SEC Info - Apache Corp. - ‘10-K’ for 12/31/22

/s/ Stephen J. Riney

Stephen J. Riney

Executive Vice President and Chief Financial Officer
(principal financial officer)

/s/ Rebecca A. Hoyt

Rebecca A. Hoyt

Senior Vice President, Chief Accounting Officer, and Controller
(principal accounting officer)

/s/ Clay Bretches

Clay Bretches

Director and Executive Vice President, Operations

/s/ David A. Pursell

David A. Pursell

Director and Executive Vice President, Development

/s/ Mark D. Maddox

Mark D. Maddox

Director and Executive Vice President, Administration

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for the preparation and integrity of the consolidated financial statements appearing in this annual report on Form 10-K. The financial statements were prepared in conformity with accounting principles generally accepted in the United States and include amounts that are based on management’s best estimates and judgments.

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements. Our internal control over financial reporting is supported by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful selection and training of qualified personnel and a written code of business conduct adopted by our Company’s board of directors, applicable to all Company directors and all officers and employees of our Company and subsidiaries.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2022.

The Company’s independent auditors, Ernst & Young LLP, a registered public accounting firm, are appointed by the Audit Committee of the Company’s board of directors. Ernst & Young LLP have audited and reported on the consolidated financial statements of Apache Corporation and subsidiaries and the effectiveness of the Company’s internal control over financial reporting. The reports of the independent auditors follow this report on pages F-2 and F-3.


/s/ *John J. Christmann IV*
Chief Executive Officer and President
(principal executive officer)

/s/ *Stephen J. Riney*
Executive Vice President and Chief Financial Officer
(principal financial officer)

/s/ *Rebecca A. Hoyt*
Senior Vice President, Chief Accounting Officer and Controller
(principal accounting officer)

Houston, Texas

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholder and the Board of Directors of Apache Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Apache Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, the related statements of consolidated operations, comprehensive income (loss), cash flows and changes in equity (deficit) and noncontrolling interest for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.


						Depreciation, depletion and amortization of property and equipment
Description of the Matter						At December 31, 2022, the carrying value of the Company’s property and equipment was $7,957 million, and depreciation, depletion and amortization (DD&A) expense was $1,177 million for the year then ended. As described in Note 1, the Company follows the successful efforts method of accounting for its oil and gas properties. DD&A of the cost of proved oil and gas properties is calculated using the unit-of-production method based on proved oil and gas reserves, as estimated by the Company’s internal reservoir engineers.

F-2


						Proved oil and gas reserves are those quantities of natural gas, crude oil, condensate, and natural gas liquids, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. Significant judgment is required by the Company’s internal reservoir engineers in evaluating geological and engineering data when estimating oil and gas reserves. Estimating reserves also requires the selection of inputs, including oil and gas price assumptions, future operating and capital costs assumptions, and tax rates by jurisdiction, among others. Because of the complexity involved in estimating oil and gas reserves, management engaged independent petroleum engineers to audit the proved oil and gas reserve estimates prepared by the Company’s internal reservoir engineers for select properties as of December 31, 2022. Auditing the Company’s DD&A calculations is complex because of the use of the work of the internal reservoir engineers and the independent petroleum engineers and the evaluation of management’s determination of the inputs described above used by the engineers in estimating oil and gas reserves.

How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its process to calculate DD&A, including management’s controls over the completeness and accuracy of the financial data provided to the engineers for use in estimating oil and gas reserves. Our audit procedures included, among others, evaluating the professional qualifications and objectivity of the Company’s internal reservoir engineers primarily responsible for overseeing the preparation of the reserve estimates and the independent petroleum engineers used to audit the proved oil and gas reserve estimates for select properties. In addition, in assessing whether we can use the work of the engineers, we evaluated the completeness and accuracy of the financial data and inputs described above used by the engineers in estimating oil and gas reserves by agreeing them to source documentation, and we identified and evaluated corroborative and contrary evidence. For proved undeveloped reserves, we evaluated management’s development plan for compliance with the SEC rule that undrilled locations are scheduled to be drilled within five years, unless specific circumstances justify a longer time, by assessing consistency of the development projections with the Company’s development plan and the availability of capital relative to the development plan. We also tested the mathematical accuracy of the DD&A calculation, including comparing the oil and gas reserve amounts used in the calculation to the Company’s reserve reports.
						Accounting for asset retirement obligation for the North Sea segment
Description of the Matter						At December 31, 2022, the asset retirement obligation (ARO) balance totaled $1,991 million. As further described in Note 9, the Company’s ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with the Company’s oil and gas properties and other long-lived assets. The estimation of the ARO related to the North Sea segment requires significant judgment given the magnitude of the expected retirement costs. Auditing the Company’s ARO for the North Sea segment is complex and highly judgmental because of the significant estimation required by management in determining the obligation. In particular, the estimate was sensitive to retirement cost estimates, which are affected by expectations about future market and economic conditions.

F-3


How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over its ARO estimation process, including management’s review of the significant assumptions that have a material effect on the determination of the obligations. We also tested management’s controls over the completeness and accuracy of financial data used in the valuation. To test the ARO for the North Sea segment, our audit procedures included, among others, assessing the significant assumptions and inputs used in the valuation, such as retirement cost estimates. For example, we evaluated retirement cost estimates by comparing the Company’s estimates to recent offshore activities and costs. We also involved our internal specialists in testing the underlying retirement cost estimates.
						Accounting for decommissioning contingency for sold Gulf of Mexico properties
Description of the Matter						At December 31, 2022, the decommissioning contingency for sold Gulf of Mexico properties (decommissioning contingency) balance totaled $1.2 billion. As further described in Note 12, the Company’s decommissioning contingency reflects the estimated undiscounted potential liability to fund decommissioning of the sold Gulf of Mexico properties. The estimation of the decommissioning contingency requires significant judgment given the magnitude and higher estimation uncertainty of the expected retirement costs. Auditing the Company’s decommissioning contingency is complex and highly judgmental because of the significant estimation required by management in determining the decommissioning contingency. In particular, the estimate was sensitive to retirement cost estimates, which are subjective assumptions affected by expectations about future market and economic conditions.

How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over its decommissioning contingency estimation process, including management’s review of the significant assumptions that have a material effect on the determination of the contingency. We also tested management’s controls over the completeness and accuracy of financial data used in the valuation. To test the decommissioning contingency, our audit procedures included, among others, assessing the significant assumptions and inputs used in the valuation, such as retirement cost estimates. For example, we evaluated retirement cost estimates by comparing the Company’s estimates to recent offshore activities and costs as well as current bids obtained from service providers. We also involved our internal specialists in testing the underlying retirement cost estimates.

/s/ i Ernst & Young LLP

We have served as the Company’s auditor since 2002.

i Houston, Texas

F-4

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

For the Year Ended December 31,

2022

2021

2020

(In millions, except per common share data)

REVENUES AND OTHER:

Oil, natural gas, and natural gas liquids production revenues(1)

i 9,028

i 6,498

i 4,037

Purchased oil and gas sales

i 1,855

i 1,487

i 398

Total revenues

i 10,883

i 7,985

i 4,435

Derivative instrument gains (losses), net

( i 107)

i 94

( i 223)

Gain on divestitures, net

i 1,180

i 67

i 32

Losses on previously sold Gulf of Mexico properties

( i 157)

( i 446)

i —

Other, net

i 139

i 228

i 64

i 11,938

i 7,928

i 4,308

OPERATING EXPENSES:

Lease operating expenses

i 1,435

i 1,241

i 1,127

Gathering, processing, and transmission(1)

i 356

i 264

i 274

Purchased oil and gas costs

i 1,776

i 1,580

i 357

Taxes other than income

i 256

i 204

i 123

Exploration

i 146

i 127

i 274

General and administrative

i 462

i 357

i 290

Transaction, reorganization, and separation

i 26

i 22

i 54

Depreciation, depletion, and amortization

i 1,177

i 1,360

i 1,772

Asset retirement obligation accretion

i 117

i 113

i 109

Impairments

i —

i 208

i 4,501

Financing costs, net

i 313

i 472

i 267

i 6,064

i 5,948

i 9,148

NET INCOME (LOSS) BEFORE INCOME TAXES

i 5,874

i 1,980

( i 4,840)

Current income tax provision

i 1,507

i 652

i 176

Deferred income tax provision (benefit)

i 145

( i 74)

( i 112)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS

i 4,222

i 1,402

( i 4,904)

Net income (loss) attributable to noncontrolling interest - Sinopec

i 464

i 174

( i 121)

Net income attributable to noncontrolling interest - Altus

i 14

i 4

i 1

Net income attributable to noncontrolling interest - APA Corporation

i 278

i —

Net income (loss) attributable to Altus Preferred Unit limited partners

( i 70)

i 162

i 76

NET INCOME (LOSS) ATTRIBUTABLE TO APA CORPORATION

i 3,536

i 1,062

( i 4,860)

(1) For revenues and gathering, processing, and transmission costs associated with Kinetik, refer to Note 7—Equity Method Interest for further detail.

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

F-5

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

For the Year Ended December 31,

2022

2021

2020

(In millions)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS

i 4,222

i 1,402

( i 4,904)

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Pension and postretirement benefit plan

( i 8)

i 7

( i 2)

Share of equity method interests other comprehensive income

i —

i 1

i —

COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS

i 4,214

i 1,410

( i 4,906)

Comprehensive income (loss) attributable to noncontrolling interest - Sinopec

i 464

i 174

( i 121)

Comprehensive income attributable to noncontrolling interest - Altus

i 14

i 4

i 1

Net income attributable to noncontrolling interest - APA Corporation

i 278

i —

Comprehensive income (loss) attributable to Altus Preferred Unit limited partners

( i 70)

i 162

i 76

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO APA CORPORATION

i 3,528

i 1,070

( i 4,862)

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

F-6

APACHE CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

For the Year Ended December 31,

2022

2021

2020

(In millions)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) including noncontrolling interests

i 4,222

i 1,402

( i 4,904)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Unrealized derivative instrument losses (gains), net

i 23

( i 69)

i 87

Gain on divestitures, net

( i 1,180)

( i 67)

( i 32)

Exploratory dry hole expense and unproved leasehold impairments

i 92

i 86

i 211

Depreciation, depletion, and amortization

i 1,177

i 1,360

i 1,772

Asset retirement obligation accretion

i 117

i 113

i 109

Impairments

i —

i 208

i 4,501

Provision for (benefit from) deferred income taxes

i 145

( i 74)

( i 112)

Loss (gain) from extinguishment of debt

i 67

i 104

( i 160)

Losses on previously sold Gulf of Mexico properties

i 157

i 446

i —

Other

( i 137)

( i 23)

i 102

Changes in operating assets and liabilities:

Receivables

( i 55)

( i 393)

i 149

Inventories

( i 1)

( i 9)

i 19

Drilling advances and other current assets

( i 12)

i 60

( i 29)

Deferred charges and other long-term assets

i 70

( i 42)

( i 13)

Accounts payable

i 12

i 205

( i 167)

Receivable/payable with APA Corporation

i —

i 40

i —

Accrued expenses

i 293

i 127

( i 163)

Deferred credits and noncurrent liabilities

( i 138)

i 31

i 18

NET CASH PROVIDED BY OPERATING ACTIVITIES

i 4,852

i 3,505

i 1,388

CASH FLOWS FROM INVESTING ACTIVITIES:

Additions to upstream oil and gas property

( i 1,503)

( i 934)

( i 1,270)

Leasehold and property acquisitions

( i 37)

( i 9)

( i 4)

Noncurrent receivable from APA Corporation

( i 832)

i —

Contributions to Altus equity method interests

i —

( i 28)

( i 327)

Proceeds from asset divestitures

i 778

i 256

i 166

Proceeds from sale of Kinetik shares

i 224

i —

Deconsolidation of Altus cash and cash equivalents

( i 143)

i —

Other, net

i 28

i 49

( i 31)

NET CASH USED IN INVESTING ACTIVITIES

( i 1,485)

( i 666)

( i 1,466)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Apache credit facility, net

i 138

i 392

i 150

Proceeds from Altus credit facility

i —

i 33

i 228

Proceeds from (payments on) note payable to APA Corporation, net

( i 835)

i 78

i —

Fixed rate debt borrowings

i —

i 1,238

Payments on fixed-rate debt

( i 1,493)

( i 1,795)

( i 1,243)

Distributions to noncontrolling interest - Sinopec

( i 362)

( i 279)

( i 91)

Distributions to Altus Preferred Unit limited partners

( i 11)

( i 46)

( i 23)

Distributions to APA Corporation

( i 894)

( i 1,182)

i —

Dividends paid

i —

( i 9)

( i 123)

Other, net

( i 4)

( i 14)

( i 43)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

( i 3,461)

( i 2,822)

i 93

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( i 94)

i 17

i 15

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

i 279

i 262

i 247

CASH AND CASH EQUIVALENTS AT END OF PERIOD

i 185

i 279

i 262

SUPPLEMENTARY CASH FLOW DATA:

Interest paid, net of capitalized interest

i 322

i 442

i 419

Income taxes paid, net of refunds

i 1,431

i 633

i 212

Non-cash financing adjustment: APA’s assumption of Apache’s borrowings on its syndicated credit facility

i 680

i —

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

F-7

APACHE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

December 31,

2022(1)

2021(1)

(In millions, except share data)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents ($ i 132 related to Altus VIE)

i 185

i 279

Receivables, net of allowance of $ i 117 and $ i 109

i 1,424

i 1,390

Other current assets (Note 6) ($ i 9 related to Altus VIE)

i i 993 /

i 649

Accounts receivable from APA Corporation

i —

i 77

i 2,602

i 2,395

PROPERTY AND EQUIPMENT:

Oil and gas, on the basis of successful efforts accounting:

i 41,245

i 40,474

Gathering, processing, and transmission facilities ($ i 209 related to Altus VIE)

i 449

i 673

Other ($ i 3 related to Altus VIE)

i 613

i 1,126

Less: Accumulated depreciation, depletion, and amortization ($ i 25 related to Altus VIE)

( i 34,350)

( i 34,213)

i 7,957

i 8,060

OTHER ASSETS:

Equity method interests (Note 7) ($ i 1,365 related to Altus VIE)

i 624

i 1,365

Decommissioning security for sold Gulf of Mexico properties (Note 12)

i 217

i 640

Deferred charges and other ($ i 6 related to Altus VIE)

i 571

i 581

Noncurrent receivable from APA Corporation

i 869

i —

Note receivable from APA Corporation (Note 2)

i 1,415

i 1,352

i 14,255

i 14,393

LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY (DEFICIT)

CURRENT LIABILITIES:

Accounts payable ($ i 12 related to Altus VIE)

i 646

i 651

Note payable to APA Corporation (Note 2)

i —

i 195

Current debt

i 2

i 215

Other current liabilities (Note 8) ($ i 15 related to Altus VIE)

i i 2,049 /

i 1,170

i 2,697

i 2,231

LONG-TERM DEBT (Note 10) ($ i 657 related to Altus VIE)

i 4,885

i 7,295

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:

Income taxes

i 314

i 148

Asset retirement obligation ($ i 68 related to Altus VIE)

i 1,936

i 2,089

Decommissioning contingency for sold Gulf of Mexico properties (Note 12)

i 738

i 1,086

Other ($ i 67 related to Altus VIE)

i 443

i 572

i 3,431

i 3,895

REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 14)

i —

i 712

EQUITY (DEFICIT):

Common stock, $ i i 0.625 / par, i 1,000 and i 1,000 shares authorized, respectively, i 1,000 and i 1,000 shares issued, respectively

i —

Paid-in capital

i 8,025

i 8,677

Accumulated deficit

( i 5,781)

( i 9,317)

Accumulated other comprehensive income

i 14

i 22

EQUITY (DEFICIT) ATTRIBUTABLE TO APA CORPORATION

i 2,258

( i 618)

Noncontrolling interest - Sinopec

i 922

i 820

Noncontrolling interest - APA Corporation

i 62

i —

Noncontrolling interest - Altus

i —

i 58

TOTAL EQUITY

i 3,242

i 260

i 14,255

i 14,393

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

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

F-8

APACHE CORPORATION AND SUBSIDIARIES

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

Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners

Common
Stock

Paid-In
Capital

Accumulated Deficit

Treasury
Stock

Accumulated
Other
Comprehensive
Income (Loss)

PARENT COMPANY
EQUITY (DEFICIT)

Noncontrolling
Interests

TOTAL
EQUITY (DEFICIT)

(In millions)

BALANCE AT DECEMBER 31, 2019

i 555

i 261

i 11,769

( i 5,601)

( i 3,190)

i 16

i 3,255

i 1,210

i 4,465

Net loss attributable to APA Corporation

—

( i 4,860)

—

( i 4,860)

—

( i 4,860)

Net loss attributable to noncontrolling interest - Sinopec

—

( i 121)

Net income attributable to noncontrolling interest - Altus

—

i 1

Net income attributable to Altus Preferred Unit limited partners

i 76

—

Distributions paid to Altus Preferred Unit limited partners

( i 23)

—

Distributions to noncontrolling interest - Egypt

—

( i 91)

Common dividends ($ i 0.10 per share)

—

( i 38)

—

( i 38)

—

( i 38)

Common stock activity, net

—

i 1

( i 18)

—

( i 17)

—

( i 17)

Compensation expense

—

i 23

—

i 23

—

i 23

Other

—

( i 1)

—

i 1

( i 2)

( i 5)

( i 7)

BALANCE AT DECEMBER 31, 2020

i 608

i 262

i 11,735

( i 10,461)

( i 3,189)

i 14

( i 1,639)

i 994

( i 645)

Net income attributable to APA Corporation

—

i 1,062

—

i 1,062

—

i 1,062

Net income attributable to noncontrolling interest - Sinopec

—

i 174

Net income attributable to noncontrolling interest - Altus

—

i 4

Net income attributable to Altus Preferred Unit limited partners

i 162

—

Distributions payable to Altus Preferred Unit limited partners

( i 12)

—

Distributions paid to Altus Preferred Unit limited partners

( i 46)

—

Distributions to noncontrolling interest - Egypt

—

( i 279)

Distributions to APA Corporation

—

( i 890)

—

( i 890)

—

( i 890)

Common dividends ($ i 0.025 per share)

—

( i 9)

—

( i 9)

—

( i 9)

APA Corporation share exchange

—

( i 262)

( i 2,927)

—

i 3,189

—

i —

Holding Company Reorganization

—

i 757

i 82

—

i 839

—

i 839

Other

—

i 11

—

i 8

i 19

( i 15)

i 4

BALANCE AT DECEMBER 31, 2021

i 712

i —

i 8,677

( i 9,317)

i —

i 22

( i 618)

i 878

i 260

Net income attributable to APA Corporation

—

i 3,536

—

i 3,536

—

i 3,536

Net income attributable to noncontrolling interest - APA

—

i 278

Net income attributable to noncontrolling interest - Sinopec

—

i 464

Net income attributable to noncontrolling interest - Altus

—

i 14

Net loss attributable to Altus Preferred Unit limited partners

( i 70)

—

Distributions to noncontrolling interest - Egypt

—

( i 362)

Distributions to APA Corporation

—

( i 678)

—

( i 678)

( i 216)

( i 894)

Deconsolidation of Altus

( i 642)

—

( i 72)

Other

—

i 26

—

( i 8)

i 18

—

i 18

BALANCE AT DECEMBER 31, 2022

i —

i 8,025

( i 5,781)

i —

i 14

i 2,258

i 984

i 3,242

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

F-9

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nature of Operations

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

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

1. i SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting policies used by Apache and its subsidiaries reflect industry practices and conform to accounting principles generally accepted in the U.S. (GAAP). The Company’s financial statements for prior periods may include reclassifications that were made to conform to the current-year presentation. Significant accounting policies are discussed below.

