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Apache recorded non-cash after-tax write-downs of its proved oil and gas properties totaling $16.6 billion, $3.1 billion, and $541 million in 2015, 2014, and 2013, respectively. The following table reflects write-downs by country: For the Year Ended December 31, 2015 Before tax After tax U.S. . . . . . . . . . . . . . . . . . . . . Canada . . . . . . . . . . . . . . . . . North Sea . . . . . . . . . . . . . . . Egypt . . . . . . . . . . . . . . . . . . Other international . . . . . . . .

$

19,537 3,667 2,032 281 -

$

12,602 2,721 1,016 281 -

Total write-downs . . . . . . . . . .

$

25,517

$

16,620

For the Year Ended December 31, 2014 Before tax After tax (In millions) $ 4,412 $ 2,844 589 224 $

5,001

$

3,068

For the Year Ended December 31, 2013 Before tax After tax $

$

552 368 75

$

356 139 46

995

$

541

In 2013, the Company recorded a non-cash write-down of $118 million, net of tax, in Argentina, which is reflected as discontinued operations in the Company’s consolidated financial statements. If commodity prices do not recover significantly from current levels, the Company expects further writedowns of the carrying value of its oil and gas properties as the full cost ceiling limitation was calculated using a historical 12-month pricing average that included commodity prices from 2015. These prices were significantly higher than current commodity futures prices. To estimate the full cost ceiling limitation for 2016, had the Company utilized commodity futures prices as of December 31, 2015 in lieu of using historical commodity prices to calculate the 12-month unweighted arithmetic average price, the write-down as of December 31, 2015 would have been higher by $4.3 billion ($3.0 billion net of tax). Lease Operating Expenses (LOE) LOE includes several key components, such as direct operating costs, repair and maintenance, and workover costs. Direct operating costs generally trend with commodity prices and are impacted by the type of commodity produced and the location of properties (i.e., offshore, onshore, remote locations, etc.). Fluctuations in commodity prices impact operating cost elements both directly and indirectly. They directly impact costs such as power, fuel, and chemicals, which are commodity price based. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as rig rates, labor, boats, helicopters, materials, and supplies. Oil, which contributed more than half of our 2015 production, is inherently more expensive to produce than natural gas. Repair and maintenance costs are typically higher on offshore properties. During 2015, LOE decreased $384 million, or 17 percent, on an absolute dollar basis compared to 2014. On a per-unit basis, LOE decreased $0.90, or 9 percent compared to 2014. During 2014, LOE decreased $412 million, or 16 percent, on an absolute dollar basis compared to 2013. On a per-unit basis, LOE decreased $0.58, or 5 percent, compared to 2013. These reductions reflect our continued focus on cost reductions consistent with the current price environment. Gathering and Transportation We generally sell oil and natural gas under two common types of agreements, both of which include a transportation charge. One is a netback arrangement, under which we sell oil or natural gas at the wellhead and collect a lower relative price to reflect transportation costs to be incurred by the purchaser. In this case, we record sales at the netback price received from the purchaser. Alternatively, we sell oil or natural gas at a specific delivery point, pay our own transportation to a third-party carrier, and receive a price with no transportation deduction. In this case, we record the separate transportation cost as gathering and transportation costs.

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Apache 2015 Summary Annual Report  

Adapting to a changing environment

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