APACHE CORP (Form: 10-Q, Received: 11/08/2013 14:45:58)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2013

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

For the transition period from to

Commission File Number 1-4300

LOGO

APACHE CORPORATION

(exact name of registrant as specified in its charter)

Delaware

41-0747868

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

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

(Address of principal executive offices)

Registrant’s Telephone Number, Including Area Code: (713) 296-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Number of shares of registrant’s common stock outstanding as of October 31, 2013. 399,236,209

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)


	For the Quarter Ended September 30,					For the Nine Months Ended September 30,
	2013			2012		2013			2012
	(In millions, except per common share data)
REVENUES AND OTHER:
Oil and gas production revenues	$	4,409		$	4,141	$	12,674		$	12,554
Derivative instrument gains (losses), net		(422	)		—		(275	)		—
Other		32			38		79			133

		4,019			4,179		12,478			12,687

OPERATING EXPENSES:
Depreciation, depletion and amortization:
Oil and gas property and equipment
Recurring		1,330			1,206		3,906			3,535
Additional		743			729		808			1,898
Other assets		99			94		297			268
Asset retirement obligation accretion		66			60		196			172
Lease operating expenses		819			801		2,419			2,178
Gathering and transportation		83			86		237			235
Taxes other than income		185			167		610			627
General and administrative		127			124		376			384
Merger, acquisitions & transition		—			7		—			29
Financing costs, net		51			40		155			125

		3,503			3,314		9,004			9,451

INCOME BEFORE INCOME TAXES		516			865		3,474			3,236
Current income tax provision		410			544		1,191			1,729
Deferred income tax provision (benefit)		(200	)		141		225			174

NET INCOME		306			180		2,058			1,333
Preferred stock dividends		6			19		44			57

INCOME ATTRIBUTABLE TO COMMON STOCK	$	300		$	161	$	2,014		$	1,276

NET INCOME PER COMMON SHARE:
Basic	$	0.75		$	0.41	$	5.11		$	3.29
Diluted	$	0.75		$	0.41	$	5.06		$	3.27
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		399			391		394			388
Diluted		401			393		407			390
DIVIDENDS DECLARED PER COMMON SHARE	$	0.20		$	0.17	$	0.60		$	0.51

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

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
NET INCOME	$	306		$	180		$	2,058		$	1,333
OTHER COMPREHENSIVE INCOME (LOSS):
Commodity cash flow hedge activity, net of tax:
Reclassification of (gain) loss on settled derivative instruments		(1	)		(59	)		13			(151	)
Change in fair value of derivative instruments		(5	)		(41	)		(6	)		71
Derivative hedge ineffectiveness reclassified into earnings		1			—			1			—

		(5	)		(100	)		8			(80	)

COMPREHENSIVE INCOME		301			80			2,066			1,253
Preferred stock dividends		6			19			44			57

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCK	$	295		$	61		$	2,022		$	1,196

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

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)


	For the Nine Months Ended September 30,
	2013			2012
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,058		$	1,333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization		5,011			5,701
Asset retirement obligation accretion		196			172
Provision for deferred income taxes		225			174
Other		187			62
Changes in operating assets and liabilities:
Receivables		(27	)		128
Inventories		(40	)		29
Drilling advances		117			(334	)
Deferred charges and other		(192	)		(200	)
Accounts payable		190			168
Accrued expenses		(394	)		(814	)
Deferred credits and noncurrent liabilities		27			3

NET CASH PROVIDED BY OPERATING ACTIVITIES		7,358			6,422

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(7,498	)		(6,387	)
Additions to gas gathering, transmission, and processing facilities		(859	)		(586	)
Proceeds from divestiture of Gulf of Mexico Shelf properties		3,594			—
Proceeds from Kitimat LNG transaction, net		396			—
Proceeds from sale of other oil and gas properties		199			26
Acquisition of Cordillera Energy Partners III, LLC		—			(2,666	)
Acquisition of Yara Pilbara Holdings Pty Limited		—			(439	)
Acquisitions, other		(156	)		(122	)
Other, net		(10	)		(386	)

NET CASH USED IN INVESTING ACTIVITIES		(4,334	)		(10,560	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net		(516	)		1,827
Fixed rate debt borrowings		—			2,991
Payments on fixed rate debt		(900	)		(400	)
Dividends paid		(280	)		(246	)
Treasury stock activity, net		(249	)		2
Other		12			(13	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(1,933	)		4,161

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,091			23
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		160			295

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,251		$	318

SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	185		$	130
Income taxes paid, net of refunds		1,344			1,876

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

APACHE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)


	September 30, 2013			December 31, 2012
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,251		$	160
Receivables, net of allowance		3,086			3,086
Inventories		889			908
Drilling advances		452			584
Derivative instruments		3			31
Prepaid assets and other		335			193

		6,016			4,962

PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full-cost accounting:
Proved properties		81,111			78,383
Unproved properties and properties under development, not being amortized		8,328			8,754
Gathering, transmission and processing facilities		6,791			5,955
Other		1,071			1,055

		97,301			94,147
Less: Accumulated depreciation, depletion and amortization		(45,839	)		(40,867	)

		51,462			53,280

OTHER ASSETS:
Goodwill		1,369			1,289
Deferred charges and other		1,392			1,206

	$	60,239		$	60,737

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,345		$	1,092
Current debt		57			990
Current asset retirement obligation		139			478
Derivative instruments		205			116
Other current liabilities		2,777			2,860

		4,523			5,536

LONG-TERM DEBT		10,868			11,355

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		8,297			8,024
Asset retirement obligation		3,123			4,100
Other		447			391

		11,867			12,515

COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value, 10,000,000 shares authorized, 6% Cumulative Mandatory Convertible, Series D, $1,000 per share liquidation preference, 1,265,000 shares converted in 2013, 1,265,000 shares issued and outstanding in 2012		—			1,227
Common stock, $0.625 par, 860,000,000 shares authorized, 407,897,495 and 392,712,245 shares issued, respectively		255			245
Paid-in capital		11,191			9,859
Retained earnings		21,938			20,161
Treasury stock, at cost, 3,977,524 and 1,071,475 shares, respectively		(280	)		(30	)
Accumulated other comprehensive loss		(123	)		(131	)

		32,981			31,331

	$	60,239		$	60,737

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

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(Unaudited)


	Series D Preferred Stock			Common Stock		Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	(In millions)
BALANCE AT DECEMBER 31, 2011	$	1,227		$	241	$	9,066		$	18,500		$	(32	)	$	(9	)	$	28,993
Net income		—			—		—			1,333			—			—			1,333
Commodity hedges, net of tax		—			—		—			—			—			(80	)		(80	)
Dividends:
Preferred		—			—		—			(57	)		—			—			(57	)
Common ($0.51 per share)		—			—		—			(198	)		—			—			(198	)
Common shares issued		—			3		598			—			—			—			601
Common stock activity, net		—			1		(12	)		—			—			—			(11	)
Treasury stock activity, net		—			—		1			—			2			—			3
Compensation expense		—			—		130			—			—			—			130

BALANCE AT SEPTEMBER 30, 2012	$	1,227		$	245	$	9,783		$	19,578		$	(30	)	$	(89	)	$	30,714

BALANCE AT DECEMBER 31, 2012	$	1,227		$	245	$	9,859		$	20,161		$	(30	)	$	(131	)	$	31,331
Net income		—			—		—			2,058			—			—			2,058
Commodity hedges, net of tax		—			—		—			—			—			8			8
Dividends:
Preferred		—			—		—			(44	)		—			—			(44	)
Common ($0.60 per share)		—			—		—			(237	)		—			—			(237	)
Common shares issued		—			9		1,218			—			—			—			1,227
Common stock activity, net		—			1		(12	)		—			—			—			(11	)
Treasury stock activity, net		—			—		(1	)		—			(250	)		—			(251	)
Conversion of Series D preferred stock		(1,227	)		—		—			—			—			—			(1,227	)
Compensation expense		—			—		135			—			—			—			135
Other		—			—		(8	)		—			—			—			(8	)

BALANCE AT SEPTEMBER 30, 2013	$	—		$	255	$	11,191		$	21,938		$	(280	)	$	(123	)	$	32,981

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

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These financial statements have been prepared by Apache Corporation (Apache or the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which contains a summary of the Company’s significant accounting policies and other disclosures. Additionally, the Company’s financial statements for prior periods may include reclassifications that were made to conform to the current-period presentation.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of September 30, 2013, Apache’s significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies of its consolidated financial statements contained in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the fair value determination of acquired assets and liabilities, the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom, assessing asset retirement obligations, and the estimate of income taxes. Actual results could differ from those estimates.

Oil and Gas Property

The Company follows the full-cost method of accounting for its oil and gas properties. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, including salaries, benefits and other internal costs directly identified with these activities, and oil and gas property acquisitions are capitalized. The net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for designated cash flow hedges. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements.

Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as “Additional depreciation, depletion and amortization” (DD&A) in the accompanying statement of consolidated operations. Such limitations are imposed separately on a country-by-country basis and are tested quarterly. For a discussion of the calculation of estimated future net cash flows, please refer to Note 14—Supplemental Oil and Gas Disclosures in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

In the third quarter of 2013, the Company recorded $552 million ($356 million net of tax) and $116 million ($76 million net of tax) in non-cash write-downs of the carrying value of the Company’s U.S. and Argentinian proved oil and gas properties, respectively. Additionally, the Company recorded a write-down of its Argentinian proved property balances of $65 million ($42 million net of tax) in the first quarter of 2013. Excluding the effects of cash flow hedges in calculating the ceiling limitation, the write-down amounts would not have been materially different. Separately, in the third quarter of 2013 the Company exited operations in Kenya and recorded $75 million, ($46 million net of tax), to additional DD&A associated with the impairment of the entire carrying value of the Kenyan oil and gas property leases.

For the 2012 quarters ended March 31, June 30, and September 30, the Company recorded write-downs of its Canadian proved property balances of $521 million ($390 million net of tax), $641 million ($480 million net of tax), and $721 million ($539 million net of tax), respectively.

New Pronouncements Issued But Not Yet Adopted

In July 2013, the FASB issued ASU No. 2013-11, which requires entities to present unrecognized tax benefits as a decrease in a net operating loss, similar tax loss, or tax credit carryforward if certain criteria are met. The guidance will eliminate the diversity in practice in the presentation of unrecognized tax benefits but will not alter the way in which entities assess deferred tax assets for realizability. ASU No. 2013-11 is effective for annual and interim reporting periods beginning after December 15, 2013. The Company is currently evaluating the impact of adopting this amendment on its consolidated financial statements, and any changes will be applied prospectively.

2. ACQUISITIONS AND DIVESTITURES

2013 Activity

Sinopec Partnership

On August 29, 2013, Apache announced a global strategic partnership with Sinopec International Petroleum Exploration and Production Corporation (Sinopec) to pursue joint upstream oil and gas projects. As the first step in this partnership, Apache will receive $3.1 billion in cash, subject to customary closing adjustments, in exchange for Sinopec gaining a 33 percent minority participation in Apache’s Egypt oil and gas business. Apache will continue to operate its Egypt upstream oil and gas business. The Egypt partnership is subject to customary governmental approvals and is expected to close during the fourth quarter of 2013, with an effective date of January 1, 2013.

Gulf of Mexico Shelf

On September 30, 2013, Apache completed the sale of its Gulf of Mexico Shelf operations and properties to Fieldwood Energy LLC (Fieldwood), an affiliate of Riverstone Holdings. Under the terms of the agreement, Apache received consideration of $3.6 billion in cash proceeds and $1.5 billion of discounted asset abandonment liabilities assumed by Fieldwood. Additionally, Apache will receive approximately $200 million associated with pending preferential right settlements expected to close in the fourth quarter. Apache has retained a 50 percent ownership interest in all exploration blocks and in horizons below existing production in developed blocks. The effective date of the agreement is July 1, 2013.

Apache’s net book value of oil and gas properties was reduced by approximately $4.3 billion of proved property costs and $632 million of unproved property costs as a result of the transaction.

Kitimat LNG Project

In February 2013, Apache completed a transaction with Chevron Canada Limited (Chevron Canada) to build and operate the Kitimat LNG project and develop shale gas resources at the Liard and Horn River basins in British Columbia. Chevron Canada and Apache Canada are now each a 50 percent owner of the Kitimat LNG plant, the Pacific Trail Pipelines Limited Partnership (PTP), and 644,000 gross undeveloped acres in the Horn River and Liard basins. As part of the transaction, Apache Canada increased its ownership in the LNG plant and PTP pipeline from 40 percent, sold portions of its existing interests in Horn River and Liard, and purchased other additional interests in Horn River. Chevron Canada will operate the LNG plant and pipeline while Apache Canada will continue to operate the upstream assets. Apache’s net proceeds from the transaction were $396 million after post-closing adjustments.

Other Activity

During the first nine months of 2013 Apache completed $199 million of other oil and gas property sales and $156 million of oil and gas property acquisitions.

2012 Activity

Cordillera Energy Partners III, LLC

On April 30, 2012, Apache completed the acquisition of Cordillera Energy Partners III, LLC (Cordillera), a privately held exploration and production company, in a stock and cash transaction. Cordillera’s properties included approximately 312,000 net acres in the Granite Wash, Tonkawa, Cleveland, and Marmaton plays in western Oklahoma and the Texas Panhandle.

Apache issued 6,272,667 shares of common stock and paid approximately $2.7 billion of cash to the sellers as consideration for the transaction. The transaction was accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes the final estimates of the assets acquired and liabilities assumed in the acquisition.


	(In millions)
Current assets	$	39
Proved properties		1,040
Unproved properties		2,299
Gathering, transmission, and processing facilities		1
Goodwill ⁽¹⁾		173
Deferred tax asset		64

Total assets acquired	$	3,616

Current liabilities		88
Deferred income tax liabilities		237
Other long-term obligations		5

Total liabilities assumed	$	330

Net assets acquired	$	3,286

⁽¹⁾	Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from assets acquired that could not be individually identified and separately recognized. Goodwill is not deductible for tax purposes.

Yara Pilbara Holdings Pty Limited

On January 31, 2012, a subsidiary of Apache Energy Limited completed the acquisition of a 49 percent interest in Yara Pilbara Holdings Pty Limited (YPHPL, formerly Burrup Holdings Limited) for $439 million, including working capital adjustments. The transaction was funded with debt. Yara Australia Pty Ltd (Yara) owns the remaining 51 percent of YPHPL and operates the plant. The investment in YPHPL is accounted for under the equity method of accounting, with the balance recorded as a component of “Deferred charges and other” in Apache’s consolidated balance sheet and results of operations recorded as a component of “Other” under “Revenues and Other” in the Company’s statement of consolidated operations.

3. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Objectives and Strategies

The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production. Apache manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production. The Company utilizes various types of derivative financial instruments, including swaps and options, to manage fluctuations in cash flows resulting from changes in commodity prices.

Counterparty Risk

The use of derivative instruments exposes the Company to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments. To reduce the concentration of exposure to any individual counterparty, Apache utilizes a diversified group of investment-grade rated counterparties, primarily financial institutions, for its derivative transactions. As of September 30, 2013, Apache had derivative positions with 17 counterparties. The Company monitors counterparty creditworthiness on an ongoing basis; however, it cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, the Company may be limited in its ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, Apache may not realize the benefit of some of its derivative instruments resulting from lower commodity prices.

The Company executes commodity derivative transactions under master agreements that have netting provisions that provide for offsetting payables against receivables. In general, if a party to a derivative transaction incurs a material deterioration in its credit ratings, as defined in the applicable agreement, the other party has the right to demand the posting of collateral, demand a transfer, or terminate the arrangement. The Company’s net derivative liability position at September 30, 2013, represents the aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position. The Company has not provided any collateral to any of its counterparties as of September 30, 2013.

Derivative Instruments

As of September 30, 2013, Apache had the following open crude oil derivative positions:


		Fixed-Price Swaps				Collars
Production Period	Settlement Index	Mbbls		Weighted Average Fixed Price		Mbbls		Weighted Average Floor Price		Weighted Average Ceiling Price
2013 ⁽¹⁾	NYMEX WTI		222	$	77.66		368	$	80.00	$	103.64
2013 ⁽¹⁾	Dated Brent		—		—		828		86.39		117.93
2013	NYMEX WTI		5,520		90.85		—		—		—
2013	Dated Brent		5,978		106.47		—		—		—
2014 ⁽¹⁾	NYMEX WTI		76		74.50		—		—		—
2014	NYMEX WTI		22,813		90.83		—		—		—
2014	Dated Brent		22,812		100.05		—		—		—

⁽¹⁾	For 2013 and 2014, these fixed-price swaps and collars have been designated as cash flow hedges with unrealized gains and losses deferred in accumulated other comprehensive loss.

As of September 30, 2013, Apache had the following open natural gas derivative positions:


		Fixed-Price Swaps
Production Period	Settlement Index	MMBtu (in 000’s)		Weighted Average Fixed Price
2013 ⁽¹⁾	NYMEX Henry Hub		2,517	$	6.71
2013	NYMEX Henry Hub		22,080		4.20
2014 ⁽¹⁾	NYMEX Henry Hub		1,295		6.72

⁽¹⁾	For 2013 and 2014, these fixed-price swaps have been designated as cash flow hedges with unrealized gains and losses deferred in accumulated other comprehensive loss.

Fair Value Measurements

Apache’s commodity derivative instruments consist of variable-to-fixed price commodity swaps and options. The fair values of the Company’s derivatives are not actively quoted in the open market. The Company uses a market approach to estimate the fair values of its derivative instruments, utilizing commodity futures price strips for the underlying commodities provided by a reputable third party.

The following table presents the Company’s derivative assets and liabilities measured at fair value on a recurring basis:


	Fair Value Measurements Using
	Quoted Price in Active Markets (Level 1)		Significant Other Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Netting ⁽¹⁾			Carrying Amount
	(In millions)
September 30, 2013
Assets:
Derivatives designated as cash flow hedges	$	—	$	11	$	—	$	11
Derivatives not designated as cash flow hedges		—		14		—		14

Total Derivative assets	$	—	$	25	$	—	$	25	$	(22	)	$	3
Liabilities:
Derivatives designated as cash flow hedges	$	—	$	8	$	—	$	8
Derivatives not designated as cash flow hedges		—		230		—		230

Total Derivative liabilities	$	—	$	238	$	—	$	238	$	(22	)	$	216
December 31, 2012
Assets:
Derivatives designated as cash flow hedges	$	—	$	48	$	—	$	48	$	(15	)	$	33
Liabilities:
Derivatives designated as cash flow hedges	$	—	$	51	$	—	$	51
Derivatives not designated as cash flow hedges		—		80		—		80

Total Derivative liabilities	$	—	$	131	$	—	$	131	$	(15	)	$	116

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

Derivative Assets and Liabilities Recorded in the Consolidated Balance Sheet

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


	September 30, 2013		December 31, 2012
	(In millions)
Current Assets: Derivative instruments	$	3	$	31
Other Assets: Deferred charges and other		—		2

Total Assets	$	3	$	33

Current Liabilities: Derivative instruments	$	205	$	116
Noncurrent Liabilities: Other		11		—

Total Liabilities	$	216	$	116

Derivative Activity Recorded in the Statement of Consolidated Operations

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


		For the Quarter Ended					For the Nine Months Ended
	Gain (Loss) on Derivatives	September 30,					September 30,
	Recognized in Income	2013			2012		2013			2012
		(In millions)
Gain (loss) on cash flow hedges reclassified from accumulated other comprehensive loss	Oil and Gas Production Revenues	$	2		$	83	$	(18	)	$	202
Gain (loss) for ineffectiveness on cash flow hedges	Revenues and other: Other	$	(1	)	$	1	$	(1	)	$	1
Gain (loss) on derivatives not designated as cash flow hedges	Derivative instrument gains (losses), net	$	(422	)	$	—	$	(275	)	$	—

Unrealized gains and losses for derivative activity recorded in the statement of consolidated operations is reflected in the statement of consolidated cash flows as a component of “Other” in “Adjustments to reconcile net income to net cash provided by operating activities.”

Derivative Activity in Accumulated Other Comprehensive Loss

A reconciliation of the components of accumulated other comprehensive loss in the statement of consolidated shareholders’ equity related to Apache’s cash flow hedges is presented in the table below. Derivative activity represents all of the reclassifications out of accumulated other comprehensive loss to income for the periods presented.


	For the Nine Months Ended September 30,
	2013						2012
	Before tax			After tax			Before tax			After tax
	(In millions)
Unrealized gain (loss) on derivatives at beginning of period	$	(10	)	$	(6	)	$	145		$	113
Realized amounts reclassified into earnings		18			13			(202	)		(151	)
Net change in derivative fair value		(7	)		(6	)		97			71
Ineffectiveness reclassified into earnings		1			1			(1	)		—

Unrealized gain on derivatives at end of period	$	2		$	2		$	39		$	33

Gains and losses on existing hedges will be realized in future earnings through 2014, in the same period as the related sales of natural gas and crude oil production occur. Included in accumulated other comprehensive loss as of September 30, 2013, is a net gain of approximately $2 million ($1 million after tax) that applies to the next 12 months; however, estimated and actual amounts are likely to vary materially as a result of changes in market conditions.

