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what’s exploringpossible
Annual Report 2009summary
2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400www.aPacHecOrP.cOm
apache corporation
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shareholderinformation
The Company has paid cash dividends on its common stock for 45 consecutive years through Dec. 31, 2009. Future dividend payments will depend upon the Company’s level of earnings, financial requirements and other relevant factors.
Apache common stock is listed on the New York and Chicago stock exchanges and the NASDAQ National Market (symbol APA). At Dec. 31, 2009, the Company’s shares of common stock outstanding were held by approximately 5,800 shareholders of record and 442,000 beneficial owners. Also listed on the New York Stock Exchange are:
ApAche FinAnce cAnAdA’s 7.75% notes, due 2029 (symbol ApA 29).
2009 HigH lOw declared Paid
First Quarter $ 88.07 $ 51.03 $ 0.15 $ 0.15
Second Quarter 87.04 61.60 0.15 0.15
Third Quarter 95.77 65.02 0.15 0.15
Fourth Quarter 106.46 88.06 0.15 0.15
2008First Quarter $ 122.34 $ 84.52 $ 0.25 $ 0.25
Second Quarter 149.23 117.65 0.15 0.15
Third Quarter 145.00 94.82 0.15 0.15
Fourth Quarter 103.17 57.11 0.15 0.15
Price range dividendS Per SHare
annual meeTingApache will hold its annual meeting of shareholders on Thursday, May 6, 2010, at 10:00 a.m. in the Ballroom, Hilton Houston Post Oak, 2001 Post Oak Boulevard, Houston, Texas. Apache plans to web cast the annual meeting live; connect through the Apache web site: www.apachecorp.com
STOcK Held in “STreeT name”The Company maintains a direct mailing list to ensure that shareholders with stock held in brokerage accounts receive information on a timely basis. Shareholders wanting to be added to this list should direct their requests to:
apache’s public affairs Department 2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400
or by calling 713.296.6157
or by registering on Apache’s Web site:www.apachecorp.com
fOrm 10-K reQueSTShareholders and other persons interested in obtaining, without cost, a copy of the Company’s Form 10-K filed with the Securities and Exchange Commission may do so by writing to:
cheri l. peper, corporate secretary
2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400
inveSTOr relaTiOnSShareholders, brokers, securities analysts or portfolio managers seeking information about the company are welcome to contact:
thomas p. chambers, Vice presiDent—planning anD inVestor relations
713.296.6685.
Members of the news media and others seeking information about the company should contact:
apache’s public affairs Department at 713.296.7276.
weB SiTewww.apachecorp.com
cOrPOraTe OfficeSone post oak central 2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400 713.296.6000
indePendenT PuBlic accOunTanTSernst & young llp fiVe houston center
1401 McKinney Street, Suite 1200 Houston, Texas 77010-2007
STOcK TranSfer agenT and regiSTrarwells fargo bank, n.a. attn: shareowner serVices
PO Box 64854 South St. Paul, Minnesota 55164-0854 651.450.4064 or 800.468.9716
Communications concerning the transfer of shares, lost certificates, dividend checks, duplicate mailings or change of address should be directed to the stock transfer agent. Shareholders can access account information on the Web site: www.shareowneronline.com
dividend reinveSTmenT PlanShareholders of record may invest their dividends automatically in additional shares of Apache common stock at the market price. Participants may also invest up to an additional $25,000 in Apache shares each quarter through this service. All bank service fees and brokerage commissions on purchases are paid by Apache. A prospectus describing the terms of the Plan and an authorization form may be obtained from the Company’s stock transfer agent, Wells Fargo Bank, N.A.
direcT regiSTraTiOnShareholders of record may hold their shares of Apache common stock in book-entry form. This eliminates costs related to safekeeping or replacing paper stock certificates. In addition, shareholders of record may request electronic movement of book-entry shares between your account with the Company’s stock transfer agent and your broker. Stock certificates may be converted to book-entry shares at any time. Questions regarding this service may be directed to the Company’s stock transfer agent, Wells Fargo Bank, N.A.
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businesscontext
shareholderletter
g.stevenfarris
Chairman and Chief executive officer
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asourcompanyevolvedfromasmalldrillingprogramcompanytoanexplorerwithglobalreach,theapacheteamhasstretchedthelimitsofwhat’spossiblethroughdetermination,adaptability,discipline,asenseofurgencyandalong-termperspective.
We’ve been exploring what’s possiblesince 1954
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at apache, exploring what’s possible has many dimensions: discovering new resources, developing ways to operate more efficiently, innovating, and expanding markets. It describes our commitment to delivering consistent profitable growth for the long-term benefit of our shareholders as we continue our evolution from a start-up drilling program company into an independent, international exploration and production company with a critical mass of acreage and production base in the United States, Australia, Canada, Egypt, the United Kingdom sector of the North Sea and Argentina.
And, at a time of unprecedented change across the globe, it describes our culture, built on a sense of urgency, discipline, innovation and spirit.
Exploring what’s possible also frames the decisions we make to respond to changes in the near-term operating and economic environment.
in 2009, the dramatic decline in oil and gas prices and the global financial crisis provided the backdrop for our primary objective: to live within our reduced cash flow in order to preserve financial flexibility. In the face of curtailed activity to achieve this objective, Apache delivered record annual average production—up 9 percent from 2008—and still added slightly more reserves than we produced, excluding revisions.
Lower oil and gas prices impacted Apache’s financial results, requiring us to reduce the carrying value of oil and gas properties and resulting in a $1.98-billion non-cash after-tax charge to earnings during the first quarter. However, with rebounding oil prices and higher production, earnings strengthened throughout the remainder of the year, reducing Apache’s net loss to $292 million or 87 cents per diluted common share for the year. Absent the write-down and other items that impact the comparability of results, Apache’s adjusted earnings totaled $1.9 billion or $5.59 per share.* Cash flow from operations before changes in operating assets and liabilities totaled $5 billion.*
The catalyst for both our production growth and the rebound in our financial results was our portfolio approach, which provides for a balance of oil and natural gas production,
fellow shareholders,
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* Non-GAAP financial measures. Please see measures and reconciliations, page 28.
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regional core areas and geological diversity. This offers multiple opportunities for growth and adaptation in an
ever-changing environment. our financial flexibility, the result of years of hard work and discipline, permits apache to pursue large-scale developments, higher-risk, higher-reward exploration and— when appropriate—value-creating acquisitions.Our current production base provides the cash flow required for the capital investments needed to develop our discoveries. For example, production from the Qasr Field—Apache’s largest discovery—and commencement of production from the Van Gogh and Pyrenees oil developments in Australia will generate cash flow that will fund the next round of investments, including our participation in Chevron’s Wheatstone liquefied natural gas (LNG) hub, which will provide a market for our Julimar and Brunello discoveries.
Gas production in the Horn River Basin shale play in Canada is expected to begin ramping up as Apache’s teams apply technological innovations to complete wells more quickly
and at lower cost. We are also planning an active horizontal drilling program in the Granite Wash tight sands play in Oklahoma and the Texas Panhandle. Apache’s investments in unconventional natural gas plays such as Horn River Basin and Granite Wash are parts of the larger expansion of gas resources that will provide North America with a way to reduce greenhouse gas emissions in a cost-effective manner.