Principles of Consolidation

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

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

In conjunction with the ratification of a new merged concession agreement with the Egyptian General Petroleum Corporation (EGPC) in December 2021, Apache modified partnership agreements for certain consolidated subsidiaries. Apache subsequently determined that one of its limited partnership subsidiaries, which has control over Apache’s Egyptian operations, qualified as a variable interest entity (VIE) under GAAP. Apache continues to consolidate this limited partnership subsidiary because the Company has concluded that it has a controlling financial interest in the Egyptian operations and was determined to be the primary beneficiary of the VIE. For all periods presented, Sinopec International Petroleum Exploration and Production Corporation (Sinopec) has owned a one-third minority participation in the Company’s consolidated Egypt oil and gas business as a noncontrolling interest. Under the modified partnership agreements, APA owns a minority participation in the remaining two-thirds of its consolidated Egypt oil and gas business as a noncontrolling interest. Refer to Note 2—Transactions with Parent Affiliate for detail regarding APA’s noncontrolling interest. All noncontrolling interests are reflected as a separate component of equity in the Company’s consolidated balance sheet.

Additionally, prior to the BCP Business Combination defined below, third-party investors owned a minority interest of approximately i 21 percent of Altus, which was reflected as a separate noncontrolling interest component of equity in the Company’s consolidated balance sheet. ALTM qualified as a VIE under GAAP, which Apache consolidated because a wholly owned subsidiary of Apache had a controlling financial interest and was determined to be the primary beneficiary. Additionally, the assets of ALTM could only be used to settle obligations of ALTM. There was no recourse to the Company for ALTM’s liabilities.

F-10

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The stockholders agreement entered into by and among the Company, ALTM, BCP, and other related and affiliated entities provides that the Company, through one of its wholly owned subsidiaries, retains the ability to designate a director to the board of directors of Kinetik for so long as the Company and its affiliates beneficially own i 10 percent or more of Kinetik’s outstanding common stock. Based on this board representation, combined with the Company’s stock ownership, management determined it has significant influence over Kinetik. Investments in which the Company has significant influence, but not control, are accounted for under the equity method of accounting. These investments are recorded separately as “Equity method interests” in the Company’s consolidated balance sheet. The Company elected the fair value option to account for its equity method interest in Kinetik. Refer to Note 7—Equity Method Interests for further detail.

Use of Estimates

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities 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. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of the Company’s financial statements and changes in these estimates are recorded when known.

Significant estimates with regard to these financial statements include the estimates of fair value for long-lived assets (refer to “Fair Value Measurements” and “Property and Equipment” sections in this Note 1 below), the fair value determination of acquired assets and liabilities (refer to Note 3—Acquisitions and Divestitures), the fair value of equity method interests (refer to “Equity Method Interests” within this Note 1 and Note 7—Equity Method Interests), the assessment of asset retirement obligations (refer to Note 9—Asset Retirement Obligation), the estimate of income taxes (refer to Note 11—Income Taxes), the estimation of the contingent liability representing Apache’s potential decommissioning obligations on sold properties in the Gulf of Mexico (refer to Note 12—Commitments and Contingencies), and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom (refer to Note 19—Supplemental Oil and Gas Disclosures (Unaudited)).

Fair Value Measurements

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

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

F-11

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Recurring fair value measurements are presented in further detail in Note 5—Derivative Instruments and Hedging Activities, Note 7—Equity Method Intere s t s, Note 10—Debt and Financing Costs, Note 13—Retirement and Deferred Compensation Plans, and Note 14—Redeemable Noncontrolling Interest — Altus.

The Company also uses fair value measurements on a nonrecurring basis when certain qualitative assessments of its assets indicate a potential impairment. i The following table presents a summary of asset impairments recorded in connection with fair value assessments:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Oil and gas proved property

i —

i 4,319

Gathering, processing, and transmission facilities

i —

i 68

Equity method interests

i —

i 160

i —

Goodwill

i —

i 87

Inventory and other

i —

i 48

i 27

Total Impairments

i —

i 208

i 4,501

For the year ended December 31, 2021, the Company recorded asset impairments totaling $ i 208 million. These charges include a $ i 160 million impairment on the Company’s equity method interest in the EPIC crude oil pipeline (EPIC) as part of Altus’ review of the fair value of its assets in relation to the BCP Business Combination. Refer to “Equity Method Interests” within this Note 1 below and Note 3—Acquisitions and Divestitures for further detail on the BCP Business Combination. The Company also recorded other impairments during 2021 of approximately $ i 26 million in connection with inventory valuations in Egypt and $ i 22 million in connection with inventory valuations and expected equipment dispositions in the North Sea.

For the year ended December 31, 2020, the Company recorded asset impairments totaling $ i 4.5 billion in connection with non-recurring fair value assessments. Given the crude oil price collapse on lower demand and economic activity resulting from the coronavirus disease 2019 (COVID-19) global pandemic and related governmental actions, the Company assessed its oil and gas property and gathering, processing, and transmission (GPT) facilities for impairment based on the net book value of its assets as of March 31, 2020. The Company recognized proved property impairments of $ i 3.9 billion, $ i 354 million, and $ i 7 million in the U.S., Egypt, and North Sea, respectively, all of which were impaired to their estimated fair values as a result of lower forecasted commodity prices, changes to planned development activity, and increasing market uncertainty. Similarly, the Company recognized GPT facility impairments of $ i 68 million in Egypt. These impairments are discussed in further detail below in “Property and Equipment - Oil and Gas Property” and “Property and Equipment - Gathering, Processing, and Transmission Facilities.”

The Company also performed an interim impairment analysis of the goodwill related to its Egypt reporting unit. Reductions in estimated net present value of expected future cash flows from oil and gas properties resulted in implied fair values below the carrying values of the Company’s Egypt reporting unit. As a result of these assessments, the Company recognized non-cash impairments of the entire amount of recorded goodwill in the Egypt reporting unit of $ i 87 million in the first quarter of 2020.

During the remainder of 2020, the Company recorded additional proved property impairments totaling $ i 20 million in Egypt, as well as $ i 13 million for the early termination of drilling rig leases, $ i 5 million for inventory revaluations, and $ i 9 million of other asset impairments, all in the U.S.

F-12

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Revenue Recognition

Upstream

The Company’s upstream oil and gas segments primarily generate revenue from contracts with customers from the sale of its crude oil, natural gas, and natural gas liquids production volumes. In addition to Apache-related production volumes, the Company also sells commodity volumes purchased from third-parties to provide flexibility to fulfill sales obligations and commitments. Under these short-term commodity sales contracts, the physical delivery of each unit of quantity represents a single, distinct performance obligation on behalf of the Company. Contract prices are determined based on market-indexed prices, adjusted for quality, transportation, and other market-reflective differentials. Revenue is measured by allocating an entirely variable market price to each performance obligation and recognized at a point in time when control is transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, and the Company’s right to payment. Control typically transfers to customers upon the physical delivery at specified locations within each contract and the transfer of title.

The Company’s Egypt operations are conducted pursuant to production-sharing contracts (PSCs). Under the terms of the Company’s PSCs, the Company is the contractor partner (Contractor) with the Egyptian General Petroleum Corporation (EGPC) and bears the risk and cost of exploration, development, and production activities. In return, if exploration is successful, the Contractor receives entitlement to variable physical volumes of hydrocarbons, representing recovery of the costs incurred and a stipulated share of production after cost recovery. Additionally, the Contractor’s income taxes, which remain the liability of the Contractor under domestic law, are paid by EGPC on behalf of the Contractor out of EGPC’s production entitlement. Income taxes paid to the Arab Republic of Egypt on behalf of the Contractor are recognized as oil and gas sales revenue and income tax expense and reflected as production and estimated reserves. Because Contractor cost recovery entitlement and income taxes paid on its behalf are determined as a monetary amount, the quantities of production entitlement and estimated reserves attributable to these monetary amounts will fluctuate with commodity prices. In addition, because the Contractor income taxes are paid by EGPC, the amount of the income tax has no economic impact on the Company’s Egypt operations despite impacting the Company’s production and reserves. Revenues related to Egypt’s tax volumes are considered revenue from a non-customer.

On December 27, 2021, the Company announced the ratification of a new merged concession agreement (MCA) with the Egyptian Ministry of Petroleum and the EGPC, having an effective date of April 1, 2021. The MCA consolidated i 98 percent of gross acreage and i 90 percent of gross production under one concession agreement and refreshed the existing development lease terms for i 20 years and exploration leases for i 5 years. The consolidated concession has a single cost recovery pool to provide improved access to cost recovery, a fixed i 40 percent cost recovery limit, and a fixed profit-sharing rate of i 30 percent for all the Company’s production covered under the new concession. For all periods presented, Sinopec has owned a one-third minority participation in the Company’s consolidated Egypt oil and gas business as a noncontrolling interest. Under the modified partnership agreements, APA owns a minority participation in the remaining two-thirds of its consolidated Egypt oil and gas business as a noncontrolling interest.

Refer to Note 18—Business Segment Information for a disaggregation of revenue by product and reporting segment.

Altus Midstream

Prior to the deconsolidation of Altus on February 22, 2022, the Company’s Altus Midstream segment was operated by ALTM, through its subsidiary, Altus Midstream LP. Altus generated revenue from contracts with customers from its gathering, compression, processing, and transmission services provided on the Company’s natural gas and natural gas liquid production volumes. Under these long-term commercial service contracts, providing the related service represented a single, distinct performance obligation on behalf of Altus that was satisfied over time. In accordance with the terms of these agreements, Altus primarily received a fixed fee for each contract year, subject to yearly fee escalation recalculations. Revenue was primarily measured using the output method and recognized in the amount to which Altus had the right to invoice, as performance completed to date corresponded directly with the value to its customers. For the periods prior to the BCP Business Combination, Altus Midstream segment revenues were primarily attributable to sales between Altus and APA, which were fully eliminated upon consolidation.

F-13

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Payment Terms and Contract Balances

Payments under all contracts with customers are typically due and received within a short-term period of one year or less, after physical delivery of the product or service has been rendered. Receivables from contracts with customers, including receivables for purchased oil and gas sales and net of allowance for credit losses, were $ i i 1.3 / billion at each of December 31, 2022 and 2021.

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

i Cash and Cash Equivalents

The Company considers all highly liquid short-term investments with a maturity of three months or less at the time of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. As of December 31, 2022 and 2021, the Company had $ i 185 million and $ i 279 million, respectively, of cash and cash equivalents. As of December 31, 2021, approximately $ i 132 million of cash was held by Altus, which was deconsolidated on February 22, 2022. The Company had i i no / restricted cash as of December 31, 2022 and 2021.

i Accounts Receivable and Allowance for Credit Losses

Accounts receivable are stated at amortized cost net of an allowance for credit losses. The Company routinely assesses the collectability of its financial assets measured at amortized cost. The Company monitors the credit quality of its counterparties through review of collections, credit ratings, and other analyses. The Company develops its estimated allowance for expected credit losses primarily using an aging method and analyses of historical loss rates as well as consideration of current and future conditions that could impact its counterparties’ credit quality and liquidity.

The following table presents changes to the Company’s allowance for credit loss:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Allowance for credit loss at beginning of year

i 109

i 95

i 88

Additional provisions for the year

i 9

i 19

i 7

Uncollectible accounts written off, net of recoveries

( i 1)

( i 5)

i —

Allowance for credit loss at end of year

i 117

i 109

i 95

i Receivable from / Payable to APA

Receivable from or payable to APA represents the net result of Apache’s administrative and support services provided to APA and other miscellaneous cash management transactions to be settled between the two affiliated entities. Cash will be transferred to Apache or paid to APA over time in order to manage affiliate balances for cash management purposes. Refer to Note 2—Transactions with Parent Affiliate for more detail.

Inventories

Inventories consist principally of tubular goods and equipment and are stated at the lower of weighted-average cost or net realizable value. Oil produced but not sold, primarily in the North Sea, is also recorded to inventory and is stated at the lower of the cost to produce or net realizable value.

Property and Equipment

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

F-14

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Oil and Gas Property

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

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

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

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

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

The significant decline in crude oil and natural gas prices, as well as longer-term commodity price outlooks, related to reduced demand for oil and natural gas as a result of the COVID-19 pandemic and related governmental actions indicated possible impairment of the Company’s proved and unproved oil and gas properties in early 2020. In addition to estimating risk-adjusted reserves and future production volumes, estimated future commodity prices are the largest driver in variability of undiscounted pre-tax cash flows. Expected cash flows were estimated based on management’s views of published West Texas Intermediate (WTI), Brent, and Henry Hub forward pricing as of the balance sheet dates. Other significant assumptions and inputs used to calculate estimated future cash flows include estimates for future development activity, exploration plans and remaining lease terms. A i 10 percent discount rate, based on a market-based weighted-average cost of capital estimate, was applied to the undiscounted cash flow estimate to value all of the Company’s asset groups that were subject to impairment charges in 2020.

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APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table represents non-cash impairments charges of the carrying value of the Company’s proved and unproved properties:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Proved properties:

U.S.

i —

i 3,938

Egypt

i —

i 374

North Sea

i —

i 7

Total proved properties

i —

i 4,319

Unproved properties:

U.S.

i 20

i 22

i 92

Egypt

i 4

i 8

North Sea

i —

i 1

Total unproved properties

i 24

i 31

i 101

Proved properties impaired had an aggregate fair value as of the most recent date of impairment of $ i 1.9 billion for 2020.

Gains and losses on divestitures of the Company’s oil and gas properties are recognized in the statement of consolidated operations upon closing of the transaction. Refer to Note 3—Acquisitions and Divestitures for more detail.

Gathering, Processing, and Transmission (GPT) Facilities

GPT facilities totaled $ i 449 million and $ i 673 million at December 31, 2022 and 2021, respectively, with accumulated depreciation for these assets totaling $ i 367 million and $ i 386 million for the respective periods. As a result of the BCP Business Combination, the Company deconsolidated $ i 183 million of Altus GPT net assets on February 22, 2022. GPT facilities are depreciated on a straight-line basis over the estimated useful lives of the assets. The estimation of useful life takes into consideration anticipated production lives from the fields serviced by the GPT assets, whether Apache-operated or third party-operated, as well as potential development plans by the Company for undeveloped acreage within, or close to, those fields.

The Company assesses the carrying amount of its GPT facilities whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of these facilities is more than the sum of the undiscounted cash flows, an impairment loss is recognized for the excess of the carrying value over its fair value.

The Company assessed its long-lived infrastructure assets for impairment as of March 31, 2020, and recorded an impairment of $ i 68 million on its GPT facilities in Egypt during the first quarter of 2020. The fair values of the impaired assets, which were determined to be $ i 46 million, were estimated using the income approach, which considers internal estimates based on future throughput volumes from applicable development concessions in Egypt and estimated costs to operate. These assumptions were applied based on throughput assumptions developed in relation to the oil and gas proved property impairment assessment, as discussed above, to develop future cash flow projections that were then discounted to estimated fair value, using a i 10 percent discount rate, based on a market-based weighted-average cost of capital estimate. The Company has classified these non-recurring fair value measurements as Level 3 in the fair value hierarchy.

Other Property and Equipment

Other property and equipment includes computer software and equipment, buildings, vehicles, furniture and fixtures, land, and other equipment. These assets are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from i 3 to i 20 years. Other property and equipment, net of accumulated depreciation totaled $ i 206 million and $ i 225 million at December 31, 2022 and 2021, respectively.

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APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Asset Retirement Costs and Obligations

The initial estimated asset retirement obligation related to property and equipment and subsequent revisions are recorded as a liability at fair value, with an offsetting asset retirement cost recorded as an increase to the associated property and equipment on the consolidated balance sheet. Revisions in estimated liabilities can result from changes in estimated inflation rates, changes in service and equipment costs and changes in the estimated timing of an asset’s retirement. Asset retirement costs are depreciated using a systematic and rational method similar to that used for the associated property and equipment. Accretion expense on the liability is recognized over the estimated productive life of the related assets.

i Capitalized Interest

For significant projects, interest is capitalized as part of the historical cost of developing and constructing assets. Significant oil and gas investments in unproved properties actively being explored, significant exploration and development projects that have not commenced production, significant midstream development activities that are in progress, and investments in equity method affiliates that are undergoing the construction of assets that have not commenced principal operations qualify for interest capitalization. Interest is capitalized until the asset is ready for service. Capitalized interest is determined by multiplying the Company’s weighted-average borrowing cost on debt by the average amount of qualifying costs incurred. Once an asset subject to interest capitalization is completed and placed in service, the associated capitalized interest is expensed through depreciation.

