Participant Deferrals, Compensation includes only those amounts paid after the Employee has made both his initial payout election under section 5.04 and his Enrollment Agreement under section 3.01. Compensation does not include any amounts paid after the Participant ceased to be eligible to participate in the Plan. A Participant who begins participating in the middle of a Plan Year cannot make Participant Deferrals from a bonus under paragraph (a)(iii) that is attributable to the Participants services during the Plan Year in which his participation begins. For example, a Participant hired in September 2010 cannot make Participant Deferrals from the incentive compensation paid to him in February 2011. | ||
(ii) | Company Deferrals . The Company Deferrals for a Participant, including one who begins participating in the middle of a Plan Year, are calculated by taking into account all |
Page 2 of 19
Compensation paid to him during the entire Plan Year, including any incentive compensation paid during the Plan Year. |
1.11 | Employee | |
Employee means any common-law employee of Apache or any Affiliated Entity. An Employee ceases to be an Employee on the date he Separates from Service. | ||
1.12 | Enrollment Agreement | |
Enrollment Agreement means an agreement made by an eligible employee whereby he elects the amounts to be withheld from his Compensation pursuant to section 3.01. | ||
1.13 | ERISA | |
ERISA means the Employee Retirement Income Security Act of 1974, as amended. | ||
1.14 | Participant | |
Participant means any eligible employee who has begun to participate in this Plan. | ||
1.15 | Participant Deferrals | |
Participant Deferrals means the amounts of a Participants Compensation that he elects to defer and have allocated to his Account pursuant to section 3.01. | ||
1.16 | Payment Processing Date | |
Payment Processing Date means the date selected by the Committee on which payments from this Plan will be processed. Except in extraordinary circumstances, there will be at least one Payment Processing Date each calendar month. | ||
1.17 | Plan | |
Plan means the plan set forth in this document, as amended. | ||
1.18 | Plan Year | |
Plan Year means the period during which the Plan records are kept. The Plan Year is the calendar year. | ||
1.19 | Retirement Plan | |
Retirement Plan means the Apache Corporation Money Purchase Retirement Plan, as amended. | ||
1.20 | Savings Plan | |
Savings Plan means Apache Corporation 401(k) Savings Plan, as amended. | ||
1.21 | Separation from Service and Separate from Service | |
Separation from Service has the same meaning as the term separation from service in Code §409A(a)(2)(A)(i), determined using the default rules in the regulations and other guidance of general applicability issued pursuant to Code §409A, except that a Separation from Service occurs only if both the Company and the Participant expect the Participants level of services to permanently drop by more than half. A Participant who has a Separation from Service Separates from Service. | ||
1.22 | Spouse | |
Spouse means the individual of the opposite sex to whom a Participant is lawfully married according to the laws of the state of the Participants domicile. |
Page 3 of 19
1.23 | Trust | |
Trust means the trust or trusts, if any, created by the Company to provide funding for the distribution of benefits in accordance with the provisions of the Plan. The assets of any such Trust remain subject to the claims of the Companys general creditors in the event of the Companys insolvency. | ||
1.24 | Trust Agreement | |
Trust Agreement means the written instrument pursuant to which each separate Trust is created. | ||
1.25 | Trustee | |
Trustee means one or more banks, trust companies, or insurance companies designated by the Company to hold and invest the Trust Fund and to pay benefits and expenses as authorized by the Committee in accordance with the terms and provisions of the Trust Agreement. |
2.01 | Eligibility and Participation | |
The Committee shall from time to time in its sole discretion select those Employees who are eligible to participate in the Plan from those Employees who are among a select group of management or highly compensated employees. | ||
2.02 | Enrollment | |
Employees who have been selected by the Committee to participate in the Plan shall complete the enrollment procedure specified by the Committee. The enrollment procedure may include written or electronic form(s) for the employee to designate his beneficiary or beneficiaries, provide instructions regarding the investment of his Account, make Participant Deferrals by entering into one or more Enrollment Agreements with the Company, select one or more payment options for the eventual distribution of his benefits, and provide such other information as the Committee may reasonably require. | ||
2.03 | Failure of Eligibility | |
The Committee has the authority to determine that a Participant is no longer eligible to participate in the Plan. No Company Deferrals will be accrued, nor any Participant Deferrals made after the Participant ceases to be eligible to participate in the Plan. The determination of the Committee with respect to the termination of participation in the Plan will be final and binding on all parties affected thereby. Any benefits accrued under the Plan at the time the Participant becomes ineligible to continue participation will be distributed in accordance with the provisions of Article V. |
3.01 | Participant Deferrals |
(a) | General . A Participant may elect to defer a portion of his Compensation by submitting a completed Enrollment Agreement. Each Enrollment Agreement must specify the amount the Participant elects to defer. Participant Deferrals are deducted through payroll withholding from the Participants cash Compensation payable by the Company. | ||
(b) | Maximum and Minimum Deferrals . A Participant may elect to defer up to 50% of his Compensation (other than a bonus described in section 1.10(a)(iii)) and up to 75% of a bonus described in section 1.10(a)(iii). The minimum deferral that a Participant may elect, for both this Plan and the Savings Plan combined, is 6% of his Compensation. If the Participant does not elect the minimum deferral from a |
Page 4 of 19
bonus described in section 1.10(a)(iii) (in his June election), he cannot make any deferrals from his regular pay during the next regular-pay deferral election (in December). |
(c) | Deadlines for Enrollment Agreements . |
(i) | Enrollment Period . In order to make Participant Deferrals, a Participant must submit an Enrollment Agreement during the enrollment period established by the Committee. The enrollment period must precede the Plan Year in which the services giving rise to the Compensation are performed, except in the following situations. |
(A) | Performance-Based Compensation . If the Compensation is performance-based compensation based on services performed over a period of at least 12 months (within the meaning of Code §409A(a)(4)(B)(iii)), the enrollment period must end at least six months before the end of the performance period. | ||
(B) | New Participant . The enrollment period for a new Participant must end no later than 30 days after he became eligible to participate in the Plan; the new Participants initial Enrollment Agreement may only apply to Compensation for which he has not yet performed any services. |
(ii) | Duration . The Enrollment Agreement shall apply to Compensation, or to a specific form of Compensation, paid during one entire Plan Year unless it is earlier canceled or revised by the Committee pursuant to subsection (f), cancelled because the Participant ceases to be eligible to participate in the Plan, or cancelled pursuant to subsection (e) (relating to hardship withdrawals). |
(d) | Procedures for Making Elections . The Committee has complete discretion to establish procedures for the completion of Enrollment Agreements, including the acceptable forms and formats of the deferral election (for example, written or electronic, as a whole percentage of Compensation or specific dollar amount, and the manner in which the Enrollment Agreement coordinates with the Savings Plan). The Committee has complete discretion to establish the enrollment periods during which Participants may make Enrollment Agreements, within the bounds described in subsections (a) and (c). The Committee may establish different enrollment periods for different types of Compensation or different groups of Participants. The Committee may specify any default choices that will apply unless the Participant affirmatively elects otherwise. For example, the Committee could decide that the failure to complete a new Enrollment Agreement means that (i) the prior Plan Years Enrollment Agreement will be continued for another year, or (ii) no Participant Deferrals will be made, or (iii) the Participant will defer 6% of his Compensation. | ||
(e) | Cancellation or Modification of Enrollment Agreements Following a Hardship Withdrawal . |
(i) | Hardship Withdrawal from this Plan . If a Participant receives a hardship withdrawal from this Plan pursuant to section 5.07, all his outstanding Enrollment Agreements shall be modified to require future Participant Deferrals of 6% of his future Compensation. The Participant may subsequently enter into new Enrollment Agreements at the usual times specified in subsection (c). | ||
(ii) | Hardship Withdrawal from the Savings Plan . If the Participant receives a hardship withdrawal from the Savings Plan, all outstanding Enrollment Agreements that apply or might apply to Compensation paid in the six months after the hardship withdrawal shall be cancelled. The Participant may subsequently enter into new Enrollment Agreements at the usual times under subsection (c), but the new Enrollment Agreements cannot apply to any Compensation paid within the six-month period following the hardship withdrawal from the Savings Plan. |
(f) | Committee-Initiated Changes in Enrollment Agreement . This subsection is effective as of January 1, 2009. If the amounts to be withheld from a Participants paycheck (including, without limitation, loan repayments, Participant Deferrals, taxes, contributions to the Savings Plan, and premium payments for |
Page 5 of 19
various benefits) are greater than the paycheck, (i) the Committee shall establish the order in which the deductions are applied, with the result that Participant Deferrals may be reduced below what the Participant had elected in an Enrollment Agreement, and (ii) the Committees procedures shall, if practicable, also automatically increase a Participants Participant Deferrals in subsequent pay period(s) covered by that Enrollment Agreement to make up for any missed deferrals. |
3.02 | Company Deferrals | |
The Company shall credit to a Participants Account a matching contribution for the Plan Year and a retirement-6 contribution for the Plan Year. Company Deferrals begin to share in the investment earnings (or losses) at the time specified in section 4.01. The Company may credit matching contributions to a Participants Account during the Plan Year on a contingent basis; if the Participant does not satisfy the requirements to receive a matching contribution for the Plan Year, or if the matching contribution credited to the Participants Account for the Plan Year is incorrect, the Participant will forfeit any excess matching contribution (adjusted to reflect investment earnings or losses thereon) credited to his Account. |
(a) | Matching Contribution . |
(i) | Basic Match . The total match for the Plan Year is equal to the Participants total deferrals for the Plan Year, up to a maximum total match for the Plan Year of 6% of the Participants Compensation for the Plan Year, except that the match in this Plan is $0 if the Participant has not made the maximum contributions to the Savings Plan that are excludable from his gross income pursuant to Code §402(g). | ||
(ii) | Definitions . | ||
The total match for a Plan Year is equal to the matching contribution to the Participants Account in this Plan for the Plan Year plus the Company Matching Contribution allocated to the Participants account in the Savings Plan for the Plan Year. | |||
The total deferrals for a Plan Year are equal to the Participant Deferrals for the Plan Year plus the Before-Tax Contributions to the Savings Plan for the Plan Year. | |||
(iii) | Additional Match . If a Participants match in the Savings Plan is reduced to comply with any requirement of federal law (such as the ACP test of Code §401(m) or the limits imposed by Code §415 or §401(a)(17)) after the match for this Plan has been calculated, then the Participants match for this Plan will be increased by the amount of the reduction in the match in the Savings Plan. |
(b) | Retirement-6 . In order to receive an allocation of the retirement-6 contribution, an employee must be eligible to participate in the Plan on the last business day of the Plan Year. The retirement-6 contribution is calculated each Plan Year after the Company Mandatory Contribution is calculated in the Retirement Plan for the Plan Year. The sum of the Participants retirement-6 contribution in this Plan and his Company Mandatory Contribution in the Retirement Plan are equal to 6% of the Participants Compensation for the Plan Year. If a Participants Company Mandatory Contribution in the Retirement Plan is reduced to comply with any requirement of federal law after the retirement-6 contribution for this Plan has been calculated, then the Participants retirement-6 contribution for this Plan will be increased by the amount of the reduction in the Company Mandatory Contribution in the Retirement Plan. | ||
(c) | Additional Contribution . A Company may make an additional Company Deferral to any Participants Account at any time, provided that the Company advises the Committee in writing of the contribution. |
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4.01 | Accounts |
(a) | Establishment of Accounts . The Committee shall establish one Account for each Participant, which will be subdivided into various subaccounts. The Accounts and subaccounts are merely for recordkeeping purposes, and do not represent any actual property that has been set aside for Participants. Nothing contained in this Article may be construed to require the Company or the Committee to fund any Participants Account. | ||
(b) | Crediting of Contributions . Participant Deferrals are credited to a Participants Account as of the date that the Participant Deferral would have been paid to the Participant had there been no Enrollment Agreement. Company Deferrals are credited to a Participants Account as of the date that the Company Deferral was earned by the Participant. | ||