We anticipate that higher production will generate adequate cash flow to support our higher activity level compared to 2009. However, it appears to us that the economic recovery is fragile at best and the near-term global outlook is uncertain.
We will review drilling and development capital on an ongoing basis and adjust to match conditions and our opportunity set. With $2 billion of cash and additional liquidity from our credit facilities, we have ample flexibility to pursue additional exploration activity or opportunistic value-adding acquisitions.
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g.stevenfarris
Chairman and Chief executive officer
At Apache, key decisions, such as our establishing the objective of living within cash flow, are made by the Office of the Chief Executive Officer, based on our assessments of short-term external factors and long-term trends measured against Apache’s strengths and capabilities. Because John Crum, Rod Eichler and Roger Plank focus on certain areas of the organization while maintaining a broad perspective, I value their insights as we make decisions to deploy capital and explore new opportunities.
We have time-tested management systems that provide a uniform system of measuring success across Apache. New leadership in most of our regions and increased mobility for our technical personnel spreads our unique culture and strengthens our knowledge and experience.
On a macro level, a number of trends are likely to have significant impact on the upstream oil and gas industry in the years to come:
Demand for our products will continue to grow, even in times of economic weakness, because billions of people are seeking to improve their living standards. in asia, new cities—with skyscrapers, factories and unfathomable congestion—are sprouting up virtually overnight.
in north america, the natural gas market has been transformed by recent improvements in horizontal drilling and completion technology that have opened up a 100-year resource with the potential to improve our energy security, create jobs and help achieve environmental and climate-change goals.
Concern about the environment and climate change will result in policy changes that will affect the way energy is used and the way we operate.
Apache’s culture thrives on challenges such as these and others—seeking larger exploration targets, investigating new markets, or innovating to improve our exploratory results and reduce costs.
We set goals for our stewardship commitments—from safe and environmentally responsible operations across our regions to improving the quality of life in our communities—just as we set goals for exploration and production activities and financial targets. In 2009, we achieved our goal of planting 1 million trees, and promptly established a new objective: planting 2 million more trees that will improve the quality of life in many communities.
we like to say we are exploring what’s possible because it reflects who we are—challenging the status quo and adapting to changing circumstances while recognizing what works. Above all, we remain dedicated to delivering results and growing a profitable global exploration and production company for the long-term benefit of our shareholders. Thank you for your continued support.
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australiaisamajorsourceofenergyandotherresourcesforboomingasianeconomies.apachesuppliesnaturalgastoaustralia’sresourceindustriesandwillprovidelngfromitsjulimardiscovery.
on aexploring
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apacheisexploringasianmarKetsforgasfromthehornriverbasinandothercanadianplays.
china’sprimaryenergydemand1997–2007(quadrillion btu)
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globalcontext
internationaloperations
rodneyj.eichler
Co-Chief operating officer and president—international
Apache’s international regions fueled the company’s production growth in 2009 with a 21-percent increase in
output. Foreign operating regions now contribute 52 percent of our worldwide production, setting us apart from most north american independents.Apache’s spirit of discovery led us to seek opportunity in areas that had typically been overlooked or were out of favor with the energy industry because others were doubtful of the areas’ exploration potential, governmental intervention or commodity markets that had not matured to reflect worldwide prices. But Apache, with a culture built on a sense of urgency and determination, overcame obstacles and recognized long-term value. Twenty years after we planted the flag outside North America, Apache’s international operations are an integral part of the company’s continued growth.
At the center of Apache’s global portfolio strategy are management systems that provide real-time feedback on how drilling and operating results are progressing throughout the year. These systems provide a framework for how success is measured, provide the basis for incentive compensation and hold all regions accountable to comparable standards.
Apache’s initial investments in new regions generally involve acreage that brings both a production base and an inventory of drilling prospects. Over time, acreage, seismic data and local experience blossom into larger exploration targets and more significant opportunities.
with larger discoveries, time horizons and capital outlays have expanded. Apache’s largest discovery to date—the Qasr Field in Egypt’s Western Desert—required $1.3 billion of capital expenditures for processing and pipeline infrastructure to deliver the gas to the fast-growing Egyptian gas market. The new facilities were commissioned in 2009, and the field has current gross production of 600 million cubic feet (MMcf) of gas and 27,000 barrels of condensate per day.
Exploration has long been a large contributor to Apache’s international growth. In the October 2009 Wood Mackenzie Exploration Service Corporate Benchmarking Report, Apache ranked first among the large independent peer group over the last 10 years by generating exploration returns calculated at 30 percent. Within our peer group of large-cap U.S.-based independents, Apache ranks second in reserves added through drilling worldwide over the past three years.
Apache has several foreign discoveries in the development phase—including Julimar, Halyard and Reindeer in Australia and Phiops in Egypt—that will add meaningful production in the years to come.
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australia
APACHE OPERATED
APACHE NON-OPERATED
OIL FIELD
GAS FIELD
EXMOUTH
ONSLOW
DAMPIER
KARRATHA
LNG PLANT
thecarnarvonbasininaustralia,whichwasoutoffavorwhenapachearrivedin1991,isanexampleofapacheseeingvaluewhereothersdidnot.
Western Australia’s natural gas potential was recognized through a history of large discoveries, but Western Australian natural gas prices were low by worldwide standards, and the basin was generally underexplored.
Nearly 20 years after our first investment in Australia, Apache has built a powerhouse region capable of driving impactful growth for the company.
In 2009, the region’s net output increased 40 percent. Production curtailed after the June 2008 explosion at Apache’s Varanus Island processing facilities was fully restored in mid-2009. Oil and gas production processed at the island surpassed pre-incident levels when new compression facilities were completed.
The resource industry boom is driving domestic natural
gas prices toward Asia/Pacific market levels. when our Devil Creek processing plant commences operation, apache will deliver more than 40 percent of western australia’s natural gas supplies.
apache has an inventory of game-changing discoveries—including Van gogh, ravensworth, reindeer, macedon, halyard and Julimar—that will fuel growth as they are brought on production.
productionatthevangoghandpyreneesoilprojectscommencedinearly2010,withproductionrampingupoverthefirsthalf.apachehasa55-percentinterestinthereindeerfield,whichisforecasttobeginproviding60mmcfofgasperday(gross)throughthedevilcreekprocessingplantin2011.
inoctober2009,apacheagreedtosupplygasfromthejulimar/brunellodiscoveriestothechevron-operatedwheatstonelnghub.webecameafoundationequitypartnerinwheatstone,whichisexpectedtoprovideanoutletforestimatedproductionof190mmcfofgasand5,100barrelsofoilperdayfor15years.
delivering disCoveries
regional stats
2009 Natural gas productioN
2009 liquid hydrocarboN productioN
proved reserves
2009 Wells drilled/productive
gross acreage
184 MMcf/day
9,779 bbls/day
305 MMboe
33/28
6.6 million
The real Value of long-term Vision
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EASTERN DESERT
WESTERN DESERT
APACHE NON-OPERATED
APACHE DEVELOPMENT LEASE
APACHE OPERATED
CAIRO
SINAI
apache’sexplorationteamshaveafielddayidentifyingprospectsinegypt’swesterndesert.itisnotuncommonforasingleexplorationwelltoencountermultipleproductivezonesinthreemainhorizons—theuppercretaceous,lowercretaceousandjurassic.