Goodwill

Goodwill represents the excess of the purchase price of an entity over the estimated fair value of the assets acquired and liabilities assumed. The Company currently carries no goodwill, but, in comparative periods, it was recorded in “Deferred charges and other” in the Company’s consolidated balance sheet. The Company assessed the carrying amount of goodwill by testing for impairment annually and when impairment indicators arose. The impairment test requires allocating goodwill and all other assets and liabilities to assigned reporting units. The Company assessed each country as a reporting unit, with Egypt being the only reporting unit to have associated goodwill during the periods presented. The fair value of the reporting unit was determined and compared to the book value of the reporting unit. If the fair value of the reporting unit was less than the book value, including goodwill, then goodwill was written down to its implied fair value through a charge to expense.

Reductions in estimated net present value of expected future cash flows from oil and gas properties during 2020 resulted in implied fair values below the carrying values of the Company’s Egypt reporting unit. As a result of this assessment, the Company recognized non-cash impairments of the entire amount of recorded goodwill in the Egypt reporting unit of $ i 87 million in 2020. This goodwill impairment was recorded in “Impairments” in the Company’s statement of consolidated operations. The Company has i i i no / / goodwill recognized as of December 31, 2022, 2021, or 2020.

F-17

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Equity Method Interests

The Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity. Under this method, the equity interests are carried originally at acquisition cost, increased by the Company’s proportionate share of the equity interest’s net income and contributions made by the Company, and decreased by the Company’s proportionate share of the equity interest’s net losses and distributions received by the Company.

Equity method interests are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred, if the loss is deemed to be other than temporary. When the loss is deemed to be other than temporary, the carrying value of the equity method investment is written down to fair value, and the amount of the write-down is included in income. Prior to the deconsolidation of Altus on February 22, 2022, in the fourth quarter of 2021, Altus, as part of its review of the fair value of its assets in relation to the BCP Business Combination, determined the current fair value of its investment in EPIC was below carrying value. Altus subsequently determined that this loss in value to be other than temporary. As such, in the fourth quarter of 2021, Altus recorded an impairment charge of $ i 160 million on its equity method interest in EPIC. The fair value of the impaired interest was determined using the income approach. The income approach considered estimates of future throughput volumes, tariff rates, and costs. These assumptions were applied to develop future cash flow projections that were then discounted to estimated fair value, using a discount rate believed to be consistent with that which would be applied by market participants. Altus classified this nonrecurring fair value measurement as Level 3 in the fair value hierarchy. Refer to Note 7—Equity Method Interests for further details of the Company’s equity method interests.

i Commitments and Contingencies

Accruals for loss contingencies arising from claims, assessments, litigation, environmental and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. For more information regarding loss contingencies, refer to Note 12—Commitments and Contingencies.

Derivative Instruments and Hedging Activities

The Company periodically enters into derivative contracts to manage its exposure to commodity price, interest rate, and/or foreign exchange risk. These derivative contracts, which are generally placed with major financial institutions, may take the form of forward contracts, futures contracts, swaps, or options.

All derivative instruments, other than those that meet the normal purchases and sales exception, are recorded on the Company’s consolidated balance sheet as either an asset or liability measured at fair value. The Company does not apply hedge accounting to any of its derivative instruments. As a result, gains and losses from the change in fair value of derivative instruments are reported in current-period income as “Derivative instrument gains (losses), net” under “Revenues and Other” in the statement of consolidated operations. Refer to Note 5—Derivative Instruments and Hedging Activities for further information.

Income Taxes

Apache records deferred tax assets and liabilities to account for the expected future tax consequences of events that have been recognized in the financial statements and tax returns. The Company routinely assesses the ability to realize its deferred tax assets. If the Company concludes that it is more likely than not that some or all of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance. Numerous judgments and assumptions are inherent in the determination of future taxable income, including factors such as future operating conditions (particularly as related to prevailing oil and gas prices) and changing tax laws.

Apache is a directly owned subsidiary of APA Corporation and is included in APA Corporation and Subsidiaries’ U.S. Federal income tax return. The Company’s financial statements recognize the current and deferred income tax consequences that result from Apache’s activities during the current period pursuant to the provisions of ASC Topic 740 “Income Taxes” as if the Company were a separate taxpayer rather than a member of APA Corporation’s consolidated income tax return group.

F-18

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Stock-Based Compensation

Prior to consummation of the Holding Company Reorganization, Apache granted various types of stock-based awards including stock options, restricted stock, cash-settled restricted stock units, and performance-based awards. Stock compensation equity awards granted are valued on the date of grant and are expensed over the required vesting service period. Cash-settled awards are recorded as a liability based on APA’s stock price and remeasured at the end of each reporting period over the vesting terms. The Company has elected to account for forfeitures as they occur rather than estimate expected forfeitures. The Company’s stock-based compensation plans, which were assumed by APA pursuant to the Holding Company Reorganization, and related accounting policies are defined and described more fully in Note 15—Capital Stock.

Transaction, Reorganization, and Separation (TRS)

In recent years, the Company streamlined its portfolio through strategic divestitures and centralized certain operational activities in an effort to capture greater efficiencies and cost savings through shared services. In light of the continued streamlining of the Company’s asset portfolio through divestitures and strategic transactions, in late 2019 management initiated a comprehensive redesign of the Company’s organizational structure and operations. Efforts related to this organization were substantially completed during 2020. The Company incurred and paid a cumulative total of $ i 79 million of reorganization costs through December 31, 2020. An additional $ i 15 million and $ i 17 million of reorganization costs were incurred during the years ended December 31, 2022 and 2021, respectively, primarily related to ongoing consulting and separation activities in the Company’s international operations.

The Company recorded $ i 26 million, $ i 22 million, and $ i 54 million of TRS costs in 2022, 2021, and 2020, respectively. TRS costs incurred in 2022 comprised $ i 15 million related to the reorganization, including $ i 9 million for consulting costs and $ i 6 million of separation costs, and $ i 11 million for costs associated with the BCP Business Combination. TRS costs incurred in 2021 comprised $ i 17 million related to the reorganization, including $ i 11 million for consulting costs and $ i 6 million of separation costs, and $ i 5 million for costs associated with the BCP Business Combination. TRS costs incurred in 2020 relate to $ i 51 million of separation costs associated with the reorganization, $ i 2 million for transaction consulting fees, and $ i 1 million of office closure costs.

2. i TRANSACTIONS WITH PARENT AFFILIATE

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

The Holding Company Reorganization gave rise to a note payable by APA to Apache. The note has a i seven-year term, maturing on February 29, 2028, and bears interest at a rate of i 4.5 percent per annum, payable semi-annually, subject to APA’s option to allow accrued interest to convert to principal (PIK) during the first i 5.5 years of the note’s term (to August 31, 2026). The note is guaranteed by each of the i three subsidiaries sold by Apache to APA. The Company recognized interest income on this note of $ i 63 million and $ i 51 million during 2022 and 2021, respectively. The interest income related to this note is reflected in “Financing costs, net” on the Company’s statement of consolidated operations. Apache allowed interest accrued from March 1, 2021 through August 31, 2022, totaling $ i 93 million, to PIK pursuant to the note.

In the fourth quarter of 2021, in conjunction with the ratification of a new merged concession agreement (MCA) with EGPC, Apache entered into an agreement with APA under which the historical value of existing concessions prior to ratifying the MCA was retained by Apache, with any excess value from the MCA terms being allocated to APA. Sinopec owns a one-third minority participation in the Company’s consolidated Egypt oil and gas business, and a portion of the remaining net income and distributable cash flow is allocated to APA in accordance with the terms of the agreement. In 2022, approximately i 30 percent of the remaining net income and distributable cash flow for the Company’s Egyptian operations was allocated to APA. Apache consolidates its Egyptian operations, with noncontrolling interests reflected as a separate component in the Company’s consolidated balance sheet. During 2022, the Company recorded net income attributable to APA’s noncontrolling interest of $ i 278 million, and distributed $ i 216 million of cash to APA in association with its noncontrolling interest.

F-19

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company continues to provide administrative and support operations for certain APA subsidiaries with interest in the U.S., Suriname, and the Dominican Republic. The Company is reimbursed by APA for employee costs, certain internal costs, and third-party costs paid by the Company in connection with its role as service provider. All reimbursements are based on actual costs incurred, and no market premium is applied by the Company to APA. The Company incurred $ i 18 million and $ i 17 million in reimbursable corporate overhead charges during 2022 and 2021, respectively.

In August 2021, Apache entered into a promissory note with APA under which Apache could borrow up to $ i 250 million from APA at APA’s discretion. The note had a term of i one year and bore interest at a variable rate per annum equal to the monthly, short-term applicable federal rate, payable semi-annually. As of December 31, 2021, there was $ i 195 million outstanding under this note, which was reflected as “Note payable to APA Corporation” on the Company’s consolidated balance sheet. All remaining borrowings were fully repaid prior to maturity on August 4, 2022.

In April 2022, Apache made a promissory note payable to APA in the original principal amount of $ i 680 million. Apache made the note in consideration for APA’s assumption under its U.S. dollar denominated syndicated facility on April, 29, 2022 of Apache’s borrowings outstanding upon the simultaneous termination of its 2018 syndicated facility, as described in Note 10—Debt and Financing Costs. The non-interest-bearing note had a term of i one year, maturing on April 28, 2023, and was fully repaid by September 30, 2022. Apache repaid $ i 331 million on the note during the second quarter of 2022 and the remaining $ i 349 million during the third quarter of 2022.

Receivable from APA Corporation, totaling $ i 869 million and $ i 77 million as of December 31, 2022 and 2021, respectively, represents the net result of Apache’s administrative and support services provided to APA and other miscellaneous cash management transactions to be settled between the two affiliated entities. Cash will be transferred to Apache over time in order to manage affiliate balances for cash management purposes.

From time to time, the Company may, at its discretion, make distributions of capital to APA Corporation. During 2022, the Company made capital distributions totaling $ i 894 million, primarily in support of APA Corporation’s share repurchase program, dividend payments made by APA, and distributions for APA’s noncontrolling interest during the period. During 2021, the Company made capital distributions totaling $ i 839 million related to dividend payments made by APA.

3. i ACQUISITIONS AND DIVESTITURES

2022 Activity

During 2022, the Company completed other leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of approximately $ i 37 million.

During 2022, the Company completed the sale of non-core assets and leasehold in multiple transactions for total cash proceeds of $ i 52 million, recognizing a gain of approximately $ i 36 million, upon closing of these transactions.

During the first quarter of 2022, the Company completed a previously announced transaction to sell certain non-core mineral rights in the Delaware Basin. The Company received total cash proceeds of approximately $ i 726 million after certain post-closing adjustments and recognized an associated gain of approximately $ i 560 million.

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

As a result of the BCP Business Combination, the Company deconsolidated ALTM on February 22, 2022 and recognized a gain of approximately $ i 609 million that reflects the difference between the Company’s share of ALTM’s deconsolidated balance sheet and the fair value of its approximate i 20 percent retained ownership in the combined entity. i A summary of components of the gain, including the ALTM balance sheet amounts deconsolidated at the time of close, is included below:

F-20

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


	As of February 22, 2022
	(In millions)

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

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

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

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

Net effect of deconsolidating balance sheet	$	( i 193)

Gain on deconsolidation of ALTM	$	i 609

During the first quarter of 2022, the Company sold i four million of its shares of Kinetik Class A Common Stock for cash proceeds of $ i 224 million and recognized a loss of $ i 25 million, including transaction fees. Refer to Note 7—Equity Method Interests for further detail. In connection with this secondary offering, the Company agreed that, within i 24 months of closing the offering, it will invest a minimum of $ i 100 million of the proceeds of the offering for new well drilling and completion activity at the Alpine High play in the Delaware Basin, where Kinetik has exclusive gas and NGL gathering and processing rights. The Company has invested approximately half of this commitment as of year-end 2022.

2021 Activity

During the second quarter of 2021, the Company completed the sale of certain non-core assets in the Permian Basin with a net carrying value of $ i 157 million for cash proceeds of $ i 176 million and the assumption of asset retirement obligations of $ i 44 million. The Company recognized a gain of approximately $ i 63 million in connection with the sale.

During 2021, the Company also completed the sale of other non-core assets and leasehold, primarily in the Permian Basin, in multiple transactions for total cash proceeds of $ i 80 million. The Company recognized a gain of approximately $ i 4 million upon closing of these transactions.

During 2021, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $ i 9 million.

F-21

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2020 Activity

During 2020, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $ i 4 million. Also during 2020, the Company completed the sale of certain non-core assets and leasehold, primarily in the Permian Basin, in multiple transactions for total cash proceeds of $ i 87 million, and recognized a gain of $ i 13 million. The Company also recognized a gain of $ i 19 million during 2020 in connection with a joint venture agreement with TotalEnergies (formerly Total S.A.) to explore and develop Block 58 offshore Suriname.

4. i CAPITALIZED EXPLORATORY WELL COSTS

The following summarizes the changes in capitalized exploratory well costs for the years ended December 31, 2022, 2021, and 2020. Additions pending the determination of proved reserves excludes amounts capitalized and subsequently charged to expense within the same year.

For the Year Ended December 31,

2022

2021

2020

(In millions)

Capitalized well costs at beginning of year

i 46

i 197

i 141

Additions pending determination of proved reserves

i 138

i 62

i 226

Divestitures and other

i —

( i 163)

( i 38)

Reclassifications to proved properties

( i 110)

( i 40)

( i 56)

Charged to exploration expense

( i 24)

( i 10)

( i 76)

Capitalized well costs at end of year

i 50

i 46

i 197

/ i

The following provides an aging of capitalized exploratory well costs and the number of projects for which exploratory well costs have been capitalized for a period greater than one year since the completion of drilling as of December 31:

2022

2021

2020

(In millions)

Exploratory well costs capitalized for a period of one year or less

i 34

i 13

i 184

Exploratory well costs capitalized for a period greater than one year

i 16

i 33

i 13

Capitalized well costs at end of year

i 50

i 46

i 197

Number of projects with exploratory well costs capitalized for a period greater than one year

i 10

i 9

i 5

Projects with suspended exploratory well costs capitalized for a period greater than one year since the completion of drilling are those identified by management as exhibiting sufficient quantities of hydrocarbons to justify potential development. Management is actively pursuing efforts to assess whether reserves can be attributed to these projects. Suspended exploratory well costs capitalized for a period greater than one year since the completion of drilling were $ i 16 million at December 31, 2022. The remaining projects pertain to onshore drilling activity in Egypt for which continued testing and evaluation is ongoing.

Dry hole expenses from suspended exploratory well costs previously capitalized for greater than one year at December 31, 2021 totaled $ i 24 million. These expenses pertain to projects in the North Sea where development is no longer progressing.

The following table summarizes aging by geographic area of those exploratory well costs that, as of December 31, 2022, have been capitalized for a period greater than one year, categorized by the year in which drilling was completed:

Total

2021

2020

2019
and Prior

(In millions)

Egypt

i 14

i 5

i —

i 9

North Sea

i 2

i —

i 16

i 7

i —

i 9

F-22

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5. i 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, as well as fluctuations in exchange rates in connection with transactions denominated in foreign currencies. The Company manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production and foreign currency transactions. The Company may utilize various types of derivative financial instruments, including forward contracts, futures contracts, swaps, and options, to manage fluctuations in cash flows resulting from changes in commodity prices or foreign currency values.

In December 2022, counterparty agreements for Apache’s commodity derivative instruments were transferred from Apache to APA Corporation. As of the dates of transfer, Apache’s consolidated balance sheet reflected derivative liabilities totaling $ i 37 million, which represented the fair values of the commodity derivative instruments on those dates. The resulting impacts of the transfer to APA Corporation were the realization of the mark-to-market loss of $ i 37 million on Apache’s i statement of consolidated operation and the derecognition of open derivative positions on Apache’s consolidated balance sheet. Apache had no outstanding derivative positions as of December 31, 2022.

Embedded Derivatives

Altus Preferred Units Embedded Derivative

The Altus Preferred Units embedded derivative was deconsolidated as of March 31, 2022 as part of the BCP Business Combination. Refer to Note 3 —Acquisitions and Divestitures for discussion of the BCP Business Combination and Note 14—Redeemable Noncontrolling Interest —Altus for a description of the Altus Preferred Units and associated embedded derivative.

Pipeline Capacity Embedded Derivatives

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

Fair Value Measurements

i i

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)

Assets:

Commodity derivative instruments

i —

Liabilities:

Commodity derivative instruments

i —

Liabilities:

Commodity derivative instruments

i —

i 10

i —

i 10

i —

i 10

Pipeline capacity embedded derivatives

i —

i 46

i —

i 46

i —

i 46

Preferred Units embedded derivative

i —

i 57

i —

i 57

(1)Derivative fair values were based on analysis of each contract on a gross basis, excluding the impact of netting agreements with counterparties and reclassifications between long-term and short-term balances.

/ /

F-23

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Derivative Activity Recorded in the Consolidated Balance Sheet

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

For the Year Ended December 31,

2022

2021

(In millions)

Current Assets: Other current assets

i —

Other Assets: Deferred charges and other

i —

Total derivative assets

i —

Current Liabilities: Other current liabilities

i —

i 4

Deferred Credits and Other Noncurrent Liabilities: Other

i —

i 109

Total derivative liabilities

i —

i 113

Derivative Activity Recorded in the Statement of Consolidated Operations

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

For the Year Ended December 31,

2022

2021

2020

(In millions)

Realized:

Commodity derivative instruments

( i 72)

i 25

( i 135)

Foreign currency derivative instruments

( i 13)

i —

( i 1)

Realized gain (loss), net

( i 85)

i 25

( i 136)

Unrealized:

Commodity derivative instruments

i 9

( i 20)

i 11

Pipeline capacity embedded derivatives

i —

i 7

( i 61)

Foreign currency derivative instruments

i —

( i 1)

Preferred Units embedded derivative

( i 31)

i 82

( i 36)

Unrealized gain (loss), net

( i 22)

i 69

( i 87)

Derivative instrument gains (losses), net

( i 107)

i 94

( i 223)

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

F-24

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6. i OTHER CURRENT ASSETS

The following table provides detail of the Company’s other current assets as of December 31:

2022

2021

(In millions)

Inventories

i 425

i 438

Drilling advances

i 64

i 55

Prepaid assets and other

i 54

i 56

Current decommissioning security for sold Gulf of Mexico assets

i 450

i 100

Total Other current assets

i i 993 /

i 649

7. i EQUITY METHOD INTERESTS

The Kinetik Class A Common Stock held by the Company is treated as an interest in equity securities measured at fair value. The Company elected the fair value option for measuring its equity method interest in Kinetik based on practical expedience, variances in reporting timelines, and cost-benefit considerations. The fair value of the Company’s interest in Kinetik is determined using observable share prices on a major exchange, a Level 1 fair value measurement. Fair value adjustments and dividends received are recorded as a component of “Other, net” under “Revenues and other” in the Company’s statement of consolidated operations.