(c) | Crediting of Earnings . Each Account is credited with investment earnings or losses calculated in accordance with section 4.02. Participant Deferrals and Company Deferrals start to be credited with investment earnings or losses as soon as administratively convenient after such amounts are credited to Accounts, except that the retirement-6 contribution under section 3.02(b) is not credited with investment earnings or losses until the corresponding Company Mandatory Contribution to the Retirement Plan is actually paid to the Retirement Plan (usually in late February). |
4.02 | Investments |
(a) | Investment Options . All amounts credited to a Participants Account are credited with investment earnings or losses as if the Participants Account was invested in one or more investments. The Committee shall designate the default investment as well as any alternatives, and may change the available alternatives or the default investment from time to time. One or more of the investment alternatives may consist, in whole or in part, of Apache common stock. At such times and under such procedures as the Committee may designate, a Participant may determine the portion of his Account that is to be deemed invested in each alternative. The Participant may make prospective changes for his investment selection as often as the Committee permits and subject to the procedures established by the Committee. A Participant may never make any retroactive changes to his investment selections. | ||
(b) | No Ownership Rights . A Participant has no ownership rights with respect to any investment of his Account. Nothing contained in this Article may be construed to give any Participant any power or control to make investment directions or otherwise influence in any manner the investment and reinvestment of assets contained within any investment alternative, such control being at all times retained in the full discretion of the Committee. As a consequence, for example, if a Participant has elected to invest a portion of his Account in Apache stock, the Participant has no voting rights with respect to that stock. |
5.01 | Vesting and Forfeitures |
(a) | Participant Deferrals . A Participant is fully vested in the portion of his Account that is attributable to his Participant Deferrals. | ||
(b) | Company Deferrals, General Rule . A Participants years of completed service in this Plan are identical to his Period of Service in the Savings Plan. A Participant will vest in the portion of his Plan Account that is attributable to Company Deferrals according to the following schedule, unless subsection (c) provides for faster vesting: |
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Years of Completed Service | Vested Portion | |
Less than 1 | 0% | |
1 | 20% | |
2 | 40% | |
3 | 60% | |
4 | 80% | |
5 or more | 100% |
(c) | Company Deferrals, Accelerated Vesting . A Participant is fully vested in the portion of his Plan Account that is attributable to Company Deferrals in the following circumstances. |
(i) | The Participant is fully vested if he attains age 65 while he is an Employee. | ||
(ii) | The Participant is fully vested if he becomes an Employee after attaining age 65. | ||
(iii) | The Participant is fully vested if, while he is an Employee, he incurs a disability that qualifies the Employee for long-term disability payments under Apaches Long-Term Disability Plan. | ||
(iv) | The Participant is fully vested if he dies while he is an Employee. | ||
(v) | All Participants are fully vested if a change of control, as defined in the Income Continuance Plan, occurs. |
(d) | Forfeiture Timing . The portion of a Participants Account that is not vested is forfeited immediately upon his Separation from Service. |
5.02 | Rehires |
(a) | Distributions . If a Participant Separated from Service and subsequently becomes eligible to participate in the Plan again, the benefits from his earlier episode of participation will be paid out as originally scheduled; the new participation will not affect the timing of any benefit payments from his earlier episode of participation. | ||
(b) | Vesting . If a Participant becomes eligible to again make Participant Deferrals more than five years after Separating from Service, (i) the Plan will establish a new Account for the benefits he accrues during his second episode of participation; (ii) his years of completed service for his new Account will include only his service from his second episode; and (iii) his new service will not increase the vesting of any benefits from his first episode of participation. If a Participant becomes eligible to again make Participant Deferrals less than five years after Separating from Service, the Participants years of completed service for his benefits from his second episode of participation will include his service from both episodes of employment. | ||
(c) | Restoration of Forfeiture . If a Participant begins to participate in the Plan again within five years after his Separation from Service, the exact amount of any forfeiture upon his earlier Separation from Service will be restored to his Account, and will be credited to a separate subaccount. The restoration will occur on the 31 st day after the Participant again begins participating in the Plan, but only if the Participant is still eligible to participate in the Plan on that date. The restored subaccount vests based on his service from both episodes of employment (and thus will almost always be partially vested immediately when the Participant again starts to participate). The vested portion of the restored subaccount will be paid to the Participant as the Participant elects in section 5.04(b) for the payment of his new Account attributable to Company Deferrals, unless section 5.05 or 5.06 require faster payment following the Participants death or a Change of Control or the Participant takes a hardship withdrawal under section 5.07. |
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5.03 | Distribution Overview |
(a) | General . In general, a single payment will occur, or a stream of installment payments will commence, on the Payment Processing Date following the earliest of the following dates, or as soon thereafter as is administratively convenient: |
(i) | Six months after the Participant Separates from Service. See section 5.04. | ||
(ii) | For unmatched Participant Deferrals only, at the time(s) selected by the Participant. See sections 5.04(c)(ii) and 5.04(c)(iii). | ||
(iii) | The date the Participant dies. See section 5.05. | ||
(iv) | The date of a Change of Control. See section 5.06. |
(b) | Hardships . A Participant may take a withdrawal under section 5.07 if he has a financial hardship. | ||
(c) | Divorce . Some or all of a Participants benefits in this Plan may be allocated to, and distributed to, his former Spouse, pursuant to section 5.08. |
5.04 | Distributions after Separation from Service and In-Service Withdrawals |
(a) | General . A Participant who Separated from Service before January 1, 2009 will be paid according to the payout provisions in the Plan (and any payout elections that had been made) that were effective when he Separated from Service, except that (i) sections 5.05 or 5.06 will apply to such Participants (and accelerate any remaining payments) if there is a Change of Control or the Participant dies, (ii) section 5.07 will apply if the Participant has a financial hardship, and (iii) section 5.08 will apply if the Participant becomes divorced. This remainder of this section contains the rules for distributions following a Separation from Service that occurs on or after January 1, 2009. | ||
(b) | Distribution of Company Deferrals. |
(i) | Initial Election . Upon becoming a Participant, an Employee shall make a payout election to have his vested Account attributable to Company Deferrals paid out in a single payment or in two to ten annual installments. To be effective, the Participants payout election must be provided to the Plan within 30 days after the date the Participant became a Participant or by such earlier date established by the Committee. The single payment or the first installment payment will be paid on the first Payment Processing Date that occurs six months or more after the Participants Separation from Service. Subsequent installments will be paid each 12 months thereafter. | ||
(ii) | Special 2007 Payout Election . The Committee extended to certain Participants the opportunity a new payout election in 2007 to have his vested Account attributable to Company Deferrals paid out in a single payment or in two to ten annual installments. To be effective, the Participants payout election must have been provided to the Plan by December 31, 2007 or by such earlier deadline established by the Committee, and the Participant must have been an Employee on the last business day of 2007. The single payment or the first installment payment will be paid on the first Payment Processing Date that occurs six months or more after the Participants Separation from Service; subsequent installments will be paid each 12 months thereafter. | ||
(iii) | Minimum Account Balance for Installments . See section 5.04(d) for the situations when a Participant will be paid a lump sum in spite of having elected installments. |
(c) | Distribution of Participant Deferrals. |
(i) | Matched and Unmatched Participant Deferrals . Because different payout alternatives are available for matched and unmatched Participant Deferrals, the Plan will separately account for matched and unmatched Participant Deferrals. Each Plan Years unmatched Participant |
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Deferrals, if any, are equal to the amount by which the sum of the Participant Deferrals to this Plan for the Plan Year and the Before-Tax Contributions to the Savings Plan for the Plan Year are greater than 6% of the Participants Compensation for the Plan Year. The Committee has full discretion in determining an appropriate and administratively feasible method for differentiating between matched and unmatched Participant Deferrals. The Committee may wait until the end of the Plan Year to make this determination, and may attribute the investment earnings or losses on the Participant Deferrals to the matched Participant Deferrals, to the unmatched Participant Deferrals, or partly to each. |
(ii) | Matched Participant Deferrals . A Participants matched Participant Deferrals will be paid out in the same fashion as the balance of his Account attributable to Company Deferrals under subsection (b). | ||
(iii) | Payout Elections for Unmatched Participant Deferrals . A Participant shall make a separate payout election for the next years unmatched Participant Deferrals. Beginning with Enrollment Agreements entered into in 2009, the payout election must be made no later than June 30 (or such earlier date established by the Committee) of the year preceding the year in which the unmatched Participant Deferral occurs. The payout elections for 2007, 2008, and 2009 unmatched Participant Deferrals must be made by the end of the year preceding the year in which the unmatched Participant Deferral occurs or such earlier date established by the Committee. Newly eligible Participants must complete a payout election at the same time as their initial Enrollment Agreement. The Participant may choose from among the following payout alternatives for the subaccount containing that Plan Years unmatched Participant Deferrals. |
(A) | No In-Service Withdrawal . The subaccount will be paid out in a single payment or in two to ten annual installments. The single payment or the first installment payment will be paid on the first Payment Processing Date that occurs six months or more after the Participants Separation from Service; subsequent installments will be paid each 12 months thereafter. Each installment will be equal to the balance in the subaccount measured as short a period of time before the installment is paid as is administratively convenient, divided by the number of remaining annual installments. | ||
(B) | In-Service Withdrawal, Single Payment . The subaccount will be paid in a single payment on the first Payment Processing Date that occurs during the month and year selected by the Participant. The Participant cannot choose to receive the single payment until the second year following the year in which the Participant Deferral occurred. For example, unmatched Participant Deferrals made in 2008 cannot be withdrawn pursuant to this paragraph until January 2010. If the Participant Separates from Service before receiving the single payment, (1) if the single payment is scheduled to be paid during the six months after the Separation from Service, it will be paid as scheduled, and (2) if the single payment is scheduled to be paid more than six months after the Separation from Service, it will instead be paid on the first Payment Processing Date that occurs six months or more after the Separation from Service. | ||
(C) | In-Service Withdrawal, Installments . The subaccount will be paid in a two to ten annual installments, with the first installment paid on the first Payment Processing Date that occurs during the month and year selected by the Participant, and subsequent installments paid each 12 months thereafter. The Participant cannot choose to receive his first installment until the second year following the year in which the Participant Deferral occurred. Each installment will be equal to the balance in the subaccount measured as short a period of time before the installment is paid as is administratively convenient, divided by the number of remaining annual installments. If the Participant Separates from Service before receiving all installments, (1) any installment scheduled to be paid |
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during the six months after the Separation from Service will be paid as scheduled, and (2) the remaining subaccount balance will be paid on the first Payment Processing Date that occurs six months or more after the Separation from Service. |
(d) | Calculating Installment Payments . | ||
If the value of the Participants Account is less than $50,000 six months after the Participants Separation from Service, the Participant will be paid a lump sum of his Account on the first Payment Processing Date that occurs six months or more after his Separation from Service. If the preceding sentence does not apply, each installment, other than installments of unmatched Participant Deferrals under section 5.03(c)(iii) above, will be equal to the vested Account balance (ignoring the subaccount(s) containing unmatched Participant Deferrals) measured as short a period of time before the installment is paid as is administratively convenient, divided by the number of remaining annual installments. | |||