The upper Cretaceous Abu Roash and Bahariya formations from 5,000 to 8,000 feet are oil-bearing and excellent candidates for water floods—a proved secondary recovery technique that we introduced in the Western Desert. Apache currently produces more than 90,000 barrels of oil per day (gross) from water floods in 51 separate Cretaceous fields across its acreage.
The Alam el Buieb (AEB) lower Cretaceous formation from 8,000 to 12,000 feet contains both oil- and gas-condensate-bearing horizons that require minimum completion expense. Among recent AEB discoveries, our newly discovered Phiops field stands out.
Deep Jurassic zones—the Safa formations—lie below 12,000 feet and produce primarily natural gas and condensate, including Qasr and many discoveries in the 100-billion cubic foot range. In 2009, Apache commenced operation of two new gas processing trains and other infrastructure that brought Qasr’s production to 600 MMcf of gas and 27,000 barrels of condensate per day.
effective use of advanced 3-D seismic acquisition and processing methods have provided much-improved images of the stacked-pay environment underlying a significant percentage of apache’s acreage and helped apache’s exploration teams unlock many of the remaining secrets of the desert’s subsurface.
the egypt region, withleaseholdencompassingmorethan10milliongrossacresinthewesterndesert,arelativelylow-costonshoreoperatingenvironment,amassivethree-dimensionalseismicdatabaseanddozensofhydrocarbon-bearinghorizonsbetween5,000and
15,000feet,is the nation’s third-largest producer, the most active driller and the most successful explorer.
theregion’stypicaldrillingprogramexceedsthecombinedtotalofallwellsdrilledbyotheroperatorsinegypt’swesterndesert.theregionisapache’slargestoilproducerandsecondlargestgasproducer.
thecrownjewelofthe2009drillingprogramwasoursuccessfulexploitationofthe2008phiopsdiscovery,whichwewillcontinuetodevelopin2010.likemanyothers,thisdiscoveryfeaturedstackedproducingzones,includingsixintheaebandtwointhejurassic.
grossproductionisexpectedtorisefrom8,100barrelsofoilperdaytoabout20,000barrelsperdayinthesecondhalfof2010withdevelopmentofadditionalinfrastructure.
unlocking secretsin the desert
egypt’s most aCtive explorer
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apache’s first discovery on the Qarun Concession—a non-operated well that tested 12,000 barrels per day in 1994—provided a hint of the potential of the western Desert. eagertostepupthepaceandincreaseourexposuretomultipleproducingbasins,apachemergedwithourpartnerphoenixresourcecompaniesin1996—atransactionthattripledourinterestintheqarunconcessionandaddeda40-percentinterestinseveralKhalda-areaconcessions.
in2001,apacheacquiredrepsol’sinterestatKhaldaandbecameoperatoroftheconcession—providingthefoundationtoexpandexplorationactivities.the2003qasrdiscoveryontheKhaldaoffsetconcessionstillstandsasapache’slargest.
apache’sgrossoperatedproductioninegypthasrocketedto162,000barrelsofoilandnearly700mmcfofgasperday.
apache-operatedgrossproduction (thousand boe per day)
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regional stats
2009 Natural gas productioN
2009 liquid hydrocarboN productioN
proved reserves
2009 Wells drilled/productive
gross acreage
363 MMcf/day
92,139 bbls/day
309 Mmboe
164/147
11.1 million
extraCting dollars from dunes
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northsea
consistentdrillingresultsandincreasedfieldefficiencyatapache’sfortiesfieldenabledthenorthsearegiontorecorditsbestperformanceinfouryears,withproductionincreasing2percentin2009.
The Charlie 6-3 well initially produced at a rate of 10,500 barrels of oil per day in an area of the field that appeared to have been swept by millions of barrels of water over the past 30 years, proving again that there are often lucrative opportunities in mature fields. The Forties 21/10-A52 well encountered a prospective new field pay sand 150 meters above the main field pay near the Forties Alpha platform.
The Forties field had an estimated 5 billion barrels of original oil in place when production began in 1974 and has recovered just over 50 percent of that volume through 2009. With approximately 2.4 billion barrels of oil remaining in the ground, each incremental percentage recovery is 50 million barrels. Apache’s operating and exploitation teams, equipped with new and existing technologies and our sense of urgency, expect to recover even greater percentages of the large hydrocarbon resource at Forties.
the Forties field—the largest field ever discovered in the united Kingdom sector of the north sea—is among apache’s best acquisitions.
addingvalueinmaturefieldshasbeenacentralelementofapache’sstrategythroughoutourhistory.in2003,apachepaid$667millionforprovedreservesof144millionbarrelsofoilequivalentandproductionof41,000barrelsperday.sinceacquiringthefield,apachestreamlinedandimprovedproductionfacilitiestoincreaseproductionefficienciesandreduceliftingcosts,anddrilled69wellstoincreaseproduction.in2010,apacheplanstocompleteengineeringstudiesforaproposednewsatelliteplatformtoaccommodateadditionaldrillingnearthealphaplatform.
overthelastsixyears,apacheproduced139millionbarrelsofoilequivalentfromthefield,ornearlythetotalestimatedreservesidentifiedwhenthefieldwas
acquired.output is about 50 percent above 2003 levels, and the current estimate of proved reserves stands at 173 million barrels equivalent.
pushing past what’s proven
new tricks in anold field
apache
trend
regional stats
2009 Natural gas productioN
2009 liquid hydrocarboN productioN
proved reserves
2009 Wells drilled/productive
gross acreage
3 MMcf/day
60,984 bbls/day
173 MMboe
17/14
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jan0
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argentina
apachewasthefirstproducertoreceivegovernmentapprovalforgasplusprojects,includingacontracttosupply50mmcfofnaturalgasperdayfromfieldsinneuquénandrionegroprovincestoanelectricgenerationplantforu.s.$5permmbtubeginningin2011.Government intervention in Argentina’s energy sector has imposed low commodity prices that discouraged drilling and created shortages of oil and natural gas, particularly for industrial users.
The government recently took an important first step toward pushing up natural gas prices with the Gas Plus program, which is designed to allow producers to seek higher prices from industrial end users for gas produced from tight sands and other unconventional formations in negotiated contracts outside government price-setting regulations.
