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14: R5 Consolidated Balance Sheet (Unaudited) HTML 14K
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Capital (Unaudited)
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Additional Information (Details)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. iYes☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). iYes☒ No ☐
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Emerging
growth company
i☐
iNon-accelerated filer
☐
Smaller reporting company
i☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i☐ No
☒
Number of registrant's units outstanding as of June 30, 2022
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Partnership’s (as defined below in the Notes to Consolidated Financial Statements) future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on the Partnership’s examination of historical operating trends, the information that was used to prepare the Partnership’s estimate of proved reserves as of December
31, 2021, and other data in its possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,”“will,”“could,”“expect,”“intend,”“project,”“estimate,”“anticipate,”“plan,”“believe,”“continue,”“seek,”“guidance,”“might,”“outlook,”“possibly,”“potential,”“prospect,”“should,”“would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Partnership believes that the expectations reflected in such forward-looking statements are reasonable under the circumstances, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Partnership’s expectations
include, but are not limited to, the Partnership’s assumptions about:
•the scope, duration, and reoccurrence of any epidemics or pandemics (including specifically the coronavirus disease 2019 (COVID-19) pandemic and any related variants) and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors, and suppliers, in response to such epidemics or pandemics;
•the mandate, availability, and effectiveness of vaccine programs and therapeutics related to the treatment of COVID-19;
•the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or services;
•the supply and demand for oil, natural gas, NGLs, and other products
or services;
•pipeline and gathering system capacity and availability;
•production and reserve levels;
•drilling risks;
•economic and competitive conditions, including market and macro-economic disruptions resulting from the Russian war in Ukraine;
•the availability of capital resources;
•capital expenditures and other contractual obligations;
•weather conditions;
•inflation rates;
•the
availability of goods and services;
•the impact of political pressure and the influence of environmental groups and other stakeholders on decisions and policies related to the industries in which the Partnership operates;
•legislative, regulatory, or policy changes, including environmental regulation and initiatives addressing the impact of global climate change;
•terrorism or cyberattacks;
•the capital markets and related risks, such as general credit, liquidity, market, and interest-rate risks; and
•other factors disclosed under Item 2 – “Properties — Estimated Proved Reserves and Future Net Cash Flows,” Item 7 – “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in the Partnership’s most recently filed Annual Report on Form 10-K and other filings that it makes with the Securities and Exchange Commission.
Other factors or events that could cause the Partnership’s actual results to differ materially from the Partnership’s expectations may emerge from time to time, and it is not possible for the Partnership to predict such factors or events. All subsequent written and oral forward-looking statements attributable to the Partnership, or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law,
the Partnership disclaims any obligation to update or revise these statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.
The
accompanying notes to consolidated financial statements
are an integral part of this statement.
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
i
Apache
Offshore Investment Partnership, a Delaware general partnership (the Investment Partnership), was formed on October 31, 1983, consisting of Apache Corporation, a Delaware corporation (Apache or the Managing Partner), as Managing Partner, and public investors (the Investing Partners). The Investment Partnership invested its entire capital in Apache Offshore Petroleum Limited Partnership, a Delaware limited partnership (the Operating Partnership). The primary business of the Investment Partnership is to serve as the sole limited partner of the Operating Partnership. The accompanying financial statements include the accounts of both the Investment Partnership and the Operating Partnership. The term “Partnership,” as used herein, refers to the Investment Partnership or the Operating Partnership, as the case may be.
These financial statements have been prepared by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which contains a summary of the Partnership’s significant accounting policies and other disclosures.
1. iSUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
As of June 30, 2022, the Partnership’s significant accounting policies are consistent with those discussed in Note 2 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
i
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserve quantities and the related present value of estimated future net cash flows therefrom and the assessment of asset retirement obligations. Actual results could differ from those estimates.
i
Oil and Gas Property
The Partnership
follows the full-cost method of accounting for its oil and gas property. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, and oil and gas property acquisitions are capitalized. The net book value of oil and gas properties may not exceed a calculated “ceiling.” The ceiling limitation is the estimated future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. For a discussion of the calculation of estimated future net cash flows, please refer to Note 10—Supplemental Oil and Gas Disclosures (Unaudited) to the consolidated financial statements contained in the Partnership’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Any excess of the net book value of proved oil and gas properties over the ceiling is charged to expense and reflected as “Additional depreciation, depletion and amortization” in the accompanying statement of consolidated operations. Such limitations are tested quarterly. The Partnership had iiino//
write-downs of the carrying value of its proved oil and gas properties during the second quarters and first six months of 2022 and 2021.
/
5
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Revenue Recognition
There have
been no significant changes to the Partnership’s contracts with customers during the six months ended June 30, 2022. The Partnership generates revenue from its contracts with customers from the sale of its crude oil, natural gas, and NGL production volumes. 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 Partnership. 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 Partnership 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 Partnership’s right to payment. Control typically transfers to customers upon the physical delivery at specified locations within each contract and the transfer of title.
i
The
table below presents revenues from contracts with customers disaggregated by product type for the quarters and six months ended June 30, 2022 and 2021:
In
accordance with the provisions of Accounting Standards Codification 606, 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 Partnership’s efforts to satisfy its obligations. As such, the Partnership 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. Payment terms 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.
The Partnership records trade accounts receivable for its unconditional rights to consideration arising under
sales contracts with customers. The carrying value of such receivables represents estimated net realizable value. The Partnership routinely assesses the collectability of all material trade and other receivables. The Partnership accrues a reserve on a receivable when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of any reserve may be reasonably estimated. As of June 30, 2022, the carrying amounts of trade accounts receivables approximate fair value because of the short-term nature of these instruments. Receivables from contracts with customers totaled $i375,948
and inil as of June 30, 2022 and December 31, 2021, respectively. The Partnership had iino/
allowance for doubtful accounts recorded for any comparative period presented.
2. iRECEIVABLE FROM / PAYABLE TO APACHE CORPORATION
The receivable from/payable to Apache represents the net result of the Investing Partners’ revenue received and expenditures paid in the current month. Generally, cash in this amount will be paid by Apache to the Partnership
or transferred to Apache in the month after the Partnership’s transactions are processed and the net results of operations are determined.
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3. iASSET RETIREMENT OBLIGATIONS
i
The
following table describes the changes to the Partnership’s asset retirement obligation liability for the first six months of 2022:
Certain assetsand liabilities are reported at fair value on a recurring basis in the Partnership’s consolidated balance sheet. As of June 30, 2022 and December 31, 2021, the carrying amounts of the Partnership’s current assets and current liabilities approximated fair value because of the short-term nature or maturity of these instruments.
The Partnership did not use derivative financial instruments or otherwise engage in hedging activities during the six months ended June 30, 2022 and 2021.
5. iNOTICE
OF WITHDRAWAL AND RIGHT OF PRESENTMENT
On March 22, 2019, Apache, as the Managing Partner of the Investment Partnership, gave notice of its intention to withdraw as Managing Partner of the Investment Partnership. The notice described the withdrawal process and certain notice periods required by that process. No party assumed the role of Managing Partner within the i120-day notice period specified by the notice of intention to withdraw. Consequently, Apache will oversee the process
of winding up and liquidating the business and affairs of the Investment Partnership. Apache has not made a decision as to when it will complete the process to withdraw as Managing Partner.
On April 26, 2019, the Managing Partner determined that, during the withdrawal and dissolution process, it would be inconsistent with the Managing Partner’s fiduciary duties to purchase (or to cause the Investment Partnership to purchase) outstanding units of partnership interests (Units) from the holders thereof pursuant to the right of presentment provided for in Sections 6.9 through 6.14 of the Partnership Agreement of the Investment Partnership (the Partnership Agreement). As a result of this determination by the Managing Partner, pursuant to Section 6.12 of the Partnership Agreement, the right of presentment was terminated for 2019 and future periods. Sections 6.9 through 6.14 have “become
null and void and of no further force or effect” as provided in Section 6.12 of the Partnership Agreement.