4. OTHER CURRENT LIABILITIES

The following table provides detail of our other current liabilities:


	September 30, 2013		December 31, 2012
	(In millions)
Accrued operating expenses	$	248	$	211
Accrued exploration and development		1,745		1,792
Accrued compensation and benefits		178		198
Accrued interest		133		160
Accrued income taxes		289		297
Other		184		202

Total Other current liabilities	$	2,777	$	2,860

5. ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the nine-month period ended September 30, 2013:


	(In millions)
Asset retirement obligation at December 31, 2012	$	4,578
Liabilities incurred		383
Liabilities acquired		53
Liabilities divested		(1,563	)
Liabilities settled		(396	)
Accretion expense		196
Revisions in estimated liabilities		11

Asset retirement obligation at September 30, 2013		3,262
Less current portion		(139	)

Asset retirement obligation, long-term	$	3,123

6. DEBT AND FINANCING COSTS

The following table presents the carrying amounts and estimated fair values of the Company’s outstanding debt:


	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Uncommitted credit lines	$	57	$	57	$	91	$	91
Commercial paper		—		—		489		489
Notes and debentures		10,868		11,258		11,765		13,340

Total Debt	$	10,925	$	11,315	$	12,345	$	13,920

The Company’s debt is recorded at the carrying amount, net of unamortized discount, on its consolidated balance sheet. The carrying amount of the Company’s commercial paper and uncommitted credit facilities and overdraft lines approximates fair value because the interest rates are variable and reflective of market rates. Apache uses a market approach to determine the fair value of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).

During 2013, Apache repaid the $500 million aggregate principal amount of 5.25-percent notes that matured on April 15, 2013 and the $400 million aggregate principal amount of 6.00-percent notes that matured on September 15, 2013 by borrowing under our commercial paper program.

The Company has available a $3.0 billion commercial paper program, which generally enables Apache to borrow funds for up to 270 days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under our committed credit facilities. During the third quarter of 2013, the Company used proceeds from divestitures to repay all outstanding commercial paper. As of December 31, 2012, the Company had $489 million in commercial paper outstanding.

As of September 30, 2013, the Company had unsecured committed revolving credit facilities totaling $3.3 billion, of which $1.0 billion matures in August 2016 and $2.3 billion matures in June 2017. The facilities consist of a $1.7 billion facility and $1.0 billion facility for the U.S., a $300 million facility for Australia, and a $300 million facility for Canada. As of September 30, 2013, available borrowing capacity under the Company’s credit facilities was $3.3 billion. The Company’s committed credit facilities are used to support Apache’s commercial paper program.

As of September 30, 2013 and December 31, 2012, current debt included $57 million and $91 million, respectively, borrowed on uncommitted credit facilities and overdraft lines.

Financing Costs, Net


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
Interest expense	$	146		$	132		$	437		$	371
Amortization of deferred loan costs		2			2			6			5
Capitalized interest		(93	)		(90	)		(276	)		(241	)
Interest income		(4	)		(4	)		(12	)		(10	)

Financing costs, net	$	51		$	40		$	155		$	125

7. INCOME TAXES

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. Accordingly, the Company recorded the income tax impact of a $552 million non-cash write-down and a $75 million non-cash impairment on its U.S. and Kenyan oil and gas properties, respectively, as discrete items for the three months ended September 30, 2013. The Company also recorded the income tax impact of $65 million and $116 million non-cash write-downs of its Argentinian proved oil and gas properties as discrete items in the first and third quarters of 2013, respectively. In 2012, the Company recorded the income tax impact of $521 million, $641 million, and $721 million non-cash write-downs of its Canadian proved oil and gas properties as discrete items in the first, second, and third quarters, respectively.

The Company recorded increases of $48 million and $10 million in the Argentina and Canada valuation allowances, respectively, during the third quarter of 2013 for deferred tax assets the Company does not expect to realize. During the first nine months of 2013, the Company recorded increases in the valuation allowances in Argentina and Canada totaling $66 million and $38 million, respectively.

Apache and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various state and foreign jurisdictions. The Company’s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority. The Company is under audit with the Internal Revenue Service (IRS) for the 2011 and 2012 tax years. The Company is also under audit in various states and in most of the Company’s foreign jurisdictions as part of its normal course of business.

8. COMMITMENTS AND CONTINGENCIES

Legal Matters

Apache is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. The Company has an accrued liability of approximately $8 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. Apache’s estimates are based on information known about the matters and its experience in contesting, litigating, and settling similar matters. Although actual amounts could differ from management’s estimate, none of the actions are believed by management to involve future amounts that would be material to Apache’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that Apache believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and a range of potential exposure, unless an estimate cannot be made at this time. It is management’s opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

Argentine Environmental Claims

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, in 2006 the Company acquired a subsidiary of Pioneer Natural Resources in Argentina (PNRA) that is involved in various administrative proceedings with environmental authorities in the Neuquén Province relating to permits for and discharges from operations in that province. In addition, PNRA was named in a suit initiated against oil companies operating in the Neuquén basin entitled Asociación de Superficiarios de la Patagonia v. YPF S.A., et. al ., originally filed on August 21, 2003, in the Argentine National Supreme Court of Justice relating to various environmental and remediation claims. The plaintiff in that case, known as ASSUPA, in 2012 asserted similar lawsuits and claims against numerous oil and gas producers relating to other geographic areas of Argentina, including claims against a Company subsidiary relating to the Austral Basin. While it is possible that one or more of the Company’s subsidiaries may incur liabilities related to these claims, no reasonable prediction can be made as the Company’s subsidiaries’ exposure related to these lawsuits is not currently determinable. No other material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

U.S. Royalty Litigation

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, on August 20, 2012, in Foster v. Apache Corporation , Civil Action No. CIV-10-0573-HE, in the United States District Court for the Western District of Oklahoma, the District Court denied plaintiff’s motion for class certification. The plaintiff filed a motion for reconsideration, which was also denied, and petitioned the United States Court of Appeals for the Tenth Circuit to accept an appeal of the District Court’s ruling denying class certification. The plaintiff withdrew the petition to appeal following decisions on July 8, 2013, by the United States Court of Appeals for the Tenth Circuit to vacate District Court class certification orders in two unrelated lawsuits – Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc. , No. 12-3176, and Chieftain Royalty Company v. XTO Energy, Inc. , No. 12-7047. No other material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

Louisiana Restoration

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, numerous surface owners have filed claims or sent demand letters to various oil and gas companies, including Apache, claiming that, under either expressed or implied lease terms or Louisiana law, they are liable for damage measured by the cost of restoration of leased premises to their original condition as well as damages for contamination and cleanup. No material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

On July 24, 2013, a lawsuit was filed captioned Board of Commissioners of the Southeast Louisiana Flood Protection Authority – East v. Tennessee Gas Pipeline Company et al. , Case No. 2013-6911 in the Civil District Court for the Parish of Orleans, State of Louisiana, in which plaintiff on behalf of itself and as the board governing the levee districts of Orleans, Lake Borgne Basin, and East Jefferson alleges that Louisiana coastal lands have been damaged as a result of oil and gas industry activity, including a network of canals for access and pipelines. The plaintiff seeks damages and injunctive relief in the form of abatement and restoration based on claims of negligence, strict liability, natural servitude of drain, public nuisance, private nuisance, and breach of contract – third party beneficiary. Apache has been indiscriminately named as one of approximately 100 defendants in the lawsuit. Defendant Chevron U.S.A., Inc. filed a notice to remove the case to the United States District Court for the Eastern District of Louisiana, civil action No. 13-5410. The overall exposure related to this lawsuit is not currently determinable. While an adverse judgment against Apache might be possible, Apache intends to vigorously defend the case.

Hurricane-Related Litigation

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, on May 27, 2011, in the case styled Comer et al. v. Murphy Oil USA, Inc. et al. , Case No. 1:11-cv-220 HS0-JMR, in the United States District Court for the Southern District of Mississippi, the District Court granted defendants’ motion to dismiss plaintiffs’ claims, and plaintiffs appealed the decision to the United States Court of Appeals for the Fifth Circuit. On May 14, 2013, the United States Court of Appeals for the Fifth Circuit affirmed the District Court’s decision in case No. 12-60291. The deadline expired for the plaintiffs to seek a review by the United States Supreme Court, and the matter is resolved. No other material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

Australia Gas Pipeline Force Majeure

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, in 2008 Company subsidiaries reported a pipeline explosion that interrupted deliveries of natural gas in Australia to customers under various long-term contracts. No material change in the status of these matters has occurred since the filing of Apache’s most recent Annual Report on Form 10-K for its 2012 fiscal year except as follows:

•

In the case captioned Alcoa of Australia Limited v. Apache Energy Limited, Apache Northwest Pty Ltd, Tap (Harriet) Pty Ltd, and Kufpec Australia Pty Ltd , Civ. 1481 of 2011, in the Supreme Court of Western Australia, on June 20, 2012, the Supreme Court struck out Alcoa’s claim that the liquidated damages provisions under two long-term contracts are unenforceable as a penalty and also struck out Alcoa’s claim for damages for breach of statutory duty. On September 17, 2013, the Western Australia Court of Appeal dismissed the Company subsidiaries’ appeal concerning Alcoa’s remaining tort claim for economic loss. On October 15, 2013, the Company subsidiaries applied to the High Court of Australia for leave to appeal. The applications for leave to appeal are pending. If the High Court does not grant leave to appeal at this time, all of the Company subsidiaries’ defenses remain intact for further proceedings at the trial court level.

•

In the case captioned Burrup Fertilisers Pty Ltd v. Apache Corporation, Apache Energy Limited, and Apache Northwest Pty Ltd, Cause No. 2009-79834, in the District Court of Harris County, Texas, on March 22, 2013, Burrup Fertilisers agreed to dismiss its Texas lawsuit based on Apache Corporation’s motion to dismiss on the ground of forum non conveniens . Accordingly, the District Court entered an agreed order dismissing Burrup Fertilisers’ Texas lawsuit on the ground of forum non conveniens . By its terms, the order of dismissal does not prevent Burrup Fertilisers from re-filing its lawsuit in the civil courts of Western Australia.

•

On October 31, 2013, a natural gas customer, Barrick (Plutonic) Limited (“Barrick”), filed a lawsuit captioned Barrick (Plutonic) Limited v. Apache Energy Limited, Apache Northwest Pty Ltd, Harriet (Onyx) Pty Ltd, and Kufpec Australia Pty Ltd , Civ. 2656 of 2013, in the Supreme Court of Western Australia. The lawsuit concerns the interruption of gas deliveries to Barrick under certain gas supply contracts. Barrick asserts tort claims against the Company’s subsidiaries and seeks approximately $19 million USD in general damages, including for alleged lost gold production at the Plutonic mine. The Company’s subsidiaries do not believe that Barrick’s claims have merit and will vigorously pursue their defenses against such claims.

•

As noted in Apache’s most recent Annual Report on Form 10-K for its 2012 fiscal year, other customers have threatened to file suit challenging the declaration of force majeure under their contracts. At least one third party that is not a customer has also threatened to file suit. In the event it is determined that the pipeline explosion was not a force majeure, Company subsidiaries believe that liquidated damages should be the extent of the damages under long-term contracts with such provisions. Approximately 90 percent of the natural gas volumes sold by Company subsidiaries under long-term contracts have liquidated damages provisions. The Company’s subsidiaries’ share of contractual liquidated damages under the long-term contracts with such provisions would not be expected to exceed $50 million AUD exclusive of interest. This is a reduction from the previous estimate of $200 million AUD. No assurance can be given that customers and/or third parties would not assert claims in excess of contractual liquidated damages, and exposure related to such claims is not currently determinable. While an adverse judgment against Company subsidiaries (and the Company, in the case of the Burrup Fertilisers lawsuit) is possible, the Company and Company subsidiaries do not believe any such claims would have merit and plan to vigorously pursue their defenses against any such claims.

Breton Lawsuit

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, on October 29, 2012, plaintiffs filed an amended complaint in Breton Energy, L.L.C. et al. v. Mariner Energy Resources, Inc., et al. , Case 4:11-cv-03561, in the United States District Court for the Southern District of Texas, Houston Division, seeking compensation

from defendants for allegedly depriving plaintiffs of rights to hydrocarbons in a reservoir described by plaintiffs as a common reservoir in West Cameron Blocks 171 and 172 offshore Louisiana in the Gulf of Mexico. On May 28, 2013, the United States District Court for the Southern District of Texas dismissed the plaintiffs’ claims and entered judgment in favor of the defendants. On June 3, 2013, the plaintiffs filed a notice of appeal in the United States Court of Appeals for the Fifth Circuit. The appeal is pending. No other material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

Escheat Audits

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, the State of Delaware, Department of Finance, Division of Revenue (Unclaimed Property), has notified numerous companies, including Apache Corporation, that the State intends to examine its books and records and those of its subsidiaries and related entities to determine compliance with the Delaware Escheat Laws. The review is ongoing, and no material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

Burrup-Related Gas Supply Lawsuits

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, on May 19, 2011, a lawsuit captioned Pankaj Oswal et al. v. Apache Corporation , Cause No. 2011-30302, in the District Court of Harris County, Texas, was filed in which plaintiffs assert claims against the Company under the Australian Trade Practices Act. Following a hearing on March 22, 2013, the District Court on April 5, 2013, granted Apache Corporation’s motion to dismiss on the ground of forum non conveniens and entered an order dismissing the Texas lawsuit. On or about October 11, 2013, a statement of claim captioned Pankaj Oswal v. Apache Corporation , No. WAD 389/2013, in the Federal Court of Australia, District of Western Australia, General Division, was filed in which plaintiff asserts claims against the Company under the Australian Trade Practices Act. The Company does not believe the lawsuit has merit and will vigorously defend against it. No other material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

In the case captioned Radhika Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al. , No. SCI 2011 4653, in the Supreme Court of Victoria, plaintiff has filed an application seeking to amend her statement of claim in order to add parties as defendants to the proceedings, including the Company and certain of its subsidiaries. Similarly, in a companion case captioned Pankaj Oswal v. Australia and New Zealand Banking Group Limited (ANZ) et al. , No. SCI 2012 01995, in the Supreme Court of Victoria, plaintiff has also filed an application seeking to amend his statement of claim in order to add parties as defendants to the proceedings, including the Company and certain of its subsidiaries. Each of the applications is opposed and will be considered by the Supreme Court of Victoria. No other material change in the status of these matters has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

Concerning the action filed by Tap (Harriet) Pty Ltd (Tap) against Burrup Fertilisers Pty Ltd et al., Civ. 2329 of 2009, in the Supreme Court of Western Australia, no material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

Environmental Matters

As of September 30, 2013, the Company had an undiscounted reserve for environmental remediation of approximately $94 million. The Company is not aware of any environmental claims existing as of September 30, 2013, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity. There can be no assurance, however, that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered on the Company’s properties.

As more fully described in Note 8 of the financial statements in Apache’s Annual Report on Form 10-K for its 2012 fiscal year, on May 25, 2011, a panel of the Bureau of Ocean Energy Management (BOEMRE, as it was then known) published a report dated May 23, 2011, and titled “OCS G-2580, Vermilion Block 380 Platform A, Incidents of Noncompliance.” The report concerned the BOEMRE’s investigation of a fire on the Vermillion 380 A platform located in the Gulf of Mexico. Apache currently operates the platform, however, at the time of the incident Mariner Energy was the operator. On April 17, 2013, the Office of Hearings and Appeals, Interior Board of Land Appeals of the United States Department of the Interior, No. IBLA 2012-183, affirmed certain Incidents of Noncompliance issued by the Bureau of Safety and Environmental Enforcement (BSEE) arising out of Mariner Energy’s operation of the Vermilion 380 platform. The Company is considering its options, including but not limited to, whether to appeal this determination. BSEE has referred the matter for a civil penalty review but no civil penalties have been assessed at this time. No other material change in the status of this matter has occurred since the filing of Apache’s Annual Report on Form 10-K for its 2012 fiscal year.

On June 1, 2013, Apache Canada Ltd. discovered a leak of produced water from a below ground pipeline in the area of our Zama Operations in northern Alberta. The pipeline was associated with a produced water disposal well. The spill resulted in approximately 97 thousand barrels of produced water (revised from an initial estimate of 60 thousand barrels) being released to the marsh land environment. The applicable government agencies were immediately notified of the event and the line was shut down. Apache Canada Ltd. is investigating the leak, while conducting clean up and monitoring activities in the affected area and communicating with appropriate parties including regulatory and First Nation representatives. While the exposure related to this incident is not currently determinable, the Company does not expect the economic impact of this incident to have a material effect on the Company’s financial position, results of operations, or liquidity.

9. CAPITAL STOCK

Net Income per Common Share

A reconciliation of the components of basic and diluted net income per common share for the quarters and nine-month periods ended September 30, 2013 and 2012 is presented in the table below.


	For the Quarter Ended September 30,
	2013						2012
	Income		Shares		Per Share		Income		Shares		Per Share
	(In millions, except per share amounts)
Basic:
Income attributable to common stock	$	300		399	$	0.75	$	161		391	$	0.41

Effect of Dilutive Securities:
Stock options and other		—		2				—		2

Diluted:
Income attributable to common stock, including assumed conversions	$	300		401	$	0.75	$	161		393	$	0.41


	For the Nine Months Ended September 30,
	2013						2012
	Income		Shares		Per Share		Income		Shares		Per Share
	(In millions, except per share amounts)
Basic:
Income attributable to common stock	$	2,014		394	$	5.11	$	1,276		388	$	3.29

Effect of Dilutive Securities:
Mandatory Convertible Preferred Stock		44		11				—		—
Stock options and other		—		2				—		2

Diluted:
Income attributable to common stock, including assumed conversions	$	2,058		407	$	5.06	$	1,276		390	$	3.27

The diluted earnings per share calculation excludes options and restricted stock units that were anti-dilutive totaling 5.4 million and 5.1 million for the quarters ending September 30, 2013 and 2012, and 6.0 million and 4.1 million for the nine months ended September 30, 2013 and 2012, respectively. For the quarter ended September 30, 2013, and the quarter and nine months ended September 30, 2012, 4.8 million, 14.3 million, and 14.3 million shares, respectively, related to the assumed conversion of the Mandatory Convertible Preferred Stock were also anti-dilutive.

Common and Preferred Stock Dividends

For the quarter and nine months ended September 30, 2013, Apache paid $78 million and $223 million, respectively, in dividends on its common stock. For the quarter and nine months ended September 30, 2012, Apache paid $67 million and $189 million, respectively. During the first quarter of 2013, Apache’s Board of Directors approved an 18 percent increase for the regular quarterly cash dividend on the Company’s common stock to $0.20 per share. This increase first applied to the dividend on common stock payable on May 22, 2013, to stockholders of record on April 22, 2013.

In each of the first nine months of 2013 and 2012, the Company also paid $57 million in dividends on its Series D Preferred Stock, which was converted to common stock in August 2013.

Stock Repurchase Program

In May 2013, Apache’s Board of Directors authorized the purchase of up to 30 million shares of the Company’s common stock, valued at approximately $2 billion when first announced. Shares may be purchased either in the open market or through privately held negotiated transactions. The Company initiated the buyback program on June 10, 2013, with the repurchase of 2,924,271 shares at an average price of $85.47 during the month of June. Subsequent to the third quarter of 2013, 5,043,713 shares were repurchased at an average price of $88.73. The Company anticipates that further purchases will primarily be made with proceeds from asset dispositions, but the Company is not obligated to acquire any specific number of shares.

Series D Preferred Stock

On July 28, 2010, Apache issued 25.3 million depositary shares, each representing a 1/20th interest in a share of Apache’s 6.00-percent Mandatory Convertible Preferred Stock, Series D (Preferred Share), or 1.265 million Preferred Shares. Upon conversion of the outstanding Preferred Shares on August 1, 2013, 14.4 million Apache common shares were issued.