In January 2010, Apache started supplying 10 MMcf per day from our Guanaco and Ranquil-Co fields in Neuquén province to the national grid for electric generation under a one-year contract with a price of U.S.$4.10 per MMBtu—well above the recent average realized natural gas price of U.S. $1–$2 per MMBtu.
with commodity prices on the rise, apache continues active drilling programs in concessions in the neuquén basin and tierra del Fuego. In 2009, the province of Neuquén agreed to extend eight federal oil and gas concessions for 10 additional years, providing a stable environment for exploration activity.
apache expanded operations in argentina at a time when investment was scarcebutsupply/demandfundamentalssuggestedthatthegovernmentultimatelywouldhavetofindawayatsomepointtoraisecommoditypricestosupplythecountrywiththeenergyitneedstogrowandprosper.
fromapache’sperspective,thegeologywasfavorableandthebasinswereunder-drilled—asituationwehaveendeavoredtoremedy.
wearepreparingforgrowth,withadatabaseof7,939squarekilometersof3-dseismic.apachealsoacquiredcuyobasinblockb,1.2millionacresnearsomeofthelargestoilfieldsinthecountry.
apachehasdevelopedaninventoryofgame-changingexplorationopportunitiesintheprolificcuyo,neuquénandaustralpetroleumbasins.wealsolaunchedourfirstdrillingprogramontwoconcessionsonthechileansideoftierradelfuego.
A big plusemerges for gas in 2009
regional stats
2009 Natural gas productioN
2009 liquid hydrocarboN productioN
proved reserves
2009 Wells drilled/productive
gross acreage
185 MMcf/day
14,746 bbls/day
119 MMboe
32/31
3.1 million
zigging at a time when others would have zagged
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taKingwhatwe’relearningincanada’shornriverbasin
bringingthatexperiencetothegranitewash
whilemaintainingourlong-termfocus,wecontinuetopushourselvesinnewwaystodiversifyandgrow.
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globalcontext
north americaoperations
johna.crum
Co-Chief operating officer and president—north america
apache’s north american exploration and operations teams pioneered development in some important new areas and continued to exploit some of the world’s legacy producing basins in 2009.Oil production, mainly from the Permian Basin and the Gulf of Mexico, comprised nearly 40 percent of North American barrel-equivalent output. After the first quarter, our oil production delivered more consistent cash flow as oil prices firmed and natural gas prices remained soft. Apache’s production is also balanced between the shorter reserve lives but higher rates of return in the Gulf of Mexico and longer reserve lives for Apache’s onshore assets in Canada and the Permian and Anadarko basins of the United States.
Recognition that North America has a 100-year resource of natural gas— driven by the identification of significant resources in shale formations and other unconventional plays—has changed continental natural gas markets for the foreseeable future. Developing these large resources will reward companies that can find and develop gas at lower costs. Although Apache’s current production in North America is primarily conventional, future growth likely will be driven by activity in two resource plays—shale gas in British Columbia’s Horn River Basin and the Granite Wash tight sands in the Anadarko Basin of Oklahoma and the Texas Panhandle. Apache has identified many years of drilling activity in both plays.
We also anticipate the increased supply of natural gas will ultimately reward producers who pursue new and unconventional markets for their supply. Apache is the first independent producer to seek global markets for its North American production through our acquisition of 51-percent ownership and throughput capacity interest in the proposed Kitimat LNG Terminal in British Columbia. We also became operator of the project.
Apache replaced 118 percent of North American production with new reserves, excluding accounting revisions, despite the decision to curtail exploration and development capital at the outset of 2009 in order to live within expected cash flow. Daily equivalent production from our North American regions declined 1.3 percent, also the result of reduced activity.
We have ramped up activity in early 2010 as we moved into full development mode at Horn River, increased drilling in the Granite Wash and reinvigorated our drilling program in the Gulf of Mexico with an expanded exploration inventory that includes targets in the Gulf’s deeper waters.
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canada
apacheandourpartnerwerefirstmoversandnowcontrolmorethan400,000acresinthehornriverbasinshaleplay,whichhasevolvedintooneofthehighest-qualityunconventionalshalegasplaysinnorthamerica.
Unconventional gas opportunities are expected to drive future growth of Apache’s Canadian Region, moving beyond the conventional plays in Alberta, British Columbia and Saskatchewan that have been the foundation of the region’s activities for 15 years.
Apache pioneered the play with the first producing well from the Horn River Basin shale formations at Ootla. We have been encouraged by production results thus far in the Horn River program as we continue to optimize the distance between wells and the number and size of fracture stimulation stages. We estimate we ultimately could drill 2,000 to 3,000 locations from multi-well pads that will reduce the operational footprint.
Apache is pursuing an additional unconventional play in New Brunswick in eastern Canada in the Frederick Brook shale formation. Through drilling, Apache has the right to earn a 50-percent interest in 116,000 prospective acres. If the program is successful, gas will be exported to markets in the northeast United States via existing pipelines.
Like the other North American regions, drilling activity in the region’s conventional production base was curtailed with lower commodity prices in 2009. Although equivalent production declined 1 percent, we replaced 208 percent of production, excluding accounting revisions.
capturing Value throughunconVentional thinking
regional stats
2009 Natural gas productioN
2009 liquid hydrocarboN productioN
proved reserves
2009 Wells drilled/productive
gross acreage
359 MMcf/day
17,275 bbls/day
531 MMboe
201/188
5.6 million
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Horn River
Montney
KITIMAT
TERRACEPRINCE RUPERT
we agreed to acquire a 51-percent ownership and throughput capacity interest in the proposed Kitimat lng terminal in northern british Columbia—theonlylngexportterminalunderdevelopmentinnorthamerica.front-endengineeringanddesignoftheprojectisexpectedtobeginin2010.ifweproceedwithdevelopment,apache’snetcapacityinthefacilityhasthepotentialtoprovideanoutletfor350mmcfperdayofgasfromhornriverorotherareasincanada,andaccesstomarketsthatreceiveworldwidelngprices.afinalinvestmentdecisionisexpectedin2011.ifwegoforward,initialgasexportsareforecastforasearlyas2014.
the magnitude of the horn river resourCe prompted apaChe to seek alternative markets
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central/permian
holdingacreageinKnownhydrocarbon-producingareasovermanyyearsoftenleadstonewopportunitieswhennewtechnologiesunlocKresourcesthatotherwisewouldnotbeeconomic.Although Apache has evolved into a successful global exploration and production company, the Central Region remains a cornerstone of Apache’s original core competency—adding value to mature assets. The region has provided steady, predictable results, enhanced by high-quality assets with an average reserve life of 19 years across a large acreage base.
in western oklahoma, horizontal drilling and multi-stage fracture stimulation technologies have breathed new life into a familiar producing formation. The Granite Wash is a tight gas horizon that exhibits better primary porosity and permeability than most shale plays in North America, and Apache has over 200,000 gross acres under lease, mainly held by production. The reserves generally have high liquid-hydrocarbon content along with natural gas, enabling very rapid payouts with high rates of return.