The initial interest in Kinetik was measured at fair value based on the Company’s ownership of approximately i 12.9 million shares of Kinetik Class A Common stock as of February 22, 2022. In March 2022, the Company sold i four million of its shares of Kinetik Class A Common Stock for a loss, including underwriters fees, of $ i 25 million, which was recorded as a component of “Gain on divestitures, net” under “Revenues and other” in the Company’s statement of consolidated operations. Refer to Note 3–Acquisitions and Divestitures for further detail.

During the second quarter of 2022, Kinetik issued a i two-for-one split of its Common Stock. Also during 2022, the Company received approximately i 1.1 million shares of Kinetik’s Class A Common Stock as paid-in-kind dividends. Finally, in 2022, the Company recorded fair value adjustments on its ownership in Kinetik totaling a gain of approximately $ i 32 million. The Company’s ownership of i 18.9 million shares represented approximately i 13 percent of Kinetik’s outstanding Class A Common Stock as of December 31, 2022.

The following table presents the activity in the Company’s equity method interest in Kinetik for the year ended December 31, 2022:


		Kinetik Holdings Inc

	(In millions)
Balance at December 31, 2021		$	i —
Initial interest upon closing the BCP Business Combination		i 802
Sale of Class A shares		( i 250)
Paid-in-kind dividend		i 40
Fair value adjustments		i 32
Balance at December 31, 2022		$	i 624

During the year ending December 31, 2022, the Company recorded GPT costs for midstream services provided by Kinetik subsequent to the close of the BCP Business Combination transaction totaling $ i 91 million. As of December 31, 2022, the Company has recorded accrued GPT costs payable to Kinetik of approximately $ i 17 million. In addition, the Company sold natural gas and NGLs to Kinetik during 2022 totaling $ i 8 million. As of December 31, 2022, the Company has recorded accrued receivables from Kinetik of approximately $ i 8 million.

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

F-25

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Interest

(In millions)

Gulf Coast Express Pipeline LLC

i 16.0

i 274

EPIC Crude Holdings, LP

i 15.0

i —

Permian Highway Pipeline LLC

i 26.7

i 630

Shin Oak Pipeline (Breviloba, LLC)

i 33.0

i 461

Total Altus equity method interests

i 1,365

The following table presents the activity in Altus’ equity method interests for the years ended December 31, 2022 and 2021:

Gulf Coast Express Pipeline LLC

EPIC Crude Holdings, LP

Permian Highway Pipeline LLC

Breviloba, LLC

Total

(In millions)

Balance at December 31, 2020

i 284

i 176

i 615

i 480

i 1,555

Capital contributions

i —

i 2

i 26

i —

i 28

Distributions

( i 50)

i —

( i 74)

( i 49)

( i 173)

Equity income (loss), net

i 40

( i 19)

i 63

i 30

i 114

Accumulated other comprehensive loss

i —

i 1

i —

i 1

Impairment(1)

i —

( i 160)

i —

( i 160)

Balance at December 31, 2021

i 274

i —

i 630

i 461

i 1,365

Capital contributions

i —

i 2

i —

i 2

Distributions

( i 5)

i —

( i 9)

( i 7)

( i 21)

Equity income (loss), net

i 8

( i 2)

i 10

i 5

i 21

Deconsolidation of Altus

( i 277)

i —

( i 631)

( i 459)

( i 1,367)

Balance at December 31, 2022

i —

(1)Prior to the deconsolidation of Altus on February 22, 2022, the Company impaired its investment in EPIC in the fourth quarter of 2021. Refer to Note 1—Summary of Significant Accounting Policies for further details on this impairment charge.

For discussion of the financial statement impacts related to the deconsolidation of ALTM, refer to Note 3—Acquisitions and Divestitures.

8. i OTHER CURRENT LIABILITIES

The following table provides detail of the Company’s other current liabilities as of December 31:

2022

2021

(In millions)

Accrued operating expenses

i 139

i 129

Accrued exploration and development

i 300

i 206

Accrued compensation and benefits

i 514

i 292

Accrued interest

i 96

i 107

Accrued income taxes

i 90

i 28

Current asset retirement obligation

i 55

i 41

Current operating lease liability

i 167

i 99

Current decommissioning contingency for sold Gulf of Mexico properties

i 450

i 100

Other

i 238

i 168

Total Other current liabilities

i i 2,049 /

i 1,170

F-26

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

9. i ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the years ended December 31, 2022 and 2021:

For the Year Ended December 31,

2022

2021

(In millions)

Asset retirement obligation at beginning of the year

i 2,130

i 1,944

Liabilities incurred

i 4

i 3

Liabilities divested

( i 73)

( i 44)

Liabilities settled

( i 39)

( i 32)

Accretion expense

i 117

i 113

Revisions in estimated liabilities

( i 148)

i 146

Asset retirement obligation at end of the year

i 1,991

i 2,130

Less current portion

( i 55)

( i 41)

Asset retirement obligation, long-term

i 1,936

i 2,089

The ARO liability reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with the Company’s oil and gas properties and other long-lived assets. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. The Company estimates the ultimate productive life of the properties, a risk-adjusted discount rate, and an inflation factor in order to determine the current present value of this obligation. To the extent future revisions to these assumptions impact the present value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property or other long-lived asset balance.

During 2022 and 2021, the Company recorded $ i 4 million and $ i 3 million, respectively, in abandonment liabilities resulting from the Company’s exploration and development capital program. Liabilities settled primarily relate to individual properties, platforms, and facilities plugged and abandoned during the period. During 2022, net abandonment costs were revised downward approximately $ i 148 million to reflect changes in estimates of timing, activity costs, and foreign currency exchange rates on service costs, primarily in the North Sea. This downward revision was partially offset by an upward revision in the U.S. During 2021, approximately $ i 146 million net abandonment costs were revised upward to reflect changes in estimates of higher activity costs and long-term inflation assumptions, primarily in the U.S.

10. i DEBT AND FINANCING COSTS

Overview

The debt of Apache is senior unsecured debt and has equal priority with respect to the payment of both principal and interest. All indentures of Apache for the notes and debentures described below place certain restrictions on the Company, including limits on Apache’s ability to incur debt secured by certain liens. Certain of these indentures also restrict the Company’s ability to enter into certain sale and leaseback transactions and give holders the option to require the Company to repurchase outstanding notes and debentures upon certain changes in control. None of the indentures contain prepayment obligations in the event of a decline in credit ratings.

On August 17, 2020, Apache closed offerings of $ i 1.25 billion in aggregate principal amount of senior unsecured notes, comprised of $ i 500 million in aggregate principal amount of i 4.625% notes due 2025 and $ i 750 million in aggregate principal amount of i 4.875% notes due 2027. The senior unsecured notes are redeemable at any time, in whole or in part, at Apache’s option, at the applicable redemption price. The net proceeds from the sale of the notes were used to purchase certain outstanding notes in cash tender offers, repay a portion of outstanding borrowings under Apache’s former senior revolving credit facility, and for general corporate purposes.

On August 18, 2020, Apache closed cash tender offers for certain outstanding notes. Apache accepted for purchase $ i 644 million aggregate principal amount of certain notes covered by the tender offers. Apache paid holders an aggregate cash purchase price of $ i 644 million, reflecting principal, aggregate discount to par of $ i 38 million, early tender premium of $ i 32 million, and accrued and unpaid interest of $ i 6 million. The Company recorded a net gain of $ i 2 million on extinguishment of debt, including an acceleration of unamortized debt discount and issuance costs, in connection with the note purchases.

F-27

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During 2020, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $ i 588 million for an aggregate purchase price of $ i 428 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $ i 168 million. These repurchases resulted in a $ i 158 million net gain on extinguishment of debt. The net gain includes an acceleration of related discount and debt issuance costs. Additionally, on November 3, 2020, Apache redeemed the remaining $ i 183 million of outstanding i 3.625% senior notes due February 1, 2021 at a redemption price equal to i 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date. The repurchases were financed by borrowings under Apache’s former revolving credit facility.

During the quarter ended September 30, 2021, Apache closed cash tender offers for certain outstanding notes, accepting for purchase $ i 1.7 billion aggregate principal amount of notes covered by the tender offers. Apache paid holders an aggregate cash purchase price of $ i 1.8 billion, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a $ i 105 million loss on extinguishment of debt, including $ i 11 million of unamortized debt discount and issuance costs, in connection with the note purchases.

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

On January 18, 2022, Apache redeemed the outstanding $ i 213 million principal amount of i 3.25% senior notes due April 15, 2022, at a redemption price equal to i 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed by borrowing under Apache’s former revolving credit facility.

During the quarter ended March 31, 2022, Apache closed cash tender offers for certain outstanding notes issued under its indentures, accepting for purchase $ i 1.1 billion aggregate principal amount of notes. Apache paid holders an aggregate $ i 1.2 billion in cash, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a $ i 66 million loss on extinguishment of debt, including $ i 11 million of unamortized debt discount and issuance costs in connection with the note purchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.

During the quarter ended March 31, 2022, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $ i 15 million for an aggregate purchase price of $ i 16 million in cash, including accrued interest and broker fees, reflecting a premium to par of $ i 1 million. The Company recognized a $ i 1 million loss on these repurchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.

On October 17, 2022, Apache redeemed the outstanding $ i 123 million outstanding principal amount of i 2.625% notes due January 15, 2023, at a redemption price equal to i 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed in part by Apache’s borrowing under the U.S. dollar-denominated revolving credit facility of APA Corporation described below.

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

The Company records gains and losses on extinguishment of debt in “Financing costs, net” in the Company’s statement of consolidated operations.

F-28

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table presents the carrying value of the Company’s debt as of December 31, 2022 and 2021:

December 31,

2022

2021

(In millions)

i 3.25% notes due 2022(1)

i —

i 213

i 2.625% notes due 2023(2)

i —

i 123

i 4.625% notes due 2025(3)

i 51

i 500

i 7.7% notes due 2026

i 78

i 79

i 7.95% notes due 2026

i 132

i 133

i 4.875% due 2027(3)

i 108

i 378

i 4.375% notes due 2028(3)

i 325

i 703

i 7.75% notes due 2029(3)(4)

i 235

i 4.25% notes due 2030(3)

i 579

i 580

i 6.0% notes due 2037(3)

i 443

i 5.1% notes due 2040(3)

i 1,333

i 5.25% notes due 2042(3)

i 399

i 4.75% notes due 2043(3)

i 428

i 4.25% notes due 2044(3)

i 221

i 7.375% debentures due 2047

i 150

i 5.35% notes due 2049(3)

i 387

i 7.625% debentures due 2096

i 39

Notes and debentures before unamortized discount and debt issuance costs(5)

i 4,908

i 6,344

Altus credit facility(6)

i —

i 657

Syndicated credit facilities(6)(7)

i —

i 542

Finance lease obligations

i 34

i 36

Unamortized discount

( i 27)

( i 30)

Debt issuance costs

( i 28)

( i 39)

Total debt

i 4,887

i 7,510

Current maturities

( i 2)

( i 215)

Long-term debt

i 4,885

i 7,295

(1)On January 18, 2022, Apache redeemed the i 3.25% senior notes due April 15, 2022, at a redemption price equal to i 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date.

(2)On October 17, 2022, Apache redeemed the i 2.625% notes due January 15, 2023, at a redemption price equal to i 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date.

(3)These notes are redeemable, as a whole or in part, at Apache’s option, subject to a make-whole premium, except that the i 7.75% notes due 2029 are only redeemable as whole for principal and accrued interest in the event of certain Canadian tax law changes. The remaining notes and debentures are not redeemable.

(4)Assumed by Apache in August 2017 as permitted by terms of these notes originally issued by a subsidiary and guaranteed by Apache.

(5)The fair values of Apache’s notes and debentures were $ i 4.2 billion and $ i 7.1 billion as of December 31, 2022 and 2021, respectively. The Company 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).

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

(7)Although Apache had no borrowings under APA’s syndicated credit facilities as of December 31, 2022, Apache currently is a guarantor of obligations under those facilities.

/ i

Maturities for the Company’s notes and debentures excluding discount and debt issuance costs as of December 31, 2022 are as follows:


	(In millions)
2023	$	i —
2024	i —
2025	i 51
2026	i 210
2027	i 108
Thereafter	i 4,539
Notes and debentures, excluding discounts and debt issuance costs	$	i 4,908

F-29

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Uncommitted Lines of Credit

The Company from time to time has and uses uncommitted credit and letter of credit facilities for working capital and credit support purposes. As of December 31, 2022 and 2021, there were i i no / outstanding borrowings under these facilities. As of December 31, 2022, there were £ i 199 million and $ i 17 million in letters of credit outstanding under these facilities. As of December 31, 2021, there were £ i 117 million and $ i 17 million in letters of credit outstanding under these facilities.

Unsecured Committed Bank Credit Facilities

On April 29, 2022, Apache entered into i two unsecured guaranties of obligations under i two unsecured syndicated credit agreements then entered into by APA Corporation (APA), of which Apache is a wholly owned subsidiary. APA’s new credit agreements are for general corporate purposes and replaced and refinanced Apache’s 2018 syndicated credit agreement (the Former Facility).

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

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

In connection with APA’s entry into the USD Agreement and the GBP Agreement (each, a New Agreement), Apache terminated US$ i 4.0 billion of commitments under the Former Facility, borrowings then outstanding under the Former Facility were deemed outstanding under APA’s USD Agreement, and letters of credit then outstanding under the Former Facility were deemed outstanding under a New Agreement, depending upon whether denominated in US dollars or pounds sterling. Apache may borrow under the USD Agreement up to an aggregate principal amount of US$ i 300 million outstanding at any given time. Apache has guaranteed obligations under each New Agreement effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than US$ i 1.0 billion.

As of December 31, 2022, there were $ i 566 million of borrowings and a $ i 20 million letter of credit outstanding under the USD Agreement, and an aggregate £ i 652 million in letters of credit outstanding under the GBP Agreement. As of December 31, 2021, there were $ i 542 million of borrowings and an aggregate £ i 748 million and $ i 20 million in letters of credit outstanding under the Former Facility. The letters of credit denominated in pounds were issued to support North Sea decommissioning obligations, the terms of which required such support after Standard & Poor’s reduced Apache’s credit rating from BBB to BB+ on March 26, 2020.

All borrowings under the USD Agreement bear interest at one of two per annum rate options selected by the borrower, being either an alternate base rate (as defined), plus a margin ranging from i 0.10% to i 0.675% (Base Rate Margin), or an adjusted term SOFR rate (as defined), plus a margin varying from i 1.10% to i 1.675% (Applicable Margin). All borrowings under the GBP Agreement bear interest at an adjusted rate per annum determined by reference to the Sterling Overnight Index Average published by the Bank of England, plus the Applicable Margin. Each New Agreement also requires the borrower to pay quarterly a facility fee on total commitments. Margins and facility fees are at varying rates per annum determined by reference to the senior, unsecured, non-credit enhanced, long-term indebtedness for borrowed money of APA, or if such indebtedness is not rated and the Apache guaranty is in effect, of Apache (Long-Term Debt Rating). As of December 31, 2022, Apache’s Long-Term Debt Rating applied, and the Base Rate Margin was i 0.60%, the Applicable Margin was i 1.60%, and the facility fee was i 0.275%.

A commission is payable quarterly to lenders under each New Agreement on the face amount of each outstanding letter of credit at a per annum rate equal to the Applicable Margin then in effect. Customary letter of credit fronting fees and other charges are payable to issuing banks.

Borrowers under each New Agreement, which may include certain subsidiaries of APA, may borrow, prepay, and reborrow loans and obtain letters of credit, and APA may obtain letters of credit for the account of its subsidiaries, in each case subject to representations and warranties, covenants, and events of default substantially similar to those in the Former Facility, such as:

F-30

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

• A financial covenant requires APA to maintain an adjusted debt-to-capital ratio of not greater than i 60 percent at the end of any fiscal quarter. For purposes of this calculation, capital continues to exclude the effects of non-cash write-downs, impairments, and related charges occurring after June 30, 2015. At December 31, 2022, APA’s debt-to-capital ratio as calculated under each New Agreement was i 21 percent.

• A negative covenant restricts the ability of APA and its subsidiaries to create liens securing debt on their hydrocarbon-related assets, with exceptions for liens typically arising in the oil and gas industry; liens securing debt incurred to finance the acquisition, construction, improvement, or capital lease of assets, provided that such debt, when incurred, does not exceed the subject purchase price and costs, as applicable, and related expenses; liens on subsidiary assets located outside of the U. S. and Canada; and liens arising as a matter of law, such as tax and mechanics’ liens. Liens on assets also are permitted if debt secured thereby does not exceed i 15 percent of APA’s consolidated net tangible assets or approximately $ i 1.5 billion as of December 31, 2022.

• Negative covenants restrict APA’s ability to merge with another entity unless it is the surviving entity, a borrower’s disposition of substantially all of its assets, prohibitions on the ability of certain subsidiaries to make payments to borrowers, and guarantees by APA or certain subsidiaries of debt of non-consolidated entities in excess of the stated threshold.

• Lenders may accelerate payment maturity and terminate lending and issuance commitments for nonpayment and other breaches; if a borrower or certain subsidiaries defaults on other indebtedness in excess of the stated threshold, has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold, or has specified pension plan liabilities in excess of the stated threshold; or APA undergoes a specified change in control. Such acceleration and termination are automatic upon specified insolvency events of a borrower or certain subsidiaries.

Consistent with the Former Facility, the New Agreements do not require collateral, do not have a borrowing base, do not permit lenders to accelerate maturity or refuse to lend based on unspecified material adverse changes, and do not have borrowing restrictions or prepayment obligations in the event of a decline in credit ratings.