10. BUSINESS SEGMENT INFORMATION

Apache is engaged in a single line of business. Both domestically and internationally, the Company explores for, develops, and produces natural gas, crude oil and natural gas liquids. At September 30, 2013, the Company had production in six countries: the United States, Canada, Egypt, Australia, the United Kingdom (U.K.) North Sea, and Argentina. Apache also pursues exploration interests in other countries that may, over time, result in reportable discoveries and development opportunities. Financial information for each country is presented below:


	United States		Canada			Egypt		Australia		North Sea		Argentina			Other International			Total
	(In millions)
For the Quarter Ended September 30, 2013
Oil and Gas Production Revenues	$	2,029	$	325		$	1,022	$	279	$	633	$	121		$	—		$	4,409

Operating Income (Loss) ⁽¹⁾	$	310	$	4		$	658	$	117	$	186	$	(115	)	$	(76	)	$	1,084

Other Income (Expense):
Derivative instrument gains (losses), net																			(422	)
Other																			32
General and administrative																			(127	)
Financing costs, net																			(51	)

Income Before Income Taxes																		$	516

For the Nine Months Ended September 30, 2013
Oil and Gas Production Revenues	$	5,543	$	952		$	2,924	$	867	$	2,025	$	363		$	—		$	12,674

Operating Income (Loss) ⁽¹⁾	$	1,607	$	17		$	1,827	$	373	$	634	$	(181	)	$	(76	)	$	4,201

Other Income (Expense):
Derivative instrument gains (losses), net																			(275	)
Other																			79
General and administrative																			(376	)
Financing costs, net																			(155	)

Income Before Income Taxes																		$	3,474

Total Assets	$	29,503	$	7,083		$	7,142	$	7,567	$	7,292	$	1,598		$	54		$	60,239

For the Quarter Ended September 30, 2012
Oil and Gas Production Revenues	$	1,533	$	318		$	1,143	$	397	$	624	$	126		$	—		$	4,141

Operating Income (Loss) ⁽¹⁾	$	495	$	(744	)	$	781	$	231	$	236	$	6		$	(7	)	$	998

Other Income (Expense):
Other																			38
General and administrative																			(124	)
Merger, acquisitions & transition																			(7	)
Financing costs, net																			(40	)

Income Before Income Taxes																		$	865

For the Nine Months Ended September 30, 2012
Oil and Gas Production Revenues	$	4,525	$	966		$	3,403	$	1,211	$	2,060	$	389		$	—		$	12,554

Operating Income (Loss) ⁽¹⁾	$	1,692	$	(1,903	)	$	2,380	$	683	$	752	$	51		$	(14	)	$	3,641

Other Income (Expense):
Other																			133
General and administrative																			(384	)
Merger, acquisitions & transition																			(29	)
Financing costs, net																			(125	)

Income Before Income Taxes																		$	3,236

Total Assets	$	29,786	$	7,349		$	7,208	$	5,876	$	6,581	$	1,823		$	187		$	58,810

⁽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. operating income includes a $552 million non-cash write-down for the quarter and nine months ended September 30, 2013. Argentina’s operating loss for the quarter and first nine months of 2013 includes additional depletion of $116 million and $181 million, respectively, to write-down the carrying value of oil and gas properties. Canada’s operating loss for the third quarter and first nine months of 2012 includes additional depletion of $721 million and $1.9 billion, respectively, to write-down the carrying value of oil and gas properties. Separately, in the third quarter of 2013 the Company exited operations in Kenya and recorded $75 million to additional DD&A associated with the impairment of the carrying value of the Kenyan oil and gas property leases.

11. SUPPLEMENTAL GUARANTOR INFORMATION

In December 1999, Apache Finance Canada Corporation (Apache Finance Canada) issued approximately $300 million of publicly-traded notes due in 2029. In May 2003, Apache Finance Canada issued an additional $350 million of publicly-traded notes due in 2015. Both are fully and unconditionally guaranteed by Apache. The following condensed consolidating financial statements are provided as an alternative to filing separate financial statements.

Apache Finance Canada has been fully consolidated in Apache’s consolidated financial statements. As such, these condensed consolidating financial statements should be read in conjunction with the financial statements of Apache Corporation and subsidiaries and notes thereto, of which this note is an integral part.

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended September 30, 2013


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	1,374		$	—		$	3,035	$	—		$	4,409
Equity in net income (loss) of affiliates		619			(4	)		3		(618	)		—
Derivative instrument gains (losses), net		(422	)		—			—		—			(422	)
Other		2			16			15		(1	)		32

		1,573			12			3,053		(619	)		4,019

OPERATING EXPENSES:
Depreciation, depletion and amortization		1,041			—			1,131		—			2,172
Asset retirement obligation accretion		20			—			46		—			66
Lease operating expenses		254			—			565		—			819
Gathering and transportation		18			—			65		—			83
Taxes other than income		62			—			123		—			185
General and administrative		103			—			25		(1	)		127
Financing costs, net		36			14			1		—			51

		1,534			14			1,956		(1	)		3,503

INCOME (LOSS) BEFORE INCOME TAXES		39			(2	)		1,097		(618	)		516
Provision (benefit) for income taxes		(267	)		(1	)		478		—			210

NET INCOME (LOSS)		306			(1	)		619		(618	)		306
Preferred stock dividends		6			—			—		—			6

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	300		$	(1	)	$	619	$	(618	)	$	300

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK ⁽¹⁾	$	295		$	(1	)	$	619	$	(618	)	$	295

⁽¹⁾	Comprehensive income (loss) activity is recorded on the Apache Corporation entity and consists of derivative instrument reclassifications and changes in fair value as reflected on our Statement of Consolidated Comprehensive Income.

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Quarter Ended September 30, 2012


	Apache Corporation		Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	1,030	$	—		$	3,111	$	—		$	4,141
Equity in net income (loss) of affiliates		41		(271	)		71		159			—
Other		—		18			21		(1	)		38

		1,071		(253	)		3,203		158			4,179

OPERATING EXPENSES:
Depreciation, depletion and amortization		349		—			1,680		—			2,029
Asset retirement obligation accretion		20		—			40		—			60
Lease operating expenses		277		—			524		—			801
Gathering and transportation		15		—			71		—			86
Taxes other than income		52		—			115		—			167
General and administrative		97		—			28		(1	)		124
Merger, acquisitions & transition		7		—			—		—			7
Financing costs, net		20		14			6		—			40

		837		14			2,464		(1	)		3,314

INCOME (LOSS) BEFORE INCOME TAXES		234		(267	)		739		159			865
Provision (benefit) for income taxes		54		(67	)		698		—			685

NET INCOME (LOSS)		180		(200	)		41		159			180
Preferred stock dividends		19		—			—		—			19

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	161	$	(200	)	$	41	$	159		$	161

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK ⁽¹⁾	$	61	$	(200	)	$	41	$	159		$	61

⁽¹⁾	Comprehensive income (loss) activity is recorded on the Apache Corporation entity and consists of derivative instrument reclassifications and changes in fair value as reflected on our Statement of Consolidated Comprehensive Income.

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2013


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	3,775		$	—		$	8,899	$	—		$	12,674
Equity in net income (loss) of affiliates		1,947			(21	)		8		(1,934	)		—
Derivative instrument gains (losses), net		(275	)		—			—		—			(275	)
Other		3			46			34		(4	)		79

		5,450			25			8,941		(1,938	)		12,478

OPERATING EXPENSES:
Depreciation, depletion and amortization		1,912			—			3,099		—			5,011
Asset retirement obligation accretion		60			—			136		—			196
Lease operating expenses		802			—			1,617		—			2,419
Gathering and transportation		49			—			188		—			237
Taxes other than income		163			—			447		—			610
General and administrative		305			—			75		(4	)		376
Financing costs, net		104			42			9		—			155

		3,395			42			5,571		(4	)		9,004

INCOME (LOSS) BEFORE INCOME TAXES		2,055			(17	)		3,370		(1,934	)		3,474
Provision (benefit) for income taxes		(3	)		(4	)		1,423		—			1,416

NET INCOME (LOSS)		2,058			(13	)		1,947		(1,934	)		2,058
Preferred stock dividends		44			—			—		—			44

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	2,014		$	(13	)	$	1,947	$	(1,934	)	$	2,014

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK ⁽¹⁾	$	2,022		$	(13	)	$	1,947	$	(1,934	)	$	2,022

⁽¹⁾	Comprehensive income (loss) activity is recorded on the Apache Corporation entity and consists of derivative instrument reclassifications and changes in fair value as reflected on our Statement of Consolidated Comprehensive Income.

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2012


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)
REVENUES AND OTHER:
Oil and gas production revenues	$	3,070		$	—		$	9,484	$	—		$	12,554
Equity in net income (loss) of affiliates		813			(672	)		176		(317	)		—
Other		(1	)		52			85		(3	)		133

		3,882			(620	)		9,745		(320	)		12,687

OPERATING EXPENSES:
Depreciation, depletion and amortization		997			—			4,704		—			5,701
Asset retirement obligation accretion		57			—			115		—			172
Lease operating expenses		708			—			1,470		—			2,178
Gathering and transportation		38			—			197		—			235
Taxes other than income		146			—			481		—			627
General and administrative		302			—			85		(3	)		384
Merger, acquisitions & transition		23			—			6		—			29
Financing costs, net		71			42			12		—			125

		2,342			42			7,070		(3	)		9,451

INCOME (LOSS) BEFORE INCOME TAXES		1,540			(662	)		2,675		(317	)		3,236
Provision (benefit) for income taxes		207			(166	)		1,862		—			1,903

NET INCOME (LOSS)		1,333			(496	)		813		(317	)		1,333
Preferred stock dividends		57			—			—		—			57

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	1,276		$	(496	)	$	813	$	(317	)	$	1,276

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK ⁽¹⁾	$	1,196		$	(496	)	$	813	$	(317	)	$	1,196

⁽¹⁾	Comprehensive income (loss) activity is recorded on the Apache Corporation entity and consists of derivative instrument reclassifications and changes in fair value as reflected on our Statement of Consolidated Comprehensive Income.

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2013


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations			Consolidated
	(In millions)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	1,434		$	(89	)	$	6,013		$	—		$	7,358

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(2,956	)		—			(4,542	)		—			(7,498	)
Additions to gas gathering, transmission and processing facilities		(85	)		—			(774	)		—			(859	)
Proceeds from divestiture of Shelf		3,594			—			—			—			3,594
Proceeds from Kitimat LNG transaction, net		—			—			396			—			396
Proceeds from sale of other oil and gas properties		—			—			199			—			199
Acquisitions, other		—			—			(156	)		—			(156	)
Investment in subsidiaries, net		596			—			—			(596	)		—
Other		(41	)		—			31			—			(10	)

NET CASH USED IN INVESTING ACTIVITIES		1,108			—			(4,846	)		(596	)		(4,334	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net		(502	)		—			(14	)		—			(516	)
Intercompany borrowings		—			1			(585	)		584			—
Payments on fixed rate debt		(900	)		—			—			—			(900	)
Dividends paid		(280	)		—			—			—			(280	)
Treasury stock activity, net		(249	)		—			—			—			(249	)
Other		17			88			(105	)		12			12

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(1,914	)		89			(704	)		596			(1,933	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		628			0			463			—			1,091
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		—			—			160			—			160

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	628		$	0		$	623		$	—		$	1,251

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Nine Months Ended September 30, 2012


	Apache Corporation			Apache Finance Canada			All Other Subsidiaries of Apache Corporation			Reclassifications & Eliminations			Consolidated
	(In millions)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	1,755		$	(86	)	$	4,753		$	—		$	6,422

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(2,330	)		—			(4,057	)		—			(6,387	)
Additions to gas gathering, transmission and processing facilities		(28	)		—			(558	)		—			(586	)
Acquisition of Cordillera		(2,666	)		—			—			—			(2,666	)
Acquisition of Yara Pilbara Holdings Pty Limited		—			—			(439	)		—			(439	)
Acquisitions, other		(56	)		—			(66	)		—			(122	)
Proceeds from sales of oil and gas properties		20			—			6			—			26
Investment in subsidiaries, net		(541	)		—			—			541			—
Other		(340	)		—			(46	)		—			(386	)

NET CASH USED IN INVESTING ACTIVITIES		(5,941	)		—			(5,160	)		541			(10,560	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and bank credit facilities, net		1,792			—			35			—			1,827
Intercompany borrowings		—			—			572			(572	)		—
Fixed rate debt borrowings		2,991			—			—			—			2,991
Payments on fixed rate debt		(400	)		—			—			—			(400	)
Dividends paid		(246	)		—			—			—			(246	)
Treasury stock activity, net		2			—			—			—			2
Other		38			82			(164	)		31			(13	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		4,177			82			443			(541	)		4,161

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(9	)		(4	)		36			—			23
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		41			5			249			—			295

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	32		$	1		$	285		$	—		$	318

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2013


	Apache Corporation		Apache Finance Canada		All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	628	$	—	$	623	$	—		$	1,251
Receivables, net of allowance		1,100		—		1,986		—			3,086
Inventories		52		—		837		—			889
Drilling advances		21		1		430		—			452
Derivative instruments		3		—		—		—			3
Prepaid assets and other		158		—		177		—			335
Intercompany receivable		4,863		—		—		(4,863	)		—

		6,825		1		4,053		(4,863	)		6,016

PROPERTY AND EQUIPMENT, NET		15,051		—		36,411		—			51,462

OTHER ASSETS:
Intercompany receivable		4,044		—		—		(4,044	)		—
Equity in affiliates		23,009		936		86		(24,031	)		—
Goodwill, net		173		—		1,196		—			1,369
Deferred charges and other		167		1,002		1,223		(1,000	)		1,392

	$	49,269	$	1,939	$	42,969	$	(33,938	)	$	60,239

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	866	$	2	$	477	$	—		$	1,345
Current debt		—		—		57		—			57
Asset retirement obligation		132		—		7		—			139
Derivative instruments		204		—		1		—			205
Other current liabilities		986		12		1,779		—			2,777
Intercompany payable		—		—		4,863		(4,863	)		—

		2,188		14		7,184		(4,863	)		4,523

LONG-TERM DEBT		10,219		648		1		—			10,868

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Intercompany payable		—		—		4,044		(4,044	)		—
Income taxes		3,074		5		5,218		—			8,297
Asset retirement obligation		338		—		2,785		—			3,123
Other		469		250		728		(1,000	)		447

		3,881		255		12,775		(5,044	)		11,867

COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY		32,981		1,022		23,009		(24,031	)		32,981

	$	49,269	$	1,939	$	42,969	$	(33,938	)	$	60,239

APACHE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012


	Apache Corporation		Apache Finance Canada		All Other Subsidiaries of Apache Corporation		Reclassifications & Eliminations			Consolidated
	(In millions)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	—	$	160	$	—		$	160
Receivables, net of allowance		876		—		2,210		—			3,086
Inventories		95		—		813		—			908
Drilling advances		21		1		562		—			584
Derivative instruments		31		—		—		—			31
Prepaid assets and other		102		—		91		—			193
Intercompany receivable		3,766		—		—		(3,766	)		—

		4,891		1		3,836		(3,766	)		4,962

PROPERTY AND EQUIPMENT, NET		18,517		—		34,763		—			53,280

OTHER ASSETS:
Intercompany receivable		4,628		—		—		(4,628	)		—
Equity in affiliates		21,047		934		97		(22,078	)		—
Goodwill, net		173		—		1,116		—			1,289
Deferred charges and other		152		1,002		1,052		(1,000	)		1,206

	$	49,408	$	1,937	$	40,864	$	(31,472	)	$	60,737

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	639	$	1	$	452	$	—		$	1,092
Current debt		912		—		78		—			990
Asset retirement obligation		471		—		7		—			478
Derivative instruments		96		—		20		—			116
Other current liabilities		893		3		1,964		—			2,860
Intercompany payable		—		—		3,766		(3,766	)		—

		3,011		4		6,287		(3,766	)		5,536

LONG-TERM DEBT		10,706		647		2		—			11,355

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Intercompany payable		—		—		4,628		(4,628	)		—
Income taxes		2,990		5		5,029		—			8,024
Asset retirement obligation		992		—		3,108		—			4,100
Other		378		250		763		(1,000	)		391

		4,360		255		13,528		(5,628	)		12,515

COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY		31,331		1,031		21,047		(22,078	)		31,331

	$	49,408	$	1,937	$	40,864	$	(31,472	)	$	60,737

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Apache Corporation, a Delaware corporation formed in 1954, is an independent energy company that explores for, develops and produces natural gas, crude oil, and natural gas liquids. The Company has exploration and production interests in six countries: the United States (U.S.), Canada, Egypt, Australia, the United Kingdom (U.K.) North Sea, and Argentina. Apache also pursues exploration interests in other countries that may over time result in reportable discoveries and development opportunities.

This discussion relates to Apache Corporation and its consolidated subsidiaries and should be read in conjunction with our consolidated financial statements and accompanying notes included under Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q, as well as our consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for our 2012 fiscal year.

Financial Overview

For the third quarter of 2013, Apache reported earnings of $300 million, or $0.75 per common share, up from $161 million, or $0.41 per share, in the third quarter of 2012. Earnings for the first nine months of 2013 totaled $2.0 billion, or $5.06 per diluted share, compared with $1.3 billion, or $3.27 per share, in the prior-year period. Apache’s adjusted earnings for the third quarter of 2013, which exclude certain items impacting the comparability of results, were $932 million, or $2.32 per diluted common share, up from $861 million, or $2.16 per share, in the third quarter of 2012. Adjusted earnings for the first nine months of 2013 totaled $2.5 billion, or $6.35 per diluted share, down from $2.9 billion or $7.22 per share in the comparable prior-year period. Adjusted earnings is not a financial measure prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). For a description of adjusted earnings and a reconciliation of adjusted earnings to income attributable to common stock, the most directly comparable GAAP financial measure, please see “Non-GAAP Measures” in this Item 2.

Underpinning earnings was a 35 percent increase in onshore North America liquids production over the prior-year quarter, driving a 2 percent increase in worldwide production to 784 thousand barrels of oil equivalent per day (Mboe/d). Worldwide liquids production for the quarter was 9 percent higher than the comparative 2012 quarter averaging 425 Mboe/d, of which 84 percent was crude oil. Record liquids revenues of $3.7 billion contributed to a 6 percent increase in production revenues to $4.4 billion.

The strength of our crude oil portfolio helped drive net cash provided by operating activities (operating cash flows or cash flows) which totaled $2.0 billion for the third quarter of 2013, up from $1.6 billion in the third quarter of 2012. Operating cash flows is a key measure for our business, as it provides liquidity for our active drilling program and large-scale development projects currently in progress. We routinely adjust our capital budget on a quarterly basis in response to changing market conditions and operating cash flow forecasts.

Although operating cash flows are the Company’s primary source of liquidity, we may also elect to utilize available committed borrowing capacity, access to both debt and equity capital markets, or proceeds from the sale of assets for all other liquidity needs. Earlier this year, the Company announced plans to divest approximately $4 billion of assets by year-end 2013 to enhance financial flexibility and rebalance our portfolio to an asset mix we believe will continue to generate strong returns, drive more predictable growth, and deliver value to our shareholders. As of the date of this filing, we have completed or announced more than $7 billion in asset sales this year, as discussed in “Operational Developments” in this Item 2. The Company has used the proceeds from these divestitures to reduce debt and to repurchase Apache common shares under a 30-million share repurchase program authorized by the Company’s Board of Directors. For additional information on this share repurchase program, please see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” of this Form 10-Q.

Operational Developments

Apache has a significant producing asset base as well as large undeveloped acreage positions that provide a platform for organic growth through sustainable lower-risk drilling opportunities, balanced by higher-risk, higher-reward exploration. We are also continuing to advance several longer-term, individually significant development projects, as more fully discussed in our 2012 Annual Report on Form 10-K. Notable operational developments include:

North America

•

In the third quarter, the Central region saw production increases for the sixth consecutive quarter as we continue to deploy capital across our nearly two million gross acres in the Anadarko basin. Production was up 31 percent relative to the prior-year quarter as the result of our active oil and liquids-rich drilling program. During the quarter we operated an average of 31 drilling rigs, drilling 91 gross wells with 98 percent success.

•

Apache operated an average of 45 rigs in the Permian Basin during the third quarter of 2013 resulting in a production increase of 18 percent relative to the third quarter of 2012. Over half of the region’s production is crude oil and 20 percent is natural gas liquids (NGL). Combined, this represents almost a quarter of Apache’s total liquids production for the third quarter of 2013.

•

Third-quarter 2013 U.S. production represents 46 percent of Apache’s total worldwide production, compared to the U.S. share of 41 percent in the third quarter of 2012. Focused drilling programs in the Permian Basin and Anadarko basin continue to provide momentum for Apache’s U.S. production growth.

•

On September 30, Apache completed the sale of certain Alberta oil and gas assets to Ember Resources, Inc. for $199 million, subject to final closing adjustments. The assets comprise 621,000 gross acres (530,000 net acres) and more than 2,700 wells. The assets had net production of 69 million cubic feet of gas and 247 barrels of liquid hydrocarbons per day in the third quarter of 2013. The effective date of the transaction is April 1, 2013.

•

In October 2013, Apache completed two additional sales of oil and gas production properties in Canada for $112 million. The assets are located primarily in Saskatchewan and Alberta, comprising approximately 4,000 operated and 1,300 non-operated wells with third-quarter 2013 average daily production of 39 million cubic feet of natural gas and 679 barrels of oil, condensate, and natural gas liquids. The effective date of both transactions is April 1, 2013.

International

•

During the third quarter of 2013, Apache, along with operator and co-venturer BHP Billiton, officially commenced operations of the $1.5 billion Macedon natural gas facility, of which, Apache owns a 28.57 percent interest. Macedon, Western Australia’s fourth domestic gas hub, has a production capacity of 200 terajoules of natural gas per day.

•

On October 1, 2013, Apache and its Australian partners finalized agreements to sell LNG to Tohoku Electric Power Company, Inc. from the Chevron-operated Wheatstone Project in Western Australia. The Wheatstone partners have agreed to supply 0.9 million metric tons per annum of LNG for up to 20 years, which brings the total LNG supplies contracted to approximately 85 percent. Apache owns a 13 percent share in the Wheatstone Project through a subsidiary.

Notable Events

Egypt Political Unrest

In February 2011, former Egyptian president Hosni Mubarak stepped down, and the Egyptian Supreme Council of the Armed Forces took power, announcing that it would remain in power until presidential and parliamentary elections could be held. In June 2012, President Mohamed Morsi of the Muslim Brotherhood’s Freedom and Justice Party was elected as Egypt’s new president, and in December 2012, the people of Egypt ratified a new constitution.