(e) | Additional Rules for Payout Elections . The Committee has complete discretion to establish procedures for the completion of payout elections, including the acceptable forms and formats of the payout election. The Committee has complete discretion to establish deadlines for the completion of payout elections, within the bounds described in this section. The Committee may establish default choices in the absence of an affirmative Participant election. | ||
(f) | Coordination with Other Distribution Sections . |
(i) | Change of Control . Section 5.06 will apply to determine the timing and amount of certain payments made on or after a Change of Control. | ||
(ii) | Death . Section 5.05 will apply to determine the timing and amount of all payments made after the Participant dies. | ||
(iii) | Hardships . A Participant may take a withdrawal under section 5.07 if he has a financial hardship. | ||
(iv) | Divorce . Some or all of a Participants benefits in this Plan may be allocated to, and distributed to, his former Spouse, pursuant to section 5.08. |
5.05 | Payments after a Participant Dies |
(a) | Payout . When a Participant dies, his remaining vested Account balance will be distributed to each of his Beneficiaries on the Payment Processing Date in the fourth month following the Participants death, provided that the Beneficiary has completed the tax-withholding forms and supplied such other information as the Committee may reasonably require. For example, if the Participant dies in November, the Beneficiary will be paid in March. This four-month delay should give the Beneficiary adequate time to decide whether to disclaim all or any part of his interest under subsection (d)). Each Beneficiary will receive a single payment. | ||
(b) | Beneficiary Designation . Each Participant shall designate one or more persons, trusts, or other entities as his Beneficiary to receive any amounts distributable hereunder at the time of the Participants death. In the absence of an effective beneficiary designation as to part or all of a Participants interest in the Plan, such amount will be distributed to the Participants surviving Spouse, if any, otherwise to the personal representative of the Participants estate. | ||
(c) | Special Rules for Spouses . A beneficiary designation may be changed by the Participant at any time and without the consent of any previously designated Beneficiary. However, if the Participant is married, his Spouse will be his Beneficiary unless such Spouse has consented to the designation of a different Beneficiary. To be effective, the Spouses consent must be in writing, witnessed by a notary public, and filed with the Committee. If the Participant has designated his Spouse as a primary or contingent Beneficiary, and the Participant and Spouse later divorce (or their marriage is annulled), |
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then the former Spouse will be treated as having pre-deceased the Participant for purposes of interpreting a beneficiary designation that was completed prior to the divorce or annulment; this provision will apply only if the Committee is informed of the divorce or annulment before payment to the former Spouse is authorized. |
(d) | Disclaiming . Any individual or legal entity who is a beneficiary may disclaim all or any portion of his interest in the Plan, provided that the disclaimer satisfies the requirements of Code §2518(b) and applicable state law. The legal guardian of a minor or legally incompetent person may disclaim for such person. The personal representative (or the individual or legal entity acting in the capacity of the personal representative according to applicable state law) may disclaim on behalf of a beneficiary who has died. The amount disclaimed will be distributed as if the disclaimant had predeceased the individual whose death caused the disclaimant to become a beneficiary. |
5.06 | Change of Control |
(a) | Former Employees . |
(i) | Separated More than Six Months . Each Participant who Separated from Service more than six months before the date of a Change of Control, including those already receiving installment payments, will be paid a single payment of his entire remaining vested Account balance on the date of a Change of Control or as soon thereafter as is administratively practicable. | ||
(ii) | Recent Separations . Each Participant who Separated from Service within six months before the date of the Change of Control will be paid his normally scheduled payments for the first six months after he Separated from Service and the remainder of his vested Account balance will be paid to him six months after his Separation from Service or as soon thereafter as is administratively practicable. |
(b) | Current Employees . |
(i) | Payout upon Separation From Service . Except as provided in paragraph (ii), each Participant who is an Employee on the date of a Change of Control, and who Separates from Service before the first anniversary of the Change of Control, will be paid a single payment of his entire vested Account balance as soon as administratively practicable after the Separation from Service; however, if the Participant is a specified employee, (A) his normally scheduled payments for the first six months after he Separated from Service will be paid as scheduled and (B) the remainder of his vested Account balance will be paid as soon as administratively practicable six months after the Separation from Service. As used in this section, the term specified employee has the same meaning as in Code §409A(a)(2)(B)(i) and is determined using the default rules contained in the regulations and other guidance of general applicability issued pursuant to Code §409A. Except as provided in paragraph (ii), each Participant who does not Separate from Service within one year of a Change of Control will be paid his benefits pursuant to section 5.04, 5.05, 5.07, or 5.08. | ||
(ii) | Payout upon a Change of Control . This paragraph applies only to benefits accrued after December 31, 2010. A Participant may elect to have all his vested benefits accrued after December 31, 2010 paid to him in a single payment on the date of the Change of Control or as soon as administratively practicable thereafter; to the extent the Participant does not elect to receive payment upon the Change of Control, his benefits shall be paid pursuant to whichever of sections 5.04, 5.05, 5.06(b)(i), 5.07, or 5.08 applies. The Participants election under this paragraph must be made no later than the later of (A) the deadline for the Participants initial payout election pursuant to section 5.04(b)(i) (that is, within 30 days of becoming eligible to participate in the Plan) or (B) June 30, 2010. The Committee may establish an earlier deadline for the payout election under this paragraph. |
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5.07 | Hardship Withdrawals | |
A Participant may withdraw all or part of the vested portion of his Account if he has a financial hardship, subject to the following rules. A Participant may take a hardship withdrawal while he is an Employee and also after he has Separated from Service. Payment shall be made as soon as practicable after the Committee has approved the withdrawal, except that payment for a financial hardship that occurs less than six months after the Participants Separation from Service shall be made as soon as practicable after the Participant has been Separated from Service for six months. |
(a) | Request for Hardship Withdrawal . The Participant must file a request for withdrawal with the Committee, along with such information and documentation as the Committee may request for this purpose. The Committee shall review the information filed as soon as practicable after it is received and shall promptly inform the Participant of the results of the Committees determination. | ||
(b) | Unforeseeable Emergency . A hardship withdrawal may be made only for the purpose of meeting an unforeseeable emergency, which is a severe financial hardship to the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant, the Participants Spouse, the Participants dependent (within the meaning of Code §152(a) without regard to Code §152(b)(1), §152(b)(2), or §152(d)(1)(B)), or the Participants Beneficiary; (ii) loss of the Participants property due to casualty; (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, such as the imminent foreclosure of or eviction from the Participants primary residence or the payment of medical expenses, or (iv) the funeral expenses of the Participants Spouse, Beneficiary, or dependent (within the meaning of Code §152(a) without regard to Code §152(b)(1), §152(b)(2), or §152(d)(1)(B)). The Committee shall determine whether an unforeseeable emergency exists based on all relevant facts and circumstances, all documentation provided by the Participant, and any guidance provided by the IRS. | ||
(c) | Amount of Withdrawal . The amount withdrawn with respect to an unforeseeable emergency may not exceed the amount necessary to satisfy the emergency plus amounts necessary to pay taxes reasonably anticipated to be incurred because of the withdrawal. The withdrawal will be reduced to take into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participants assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). | ||
(d) | Coordination with Savings Plan . If the Participants circumstances are such that he can take a hardship withdrawal from both the Savings Plan and from this Plan, the withdrawal will first be taken from this Plan and, if the Participant exhausts his vested Account in this Plan, the Participant may elect to satisfy any remaining hardship by taking a hardship withdrawal from the Savings Plan. | ||
(e) | Cancellation or Modification of Participant Deferrals . See section 3.01(e) for the cancellation or modification of Enrollment Agreements after a hardship withdrawal from this Plan or the Savings Plan. | ||
(f) | Source of Funds . A Participants hardship withdrawal will be taken first from the subaccounts containing unmatched Participant Deferrals, with the earliest-made unmatched Participant Deferrals withdrawn first. Then, if necessary, amounts will be withdrawn from the subaccount(s) containing matched Participant Deferrals. And finally, if necessary, vested amounts will be withdrawn from the subaccount(s) containing Company Deferrals. |
5.08 | Divorce |
(a) | General . If a Participant has divorced his Spouse, all or a portion of his Account may be allocated to his former Spouse. The Participant may be a former or current employee of the Company. | ||
(b) | Contents of Order . The allocation will occur as soon as practicable after the Plan receives a judgment, decree, or order (collectively, an order) that (i) is made pursuant to a state domestic relations law or community property law, (ii) relates to the marital property rights of the former Spouse, (iii) |
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unambiguously specifies the amount or percentage of the Participants Account that is to be allocated to the former Spouse, or unambiguously specifies the manner in which the amount or percentage is to be calculated, (iv) does not allocate any benefits that have already been allocated to a different former Spouse, (v) contains the name and last known mailing address of the Participant and the former Spouse, (vi) the name of the Plan, (vii) does not contain any provision that violates subsections (c), (d), or (e), and (viii) contains the former Spouses Social Security number (or other similar taxpayer identification number) unless such number has been provided by the former Spouse to the Plan in a manner acceptable to the Committee. |
(c) | Payout Provisions . The vested portion of the amount allocated to the former Spouse will be paid to the former Spouse in a single payment on the first Payment Processing Date that is administratively practicable after (i) the Plan has determined that the order meets the requirements of subsection (b), (ii) the Plan has communicated its interpretation of the order to the Participant and former Spouse, and given them a reasonable amount of time (such as 30 days) to object to the Plans interpretation, (and if there is a timely objection, the parties must submit a revised order or withdraw their objections), and (iii) the parties agree to the Plans interpretation of the order. | ||
(d) | Not Fully Vested . If the former Spouse is allocated any unvested amounts, the Plan will establish a separate account for the former Spouse and she may direct the Plan as to how those amounts will be deemed to be invested, in the same manner as a Participant directs the Plan in Article IV. Unvested amounts are forfeited at the same time as the Participants unvested amounts are forfeited. If an amount allocated to the former Spouse subsequently become vested, the newly-vested amount will be paid to the former Spouse in a single payment on the first Payment Processing Date that is administratively practicable following the additional vesting. If the former Spouse dies before award is fully vested, she shall forfeit her remaining Account balance, and that exact amount shall be returned to the Participants subaccount containing Company Deferrals. | ||
(e) | Source of Funds . If a Participant is not fully vested in his Account when the allocation to the former Spouse occurs, the amount allocated to the former Spouse will be taken on a pro-rata basis from each of the Participants subaccounts. |
5.09 | Administrative Delays in Payments | |
The Committee may delay any payment from this Plan for as short a period as is administratively necessary. For example, a delay may be imposed upon all payments when there is a change of recordkeeper or trustee, and a delay may be imposed on payments to any recipient until the recipient has provided (a) the information needed to determine the appropriate tax withholding and tax reporting and (b)any other information reasonably requested by the Committee. |
5.10 | Noncompliance with Code §409A | |