Apache was in compliance with applicable terms of each New Agreement as of December 31, 2022.

In November 2018, Altus and its subsidiary, Altus Midstream LP (Altus LP), were subsidiaries of Apache, and Altus LP entered into an unsecured revolving credit facility for general corporate purposes. The agreement for the facility, as amended, provided aggregate commitments from a syndicate of banks of $ i 800 million, including a letter of credit subfacility. The credit facility was not guaranteed by APA, Apache, or any of APA’s other subsidiaries. On February 22, 2022, Altus was deconsolidated from APA and Apache. As of December 31, 2021, there were $ i 657 million of borrowings and $ i 2 million letters of credit outstanding under the facility.

Financing Costs, Net

The following table presents the components of the Company’s financing costs, net:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Interest expense

i 312

i 419

i 438

Amortization of debt issuance costs

i 7

i 8

Capitalized interest

( i 1)

i —

( i 12)

Loss (gain) on extinguishment of debt

i 67

i 104

( i 160)

Interest income

( i 9)

( i 8)

( i 7)

Interest income from APA Corporation, net

( i 63)

( i 51)

i —

Financing costs, net

i 313

i 472

i 267

As of December 31, 2022, the Company had $ i 28 million of debt issuance costs, which will be charged to financing costs over the life of the related debt issuances. Discount amortization of $ i 2 million, $ i 6 million, and $ i 7 million was recorded as interest expense in 2022, 2021, and 2020, respectively.

F-31

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

11. i INCOME TAXES

Income (loss) before income taxes was composed of the following:

For the Year Ended December 31,

2022

2021

2020

(In millions)

U.S.

i 2,656

i 689

( i 4,581)

Foreign

i 3,218

i 1,291

( i 259)

Total

i 5,874

i 1,980

( i 4,840)

/ i

The total income tax provision consisted of the following:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Current income taxes:

Federal

i 1

i 16

( i 2)

State

i 11

i —

Foreign

i 1,495

i 636

i 178

i 1,507

i 652

i 176

Deferred income taxes:

Federal

i —

Foreign

i 145

( i 74)

( i 112)

i 145

( i 74)

( i 112)

Total

i 1,652

i 578

i 64

The total income tax provision differs from the amounts computed by applying the U.S. statutory income tax rate to income (loss) before income taxes. i A reconciliation of the tax on the Company’s income (loss) before income taxes and total tax expense is shown below:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Income tax expense (benefit) at U.S. statutory rate

i 1,234

i 416

( i 1,016)

State income tax, less federal effect(1)

i 9

i —

Taxes related to foreign operations

i 774

i 300

i 97

Tax credits

( i 4)

( i 10)

( i 13)

Net change in tax contingencies

i 1

i 16

i 1

Goodwill impairment

i —

i 35

Valuation allowances(1)

( i 705)

( i 111)

i 965

Tax adjustments attributable to BCP Business Combination

i 126

i —

Remeasurement of U.K. deferred tax liability

i 208

i —

Tax attributable to Altus Preferred Unit limited partners

i —

( i 34)

( i 16)

All other, net

i 9

i 1

i 11

i 1,652

i 578

i 64

(1)The change in state valuation allowance is included as a component of state income tax.

F-32

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The net deferred income tax liability reflects the net tax impact of temporary differences between the asset and liability amounts carried on the balance sheet under GAAP and amounts utilized for income tax purposes. i The net deferred income tax liability consisted of the following as of December 31:

2022

2021

(In millions)

Deferred tax assets:

U.S. and state net operating losses

i 2,035

i 2,494

Capital losses

i 357

i 647

Tax credits and other tax incentives

i 26

i 24

Foreign tax credits

i 2,241

Accrued expenses and liabilities

i 145

i 152

Asset retirement obligation

i 672

i 712

Property and equipment

i —

i 3

Investment in Altus Midstream LP

i —

i 64

Net interest expense limitation

i 55

i 135

Lease liability

i 113

i 81

Decommissioning contingency for sold Gulf of Mexico properties

i 275

i 263

Other

i —

i 1

Total deferred tax assets

i 5,919

i 6,817

Valuation allowance

( i 4,831)

( i 5,875)

Net deferred tax assets

i 1,088

i 942

Deferred tax liabilities:

Equity investments

i 1

i 2

Property and equipment

i 1,014

i 748

Right-of-use asset

i 110

i 77

Decommissioning security for sold Gulf of Mexico properties

i 148

i 164

Other

i 90

i 86

Total deferred tax liabilities

i 1,363

i 1,077

Net deferred income tax liability

i 275

i 135

Net deferred tax assets and liabilities are included in the consolidated balance sheet as of December 31 as follows:

2022

2021

(In millions)

Assets:

Deferred charges and other

i 39

i 13

Liabilities:

Income taxes

i 314

i 148

Net deferred income tax liability

i 275

i 135

On January 14, 2022, Apache Midstream LLC, a wholly owned subsidiary of Apache, exchanged i 12.5 million Common Units in Altus Midstream LP for i 12.5 million shares of ALTM Class A Common Stock, in a taxable exchange. On February 22, 2022, as a result of the BCP Business Combination, the Company deconsolidated ALTM. On March 11, 2022, the Company sold i four million of its shares of Kinetik Class A Common Stock. The Company recorded tax expense of $ i 126 million associated with the BCP Business Combination. The tax impact of the BCP Business Combination was fully offset by a change in valuation allowance. Refer to Note 3— Acquisitions and Divestitures for further detail.

F-33

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On May 26, 2022, the U.K. Chancellor of the Exchequer announced a new tax (the Energy Profits Levy) on the profits of oil and gas companies operating in the U.K. and the U.K. Continental Shelf. Under the new law, an additional levy is assessed at a 25 percent rate and is effective for the period of May 26, 2022, through December 31, 2025. The Company recorded a deferred tax expense of $ i 208 million associated with the remeasurement of the U.K. deferred tax liability. On November 17, 2022, the U.K. Chancellor of the Exchequer announced in the Autumn Statement 2022 further changes to the Energy Profits Levy, increasing the levy assessed from a 25 percent rate to a 35 percent rate, effective for the period of January 1, 2023, through March 31, 2028. On November 22, 2022, the U.K. Government published draft legislation to implement this change, among other provisions, and on January 10, 2023, the Finance Act 2023 was enacted, receiving Royal Assent. Under U.S. GAAP, the financial statement impact of new legislation is recorded in the period of enactment. Therefore, in the first quarter of 2023, the Company expects to record a deferred tax expense of approximately $ i 170 million to $ i 190 million related to the remeasurement of the December 31, 2022 U.K. deferred tax liability.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. A significant piece of negative evidence evaluated was the U.S. pre-tax book cumulative loss incurred over the three-year period ended December 31, 2022. This cumulative loss was primarily the result of low commodity prices and oil and gas impairments during this period. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future growth.

In 2022, 2021, and 2020, the Company’s valuation allowance decreased by $ i 1.0 billion, decreased by $ i 116 million, and increased by $ i 1.0 billion, respectively, as detailed in the table below:

2022

2021

2020

(In millions)

Balance at beginning of year

i 5,875

i 5,991

i 4,959

State(1)

( i 111)

i 1

i 67

U.S.

( i 706)

( i 112)

i 960

Foreign

( i 227)

( i 5)

i 5

Balance at end of year

i 4,831

i 5,875

i 5,991

(1)Reported as a component of state income taxes.

/ i

On December 31, 2022, the Company had net operating losses as follows:

Amount

Expiration

(In millions)

U.S.

i 7,968

2027 - Indefinite

State

i 6,505

Various

The Company has a U.S. net operating loss carryforward of $ i 8.0 billion, which includes $ i 82 million of net operating loss subject to annual limitation under Section 382 of the Internal Revenue Code (Code). Net operating losses generated in tax years beginning after 2017 are subject to an 80 percent taxable income limitation with indefinite carryover under the 2017 Tax Cuts and Jobs Act. The Company also has state net operating losses of $ i 6.5 billion, a net interest expense carryover of $ i 246 million under Section 163(j) of the Code subject to indefinite carryover, and a U.S. capital loss carryforward of $ i 1.6 billion, which has a i five year carryover period expiring between 2023-2027. The Company has recorded a full valuation allowance against the U.S. net operating losses, the state net operating losses, the net interest expense carryover, and the U.S. capital loss because it is more likely than not that these attributes will not be realized.

F-34

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

On December 31, 2022, the Company had foreign tax credits as follows:

Amount

Expiration

(In millions)

Foreign tax credits

i 2,241

2025-2026

The Company has a $ i 2.2 billion U.S. foreign tax credit carryforward. The Company has recorded a full valuation allowance against the U.S. foreign tax credits listed above because it is more likely than not that these attributes will expire unutilized.

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes,” which prescribes a minimum recognition threshold that a tax position must meet before being recognized in the financial statements. Tax positions generally refer to a position taken in a previously filed income tax return or expected to be included in a tax return to be filed in the future that is reflected in the measurement of current and deferred income tax assets and liabilities. i A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

2022

2021

2020

(In millions)

Balance at beginning of year

i 116

i 93

i 82

Additions based on tax positions related to prior year

i —

i 16

i —

Additions based on tax positions related to the current year

i —

i 7

i 11

Reductions for tax positions of prior years

( i 27)

i —

Balance at end of year

i 89

i 116

i 93

The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense. Each quarter, the Company assesses the amounts provided for and, as a result, may increase or reduce the amount of interest and penalties. During each of the years ended December 31, 2022, 2021, and 2020, the Company recorded tax expense of $ i i i 1 / / million for interest and penalties. At December 31, 2022, 2021, and 2020, the Company had an accrued liability for interest and penalties of $ i 5 million, $ i 4 million, and $ i 3 million, respectively.

In 2022, 2021, and 2020, the Company recorded a $ i 27 million net decrease, a $ i 23 million net increase, and an $ i 11 million net increase, respectively, in its reserve for uncertain tax positions.

On September 26, 2022, the Company received a Statutory Notice of Deficiency from the IRS disallowing certain net operating loss carryback and research and development credit refund claims. As a result of the disallowance, on December 14, 2022, the Company filed a petition with the U.S. Tax Court challenging the tax adjustments and requesting a redetermination of the deficiencies stated in the notice.

Apache and its subsidiaries are subject to U.S. federal income tax as well as income tax in various states and foreign jurisdictions. The Company’s uncertain tax positions are related to tax years that may be subject to examination by the relevant taxing authority. i Apache’s earliest open tax years in its key jurisdictions are as follows:

Jurisdiction


U.S.			2014
Egypt			2005
U.K.			2021

F-35

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

12. i COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls, which also may include controls related to the potential impacts of climate change. As of December 31, 2022, the Company has an accrued liability of approximately $ i 64 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. The Company’s estimates are based on information known about the matters and its experience in contesting, litigating, and settling similar matters. Although actual amounts could differ from management’s estimate, none of the actions are believed by management to involve future amounts that would be material to the Company’s financial position, results of operations, or liquidity after consideration of recorded accruals. For material matters that the Company believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and a range of potential exposure, unless an estimate cannot be made at this time. It is management’s opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

Argentine Environmental Claims

On March 12, 2014, the Company and its subsidiaries completed the sale of all of the Company’s subsidiaries’ operations and properties in Argentina to YPF Sociedad Anonima (YPF). As part of that sale, YPF assumed responsibility for all of the past, present, and future litigation in Argentina involving Company subsidiaries, except that Company subsidiaries have agreed to indemnify YPF for certain environmental, tax, and royalty obligations capped at an aggregate of $ i 100 million. The indemnity is subject to specific agreed conditions precedent, thresholds, contingencies, limitations, claim deadlines, loss sharing, and other terms and conditions. On April 11, 2014, YPF provided its first notice of claims pursuant to the indemnity. Company subsidiaries have not paid any amounts under the indemnity but will continue to review and consider claims presented by YPF. Further, Company subsidiaries retain the right to enforce certain Argentina-related indemnification obligations against Pioneer Natural Resources Company (Pioneer) in an amount up to $ i 45 million pursuant to the terms and conditions of stock purchase agreements entered in 2006 between Company subsidiaries and subsidiaries of Pioneer.

Louisiana Restoration

Louisiana surface owners often file lawsuits or assert claims against oil and gas companies, including the Company, claiming that operators and working interest owners in the chain of title are liable for environmental damages on the leased premises, including damages measured by the cost of restoration of the leased premises to its original condition, regardless of the value of the underlying property. From time to time, restoration lawsuits and claims are resolved by the Company for amounts that are not material to the Company, while new lawsuits and claims are asserted against the Company. With respect to each of the pending lawsuits and claims, the amount claimed is not currently determinable or is not material. Further, the overall exposure related to these lawsuits and claims is not currently determinable. While adverse judgments against the Company are possible, the Company intends to actively defend these lawsuits and claims.

Starting in November of 2013 and continuing into 2022, several parishes in Louisiana have pending lawsuits against many oil and gas producers, including the Company. In these cases, the Parishes, as plaintiffs, allege that defendants’ oil and gas exploration, production, and transportation operations in specified fields were conducted in violation of the State and Local Coastal Resources Management Act of 1978, as amended, and applicable regulations, rules, orders, and ordinances promulgated or adopted thereunder by the Parish or the State of Louisiana. Plaintiffs allege that defendants caused substantial damage to land and water bodies located in the coastal zone of Louisiana. Plaintiffs seek, among other things, unspecified damages for alleged violations of applicable law within the coastal zone, the payment of costs necessary to clear, re-vegetate, detoxify, and otherwise restore the subject coastal zone as near as practicable to its original condition, and actual restoration of the coastal zone to its original condition. While adverse judgments against the Company might be possible, the Company intends to vigorously oppose these claims.

F-36

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Apollo Exploration Lawsuit

In a case captioned Apollo Exploration, LLC, Cogent Exploration, Ltd. Co. & SellmoCo, LLC v. Apache Corporation, Cause No. CV50538 in the 385th Judicial District Court, Midland County, Texas, plaintiffs alleged damages in excess of $ i 200 million (having previously claimed in excess of $ i 1.1 billion) relating to purchase and sale agreements, mineral leases, and area of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. The trial court entered final judgment in favor of the Company, ruling that the plaintiffs take nothing by their claims and awarding the Company its attorneys’ fees and costs incurred in defending the lawsuit. The court of appeals affirmed in part and reversed in part the trial court’s judgment thereby reinstating some of plaintiff’s claims. The Texas Supreme Court granted the Company’s petition for review and heard oral argument in October 2022.

Australian Operations Divestiture Dispute

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

Canadian Operations Divestiture Dispute

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

California and Delaware Litigation

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

On September 10, 2020, the State of Delaware filed suit, individually and on behalf of the people of the State of Delaware, against over i 25 oil and gas companies alleging damages as a result of global warming. Plaintiffs seek unspecified damages and abatement under various tort theories. After removal of this lawsuit to federal court, the district court remanded it back to state court. The 3rd Circuit has since, once again, affirmed the district court’s remand to state court. The defendants are appealing this latest remand decision to the U.S. Supreme Court.

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

F-37

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Castex Lawsuit

In a case styled Apache Corporation v. Castex Offshore, Inc., et. al., Cause No. 2015-48580, in the 113th Judicial District Court of Harris County, Texas, Castex filed claims for alleged damages of approximately $ i 200 million, relating to overspend on the Belle Isle Gas Facility upgrade, and the drilling of i five sidetracks on the Potomac #3 well. After a jury trial, a verdict of approximately $ i 60 million, plus fees, costs, and interest was entered against the Company. The Fourteenth Court of Appeals of Texas reversed the judgment, in part, reducing the judgment to approximately $ i 13.5 million, plus fees, costs, and interest against the Company. Further appeal is pending.

Shareholder and Derivative Lawsuits

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

On January 18, 2023, a case captioned Jerry Hight, Derivatively and on behalf of APA Corporation v. John J. Christmann IV et al. was filed in the 61st District Court of Harris County, Texas. The case purports to be a derivative action brought against senior management and Company directors over many of the same allegations included in the Plymouth County Retirement System matter and asserts claims of (1) breach of fiduciary duty; (2) waste of corporate assets; and (3) unjust enrichment. The defendants believe that plaintiff’s claims lack merit and intend to vigorously defend this lawsuit.

Environmental Matters

The Company, as an owner or lessee and operator of oil and gas properties, is subject to various federal, state, local, and foreign country laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks.

The Company manages its exposure to environmental liabilities on properties to be acquired by identifying existing problems and assessing the potential liability. The Company also conducts periodic reviews, on a Company-wide basis, to identify changes in its environmental risk profile. These reviews evaluate whether there is a probable liability, the amount, and the likelihood that the liability will be incurred. The amount of any potential liability is determined by considering, among other matters, incremental direct costs of any likely remediation and the proportionate cost of employees who are expected to devote a significant amount of time directly to any possible remediation effort. As it relates to evaluations of purchased properties, depending on the extent of an identified environmental problem, the Company may exclude a property from the acquisition, require the seller to remediate the property to the Company’s satisfaction, or agree to assume liability for the remediation of the property. The Company’s general policy is to limit any reserve additions to any incidents or sites that are considered probable to result in an expected remediation cost exceeding $ i 300,000. Any environmental costs and liabilities that are not reserved for are treated as an expense when actually incurred. In the Company’s estimation, neither these expenses nor expenses related to training and compliance programs are likely to have a material impact on its financial condition.

As of December 31, 2022, the Company had an undiscounted reserve for environmental remediation of approximately $ i 1 million.

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

F-38

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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

Potential Decommissioning Obligations on Sold Properties

In 2013, Apache sold its Gulf of Mexico (GOM) Shelf operations and properties and its GOM operating subsidiary, GOM Shelf LLC (GOM Shelf) to Fieldwood Energy LLC (Fieldwood). Under the terms of the purchase agreement, Apache received cash consideration of $ i 3.75 billion and Fieldwood assumed the obligation to decommission the properties held by GOM Shelf and the properties acquired from Apache and its other subsidiaries (collectively, the Legacy GOM Assets). In respect of such abandonment obligations, Fieldwood posted letters of credit in favor of Apache (Letters of Credit) and established trust accounts (Trust A and Trust B) of which Apache was a beneficiary and which were funded by i two net profits interests (NPIs) depending on future oil prices. On February 14, 2018, Fieldwood filed for protection under Chapter 11 of the U.S. Bankruptcy Code. In connection with the 2018 bankruptcy, Fieldwood confirmed a plan under which Apache agreed, inter alia, to (i) accept bonds in exchange for certain of the Letters of Credit and (ii) amend the Trust A trust agreement and one of the NPIs to consolidate the trusts into a single Trust (Trust A) funded by both remaining NPIs. Currently, Apache holds i two bonds (Bonds) and i five Letters of Credit to secure Fieldwood’s asset retirement obligations on the Legacy GOM Assets as and when Apache is required to perform or pay for decommissioning any Legacy GOM Asset over the remaining life of the Legacy GOM Assets.