Apache’s first horizontal well in the play, the Hostetter 1-23H, was drilled to a vertical depth of 12,500 feet followed by a 4,000-foot lateral with eight fracture stimulation stages. It produced at an initial rate of 17 MMcf of gas and 800 barrels of oil per day and paid out its entire investment in three months. In early 2010, we had four rigs in operation in the play and hundreds of potential drilling locations identified across our acreage.
apache drilled its first wells in oklahoma 55 years ago and the Central region grew to be apache’s largest with 27 percent of total worldwide proved reserves.
in2009,thecentralregionreplaced101percentofproductionthroughdrillingandacquisitionsbeforerevisionsbutproductiondeclined2percentto89,100barrelsequivalentperdaybecauseofreducedactivity.
inthepermianbasin,apachecompleteda$187-milliontacticalacquisitionfrommarathonoilthatbroughtdailyproductionof3,500barrelsofoilequivalent.thefieldsareanoutstandingfitwithapache’sexistingproduction,particularlyinleacounty,n.m.,whereweidentifiedmorethan200futuredrillinglocations.
inearly2010,apacheestablishedanewpermianregiontomanageourwesttexasandnewmexicoassetsseparatefromthecentralregion,whichwillcontinuetofocusontheanadarkobasinaswellasapache’sassetsineasttexas.inthepermian,thechangewillfacilitatecloserinteractionbetweentechnicalstaff,whichwillbebasedinmidland,andfieldpersonnel,andultimatelywillprovidegreaterfocusontheseoil-producingassets.
knowing when tohold ‘em
regional stats
2009 Natural gas productioN
2009 liquid hydrocarboN productioN
proved reserves
2009 Wells drilled/productive
gross acreage
300 MMcf/day
39,180 bbls/day
630 MMboe
135/133
2 million
five deCades and still going strong
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gulfcoast
apacheisthelargestheld-by-productionacreageholderandthesecond-largestproducerontheoutercontinentalshelfofthegulfofmexico.Apache also holds substantial producing acreage along the Gulf Coast in Louisiana and Texas. Our assets, which are balanced between oil and natural gas, generally provide high rates of return and cash flows.
In 2009, production was essentially flat as the region focused on production restoration activities in the aftermath of Hurricane Ike. Drilling was curtailed as part of the corporate objective of living within cash flow. The Gulf Coast Region drilled only 26 wells in 2009, down from 116 wells in 2008, with drilling success at South Timbalier 287 and South Timbalier 308 as well as Ewing Banks 826.
after our 2008 geauxpher deepwater discovery at garden banks 462, the region started focusing on select opportunities in deeper water. Geauxpher, located in water 2,700 feet deep, was brought on line in the second quarter of 2009 and continues to produce 84 MMcf per day—34 MMcf per day net to Apache’s interest. Gross cumulative production through year-end was 21 Bcf—8.4 Bcf net to Apache.
After positive drilling results in 2009, Apache is proceeding with development plans at Garden Banks 605—at a water depth of 2,936 feet—and at Ewing Bank 998—in water 909 feet deep.
the region is off to a fast start in 2010—the first eight wells were successful— withfiveoperatedrigsundercontract,andplanstodrill67wellsin2010.anearlysuccessin2,096feetofwateratmississippicanyon199ledtoasuccessfulappraisalwell;developmentplansarebeingformulated.productionisexpectedinearly2011fromanewplatformatmainpass308afteranewfielddiscoveryandsuccessfulappraisalweredrilledonthe100-percentworking-interestproperty.
seeking opportunityin deeper water
regional stats
2009 Natural gas productioN
2009 liquid hydrocarboN productioN
proved reserves
2009 Wells drilled/productive
gross acreage
367 MMcf/day
56,089 bbls/day
300 MMboe
26/15
3 million
off to a fast start
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sometimes, the answer to a technological question can be answered with fairly common modern devices—such as flash memory found in ipods and other mp3 players.When Apache sought to map three-dimensional seismic seamlessly across the border between Chile and Argentina on the island of Tierra del Fuego, we faced many hurdles, including longstanding political tensions that limited cross-border operations. Apache had previously acquired a 3-D survey on the Argentine side of the border using a cabled system, and needed continuous sampling to acquire a 3-D survey on the Chilean (west) side.
Apache, working with a technology partner, developed a solution that was cable-free and utilized lightweight vehicles and small crews to deploy receiver stations on the Argentine side of the border. More than 1,000 new units—geophones attached to the flash drives—could just sit and record the seismic shots from the Chilean side. No cables were laid across the border, and there were no questions about radio, microwave or laser transmissions passing from one country into another.
In 2010, Apache is planning to use a similar system to minimize the environmental impact of a 3-D survey on recently acquired exploration acreage in Argentina’s wine country in Mendoza province.
apache’s scientists and engineers have been granted or have applied for 17 patents for a range of inventions, from systems used for interpreting seismic data or processing well logs to improvements in drilling and completion techniques. Often, Apache has sold the inventions to service companies for commercialization while retaining our ability to use the innovations under preferential terms.
Exploring what’s possible means knowing what technologies to use and when to use them.
seis
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atapache,animportantinnovationcancomefromanadvancedcomputationaltechniqueoranewapplicationoffamiliarequipment.
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The Forties Field, the largest ever discovered in the United Kingdom sector of the North Sea, has given up more than 2.4 billion barrels of oil over the last
30 years. apache is using techniques that bring together many sources of data to give an accurate picture of the current state of the field and identify likely places to find unswept deposits.Four-dimensional modeling uses reservoir-engineering data and a series of 3-D seismic surveys to create a time-lapse picture that shows where oil has moved as water is pumped through the field to maximize production. It’s a technique that is well-suited for larger, mature fields such as Forties. The latest model of the reservoir highlighted the potential for similar stranded oil accumulations in close proximity to the Charlie platform and helped Apache’s technical teams identify the Charlie 6-3 target drilled in 2009. The well came on production at 10,500 barrels per day—the field’s highest initial production rate since 1994.
In 2010, Apache is planning another 3-D seismic survey, which will be used to create a new time-lapse picture and pinpoint additional targets.
technologycontext
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Increasing efficiency and driving down costs is critical to the success of all projects, but particularly with the development of the Horn River Basin shale gas play in northeast British Columbia, where Apache holds a 50-percent interest in more than 400,000 acres.
Apache is taking pad-drilling operations to a new level, with 16 horizontal wells on a single, six-acre location. To keep the frac equipment working efficiently, Apache’s engineers developed and applied for a patent for a manifold that will connect all the wells on the pad, minimizing non-productive time and enabling 24-hour operations.
Each horizontal lateral is well over a mile long, and engineers and geoscientists are still experimenting to determine how many fracture stimulation stages can be used to get the best results from each well.
Apache pioneered production in the Horn River Basin at Ootla. Today, it is leveraging technology and urgency to develop one of North America’s leading shale plays.
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recent innovations in drilling and completion technologies have unlocked a 100-year north american natural gas resource that has transformed the industry. The abundance of natural gas from conventional and unconventional sources such as shale formations offers U.S. political leaders a chance to reduce the nation’s reliance on imported oil, create domestic jobs and help achieve environmental and climate-change goals—if they will take it.
Natural gas, which can be produced in a safe, environmentally responsible manner, is cleaner than coal for generating electricity, and cleaner than other fossil fuels when used in transportation. Using more gas is the best way to achieve substantial reductions of emissions of greenhouse gases in the near term.
Political deadlock on Capitol Hill may have diminished the likelihood that Congress will pass major energy and climate change legislation in 2010. However, proposals to impose unwarranted regulatory burdens on the proven technology of hydraulic fracturing and to impose new taxes on domestic drilling activities could impede the development of this domestic resource that could help the nation achieve its energy security, job creation and environmental goals.