To the extent that the Company or the Committee takes any action that causes a violation of Code §409A or fails to take any reasonable action required to comply with Code §409A, Apache shall pay an additional amount (the gross-up) to the individual(s) who are subject to the penalty tax under Code §409A(a)(1); the gross-up will be sufficient to put the individual in the same after-tax position he would have been in had there been no violation of Code §409A. The Company shall not pay a gross-up if the cause of the violation of Code §409A is the due to the recipients action or due to the recipients failure to take reasonable actions (such as failing to timely provide the information required for tax withholding or failing to timely provide other information reasonably requested by the Committee with the result that the delay in payment violates Code §409A). Any gross-up will be paid as soon as administratively convenient after the Committee determines the gross-up is owed, and no later than the end of the calendar year immediately following the calendar year in which the additional taxes are remitted. However, if the gross-up is due to a tax audit or litigation addressing the existence or amount of a tax liability, the gross-up will be paid as soon as administratively convenient after the litigation or audit is completed, and no later than the end of the calendar |
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year following the calendar year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the litigation. |
5.11 | Cash Payment and Withholding | |
All payments from the Plan will be made in cash. The Plan will withhold any taxes or other amounts that it is required to withhold pursuant to any applicable law. |
6.01 | The Committee Plan Administrator |
(a) | Current . As of January 1, 2009, the Committee is comprised of the members of the Retirement Plan Advisory Committee. | ||
(b) | Before a Change of Control . Before a change of control, as defined in the Income Continuance Plan, the board of directors of Apache shall appoint an administrative Committee consisting of no fewer than three individuals who may be, but need not be, Participants, officers, directors, or employees of the Company. Apaches board of directors may remove Committee members at will. If the absence of any Committee members, Apache shall become the sole Committee member. | ||
(c) | After a Change of Control . This subsection applies on and after the date of a change of control, as defined in the Income Continuance Plan. The only individuals who are able to serve on the Committee after the date of the Change of Control are those who are not then employed by Apache, its successor, or any related legal entities. No Committee members may be added on or after the day of the Change of Control, except that, if the Committee is comprised solely of individuals, (i) the Committee may appoint a legal entity as a Committee member, and (ii) if the number of Committee members drops below three, the remaining member(s) may not resign until having appointed a legal entity or another individual as a Committee member. If all Committee members leave the Committee (if, for example, all Committee members die before the last one appoints a new Committee member or if the sole Committee member is a legal entity that goes out of business), the Committee shall automatically consist of the three Participants with the largest Accounts who are not then employed by Apache, its successor, or any related legal entities. | ||
(d) | Plan Administrator . The Committee is the Plans administrator within the meaning of ERISA §3(16)(A). The sole named fiduciaries of the Plan are the Committee and any Trustees. |
6.02 | Committee Duties | |
The Committee shall administer the Plan and shall have all discretion and powers necessary for that purpose, including, but not by way of limitation, full discretion and power to interpret the Plan, to determine the eligibility, status, and rights of all persons under the Plan and, in general, to decide any dispute and all questions arising in connection with the Plan. The Committee shall direct the Company, the Trustee, or both, as the case may be, concerning distributions in accordance with the provisions of the Plan. The Committee shall maintain all Plan records except records of any Trust. The Committee shall publish, file, or disclose or cause to be published, filed, or disclosed all reports and disclosures required by federal or state laws. The Committee may authorize one or more of its members or agents to sign instructions, notices, and determinations on its behalf. | ||
6.03 | Organization of Committee | |
The Committee shall adopt such rules as it deems desirable for the conduct of its affairs and for the administration of the Plan. It may appoint agents (who need not be members of the Committee) to whom it may delegate such powers as it deems appropriate, except that any dispute shall be determined by the Committee. The Committee may make its determinations with or without meetings. It may authorize one or more of its members or agents to sign instructions, notices, and determinations on its behalf. If a Committee |
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decision or action affects a relatively small percentage of Plan Participants including a Committee member, such Committee member will not participate in the Committee decision or action. The action of a majority of the disinterested Committee members constitutes the action of the Committee. |
6.04 | Indemnification | |
The Committee and all of the agents and representatives of the Committee shall be indemnified and saved harmless by the Company against any claims, and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims judicially determined to be attributable to gross negligence or willful misconduct. | ||
6.05 | Agent for Process | |
Apaches Vice President, General Counsel, and Secretary shall be the agents of the Plan for service of all process on the Plan. | ||
6.06 | Determination of Committee Final | |
The decisions made by the Committee are final and conclusive on all persons. | ||
6.07 | No Bonding | |
Neither the Committee nor any committee member is required to give any bond or other security in any jurisdiction in connection with the administration of the Plan, unless Apache determines otherwise or any applicable federal or state law so requires. |
7.01 | Trust Agreement | |
The Company may, but is not required to, adopt one or more Trust Agreements for the holding, investment, and administration of funds for Plan benefits. The Trustee may maintain and allocate assets to a separate account for each Participant under the Plan. The assets of any Trust remain subject to the claims of the Companys general creditors in the event of the Companys insolvency. | ||
7.02 | Expenses of Trust | |
The parties expect that any Trust created pursuant to section 7.01 will be treated as a grantor trust for federal and state income tax purposes and that, as a consequence, the Company will recognize taxable income from the Trust assets, but the Trust itself will not separately be subject to income tax with respect to its income. However, if the Trust should be separately taxable, the Trustee will pay all such taxes out of the Trust. All expenses of administering any Trust, if not paid by the Company, will be a charge against and will be paid from the assets of the Trust. |
8.01 | Termination of Plan | |
Apache expects to continue the Plan indefinitely, but each Company may terminate its participation in the Plan at any time with Apaches permission, and Apache may terminate the entire Plan at any time. | ||
8.02 | Amendment |
(a) | Before a Change of Control . Before a change of control, as defined in the Income Continuance Plan, Apache may amend the Plan at any time and from time to time, retroactively or otherwise, on behalf of |
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all Companies, but no amendment may reduce any vested benefit that has accrued on the later of (a) the effective date of the amendment, or (b) the date the amendment is adopted. |
(b) | After a Change of Control . The Plan may be amended after a change of control, as defined in the Income Continuance Plan, (i) at any time but only to the extent necessary to alleviate a material adverse tax consequence to one or more Participants, former Spouses, or Beneficiaries, and (ii) at any time after the second anniversary of such change of control, but only with respect to the benefits of Participants who are then employed by Apache, its successor, or any related entity. | ||
(c) | Procedure . Each amendment must be in writing. Each amendment must be approved by the board of directors of Apache or its successor, or by an officer of Apache or its successor who is authorized by its board of directors to amend the Plan. Each amendment must be executed by an officer of Apache or its successor who is authorized to execute the amendment. |
9.01 | Funding of Benefits No Fiduciary Relationship | |
All benefits payable under the Plan will be paid either from the Trust or by the Company out of its general assets. Nothing contained in the Plan may be deemed to create any fiduciary relationship between the Company and the Participants. Notwithstanding anything herein to the contrary, to the extent that any person acquires a right to receive benefits under the Plan, such right will be no greater than the right of any unsecured general creditor of the Company, except to the extent provided in the Trust Agreement, if any. | ||
9.02 | Right to Terminate Employment | |
The Company may terminate the employment of any Participant as freely and with the same effect as if the Plan were not in existence. | ||
9.03 | Inalienability of Benefits | |
Except for disclaimers under section 5.05(d) and payments to a former Spouse pursuant to section 5.08, no Participant or Beneficiary has the right to assign, alienate, pledge, transfer, hypothecate, encumber, or anticipate his interest in any benefits under the Plan, nor are the benefits subject to garnishment by any creditor, nor may the benefits under the Plan be levied upon or attached. The preceding sentence does not apply to the enforcement of a federal tax levy made pursuant to Code §6331, the collection by the United States on a judgment resulting from an unpaid tax assessment, or any debt or obligation that is permitted to be collected from the Plan under federal law (such as the Federal Debt Collection Procedures Act of 1977). | ||
9.04 | Claims Procedure |
(a) | General . Each claim for benefits will be processed in accordance with the procedures established by the Committee. The procedures will comply with the guidelines specified in this section. The Committee may delegate its duties under this section. | ||
(b) | Representatives . A claimant may appoint a representative to act on his behalf. The Plan will only recognize a representative if the Plan has received a written authorization signed by the claimant and on a form prescribed by the Committee, with the following exceptions. The Plan will recognize a claimants legal representative, once the Plan is provided with documentation of such representation. If the claimant is a minor child, the Plan will recognize the claimants parent or guardian as the claimants representative. Once an authorized representative is appointed, the Plan will direct all information and notification regarding the claim to the authorized representative and the claimant will be copied on all notifications regarding decisions, unless the claimant provides specific written direction otherwise. |
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(c) | Extension of Deadlines . The claimant may agree to an extension of any deadline that is mentioned in this section that applies to the Plan. The Committee or the relevant decision-maker may agree to an extension of any deadline that is mentioned in this section that applies to the claimant. | ||
(d) | Fees . The Plan may not charge any fees to a claimant for utilizing the claims process described in this section. | ||
(e) | Filing a Claim . A claim is made when the claimant files a claim in accordance with the procedures specified by the Committee. Any communication regarding benefits that is not made in accordance with the Plans procedures will not be treated as a claim. | ||
(f) | Initial Claims Decision . The Plan will decide a claim within a reasonable time up to 90 days after receiving the claim. The Plan will have a 90-day extension, but only if the Plan is unable to decide within 90 days for reasons beyond its control, the Plan notifies the claimant of the special circumstances requiring the need for the extension by the 90th day after receiving the claim, and the Plan notifies the claimant of the date by which the Plan expects to make a decision. | ||
(g) | Notification of Initial Decision . The Plan will provide the claimant with written notification of the Plans full or partial denial of a claim, reduction of a previously approved benefit, or termination of a benefit. The notification will include a statement of the reason(s) for the decision; references to the plan provision(s) on which the decision was based; a description of any additional material or information necessary to perfect the claim and why such information is needed; a description of the procedures and deadlines for appeal; a description of the right to obtain information about the appeal procedures; and a statement of the claimants right to sue. | ||
(h) | Appeal . The claimant may appeal any adverse or partially adverse decision. To appeal, the claimant must follow the procedures specified by the Committee. The appeal must be filed within 60 days of the date the claimant received notice of the initial decision. If the appeal is not timely and properly filed, the initial decision will be the final decision of the Plan. The claimant may submit documents, written comments, and other information in support of the appeal. The claimant will be given reasonable access at no charge to, and copies of, all documents, records, and other relevant information. | ||
(i) | Appellate Decision . The Plan will decide the appeal of a claim within a reasonable time of no more than 60 days from the date the Plan receives the claimants appeal. The 60-day deadline will be extended by an additional 60 days, but only if the Committee determines that special circumstances require an extension, the Plan notifies the claimant of the special circumstances requiring the need for the extension by the 60 th day after receiving the appeal, and the Plan notifies the claimant of the date by which the Plan expects to make a decision. If an appeal is missing any information from the claimant that is needed to decide the appeal, the Plan will notify the claimant of the missing information and grant the claimant a reasonable period to provide the missing information. If the missing information is not timely provided, the Plan will deny the claim. If the missing information is timely provided, the 60-day deadline (or 120-day deadline with the extension) for the Plan to make its decision will be increased by the length of time between the date the Plan requested the missing information and the date the Plan received it. | ||