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

F-39

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

As of December 31, 2022, Apache estimates that its potential liability to fund decommissioning of Legacy GOM Assets it may be ordered to perform ranges from $ i 1.2 billion to $ i 1.4 billion on an undiscounted basis. Management does not believe any specific estimate within this range is a better estimate than any other. Accordingly, the Company has recorded a contingent liability of $ i 1.2 billion as of December 31, 2022, representing the estimated costs of decommissioning it may be required to perform on Legacy GOM Assets. Of the total liability recorded, $ i 738 million is reflected under the caption “Decommissioning contingency for sold Gulf of Mexico properties,” and $ i 450 million is reflected under “Other current liabilities” in the Company’s consolidated balance sheet. Changes in significant assumptions impacting Apache’s estimated liability, including expected decommissioning rig spread rates, lift boat rates, and planned abandonment logistics could result in a liability in excess of the amount accrued.

As of December 31, 2022, the Company has also recorded a $ i 667 million asset, which represents the amount the Company expects to be reimbursed from the Trust A funds, the Bonds, and the Letters of Credit for decommissioning it may be required to perform on Legacy GOM Assets. Of the total asset recorded, $ i 217 million is reflected under the caption “Decommissioning security for sold Gulf of Mexico properties,” and $ i 450 million is reflected under “Other current assets.” The Company recognized $ i 157 million and $ i 446 million during 2022 and 2021, respectively, of “Losses on previously sold Gulf of Mexico properties” to reflect the net impact of changes to the estimated decommissioning liability and decommissioning asset to the Company’s statement of consolidated operations.

Leases and Contractual Obligations

The Company determines if an arrangement is an operating or finance lease at the inception of each contract. If the contract is classified as an operating lease, Apache records an ROU asset and corresponding liability reflecting the total remaining present value of fixed lease payments over the expected term of the lease agreement. The expected term of the lease may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. If the Company’s lease does not provide an implicit rate in the contract, the Company uses its incremental borrowing rate when calculating the present value. In the normal course of business, Apache enters into various lease agreements for real estate, drilling rigs, vessels, aircrafts, and equipment related to its exploration and development activities, which are typically classified as operating leases under the provisions of the standard. ROU assets are reflected within “Deferred charges and other assets” on the Company’s consolidated balance sheet, and the associated operating lease liabilities are reflected within “Other current liabilities” and “Other” within “Deferred Credits and Other Noncurrent Liabilities,” as applicable. As allowed under ASU 2016-02, “Leases (Topic 842),” the Company applied practical expedients permitting an entity the option to not evaluate under such standard those existing or expired land easements that were not previously accounted for as leases as well as permitting an entity the option to carry forward its historical assessments of whether existing agreements contain a lease, classification of existing lease agreements, and treatment of initial direct lease costs.

Operating lease expense associated with ROU assets is recognized on a straight-line basis over the lease term. Lease expense is reflected on the statement of consolidated operations commensurate with the leased activities and nature of the services performed. Gross fixed operating lease expense, inclusive of amounts billable to partners and other working interest owners, was $ i 144 million, $ i 127 million, and $ i 149 million for the years ended 2022, 2021, and 2020, respectively. As allowed under the standard, Apache elected to exclude short-term leases (those with terms of 12 months or less) from the balance sheet presentation.

In addition, the Company periodically enters into finance leases that are similar to those leases classified as capital leases under previous GAAP. Finance lease assets are included in “Property, Plant, and Equipment” on the consolidated balance sheet, and the associated finance lease liabilities are reflected within “Current debt” and “Long-term debt,” as applicable. Depreciation on the Company’s finance lease asset was $ i i i 2 / / million in each of the years 2022, 2021, and 2020. Interest on the Company’s finance lease liability was $ i i i 2 / / million in each of the years 2022, 2021, and 2020.

The following table represents the Company’s weighted average lease term and discount rate as of December 31, 2022:

Operating Leases

Finance Lease

Weighted average remaining lease term

i 2.5 years

i 10.7 years

Weighted average discount rate

i 3.7

i 4.4

F-40

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

i i i

At December 31, 2022, contractual obligations for long-term operating leases, finance leases, and purchase obligations are as follows:

Net Minimum Commitments(1)

Operating Leases(2)

Finance Lease(3)

Purchase Obligations(4)(5)

(In millions)

2023

i 174

i 3

i 222

2024

i 102

i 3

i 183

2025

i 14

i 4

i 163

2026

i 6

i 4

i 1,951

2027

i 6

i 4

i 133

Thereafter

i 11

i 27

i 333

Total future minimum payments

i 313

i 45

i 2,985

Less: imputed interest

( i 14)

( i 11)

N/A

Total lease liabilities

i 299

i 34

N/A

Current portion

i 167

i 2

N/A

Non-current portion

i 132

i 32

N/A

(1)Excludes commitments for jointly owned fields and facilities for which the Company is not the operator.

(2)Amounts represent future payments associated with oil and gas operations inclusive of amounts billable to partners and other working interest owners. Such payments may be capitalized as a component of oil and gas properties and subsequently depreciated, impaired, or written off as exploration expense.

(3)Amounts represent the Company’s finance lease obligation related to the Company’s Midland, Texas regional office building.

(4)Amounts represent any agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms. These include minimum commitments associated with take-or-pay contracts, NGL processing agreements, drilling work program commitments, and agreements to secure capacity rights on third-party pipelines. Amounts exclude certain product purchase obligations related to marketing and trading activities for which there are no minimum purchase requirements or the amounts are not fixed or determinable. Total costs incurred under take-or-pay and throughput obligations were $ i 183 million, $ i 194 million, and $ i 120 million in 2022, 2021, and 2020, respectively.

/ / /

(5)Under terms agreed to in the new Egypt merged concession agreement, the Company committed to spend a minimum of $ i 3.5 billion on exploration, development, and operating activities by March 31, 2026. As of December 31, 2022, the Company has spent $ i 1.7 billion and believes it will be able to satisfy the remaining obligation within its current exploration and development program.

The lease liability reflected in the table above represents the Company’s fixed minimum payments that are settled in accordance with the lease terms. Actual lease payments during the period may also include variable lease components such as common area maintenance, usage-based sales taxes and rate differentials, or other similar costs that are not determinable at the inception of the lease. Gross variable lease payments, inclusive of amounts billable to partners and other working interest owners were $ i 89 million, $ i 63 million, and $ i 41 million in 2022, 2021, and 2020, respectively.

In addition to the lease liabilities in the table above, at December 31, 2022, undiscounted fixed minimum payments for operating leases not yet commenced totaled $ i 207 million. The leases primarily relate to office leases in Houston and Egypt, and estimated cash payments for 2023 are not expected to be material. The underlying assets for these leases were primarily designed by the lessors, and the Company is in the process of designing leasehold improvements for both leases.

13. i RETIREMENT AND DEFERRED COMPENSATION PLANS

The Company provides retirement benefits to its U.S. employees through the use of multiple plans: a 401(k) savings plan, a money purchase retirement plan, a non-qualified retirement savings plan, and a non-qualified restorative retirement savings plan. The 401(k) savings plan provides participating employees the ability to elect to contribute to the plan up to i 50 percent of eligible compensation as defined in the plan, with the Company making matching contributions up to a maximum of i 8 percent of each employee’s annual eligible compensation. In addition, the Company contributes i 6 percent of each participating employee’s annual eligible compensation to a money purchase retirement plan. The 401(k) savings plan and the money purchase retirement plan are subject to certain annually-adjusted, government-mandated restrictions that limit the amount of employee and Company contributions. For certain eligible employees, the Company also provides a non-qualified retirement savings plan or a non-qualified restorative retirement savings plan. These plans allow the deferral of up to i 50 percent of each employee’s base salary, up to i 75 percent of each employee’s annual bonus (that accepts employee contributions) and the Company’s matching contributions in excess of the government mandated limitations imposed in the 401(k) savings plan and money purchase retirement plan.

F-41

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Vesting in the Company’s contributions in the 401(k) savings plan, the money purchase retirement plan, the non-qualified retirement savings plan and the non-qualified restorative retirement savings plan occurs at the rate of i 20 percent for every completed year of employment. Upon a qualifying change in control of ownership of APA Corporation, as defined in the applicable plan, immediate and full vesting occurs.

The aggregate annual cost to the Company of all U.S. and international savings plans, the money purchase retirement plan, non-qualified retirement savings plan, and non-qualified restorative retirement savings plan was $ i 40 million, $ i 31 million, and $ i 43 million for 2022, 2021, and 2020, respectively.

The Company also provides a funded noncontributory defined benefit pension plan (U.K. Pension Plan) covering certain employees of the Company’s North Sea operations in the U.K. The plan provides defined pension benefits based on years of service and final salary. The plan applies only to employees who were part of BP North Sea’s pension plan as of April 2, 2003, prior to the acquisition of BP North Sea by the Company effective July 1, 2003.

Additionally, the Company offers postretirement medical benefits to U.S. employees who meet certain eligibility requirements. Eligible participants receive medical benefits up until the age of 65 or at the date they become eligible for Medicare, provided the participant remits the required portion of the cost of coverage. The plan is contributory with participants’ contributions adjusted annually. The postretirement benefit plan does not cover benefit expenses once a covered participant becomes eligible for Medicare.

F-42

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables set forth the benefit obligation, fair value of plan assets and funded status as of December 31, 2022, 2021, and 2020, and the underlying weighted average actuarial assumptions used for the U.K. Pension Plan and U.S. postretirement benefit plan. The Company uses a measurement date of December 31 for its pension and postretirement benefit plans.

2022

2021

2020

Pension
Benefits

Postretirement
Benefits

Pension
Benefits

Postretirement
Benefits

Pension
Benefits

Postretirement
Benefits

(In millions)

Change in Projected Benefit Obligation

Projected benefit obligation at beginning of year

i 211

i 20

i 233

i 20

i 199

i 20

Service cost

i 2

i 1

i 3

i 1

i 3

i 1

Interest cost

i 3

i —

i 3

i —

i 4

i —

Foreign currency exchange rates

( i 21)

i —

( i 2)

i —

i 8

i —

Actuarial losses (gains)

( i 79)

( i 5)

i 1

i 30

i 1

Plan settlements

i —

( i 17)

i —

Benefits paid

( i 8)

( i 3)

( i 4)

( i 11)

( i 4)

Retiree contributions

i —

i 2

i —

i 2

i —

i 2

Projected benefit obligation at end of year

i 108

i 15

i 211

i 20

i 233

i 20

Change in Plan Assets

Fair value of plan assets at beginning of year

i 254

i —

i 262

i —

i 228

i —

Actual return (loss) on plan assets

( i 87)

i —

i 11

i —

i 31

i —

Foreign currency exchange rates

( i 26)

i —

( i 3)

i —

i 9

i —

Employer contributions

i 4

i 2

i 5

i 2

i 5

i 2

Plan settlements

i —

( i 17)

i —

Benefits paid

( i 8)

( i 4)

( i 11)

( i 4)

Retiree contributions

i —

i 2

i —

i 2

i —

i 2

Fair value of plan assets at end of year

i 137

i —

i 254

i —

i 262

i —

Funded status at end of year

i 29

( i 15)

i 43

( i 20)

i 29

( i 20)

Amounts recognized in Consolidated Balance Sheet

Current liability

i —

( i 2)

i —

( i 2)

i —

( i 2)

Non-current asset (liability)

i 29

( i 13)

i 43

( i 18)

i 29

( i 18)

i 29

( i 15)

i 43

( i 20)

i 29

( i 20)

Pre-tax Amounts Recognized in Accumulated Other Comprehensive Income (Loss)

Accumulated gain (loss)

( i 10)

i 18

i 1

i 14

( i 11)

i 16

Weighted Average Assumptions used as of December 31

Discount rate

i 5.00

i 5.29

i 1.80

i 2.57

i 1.40

i 2.06

Salary increases

i 4.70

N/A

i 4.90

N/A

i 4.50

N/A

Expected return on assets

i 4.70

N/A

i 1.90

N/A

i 1.50

N/A

Healthcare cost trend

Initial

N/A

i 6.50

N/A

i 6.25

N/A

i 6.00

Ultimate in 2028

N/A

i 5.25

N/A

i 5.00

N/A

i 5.00

As of December 31, 2022, 2021, and 2020, the accumulated benefit obligation for the U.K. Pension Plan was $ i 89 million, $ i 205 million, and $ i 207 million, respectively.

F-43

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company’s defined benefit pension plan assets are held by a non-related trustee who has been instructed to invest the assets in a blend of equity securities and low-risk debt securities. The Company intends that this blend of investments will provide a reasonable rate of return such that the benefits promised to members are provided. The U.K. Pension Plan policy is to target an ongoing funding level of i 100 percent through prudent investments and includes policies and strategies such as investment goals, risk management practices, and permitted and prohibited investments. i A breakout of previous allocations for plan asset holdings and the target allocation for the Company’s plan assets are summarized below:


	Target Allocation		Percentage of Plan Assets at Year-End
	2022		2022		2021
Asset Category
Equity securities:

Overseas quoted equities	i 14	%	i 15	%	i 15	%
Total equity securities	i 14	%	i 15	%	i 15	%
Debt securities:
U.K. government bonds	i 52	%	i 52	%	i 54	%
U.K. corporate bonds	i 32	%	i 32	%	i 25	%
Total debt securities	i 84	%	i 84	%	i 79	%
Cash	i 2	%	i 1	%	i 6	%
Total	i 100	%	i 100	%	i 100	%

The plan’s assets do not include any direct ownership of equity or debt securities of the Company. The fair value of plan assets at December 31, 2022 and 2021 are based upon unadjusted quoted prices for identical instruments in active markets, which is a Level 1 fair value measurement. i The following tables present the fair values of plan assets for each major asset category based on the nature and significant concentration of risks in plan assets at December 31, 2022 and 2021:

December 31,

2022

2021

(In millions)

Equity securities:

Overseas quoted equities

i 20

i 38

Total equity securities

i 20

i 38

Debt securities:

U.K. government bonds

i 71

i 138

U.K. corporate bonds

i 44

i 62

Total debt securities

i 115

i 200

Cash

i 2

i 16

Fair value of plan assets

i 137

i 254

The expected long-term rate of return on assets assumptions are derived relative to the yield on long-dated fixed-interest bonds issued by the U.K. government (gilts). For equities, outperformance relative to gilts is assumed to be i 3.5 percent per year.

F-44

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following tables set forth the components of the net periodic cost and the underlying weighted average actuarial assumptions used for the pension and postretirement benefit plans as of December 31, 2022, 2021, and 2020:

2022

2021

2020

Pension
Benefits

Postretirement
Benefits

Pension
Benefits

Postretirement
Benefits

Pension
Benefits

Postretirement
Benefits

(In millions)

Components of Net Periodic Benefit Cost

Service cost

i 2

i 1

i 3

i 1

i 3

i 1

Interest cost

i 3

i —

i 3

i —

i 4

i —

Expected return on assets

( i 4)

i —

( i 4)

i —

( i 5)

i —

Amortization of loss

i —

( i 1)

i —

( i 1)

i —

( i 1)

Settlement loss

i —

Net periodic benefit cost

i 1

i —

i 2

i —

i 2

i —

Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost for the Years Ended December 31

Discount rate

i 1.80

i 2.57

i 1.40

i 2.06

i 2.10

i 3.00

Salary increases

i 4.90

N/A

i 4.50

N/A

i 4.30

N/A

Expected return on assets

i 1.90

N/A

i 1.50

N/A

i 2.20

N/A

Healthcare cost trend

Initial

N/A

i 6.25

N/A

i 6.00

N/A

i 6.25

Ultimate in 2028

N/A

i 5.00

N/A

i 5.00

N/A

i 5.00

The Company expects to contribute approximately $ i 2 million to its pension plan and $ i 3 million to its postretirement benefit plan in 2023. i The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Pension
Benefits

Postretirement
Benefits

(In millions)

2023

i 5

i 2

2024

i 5

i 2

2025

i 5

i 2

2026

i 5

i 1

2027

i 5

i 1

Years 2028-2032

i 28

i 6

F-45

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

14. i REDEEMABLE NONCONTROLLING INTEREST — ALTUS

Preferred Units Issuance

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

Classification

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

Measurement

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

Activity related to the Preferred Units for the 2022 and 2021 periods is as follows:

Units Outstanding

Financial Position(1)

(In millions, except unit data)

Redeemable noncontrolling interest — Altus Preferred Unit limited partners: at December 31, 2020

i 660,694

i 608

Cash distributions to Altus Preferred Unit limited partners

—

( i 46)

Distributions payable to Altus Preferred Unit limited partners

—

( i 12)

Allocation of Altus Midstream net income

N/A

i 80

Accreted value adjustment

N/A

i 82

Redeemable noncontrolling interest — Altus Preferred Unit limited partners: at December 31, 2021

i 660,694

i 712

Allocation of Altus Midstream LP net income

N/A

i 12

Accreted value adjustment(1)

N/A

( i 82)

Redeemable noncontrolling interest — Altus Preferred Unit limited partners: at February 22, 2022

i 660,694

i 642

Preferred Units embedded derivative

i 89

Deconsolidation of Altus

( i 731)

i —

(1)Includes the reversal of previously recorded accreted value adjustments due to the deconsolidation of Altus.

N/A - not applicable.

F-46

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

15. CAPITAL STOCK AND EQUITY

Upon consummation of the Holding Company Reorganization, each outstanding share of Apache common stock automatically converted into a share of APA common stock on a i one-for-one basis. As a result, each stockholder of Apache now owns the same number of shares of APA common stock that such stockholder owned of Apache common stock immediately prior to the Holding Company Reorganization. As a result of the Holding Company Reorganization and subsequent activity, Apache recorded various intercompany activities during the quarter ended March 31, 2021 as capital transactions, which are reflected in Apache’s Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling Interest. Refer to Note 2—Transactions with Parent Affiliate for more detail.