In July 2013, the Egyptian military removed President Morsi from power and installed Egypt’s Chief Justice, Adly Mansour, as acting president of a temporary government, which has announced it is seeking to schedule new parliamentary and presidential elections in early to mid-2014.

Apache’s operations, located in remote locations in the Western Desert, have not experienced production interruptions, and we have continued to receive development lease approvals for our drilling program. However, a further deterioration in the political, economic, and social conditions or other relevant policies of the Egyptian government, such as changes in laws or regulations, export restrictions, expropriation of our assets or resource nationalization, and/or forced renegotiation or modification of our existing contracts with the Egyptian General Petroleum Corporation (EGPC) could materially and adversely affect our business, financial condition, and results of operations.

As of December 31, 2012, Apache had 2,995,771 net undeveloped acres in Egypt set to expire by year-end 2013, and 285,325 and 954,553 net undeveloped acres set to expire in 2014 and 2015, respectively. During the first nine months of 2013, EGPC granted six-month extensions for each of our concessions expiring during this year, with no material relinquishments expected prior to year-end. We continue to seek longer term extensions but cannot assure that such extensions can be achieved on an economic basis or otherwise on terms agreeable to both the Company and EGPC. There are currently no reserves recorded on this undeveloped acreage and Apache will not make future investments in these areas unless the present concessions are extended.

Apache purchases multi-year political risk insurance from the Overseas Private Investment Corporation (OPIC) and other highly rated international insurers covering a portion of its investments in Egypt. In the aggregate, these insurance policies, subject to the policy terms and conditions, provide approximately $856 million of coverage to Apache for losses arising from confiscation, nationalization, and expropriation risks, with a $149 million sub-limit for currency inconvertibility.

In addition, Apache has a separate policy with OPIC, which provides $300 million of coverage for losses arising from (1) non-payment by EGPC of arbitral awards covering amounts owed Apache on past due invoices and (2) expropriation of exportable petroleum in the event that actions taken by the government of Egypt prevent Apache from exporting our share of production. In October 2012, the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, announced that it was providing $150 million in reinsurance to OPIC for the remainder of the policy term. This provision of long-term reinsurance to OPIC will allow Apache to maintain the $300 million of insurance coverage through 2024.

Results of Operations

Oil and Gas Revenues

Oil and gas production revenues for the third quarter and first nine months of 2013 totaled $4.4 billion and $12.7 billion, respectively, a $268 million and $120 million increase from the comparative 2012 periods. The table below presents revenues by region and each region’s percent contribution to revenues for 2013 and 2012.


	For the Quarter Ended September 30,										For the Nine Months Ended September 30,
	2013					2012					2013					2012
	$ Value		% Contribution			$ Value		% Contribution			$ Value		% Contribution			$ Value		% Contribution
	($ in millions)
Total Oil Revenues:
United States	$	1,594		45	%	$	1,143		35	%	$	4,253		43	%	$	3,409		35	%
Canada		166		5	%		115		4	%		441		4	%		361		3	%

North America		1,760		50	%		1,258		39	%		4,694		47	%		3,770		38	%

Egypt		925		26	%		1,021		32	%		2,633		26	%		3,028		31	%
Australia		201		6	%		303		9	%		603		6	%		947		10	%
North Sea		581		16	%		571		18	%		1,859		19	%		1,876		19	%
Argentina		71		2	%		67		2	%		200		2	%		203		2	%

International		1,778		50	%		1,962		61	%		5,295		53	%		6,054		62	%

Total ⁽¹⁾	$	3,538		100	%	$	3,220		100	%	$	9,989		100	%	$	9,824		100	%

Total Gas Revenues:
United States	$	287		42	%	$	288		36	%	$	894		41	%	$	837		36	%
Canada		139		20	%		186		24	%		457		21	%		547		23	%

North America		426		62	%		474		60	%		1,351		62	%		1,384		59	%

Egypt		96		14	%		122		15	%		291		13	%		375		16	%
Australia		78		11	%		94		12	%		264		12	%		264		11	%
North Sea		45		6	%		44		6	%		142		6	%		148		7	%
Argentina		47		7	%		54		7	%		148		7	%		168		7	%

International		266		38	%		314		40	%		845		38	%		955		41	%

Total ⁽²⁾	$	692		100	%	$	788		100	%	$	2,196		100	%	$	2,339		100	%

Natural Gas Liquids (NGL)
Revenues:
United States	$	149		83	%	$	102		76	%	$	396		81	%	$	279		71	%
Canada		19		11	%		17		13	%		53		11	%		58		15	%

North America		168		94	%		119		89	%		449		92	%		337		86	%

North Sea		7		4	%		9		7	%		24		5	%		36		9	%
Argentina		4		2	%		5		4	%		16		3	%		18		5	%

International		11		6	%		14		11	%		40		8	%		54		14	%

Total	$	179		100	%	$	133		100	%	$	489		100	%	$	391		100	%

Total Oil and Gas Revenues:
United States	$	2,030		46	%	$	1,533		37	%	$	5,543		44	%	$	4,525		36	%
Canada		324		7	%		318		8	%		951		7	%		966		8	%

North America		2,354		53	%		1,851		45	%		6,494		51	%		5,491		44	%

Egypt		1,021		23	%		1,143		28	%		2,924		23	%		3,403		27	%
Australia		279		6	%		397		9	%		867		7	%		1,211		10	%
North Sea		633		15	%		624		15	%		2,025		16	%		2,060		16	%
Argentina		122		3	%		126		3	%		364		3	%		389		3	%

International		2,055		47	%		2,290		55	%		6,180		49	%		7,063		56	%

Total	$	4,409		100	%	$	4,141		100	%	$	12,674		100	%	$	12,554		100	%

⁽¹⁾	Financial derivative hedging activities decreased oil revenues $7 million and $44 million for the 2013 third quarter and nine-month period, respectively, and $22 million and $126 million for the 2012 third quarter and nine-month period, respectively.

⁽²⁾	Financial derivative hedging activities increased natural gas revenues $9 million and $26 million for the 2013 third quarter and nine-month period, respectively, and $105 million and $328 million for the 2012 third quarter and nine-month period, respectively.

Production

The table below presents the third-quarter and year-to-date 2013 and 2012 production and the relative increase or decrease from the prior period.


	For the Quarter Ended September 30,							For the Nine Months Ended September 30,
	2013		2012		Increase (Decrease)			2013		2012		Increase (Decrease)
Oil Volume – b/d
United States		163,690		133,001		23	%		156,803		128,884		22	%
Canada		18,573		15,075		23	%		18,112		15,311		18	%

North America		182,263		148,076		23	%		174,915		144,195		21	%

Egypt ⁽¹⁾		89,294		97,546		(8	%)		89,530		98,648		(9	%)
Australia		18,787		28,191		(33	%)		20,195		29,690		(32	%)
North Sea		57,861		57,296		1	%		63,291		63,058		0	%
Argentina		9,560		9,885		(3	%)		9,408		9,701		(3	%)

International		175,502		192,918		(9	%)		182,424		201,097		(9	%)

Total		357,765		340,994		5	%		357,339		345,292		3	%

Natural Gas Volume – Mcf/d
United States		830,423		863,433		(4	%)		848,173		841,859		1	%
Canada		529,402		604,442		(12	%)		523,163		617,530		(15	%)

North America		1,359,825		1,467,875		(7	%)		1,371,336		1,459,389		(6	%)

Egypt ⁽¹⁾		350,504		329,793		6	%		357,747		354,856		1	%
Australia		212,141		215,317		(1	%)		212,845		217,053		(2	%)
North Sea		46,971		54,478		(14	%)		50,108		62,061		(19	%)
Argentina		185,962		213,745		(13	%)		186,241		216,399		(14	%)

International		795,578		813,333		(2	%)		806,941		850,369		(5	%)

Total		2,155,403		2,281,208		(6	%)		2,178,277		2,309,758		(6	%)

NGL Volume – b/d
United States		57,510		39,076		47	%		54,639		30,385		80	%
Canada		7,012		6,036		16	%		6,788		6,063		12	%

North America		64,522		45,112		43	%		61,427		36,448		69	%

North Sea		1,097		1,470		(25	%)		1,263		1,797		(30	%)
Argentina		1,713		3,006		(43	%)		2,254		3,022		(25	%)

International		2,810		4,476		(37	%)		3,517		4,819		(27	%)

Total		67,332		49,588		36	%		64,944		41,267		57	%

BOE per day ⁽²⁾
United States		359,604		315,982		14	%		352,804		299,578		18	%
Canada		113,819		121,851		(7	%)		112,095		124,296		(10	%)

North America		473,423		437,833		8	%		464,899		423,874		10	%

Egypt		147,711		152,512		(3	%)		149,154		157,791		(5	%)
Australia		54,144		64,078		(16	%)		55,669		65,866		(15	%)
North Sea		66,787		67,845		(2	%)		72,905		75,198		(3	%)
Argentina		42,266		48,515		(13	%)		42,702		48,790		(12	%)

International		310,908		332,950		(7	%)		320,430		347,645		(8	%)

Total		784,331		770,783		2	%		785,329		771,519		2	%

⁽¹⁾

Gross oil production in Egypt for the third quarter and nine-month period of 2013 was 193,869 b/d and 195,442 b/d, respectively. For the comparative 2012 periods gross oil production in Egypt was 210,848 b/d and 213,342 b/d, respectively. Gross natural gas production in Egypt for the third quarter and nine-month period of 2013 was 915,965 Mcf/d and 910,599 Mcf/d, respectively. For the comparative 2012 periods gross natural gas production in Egypt was 901,181 Mcf/d and 904,129 Mcf/d, respectively.

⁽²⁾	The table shows production 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.

Pricing

The table below presents third-quarter and year-to-date 2013 and 2012 pricing and the relative increase or decrease from the prior periods.


	For the Quarter Ended September 30,							For the Nine Months Ended September 30,
	2013		2012		Increase (Decrease)			2013		2012		Increase (Decrease)
Average Oil Price—Per barrel
United States	$	105.82	$	93.38		13	%	$	99.35	$	96.53		3	%
Canada		97.58		82.92		18	%		89.33		85.96		4	%
North America		104.98		92.32		14	%		98.31		95.41		3	%
Egypt		112.61		113.72		(1	%)		107.73		112.02		(4	%)
Australia		116.21		116.79		0	%		109.40		116.39		(6	%)
North Sea		109.33		108.44		1	%		107.61		108.60		(1	%)
Argentina		79.77		73.44		9	%		77.66		76.36		2	%
International		110.13		110.54		0	%		106.32		109.87		(3	%)
Total ⁽¹⁾		107.50		102.62		5	%		102.40		103.83		(1	%)
Average Natural Gas Price—Per Mcf
United States	$	3.75	$	3.63		3	%	$	3.86	$	3.63		6	%
Canada		2.87		3.33		(14	%)		3.20		3.23		(1	%)
North America		3.41		3.51		(3	%)		3.61		3.46		4	%
Egypt		3.01		4.04		(25	%)		2.98		3.86		(23	%)
Australia		3.98		4.76		(16	%)		4.54		4.45		2	%
North Sea		10.29		8.65		19	%		10.37		8.67		20	%
Argentina		2.76		2.78		(1	%)		2.91		2.84		2	%
International		3.64		4.21		(14	%)		3.84		4.10		(6	%)
Total ⁽²⁾		3.49		3.76		(7	%)		3.69		3.70		(0	%)
Average NGL Price—Per barrel
United States	$	28.25	$	28.25		0	%	$	26.55	$	33.51		(21	%)
Canada		28.77		31.01		(7	%)		28.49		35.02		(19	%)
North America		28.30		28.62		(1	%)		26.76		33.76		(21	%)
North Sea		69.77		65.45		7	%		70.51		73.60		(4	%)
Argentina		22.19		16.25		37	%		25.11		21.15		19	%
International		40.77		32.41		26	%		41.41		40.71		2	%
Total		28.82		28.96		0	%		27.56		34.57		(20	%)

⁽¹⁾	Reflects a per-barrel decrease of $0.22 and $0.45 from derivative hedging activities for the 2013 third quarter and nine-month period, respectively, and a decrease of $0.71 and $1.33 from derivative hedging activities for the comparative 2012 third quarter and nine-month period, respectively.

⁽²⁾	Reflects a per-Mcf increase of $0.05 and $0.04 from derivative hedging activities for the 2013 third quarter and nine-month period, respectively, and an increase of $0.50 and $0.52 from derivative hedging activities for the comparative 2012 third quarter and nine-month period, respectively.

Third-Quarter 2013 compared to Third-Quarter 2012

Crude Oil Revenues Crude oil revenues for the third quarter of 2013 totaled $3.5 billion, a $318 million increase from the comparative 2012 quarter. A 5 percent increase in average daily production increased third-quarter 2013 revenues by $165 million compared to the prior-year quarter, while 5 percent higher realized prices increased revenues by $153 million. Crude oil prices realized in the third quarter of 2013 averaged $107.50 per barrel, compared with $102.62 in the comparative prior-year quarter. Crude oil accounted for 80 percent of oil and gas production revenues and 46 percent of worldwide production in the third quarter of 2013.

Worldwide production increased 17 thousand barrels of oil per day (Mb/d) from the third quarter of last year to 358 Mb/d, primarily driven by an increase in drilling activity in the Permian Basin and Anadarko basin, partially offset by production decreases in Egypt and Australia. Oil production increased 13 Mb/d in our Permian region, primarily in the Deadwood and Wolfcamp plays, and 9 Mb/d in our Central region with increased activity across our acreage. Production from our Gulf of Mexico (Shelf and Deepwater) regions increased 7 Mb/d on lower downtime compared to the prior-year period. A greater focus on liquids-rich drilling targets increased production 3 Mb/d in Canada. Net oil production in Egypt decreased 8 Mb/d as a result of natural decline and Australia’s production decreased 9 Mb/d primarily on natural decline from our Pyrenees and Van Gogh fields.

Natural Gas Revenues Gas revenues for the third quarter of 2013 totaled $692 million, down 12 percent from the third quarter of 2012. A 6 percent decrease in average production reduced natural gas revenues by $40 million as compared to the prior-year quarter, while a 7 percent decrease in average realized prices decreased revenues by $56 million. Natural gas accounted for 16 percent of our oil and gas production revenues and 46 percent of our equivalent production.

Apache’s drilling programs remain focused on oil and liquids-rich gas targets. As a result, our worldwide natural gas production was 126 million cubic feet per day (MMcf/d) lower than the third quarter of last year. Gas production declined 75 MMcf/d, 52 MMcf/d, 28 MMcf/d, and 8 MMcf/d in Canada, our Gulf of Mexico regions (Shelf and Deepwater), Argentina, and the North Sea, respectively, primarily as a result of natural decline. Production from our Gulf of Mexico regions was also negatively impacted by third-party downtime; however, the region benefited from the positive results of drilling and recompletion programs. Gas production in our Permian region increased 10 MMcf/d as a result of gas associated with liquids-rich drilling activity in the Deadwood and Wolfcamp plays. Gas production increased 18 MMcf/d in our Gulf Coast Onshore region as a result of successful drilling and recompletion activities. Argentina’s production was further impacted by restricted transportation capacity.

Year-to-Date 2013 compared to Year-to-Date 2012

Crude Oil Revenues Crude oil revenues for the first nine months of 2013 totaled $10.0 billion, $165 million higher than the comparative 2012 period, the result of a 3 percent increase in worldwide production partially offset by a 1 percent decline in average realized prices. Crude oil accounted for 79 percent of oil and gas production revenues and 46 percent of worldwide production for the first nine months of 2013, and 78 percent of production revenues and 45 percent of worldwide production for the 2012 comparative period. Higher production volumes added $301 million compared to the first nine months of 2012, while lower realized prices reduced revenues by $136 million. Crude oil prices realized in the first nine months of 2013 averaged $102.40 per barrel, compared with $103.83 in the comparative prior-year period.

Worldwide production increased 12 Mb/d to 357 Mb/d in the first nine months of this year from the same period last year, primarily driven by an increase in drilling activity and successful programs in the Permian Basin and Anadarko basin, partially offset by production declines in Egypt and Australia. Production increased 11 Mb/d, or 92 percent, in our Central region on increased drilling activity and 11 Mb/d in our Permian region with continued focus in the Deadwood, Spraberry, and Wolfcamp plays. Net production in Egypt was 9 Mb/d lower on natural decline, and Australia production decreased 9 Mb/d as a result of natural decline from our Pyrenees and Van Gogh fields.

Natural Gas Revenues Gas revenues for the first nine months of 2013 totaled $2.2 billion, down 6 percent from the comparative 2012 period. A 6 percent decline in average production reduced natural gas revenues by $141 million, while a minimal decrease in average realized prices reduced revenues by $2 million. Natural gas accounted for 17 percent of our oil and gas production revenues and 46 percent of our equivalent production, compared to 19 percent and 50 percent, respectively, for the 2012 period.

Throughout the year, Apache’s drilling programs remained focused on oil and liquids-rich gas targets. As a result, our worldwide natural gas production was 131 MMcf/d lower than the first nine months of last year. Gas production declined 94 MMcf/d, 69 MMcf/d, 30 MMcf/d, 12 MMcf/d in Canada, our Gulf of Mexico regions, Argentina, and the North Sea, respectively, primarily as a result of natural decline. Production from our Gulf of Mexico regions was also negatively impacted by third-party downtime; however, the region benefited from the positive results of drilling and recompletion programs. Argentina’s production was also negatively impacted by restricted transportation capacity. Gas production in our Central and Permian regions increased 48 MMcf/d and 9 MMcf/d, respectively, as a result of gas associated with liquids-rich drilling activity in the Anadarko basin and Permian Basin. Gas production increased 19 MMcf/d in our Gulf Coast Onshore region as a result of successful drilling and recompletion activities.

Operating Expenses

The table below presents a comparison of our expenses on an absolute dollar basis and a boe basis. Our discussion may reference expenses on a boe basis, on an absolute dollar basis or both, depending on their relevance.


	For the Quarter Ended September 30,								For the Nine Months Ended September 30,
	2013		2012		2013		2012		2013		2012		2013		2012
	(In millions)				(Per boe)				(In millions)				(Per boe)
Depreciation, depletion and amortization:
Oil and gas property and equipment
Recurring	$	1,330	$	1,206	$	18.43	$	17.00	$	3,906	$	3,535	$	18.22	$	16.72
Additional		743		729		10.30		10.27		808		1,898		3.77		8.98
Other assets		99		94		1.37		1.33		297		268		1.38		1.27
Asset retirement obligation accretion		66		60		0.92		0.84		196		172		0.91		0.81
Lease operating costs		819		801		11.34		11.30		2,419		2,178		11.28		10.30
Gathering and transportation costs		83		86		1.15		1.22		237		235		1.12		1.11
Taxes other than income		185		167		2.57		2.36		610		627		2.85		2.97
General and administrative expense		127		124		1.76		1.76		376		384		1.75		1.82
Merger, acquisitions & transition		—		7		—		0.10		—		29		—		0.14
Financing costs, net		51		40		0.71		0.56		155		125		0.72		0.59

Total	$	3,503	$	3,314	$	48.55	$	46.74	$	9,004	$	9,451	$	42.00	$	44.71

Recurring Depreciation, Depletion and Amortization (DD&A) The following table details the changes in recurring DD&A of oil and gas properties between the third quarters and nine-month periods of 2013 and 2012:


	For the Quarter Ended September 30,		For the Nine Months Ended September 30,
	(In millions)		(In millions)
2012 DD&A	$	1,206	$	3,535
Volume change		27		73
DD&A rate change		97		298

2013 DD&A	$	1,330	$	3,906

Oil and gas property recurring DD&A expense of $1.3 billion in the third quarter of 2013 increased $124 million compared to the prior-year quarter on an absolute dollar basis: $97 million on rate and $27 million from higher volumes. Oil and gas property recurring DD&A expense of $3.9 billion in the first nine months of 2013 increased $371 million compared to the prior-year period on an absolute dollar basis: $298 million on rate and $73 million from higher volumes. The Company’s oil and gas property recurring DD&A rate increased $1.43 and $1.50 per boe for the third quarter and first nine months of 2013, respectively, compared to the prior-year periods, reflecting acquisition and drilling costs that exceed our historical levels.

Additional DD&A Under the full-cost method of accounting, the Company is required to review the carrying value of its proved oil and gas properties each quarter on a country-by-country basis. Under these rules, capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, may not exceed the present value of estimated future net cash flows from proved oil and gas reserves, net of related tax effects and discounted 10 percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as “Additional DD&A” in the statement of consolidated operations.

In the third quarter of 2013, the Company recorded $552 million ($356 million net of tax) and $116 million ($76 million net of tax) in non-cash write-downs of the carrying value of the Company’s U.S. and Argentinian proved oil and gas properties, respectively. Additionally, we recorded a write-down of our Argentinian proved property balances of $65 million ($42 million net of tax) in the first quarter of 2013. Separately, in the third quarter of 2013 the Company exited operations in Kenya and recorded $75 million ($46 million net of tax) to additional DD&A associated with the impairment of the carrying value of the Kenyan oil and gas property leases.