(j) | Notification of Decision . The Plan will provide the claimant with written notification of the Plans appellate decision (positive or adverse). The notification of any adverse or partially adverse decision must include a statement of the reason(s) for the decision; reference to the plan provision(s) on which the decision was based; a description of the procedures and deadlines for a second appeal, if any; a description of the right to obtain information about the second-appeal procedures; a statement of the claimants right to sue; and a statement that the claimant is entitled to receive, free of charge and upon request, reasonable access to and copies of all documents, records, and other information relevant to the claim. |
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(k) | Limitations on Bringing Actions in Court . Once an appellate decision that is adverse or partially adverse to the claimant has been made, the claimant may file suit in court only if he does so by the earlier of the following dates: (i) the one-year anniversary of the date of an appellate decision made on or before a Change of Control or the three-year anniversary of the date of an appellate decision made after a Change of Control, or (ii) the date on which the statute of limitations for such claim expires. |
9.05 | Disposition of Unclaimed Distributions | |
It is the affirmative duty of each Participant to inform the Plan of, and to keep on file with the Plan, his current mailing address and the mailing address of any beneficiaries. If a Participant fails to inform the Plan of these current mailing addresses, neither the Plan nor the Company is responsible for any late payment of benefits or loss of benefits. The Plan, the Committee, and the Company have no duty to search for a missing individual until the date of a Change of Control, at which point the Company has the duty to undertake reasonable measures to search for the proper recipient of any payment under the Plan that is scheduled to be paid on or after the date of the Change of Control. If the missing individual is not found within a year after a payment should have been made to him, all his benefits will be forfeited. If the missing individual later is found, the exact amount forfeited will be restored to his Account as soon as administratively convenient, without any adjustment for forgone investment earnings or losses. | ||
9.06 | Distributions due Infants or Incompetents | |
If any person entitled to a distribution under the Plan is an infant, or if the Committee determines that any such person is incompetent by reason of physical or mental disability, whether or not legally adjudicated an incompetent, the Committee has the power to cause the distributions becoming due to such person to be made to another for his benefit, without responsibility of the Committee to see to the application of such distributions. Distributions made pursuant to such power will operate as a complete discharge of the Company, the Trustee, the Plan, and the Committee. | ||
9.07 | Use and Form of Words | |
When any words are used herein in the masculine gender, they are to be construed as though they were also used in the feminine gender in all cases where they would so apply, and vice versa. Whenever any words are used herein in the singular form, they are to be construed as though they were also used in the plural form in all cases where they would so apply, and vice versa. | ||
9.08 | Headings | |
Headings of Articles and sections are inserted solely for convenience and reference, and constitute no part of the Plan. | ||
9.09 | Governing Law | |
The Plan shall be construed in accordance with ERISA, the Code, and, to the extent applicable, the laws of the State of Texas excluding any conflicts-of-law provisions. |
APACHE CORPORATION
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/s/ Margery M. Harris | ||||
Margery M. Harris | ||||
Vice President, Human Resources
July 14, 2010 |
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ATTEST: | APACHE CORPORATION | |||||||
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Cheri L. Peper
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By: | Margery M. Harris | ||||||
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APACHE CORPORATION | |||||||
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/s/ Cheri L. Peper
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1.01 | Definitions | |
Defined terms used in this Plan shall have the meanings set forth below: |
(a) | Account means the memorandum account maintained for each Participant that is credited with all Participant Deferrals and any contributions by the Company. Each Participants Account is divided into subaccounts, as determined by the Committee, and in general each award or deferral will be allocated to its own subaccount. | ||
(b) | Apache means Apache Corporation or any successor thereto. | ||
(c) | Affiliated Entity means any legal entity that is treated as a single employer with Apache pursuant to Code §414(b), §414(c), §414(m), or §414(o). | ||
(d) | Beneficiary means a Participants beneficiary, as determined in section 5.04. | ||
(e) | Change of Control means a change of control as defined in the Income Continuance Plan that is also described in Code §409A(a)(2)(A)(v). | ||
(f) | Code means the Internal Revenue Code of 1986, as amended. | ||
(g) | Committee means the Stock Option Plan Committee of Apaches Board of Directors. The Committee shall be constituted at all times so as to permit the Plan to be administered by non-employee directors (as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended). | ||
(h) | Company means Apache and any Affiliated Entity that, with approval of the Board of Directors of Apache, has adopted the Plan. | ||
(i) | Company Deferrals means the allocations to a Participants Account made pursuant to section 3.02. | ||
(j) | Compensation means amounts deferrable under this Plan, as determined by the Committee. Election Agreement means an agreement made by an eligible employee whereby he elects the amount(s) to be withheld from his Compensation pursuant to section 3.01. | ||
(k) | ERISA means the Employee Retirement Income Security Act of 1974, as amended | ||
(l) | Fair Market Value means the per share closing price of the Stock as reported on The New York Stock Exchange, Inc. Composite Transactions Reporting System for a particular date or, if the Stock is not so listed on such date, as reported on NASDAQ or on such other exchange or electronic trading system which, on the date in question, reports the largest number of traded shares of Stock, provided , however , that if on the date Fair Market Value is to be determined there are no transactions in the Stock, Fair Market Value shall be determined as of the immediately preceding date on which there were transactions in the Stock; provided further , however , that if the foregoing provisions are not applicable, the fair market value of a share of the Stock as determined by the Committee by the |
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reasonable application of such reasonable valuation method, consistently applied, as the Committee deems appropriate. | |||
(m) | Participant means any eligible employee selected to participate in the Plan. | ||
(n) | Participant Deferrals means the amounts of a Participants Compensation that elects to defer and have allocated to his Account pursuant to section 3.01. | ||
(o) | Plan means the plan set forth in this document, as amended. | ||
(p) | Plan Year means the calendar year. | ||
(q) | Separation from Service has the same meaning as the term separation from service in Code §409A(a)(2)(A)(i), determined using the default rules in the regulations and other guidance of general applicability issued pursuant to Code §409A, except that a Separation from Service occurs only if both the Company and the Participant expect the Participants level of services to permanently drop by more than half. A Participant who has a Separation from Service Separates from Service. | ||
(r) | Spouse means the individual of the opposite sex to whom a Participant is lawfully married according to the laws of the state of the Participants domicile. | ||
(s) | Stock means the $0.625 par value common stock of Apache. | ||
(t) | Stock Units mean investment units and any related units from dividend amounts. Each Stock Unit is equivalent to one share of Stock. | ||
(u) | Trust means the trust or trusts, if any, created by the Company to provide funding for the distribution of benefits in accordance with the provisions of the Plan. The assets of any such Trust remain subject to the claims of the Companys general creditors in the event of the Companys insolvency. | ||
(v) | Trust Agreement means the written instrument pursuant to which each separate Trust is created. | ||
(w) | Trustee means one or more banks, trust companies, or insurance companies designated by the Company to hold and invest the Trust fund and to pay benefits and expenses as authorized by the Committee in accordance with the terms and provisions of the Trust Agreement. |
1.02 | Headings; Gender and Number | |
The headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. Except when otherwise indicated by the context, the masculine gender shall also include the feminine gender, and the definition of any term herein in the singular shall also include the plural. |
2.01 | Eligibility and Participation | |
The Committee shall from time to time in its sole discretion select those employees of the Company who are eligible to participate in the Plan from among a select group of management or highly compensated employees. | ||
2.02 | Election | |
Participants shall complete the election procedures specified by the Committee. The election procedures may include form(s) for the Participant to designate a Beneficiary, elect Participant Deferrals by entering into an Election Agreement with the Company, select a payment option for the eventual distribution of his Account or any subaccount, and provide such other information as the Committee may reasonably require. | ||
2.03 | Failure of Eligibility | |
The Committee shall have the authority to determine that a Participant is no longer eligible to participate in the Plan. When a Participant becomes ineligible, all outstanding Election Agreements shall be cancelled. The determination of the Committee with respect to the termination of participation in the Plan shall be final and binding on all parties affected thereby. Any benefits vested hereunder at the time the Participant |
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becomes ineligible to continue participation shall be distributed in accordance with the provisions of Article V. |
3.01 | Participant Deferrals |
(a) | General . A Participant may elect to defer a portion of his Compensation by filing the appropriate Election Agreement with the Committees designee. The Committee has complete discretion to establish procedures for the completion of Election Agreements, including the acceptable forms and formats of the deferral election. The Committee has complete discretion to establish the election periods during which Participants may make Election Agreements, within the bounds described in subsection (b). The Committee may establish different election periods for different types of Compensation, different grants of Compensation, or different groups of Participants. | ||
(b) | Deadlines for Election Agreements . |
(i) | Election Period . In order to make Participant Deferrals, a Participant must submit an Election Agreement during the election period established by the Committee. The election period must precede the Plan Year in which the services giving rise to the Compensation are performed, except in the following situations. |
(A) | Performance-Based Compensation . If the Compensation is performance-based compensation based on services performed over a period of at least 12 months (within the meaning of Code §409A(a)(4)(B)(iii)), the election period must end at least six months before the end of the performance period. | ||
(B) | New Participant . The election period for a new Participant must end no later than 30 days after he became eligible to participate in the Plan; the new Participants initial Election Agreement may only apply to Compensation for which he has not yet performed any services. However, a Participant who has a lapse in eligibility to participate in the Plan can only use this special 30-day election when he again becomes eligible to accrue benefits (other than investment earnings), (1) on the date of his new eligibility if he has received a complete payout of his benefits from his prior episode of participation, or (2) if his lapse in eligibility was at least 24 months in duration. | ||
(C) | Unvested Deferrals . The election period for any Compensation that is subject to the condition that the Participant continue to provide services for Apache and Affiliated Entities for at least 12 months, such as many grants of restricted stock units, must end within 30 days of the date the Compensation is awarded, provided that (1) the award does not vest for 12 months following the end of the election period, (2) no event other than the Participants death or disability (within the meaning of Code §409A(2)(C)), or a Change of Control can cause vesting within the 12 months following the end of the election period, and (3) if the Participants death or disability, or the Change of Control occurs before the first anniversary of the end of the election period, the Election Agreement shall be cancelled. |
(ii) | Duration of and Cancellation of Election Agreements . The Committee has full discretion to determine which Compensation is subject to each Election Agreement. The Election Agreement becomes irrevocable by the Participant at the end of the election period. The Committee shall determine, at the time the Election Agreement is made, the circumstances in which the Election Agreement shall be cancelled, such as upon the Participants disability or upon a Change of Control. An Election Agreement is not affected by a hardship withdrawal from the Non-Qualified Retirement/Savings Plan of Apache Corporation. However, if the Participant takes a hardship withdrawal from the Apache Corporation 401(k) Savings Plan, all outstanding Election Agreements that apply to Compensation that would have been paid to the Participant within six months after the hardship withdrawal (if the Election Agreements had not been in effect) shall be cancelled and no further Participant Deferrals made pursuant to such Election Agreements. |
