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Provision for Income Taxes In 2015, Apache repatriated the sales proceeds from the divestment of its interest in LNG projects and Australian upstream assets. Upon the repatriation of these proceeds, Apache recognized a U.S. current income tax liability of $560 million. Pursuant to its plan of divestiture of these assets, Apache recorded a deferred income tax liability of $560 million on undistributed foreign earnings in 2014. The 2015 income tax benefit from continuing operations totaled $5.5 billion. The deferred tax position in the U.S. changed from a net deferred tax liability as of December 31, 2014 to a net deferred tax asset as of December 31, 2015 as a result of $19.5 billion in non-cash ceiling test write-downs and the recognition of $2.1 billion of deferred tax assets related to foreign tax credit carryforwards. The 2015 effective tax rate reflects an increase in valuation allowance against the U.S. and Canadian region’s net deferred tax assets. Separately, the U.K. government enacted Finance Bill 2015 that provides income tax relief to E&P companies operating in the North Sea through a reduction of Supplementary Charge from 32 percent to 20 percent, effective January 1, 2015. As a result of the enacted legislation, in 2015, Apache recorded a deferred tax benefit of $619 million related to the remeasurement of the Company’s December 31, 2014 U.K. deferred income tax liability. The 2014 provision for income taxes from continuing operations totaled $663 million. The 2014 effective rate reflects the tax benefit from the $5.0 billion non-cash ceiling test write-down in the U.S. and North Sea. The Company’s rate is also impacted by the $560 million of deferred income tax expense recorded in 2014 for changing our position on undistributed earnings on foreign subsidiaries and $311 million of deferred income tax expense on distributed foreign earnings. In addition, the Company had approximately $1.9 billion of impairments related to non-cash write-downs of goodwill and assets held for sale which impact the effective tax rate. For additional information regarding income taxes, please refer to Note 7—Income Taxes in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Form 10-K. Capital Resources and Liquidity Operating cash flows are the Company’s primary source of liquidity. We may also elect to utilize available cash on hand, committed borrowing capacity, access to both debt and equity capital markets, or proceeds from the sale of nonstrategic assets for all other liquidity and capital resource needs. Apache’s operating cash flows, both in the short-term and the long-term, are impacted by highly volatile oil and natural gas prices, as well as costs and sales volumes. Significant changes in commodity prices impact our revenues, earnings and cash flows. These changes potentially impact our liquidity if costs do not trend with changes in commodity prices. Historically, costs have trended with commodity prices, albeit on a lag. Sales volumes also impact cash flows; however, they have a less volatile impact in the short-term. Deterioration in commodity prices also impacts estimated quantities of proved reserves. During 2015, we recognized negative reserve revisions of approximately 15 percent of our year-end 2014 estimated proved reserves as a result of lower prices. If realized prices for the remainder of 2016 approximate commodity future prices as of December 31, 2015, the Company is reasonably likely to report additional negative revisions, currently estimated at eight to ten percent of year-end 2015 estimated proved reserves. Apache’s long-term operating cash flows are dependent on reserve replacement and the level of costs required for ongoing operations. Cash investments are required to fund activity necessary to offset the inherent declines in production and proved crude oil and natural gas reserves. Future success in maintaining and growing reserves and production is highly dependent on the success of our drilling program and our ability to add reserves economically. We currently plan capital investments in 2016 in the range of $1.4 to $1.8 billion, a reduction of over 60 percent from 2015 levels. Approximately $700 million to $800 million will be allocated to North American onshore plays, with the balance to international and U.S. offshore regions. This budget may be adjusted with 44

Apache 2015 Summary Annual Report