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gas
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Hydraulic fracturing—done properly and with adequate regard for the environment—is a proven technique used to tap gas in hard rocks generally thousands of feet below drinking water supplies.
Instead of creating new burdens on the industry, we urge Congress and the administration to consider steps that would encourage expanded use of natural gas as a transportation fuel. Compressed natural gas (CNG) has about 20 percent less carbon dioxide emissions than gasoline and diesel, and fewer emissions of smog-causing pollutants. Reducing our reliance on imported oil would strengthen our economy by creating jobs and alleviating the balance of payments deficit.
While we hope our political leadership will craft comprehensive federal policies to encourage CNG use, Apache isn’t waiting. We are converting many of our fleet vehicles to CNG, and we are developing our own refueling infrastructure where it does not exist. Also, we have offered to partner with municipal governments in Houston, Tulsa, Okla., and Lafayette, La., to develop CNG refueling facilities for parts of their fleets.
Natural gas is an essential part of the solution to many of the nation’s challenges.
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qasrandotherdiscoverieswillfuelfutureexploration
ASALA WATERFLOOD
QASR GAS
GEAUXPHER
OOTLA
VAN GOGH
PYRENEES
PHIOPS
GAS PLUSHALYARD
SALAM 5REINDEER
2008 2009 2010 2011 2012
ourbalancedportfolioandcommitmenttofinancialdisciplineprovideflexibilitytorespondtochangingcircumstancesornewopportunities.
ourexpanding
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capitalization($ billions)
equity
debt
30
25
20
15
10
5
0506070809
annualproduction(MMboe)
2500
2000
1500
1000
500
provedreserves(MMboe)
liquids gas
liquids gas
250
200
150
100
50
05060708090506070809
15
12
9
6
3
revenues($ billions)
netcashprovidedbyoperatingactivities ($ billions)
05060708090506070809
8
6
4
2
marKetcontext
financialperspective
rogerb.planK
president
Financial discipline has served apache well for more than 50 years, and never was it more important than during the global financial crisis of 2009. From a financial perspective, a strong balance sheet provides Apache with the flexibility to maintain growth from our core drilling program, larger exploration targets and the associated development capital and occasional opportunistic acquisitions.
The year began with nearly unprecedented uncertainty and volatility in virtually all markets as the world grappled with the global financial crisis. Equity and commodity prices declined to multiyear lows. Credit markets were dysfunctional at best, drying up completely in some instances. The decline in oil and gas prices that began in the final months of 2008 continued in the early months of 2009, with prices sinking by more than two-thirds from their 12-month highs. As a result, Apache reported a $1.98-billion non-cash, after-tax reduction in the carrying value of oil and gas properties in the first quarter. Earnings rebounded sharply over the remainder of the year with stronger oil prices and Apache’s 9-percent increase in global production.
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For the year, Apache recorded a net loss of $292 million or 87 cents per diluted common share. Absent the write-down and other items that impact the comparability of results, Apache’s adjusted earnings totaled $1.9 billion or $5.59 per
share.* the magnitude of the turnaround is underscored by the fact that apache earned more in the last three quarters of 2009 than in all but four full years. Cash flow from operations before changes in operating assets and liabilities* totaled $5 billion.
Amid the year’s turmoil, Apache’s primary objective for 2009 was to live within cash flow to preserve financial flexibility. We began 2009 with cash and short-term investments approaching $2 billion, which we intended to preserve and ultimately use to make opportunistic acquisitions. To meet our objective, we entered the year with a severely reduced exploration and development capital budget of $3.5 billion, just slightly more than half the prior year’s $6.7 billion. Activity was curtailed throughout all regions. We reduced operating costs where possible to match lower commodity prices and deferred projects that did not result in the loss of a lease or opportunity.
Having entered 2009 with approximately $4 billion of cash and liquidity, we were surprised and somewhat dismayed when the world’s financial crisis and sinking commodity prices did not deliver more opportunities to acquire properties on attractive terms. Although we were able to complete $310 million of acquisitions, mainly in the first quarter, when oil prices reached their lows for the year, material acquisition opportunities throughout the industry were few and far between.
Clearly, there are encouraging signs that the transaction pipeline may be beginning to thaw. However, it coincides with broader trends of resource nationalism among the producing countries and a scarcity mentality, particularly for oil, that is likely to drive up the cost of entry in new producing areas.
Apache will continue to explore possible transactions that make sense strategically and on a value basis. However, our continuing evolution toward more international exploration and our pipeline of large-scale discoveries in the development phase likely foretells where more of our capital will be directed in the future.
apache’sabilitytocontinuetoincreaseproductionintimesofconstrainedcapitaldemonstratesthebenefitofourlong-termapproach.
our global, balanced production base generates substantial cash flow to fund larger exploration targets and considerable associated development costs. Production growth in the face of significantly reduced capital spending would not have been possible without stability from several high-impact discoveries around the world making meaningful contributions to our production base. As Apache has evolved over the years from largely a U.S. development driller and producer to an international exploration and production company, our investment time horizons and capital outlays have, out of necessity, expanded materially.
Apache’s Qasr Field in Egypt’s Western Desert required substantial infrastructure investments to reach current gross production of 600 MMcf of gas and 27,000 barrels of condensate per day. With more such discoveries in the pipeline to be developed—Julimar, Reindeer, Van Gogh, Pyrenees, Horn River and others discussed elsewhere in this report—Apache must increasingly balance long-term investments that can move the needle for investors, with short-term investments that generate immediate cash flow to pay for them. Fortunately, once this pipeline is running, more discoveries bring sizeable, steady cash flow that can fund future high-impact growth projects.
* Non-GAAP financial measures. Please see measures and reconciliations, page 28.
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apacheended2009with$2billionincashandshort-terminvestments.
$2500
$2000
$1500
$1000
$500
1q2q3q4q1q2q3q4q2008 2009
29%
Nor
th a
Mer
icaN
gas
21%
iNte
rNat
ioNal
gas
50%
tota
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iqui
ds
19%
Nor
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Mer
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gas
9%i N
terN
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gas
72%
tota
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iqui
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in2009,whileourworldwideproductionwassplitevenlybetweenliquidhydrocarbonsandnaturalgas,oilgeneratedmorethan70percentofrevenues.
apache aims to maintain a balance between oil and natural gas production because, over several decades, we have learned that the two commodities rarely move in parallel, and often move in unanticipated ways. Apache’s diverse revenue sources set us apart from many independents that rely primarily on North American gas production. Our balance also contributed substantially to the recovery of Apache’s earnings and cash flow after the challenging first quarter.
We have increased our gas hedging program for 2010 because we believe the abundance of natural gas resources unlocked by the development of North America’s vast shale formations is likely to put continued pressure on gas prices. We have hedged 2010 volumes equal to approximately 41 percent of fourth-quarter 2009 North American daily gas production. We do not see similar pressures on oil prices because oil is increasingly difficult to find and is coveted by developing countries, in particular. At year-end, we had hedged 2010 volumes equal to only 13 percent fourth-quarter 2009 global oil production.
