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earnings in the near-term and other non-strategic assets. These divestitures included Apache’s interest in LNG projects in Australia and Canada, its exploration and production operations in Australia and Argentina, and mature assets offshore in the Gulf of Mexico. The proceeds were used to reduce debt levels and redeployed to upgrade our portfolio. Preserving financial flexibility is also key to our overall business philosophy. In response to the decline in commodity prices, Apache immediately took proactive measures to reduce activity levels and focused on bringing costs into alignment with commodity prices. We reduced our capital investments by over 60 percent from 2014 levels and realized meaningful reductions in drilling, operating, and overhead costs. These steps, coupled with our strategic divestitures, enabled us to reduce debt $2.5 billion and increase cash $700 million from year-end 2014. We accomplished this in spite of a 47 percent decrease in crude oil realizations and a 44 percent decline in North American natural gas realizations. During 2016 we will continue to focus on our cost structure and expect to realize additional reductions in overhead, operating, and capital costs. In addition, we have chosen to reduce our capital spending to a level at which we believe we can achieve “cash flow neutrality” for the year. We intend to fund our capital program and dividends through cash from operations and a limited amount of non-core asset sales, without external financing. Our 2016 capital budget is over 60 percent lower than 2015 and 80 percent lower than 2014. Our 2016 capital will be allocated on a prioritized basis as follows: (i) maintain assets and keeping them running efficiently and preserve mineral rights and leases, (ii) further optimize and build high quality inventory for the future, (iii) conduct certain medium-cycle, high-impact exploration activities, and (iv) conduct limited-scale development activities that remain economically robust at these low prices. We currently plan capital investments in 2016 in the range of $1.4 to $1.8 billion excluding noncontrolling interest: $700 million to $800 million allocated to North American onshore plays, and the balance to international and U.S. offshore regions. This budget may be adjusted, up or down, with commodity price movements throughout the year. Given the further curtailment of capital spending, we are projecting a production decline of 7 percent to 11 percent in 2016 compared to 2015 levels, after adjusting for divestitures and volumes associated with Egypt’s noncontrolling interest and tax impacts. For a more in-depth discussion of our divestitures, strategy, 2015 results, and the Company’s capital resources and liquidity, please see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K. Geographic Area Overviews We have exploration and production interests in four countries: the U.S., Canada, Egypt, and the U.K. North Sea. Apache also pursues exploration interests in other countries that may over time result in reportable discoveries and development opportunities. During 2015, the Company completed the sale of all of its operations in Australia. Results of operations and cash flows for Australia operations are reflected as discontinued operations in the Company’s financial statements and are not included in the tables below.

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Apache 2015 Summary Annual Report  

Adapting to a changing environment

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