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3.02 | Company Deferrals | |
Upon prior approval of the Committee, the Company may credit any amount to a Participants Account at any time. |
5.01 | Vesting |
(a) | General . Each award of Compensation to a Participant shall vest in accordance with the terms of the award, which are determined by the Committee. Upon the death of a Participant, the award shall specify whether no vesting occurs, whether the next tranche or some other portion of the award vests, or whether the entire award vests. | ||
(b) | Termination for Cause . If the employment of the Participant is terminated for cause as determined by the Company, the Participants entire Account balance, whether vested or not, shall be forfeited immediately. For this purpose, cause shall mean a gross violation, as determined by the Company, of the Companys established policies and procedures. | ||
(c) | Earnings . Stock Units attributable to dividend amounts credited to a Participants Account shall vest as the Stock Units on which the dividend amounts are calculated vest. | ||
(d) | Change of Control . If a change of control, within the meaning of Apaches Income Continuance Plan or any successor plan, of Apache occurs, all unvested Stock Units credited to Participants Accounts shall become automatically vested, without further action by the Committee or Apaches board of directors. |
5.02 | Payouts of Company Deferrals . |
(a) | Timing of Payout . The Committee may specify the timing of the distribution of any grant of Company Deferrals, or the Committee may allow a Participant to make a payout election for his Company Deferrals. If the Participant is given the opportunity to make a payout election, the deadline for the election is 30 days after the grant of a Company Deferral. | ||
(b) | Payout Alternatives . A Participant shall receive a lump sum distribution of the subaccount(s) containing Company Deferrals six months after he Separates from Service, unless the Committee permits him to elect five installments and he so elects, in which case the first installment will be paid six months after his Separation from Service, or as soon as convenient after that date, and subsequent installments will be paid on the anniversary of the first installment, or as near to that date as is administratively convenient. If the Participant is given the opportunity to make a payout election, the deadline for the election is 30 days after the grant of a Company Deferral, or if later, December 31, 2008. |
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(c) | Death or Change of Control . If there is a Change of Control or the Participant dies before receiving all installments, the remaining vested benefits shall be paid as specified in section 5.04 or 5.05, rather than as provided for in this section. | ||
(d) | Small Accounts . See section 5.03(d) for payouts of small accounts. |
5.03 | Payouts of Participant Deferrals |
(a) | Election . Each subaccount containing Participant Deferrals shall be paid in a lump sum six months after the Participants Separation from Service unless the Committee, in its sole discretion, allows a Participant to elect, and the Participant does elect, toto have the Participant Deferrals under an Election Agreement paid to him in one of the following manners. Any payout election that the Participant is permitted make with respect to deferrals pursuant to an Election Agreement must be made by the end of the election period for that Election Agreement. The Committee has the discretion to reduce the possible payout alternatives from the three identified below.. |
(i) | In-Service Withdrawal, Single Payment . The subaccount for Participant Deferrals from an Election Agreement will be paid in a lump sum five years after the Stock Units vest, or as near to that date as is administratively convenient. For example, if the Stock Units under a particular Election Agreement vest over four years, the Participant will receive four annual lump sums. If the Participant Separates from Service before receiving all lump sums with respect to an Election Agreement, (A), if a lump sum is scheduled to be paid during the six months after the Separation from Service, it will be paid as scheduled, and (B) if any lump sum is scheduled to be paid more than six months after the Separation from Service, it will instead be paid 6 months after his Separation from Service, or as soon thereafter as is administratively convenient. | ||
(ii) | In-Service Withdrawal, Limited Installments . This payout alternative is available only if all Stock Units relating to an Election Agreement either are vested at the time of the Election Agreement or are scheduled to vest on a single date; thus, for example, this alternative is not available for a restricted stock unit award where vesting is scheduled to occur over four years. The benefits will be paid in five annual installments, with the first installment paid five years after the Stock Units vest (or, if vested when granted, five years after the date of the grant), or as near to that date as is administratively convenient. Subsequent installments are paid on the anniversary of the first installment or as near to that date as is administratively convenient. The amount of each installment is equal to the number of remaining Stock Units associated the Election Agreement, divided by the number of remaining installments, rounded down to the nearest whole Stock Unit, except that the last installment is equal to the number of remaining vested Stock Units, with any fractional share paid in cash. If the Participant Separates from Service before receiving all installments with respect to an Election Agreement, (A), any installment payment scheduled to be paid during the six months after the Separation from Service will be paid as scheduled, and (B) any remaining installment(s) will instead be paid in a lump sum 6 months after his Separation from Service, or as soon thereafter as is administratively convenient. | ||
(iii) | No In-Service Withdrawal . The subaccount for the Participant Deferrals from each Election Agreement will be paid out in a single payment or in five annual installments. The single payment or the first installment payment will be paid six months after the Participants Separation from Service or as soon thereafter as is administratively convenient; subsequent installments will be paid on each anniversary of the first installment, or as near thereto as administratively convenient. Each installment will be equal to the balance in the subaccount measured as short a period of time before the installment is paid as is administratively convenient, divided by the number of remaining annual installments, rounded down to the nearest whole Stock Unit, except that the last installment shall be equal to the number of remaining Stock Units, with any fractional share paid in cash. |
(b) | Existing Elections . If a Participant made an Election Agreement before 2009 for an award that vested over more than one year, such as the restricted stock unit grants made on September 11, 2007 that vest |
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over four years, and the Participant elected to defer such amounts for five years after vesting occurred with each amount paid in five installments, the payments scheduled to be made on or after January 1, 2009 will, in spite of the Participants previous election, be paid a lump sum on the fifth anniversary of date of the date such Stock Units vested, or, if later, in January of 2009. If the Participant Separates from Service before receiving all lump sums with respect to an Election Agreement, (i) if a lump sum is scheduled to be paid during the six months after the Separation from Service, it will be paid as scheduled, and (ii) if any lump sum is scheduled to be paid more than six months after the Separation from Service, it will instead be paid in January 2009 or if later six months after his Separation from Service, or as soon thereafter as is administratively convenient | |||
(c) | Death or Change of Control . If there is a Change of Control or the Participant dies before receiving all vested Stock Units, the remaining vested Stock Units shall be paid as specified in section 5.04 or 5.05, rather than as originally scheduled. | ||
(d) | Small Accounts . If the Fair Market Value of a Participants vested Account six months after he Separates from Service is less than $100,000, he shall receive a lump sum payment of the vested Account balance six months after the Separation from Service or as soon thereafter as is administratively convenient. |
5.04 | Distributions After Participants Death | |
This section applies once a Participant dies. |
(a) | Immediate Payment . When a Participant dies, his remaining vested Account balance shall be paid to each beneficiary in one lump sum four months after the Participants death, which should give each beneficiary adequate time to decide whether to disclaim. However, no payment may be made before the Committees designee has been furnished with proof of death and such other information as it may reasonably require, including information needed for tax reporting purposes. Such distribution shall be paid in whole shares of Stock, with any fractional shares paid in cash | ||
(b) | Designating Beneficiaries . Each Participant shall designate one or more persons, trusts, or other entities as his Beneficiary to receive any amounts distributable hereunder after the Participants death, by furnishing the Committee with a beneficiary designation form. In the absence of an effective Beneficiary designation as to part or all of a Participants interest in the Plan, such amount will be distributed to the Participants surviving Spouse, if any, otherwise to the Participants estate. Unless the Participants beneficiary designation form specifies otherwise, if a Beneficiary dies after the Participant but before being paid by the Plan, the Plan shall pay the Beneficiarys estate. | ||
(c) | Changing Beneficiaries . A beneficiary designation may be changed by the Participant at any time and without the consent of any previously designated Beneficiary. However, if the Participant is married, his Spouse shall be his Beneficiary unless such Spouse has consented to the designation of a different Beneficiary. To be effective, the Spouses consent must be in writing, witnessed by a notary public, and filed with the Committees designee. If a Participant has designated his Spouse as a Beneficiary or as a contingent Beneficiary, and the Participant and that Spouse subsequently divorce, then the former Spouse will be treated as having pre-deceased the Participant for purposes of interpreting a beneficiary designation form completed prior to the divorce; this sentence shall apply only if the Committees designee is informed of the divorce before payment to the former Spouse is authorized. | ||
(d) | Disclaimers . Any individual or legal entity who is a Beneficiary may disclaim all or any portion of his interest in the Plan, provided that the disclaimer satisfies the requirements of applicable state law and Code §2518(b). The legal guardian of a minor or legally incompetent person may disclaim for such person. The personal representative (or the individual or legal entity acting in the capacity of the personal representative according to applicable state law) may disclaim on behalf of a Beneficiary who has died. The amount disclaimed shall be distributed as if the disclaimant had predeceased the Participant. |
5.05 | Change of Control |
(a) | Former Employees . |
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(i) | Separated More than Six Months . Each Participant who is not a specified employee (defined below) and each Participant who Separated from Service more than six months before the date of a Change of Control, including those who are already receiving installment payments, will be paid a single payment of his entire remaining vested Account balance on the date of the Change of Control or as soon thereafter as is administratively practicable. | ||
(ii) | Recent Separations . Each Participant who is a specified employee and who Separated from Service less than six months before the Change of Control occurred will be paid a single payment of his entire Account balance six months after his Separation from Service, or as soon thereafter as is administratively practicable. | ||
(iii) | Specified Employee . The term specified employee has the same meaning as the term specified employee in Code §409A(a)(2)(B)(i), and is determined using the default rules in the regulations and other guidance of general applicability issued pursuant to Code §409A. |
(b) | Current Employees . Each Participant who is an employee on the date of a Change of Control will be paid a lump sum of his entire vested Account balance on the date of the Change of Control or as soon thereafter as is administratively practicable. |
5.06 | Rehires . If a Participant Separated from Service and then becomes eligible to again accrue benefits, the payment of his benefits from his first episode of participation will not be affected by his subsequent participation. He will be treated as a new Participant for making payout elections for benefits accruing during his second episode of participation, except as otherwise provided in section 3.01. | |
5.07 | Form of Distribution . Subject to section 5.08, each payment shall be made in whole shares of Stock, with each Stock Unit being converted into one share of Stock. Any fractional Stock Units will be converted into cash based on the Fair Market Value of a share of Stock on the day preceding the day the payment is processed. Upon a change of control as defined in the Income Continuance Plan or its successor, the payment for each Stock Unit shall be one share of Stock unless the material characteristics of the Stock were affected by the Change of Control, in which case the payment for each Stock Unit shall be in the form of cash equal to the fair market value, determined as of the date of the Change of Control, of the property an Apache shareholder receives upon the change of control in exchange for one of his Shares. | |
5.08 | Withholding | |