Apache took steps toward further diversification of future revenue during 2009 by agreeing to participate in liquefied natural gas (LNG) projects in Australia and Canada that have the potential to provide access to global markets for our large natural gas discoveries.
apacheachievedour2009goaloflivingwithincashflow,entering2010withacashbalanceof$2billion.
Higher oil prices and additional production enabled us to increase our capital budget by $500 million at midyear, make modest asset purchases of $310 million, and retire a preferred stock issue of $100 million. This is in sharp contrast to those companies forced to issue equity at or near multiyear low share prices and in several cases well below the prices paid in earlier share buy-backs. Apache’s balanced portfolio generated considerable cash flow and enabled us to avoid such destructive dilution and fund continued growth.
For example, in Australia—where we anticipate our greatest growth over the next two years—we invested $1.5 billion in 2008 and 2009, outpacing $500 million in region cash flow over the same period. On the other hand, other regions’ cash flow exceeded capital over the same period, effectively funding Australia’s growth and supplanting the need to issue equity or debt.
Apache remains focused on growing profitably with a commitment to financial discipline and managing the business with a long-term perspective. Apache once again enters a new year in a strong financial position, a deep inventory of exploration and development projects and a disciplined approach to acquisitions.
commoditymix—production commoditymix—revenue
livingwithincashflow( $ millions)
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42.8
20%
32.5
15%
28.2
13%
22.4
11%
55.7
26%
14.7
7%
16.6
8%
u.s.
gul
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u.s.
ceN
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caNad
a
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egyp
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300.0
13%
630.0
27%
531.0
22%
172.5
7%
308.8
13%
305.3
13%
119.0
5%
u.s.
gul
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u.s.
ceN
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a
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egyp
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rali
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Nti
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602.5
19%
326.0
10%
412.1
13%
375.2
12%
675.7
22%
602.7
19%
139.8
5%
u.s.
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<1%
chil
e
2009production( MMboe) TOTAL: 213
2009provedreserves( MMboe) TOTAL: 2,366.6
2009exploration&developmentcapital( $ millions) TOTAL: 3,144.7
2009
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2009 2008 2007
financialhighlightsRevenues $ 8,615 $12,390 $10,000
Income (loss) Attributable to Common Stock (292) 706 2,807
Diluted (loss) Net Income per Common Share (.87) 2.09 8.39
Cash from Operations before Changes in Operating Assets and Liabilities*:
Net Cash Provided by Operating Activities 4,224 7,065 5,677
Changes in Operating Assets and Liabilities 761 312 518
Cash from Operations Before Changes in Operating Assets and Liabilities
$ 4,985 $7,377 $6,195
Total Assets $28,186 $29,186 $28,635
Long-Term Debt 4,950 4,809 4,012
Shareholders’ Equity 15,779 16,509 15,378
Cash Dividends paid per Common Share 0.60 0.70 0.60
operationalhighlightsOil and Gas Expenditures
(including acquisitions, gas gathering, transmission and processing facilities and capitalized interest)
$ 3,821 $6,328 $5,802
Natural Gas Production (mmc f/d) 1,759 1,618 1,796
Oil and Condensate Production (mbbls/d) 290 265 262
Proved Reserves (mmboe) 2,367 2,401 2,446
year ended December 31(dollars in millions, except per-share data)
marKetcontext
performancehighlights
2009 2008
Income (loss) Attributable to Common Stock (GAAP) $(291,692) $706,274
Adjustments:
Foreign currency fluctuation impact on deferred tax expense 197,724 (397,454)
Additional depletion, net of tax 1,981,398 3,647,745
Out-of-period tax adjustments — (173,795)
Adjusted Earnings (Non-GAAP) $ 1,887,430 $3,782,770
Adjusted Earnings Per Share (Non-GAAP)
Basic $ 5.62 $ 11.31
Diluted $ 5.59 $11.22
Average Number of Common Shares
Basic 335,852 334,351
Diluted 337,737 337,191
year ended December 31(thousands except per-share data) *Non-GAAP Financial Measure:
This annual report discusses Apache’s cash from operations before changes in operating assets and liabilities. Management believes the information is useful for investors because it is used internally and widely accepted by those following the oil and gas industry as a financial indicator of a company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt. It is also used by research analysts to value and compare oil and gas exploration and production companies, and is frequently included in published research when providing investment recommendations. Cash from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity, but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities.
This annual report also discusses Apache’s adjusted earnings, which exclude certain items that management believes affect the comparability of operating results and are meaningful for the following reasons: Management uses adjusted earnings to evaluate the company’s operational trends and performance relative to other oil and gas producing companies; management believes this presentation may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends; and the reconciling items below are the types of items management believes are frequently excluded by analysts when evaluating the operating trends and comparability of the company’s results.
reconciliationofincomeattributabletocommonstocKtoadjustedearnings
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humancontext
stewardship
fromcypresstreestoschools,apacheisapartofthecommunitieswhereweworK.
everyday,acrossfivecontinents,apacheanditsemployeesfocusonensuringsafeoperations,taKeactiverolesintheircommunitiesandworKtoprotecttheenvironment.
onfocused
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workers throughout the organization understand their personal responsibility for ensuring safe and environmentally responsible operations. The individual initiative and sense of responsibility that drive Apache’s operations also infuse our environmental, health and safety (EH&S) programs. Apache has established Worldwide EH&S Standards across the company that permit each region to adapt programs and procedures to fit the rules and culture in each location. We maintain high standards for assuring the competency of workers, managing work and workers, complying with regulations, properly designing and maintaining facilities, using appropriate environmental considerations and planning for responses to extraordinary events.
Members of the Apache team have responded to this empowering environment with a continuing trend of reduced accidents and improved compliance. During the last year, Apache achieved a 4.7-percent decrease in recordable injuries and a 25-percent decrease in injuries that prevent or restrict the ability to work. This continues a four-year trend that has reduced recordable injuries by 42 percent and work-restricting injuries by 39 percent.
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apache employees worldwide ask hard questions about our operations performance and find solutions that create value and reduce greenhouse gas emissions.We understand that widespread and effective actions to reduce GHG emissions will fail unless they make economic sense.
In 2009, we completed a regional electrification project in Egypt’s Western Desert, installing large natural gas turbines for power generation that allow us to retire hundreds of dirty diesel engines and make a significant reduction in emissions.
At our North Sea Forties Field, the Ring Main project linked our facilities together in a manner that allows us to use field gas to fuel power generators instead of diesel and vastly reduces flaring. At the Midale Field in Canada, we inject carbon dioxide from third-party coal gasification.
We continue to strive to optimize our own energy efficiency, while at the same time providing a viable energy alternative—natural gas—that enables others to lower their emissions at the lowest possible cost.
On a corporate level, we have helped build organizations such as Fund for Teachers, which provides grants for educators to pursue self-designed sabbatical opportunities, and Springboard—Educating the Future, which built 201 schools that are providing education opportunities for 7,000 girls in Egypt’s rural villages. In 2009, we joined with our employees to contribute more than $900,000 to more than 200 educational, arts and civic organization across our operating regions.
apache Foundation provided 100,000 tree seedlings to assist with a locally organized cypress swamp reforestation project to further recovery efforts in a hard-hit area just east of new orleans.Hurricane Katrina’s storm surge, which swept away homes, businesses and infrastructure in Louisiana’s St. Bernard Parish, also washed away or damaged most vegetation in the community. The parish was completely flooded in the 2005 hurricane, when a 30-foot tidal surge destroyed eight miles of levees along the Mississippi River Gulf Outlet Canal. The trees are being planted between two area levee systems to reforest former swampland.