Prior to terminating the right of presentment, the Investment Partnership had not made a repurchase under the right of presentment since 2008.
6. iFINANCIAL CONDITION OF THE OPERATOR OF THE
PARTNERSHIP’S PRODUCING LEASE
On August 3, 2020, Fieldwood Energy LLC, the operator of the Partnership’s producing lease, and certain of its affiliated debtors (collectively, Fieldwood) filed for protection under Chapter 11 of the United States Bankruptcy Code. On June 25, 2021, the United States Bankruptcy Court for the Southern District of Texas (Houston Division) entered an order confirming Fieldwood’s bankruptcy plan. On August 27, 2021, Fieldwood’s bankruptcy plan became effective. Pursuant to the plan, Fieldwood separated its ownership in and operatorship of the Partnership’s producing lease, together with several of Fieldwood’s other leases, into a standalone company (GOM Shelf, LLC), which will continue to perform Fieldwood’s obligations with respect to the Partnership’s
properties. The reorganization of Fieldwood under the plan is not expected to have any material adverse effect on the Partnership’s operations.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion relates to Apache Offshore Investment Partnership (the Partnership) and should be read in conjunction with the Partnership’s consolidated financial statements and accompanying notes included under Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q, as well as the Partnership’s consolidated financial statements, accompanying
notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The Partnership’s business is participation in oil and gas development and production activities on federal lease tracts in the Gulf of Mexico, offshore Louisiana.
Results of Operations
Net Income and Revenue
The Partnership reported net income of $191,354 ($130 per Investing Partner Unit) for the second quarter of 2022 compared to a net loss of $51,227 ($50 per Investing Partner Unit) in the second quarter of 2021. For the first six months
of 2022, the Partnership reported a net income of $328,892 ($218 per Investing Partner Unit) compared to a net loss of $115,067 ($115 per Investing Partner Unit) in the first six months of 2021. The increase in net income was primarily driven by higher revenues compared to the same prior year periods.
The Partnership’s revenues for the second quarter of 2022 increased 168 percent from the second quarter of 2021. Total revenues in the first six months of 2022 increased 121 percent from the first six months of 2021. The increased revenues for both periods were a result of increased production and higher crude oil and natural gas prices compared to the same prior year periods. The increase in realized prices was primarily driven by effects of global inflation and the conflict in Ukraine on global commodity prices
during the first six months of 2022 compared to the same prior year period. The Partnership’s crude oil, natural gas, and NGLs production volume and price information is summarized in the following table (gas volumes are presented in thousand cubic feet (Mcf) per day):
The
Partnership’s crude oil sales for the second quarter of 2022 totaled $466,197, increasing 163 percent compared to $177,023 in the second quarter of 2021. The Partnership’s average realized price for oil increased $46.15 per barrel from the second quarter of 2021, increasing sales by $133,839. Crude oil volumes increased to 48 barrels per day during the second quarter of 2022 compared to 32 barrels per day from the second quarter of 2021. The increased production was primarily the result of repair downtime at South Timbalier 295 during the second quarter of 2021 offset by natural decline. The increase in production increased associated oil sales by $155,335.
Crude oil sales for the first six months of 2022 totaled $896,817, increasing 123 percent compared to $402,244 in the first six months of 2021. The Partnership’s average realized oil price in the first six months of 2022 increased $42.96 per barrel from the first six months
of 2021, increasing sales by $309,611. Crude oil volumes increased to 50 barrels per day in the first six months of 2022, compared to 40 barrels per day in the same prior year period. The increased production was primarily the result of repair downtime at South Timbalier 295 during the first six months of 2021 offset by natural decline. The increase in production increased oil sales by $184,962.