For the 2012 quarters ended March 31, June 30, and September 30, the Company recorded write-downs of Canadian proved property balances of $521 million ($390 million net of tax), $641 million ($480 million net of tax), and $721 million ($539 million net of tax), respectively.

Additional write-downs in Argentina may occur given certain operational and economic conditions including our inability to extend existing concessions with economically viable terms. Future investment by Apache in producing areas will be significantly influenced by the ability to extend present concessions. Future investment in undeveloped areas will also be significantly influenced by our ability to extend present concessions, with 949,589 net undeveloped acres in Argentina on concessions set to expire by year-end 2013. There are no reserves recorded on this acreage.

Lease Operating Expenses (LOE) LOE increased $18 million, or 2 percent, for the quarter, and $241 million, or 11 percent, for the nine month period, on an absolute dollar basis relative to the comparable periods of 2012. On a per unit basis, LOE was relatively flat at $11.34 per boe for the third quarter of 2013, as compared to the same prior-year period, and increased 10 percent to $11.28 per boe for the first nine months of 2013, as compared to the prior-year nine-month period. The following table identifies changes in Apache’s LOE rate between the third quarters and nine-month periods of 2013 and 2012.


For the Quarter Ended September 30,				For the Nine Months Ended September 30,
	Per boe				Per boe
2012 LOE	$	11.30		2012 LOE	$	10.30
Transportation		0.34		Repairs and maintenance		0.22
Power and fuel costs		0.21		Transportation		0.21
Labor and overhead costs		0.15		Power and fuel costs		0.19
Non-operated property costs		0.10		Labor and overhead costs		0.17
Workover costs		(0.28	)	Non-operated property costs		0.13
Repairs and maintenance		(0.35	)	Chemicals		0.04
Other		0.07		Other		0.22
Increased production		(0.20	)	Increased production		(0.20	)

2013 LOE	$	11.34		2013 LOE	$	11.28

Gathering and Transportation Gathering and transportation costs totaled $83 million and $237 million in the third quarter and first nine months of 2013, respectively, down $3 million and up $2 million from the third quarter and first nine months of 2012, respectively. The following table presents gathering and transportation costs paid by Apache directly to third-party carriers for each of the periods presented:


	For the Quarter Ended September 30,				For the Nine Months Ended September 30,
	2013		2012		2013		2012
	(In millions)
Canada	$	38	$	38	$	118	$	121
U.S.		23		20		67		52
Egypt		11		9		31		29
North Sea		9		18		15		28
Argentina		2		1		6		5

Total Gathering and transportation	$	83	$	86	$	237	$	235

U.S. costs for the third quarter and first nine months of 2013 increased $3 million and $15 million, respectively, as compared to the same prior-year periods primarily as a result of higher production in the Central and Permian regions from increased drilling activity. North Sea costs for the third quarter and first nine months of 2013 decreased $9 million and $13 million, respectively, as compared to the prior-year period on lower production and cost-sharing with partners in the Bacchus field, which commenced production in April 2012.

Taxes other than Income Taxes other than income totaled $185 million and $610 million for the third quarter and the first nine months of 2013, respectively, an increase of $18 million and a decrease of $17 million from the comparative prior-year periods. The following table presents a comparison of these expenses:


	For the Quarter Ended September 30,				For the Nine Months Ended September 30,
	2013		2012		2013		2012
	(In millions)
U.K. PRT	$	66	$	62	$	273	$	332
Severance taxes		73		56		189		162
Ad valorem taxes		29		26		88		75
Other		17		23		60		58

Total Taxes other than income	$	185	$	167	$	610	$	627

For the third quarter of 2013, severance and ad valorem tax expense increased $17 million and $3 million, respectively, on increased production from U.S. onshore fields. The North Sea Petroleum Revenue Tax (PRT) is assessed on qualifying fields in the U.K. North Sea. U.K. PRT was $4 million higher than the 2012 period based on an increase in revenues as a result of higher production on qualifying fields.

U.K. PRT for the first nine months of 2013 was $59 million lower when compared to the 2012 period based on a decrease in production revenue. For the first nine months of 2013, property acquisitions and higher drilling activity increased severance taxes and ad valorem taxes by $27 million and $13 million, respectively, as compared to the first nine months of 2012.

General and Administrative Expenses General and administrative expenses (G&A) for the third quarter of 2013 increased $3 million from the third quarter of 2012 on an absolute basis but were flat on a per-unit basis on higher production. For the first nine months of 2013 G&A decreased $8 million on an absolute basis from the comparable 2012 period on lower personnel, office, and information technology costs, and decreased $.07 per boe on a per-unit basis.

Financing Costs, Net Financing costs incurred during the period comprised the following:


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
	(In millions)
Interest expense	$	146		$	132		$	437		$	371
Amortization of deferred loan costs		2			2			6			5
Capitalized interest		(93	)		(90	)		(276	)		(241	)
Interest income		(4	)		(4	)		(12	)		(10	)

Financing costs, net	$	51		$	40		$	155		$	125

Net financing costs were up $11 million and $30 million in the third quarter and first nine months of 2013, respectively, compared to the same 2012 periods. The $14 million and $66 million increases in interest expense in the third quarter and first nine months of 2013, respectively, are primarily associated with $5.0 billion of debt issued in 2012. The $3 million and $35 million increases in capitalized interest in the third quarter of 2013 and the first nine months of 2013, respectively, are a direct result of higher unproved property balances from the Cordillera acquisition and U.S. leasing activities.

Provision for Income Taxes The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. Accordingly, the Company recorded the income tax impact of a $552 million non-cash write-down and a $75 million non-cash impairment on its U.S. and Kenyan oil and gas properties, respectively, as discrete items for the three months ended September 30, 2013. The Company also recorded the income tax impact of $65 million and $116 million non-cash write-downs of its Argentinian proved oil and gas properties as discrete items in the first and third quarters of 2013, respectively. In 2012, the Company recorded the income tax impact of $521 million, $641 million, and $721 million non-cash write-downs of its Canadian proved oil and gas properties as discrete items in the first, second, and third quarters, respectively.

The 2013 third-quarter provision for income taxes was $210 million, representing an effective income tax rate of 41 percent for the quarter compared to 79 percent during the 2012 period. The 2013 third quarter effective rate reflects the impact of the U.S. and Kenyan non-cash oil and gas property write-downs, deferred tax adjustments, and foreign currency fluctuations on deferred taxes. The 2012 third quarter effective rate reflects the impact of a $721 million Canadian non-cash oil and gas property write-down, a $118 million North Sea decommissioning tax rate adjustment, and foreign currency fluctuations on deferred taxes. Excluding these items, the third-quarter 2013 effective rate would have been 42 percent, a decrease from 45 percent in the third quarter of 2012.

The 2013 first nine-months provision for income taxes was $1.4 billion, representing an effective income tax rate of 41 percent for the period compared to 59 percent during the 2012 period. The 2013 effective rate reflects U.S. and Kenyan non-cash oil and gas property write-downs and foreign currency fluctuations on deferred taxes. The 2012 effective rate reflects the impact of Canadian non-cash write-downs, a North Sea decommissioning tax rate adjustment, and foreign currency fluctuations on deferred taxes. Excluding these items, the effective rate for the first nine months of 2013 would have been 42 percent, a decrease from 43 percent in the comparative 2012 period.

Capital Resources and Liquidity

Operating cash flows are the Company’s primary source of liquidity. We may also elect to utilize available committed borrowing capacity, access to both debt and equity capital markets, or proceeds from the occasional sale of nonstrategic assets for all other liquidity and capital resource needs.

Apache’s operating cash flows, both in the short-term and the long-term, are impacted by highly volatile oil and natural gas prices. Significant deterioration in commodity prices negatively impacts our revenues, earnings and cash flows, and potentially our liquidity if spending does not trend downward as well. Sales volumes and costs also impact cash flows; however, these historically have not been as volatile and have less impact than commodity prices in the short-term.

Apache’s long-term operating cash flows are dependent on reserve replacement and the level of costs required for ongoing operations. Cash investments are required to fund activity necessary to offset the inherent declines in production and proven crude oil and natural gas reserves. Future success in maintaining and growing reserves and production is highly dependent on the success of our exploration and development activities and our ability to acquire additional reserves at reasonable costs.

We believe the liquidity and capital resource alternatives available to Apache, combined with internally generated cash flows, will be adequate to fund short-term and long-term operations, including our capital spending program, repayment of debt maturities, and any amount that may ultimately be paid in connection with contingencies.

In May 2013, we announced plans to divest approximately $4 billion of assets in 2013 to rebalance our portfolio and strengthen our balance sheet. We have subsequently entered into and/or completed the following material transactions:

•

Also on September 30, Apache completed the sale of certain Alberta oil and gas assets to Ember Resources, Inc. for $199 million, subject to final closing adjustments. The assets comprise 621,000 gross acres (530,000 net acres) and more than 2,700 wells. The assets had net production of 69 million cubic feet of gas and 247 barrels of liquid hydrocarbons per day in the third quarter of 2013. The effective date of the transaction is April 1, 2013.

•

In August 2013, Apache announced the launch of a global strategic partnership with Sinopec International Petroleum Exploration and Production Corporation (Sinopec) to pursue joint upstream oil and gas projects. As the first step in this partnership, Apache will receive $3.1 billion in cash, subject to customary closing adjustments, in exchange for Sinopec gaining a 33 percent minority participation in Apache’s Egypt oil and gas business. Apache will continue to operate its Egypt upstream oil and gas business. The Egypt partnership is subject to customary governmental approvals and is expected to close during the fourth quarter, with an effective date of January 1, 2013.

For additional information, please see Part II, Item 1A, “Risk Factors” of this Form 10-Q and Part I, Items 1 and 2, “Business and Properties,” and Item 1A, “Risk Factors Related to Our Business and Operations,” in our Annual Report on Form 10-K for our 2012 fiscal year.

Sources and Uses of Cash

The following table presents the sources and uses of our cash and cash equivalents for the periods presented.


	For the Nine Months Ended
	September 30,
	2013		2012
	(In millions)
Sources of Cash and Cash Equivalents:
Net cash provided by operating activities	$	7,358	$	6,422
Proceeds from divestiture of Gulf of Mexico Shelf properties		3,594		—
Fixed rate debt borrowings		—		2,991
Net commercial paper and bank loan borrowings		—		1,827
Proceeds from Kitimat LNG transaction, net		396		—
Sale of other oil and gas properties		199		26
Other		12		2

		11,559		11,268

Uses of Cash and Cash Equivalents:
Capital expenditures ⁽¹⁾	$	8,357	$	6,973
Acquisitions		156		2,788
Payments of fixed rate debt		900		400
Net commercial paper and bank loan repayments		516		—
Dividends		280		246
Treasury stock activity, net		249		—
Equity investment in Yara Pilbara Holdings Pty Limited (YPHL)		—		439
Other		10		399

		10,468		11,245

Increase in cash and cash equivalents	$	1,091	$	23

⁽¹⁾	The table presents capital expenditures on a cash basis; therefore, the amounts may differ from those discussed elsewhere in this document, which include accruals.

Net Cash Provided by Operating Activities Cash flows are our primary source of capital and liquidity and are impacted, both in the short-term and the long-term, by volatile oil and natural gas prices. The factors that determine operating cash flow are largely the same as those that affect net earnings, with the exception of non-cash expenses such as DD&A, asset retirement obligation (ARO) accretion, and deferred income tax expense, which affect earnings but do not affect cash flows.

Net cash provided by operating activities for the first nine months of 2013 totaled $7.4 billion, up $936 million from the first nine months of 2012. The increase primarily reflects comparative changes in working capital during the periods.

For a detailed discussion of commodity prices, production, and expenses, refer to the “Results of Operations” of this Item 2. For additional detail of changes in operating assets and liabilities, see the statement of consolidated cash flows in Item 1, Financial Statements of this Form 10-Q.

Capital Expenditures We fund exploration and development (E&D) activities primarily through operating cash flows and budget capital expenditures based on projected cash flows. With our significant acquisitions over the past three years and increased production levels, the Company’s operating cash flows have been trending upward. This additional cash flow has primarily been invested in exploration and development activities, including increased drilling on our expanded acreage positions. We routinely adjust our capital budget on a quarterly basis in response to changing market conditions and operating cash flow forecasts.

The following table details capital expenditures for each country in which we do business:


	For the Nine Months Ended
	September 30,
	2013		2012
	(In millions)
E&D Costs:
United States	$	4,171	$	3,608
Canada		502		459

North America		4,673		4,067

Egypt		813		809
Australia		911		518
North Sea		647		703
Argentina		145		222
Other International		28		84

International		2,544		2,336

Worldwide E&D Costs		7,217		6,403

Gathering Transmission and Processing Facilities (GTP):
United States		120		57
Canada		111		138
Egypt		57		15
Australia		534		338
Argentina		7		12

Total GTP Costs		829		560

Asset Retirement Costs		394		556
Capitalized Interest		276		241

Capital Expenditures, excluding acquisitions		8,716		7,760

Acquisitions, including GTP		318		3,421
Asset Retirement Costs—Acquired		53		33

Total Capital Expenditures	$	9,087	$	11,214

Worldwide E&D expenditures for the first nine months of 2013 totaled $7.2 billion, or 13 percent above the first nine months of 2012. E&D spending in North America, which was up 15 percent, totaled 65 percent of worldwide E&D spending. Expenditures in the U.S. increased 16 percent primarily on increased drilling activity in the Anadarko basin and Permian Basin, where we continue to shift to more horizontal drilling. In our Central region we have increased our activity in the Whittenburg and Anadarko basins where our active horizontal drilling program in the Granite Wash and Tonkawa plays continued to expand. In the Permian Basin, we averaged operating 45 rigs during the quarter, of which 20 are drilling horizontal wells, primarily targeting the Wolfcamp shale in the Barnhart area and the Cline shale in the Deadwood area. E&D spending in Canada increased 9 percent from the prior-year period as the region has continued to target oil and liquids-rich plays across its acreage.

E&D expenditures outside of North America increased 9 percent when compared to the first nine months of 2012. Australian expenditures were up $393 million as both exploration and development drilling continued with higher activity levels than the prior-year period. Argentina expenditures were down $77 million on decreased drilling activity. E&D drilling in Egypt was essentially flat compared to prior year; however, the region is drilling several horizontal wells in 2013 and expects to expand these efforts in coming years.

We invested $829 million in GTP in the first nine months of 2013, a 48 percent increase over prior-year activity, with the majority related to activities associated with the Wheatstone LNG project in Australia.

Dividends For the nine-month periods ended September 30, 2013 and 2012, the Company paid $223 million and $189 million, respectively, in dividends on its common stock. In each of the first nine months of 2013 and 2012, the Company also paid $57 million in dividends on its Series D Preferred Stock, which was converted to common stock in August 2013.

Treasury Stock Activity, Net In May 2013, Apache’s Board of Directors authorized the purchase of up to 30 million shares of the Company’s common stock, valued at approximately $2 billion when first announced. Shares may be purchased either in the open market or through privately held negotiated transactions. The Company initiated the buyback program on June 10, 2013, with the repurchase of 2,924,271 shares at an average price of $85.47 during the month of June. Additionally, subsequent to the third quarter of 2013, 5,043,713 shares were repurchased at an average price of $88.73. The Company anticipates that further purchases will primarily be made with proceeds from asset dispositions, but the Company is not obligated to acquire any specific number of shares.

Liquidity

The following table presents a summary of our key financial indicators at the dates presented:


	September 30,			December 31,
	2013			2012
	(In millions of dollars, except as indicated)
Cash and cash equivalents	$	1,251		$	160
Total debt		10,925			12,345
Shareholders’ equity		32,981			31,331
Available committed borrowing capacity		3,300			2,811
Floating-rate debt/total debt		1	%		5	%
Percent of total debt-to-capitalization		25	%		28	%

Cash and cash equivalents We had $1.3 billion in cash and cash equivalents as of September 30, 2013, compared to $160 million at December 31, 2012. Approximately $614 million of the cash was held by foreign subsidiaries, with the remaining $637 million held by Apache Corporation and U.S. subsidiaries. The cash held by foreign subsidiaries may be subject to additional U.S. income taxes if repatriated. Almost all of the cash is denominated in U.S. dollars and, at times, is invested in highly liquid investment grade securities with maturities of three months or less at the time of purchase.

Debt As of September 30, 2013, outstanding debt, which consisted of notes, debentures, and uncommitted bank lines, totaled $10.9 billion. Current debt included $57 million borrowed under uncommitted credit facilities and overdraft lines in Canada and Argentina. The $500 million 5.25-percent notes due in April 2013 and $400 million 6.00-percent notes due in September 2013 were repaid using our commercial paper program.

Available committed borrowing capacity As of September 30, 2013, the Company had unsecured committed revolving syndicated bank credit facilities totaling $3.3 billion, of which $1.0 billion matures in August 2016 and $2.3 billion matures in June 2017. The facilities consist of a $1.7 billion facility and a $1.0 billion facility in the U.S., a $300 million facility in Australia, and a $300 million facility in Canada. In July 2013, we amended our $1.0 billion U.S. credit facility to conform certain representations, covenants, and events of default to those in our $1.7 billion U.S. credit facility. The amendments did not affect the amount or repayment terms of the $1.0 billion U.S. facility. As of September 30, 2013, available borrowing capacity under the Company’s credit facilities was $3.3 billion. The Company’s committed credit facilities are used to support Apache’s commercial paper program.

The Company has available a $3.0 billion commercial paper program, which generally enables Apache to borrow funds for up to 270 days at competitive interest rates. The commercial paper program is fully supported by available borrowing capacity under committed credit facilities. During the third quarter of 2013, the Company used proceeds from divestitures to repay all outstanding commercial paper. At December 31, 2012, the Company had $489 million in commercial paper outstanding.

The Company was in compliance with the terms of all credit facilities as of September 30, 2013.

Percent of total debt-to-capitalization The Company’s September 30, 2013 debt-to-capitalization ratio was 25 percent, down from 28 percent at December 31, 2012.

Non-GAAP Measures

The Company makes reference to some measures in discussion of its financial and operating highlights that are not required by or presented in accordance with GAAP. Management uses these measures in assessing operating results and believes the presentation of these measures provides information useful in assessing the Company’s financial condition and results of operations. These non-GAAP measures should not be considered as alternatives to GAAP measures and may be calculated differently from, and therefore may not be comparable to, similarly-titled measures used at other companies.

Adjusted Earnings

To assess the Company’s operating trends and performance, management uses Adjusted Earnings, which is net income excluding certain items that management believes affect the comparability of operating results. Management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends. The reconciling items below are the types of items management excludes and believes are frequently excluded by analysts when evaluating the operating trends and comparability of the Company’s results.


	For the Quarter Ended September 30,					For the Nine Months Ended September 30,
	2013			2012		2013			2012
	(In millions, except per share data)
Income Attributable to Common Stock (GAAP)	$	300		$	161	$	2,014		$	1,276
Adjustments:
Oil & gas property write-downs, net of tax ⁽¹⁾		478			539		520			1,409
Commodity derivative mark-to-market, net of tax ⁽²⁾		213			—		88			—
Deferred tax adjustments		(31	)		—		15			—
North Sea decommissioning tax rate adjustment		—			118		—			118
Merger, acquisitions & transition, net of tax ⁽³⁾		—			4		—			17
Unrealized foreign currency fluctuation impact on deferred tax expense		(28	)		39		(98	)		40

Adjusted Earnings (Non-GAAP)	$	932		$	861	$	2,539		$	2,860

Net Income per Common Share – Diluted (GAAP)	$	0.75		$	0.41	$	5.06		$	3.27
Adjustments:
Oil & gas property write-downs, net of tax ⁽¹⁾		1.18			1.33		1.28			3.49
Commodity derivative mark-to-market, net of tax ⁽²⁾		0.53			—		0.22			—
Deferred tax adjustments		(0.07	)		—		0.03			—
North Sea decommissioning tax rate adjustment		—			0.30		—			0.30
Merger, acquisitions & transition, net of tax ⁽³⁾		—			0.02		—			0.05
Unrealized foreign currency fluctuation impact on deferred tax expense		(0.07	)		0.10		(0.24	)		0.11

Adjusted Earnings Per Share – Diluted (Non-GAAP)	$	2.32		$	2.16	$	6.35		$	7.22

⁽¹⁾

Write-downs of our U.S. and Argentinian proved property balances of $552 million and $116 million pre-tax, respectively, were recorded in the third quarter of 2013, for which tax benefits of $196 million and $40 million, respectively, were recognized. We also recorded a $75 million pre-tax impairment of our Kenyan oil and gas property leases, for which a tax benefit of $29 million was recognized. Additionally, a write-down of our Argentinian proved property balances of $65 million pre-tax was recorded in the first quarter of 2013, for which a tax benefit of $23 million was recognized. In the third quarter and first nine months of 2012, write-downs of Canadian proved property balances of $721 million and $1.9 billion pre-tax were recorded, respectively, for which tax benefits of $182 million and $474 million, respectively, were recognized. The tax effect was calculated utilizing the statutory rates in effect in each country.

⁽²⁾	Commodity derivative unrealized mark-to-market losses recorded in the third quarter and first nine months of 2013 totaled $331 million and $137 million, respectively, for which tax benefits of $118 million and $49 million were recognized.

