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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Apache Corporation, a Delaware corporation formed in 1954, is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids. We currently 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, Apache sold its Australia LNG business and oil and gas assets. During 2014, Apache sold its operations in Argentina. Results of operations and cash flows from operations for Argentina and Australia are reflected as discontinued operations in the Company’s financial statements for all periods presented. Certain historical information has been recast to reflect the results of operations for Argentina and Australia as discontinued operations. The following discussion should be read together with the Consolidated Financial Statements and the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Form 10-K, and the risk factors and related information set forth in Part I, Item 1A and Part II, Item 7A of this Form 10-K. Overview of 2015 Results This year was a transitional year for Apache. We made significant progress high-grading our portfolio, reducing drilling activity, driving down costs, and proactively strengthening our financial condition. We completed an extensive refocusing of the Company’s asset portfolio which began several years ago. Through this process, we successfully monetized both capital intensive projects and assets that were not accretive to 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. Proceeds from divestitures were used to improve our liquidity and redeployed to upgrade our portfolio. We also reacted swiftly to the significant decline in crude oil prices that began in the third quarter of 2014 and continued throughout 2015 and into 2016. Immediate action was taken to substantially reduce activity levels, and concrete steps were taken to cut overhead and operating costs. Apache’s intense focus on driving internal efficiencies, along with considerable downward pressure on third-party service costs, resulted in savings in both capital and operating costs. Lease operating expenses and general and administrative expenses decreased 17 percent and 16 percent, respectively, from the prior year. During the year, we also took action to strengthen our financial and liquidity position. The Company reduced debt by $2.5 billion since year-end 2014 and exited the year with $1.5 billion of cash. Our nearest longterm debt maturity is in 2018, and only $700 million, or 8 percent of our total debt portfolio, matures prior to 2021. In June 2015, we replaced $5.3 billion in revolving credit facilities with one $3.5 billion credit facility, which matures in June 2020. Daily production of crude oil, natural gas, and natural gas liquids averaged 535 Mboe/d during 2015. Excluding the impact of divested assets and the impact of Egypt impairments and write-downs, production for the year would have increased 3 percent from 2014, despite a reduction of over 60 percent in capital spending. Production volumes for 2015 included a nonrecurring downward adjustment of 9,649 boe/d related to Egypt taxes. In the fourth quarter of 2015, we incurred charges totaling $1.3 billion for an impairment of certain gathering, transmission, and processing (GTP) assets and a write-down of oil and gas properties in Egypt. These charges drove a significant loss in Egypt for the fourth quarter, which mostly offset tax expense and tax volumes recognized in the first three quarters of the year. For more information regarding our production-sharing contracts and taxes, please refer to the “Geographic Area Overviews” section set forth in Part I, Item 1 and 2 of this Form 10-K. 30

Apache 2015 Summary Annual Report