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Natural gas sales totaled $77,763 in the second quarter of 2022, increasing 212 percent compared to $24,920 in the second quarter of 2021. The Partnership’s average realized natural gas price increased from $3.87 per Mcf in the second quarter of 2021 to $8.06 in the second quarter of 2022, increasing natural gas revenues by $26,988. Natural gas volumes increased by 49 percent during
the second quarter of 2022 compared to the second quarter of 2021, increasing gas sales by $25,855. The increased production was primarily the result of repair downtime during the second quarter of 2021.
Natural gas sales for the first six months of 2022 totaled $115,519, increasing 120 percent compared to $52,520 during the first six months of 2021. The Partnership’s average realized natural gas price increased from $3.12 per Mcf in the first six months of 2021 to $6.48 per Mcf in the first six months of 2022, increasing sales by $56,629. A 5 percent increase in natural gas volumes during the first six months of 2022 from the same prior year period increased gas sales by $6,370. The Partnership’s increase in gas production in the first six months of 2022 was primarily the result of repair downtime during 2021 offset by natural decline in gas production at South Timbalier 295.
The
Partnership sold an average of 5 and 4 barrels per day of NGL in the second quarter and first six months of 2022, respectively, essentially unchanged from the average of 4 barrels per day in the same respective periods of 2021. NGL revenues increased primarily as the result of a 70 percent and 82 percent increase in realized prices during the second quarter and first six months of 2022, respectively, compared to the same respective prior year periods.
Since the Partnership does not anticipate acquiring additional acreage or conducting exploratory drilling on leases in which it currently holds an interest, declines in oil and gas production can be expected in future periods as a result of natural depletion. Also, given the small number of producing wells owned by the Partnership and exposure to inclement weather and pipeline interruptions in the Gulf of Mexico, the Partnership’s production is subject to more volatility than
those companies with a larger or more diversified property portfolio.
Operating Expenses
The Partnership’s depreciation, depletion and amortization (DD&A) expense expressed as a percentage of oil and gas sales was approximately 23 percent and 24 percent for the second quarter and first six months of 2022, respectively, compared to approximately 30 percent and 35 percent for the second quarter and first six months of 2021. The decrease in DD&A depletion percentage was primarily driven by higher estimated future gross revenues from proved oil and gas reserves, which are based on an unweighted arithmetic average of commodity prices in effect for the first day of each of the previous 12 months, held flat for the life of expected production. Total DD&A for the second quarter and first six months of 2022 totaled $127,846 and $252,344, respectively, compared to $63,452 and $162,914
in the same respective prior year periods. The increase in DD&A expense was driven by higher sales revenue during 2022.
Lease operating expenses (LOE) for the second quarter and first six months of 2022 totaled $139,819 and $254,619, respectively, up 28 percent and 4 percent from the same respective prior year periods, primarily the result of increased direct operating costs at South Timbalier 295. LOE typically trend with commodity prices. Gathering and transportation costs increased 229 percent and 66 percent in the second quarter and first six months of 2022, respectively, compared to the same respective prior year periods, primarily the result of increased production volumes during the period and increased transportation rates trending with global inflation. Administrative expenses for the second quarter and first six months of 2022 were 3 percent higher compared to the same respective prior year periods.
Capital
Resources and Liquidity
The Partnership’s primary capital resource is net cash provided by operating activities. During the first six months of 2022, the Partnership recorded $95,721 of net cash flow provided by operating activities, compared to $88,830 of net cash flow provided by operating activities in the first six months of 2021. The increase in operating cash flow was primarily driven by increased oil and gas sale revenues, offset by accrued repair and maintenance costs paid in 2022 and other changes to operating assets and liabilities.
At June 30, 2022, the Partnership had approximately $4.2 million in cash and cash equivalents, essentially flat from the year ended December 31, 2021. The Partnership’s goal is to maintain cash and cash equivalents at least sufficient to cover
the undiscounted value of its future asset retirement obligation liability. The Partnership also plans to reserve funds for unexpected repairs, which may disrupt the Partnership’s production, and for future recompletion operations.