⁽³⁾	Merger, acquisitions & transition costs recorded in the third quarter and first nine months of 2012 totaled $7 million and $29 million, respectively, for which tax benefits of $3 million and $12 million were recognized.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices we receive for our crude oil, natural gas and NGLs, which have historically been very volatile because of unpredictable events such as economic growth or retraction, weather, and political climate. Our average crude oil realizations have increased to $107.50 per barrel in the third quarter of 2013 from $102.62 per barrel in the comparable period of 2012. Our average natural gas price realizations have fallen, decreasing 10 percent to $3.49 per Mcf in the third quarter of 2013 from $3.76 per Mcf in the comparable period of 2012.

We periodically enter into derivative positions on a portion of our projected oil and natural gas production through a variety of financial and physical arrangements intended to manage fluctuations in cash flows resulting from changes in commodity prices. For the third quarter and first nine months of 2013, approximately 13 percent and 7 percent, respectively, of our natural gas production and approximately 40 percent and 41 percent, respectively, of our crude oil production was subject to financial derivatives. Apache does not hold or issue derivative instruments for trading purposes.

On September 30, 2013, the Company had open natural gas derivatives in an asset position with a fair value of $25 million. A 10 percent movement in natural gas prices would move the fair value by approximately $6 million. The Company also had open oil derivatives in a liability position with a fair value of $238 million. A 10 percent increase in oil prices would increase the liability by approximately $607 million, while a 10 percent decrease in prices would move the derivatives to an asset position of $365 million. These fair value changes assume volatility based on prevailing market parameters at September 30, 2013. See Note 3—Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements in Item 1 of this Form 10-Q for notional volumes and terms associated with the Company’s derivative contracts.

Interest Rate Risk

The Company considers its interest rate risk exposure to be minimal as a result of fixing interest rates on approximately 99 percent of the Company’s debt. At September 30, 2013, total debt included $57 million of floating-rate debt. As a result, Apache’s annual interest costs will fluctuate based on short-term interest rates on approximately 1 percent of our total debt outstanding at September 30, 2013. The impact on cash flow of a 10 percent change in the floating interest rate based on debt balances at September 30, 2013, would be approximately $242,000 per quarter.

Foreign Currency Risk

The Company’s cash flow stream relating to certain international operations is based on the U.S. dollar equivalent of cash flows measured in foreign currencies. In Australia, oil production is sold under U.S. dollar contracts, and gas production is sold under a combination of Australian dollar and U.S. dollar fixed-price contracts. Approximately half the costs incurred for Australian operations are paid in U.S. dollars. In Canada, oil and gas prices and costs, such as equipment rentals and services, are generally denominated in Canadian dollars but heavily influenced by U.S. markets. Our North Sea production is sold under U.S. dollar contracts, and the majority of costs incurred are paid in British pounds. In Egypt, all oil and gas production is sold under U.S. dollar contracts, and the majority of the costs incurred are denominated in U.S. dollars. Argentine revenues and expenditures are largely denominated in U.S. dollars but are converted into Argentine pesos at the time of payment. Revenue and disbursement transactions denominated in Australian dollars, Canadian dollars, British pounds, and Argentine pesos are converted to U.S. dollar equivalents based on average exchange rates during the period.

Foreign currency gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated at the end of each month. Currency gains and losses are included as either a component of “Other” under “Revenues and Other” or, as is the case when we re-measure our foreign tax liabilities, as a component of the Company’s provision for income tax expense on the statement of consolidated operations. A foreign currency net gain or loss of $238 million would result from a 10 percent weakening or strengthening, respectively, in the Australian dollar, Canadian dollar, British pound, and Argentine peso as of September 30, 2013.

Forward-Looking Statements and Risk

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on our examination of historical operating trends, the information that was used to prepare our estimate of proved reserves as of December 31, 2012, and other data in our possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” or “continue” or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, our assumptions about:

•

the market prices of oil, natural gas, NGLs, and other products or services;

•

our commodity hedging arrangements;

•

the integration of acquisitions;

•

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;

•

the impact on our operations from changes in the Egyptian government;

•

terrorism or cyber attacks;

•

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—Management’s 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 in our third-quarter 2013 earnings release, other factors disclosed under Part II, Item 1A—Risk Factors of this Form 10-Q, and other filings that we make with the Securities and Exchange Commission.

All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. We assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise.

ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

G. Steven Farris, the Company’s Chairman and Chief Executive Officer, in his capacity as principal executive officer, and Thomas P. Chambers, the Company’s Executive Vice President and Chief Financial Officer, in his capacity as principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2013, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Company’s disclosure controls and procedures were effective, providing effective means to ensure that information we are required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

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

Changes in Internal Control over Financial Reporting

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

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Please refer to both Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (filed with the SEC on March 1, 2013) and Part I, Item 1 of this Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013, for a description of material legal proceedings.

ITEM 1A.

RISK FACTORS

Please refer to the risk factors as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and as noted above in Part I, Item 3 of this Form 10-Q. For the nine months ended September 30, 2013, Apache notes the following updated risk factor:

A deterioration of conditions in Egypt or changes in the economic and political environment in Egypt could have an adverse impact on our business.

In February 2011, the former Egyptian president Hosni Mubarak stepped down, and the Egyptian Supreme Council of the Armed Forces took power, announcing that it would remain in power until the presidential and parliamentary elections could be held. In June 2012, President Mohamed Morsi of the Muslim Brotherhood’s Freedom and Justice Party was elected as Egypt’s new president, and in December 2012 the people of Egypt ratified a new constitution. In July 2013, the Egyptian military removed President Morsi from power and installed Egypt’s Chief Justice, Adly Mansour, as acting president of a temporary government, which is seeking to set a schedule for new parliamentary and presidential elections in 2014. Deterioration in the political, economic, and social conditions or other relevant policies of the Egyptian government, such as changes in laws or regulations, export restrictions, expropriation of our assets or resource nationalization, and/or forced renegotiation or modification of our existing contracts with EGPC could materially and adversely affect our business, financial condition, and results of operations. Our operations in Egypt contributed 19 percent of our production for the nine months ended September 30, 2013, 20 percent of our 2012 production, and accounted for 10 percent of our year-end estimated proved reserves. At year-end 2012, 17 percent of our estimated discounted future net cash flows and 7 percent of our net capitalized oil and gas property was attributable to Egypt.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents information on shares of common stock repurchased by the Company during the quarter ended September 30, 2013:


Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾
July 1 to July 31, 2013		—	$	—		—		27,075,729
August 1 to August 31, 2013		—		—		—		27,075,729
September 1 to September 30, 2013		—		—		—		27,075,729

Total		—	$	—

⁽¹⁾

On May 9, 2013, the Company announced that its Board of Directors authorized the repurchase of up to 30 million shares of the Company’s common stock. The Company may buy shares from time to time on the open market, in privately negotiated transactions, or a combination of both. The timing and amounts of any repurchases will be at the discretion of Apache’s management and will depend on a variety of factors, including the stock price, corporate and regulatory requirements, and other market and economic conditions. Repurchased shares will be available for general corporate purposes.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

MINE SAFETY DISCLOSURES

None

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS



	*10.1 –			Amendment to Apache Corporation 401(k) Savings Plan, dated October 25, 2013.

	*10.2 –			Apache Corporation 2003 Stock Appreciation Rights Plan, as amended and restated September 16, 2013.

	*10.3 –			Apache Corporation 2005 Stock Option Plan, as amended and restated September 16, 2013.

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

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

	*32.1 –			Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.

	*101.INS –			XBRL Instance Document.

	*101.SCH –			XBRL Taxonomy Schema Document.

	*101.CAL –			XBRL Calculation Linkbase Document.

	*101.LAB –			XBRL Label Linkbase Document.

	*101.PRE –			XBRL Presentation Linkbase Document.

	*101.DEF –			XBRL Definition Linkbase Document.

	*			Filed herewith

SIGNATURES

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


						APACHE CORPORATION

Dated: November 8, 2013						/s/ THOMAS P. CHAMBERS
						Thomas P. Chambers
						Executive Vice President and Chief Financial Officer
						(Principal Financial Officer)

Dated: November 8, 2013						/s/ REBECCA A. HOYT
						Rebecca A. Hoyt
						Vice President, Chief Accounting Officer and Controller
						(Principal Accounting Officer)

Exhibit 10.1

Apache Corporation 401(k) Savings Plan

Apache Corporation (“Apache”) sponsors the Apache Corporation 401(k) Savings Plan (the “Plan”). In section 10.4 of the Plan, Apache reserved the right to amend the Plan from time to time. Apache hereby exercises that right by adding the following paragraphs to the end of the “Sales” section of Appendix C, effective as of the closing date of the transaction described in the “Purchase and Sale Agreement by and among Apache Corporation, Apache Shelf, Inc., and Apache Deepwater LLC, and Fieldwood Energy, LLC and GOM Shelf LLC” that was entered into on July 18, 2013.

The following three paragraphs apply to any Employee who transfers to Fieldwood Energy, LLC (“Fieldwood”) or to any business while it is treated as a single employer with Fieldwood pursuant to Code §414(b), §414(c), §414(m), or §414(o) (collectively, the “Fieldwood Group”), and whose transfer occurs within one year following the closing of the transaction described in the “Purchase and Sale Agreement by and among Apache Corporation, Apache Shelf, Inc., and Apache Deepwater LLC, and Fieldwood Energy, LLC and GOM Shelf LLC” (the “PSA”) that was entered into on July 18, 2013 (a “Transferred Employee”).

Vesting . Notwithstanding subsection 5.3(a), for vesting purposes, a Period of Service for a Transferred Employee shall include such Transferred Employee’s service with the Fieldwood Group until termination of employment with the Fieldwood Group. Notwithstanding subsection 5.4(b), the earliest date a forfeiture may occur is the date of the Employee’s termination of employment with the Fieldwood Group.

Distributions . A Transferred Employee may take a distribution of the entire distributable amount at any time after his Termination from Service Date from the Company. The distributable amount, as determined under section 6.3, only includes vested benefits. If the Transferred Employee takes a distribution and then accrues additional vested amounts, such Transferred Employee may take additional distribution(s) of such additional vested amounts, each of which shall be equal to the entire distributable amount at the time of the distribution. Notwithstanding subsection 6.6(c), the Plan will not cash out a small Account until the Transferred Employee becomes fully vested or, if earlier, such Transferred Employee terminates employment with the Fieldwood Group.

Loans . A Transferred Employee may roll over any outstanding loan from the Plan to a qualified plan sponsored by any member of the Fieldwood Group that agrees to accept such a rollover, as long as the rollover is initiated by the last day of the calendar quarter following the calendar quarter in which the Transferred Employee’s Effective Date (as defined in Section 8.3(b) of Exhibit F to the PSA) occurs. Any loan not rolled over by such date shall be subject to the default rules in section 7.6. Notwithstanding Article VI, a Transferred Employee may roll over a loan under this paragraph without taking any other distribution from the Plan.

EXECUTED this 25th day of October, 2013.


APACHE CORPORATION

By:		/s/ Margery M. Harris
		Margery M. Harris
		Executive Vice President, Human Resources

Page 1 of 1

Exhibit 10.2

APACHE CORPORATION

2003 Stock Appreciation Rights Plan

(Amended and Restated effective September 16, 2013)

Section 1

Introduction

1.1 Establishment . Apache Corporation, a Delaware corporation (hereinafter referred to, together with its Affiliated Corporations (as defined in Section 2.1 hereof) as the “Company” except where the context otherwise requires), hereby establishes the Apache Corporation 2003 Stock Appreciation Rights Plan (the “Plan”) for Eligible Employees (as defined in Section 2.1 hereof). The Plan permits the grant of stock appreciation rights to Eligible Employees selected by the Committee (as defined in Section 2.1 hereof).

1.2 Purposes . The purposes of the Plan are to provide the Eligible Employees designated by the Committee for participation in the Plan with added incentives to continue in the long-term service of the Company and to create in such employees a more direct interest in the future success of the operations of the Company by relating incentive compensation to increases in stockholder value, so that the income of those employees is more closely aligned with the interests of the Company’s stockholders. The Plan is also designed to retain and motivate Eligible Employees and attract talented personnel in a competitive environment.

1.3 Effective Date . The effective date of the Plan (the “Effective Date”) is May 1, 2003.

Section 2

Definitions

2.1 Definitions . The following terms shall have the meanings set forth below:

(a) “ Administrative Agent ” means any designee or agent that may be appointed by the Committee pursuant to Section 3.1(b) hereof.

(b) “ Affiliated Corporation ” means any corporation or other entity (including but not limited to a partnership) which is affiliated with Apache Corporation through stock ownership or otherwise and is treated as a common employer under the provisions of Sections 414(b) and (c) or any successor section(s) of the Internal Revenue Code.

(d) “ Committee ” means the Stock Plan Committee of the Board, which is empowered hereunder to take actions in the administration of the Plan. The Committee shall be constituted at all times as to permit the Plan to comply with Rule 16b-3 or any successor rule(s) promulgated under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

(e) “ Eligible Employees ” means full-time employees (including, without limitation, officers and directors who are also employees), and certain part-time employees, of the Company or any division thereof.

(f) “ Exercise Date ” means the date of exercise determined in accordance with subsection 7.2(g) hereof.

(g) “ Expiration Date ” means the date on which the Stock Appreciation Right Period (as defined in subsection 7.2(c) hereof) ends.

(h) “ 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 reasonable application of such reasonable valuation method, consistently applied, as the Committee deems appropriate.

(i) “ Grant Date ” means the date of grant determined in accordance with subsection 7.2(h) hereof.

(j) “ Internal Revenue Code ” means the Internal Revenue Code of 1986, as it may be amended from time to time.

(k) “ Participant ” means an Eligible Employee designated by the Committee from time to time during the term of the Plan to receive one or more Stock Appreciation Rights under the Plan.

(l) “ Stock Appreciation Right ” means to receive an amount equal to the excess of the Fair Market Value as of the Exercise Date of one share of Stock over the SAR Price times the number of shares of Stock to which the Stock Appreciation Right relates.

(m) “ SAR Price ” means the price at which the Stock Appreciation Right was granted determined in accordance with subsection 7.2(b) hereof.

(n) “ Stock ” means the U.S. $0.625 par value Common Stock of the Company.

2.2 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.

Section 3

Plan Administration

3.1 Administration by the Committee .

(a) The Plan shall be administered by the Committee. In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, select the Participants from among the Eligible Employees, determine the Stock Appreciation Rights to be granted pursuant to the Plan, the number of shares of Stock to which each Stock Appreciation Right relates, the time at which such Stock Appreciation Rights are to be granted, fix the SAR Price, and establish such other terms and requirements as the Committee may deem necessary or desirable and consistent with the terms of the Plan. The Committee shall determine the form or forms of the agreements with Participants which shall evidence the particular provisions, terms, conditions, rights and duties of the Company and the Participants with respect to Stock Appreciation Rights granted pursuant to the Plan, which provisions need not be identical except as may be provided herein.

(b) The Committee may from time to time adopt such rules and regulations for carrying out the purposes of the Plan as it may deem proper and in the best interests of the Company. The Committee may appoint an Administrative 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 correct any defect, supply any omission or reconcile any inconsistency in the Plan, or in any agreement entered into hereunder, in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. No member of the Committee shall be liable for any action or determination made in good faith. The determination, interpretations and other actions of the Committee pursuant to the provisions of the Plan shall be binding and conclusive for all purposes and on all persons.

Section 4

Adjustments to or Other Changes in Stock

4.1 Adjustments for Stock Split, Stock Dividend, etc. If the Company 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, in each case, equitably and proportionally adjusted to take into account the occurrence of any of the above events, (i) the shares of Stock to which each outstanding Stock Appreciation Right relates; and (ii) the SAR Price for each outstanding Stock Appreciation Right granted hereunder.

4.2 Other Changes in Stock . In the event there shall be any change, other than as specified in Section 4.1 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 to which outstanding Stock Appreciation Rights relate, then such adjustments shall be made by the Committee and shall be effective for all purposes of the Plan and for each outstanding Stock Appreciation Right that involves the particular type of stock for which a change was effected.

4.3 Determination by the Committee, Etc . Adjustments under this Section 4 shall be made by the Committee, whose determinations with regard thereto shall be final and binding upon all parties.

Section 5

Reorganization or Liquidation

In the event that the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or if all or substantially all of the assets or more than 20 percent of the outstanding voting stock of the Company is acquired by any other corporation, business entity or person, or in case of a reorganization (other than a reorganization under the United States Bankruptcy Code) or liquidation of the Company, and if the provisions of Section 8 hereof do not apply, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall, as to the Plan and outstanding Stock Appreciation Rights either (i) make appropriate provision for the adoption and continuation of the Plan by the acquiring or successor corporation and for the protection of any such outstanding Stock Appreciation Rights by the substitution on an equitable basis of appropriate stock of the Company or of the merged, consolidated or otherwise reorganized corporation which will be issuable with respect to

the Stock, provided that no additional benefits shall be conferred upon the Participants holding such Stock Appreciation Rights as a result of such substitution, and the excess of the aggregate Fair Market Value of the shares of Stock to which the Stock Appreciation Rights relate immediately after such substitution over the aggregate SAR Price thereof is not more than the excess of the aggregate Fair Market Value of the shares of Stock to which such Stock Appreciation Rights relate immediately before such substitution over the aggregate Unit Price thereof, or (ii) upon written notice to the Participants, provide that all unexercised Stock Appreciation Rights shall be exercised within a specified number of days of the date of such notice or such Stock Appreciation Rights will be terminated. In the latter event, the Committee shall accelerate the vesting dates of outstanding Stock Appreciation Rights so that all Stock Appreciation Rights become fully vested and exercisable prior to any such event.

Section 6

Participation

Participants in the Plan shall be those Eligible Employees who, in the judgment of the Committee, are performing, or during the term of their incentive arrangement will perform, vital services in the management, operation and development of the Company or an Affiliated Corporation, and significantly contribute, or are expected to significantly contribute, to the achievement of the Company’s long-term corporate economic objectives. Participants may be granted from time to time one or more Stock Appreciation Rights; provided, however, that the grant of each such Stock Appreciation Right shall be separately approved by the Committee, and receipt of one such Stock Appreciation Right shall not result in automatic receipt of any other Stock Appreciation Right. Upon determination by the Committee that a Stock Appreciation Right is to be granted to a Participant, written notice shall be given to such person, specifying the terms, conditions, rights and duties related thereto. Each Participant shall, if required by the Committee, enter into an agreement with the Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan, specifying such terms, conditions, rights and duties. Stock Appreciation Rights shall be deemed to be granted as of the date specified in the grant resolution of the Committee, which date shall be the date of any related agreement with the Participant. In the event of any inconsistency between the provisions of the Plan and any such agreement entered into hereunder, the provisions of the Plan shall govern.

Section 7

Stock Appreciation Rights

7.1 Grant of Stock Appreciation Rights . Coincident with or following designation for participation in the Plan, an Eligible Employee may be granted one or more Stock Appreciation Rights. Grants of Stock Appreciation Rights under the Plan shall be made by the Committee. In no event shall the exercise of one Stock Appreciation Right affect the right to exercise any other Stock Appreciation Right or affect the number of shares of Stock to which any other Share Appreciation Right relates, except as provided in subsection 7.2(j) hereof.

7.2 Stock Appreciation Right Agreements . Each Stock Appreciation Right granted under the Plan shall be evidenced by a written agreement which shall be entered into by the Company and the Participant to whom the Stock Appreciation Right is granted (the “Stock Appreciation Right Agreement”), and which shall contain the following terms and conditions, as well as such other terms and conditions, not inconsistent therewith, as the Committee may consider appropriate in each case:

(a) Number of Shares . Each Stock Appreciation Right Agreement shall state that it relates to a specified number of shares of Stock, as determined by the Committee.

(b) SAR Price . The price shall be determined in each case by the Committee at the time of grant and set forth in the Stock Appreciation Right Agreement, but in no event shall the SAR Price be less than the Fair Market Value of the Stock on the Grant Date.

(c) Duration of Stock Appreciation Rights; Employment Required For Exercise . Each Stock Appreciation Right Agreement shall state the period of time, determined by the Committee, within which the Stock Appreciation Right may be exercised by the Participant (the “Stock Appreciation Right Period”). The Stock Appreciation Right Period must end, in all cases, not more than ten years from the Grant Date. Except as otherwise provided in Sections 5 and 8 and subsection 7.2(d)(iv) hereof, each Stock Appreciation Right granted under the Plan shall become exercisable in increments such that 25 percent of the Share Appreciation Right becomes exercisable on each of the four subsequent one-year anniversaries of the date the Stock Appreciation Right is granted, provided that each such additional 25-percent increment shall become exercisable only if the Participant has been continuously employed by the Company from the date the Stock Appreciation Right is granted through the date on which each such additional 25-percent increment becomes exercisable.