At the time of vesting or payment, as applicable, either the recipient shall pay the Plan cash sufficient to cover the required withholding or the Plan shall withhold from such payment any taxes or other amounts that are required to be withheld pursuant to any applicable law; any Stock Units withheld shall be converted into cash based on the Fair Market Value of a share of Stock (a) on the day preceding the day the payment is processed or (b) on the day the vesting occurs. | ||
5.09 | Divorce |
(a) | General . If a Participant has divorced his Spouse, all or a portion of his Account may be allocated to his former Spouse. The Participant may be a former or current employee of the Company. | ||
(b) | Contents of Order . The allocation will occur as soon as practicable after the Plan receives a judgment, decree, or order (collectively, an order) that (i) is made pursuant to a state domestic relations law or community property law, (ii) relates to the marital property rights of the former Spouse, (iii) unambiguously specifies the amount or percentage of the Participants Account that is to be allocated to the former Spouse, or unambiguously specifies the manner in which the amount or percentage is to be calculated, (iv) does not allocate any benefits that have already been allocated to a different former Spouse, (v) contains the name and last known mailing address of the Participant and eh former Spouse, (vi) the name of the Plan, (vii) does not contain any provision that violates subsections (c), (d), or (e), and (viii) contains the former Spouses Social Security number (or other similar taxpayer identification number) unless such number has been provided by the former Spouse to the Plan in a manner acceptable to the Committee. |
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(c) | Payout Provisions . The vested portion of the amount allocated to the former Spouse will be paid to the former Spouse in a single payment as soon as administratively practicable after (i) the Plan has determined that the order meets the requirements of subsection (b), (ii) the Plan has communicated its interpretation of the order to the Participant and former Spouse, and given them a reasonable amount of time (such as 30 days) to object to the Plans interpretation, (and if there is a timely objection, the parties must submit a revised order or withdraw their objections), and (iii) the parties agree to the Plans interpretation of the order. | ||
(d) | Not Fully Vested . If the former Spouse is allocated any unvested amounts, the Plan will establish a separate account for the former Spouse. Unvested amounts are forfeited at the same time as the Participants unvested amounts are forfeited. If an amount allocated to the former Spouse subsequently become vested, the newly-vested amount will be paid to the former Spouse in a single payment as soon as administratively practicable following the additional vesting. If the former Spouse dies before award is fully vested, the unvested amounts shall be returned to the Participants Account. | ||
(e) | Source of Funds . The order may specify which subaccounts the former Spouses benefits shall be taken from; if the order is silent on this matter, the amount awarded to the former Spouse shall be taken from the Participants subaccounts in the order determined by the Committee and shall be taken on a pro rata basis from the vested portion of the Account and the unvested portion. |
5.10 | Administrative Delays in Payments | |
The Committee may delay any payment from this Plan for as short a period as is administratively necessary. For example, a delay may be imposed upon all payments when there is a change of recordkeeper or trustee, and a delay may be imposed on payments to any recipient until the recipient has provided (a) the information needed to determine the appropriate tax withholding and tax reporting and (b) any other information reasonably requested by the Committee. | ||
5.11 | Noncompliance with Code §409A | |
To the extent that the Company or the Committee takes any action that causes a violation of Code §409A or fails to take any reasonable action required to comply with Code §409A, Apache shall pay an additional amount (the gross-up) to the individual(s) who are subject to the penalty tax under Code §409A(a)(1); the gross-up will be sufficient to put the individual in the same after-tax position he would have been in had there been no violation of Code §409A. The Company shall not pay a gross-up if the cause of the violation of Code §409A is the due to the recipients action or due to the recipients failure to take reasonable actions (such as failing to timely provide the information required for tax withholding or failing to timely provide other information reasonably requested by the Committee with the result that the delay in payment violates Code §409A). Any gross-up will be paid as soon as administratively convenient after the Committee determines the gross-up is owed, and no later than the end of the calendar year immediately following the calendar year in which the additional taxes are remitted. However, if the gross-up is due to a tax audit or litigation addressing the existence or amount of a tax liability, the gross-up will be paid as soon as administratively convenient after the litigation or audit is completed, and no later than the end of the calendar year following the calendar year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the litigation. |
6.01 | Committee to Administer and Interpret Plan | |
The Plan shall be administered by the Committee. The Committee shall have all discretion and powers necessary for administering the Plan, including, but not by way of limitation, full discretion and power to interpret the Plan, to determine the eligibility, status and rights of all persons under the Plan and, in general, to decide any dispute. The Committee shall direct the Company, the Trustee, or both, as the case may be, concerning distributions in accordance with the provisions of the Plan. The Committees designee shall maintain all Plan records except records of any Trust. The Committee may delegate any of its administrative duties to a designee. |
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6.02 | Organization of Committee | |
The Committee shall adopt such rules as it deems desirable for the conduct of its affairs and for the administration of the Plan. The Committee may appoint a designee and/or agent (who need not be a member of the Committee or an employee of the Company) to assist the Committee in administration of the Plan and to whom it may delegate such powers as the Committee deems appropriate, except that the Committee shall determine any dispute. The Committee may make its determinations with or without meetings. The Committee may authorize one or more of its members, designees or agents to sign instructions, notices and determinations on its behalf. The action of a majority of the Committees members shall constitute the action of the Committee. | ||
6.03 | Agent for Process | |
Apaches General Counsel and Apaches Corporate Secretary shall each be an agent of the Plan for service of all process. | ||
6.04 | Determination of Committee Final | |
The decisions made by the Committee shall be final and conclusive on all persons. |
7.01 | Trust Agreement | |
The Company may, but shall not be required to, adopt a separate Trust Agreement for the holding and administration of the funds contributed to Accounts under the Plan. The Trustee shall maintain and allocate assets to a separate account for each Participant under the Plan. The assets of any such Trust shall remain subject to the claims of the Companys general creditors in the event of the Companys insolvency. | ||
7.02 | Expenses of Trust | |
The parties expect that any Trust created pursuant to section 7.01 will be treated as a grantor trust for federal and state income tax purposes and that, as a consequence, such Trust will not be subject to income tax with respect to its income. However, if the Trust is separately taxable, the Trustee shall pay all such taxes out of the Trust. All expenses of administering any such Trust shall be a charge against and shall be paid from the assets of such Trust. |
8.01 | Amendment | |
The Plan may be amended at any time and from time to time, retroactively or otherwise; however, no amendment shall reduce any vested benefit that has accrued on the effective date of such amendment. Each Plan amendment shall be in writing and shall be approved by the Committee and/or Apaches Board of Directors. An officer of Apache to whom the Committee and/or Apaches Board of Directors has delegated the authority to execute Plan amendments shall execute each such amendment or the Plan document restated to include all such Plan amendment(s). | ||
The Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with the provisions of the laws (including, but not limited to, tax laws and regulations) of countries other than the United States in which the Company may operate, so as to assure the viability of the benefits of the Plan to Participants employed in such countries. In only certain limited circumstances, as described in the Treasury Regulations and other guidance of general applicability issued pursuant to Code §409A, may the termination of a plan affect the timing of the payment of Plan benefits. | ||
8.02 | Successors and Assigns; Termination of Plan | |
The Plan is binding upon Apache and its successors and assigns. The Plan shall continue in effect from year to year unless and until terminated by Apaches Board of Directors. Any such termination shall operate only prospectively and shall not reduce any vested benefit that has accrued on the effective date of such termination. |
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9.01 | Number of Shares | |
Subject to Section 4.01, and to adjustment pursuant to Section 9.03 hereof, 350,000 shares of Stock (adjusted to 735,000 shares for (i) the Companys five-percent stock dividend, record date March 12, 2003, paid April 2, 2003, and (ii) the Companys two-for-one stock split, record date December 31, 2003, distributed January 14, 2004) are authorized for issuance under the Plan in accordance with the provisions of the Plan and subject to such restrictions or other provisions as the Committee may from time to time deem necessary. This authorization may be increased from time to time by approval of the Board and the stockholders of Apache if, in the opinion of counsel for the Company, such stockholder approval is required. Shares of Stock distributed under the terms of the Plan and shares of Stock equal to the number of Stock Units credited to Participants Accounts maintained under the Plan shall be applied to reduce the maximum number of shares of Stock remaining available for use under the Plan. However, shares of Stock represented by any Stock Units related to the deferral of income from any plan for which shares of Stock have been authorized for issuance, such as the 2007 Omnibus Equity Compensation Plan, shall retain their authorization under such plan, and shall not be applied to reduce the number of shares of Stock remaining available for use under the Plan. Apache, at all times during the existence of the Plan and while any Stock Units are credited to Participants Accounts maintained under the Plan, shall retain as Stock in Apaches treasury at least the number of shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder. | ||
9.02 | Other Shares of Stock | |
The shares of Stock represented by any Stock Units from dividend amounts that are forfeited, and any shares of Stock that for any other reason are not issued to a Participant or are forfeited, shall again become available for use under the Plan. | ||
9.03 | Adjustments for Stock Split, Stock Dividend, Etc. | |
If Apache shall at any time increase or decrease the number of its outstanding shares of Stock or change in any way the rights and privileges of such shares by means of the payment of a Stock dividend or any other distribution upon such shares payable in Stock, or through a Stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock, then in relation to the Stock that is affected by one or more of the above events, the numbers, rights and privileges of the following shall be increased, decreased or changed in like manner as if they had been issued and outstanding, fully paid and nonassessable at the time of such occurrence: (a) the shares of Stock remaining available for use under the Plan; and (b) the shares of Stock then represented by Stock Units credited to Participants Accounts maintained under the Plan. | ||
9.04 | Dividend Payable in Stock of Another Corporation, Etc. | |
If Apache shall at any time pay or make any dividend or other distribution upon the Stock payable in securities or other property (except cash or Stock), a proportionate part of such securities or other property shall be set aside for Stock Units credited to Participants Accounts maintained under the Plan and delivered to any Participant upon distribution pursuant to the terms of the Plan. Prior to the time that any such securities or other property are delivered to a Participant in accordance with the foregoing, Apache shall be the owner of such securities or other property and shall have the right to vote the securities, receive any dividends payable on such securities, and in all other respects shall be treated as the owner. If securities or other property which have been set aside by Apache in accordance with this Section are not delivered to a Participant because all or part of his Stock Units are forfeited pursuant to the terms of the Plan, then the applicable portion of such securities or other property shall remain the property of Apache and shall be dealt with by Apache as it shall determine in its sole discretion. |
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9.05 | Other Changes in Stock | |
In the event there shall be any change, other than as specified in Sections 9.03 and 9.04 hereof, in the number or kind of outstanding shares of Stock or of any stock or other securities into which the Stock shall be changed or for which it shall have been exchanged, and if the Committee shall in its discretion determine that such change equitably requires an adjustment in the number or kind of shares (a) remaining available for use under the Plan and/or (b) represented by Stock Units credited to Participants Accounts maintained under the Plan, then such adjustments shall be made by the Committee and shall be effective for all purposes of the Plan. | ||
9.06 | Rights to Subscribe | |