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The Partnership’s future financial condition, results of operations, and cash from operating activities will largely depend upon prices received for its oil and natural gas production. A substantial portion of the Partnership’s production is sold under market-sensitive contracts. Prices for oil and natural gas are subject to fluctuations in response to changes in supply, market uncertainty, and a variety of factors beyond the Partnership’s control. These
factors include worldwide political and economic conditions, the foreign and domestic supply of oil and natural gas, the price of foreign imports, the level of consumer demand, weather, and the price and availability of alternative fuels.
The Partnership’s oil and gas reserves and production will also significantly impact future results of operations and cash from operating activities. The Partnership’s production is subject to fluctuations in response to remaining quantities of oil and gas reserves, weather, pipeline capacity and availability, consumer demand, mechanical well performance and workovers, and recompletion activities. Declines in oil and gas production can be expected in future years as a result of normal depletion and the non-participation in acquisition or exploration activities by the Partnership.
Based on production estimates from independent engineers and existing
cash balances reserved for platform dismantlement and abandonment activities, current market conditions resulting from the COVID-19 pandemic, the recent rise in inflation and interest rates, and geopolitical events, including the Russian war in Ukraine, are not expected to materially impact the Partnership’s liquidity. The Partnership forecasts it will be able to meet its liquidity needs for routine operations in 2022 and in the long-term, although volatile oil and gas prices and consumer demand resulting from the current market conditions could decrease revenue and could require the Partnership to further reduce its cash and cash equivalents.
In the event that future short-term operating cash requirements are greater than the Partnership’s financial resources, the Partnership may seek short-term, interest-bearing advances from the Managing Partner as needed. The Managing Partner, however, is not obligated to make loans to
the Partnership. The Partnership does not intend to incur debt from banks or other outside sources nor solicit capital from existing Unit holders or in the open market.
Critical Accounting Policies and Estimates
The Partnership prepares its financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States (U.S. GAAP), which requires management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and accompanying notes. Management identifies certain accounting policies as critical based on, among other things, their impact on the Partnership’s financial condition, results of operations or liquidity and the degree of difficulty, subjectivity, and
complexity in their development. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. For a discussion of the Partnership’s significant accounting policies, please see the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Some of the more significant estimates include reserve estimates and asset retirement obligations.
New Accounting Pronouncements
There have been no material changes in recently issued or adopted accounting standards from those disclosed in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Material
Cash Requirements, Capital Commitments and Contingencies
The Partnership’s material cash requirements are for operating expenses, recompletion expenditures, and future dismantlement and abandonment costs. To the extent there is discretion, the Partnership allocates available capital to investment in the Partnership’s properties so as to maximize production and resultant cash flow. The Partnership had no outstanding debt or lease commitments at June 30, 2022. The Partnership did not have any contractual obligations as of June 30, 2022, other than the liability for dismantlement and abandonment costs of its oil and gas properties. The Partnership has recorded a separate liability for this asset retirement obligation as discussed in the Notes to the Financial Statements included under Part I, Item I of this Quarterly Report on Form
10-Q.
The Partnership anticipates $450,996 of costs will be spent during the next twelve months, primarily to dismantle platforms at North Padre Island 969/976. Based on information currently available to the Partnership, it anticipates minimal capital expenditures during the remainder of 2022 for recompletions and other capital projects at South Timbalier 295. Such estimates may change based on realized oil and gas prices, recompletion results, weather disruptions, rates charged by contractors or changes by the operator to their development or abandonment plans.
The Partnership believes its balances of cash and cash equivalents and cash provided by operating activities will be sufficient to satisfy cash requirements over the next twelve months and beyond.