(d) Termination of Employment, Death, Disability, Etc . Each Stock Appreciation Right Agreement shall provide as follows with respect to the exercise of the Stock Appreciation Right upon termination of the employment or the death of the Participant:

(i) If the employment of the Participant by the Company is terminated within the Stock Appreciation Right Period for cause, as determined by the Company, the Stock Appreciation Right shall thereafter be void for all purposes. As used in this subsection 7.2(d), “cause” shall mean a gross violation, as determined by the Company, of the Company’s established policies and procedures, provided that the effect of this subsection 7.2(d) shall be limited to determining the consequences of a termination and that nothing in this subsection 7.2(d) shall restrict or otherwise interfere with the Company’s discretion with respect to the termination of any employee.

(ii) If the Participant retires from employment by the Company on or after attaining age 60, the Stock Appreciation Right may be exercised by the Participant within 36 months following his or her retirement (provided that such exercise must occur within the Stock Appreciation Right Period), but not thereafter. In the event of the Participant’s death during such 36-month period, each Stock Appreciation Right may be exercised by those entitled to do so in the manner referred to in (iv) below. In any such case, the Stock Appreciation Right may be exercised only as to the increment(s) of the Stock Appreciation Right that have become exercisable on or before the date of the Participant’s retirement.

(iii) If the Participant becomes disabled (as determined pursuant to the Company’s Long-Term Disability Plan or any successor plan), during the Stock Appreciation Right Period while still employed, or within the three-month period referred to in subsection 7.2(d)(v) below, or within the 36-month period referred to in subsection 7.2(d)(ii) above, the Stock Appreciation Right may be exercised by the Participant or by his or her guardian or legal representative, within twelve months following the Participant’s disability, or within the 36-month period referred to in subsection 7.2(d)(ii) above if applicable and if longer (provided that such exercise must occur within the Stock Appreciation Right Period), but not thereafter. In the event of the Participant’s death during such twelve-month period, each Stock Appreciation Right may be exercised by those entitled to do so in the manner referred to in subsection 7.2(d)(iv) below. In any such case, the Stock Appreciation Right may be exercised only as to the increment(s) of the Stock Appreciation Right that have become exercisable on or before the date of the Participant’s disability.

(iv) In the event of the Participant’s death while still employed by the Company, each Stock Appreciation Right of the deceased Participant may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution or as otherwise provided in Section 9.2 within twelve months following the Participant’s death (provided that in any event such exercise must occur within the Stock Appreciation Right Period), but not thereafter, as to all increments of each Stock Appreciation Right, including each 25-percent increment of the Stock Appreciation Right, if any, which has not yet become exercisable at the time of the Participant’s death. In the event of the Participant’s death within the 36-month period referred to in subsection 7.2(d)(ii) above, the increment(s) of or within the twelve-month period referred to in subsection 7.2(d)(iii) above, the increment(s) of each Stock Appreciation Right of the deceased Participant that are exercisable at the time of death may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution or as otherwise provided in Section 9.2 within twelve months following the Participant’s death or within the 36-month period referred to in subsection 7.2(d)(ii) above, if applicable and if longer (provided that in any event such exercise must occur within the Stock Appreciation Right Period).

(v) If the employment of the Participant by the Company is terminated (which for this purpose means that the Participant is no longer employed by the Company or by an Affiliated Corporation) within the Stock Appreciation Right Period for any reason other than cause, the Participant’s retirement on or after attaining age 60, or the Participant’s disability or death, the Stock Appreciation Right may be exercised by the Participant within three months following the date of such termination (provided that such exercise must occur within the Stock Appreciation Right Period), but not thereafter. In any such case, the Stock Appreciation Right may be exercised only as to the increment(s) of the Stock Appreciation Right that have become exercisable on or before the date of termination of the Participant’s employment.

(vi) Notwithstanding the provisions of Section 7.2(d) of the Plan to the contrary, for purposes of the Stock Appreciation Right, the Participant’s employment shall be deemed to continue with the Company during the Participant’s period of continuous employment by Fieldwood Energy LLC or any business while it is treated as a single employer with Fieldwood Energy LLC pursuant to Code §414(b), §414(c), §414(m), or §414(o) (collectively “Fieldwood”) commencing on the date such Participant is first employed by Fieldwood in connection with the sale of certain assets pursuant to the Purchase and Sale Agreement by and among Apache Corporation, Apache Shelf, Inc., and Apache Deepwater LLC, as Sellers, and Fieldwood Energy LLC, as Buyer, and GOM Shelf LLC, dated July 18, 2013, and shall be deemed to cease with the Company on the date of termination of the Participant’s employment with Fieldwood for any reason. Participant shall immediately notify the Company of his or her termination of employment with Fieldwood and the reason for such termination (termination for cause, disability, retirement after age 60, or termination for a reason other than the preceding reasons). If a Participant fails to timely notify the Company of the Participant’s termination of employment with Fieldwood, and such failure to timely notify allows an exercise of any Stock Appreciation Rights hereunder to occur, which exercise of Stock Appreciation Rights would have been forfeited if the notification of termination had been delivered timely, then Participant must immediately return or pay to Apache Corporation the gross proceeds from the exercise thereof.

(e) Transferability . Each Stock Appreciation Right Agreement shall provide that the Stock Appreciation Right granted therein is not transferable by the Participant except by will or pursuant to the laws of descent and distribution or as otherwise provided in Section 9.2, and that such Stock Appreciation Right is exercisable during the Participant’s lifetime only by him or her, or in the event of the Participant’s disability or incapacity, by his or her guardian or legal representative.

(f) Agreement to Continue in Employment . Each Stock Appreciation Right Agreement shall contain the Participant’s agreement to remain in the employment of the Company, at the pleasure of the Company, for a continuous period of at least one year after the date of such Stock Appreciation Right Agreement, at the salary rate in effect on the date of such agreement or at such changed rate as may be fixed, from time to time, by the Company.

(g) Exercise, Payments, Etc .

(i) Each Stock Appreciation Right Agreement shall provide that the method for exercising the Stock Appreciation Right granted therein shall be by delivery to the Administrative Agent or to the Office of the Secretary of the Company of written notice specifying the number of shares of Stock that relate to the Stock Appreciation Right being exercised. Such notice shall be in a form satisfactory to the Committee and shall specify the particular Stock Appreciation Rights (or portions thereof) which are being exercised and the number of shares of Stock that relate to the Stock Appreciation Rights being exercised. The exercise of the Stock Appreciation Right shall be deemed effective on the date such notice is received by the Administrative Agent or by the Office of the Secretary (the “Exercise Date”).

(ii) Subject to subsection 7.2(i) and Section 12.1 hereof, the amount to which the Participant is entitled as a result of the exercise of the Stock Appreciation Right shall be paid through the Company’s payroll system, as part of the payroll cycle next following the Exercise Date, or through the Administrative Agent.

(iii) For purposes of the Plan, the income resulting from a Stock Appreciation Right exercise shall be based on the Fair Market Value of the Stock for the Exercise Date.

(h) Grant Date. A Stock Appreciation Right shall be considered as having been granted on the date specified in the grant resolution of the Committee.

(i) Tax Withholding . Each Stock Appreciation Right Agreement shall provide that, upon exercise of a Stock Appreciation Right, minimum tax withholding required by Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code and applicable state and local income and other tax laws shall be deducted from the amount payable to the Participant.

(j) Adjustment of Stock Appreciation Rights . Subject to the provisions of Sections 4, 5, 7, 8 and 11 hereof, the Committee may make any adjustment in the number of shares of Stock to which an outstanding Stock Appreciation Right relates, or the terms of an outstanding Stock Appreciation Right and a subsequent granting of a Stock Appreciation Right, by amendment or by substitution for an outstanding Stock Appreciation Right; however, except as provided in Sections 4, 5, 8 and 11 hereof, the Committee may not adjust the SAR Price of any outstanding Stock Appreciation Right. Such amendment or substitution may result in terms and conditions (including the number of shares of Stock to which the Stock Appreciation Right relates, vesting schedule or Stock Appreciation Right Period) that differ from the terms and conditions of the original Stock Appreciation Right. The Committee may not, however, adversely affect the rights of any Participant to previously granted Stock Appreciation Rights without the consent of such Participant. If such action is effected by amendment, the effective date of such amendment will be the date of grant of the original Stock Appreciation Right.

7.3 Stockholder Privileges . No Participant shall have any rights as a stockholder with respect to any shares of Stock to which a Stock Appreciation Right relates.

Section 8

Change of Control

8.1 In General . In the event of the occurrence of a change of control of the Company, as defined in Section 8.3 hereof, all outstanding Stock Appreciation Rights shall become automatically vested, without further action by the Committee or the Board, so as to make all such Stock Appreciation Rights fully vested and exercisable as of the date of such change of control.

8.2 Limitation on Payments . If the provisions of this Section 8 would result in the receipt by any Participant of a payment within the meaning of Section 280G or any successor section(s) of the Internal Revenue Code, and the regulations promulgated thereunder, and if the receipt of such payment by any Participant would, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Sections 280G and 4999 or any successor section(s) of the Internal Revenue Code, then the amount of such payment shall be reduced to the extent required, in the opinion of independent tax counsel, to prevent the imposition of such excise tax; provided, however, that the Committee, in its sole discretion, may authorize the payment of all or any portion of the amount of such reduction to the Participant.

8.3 Definition . For purposes of the Plan, a “change of control” shall mean any of the events specified in the Company’s Income Continuance Plan or any successor plan which constitute a change of control within the meaning of such plan.

Section 9

Rights of Employees, Participants

9.1 Employment . Nothing contained in the Plan or in any Stock Appreciation Right granted under the Plan shall confer upon any Participant any right with respect to the continuation of his or her employment by the Company or any Affiliated Corporation, or interfere in any way with the right of the Company or any Affiliated Corporation, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the level of the Participant’s compensation from the level in existence at the time of the grant of an Stock Appreciation Right. Whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of employment shall be determined by the Committee at the time.

9.2 Nontransferability . No right or interest of any Participant in any Stock Appreciation Right granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of a Participant’s death, a Participant’s rights and interests in any Stock Appreciation Right shall, to the extent provided in Section 7 hereof, be transferable by testamentary will or the laws of descent and distribution, or a beneficiary designation that is in a form approved by the Committee and in compliance with the provisions of this Plan, applicable law, and the applicable Stock Appreciation Right, and payment of any amounts due under the Plan shall be made to, and exercise of any Stock Appreciation Right may be made by, the Participant’s designated beneficiary, legal representatives, heirs or legatees, as applicable. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his or her affairs because of mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator or other legal personal representative upon furnishing the Committee with evidence of such status satisfactory to the Committee.

Section 10

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of a Stock Appreciation Right exercise shall not constitute “earnings” or “compensation” with respect to which any other employee benefits of such Participant are determined including, without limitation, benefits under any pension, profit sharing, life insurance or salary continuation plan.

Section 11

Plan Amendment, Modification and Termination

The Committee or the Board may at any time terminate, and from time to time may amend or modify the Plan provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the Company’s stockholders if stockholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements unless the Company, on the advice of counsel, determines that stockholder approval is otherwise necessary or desirable.

No amendment, modification or termination of the Plan shall in any manner adversely affect any Stock Appreciation Right theretofore granted under the Plan, without the consent of the Participant holding such Stock Appreciation Right.

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.

Section 12

Withholding

12.1 Withholding Requirement . The Company’s obligations to deliver the amounts payable to the Participant for the exercise of a Stock Appreciation Right, shall be subject to the Participant’s satisfaction of all applicable federal, state and local income and other tax withholding requirements.

12.2 Excess Withholding . At the time the Committee grants a Stock Appreciation Right, it may, in its sole discretion, grant the Participant an election to pay additional or excess amounts of tax withholding, beyond the required amounts and up to the Participant’s marginal tax rate. Such election must be specified in the written notice of exercise given in accordance with subsection 7.2(g) hereof.

Section 13

Requirements of Law

13.1 Requirements of Law . The payment of amounts pursuant to the Plan shall be subject to all applicable laws, rules and regulations.

13.2 Federal Securities Laws Requirements . If a Participant is an officer or director of the Company within the meaning of Section 16 of the 1934 Act, Stock Appreciation Rights granted hereunder shall be subject to all conditions required under Rule 16b-3, or any successor rule(s) promulgated under the 1934 Act, to qualify the Stock Appreciation Right for any exception from the provisions of Section 16 available under such rule. Such conditions are hereby incorporated herein by reference and shall be set forth in the Stock Appreciation Right Agreement with the Participant which describes the Stock Appreciation Right.

13.3 Governing Law . The Plan and all Stock Appreciation Right Agreements hereunder shall be construed in accordance with and governed by the laws of the State of Texas.

Section 14

Duration of the Plan

The Plan shall terminate effective as of May 2, 2007, and no Stock Appreciation Right shall be granted on or after such termination date. Any Stock Appreciation Rights outstanding at the time of the Plan termination shall continue to be exercisable in accordance with the Stock Appreciation Right Agreement pertaining to each such Stock Appreciation Right.

Dated: September 16, 2013


	APACHE CORPORATION

ATTEST:

/s/ Cheri L. Peper	By:	/s/ Margery M. Harris
Cheri L. Peper		Margery M. Harris
Corporate Secretary		Executive Vice President,
		Human Resources

Exhibit 10.3

APACHE CORPORATION

2005 STOCK OPTION PLAN

(Amended and Restated effective September 16, 2013)

Section 1

Introduction

1.1 Establishment . Apache Corporation, a Delaware corporation (hereinafter referred to, together with its Affiliated Corporations (as defined in Section 2.1 hereof) as the “Company” except where the context otherwise requires), hereby establishes the Apache Corporation 2005 Stock Option Plan (the “Plan”) for Eligible Employees (as defined in Section 2.1 hereof). The Plan permits the grant of stock options to Eligible Employees selected by the Committee (as defined in Section 2.1 hereof).

1.2 Purposes . The purposes of the Plan are to provide the Eligible Employees designated by the Committee for participation in the Plan with added incentives to continue in the long-term service of the Company and to create in such employees a more direct interest in the future success of the operations of the Company by relating incentive compensation to increases in stockholder value, so that the income of those employees is more closely aligned with the interests of the Company’s stockholders. The Plan is also designed to attract outstanding individuals and to retain and motivate Eligible Employees by providing an opportunity for investment in the Company.

1.3 Effective Date . The Effective Date of the Plan (the “Effective Date”) is February 3, 2005. This Plan and each Option (as defined in Section 2.1 hereof) granted hereunder is conditioned on and shall be of no force or effect until the Plan is approved by the stockholders of the Company. The Committee may grant Options, the exercise of which shall be expressly subject to the condition that the Plan shall have been approved by the stockholders of the Company.

Section 2

Definitions

2.1 Definitions . The following terms shall have the meanings set forth below:

(a) “ Administrative Agent ” means any designee or agent that may be appointed by the Committee pursuant to Section 3.1(b) hereof.

(f) “ Expiration Date ” means the date on which the Option Period (as defined in subsection 7.2(c) hereof) ends.

(g) “ 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 reasonable application of such reasonable valuation method, consistently applied, as the Committee deems appropriate.

(h) “ Internal Revenue Code ” means the Internal Revenue Code of 1986, as it may be amended from time to time, and any successor thereto.

(i) “ Option ” means a right to purchase shares of Stock at a stated price for a specified period of time. All Options granted under the Plan shall be Options which are not “incentive stock options” as described in Section 422 or any successor section(s) of the Internal Revenue Code.

(j) “ Option Price ” means the price at which shares of Stock subject to an Option may be purchased, determined in accordance with subsection 7.2(b) hereof.

(k) “ Participant ” means an Eligible Employee designated by the Committee from time to time during the term of the Plan to receive one or more Options under the Plan.

(l) “ Stock ” means the U.S. $0.625 par value Common Stock of the Company or any security into which such Common Stock is converted or exchanged upon merger, consolidation, or any capital restructuring (within the meaning of Section 4.3) of the Company.

Section 3

Plan Administration

3.1 Administration by the Committee .

(a) The Plan shall be administered by the Committee. In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, select the Participants from among the Eligible Employees, determine the Options to be granted pursuant to the Plan, the number of shares of Stock to be issued thereunder, the time at which such Options are to be granted, fix the Option Price, and establish such other terms and requirements as the Committee may deem necessary or desirable and consistent with the terms of the Plan. The Committee shall determine the form or forms of the agreements with Participants which shall evidence the particular provisions, terms, conditions, rights and duties of the Company and the Participants with respect to Options granted pursuant to the Plan, which provisions need not be identical except as may be provided herein.

3.2 Compliance with Section 162(m) . The Plan is intended to comply with the requirements of Section 162(m) or any successor section(s) of the Internal Revenue Code (“Section 162(m)”) as to any “covered employee” as defined in Section 162(m), and shall be administered, interpreted and construed consistently therewith. In accordance with this intent, the amount of income a Participant may receive from Options granted under the Plan shall be based solely on an increase in the value of the Stock after the date of the grant of the Option, or such other bases as may be permitted by applicable law. The Committee is authorized to take such additional action, if any, that may be required to ensure that the Plan and any Option granted under the Plan satisfy the requirements of Section 162(m), taking into account any regulations or other guidance issued by the Internal Revenue Service.

Section 4

Stock Subject to the Plan

4.1 Number of Shares . Subject to Section 7.1 hereof and to adjustment pursuant to Section 4.3 hereof, five million (5,000,000) shares of Stock 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 the Company if, on the advice of counsel for the Company, such stockholder approval is required. Shares of Stock which may be issued upon exercise of Options shall be applied to reduce the maximum number of shares of Stock remaining available for use under the Plan. The Company shall at all times during the term of the Plan and while any Options are outstanding retain as authorized and unissued Stock, or as Stock in the Company’s 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.

4.2 Other Shares of Stock . Any shares of Stock that are subject to an Option which expires, is forfeited, is cancelled, or for any reason is terminated unexercised, and any shares of Stock that for any other reason are not issued to a Participant or are forfeited shall automatically become available for use under the Plan.

4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company 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 (any of the foregoing being herein called a “capital restructuring”), 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, in each case, equitably and proportionally adjusted to take into account the occurrence of any of the above events, (i) the shares of Stock as to which Options may be granted under the Plan; (ii) the shares of Stock then included in each outstanding Option granted hereunder; and (iii) the Option Price for each outstanding Option granted hereunder.

4.4 Dividend Payable in Stock of Another Corporation, Etc . If the Company shall at any time pay or make any dividend or other distribution upon the Stock payable in securities or other property (except money or Stock), a proportionate part of such securities or other property shall be set aside and delivered to any Participant then holding an Option for the particular type of Stock for which the dividend or other distribution was made, upon exercise thereof. Prior to the time that any such securities or other property are delivered to a Participant in accordance with the foregoing, the Company 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 the Company in accordance with this Section are not delivered to a Participant because an Option is not exercised, then such securities or other property shall remain the property of the Company and shall be dealt with by the Company as it shall determine in its sole discretion.

4.5 Other Changes in Stock . In the event there shall be any change, other than as specified in Sections 4.3 and 4.4 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 subject to outstanding Options or which have been reserved for issuance pursuant to the Plan but are not then subject to an Option, then such adjustments shall be made by the Committee and shall be effective for all purposes of the Plan and on each outstanding Option that involves the particular type of stock for which a change was effected.

4.6 Rights to Subscribe . If the Company 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 the Company or of any other corporation, there shall be reserved with respect to the shares then under Option to any Participant of the particular class of Stock involved the Stock or other securities which the Participant would have been entitled to subscribe for if immediately prior to such grant the Participant had exercised his entire Option. If, upon exercise of any such Option, the Participant subscribes for the additional shares or other securities, the aggregate Option Price shall be increased by the amount of the price that is payable by the Participant for such additional shares or other securities.

4.7 General Adjustment Rules . No adjustment or substitution provided for in this Section 4 shall require the Company to sell a fractional share of Stock under any Option, or otherwise issue a fractional share of Stock, and the total substitution or adjustment with respect to each Option shall be limited by deleting any fractional share. In the case of any such substitution or adjustment, the aggregate Option Price for the shares of Stock then subject to the Option shall remain unchanged but the Option Price per share under each such Option shall be equitably adjusted by the Committee to reflect the greater or lesser number of shares of Stock or other securities into which the Stock subject to the Option may have been changed.

4.8 Determination by the Committee, Etc . Adjustments under this Section 4 shall be made by the Committee, whose determinations with regard thereto shall be final and binding upon all parties.

Section 5

Reorganization or Liquidation

In the event that the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or if all or substantially all of the assets or more than 20 percent of the outstanding voting stock of the Company is acquired by any other corporation, business entity or person, or in case of a reorganization (other than a reorganization under the United States Bankruptcy Code) or liquidation of the Company, and if the provisions of Section 8 hereof do not apply, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall, as to the Plan and outstanding Options make appropriate provision for the adoption and continuation of the Plan by the acquiring or successor corporation and for the protection of any such outstanding Options by the substitution on an equitable basis of appropriate stock of the Company or of the merged, consolidated or otherwise reorganized corporation which will be issuable with

respect to the Stock, provided that no additional benefits shall be conferred upon the Participants holding such Options as a result of such substitution, and the excess of the aggregate Fair Market Value of the shares subject to the Options immediately after such substitution over the aggregate Option Price thereof is not more than the excess of the aggregate Fair Market Value of the shares subject to such Options immediately before such substitution over the aggregate Option Price thereof. Additionally, upon the occurrence of such an event and upon written notice to the Participants, the Committee may provide that all unexercised Options shall be exercised within a specified number of days of the date of such notice or such Options will be terminated. In the latter event, the Committee shall accelerate the vesting dates of outstanding Options so that all Options become fully vested and exercisable prior to any such event.

