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In the U.S. and Canada we sell oil and natural gas under both types of arrangements. In the North Sea, we pay transportation charges to a third-party carrier. In Egypt, our oil and natural gas production is primarily sold to EGPC under netback arrangements; however, we also export crude oil under both types of arrangements. 2015 vs. 2014 Gathering and transportation costs decreased $62 million from 2014. The decrease was driven primarily by North American onshore divestitures. 2014 vs. 2013 Gathering and transportation costs decreased $15 million from 2013. Canada’s 2014 costs decreased $32 million from a decline in production primarily associated with divestitures. The U.S. costs for 2014 increased $9 million as compared to 2013 primarily as a result of increased production in the MidContinent/Gulf Coast and Permian regions from increased drilling activity partially offset by a decrease from the Gulf of Mexico asset sales. Egypt costs were down $2 million from decreases in the world scale freight rates. North Sea costs increased $10 million on increased NGL activity and oil transportation tariffs. Taxes Other Than Income Taxes other than income primarily consist of U.K. Petroleum Revenue Tax (PRT), severance taxes on properties onshore and in state or provincial waters off the coast of the U.S., and ad valorem taxes on properties in the U.S. and Canada. Severance taxes are generally based on a percentage of oil and gas production revenues, while the U.K. PRT is assessed on net receipts from qualifying fields in the U.K. North Sea. We are subject to a variety of other taxes including U.S. franchise taxes and various Canadian taxes, including the Freehold Mineral tax and Saskatchewan Resources surtax. The table below presents a comparison of these expenses: For the Year Ended December 31, 2015 2014 2013 (In millions)

U.K. PRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Severance taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ad valorem taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

59 121 77 25

$

177 259 104 37

$

373 257 104 38

Total Taxes other than income . . . . . . . . . . . . . . . . . . . . . . .

$

282

$

577

$

772

2015 vs. 2014 Taxes other than income were $295 million lower than 2014. U.K. PRT decreased $118 million over the comparable 2014 period as the result of decreased production revenues in the North Sea from qualifying fields during the year. Severance tax decreased $138 million as the result of lower revenues and the divestiture of properties in Louisiana and Oklahoma. Ad valorem taxes decreased $27 million as a result of property divestitures. In 2015, the U.K. government enacted Finance Bill 2015, which provides tax relief to exploration and production (E&P) companies operating in the North Sea. Effective January 1, 2016, the U.K. PRT rate is reduced from 50 percent to 35 percent. 2014 vs. 2013 Taxes other than income were $195 million lower than 2013. U.K. PRT decreased $196 million over the comparable 2013 period based on a decrease in production revenues in the North Sea from qualifying fields during the year. Severance tax increased $2 million with increased production from the Permian region offset by higher tax credits and decreased commodity prices. Impairments During 2015, the Company recorded asset impairments totaling $1.9 billion in connection with fair value assessments in the current low commodity price environment, including $1.7 billion for the impairment of gathering, transmission, and processing (GTP) facilities, $148 million for the impairment of our YPHPL equity method investment sold in the fourth quarter, and $55 million for inventory write-downs. GTP impairments included $555 million ($410 million net of tax) for facilities in Canada, $102 million in the U.S. ($66 million net 42


Apache 2015 Summary Annual Report