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On
August 3, 2020, Fieldwood Energy LLC, the operator of the Partnership’s producing lease, and certain of its affiliated debtors (collectively, Fieldwood) filed for protection under Chapter 11 of the United States Bankruptcy Code. On June 25, 2021, the United States Bankruptcy Court for the Southern District of Texas (Houston Division) entered an order confirming Fieldwood’s bankruptcy plan. On August 27, 2021, Fieldwood’s bankruptcy plan became effective. Pursuant to the plan, Fieldwood separated its ownership in and operatorship of the Partnership’s producing lease, together with several of Fieldwood’s other leases, into a standalone company (GOM Shelf, LLC), which will continue to perform Fieldwood’s obligations with respect to the Partnership’s properties. The reorganization of Fieldwood under the plan is not expected
to have any material adverse effect on the Partnership’s operations.
Notice of Withdrawal and Right of Presentment
On March 22, 2019, Apache, as the Managing Partner of the Investment Partnership, gave notice of its intention to withdraw as Managing Partner of the Investment Partnership. The notice described the withdrawal process and certain notice periods required by that process. No party assumed the role of Managing Partner within the 120-day notice period specified by the notice of intention to withdraw. Consequently, Apache will oversee the process of winding up and liquidating the business and affairs of the Investment Partnership. Apache has not made a decision as to when it will complete the process to withdraw as Managing Partner.
On April
26, 2019, the Managing Partner determined that, during the withdrawal and dissolution process, it would be inconsistent with the Managing Partner’s fiduciary duties to purchase (or to cause the Investment Partnership to purchase) outstanding units of partnership interests (Units) from the holders thereof pursuant to the right of presentment provided for in Sections 6.9 through 6.14 of the Partnership Agreement of the Investment Partnership (the Partnership Agreement). As a result of this determination by the Managing Partner, pursuant to Section 6.12 of the Partnership Agreement, the right of presentment was terminated for 2019 and future periods. Sections 6.9 through 6.14 have “become null and void and of no further force or effect” as provided in Section 6.12 of the Partnership Agreement.
Prior to terminating the right of presentment, the Investment Partnership had not made a repurchase under the right of presentment
since 2008.
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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company,” the Partnership is not required to provide the information required by this Item. The Partnership has chosen to disclose, however, that it has not engaged in any transactions, issued or bought any financial instruments, or entered into any contracts that are required to be disclosed in response to
this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
John J. Christmann IV, the Managing Partner’s Chief Executive Officer and President (in his capacity as principal executive officer), and Stephen J. Riney, the Managing Partner’s Executive Vice President and Chief Financial Officer (in his capacity as principal financial officer), evaluated the effectiveness of the Partnership’s disclosure controls and procedures as of June 30, 2022, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded
that the Partnership’s disclosure controls and procedures were effective, providing effective means to ensure that the information it is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and communicated to the Partnership’s management, including the Managing Partner’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There was no change in the Partnership’s internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or is reasonably likely to materially affect, the Partnership’s internal controls over financial reporting.
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PART
II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
As a “smaller reporting company,” the Partnership is not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
p3.1
Partnership
Agreement of Apache Offshore Investment Partnership (incorporated by reference to Exhibit (3)(i) to Form 10 filed by Partnership with the SEC on April 30, 1985, SEC File No. 0-13546).
p3.2
Amendment No. 1, dated February 11, 1994, to the Partnership Agreement of Apache Offshore Investment Partnership (incorporated by reference to Exhibit 3.3 to Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993, SEC File No. 0-13546).
p3.3
Limited
Partnership Agreement of Apache Offshore Petroleum Limited Partnership (incorporated by reference to Exhibit (3)(ii) to Form 10 filed by Partnership with the SEC on April 30, 1985, SEC File No. 0-13546).
The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL:
(i) Statement of Consolidated Operations, (ii) Statement of Consolidated Cash Flows, (iii) Consolidated Balance Sheet, (iv) Statement of Consolidated Changes in Partners’ Capital and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
*101.SCH
Inline XBRL Taxonomy Schema Document.
*101.CAL
Inline XBRL Calculation Linkbase Document.
*101.DEF
Inline XBRL Definition Linkbase Document.
*101.LAB
Inline
XBRL Label Linkbase Document.
*101.PRE
Inline XBRL Presentation Linkbase Document.
*104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