If Apache shall at any time grant to the holders of its Stock rights to subscribe pro rata for additional shares thereof or for any other securities of Apache or of any other corporation, there shall be reserved with respect to the Stock Units credited to Participants Accounts maintained under the Plan the Stock or other securities which the Participant would have been entitled to subscribe for if immediately prior to such grant the shares of Stock represented by such Stock Units had been issued and outstanding. If, at the time of distribution under the terms of the Plan, the Participant subscribes for the additional shares or other securities, the price that is payable by the Participant for such additional shares or other securities shall be withheld from such distribution pursuant to Section 5.08 hereof. | ||
9.07 | General Adjustment Rules | |
No adjustment or substitution provided for in this Article IX shall require Apache to sell or otherwise issue a fractional share of Stock. All benefits payable under the Plan shall be distributed in whole shares of Stock, with any fractional shares paid in cash. | ||
9.08 | Determination by the Committee, Etc. | |
Adjustments under this Article IX shall be made by the Committee, whose determinations with regard thereto shall be final and binding upon all parties thereto. |
11.01 | Funding of Benefits No Fiduciary Relationship | |
Benefits shall be paid either out of the Trust or, if no Trust is in existence or if the assets in the Trust are insufficient to provide fully for such benefits, then such benefits shall be distributed by the Company out of its general assets. Nothing contained in the Plan shall be deemed to create any fiduciary relationship between the Company and the Participants. Notwithstanding anything herein to the contrary, to the extent that any |
Page 11 of 14
person acquires a right to receive benefits under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company, except to the extent provided in the Trust Agreement, if any. | ||
11.02 | Right to Terminate Employment | |
The Company may terminate the employment of any Participant as freely and with the same effect as if the Plan were not in existence. | ||
11.03 | Inalienability of Benefits | |
Except for disclaimers under section 5.04(d) and payments to a former Spouse pursuant to section 5.09, no Participant or Beneficiary has the right to assign, alienate, pledge, transfer, hypothecate, encumber, or anticipate his interest in any benefits under the Plan, nor are the benefits subject to garnishment by any creditor, nor may the benefits under the Plan be levied upon or attached. The preceding sentence does not apply to the enforcement of a federal tax levy made pursuant to Code §6331, the collection by the United States on a judgment resulting from an unpaid tax assessment, or any debt or obligation that is permitted to be collected from the Plan under federal law (such as the Federal Debt Collection Procedures Act of 1977). | ||
11.04 | Claims Procedure |
(a) | General . Each claim for benefits shall be processed in accordance with the procedures that may be established by the Committee. The procedures shall comply with the guidelines specified in this section. The Committee may delegate its duties under this section. | ||
(b) | Representatives . A claimant may appoint a representative to act on his behalf. The Plan shall only recognize a representative if the Plan has received a written authorization signed by the claimant and on a form prescribed by the Committee, with the following exceptions. The Plan shall recognize a claimants legal representative, once the Plan is provided with documentation of such representation. If the claimant is a minor child, the Plan shall recognize the claimants parent or guardian as the claimants representative. Once an authorized representative is appointed, the Plan shall direct all information and notification regarding the claim to the authorized representative and the claimant shall be copied on all notifications regarding decisions, unless the claimant provides specific written direction otherwise. | ||
(c) | Extension of Deadlines . The claimant may agree to an extension of any deadline that is mentioned in this section that applies to the Plan. The Committee or the relevant decision-maker may agree to an extension of any deadline that is mentioned in this section that applies to the claimant. | ||
(d) | Fees . The Plan may not charge any fees to a claimant for utilizing the claims process described in this section. | ||
(e) | Filing a Claim . A claim is made when the claimant files a claim in accordance with the procedures specified by the Committee. Any communication regarding benefits that is not made in accordance with the Plans procedures will not be treated as a claim. | ||
(f) | Initial Claims Decision . The Plan shall decide a claim within a reasonable time up to 90 days after receiving the claim. The Plan shall have a 90-day extension, but only if the Plan is unable to decide within 90 days for reasons beyond its control, the Plan notifies the claimant of the special circumstances requiring the need for the extension by the 90th day after receiving the claim, and the Plan notifies the claimant of the date by which the Plan expects to make a decision. | ||
(g) | Notification of Initial Decision . The Plan shall provide the claimant with written notification of the Plans full or partial denial of a claim, reduction of a previously approved benefit, or termination of a benefit. The notification shall include a statement of the reason(s) for the decision; references to the plan provision(s) on which the decision was based; a description of any additional material or information necessary to perfect the claim and why such information is needed; a description of the procedures and deadlines for appeal; a description of the right to obtain information about the appeal procedures; and a statement of the claimants right to sue. |
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(h) | Appeal . The claimant may appeal any adverse or partially adverse decision. To appeal, the claimant must follow the procedures specified by the Committee. The appeal must be filed within 60 days of the date the claimant received notice of the initial decision. If the appeal is not timely and properly filed, the initial decision shall be the final decision of the Plan. The claimant may submit documents, written comments, and other information in support of the appeal. The claimant shall be given reasonable access at no charge to, and copies of, all documents, records, and other relevant information. | ||
(i) | Appellate Decision . The Plan shall decide the appeal of a claim within a reasonable time of no more than 60 days from the date the Plan receives the claimants appeal. The 60-day deadline shall be extended by an additional 60 days, but only if the Committee determines that special circumstances require an extension, the Plan notifies the claimant of the special circumstances requiring the need for the extension by the 60th day after receiving the appeal, and the Plan notifies the claimant of the date by which the Plan expects to make a decision. If an appeal is missing any information from the claimant that is needed to decide the appeal, the Plan shall notify the claimant of the missing information and grant the claimant a reasonable period to provide the missing information. If the missing information is not timely provided, the Plan shall deny the claim. If the missing information is timely provided, the 60-day deadline (or 120-day deadline with the extension) for the Plan to make its decision shall be increased by the length of time between the date the Plan requested the missing information and the date the Plan received it. | ||
(j) | Notification of Decision . The Plan shall provide the claimant with written notification of the Plans appellate decision (positive or adverse). The notification of any adverse or partially adverse decision shall include a statement of the reason(s) for the decision; reference to the plan provision(s) on which the decision was based; a description of the procedures and deadlines for a second appeal, if any; a description of the right to obtain information about the second-appeal procedures; a statement of the claimants right to sue; and a statement that the claimant is entitled to receive, free of charge and upon request, reasonable access to and copies of all documents, records, and other information relevant to the claim. | ||
(k) | Limitations on Bringing Actions in Court . Once an appellate decision that is adverse or partially adverse to the claimant has been made, the claimant may file suit in court only if he does so by the earlier of the following dates: (i) the one-year anniversary of the date of an appellate decision made on or before a Change of Control or the three-year anniversary of the date of an appellate decision made after a Change of Control, or (ii) the date on which the statute of limitations for such claim expires. |
11.05 | Disposition of Unclaimed Distributions | |
It is the affirmative duty of each Participant to inform the Plan of, and to keep on file with the Plan, his current mailing address and the mailing address of his Spouse and any Beneficiaries. If a Participant fails to inform the Plan of these current mailing addresses, neither the Plan nor the Company is responsible for any late payment of benefits or loss of benefits. The Plan, the Committee, and the Company have no duty to search for a missing individual until the date of a Change of Control, at which point the Company has the duty to undertake reasonable measures to search for the proper recipient of any payment under the Plan that is scheduled to be paid on or after the date of the Change of Control. If the missing individual is not found within a year after a payment should have been made to him, all his benefits will be forfeited. If the missing individual later is found, the exact number of Stock Units forfeited will be restored to the Account as soon as administratively convenient, without any adjustment for dividends paid in the interim. | ||
11.06 | Distributions due Infants or Incompetents | |
If any person entitled to a distribution under the Plan is an infant, or if the Committee determines that any such person is incompetent by reason of physical or mental disability, whether or not legally adjudicated an incompetent, the Committee shall have the power to cause the distributions becoming due to such person to be made to another for his benefit, without responsibility of the Committee to see to the application of such distributions. Distributions made pursuant to such power shall operate as a complete discharge of the Company, the Trustee, if any, and the Committee. |
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11.07 | Addresses | |
Any notice, form, or election required or permitted to be given under the Plan shall be in writing and shall be given by first class mail, by Federal Express, UPS, or other carrier, by fax or other electronic means, or by personal delivery to the appropriate party, addressed: |
(a) | If to the Company, to Apache Corporation at its principal place of business at 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400 (Attention: Corporate Secretary) or at such other address as may have been furnished in writing by the Company to a Participant; or | ||
(b) | If to a Participant, at the address the Participant has furnished to the Company in writing. | ||
(c) | If to a Beneficiary or former Spouse, at the address the Participant has furnished to the Company in writing, or at the address the Beneficiary or former Spouse subsequently provided in writing. |
ATTEST:
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APACHE CORPORATION | |||
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||||
/s/ Cheri L. Peper
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/s/ Margery M. Harris | |||
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||||
Cheri L. Peper
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Margery M. Harris | |||
Corporate Secretary
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Vice President, Human Resources |
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7
ATTEST: | APACHE CORPORATION | |||||||||
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By:
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/s/ Cheri L. Peper | By: | /s/ Margery M. Harris | |||||||
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Cheri L. Peper | Margery M. Harris | ||||||||
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Corporate Secretary | Vice President, Human Resources |
8
(1) | Interest expense related to the provisions for uncertainty in income taxes under ASC Topic 740, Income Taxes is not included in the computation of ratios of earnings to fixed charges and combined fixed charges and preferred stock dividends. | |
(2) | Represents the portion of rental expense assumed to be attributable to interest factors of related rental obligations determined at interest rates appropriate for the period during which the rental obligations were incurred. Approximately 32 to 34 percent applies to rental payments for all periods presented. | |
(3) | The Company does not receive a tax benefit for its preferred stock dividends. This amount represents the pre-tax earnings that would be required to cover its preferred stock dividends. |
1. | I have reviewed this quarterly report on Form 10-Q of Apache Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ G. Steven Farris
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||
Chairman and Chief Executive Officer
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||
(principal executive officer)
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1. | I have reviewed this quarterly report on Form 10-Q of Apache Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Roger B. Plank
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President (principal financial officer)
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/s/ G. Steven Farris | ||||
By:
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G. Steven Farris | |||
Title:
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Chairman and Chief Executive Officer
(principal executive officer) |
|||
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||||
Date:
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August 6, 2010 |
/s/ Roger B. Plank | ||||
By:
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Roger B. Plank | |||
Title:
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President (principal financial officer) | |||
|
||||
Date:
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August 6, 2010 |