Section 6

Participation

Participants in the Plan shall be those Eligible Employees who, in the judgment of the Committee, are performing, or during the term of their incentive arrangement will perform, vital services in the management, operation and development of the Company or an Affiliated Corporation, and significantly contribute, or are expected to significantly contribute, to the achievement of the Company’s long-term corporate economic objectives. Participants may be granted from time to time one or more Options; provided, however, that the grant of each such Option shall be separately approved by the Committee, and receipt of one such Option shall not result in automatic receipt of any other Option. Upon determination by the Committee that an Option is to be granted to a Participant, written notice shall be given to such person, specifying the terms, conditions, rights and duties related thereto. Each Participant shall, if required by the Committee, enter into an agreement with the Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan, specifying such terms, conditions, rights and duties. Options shall be deemed to be granted as of the date specified in the grant resolution of the Committee, which date shall be the date of any related agreement with the Participant. In the event of any inconsistency between the provisions of the Plan and any such agreement entered into hereunder, the provisions of the Plan shall govern.

Section 7

Stock Options

7.1 Grant of Stock Options . Coincident with or following designation for participation in the Plan, an Eligible Employee may be granted one or more Options. Grants of Options under the Plan shall be made by the Committee. In no event shall the exercise of one Option affect the right to exercise any other Option or affect the number of shares of Stock for which any other Option may be exercised, except as provided in subsection 7.2(j) hereof. During the duration of the Plan, no Eligible Employee may be granted Options which in the aggregate cover in excess of 25 percent of the total shares of Stock authorized under the Plan.

7.2 Stock Option Agreements . Each Option granted under the Plan shall be evidenced by a written stock option agreement which shall be entered into by the Company and the Participant to whom the Option is granted (the “Stock Option Agreement”), and which shall contain the following terms and conditions set out in this Section 7.2, as well as such other terms and conditions, not inconsistent therewith, as the Committee may consider appropriate. This requirement for delivery of a written Stock Option Agreement is satisfied by electronic delivery of such agreement provided that evidence of the Participant’s receipt of such electronic delivery is available to the Company and all applicable laws and regulations permit such delivery.

(a) Number of Shares . Each Stock Option Agreement shall state that it covers a specified number of shares of Stock, as determined by the Committee.

(b) Price . The price at which each share of Stock covered by an Option may be purchased shall be determined in each case by the Committee and set forth in the Stock Option Agreement, but in no event shall the price be less than the Fair Market Value of the Stock on the date the Option is granted.

(c) Duration of Options; Employment Required For Exercise . Each Stock Option Agreement shall state the period of time, determined by the Committee, within which the Option may be exercised by the Participant (the “Option Period”). The Option Period must end, in all cases, not more than ten years from the date an Option is granted. Except as otherwise provided in Sections 5 and 8 and subsection 7.2(d)(iv) hereof, each Option granted under the Plan shall become exercisable in increments such that 25 percent of the Option becomes exercisable on each of the four subsequent one-year anniversaries of the date the Option is granted, provided that each such additional 25-percent increment shall become exercisable only if the Participant has been continuously employed by the Company from the date the Option is granted through the date on which each such additional 25-percent increment becomes exercisable.

(d) Termination of Employment, Death, Disability, Etc . Each Stock Option Agreement shall provide as follows with respect to the exercise of the Option upon termination of the employment or the death or disability of the Participant:

(i) If the employment of the Participant by the Company is terminated within the Option Period for cause, as determined by the Company, the Option shall thereafter be void for all purposes. As used in this subsection 7.2(d), “cause” shall mean a gross violation, as determined by the Company, of the Company’s established policies and procedures, provided that the effect of this subsection 7.2(d) shall be limited to determining the consequences of a termination and that nothing in this subsection 7.2(d) shall restrict or otherwise interfere with the Company’s discretion with respect to the termination of any employee.

(ii) If the Participant retires from employment by the Company on or after attaining age 60, the Option may be exercised by the Participant within 36 months following his or her retirement (provided that such exercise must occur within the Option Period), but not thereafter. In the event of the Participant’s death during such 36-month period, each Option may be exercised by those entitled to do so in the manner referred to in (iv) below. In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of the Participant’s retirement.

(iii) If the Participant becomes disabled (as determined pursuant to the Company’s Long-Term Disability Plan or any successor plan), during the Option Period while still employed, or within the three-month period referred to in subsection 7.2(d)(v) below, or within the 36-month period referred to in subsection 7.2(d)(ii) above, the Option may be exercised by the Participant or by his or her guardian or legal representative, within twelve months following the Participant’s disability, or within the 36-month period referred to in subsection 7.2(d)(ii) above if applicable and if longer (provided that such exercise must occur within the Option Period), but not thereafter. In the event of the Participant’s death during such twelve-month period, each Option may be exercised by those entitled to do so in the manner referred to in subsection 7.2(d)(iv) below. In any such case, the Option may be exercised only as to the shares of Stock as to which the Option had become exercisable on or before the date of the Participant’s disability.

(iv) In the event of the Participant’s death while still employed by the Company, each Option of the deceased Participant may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution or as otherwise provided in Section 9.2 within twelve months following the Participant’s death (provided that in any event such exercise must occur within the Option Period), but not thereafter, as to all shares of Stock which are subject to such Option, including each 25-percent increment of the Option, if any, which has not yet become exercisable at the time of the Participant’s death. In the event of the Participant’s death within the 36-month period referred to in subsection 7.2(d)(ii) above or within the twelve-month period referred to in subsection 7.2(d)(iii) above, each Option of the deceased Participant that is exercisable at the time of death may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution or as otherwise provided in Section 9.2 within twelve months following the Participant’s death or within the 36-month period referred to in subsection 7.2(d)(ii) above, if applicable and if longer (provided that in any event such exercise must occur within the Option Period). The provisions of this paragraph (iv) of subsection 7.2(d) shall be applicable to each Stock Option Agreement as if set forth therein word for word. Each Stock Option Agreement executed by the Company prior to the adoption of this provision shall be deemed amended to include the provisions of this paragraph and all Options granted pursuant to such Stock Option Agreements shall be exercisable as provided herein.

(v) If the employment of the Participant by the Company is terminated (which for this purpose means that the Participant is no longer employed by the Company or by an Affiliated Corporation) within the Option Period for any reason other than cause, the Participant’s retirement on or after attaining age 60, or the Participant’s disability or death, the Option may be exercised by the Participant within three months following the date of such termination (provided that such exercise must occur within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of termination of the Participant’s employment.

(vi) Notwithstanding the provisions of Section 7.2(d) of the Plan to the contrary, for purposes of the Options, a Participant’s employment shall be deemed to continue with the Company during the Participant’s period of continuous employment by Fieldwood Energy LLC or any business while it is treated as a single employer with Fieldwood Energy LLC pursuant to Code §414(b), §414(c), §414(m), or §414(o) (collectively “Fieldwood”) commencing on the date such Participant is first employed by Fieldwood in connection with the sale of certain assets pursuant to the Purchase and Sale Agreement by and among Apache Corporation, Apache Shelf, Inc., and Apache Deepwater LLC, as

Sellers, and Fieldwood Energy LLC, as Buyer, and GOM Shelf LLC, dated July 18, 2013, and shall be deemed to cease with the Company on the date of termination of the Participant’s employment with Fieldwood for any reason. The Participant shall immediately notify the Company of his or her termination of employment with Fieldwood and the reason for such termination (termination for cause, disability, retirement after age 60, or termination for a reason other than the preceding reasons). If a Participant fails to timely notify the Company of the Participant’s termination of employment with Fieldwood, and such failure to timely notify allows an exercise of any Options hereunder to occur, which exercise of Options would have been forfeited if the notification of termination had been delivered timely, then the Participant must immediately return to the Company all shares received on exercise of such Options (except shares sold for fair market value prior to their return to the Company) and, if any of such shares have been sold, pay to the Company the amount by which the gross sales price of such shares exceeded the exercise price of the Options.

(e) Transferability . Each Stock Option Agreement shall provide that the Option granted therein is not transferable by the Participant except by will or pursuant to the laws of descent and distribution or as otherwise provided in Section 9.2, and that such Option is exercisable during the Participant’s lifetime only by him or her, or in the event of the Participant’s disability or incapacity, by his or her guardian or legal representative.

(f) Agreement to Continue in Employment . Each Stock Option Agreement shall contain the Participant’s agreement to remain in the employment of the Company, at the pleasure of the Company, for a continuous period of at least one year after the date of such Stock Option Agreement, at the salary rate in effect on the date of such agreement or at such changed rate as may be fixed, from time to time, by the Company. Termination of the Stock Option Agreement and all unvested Options granted under such Stock Option Agreement shall be the Company’s sole and exclusive remedy for an employee’s breach of this Section 7.2(f).

(g) Exercise, Payments, Etc .

(i) Each Stock Option Agreement shall provide that the method for exercising the Option granted therein shall be by delivery to the Office of the Secretary of the Company or to the Administrative Agent of written notice specifying the number of shares of Stock with respect to which such Option is exercised and payment to the Company of the aggregate Option Price. Such notice shall be in a form satisfactory to the Committee and shall specify the particular Options (or portions thereof) which are being exercised and the number of shares of Stock with respect to which the Options are being exercised. The Participant’s obligation to deliver written notice of exercise is satisfied by electronic delivery of such notice through means satisfactory to the Committee

and prescribed by the Company. The exercise of the Option shall be deemed effective on the date such notice is received by the Office of the Secretary or by the Administrative Agent and payment is made to the Company of the aggregate Option Price (the “Exercise Date”); however, if payment of the aggregate Option Price is made pursuant to a sale of shares of Stock as contemplated by subsection 7.2(g)(iii)(E) below, the Exercise Date shall be deemed to be the date of such sale. If requested by the Company, such notice shall contain the Participant’s representation that he or she is purchasing the Stock for investment purposes only and his or her agreement not to sell any Stock so purchased in any manner that is in violation of the Securities Act of 1933, as amended, or any applicable state law, and such restriction, or notice thereof, shall be placed on the certificates representing the Stock so purchased. The purchase of such Stock shall take place upon delivery of such notice to the Office of the Secretary of the Company or to the Administrative Agent, at which time the aggregate Option Price shall be paid in full to the Company by any of the methods or any combination of the methods set forth in subsection 7.2(g)(iii) below.

(ii) The shares of Stock to which the Participant is entitled as a result of the exercise of the Option shall be issued by the Company and (A) delivered by electronic means to an account designated by the Participant, or (B) delivered to the Participant in the form of a properly executed certificate or certificates representing such shares of Stock. If shares of Stock are used to pay all or part of the aggregate Option Price, the Company shall issue and deliver to the Participant the additional shares of Stock, in excess of the aggregate Option Price or portion thereof paid using shares of Stock, to which the Participant is entitled as a result of the Option exercise. The Company’s obligation to deliver the shares of Stock to which the Participant is entitled as a result of the exercise of the Option shall be subject to the payment in full to the Company of the aggregate Option Price and the required tax withholding.

(iii) The aggregate Option Price shall be paid by any of the following methods or any combination of the following methods:

(A) in cash, including the wire transfer of funds in U.S. dollars to one of the Company’s bank accounts located in the United States, with such bank account to be designated from time to time by the Company;

(B) by personal, certified or cashier’s check payable in U.S. dollars to the order of the Company;

(C) by delivery to the Company or the Administrative Agent of certificates representing a number of shares of Stock then owned by the Participant, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the aggregate Option Price of the Option being exercised, properly endorsed for transfer to the Company, provided that the shares of Stock used for this purpose must have been owned by the Participant for a period of at least six months;

(D) by certification or attestation to the Company or the Administrative Agent of the Participant’s ownership (as of the Exercise Date) of a number of shares of Stock, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the aggregate Option Price of the Option being exercised, provided that the shares of Stock used for this purpose have been owned by the Participant for a period of at least six months; or

(E) by delivery to the Company or the Administrative Agent of a properly executed notice of exercise together with irrevocable instructions to a broker to promptly deliver to the Company, by wire transfer or check as noted in subsection 7.2(g)(iii)(A) and (B) above, the amount of the proceeds of the sale of all or a portion of the Stock or of a loan from the broker to the Participant necessary to pay the aggregate Option Price.

(iv) For purposes of the Plan, the income resulting from an Option exercise shall be based on the Fair Market Value of the Stock for the Exercise Date; however, if payment of the aggregate Option Price is made pursuant to a sale of shares of Stock as contemplated by subsection 7.2(g)(iii)(E) hereof, the Fair Market Value shall be deemed to be the per share sale price and the Exercise Date shall be deemed to be the date of such sale.

(h) Date of Grant . An Option shall be considered as having been granted on the date specified in the grant resolution of the Committee.

(i) Tax Withholding . Each Stock Option Agreement shall provide that, upon exercise of the Option, the Participant shall make appropriate arrangements with the Company to provide for the minimum amount of tax withholding required by law, including without limitation Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code and applicable state and local income and other tax laws, by payment of such taxes in cash (including wire transfer), by check, or as provided in Section 13.2 hereof.

(j) Adjustment of Options . Subject to the provisions of Sections 4, 5, 7, 8 and 12 hereof, the Committee may make any adjustment in the number of shares of Stock covered by, or the terms of an outstanding Option and a subsequent granting of an Option, by amendment or by substitution for an outstanding Option; however, except as provided in Sections 4, 5, 8 and 12 hereof, the Committee may not adjust the Option Price of any outstanding Option. Such amendment or substitution may result in terms and conditions (including the number of shares of Stock covered, vesting schedule or Option Period) that differ from the terms and conditions of the original Option. The Committee may not, however, adversely affect the rights of any Participant to previously granted Options without the consent of such Participant. If such action is effected by amendment, the effective date of such amendment will be the date of grant of the original Option.

7.3 Stockholder Privileges . No Participant shall have any rights as a stockholder with respect to any shares of Stock covered by an Option until the Participant becomes the holder of record of such Stock. Except as provided in Section 4 hereof, no adjustments shall be made for dividends or other distributions or other rights as to which there is a record date preceding the date on which such Participant becomes the holder of record of such Stock.

Section 8

Change of Control

8.1 In General . In the event of the occurrence of a change of control of the Company, as defined in Section 8.3 hereof, all outstanding Options shall become automatically vested, without further action by the Committee or the Board, so as to make all such Options fully vested and exercisable as of the date of such change of control.

8.2 Limitation on Payments . If the provisions of this Section 8 would result in the receipt by any Participant of a payment within the meaning of Section 280G or any successor section(s) of the Internal Revenue Code, and the regulations promulgated thereunder, and if the receipt of such accelerated vesting or payment by any Participant would, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Sections 280G and 4999 or any successor section(s) of the Internal Revenue Code, then the amount of such accelerated vesting or payment shall be reduced to the extent required, in the opinion of independent tax counsel, to prevent the imposition of such excise tax; provided, however, that any payment or vesting of any Options shall occur as otherwise provided herein to the fullest extent possible without triggering such excise tax.

Section 9

Rights of Employees, Participants

9.1 Employment . Nothing contained in the Plan or in any Option granted under the Plan shall confer upon any Participant any right with respect to the continuation of his or her employment by the Company or any Affiliated Corporation, or interfere in any way with the right of the Company or any Affiliated Corporation, subject to the terms of any separate employment agreement to the contrary, at any time, to terminate such employment or to increase or decrease the level of the Participant’s compensation from the level in existence at the time of the grant of an Option. Whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of employment shall be determined by the Committee at the time.

9.2 Nontransferability . No right or interest of any Participant in an Option granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of a Participant’s death, a Participant’s rights and interests in Options shall, to the extent provided in Section 7 hereof, be transferable by testamentary will or the laws of descent and distribution, or a beneficiary designation that is in a form approved by the Committee and in compliance with the provisions of the Plan, applicable law, and the applicable Option, and payment of any amounts due under the Plan shall be made to, and exercise of any Options may be made by, the Participant’s designated beneficiary, legal representatives, heirs or legatees, as applicable. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his or her affairs because of mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator or other legal personal representative upon furnishing the Committee with evidence of such status satisfactory to the Committee.

Section 10

General Restrictions

10.1 Investment Representations . The Company may require a Participant, as a condition of exercising an Option, to give written assurances in substance and form satisfactory to the Company and its counsel to the effect that such person is acquiring the Stock subject to the Option for his own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws.

10.2 Compliance with Securities Laws . Each Option shall be subject to the requirement that, if at any time counsel to the Company shall determine that the listing, registration or qualification of the shares of Stock subject to such Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of shares of Stock thereunder, such Option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration, qualification, consent or approval.

Section 11

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of an Option exercise shall not constitute “earnings” or “compensation” with respect to which any other employee benefits of such Participant are determined including, without limitation, benefits under any pension, profit sharing, life insurance or salary continuation plan.

Section 12

Plan Amendment, Modification and Termination

The Board may at any time terminate, and from time to time may amend or modify the Plan provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the Company’s stockholders if stockholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements unless the Company, on the advice of counsel, determines that stockholder approval is otherwise necessary or desirable.

No amendment, modification or termination of the Plan shall in any manner adversely affect any Option theretofore granted under the Plan, without the consent of the Participant holding such Option.

Section 13

Withholding

13.1 Withholding Requirement . The Company’s obligations to deliver shares of Stock upon the exercise of an Option shall be subject to the Participant’s satisfaction of all applicable federal, state and local income and other tax withholding requirements.

13.2 Satisfaction of Required Withholding . At the time the Committee grants an Option, it may, in its sole discretion, grant the Participant an election to pay all such amounts of required tax withholding, or any part thereof:

(a) by the delivery to the Company or the Administrative Agent of a number of shares of Stock then owned by the Participant, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the amount required to be withheld, provided that such shares have been held by the Participant for a period of at least six months;

(b) by certification or attestation to the Company or the Administrative Agent of the Participant’s ownership (as of the Exercise Date) of a number of shares of Stock, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the amount required to be withheld, provided that such shares of Stock have been owned by the Participant for a period of at least six months; or

(c) by the Company or the Administrative Agent withholding from the shares of Stock otherwise issuable to the Participant upon exercise of the Option, a number of shares of Stock, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the amount required to be withheld. Any such elections by Participants to have shares of Stock withheld for this purpose will be subject to the following restrictions:

(i) all elections shall be made on or prior to the Exercise Date; and

(ii) all elections shall be irrevocable.

13.3 Section 16 Requirements . If the Participant is an officer or director of the Company within the meaning of Section 16 or any successor section(s) of the 1934 Act (“Section 16”), the Participant must satisfy the requirements of such Section 16 and any applicable rules and regulations thereunder with respect to the use of shares of Stock to satisfy such tax withholding obligation.

Section 14

Requirements of Law

14.1 Requirements of Law . The issuance of Stock and the payment of cash pursuant to the Plan shall be subject to all applicable laws, rules and regulations.

14.2 Federal Securities Laws Requirements . If a Participant is an officer or director of the Company within the meaning of Section 16, Options granted hereunder shall be subject to all conditions required under Rule 16b-3, or any successor rule(s) promulgated under the 1934 Act, to qualify the Option for any exception from the provisions of Section 16 available under such Rule. Such conditions are hereby incorporated herein by reference and shall be set forth in the Stock Option Agreement with the Participant which describes the Option.

14.3 Governing Law . The Plan and all Stock Option Agreements hereunder shall be construed in accordance with and governed by the laws of the State of Texas.

Section 15

Duration of the Plan

The Plan shall terminate effective as of May 2, 2007, and no Option shall be granted on or after termination date. Any Options outstanding at the time of the Plan termination shall continue to be exercisable in accordance with the Stock Option Agreement pertaining to each such Option.

Dated: September 16, 2013


	APACHE CORPORATION

ATTEST:

/s/ Cheri L. Peper	By:	/s/ Margery M. Harris
Cheri L. Peper		Margery M. Harris
Corporate Secretary		Executive Vice President,
		Human Resources

EXHIBIT 31.1

CERTIFICATIONS

I, G. Steven Farris, certify that:

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;

The registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.

/s/ G. Steven Farris

G. Steven Farris

Chairman and Chief Executive Officer

(principal executive officer)

Date: November 8, 2013

EXHIBIT 31.2

CERTIFICATIONS

I, Thomas P. Chambers, certify that:

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;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Thomas P. Chambers

Thomas P. Chambers

Executive Vice President and Chief Financial Officer

(principal financial officer)

Date: November 8, 2013

EXHIBIT 32.1

APACHE CORPORATION

Certification of Principal Executive Officer

and Principal Financial Officer

I, G. Steven Farris, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Corporation for the quarterly period ending September 30, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Corporation.

/s/ G. Steven Farris

By: G. Steven Farris

Title: Chairman and Chief Executive Officer

(principal executive officer)

Date: November 8, 2013

I, Thomas P. Chambers, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Corporation for the quarterly period ending September 30, 2013, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Corporation.

/s/ Thomas P. Chambers

By: Thomas P. Chambers

Title: Executive Vice President and Chief Financial Officer

(principal financial officer)

Date: November 8, 2013