Additionally, in connection with the Holding Company Reorganization, Apache transferred to APA, and APA assumed, sponsorship of all of Apache’s stock plans along with all of Apache’s rights and obligations under each plan. Subsequent to the Holding Company Reorganization, stock-based compensation associated with APA equity awards granted and outstanding to Apache employees are reflected as capital contributions from APA to Apache.

i Net Income (Loss) per Common Share

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

Stock Compensation Plans

Prior to consummation of the Holding Company Reorganization, the Company maintained several stock-based compensation plans, which include stock options, restricted stock, and conditional restricted stock unit plans. In 2021, pursuant to the Holding Company Reorganization, Apache’s outstanding common shares were converted into equivalent corresponding shares of APA. APA assumed sponsorship of all stock compensation plans. All cash-settled awards previously indexed to Apache’s stock price were subsequently indexed to APA’s stock price, and all unvested stock-settled awards will be settled in APA stock upon vesting.

On May 12, 2016, the Company’s shareholders approved the 2016 Omnibus Compensation Plan (the 2016 Plan), which is used to provide eligible employees with equity-based incentives by granting incentive stock options, non-qualified stock options, performance awards, restricted stock awards, restricted stock units, stock appreciation rights, cash awards, or any combination of the foregoing. As of December 31, 2022, i 10.1 million shares were authorized and available for grant under the 2016 Plan. Previously approved plans remain in effect solely for the purpose of governing grants still outstanding that were issued prior to approval of the 2016 Plan. All new grants are issued from the 2016 Plan. In 2018, the Company began issuing cash-settled awards (phantom units) under the restricted stock and conditional restricted stock unit plans. The phantom units represent a hypothetical interest in the Company’s stock and, once vested, are settled in cash.

Costs related to the plans are capitalized or expensed to “Lease operating expenses,” “Exploration,” or “General and administrative” in the Company’s statement of consolidated operations based on the nature of each employee’s activities. i The following table summarizes the Company’s stock-settled and cash-settled compensation costs:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Stock-settled and cash-settled compensation expensed

i 288

i 152

i 40

Stock-settled and cash-settled compensation capitalized

i 43

i 18

i 7

Total stock-settled and cash-settled compensation costs

i 331

i 170

i 47

Stock Options

As of December 31, 2022, APA had outstanding options to purchase shares of APA’s common stock under the 2016 Plan and the 2011 Omnibus Equity Compensation Plan (the 2011 Plan and, with the 2016 Plan, the Omnibus Plans). The Omnibus Plans were submitted to and approved by the Company’s shareholders. New shares of common stock will be issued for employee stock option exercises. Under the Omnibus Plans, the exercise price of each option equals the closing price of APA’s common stock on the date of grant. Options granted become exercisable ratably over a i three-year period and expire i 10 years after granted.

F-47

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes stock option activity for the years ended December 31, 2022, 2021, and 2020:

2022

2021

2020

Shares
Under Option

Weighted Average
Exercise Price

Shares
Under Option

Weighted Average
Exercise Price

Shares
Under Option

Weighted Average
Exercise Price

(In thousands, except exercise price amounts)

Outstanding, beginning of year

i 3,012

i 63.79

i 3,537

i 72.10

i 4,298

i 75.24

Exercised

( i 99)

i 42.09

i —

Forfeited

( i 2)

i 49.10

i —

( i 37)

i 44.98

Expired

( i 833)

i 81.56

( i 525)

i 119.83

( i 724)

i 92.14

Outstanding, end of year(1)

i 2,078

i 57.71

i 3,012

i 63.79

i 3,537

i 72.10

Expected to vest

i —

i 150

i 45.77

Exercisable, end of year(1)

i 2,078

i 57.71

i 3,012

i 63.79

i 3,387

i 73.26

(1)As of December 31, 2022, options exercisable and outstanding had a weighted average remaining contractual life of i 3.1 years and aggregate intrinsic value of $ i 3.5 million.

There were i no options issued and i 98,646 options exercised during the year ended December 31, 2022. There were i i no / options issued and i i no / options exercised during the years ended December 31, 2021, and 2020.

Restricted Stock Units and Restricted Stock Phantom Units

Prior to consummation of the Holding Company Reorganization, the Company had restricted stock unit and restricted stock phantom unit plans for eligible employees, including officers. The value of the stock-settled restricted stock unit awards is established by the market price on the date of grant and is recorded as compensation expense ratably over the vesting terms. The restricted stock phantom unit awards represent a hypothetical interest in either APA’s common stock or, prior to the BCP Business Combination, in ALTM’s common stock, as applicable, and, once vested, are settled in cash. Compensation expense related to the cash-settled awards is recorded as a liability and remeasured at the end of each reporting period over the applicable vesting term.

For the years ended December 31, 2022, 2021, and 2020, compensation costs charged to expense for the restricted stock units and restricted stock phantom units was $ i 145 million, $ i 91 million, and $ i 39 million, respectively. As of December 31, 2022, 2021, and 2020, capitalized compensation costs for the restricted stock units and restricted stock phantom units were $ i 22 million, $ i 15 million, and $ i 6 million, respectively.

The following table summarizes stock-settled restricted stock unit activity for the years ended December 31, 2022, 2021, and 2020:

2022

2021

2020

Units

Weighted
Average Grant-Date Fair Value

Units

Weighted
Average Grant-Date Fair Value

Units

Weighted
Average Grant-Date Fair Value

(In thousands, except per share amounts)

Non-vested, beginning of year

i 2,073

i 19.98

i 1,552

i 28.43

i 2,448

i 46.65

Granted

i 847

i 29.90

i 1,506

i 16.46

i 1,352

i 24.60

Vested(3)

( i 978)

i 22.39

( i 857)

i 29.13

( i 1,933)

i 48.65

Forfeited

( i 57)

i 23.49

( i 128)

i 19.78

( i 315)

i 30.09

Non-vested, end of year(1)(2)

i 1,885

i 23.08

i 2,073

i 19.98

i 1,552

i 28.43

(1)As of December 31, 2022, there was $ i 14 million of total unrecognized compensation cost related to i 1,885,491 unvested stock-settled restricted stock units.

(2)As of December 31, 2022, the weighted-average remaining life of unvested stock-settled restricted stock units is approximately i 0.7 years.

(3)The grant date fair values of the stock-settled awards vested during 2022, 2021, and 2020 were approximately $ i 22 million, $ i 25 million, and $ i 94 million, respectively.

F-48

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes cash-settled restricted stock phantom unit activity for the years ended December 31, 2022, 2021, and 2020:

For the Year Ended December 31,

2022

2021

2020

(In thousands)

Non-vested, beginning of year

i 6,402

i 4,423

i 5,384

Adjustment for ALTM reverse stock split(1)

i —

( i 1,246)

Adjustment from ALTM transaction(2)

i 143

i —

Granted(3)

i 2,568

i 4,441

i 3,462

Vested

( i 2,970)

( i 2,049)

( i 1,618)

Forfeited

( i 434)

( i 413)

( i 1,559)

Non-vested, end of year(4)

i 5,709

i 6,402

i 4,423

(1)Prior to the deconsolidation of Altus on February 22, 2022, on June 30, 2020, ALTM executed a 1-for-20 reverse stock split of its outstanding common stock. Outstanding cash-settled awards were based on the per-share market price of ALTM common stock.

(2)Following the BCP Business Combination, certain employees were granted restricted stock phantom units based on APA’s common stock price to replace the equivalent value in restricted stock phantom units based on ALTM’s common stock price.

(3)Restricted stock phantom units granted during 2022, 2021, and 2020 included i 2,512,602, i 4,375,546, and i 3,378,486 awards, respectively, based on the per-share market price of APA common stock and i 55,546, i 65,327, and i 83,239 awards, respectively, based on the per-share market price of ALTM common stock prior to the deconsolidation of Altus on February 22, 2022. The restricted stock phantom units granted during 2020 based on ALTM’s per-share market price reflect the 1-for-20 reverse stock split described above.

(4)The outstanding liability for the unvested cash-settled restricted stock phantom units that had not been recognized as of December 31, 2022 was approximately $ i 103 million.

In January 2023, APA awarded i 580,254 restricted stock units and i 1,950,332 restricted stock phantom units based on APA’s weighted-average per-share market price of $ i 42.15 under the 2016 Plan to eligible employees. Total compensation cost for the restricted stock units and the restricted stock phantom units, absent any forfeitures, is estimated to be $ i 24 million and $ i 85 million, respectively, and was calculated based on the per-share fair market value of a share of APA’s common stock as of the grant date. Compensation cost will be recognized over a i three-year vesting period for both plans. The restricted stock phantom units will be classified as a liability and remeasured at the end of each reporting period based on the change in fair value of one share of the Company’s common stock, a Level 1 fair value measurement.

Performance Program

To provide long-term incentives for the Company’s employees to deliver competitive shareholder returns, the Company makes annual grants of conditional restricted stock units to eligible employees. Apache has a performance program for certain eligible employees with payout for a portion of the shares based upon measurement of total shareholder return (TSR) of APA common stock as compared to a designated peer group during a i three-year performance period. Payout for the remaining portion of the shares is based on performance and financial objectives as defined in the plan. The overall results of the objectives are calculated at the end of the award’s stated performance period and, if a payout is warranted, applied to the target number of restricted stock units awarded. The performance shares will immediately vest i 50 percent at the end of the i three-year performance period, with the remaining i 50 percent vesting at the end of the following year. Grants from the performance programs outstanding at December 31, 2022, are as described below:

•In January 2018, the Company’s Board of Directors approved the 2018 Performance Program, pursuant to the 2016 Plan. Eligible employees received initial cash-settled conditional phantom units totaling i 931,049 units. A total of i 23,633 phantom units were outstanding as of December 31, 2022. The results for the performance period yielded a payout of i 23 percent of target.

•In January 2019, the Company’s Board of Directors approved the 2019 Performance Program, pursuant to the 2016 Plan. Eligible employees received initial cash-settled conditional phantom units totaling i 1,679,832 units. A total of i 604,417 phantom units were outstanding as of December 31, 2022. The results for the performance period yielded a payout of i 100 percent of target.

•In January 2020, the Company’s Board of Directors approved the 2020 Performance Program, pursuant to the 2016 Plan. Eligible employees received initial cash-settled conditional phantom units totaling i 1,687,307 units. A total of i 1,311,715 phantom units were outstanding as of December 31, 2022. The results for the performance period yielded a payout of i 155 percent of target.

F-49

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

•In January 2021, the Company’s Board of Directors approved the 2021 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling i 1,959,856 units. The actual amount of phantom units awarded will be between i zero and i 200 percent of target. A total of i 1,826,890 phantom units were outstanding as of December 31, 2022, from which a minimum of i zero to a maximum of i 3,653,780 units could be awarded.

•In January 2022, the Company’s Board of Directors approved the 2022 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling i 1,093,034 units. The actual amount of phantom units awarded will be between i zero and i 200 percent of target. A total of i 1,068,530 phantom units were outstanding as of December 31, 2022, from which a minimum of i zero to a maximum of i 2,137,060 units could be awarded.

Compensation costs charged to expense under the performance programs were an expense of $ i 136 million, an expense of $ i 56 million, and a credit of $ i 8 million during 2022, 2021, and 2020, respectively. Capitalized compensation costs under the performance programs were an expense of $ i 21 million, an expense of $ i 3 million, and a credit of $ i 1 million during 2022, 2021, and 2020, respectively.

The following table summarizes cash-settled conditional restricted stock unit activity for the year ended December 31, 2022:


						Units
						(In thousands)
Non-vested, beginning of year						i 4,531
Granted						i 1,676
Vested						( i 656)
Forfeited						( i 106)
Expired						( i 610)
Non-vested, end of year(1)						i 4,835

(1)As of December 31, 2022, the outstanding liability for the unvested cash-settled conditional restricted stock units that had not been recognized was approximately $ i 53 million.

In January 2023, APA’s board of directors approved the 2023 Performance Program, pursuant to the 2016 Plan. Payout for i 40 percent of the shares is based upon measurement of TSR of APA common stock as compared to a designated peer group and the S&P 500 Index during a i three-year performance period. Payout for the remaining i 60 percent of the shares is based on the performance and financial objectives defined in the 2023 Performance Program. Eligible employees received the initial cash-settled conditional phantom units totaling i 797,429 units, with the ultimate number of phantom units to be awarded ranging from i zero to a maximum of i 1,594,858 units. These phantom units represent a hypothetical interest in the Company’s common stock, and, once vested, are settled in cash. The TSR component of the award had a grant date fair value per award of $ i 62.15 based on a Monte Carlo simulation. The grant date fair value per award for the remaining i 60 percent was $ i 44.06 based on the weighted-average fair market value of a share of common stock of APA as of the grant date. These 2023 Performance Program phantom units will be classified as a liability and remeasured at the end of each reporting period based on the change in fair value of one share of the Company’s common stock, a Level 1 fair value measurement.

16. i ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Components of accumulated other comprehensive income (loss) include the following:

As of December 31,

2022

2021

2020

(In millions)

Share of equity method interests other comprehensive loss

i —

( i 1)

Pension and postretirement benefit plan (Note 13)

i 14

i 22

i 15

Accumulated other comprehensive income

i 14

i 22

i 14

F-50

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

17. i MAJOR CUSTOMERS

The Company is exposed to credit risk in the event of nonpayment by counterparties, a significant portion of which are concentrated in energy-related industries. The creditworthiness of customers and other counterparties is subject to continuing review, including the use of master netting agreements, where appropriate. During 2022, sales to EGPC accounted for approximately i 15 percent of the Company’s worldwide crude oil, natural gas, and NGLs revenues. During 2021, sales to EGPC and CFE International accounted for approximately i 14 percent and i 10 percent, respectively, of the Company’s worldwide crude oil, natural gas, and NGLs revenues. During 2020, sales to EGPC and Vitol accounted for approximately i 17 percent and i 14 percent, respectively, of the Company’s worldwide crude oil, natural gas, and NGLs revenues.

Management does not believe that the loss of any one of these customers would have a material adverse effect on the results of operations.

18. i BUSINESS SEGMENT INFORMATION

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

Egypt(1)

North Sea

U.S.

Altus Midstream

Intersegment Eliminations & Other

Total(2)

Upstream

(In millions)

2022

Oil revenues

i 3,145

i 1,232

i 2,323

i —

i 6,700

Natural gas revenues

i 370

i 281

i 894

i —

i 1,545

Natural gas liquids revenues

i 6

i 45

i 735

i —

( i 3)

i 783

Oil, natural gas, and natural gas liquids production revenues

i 3,521

i 1,558

i 3,952

i —

( i 3)

i 9,028

Purchased oil and gas sales

i —

i 1,850

i 5

i —

i 1,855

Midstream service affiliate revenues

—

i 16

( i 16)

—

i 3,521

i 1,558

i 5,802

i 21

( i 19)

i 10,883

Operating Expenses:

Lease operating expenses

i 526

i 404

i 506

i —

( i 1)

i 1,435

Gathering, processing, and transmission

i 22

i 43

i 304

i 5

( i 18)

i 356

Purchased oil and gas costs

i —

i 1,776

i —

i 1,776

Taxes other than income

i —

i 253

i 3

i —

i 256

Exploration

i 84

i 35

i 24

i —

i 3

i 146

Depreciation, depletion, and amortization

i 400

i 238

i 537

i 2

i —

i 1,177

Asset retirement obligation accretion

i —

i 82

i 34

i 1

i —

i 117

i 1,032

i 802

i 3,434

i 11

( i 16)

i 5,263

Operating Income (Loss)

i 2,489

i 756

i 2,368

i 10

( i 3)

i 5,620

Other Income (Expense):

Gain on divestitures, net

i 1,180

Losses on previously sold Gulf of Mexico properties

( i 157)

Derivative instrument losses, net

( i 107)

Other

i 139

General and administrative

( i 462)

Transaction, reorganization, and separation

( i 26)

Financing costs, net

( i 313)

Income Before Income Taxes

i 5,874

Total Assets(3)

i 3,148

i 1,911

i 9,196

i —

i 14,255

Net Property and Equipment

i 1,976

i 1,386

i 4,595

i —

i 7,957

Additions to Net Property and Equipment

i 695

i 210

i 752

i —

i 1,657

F-51

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Egypt(1)

North Sea

U.S.

Altus Midstream

Intersegment Eliminations & Other

Total(2)

Upstream

(In millions)

2021

Oil revenues

i 1,806

i 929

i 1,850

i —

i 4,585

Natural gas revenues

i 270

i 183

i 754

i —

i 1,207

Natural gas liquids revenues

i 9

i 24

i 676

i —

( i 3)

i 706

Oil, natural gas, and natural gas liquids production revenues

i 2,085

i 1,136

i 3,280

i —

( i 3)

i 6,498

Purchased oil and gas sales

i —

i 1,476

i 11

i —

i 1,487

Midstream service affiliate revenues

—

i 127

( i 127)

—

i 2,085

i 1,136

i 4,756

i 138

( i 130)

i 7,985

Operating Expenses:

Lease operating expenses

i 469

i 383

i 391

i —

( i 2)

i 1,241

Gathering, processing, and transmission

i 12

i 39

i 309

i 32

( i 128)

i 264

Purchased oil and gas costs

i —

i 1,575

i 5

i —

i 1,580

Taxes other than income

i —

i 190

i 14

i —

i 204

Exploration

i 63

i 34

i 28

i —

i 2

i 127

Depreciation, depletion, and amortization

i 524

i 270

i 554

i 12

i —

i 1,360

Asset retirement obligation accretion

i —

i 79

i 30

i 4

i —

i 113

Impairments

i 26

i 22

i —

i 160

i —

i 208

i 1,094

i 827

i 3,077

i 227

( i 128)

i 5,097

Operating Income (Loss)

i 991

i 309

i 1,679

( i 89)

( i 2)

i 2,888

Other Income (Expense):

Gain on divestitures, net

i 67

Losses on previously sold Gulf of Mexico properties

( i 446)

Derivative instrument gains, net

i 94

Other

i 228

General and administrative

( i 357)

Transaction, reorganization, and separation

( i 22)

Financing costs, net

( i 472)

Income Before Income Taxes

i 1,980

Total Assets(3)

i 2,796

i 2,199

i 7,700

i 1,698

i —

i 14,393

Net Property and Equipment

i 1,720

i 1,646

i 4,507

i 187

i —

i 8,060

Additions to Net Property and Equipment

i 319

i 159

i 523

i 3

i —

i 1,004

F-52

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Egypt(1)

North Sea

U.S.