In spring 2009, just three years after launch, Apache Foundation’s Tree Grant Program reached its goal of planting 1 million trees to improve wildlife habitats, restore storm damage, and enhance cities and neighborhoods in 14 states. Apache has committed to donating an additional 2 million trees by 2014.
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31
frederick M. boheN (3)(5)
Former executive Vice president and Chief operating officer, the rockefeller university
g. steveN farris (1)
Chairman and Chief executive officer, apache Corporation
raNdolph M. ferlic, M.d. (1)(2)
Founder and Former president, surgical services of the great plains, p.C.
eugeNe c. fiedorek (2)
private investor, Former managing Director, enCap investments l.C.
a.d. frazier, Jr. (3)(5)
Co-Founder and Vice Chairman, both holdings, llC
patricia albJerg grahaM (4)
Charles warren professor of the history of education emerita, harvard university
JohN a. kocur (1)(3)(4)
attorney at law; Former Vice Chairman of the board, apache Corporation
george d. laWreNce (1)(3)
private investor; Former Chief executive officer, the phoenix resource Companies, inc.
f. h. Merelli (1)(2)
Chairman of the board, Chief executive officer, and president, Cimarex energy Co.
rodMaN d. pattoN (2)
Former managing Director, merrill lynch energy group
charles J. pitMaN (4)
Former regional president—middle east/ Caspian/egypt/india, bp amoco plc;
( 1 ) executive Committee
( 2 ) audit Committee
( 3 ) management Development and Compensation Committee
( 4 ) Corporate governance and nominating Committee
( 5 ) stock option plan Committee
g. steveN farris Chairman and Chief executive officer
roger b. plaNkpresident
JohN a. cruMCo-Chief operating officer and president— north america
rodNey J. eichlerCo-Chief operating officer and president—international
Michael s. bahorichexecutive Vice president and technology officer
JoN a. JeppeseNexecutive Vice president
p. aNthoNy laNNieexecutive Vice president and general Counsel
W. kregg olsoNexecutive Vice president— Corporate reservoir engineering
sarah b. tesliksenior Vice president—policy and governance
JohN r. bediNgfieldVice president— worldwide exploration and new Ventures
thoMas p. chaMbersVice president—planning and investor relations
MattheW W. duNdreaVice president and treasurer
robert J. dyeVice president—Corporate services
david l. freNch Vice president—business Development
Margie harrisVice president—human resources
rebecca a. hoytVice president and Controller
JaNiNe J. McardleVice president—oil and gas marketing
aaroN s. g. MerrickVice president—information technology
urbaN f. o’brieNVice president—government affairs
JoN W. sauerVice president—tax
cheri l. peperCorporate secretary
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shareholderinformation
The Company has paid cash dividends on its common stock for 45 consecutive years through Dec. 31, 2009. Future dividend payments will depend upon the Company’s level of earnings, financial requirements and other relevant factors.
Apache common stock is listed on the New York and Chicago stock exchanges and the NASDAQ National Market (symbol APA). At Dec. 31, 2009, the Company’s shares of common stock outstanding were held by approximately 5,800 shareholders of record and 442,000 beneficial owners. Also listed on the New York Stock Exchange are:
ApAche FinAnce cAnAdA’s 7.75% notes, due 2029 (symbol ApA 29).
2009 HigH lOw declared Paid
First Quarter $ 88.07 $ 51.03 $ 0.15 $ 0.15
Second Quarter 87.04 61.60 0.15 0.15
Third Quarter 95.77 65.02 0.15 0.15
Fourth Quarter 106.46 88.06 0.15 0.15
2008First Quarter $ 122.34 $ 84.52 $ 0.25 $ 0.25
Second Quarter 149.23 117.65 0.15 0.15
Third Quarter 145.00 94.82 0.15 0.15
Fourth Quarter 103.17 57.11 0.15 0.15
Price range dividendS Per SHare
annual meeTingApache will hold its annual meeting of shareholders on Thursday, May 6, 2010, at 10:00 a.m. in the Ballroom, Hilton Houston Post Oak, 2001 Post Oak Boulevard, Houston, Texas. Apache plans to web cast the annual meeting live; connect through the Apache web site: www.apachecorp.com
STOcK Held in “STreeT name”The Company maintains a direct mailing list to ensure that shareholders with stock held in brokerage accounts receive information on a timely basis. Shareholders wanting to be added to this list should direct their requests to:
apache’s public affairs Department 2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400
or by calling 713.296.6157
or by registering on Apache’s Web site:www.apachecorp.com
fOrm 10-K reQueSTShareholders and other persons interested in obtaining, without cost, a copy of the Company’s Form 10-K filed with the Securities and Exchange Commission may do so by writing to:
cheri l. peper, corporate secretary
2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400
inveSTOr relaTiOnSShareholders, brokers, securities analysts or portfolio managers seeking information about the company are welcome to contact:
thomas p. chambers, Vice presiDent—planning anD inVestor relations
713.296.6685.
Members of the news media and others seeking information about the company should contact:
apache’s public affairs Department at 713.296.7276.
weB SiTewww.apachecorp.com
cOrPOraTe OfficeSone post oak central 2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400 713.296.6000
indePendenT PuBlic accOunTanTSernst & young llp fiVe houston center
1401 McKinney Street, Suite 1200 Houston, Texas 77010-2007
STOcK TranSfer agenT and regiSTrarwells fargo bank, n.a. attn: shareowner serVices
PO Box 64854 South St. Paul, Minnesota 55164-0854 651.450.4064 or 800.468.9716
Communications concerning the transfer of shares, lost certificates, dividend checks, duplicate mailings or change of address should be directed to the stock transfer agent. Shareholders can access account information on the Web site: www.shareowneronline.com
dividend reinveSTmenT PlanShareholders of record may invest their dividends automatically in additional shares of Apache common stock at the market price. Participants may also invest up to an additional $25,000 in Apache shares each quarter through this service. All bank service fees and brokerage commissions on purchases are paid by Apache. A prospectus describing the terms of the Plan and an authorization form may be obtained from the Company’s stock transfer agent, Wells Fargo Bank, N.A.
direcT regiSTraTiOnShareholders of record may hold their shares of Apache common stock in book-entry form. This eliminates costs related to safekeeping or replacing paper stock certificates. In addition, shareholders of record may request electronic movement of book-entry shares between your account with the Company’s stock transfer agent and your broker. Stock certificates may be converted to book-entry shares at any time. Questions regarding this service may be directed to the Company’s stock transfer agent, Wells Fargo Bank, N.A.
what’s exploringpossible
Annual Report 2009summary
2000 Post Oak Boulevard, Suite 100 Houston, Texas 77056-4400www.aPacHecOrP.cOm
apache corporation