Altus Midstream

Intersegment Eliminations & Other

Total(2)

Upstream

(In millions)

2020

Oil revenues

i 1,102

i 795

i 1,209

i —

i 3,106

Natural gas revenues

i 280

i 67

i 251

i —

i 598

Natural gas liquids revenues

i 8

i 21

i 304

i —

i 333

Oil, natural gas, and natural gas liquids production revenues

i 1,390

i 883

i 1,764

i —

i 4,037

Purchased oil and gas sales

i —

i 394

i 4

i —

i 398

Midstream service affiliate revenues

—

i 145

( i 145)

—

i 1,390

i 883

i 2,158

i 149

( i 145)

i 4,435

Operating Expenses:

Lease operating expenses

i 424

i 305

i 400

i —

( i 2)

i 1,127

Gathering, processing, and transmission

i 38

i 50

i 291

i 38

( i 143)

i 274

Purchased oil and gas costs

i —

i 354

i 3

i —

i 357

Taxes other than income

i —

i 108

i 15

i —

i 123

Exploration

i 63

i 28

i 168

i —

i 15

i 274

Depreciation, depletion, and amortization

i 601

i 380

i 779

i 12

i —

i 1,772

Asset retirement obligation accretion

i —

i 73

i 32

i 4

i —

i 109

Impairments

i 529

i 7

i 3,963

i 2

i —

i 4,501

i 1,655

i 843

i 6,095

i 74

( i 130)

i 8,537

Operating Income (Loss)

( i 265)

i 40

( i 3,937)

i 75

( i 15)

( i 4,102)

Other Income (Expense):

Gain on divestitures, net

i 32

Derivative instrument losses, net

( i 223)

Other

i 64

General and administrative

( i 290)

Transaction, reorganization, and separation

( i 54)

Financing costs, net

( i 267)

Loss Before Income Taxes

( i 4,840)

Total Assets(3)

i 3,003

i 2,220

i 5,540

i 1,786

i 197

i 12,746

Net Property and Equipment

i 1,955

i 1,773

i 4,760

i 196

i 135

i 8,819

Additions to Net Property and Equipment

i 454

i 215

i 345

i 12

i 136

i 1,162

(1)Includes revenue from non-customers for the years ended December 31, 2022, 2021, and 2020 of:

For the Year Ended December 31,

2022

2021

2020

(In millions)

Oil

i 989

i 420

i 95

Natural gas

i 117

i 47

i 14

Natural gas liquids

i 2

i —

(2)Includes noncontrolling interests in Egypt and Altus Midstream.

(3)Intercompany balances are excluded from total assets.

F-53

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

19. i SUPPLEMENTAL OIL AND GAS DISCLOSURES (Unaudited)

Oil and Gas Operations

The following table sets forth revenue and direct cost information relating to the Company’s oil and gas exploration and production activities. Apache has no long-term agreements to purchase oil or gas production from foreign governments or authorities.

United
States

Egypt(1)

North Sea

Other
International

Total(1)

(In millions, except per boe)

2022

Oil and gas production revenues

i 3,952

i 3,521

i 1,558

i —

i 9,031

Operating cost:

Depreciation, depletion, and amortization(2)

i 508

i 390

i 232

i —

i 1,130

Asset retirement obligation accretion

i 34

i —

i 82

i —

i 116

Lease operating expenses

i 506

i 526

i 404

i —

i 1,436

Gathering, processing, and transmission

i 304

i 22

i 43

i —

i 369

Exploration expenses

i 24

i 84

i 35

i 3

i 146

Production taxes(3)

i 252

i —

i 252

Income tax

i 488

i 1,100

i 495

i —

i 2,083

i 2,116

i 2,122

i 1,291

i 3

i 5,532

Results of operations

i 1,836

i 1,399

i 267

( i 3)

i 3,499

2021

Oil and gas production revenues

i 3,280

i 2,085

i 1,136

i —

i 6,501

Operating cost:

Depreciation, depletion, and amortization(2)

i 511

i 477

i 267

i —

i 1,255

Asset retirement obligation accretion

i 30

i —

i 79

i —

i 109

Lease operating expenses

i 391

i 469

i 383

i —

i 1,243

Gathering, processing, and transmission

i 309

i 12

i 39

i —

i 360

Exploration expenses

i 28

i 63

i 34

i 2

i 127

Production taxes(3)

i 188

i —

i 188

Income tax

i 383

i 479

i 134

i —

i 996

i 1,840

i 1,500

i 936

i 2

i 4,278

Results of operations

i 1,440

i 585

i 200

( i 2)

i 2,223

2020

Oil and gas production revenues

i 1,764

i 1,390

i 883

i —

i 4,037

Operating cost:

Depreciation, depletion, and amortization(2)

i 726

i 540

i 377

i —

i 1,643

Asset retirement obligation accretion

i 32

i —

i 73

i —

i 105

Lease operating expenses

i 400

i 424

i 305

i —

i 1,129

Gathering, processing, and transmission

i 291

i 38

i 50

i —

i 379

Exploration expenses

i 168

i 63

i 28

i 15

i 274

Impairments related to oil and gas properties

i 3,938

i 374

i 7

i —

i 4,319

Production taxes(3)

i 106

i —

i 106

Income tax

( i 818)

( i 22)

i 17

i —

( i 823)

i 4,843

i 1,417

i 857

i 15

i 7,132

Results of operations

( i 3,079)

( i 27)

i 26

( i 15)

( i 3,095)

(1)Includes noncontrolling interests in Egypt.

(2)Reflects DD&A of capitalized costs of oil and gas properties and, therefore, does not agree with DD&A reflected on Note 18—Business Segment Information.

(3)Reflects only amounts directly related to oil and gas producing properties and, therefore, does not agree with taxes other than income reflected on Note 18—Business Segment Information.

F-54

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Costs Incurred in Oil and Gas Property Acquisitions, Exploration, and Development Activities

United
States

Egypt(2)

North Sea

Other
International

Total(2)

(In millions)

2022

Acquisitions:

Proved

i 19

i 3

i —

i 22

Unproved

i 28

i —

i 28

Exploration

i 4

i 169

i 61

i 3

i 237

Development

i 775

i 568

( i 57)

i —

i 1,286

Costs incurred(1)

i 826

i 740

i 4

i 3

i 1,573

(1) Includes capitalized interest, asset retirement costs:

Capitalized interest

i —

i 1

i —

i 1

Asset retirement costs

i 76

i —

( i 215)

i —

( i 139)

2021

Acquisitions:

Proved

i —

( i 157)

i —

( i 157)

Unproved

i 9

i 20

i —

i 29

Exploration

i 6

i 86

i 39

i 30

i 161

Development

i 545

i 404

i 135

i 1

i 1,085

Costs incurred(1)

i 560

i 353

i 174

i 31

i 1,118

(1) Includes capitalized interest and asset retirement costs, and Egypt modernization impacts as follows:

Capitalized interest

i —

Asset retirement costs

i 130

i —

i 19

i —

i 149

Egypt PSC modernization impacts - Proved and Unproved

i —

( i 145)

i —

( i 145)

2020

Acquisitions:

Proved

i —

i 7

i —

i 7

Unproved

i 4

i —

i 4

Exploration

i 8

i 102

i 68

i 150

i 328

Development

i 332

i 378

i 162

i —

i 872

Costs incurred(1)

i 344

i 487

i 230

i 150

i 1,211

(1) Includes capitalized interest and asset retirement costs as follows:

Capitalized interest

i —

i 3

Asset retirement costs

i 9

i —

i 29

i —

i 38

(2) Includes a noncontrolling interest in Egypt.

In 2021, in connection with Apache’s agreement to enter into a new merged concession agreement with EGPC, as referenced in Note 1—Summary of Significant Accounting Policies, the Company recorded a reduction in proved properties totaling $ i 165 million and an increase in unproved properties of $ i 20 million, reflecting $ i 247 million of incremental value due to the Company for the period between the effective date of April 1, 2021 and closing, partially offset by a $ i 100 million signing bonus and $ i 2 million of other post-closing adjustments.

F-55

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Capitalized Costs

The following table sets forth the capitalized costs and associated accumulated depreciation, depletion, and amortization relating to the Company’s oil and gas acquisition, exploration, and development activities:

United
States

Egypt(1)

North
Sea

Other
International

Total(1)

(In millions)

2022

Proved properties

i 18,990

i 13,014

i 8,945

i —

i 40,949

Unproved properties

i 208

i 77

i 11

i —

i 296

i 19,198

i 13,091

i 8,956

i —

i 41,245

Accumulated DD&A

( i 14,846)

( i 11,157)

( i 7,573)

i —

( i 33,576)

i 4,352

i 1,934

i 1,383

i —

i 7,669

2021

Proved properties

i 18,732

i 12,373

i 8,954

i —

i 40,059

Unproved properties

i 319

i 63

i 33

i —

i 415

i 19,051

i 12,436

i 8,987

i —

i 40,474

Accumulated DD&A

( i 14,814)

( i 10,767)

( i 7,345)

i —

( i 32,926)

i 4,237

i 1,669

i 1,642

i —

i 7,548

(1)Includes noncontrolling interests in Egypt.

Oil and Gas Reserve Information

Estimated reserves that can be produced economically through application of improved recovery techniques are included in the “proved” classification when successful testing by a pilot project or the operation of an active, improved recovery program using reliable technology establishes the reasonable certainty for the engineering analysis on which the project or program is based. Economically producible means a resource that generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation. Reasonable certainty means a high degree of confidence that the quantities will be recovered. Reliable technology is a grouping of one or more technologies (including computational methods) that has been field-tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation. In estimating its proved reserves, Apache uses several different traditional methods that can be classified in three general categories: (1) performance-based methods; (2) volumetric-based methods; and (3) analogy with similar properties. Apache will, at times, utilize additional technical analysis such as computer reservoir models, petrophysical techniques, and proprietary 3-D seismic interpretation methods to provide additional support for more complex reservoirs. Information from this additional analysis is combined with traditional methods outlined above to enhance the certainty of the Company’s reserve estimates.

i There are numerous uncertainties inherent in estimating quantities of proved reserves and projecting future rates of production and timing of development expenditures. The reserve data in the following tables only represent estimates and should not be construed as being exact.

F-56

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Crude Oil and Condensate

United
States

Egypt(1)

North
Sea

Total(1)

(Thousands of barrels)

Proved developed reserves:

i 278,145

i 103,573

i 101,712

i 483,430

i 206,936

i 95,981

i 86,566

i 389,483

i 180,968

i 106,646

i 77,073

i 364,687

i 168,817

i 108,050

i 82,580

i 359,447

Proved undeveloped reserves:

i 46,716

i 10,831

i 10,049

i 67,596

i 25,516

i 11,228

i 7,273

i 44,017

i 18,168

i 11,003

i 5,757

i 34,928

i 16,221

i 8,557

i 2,873

i 27,651

Total proved reserves:

Balance December 31, 2019

i 324,861

i 114,404

i 111,761

i 551,026

Extensions, discoveries and other additions

i 17,858

i 17,855

i 5,275

i 40,988

Revisions of previous estimates

( i 69,247)

i 2,541

( i 4,756)

( i 71,462)

Production

( i 32,299)

( i 27,591)

( i 18,441)

( i 78,331)

Sales of minerals in-place

( i 8,721)

i —

( i 8,721)

Balance December 31, 2020

i 232,452

i 107,209

i 93,839

i 433,500

Extensions, discoveries and other additions

i 17,869

i 13,390

i 2,288

i 33,547

Purchases of minerals in-place

i 126

i —

i 126

Revisions of previous estimates

( i 4,479)

i 22,727

( i 60)

i 18,188

Production

( i 27,450)

( i 25,677)

( i 13,237)

( i 66,364)

Sales of minerals in-place

( i 19,382)

i —

( i 19,382)

Balance December 31, 2021

i 199,136

i 117,649

i 82,830

i 399,615

Extensions, discoveries and other additions

i 9,776

i 7,580

i 2,616

i 19,972

Purchases of minerals in-place

i 522

i —

i 522

Revisions of previous estimates

i 7,170

i 22,433

i 11,898

i 41,501

Production

( i 24,141)

( i 31,055)

( i 11,891)

( i 67,087)

Sales of minerals in-place

( i 7,425)

i —

( i 7,425)

Balance December 31, 2022

i 185,038

i 116,607

i 85,453

i 387,098

(1)Includes proved reserves of i 62 MMbbls, i 39 MMbbls, i 36 MMbbls, and i 38 MMbbls as of December 31, 2022, 2021, 2020, and 2019, respectively, attributable to noncontrolling interests in Egypt.

F-57

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Natural Gas Liquids

United
States

Egypt(1)

North
Sea

Total(1)

(Thousands of barrels)

Proved developed reserves:

i 158,794

i 667

i 2,317

i 161,778

i 150,599

i 716

i 2,053

i 153,368

i 164,172

i 446

i 2,059

i 166,677

i 152,999

i —

i 2,230

i 155,229

Proved undeveloped reserves:

i 23,569

i 90

i 660

i 24,319

i 15,141

i 126

i 320

i 15,587

i 16,380

i 30

i 275

i 16,685

i 15,398

i —

i 76

i 15,474

Total proved reserves:

Balance December 31, 2019

i 182,363

i 757

i 2,977

i 186,097

Extensions, discoveries and other additions

i 11,435

i 97

i 312

i 11,844

Revisions of previous estimates

( i 469)

i 264

( i 207)

( i 412)

Production

( i 27,133)

( i 276)

( i 709)

( i 28,118)

Sales of minerals in-place

( i 456)

i —

( i 456)

Balance December 31, 2020

i 165,740

i 842

i 2,373

i 168,955

Extensions, discoveries and other additions

i 21,055

i 7

i 81

i 21,143

Purchases of minerals in-place

i 191

i —

i 191

Revisions of previous estimates

i 22,724

( i 180)

i 318

i 22,862

Production

( i 24,175)

( i 193)

( i 438)

( i 24,806)

Sales of minerals in-place

( i 4,983)

i —

( i 4,983)

Balance December 31, 2021

i 180,552

i 476

i 2,334

i 183,362

Extensions, discoveries and other additions

i 5,456

i —

i 45

i 5,501

Purchases of minerals in-place

i 233

i —

i 233

Revisions of previous estimates

i 10,355

( i 407)

i 333

i 10,281

Production

( i 21,859)

( i 69)

( i 406)

( i 22,334)

Sales of minerals in-place

( i 6,340)

i —

( i 6,340)

Balance December 31, 2022

i 168,397

i —

i 2,306

i 170,703

(1) Includes proved reserves of i 159 Mbbls, i 281 Mbbls, and i 252 Mbbls as of December 31, 2021, 2020, and 2019, respectively, attributable to noncontrolling interests in Egypt.

F-58

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Natural Gas

United
States

Egypt(1)

North
Sea

Total(1)

(Millions of cubic feet)

Proved developed reserves:

i 945,938

i 433,382

i 106,329

i 1,485,649

i 1,052,756

i 409,035

i 68,159

i 1,529,950

i 1,237,461

i 464,826

i 76,155

i 1,778,442

i 1,128,066

i 399,502

i 66,292

i 1,593,860

Proved undeveloped reserves:

i 115,040

i 24,704

i 16,604

i 156,348

i 76,504

i 12,572

i 8,341

i 97,417

i 184,441

i 9,899

i 7,124

i 201,464

i 188,976

i 1,068

i 2,304

i 192,348

Total proved reserves:

Balance December 31, 2019

i 1,060,978

i 458,086

i 122,933

i 1,641,997

Extensions, discoveries and other additions

i 60,965

i 83,718

i 8,140

i 152,823

Revisions of previous estimates

i 215,166

( i 19,849)

( i 33,541)

i 161,776

Production

( i 205,594)

( i 100,348)

( i 21,032)

( i 326,974)

Sales of minerals in-place

( i 2,255)

i —

( i 2,255)

Balance December 31, 2020

i 1,129,260

i 421,607

i 76,500

i 1,627,367

Extensions, discoveries and other additions

i 227,684

i 50,209

i 3,684

i 281,577

Purchases of minerals in-place

i 839

i —

i 839

Revisions of previous estimates

i 279,610

i 99,143

i 17,171

i 395,924

Production

( i 192,523)

( i 96,234)

( i 14,076)

( i 302,833)

Sales of minerals in-place

( i 22,968)

i —

( i 22,968)

Balance December 31, 2021

i 1,421,902

i 474,725

i 83,279

i 1,979,906

Extensions, discoveries and other additions

i 38,157

i 10,191

i 1,643

i 49,991

Purchases of minerals in-place

i 1,592

i —

i 1,592

Revisions of previous estimates

i 96,381

i 45,725

( i 3,431)

i 138,675

Production

( i 167,580)

( i 130,071)

( i 12,895)

( i 310,546)

Sales of minerals in-place

( i 73,410)

i —

( i 73,410)

Balance December 31, 2022

i 1,317,042

i 400,570

i 68,596

i 1,786,208

(1) Includes proved reserves of i 224 Bcf, i 158 Bcf, i 141 Bcf, and i 153 Bcf as of December 31, 2022, 2021, 2020, and 2019, respectively, attributable to noncontrolling interests in Egypt.

F-59

APACHE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Total Equivalent Reserves

United
States

Egypt(1)

North
Sea

Total(1)

(Thousands barrels of oil equivalent)

Proved developed reserves:

i 594,595

i 176,470

i 121,751

i 892,816

i 532,994

i 164,870

i 99,979

i 797,843

i 551,384

i 184,563

i 91,825

i 827,772

i 509,827

i 174,633

i 95,859

i 780,319

Proved undeveloped reserves:

i 89,458

i 15,038

i 13,476

i 117,972

i 53,408

i 13,449

i 8,983

i 75,840

i 65,288

i 12,683

i 7,219

i 85,190