Apache Corporation (APA) 1999年年度報告「NYSE」.pdf

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1、FORM 10-K APACHE CORP(Annual Report)Filed 3/25/1999 For Period Ending 12/31/1998Address2000 POST OAK BLVD ONE POST OAK CENTER STE 100HOUSTON,Texas 77056-4400Telephone713-296-6000 CIK0000006769IndustryOil&Gas OperationsSectorEnergyFiscal Year12/31SECURITIES AND EXCHANGE COMMISSION Washington,D.C.2054

2、9 FORM 10-K (MARK ONE)X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,1998,OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1

3、-4300 APACHE CORPORATION ONE POST OAK CENTRAL 2000 POST OAK BOULEVARD,SUITE 100 HOUSTON,TEXAS 77056-4400 TELEPHONE NUMBER(713)296-6000 Securities registered pursuant to Section 12(b)of the Act:Securities Registered Pursuant to Section 12(g)of the Act:NONE Indicate by check mark whether the registran

4、t(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes X N

5、o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amend

6、ment to this Form 10-K.DOCUMENTS INCORPORATED BY REFERENCE:Portions of registrants proxy statement relating to registrants 1999 annual meeting of stockholders have been incorporated by reference into A DELAWARE CORPORATION IRS EMPLOYER NO.41-0747868 NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH

7、 REGISTERED -Common Stock,$1.25 Par Value New York Stock Exchange Chicago Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange Chicago Stock Exchange 9.25%Notes due 2002 New York Stock Exchange Aggregate market value of the voting stock held by non-affiliates of registrant as of Fe

8、bruary 26,1999.$1,949,775,431 Number of shares of registrants common stock outstanding as of February 26,1999.97,794,379 Part III hereof.TABLE OF CONTENTS DESCRIPTION All defined terms under Rule 4-10(a)of Regulation S-X shall have their statutorily prescribed meanings when used in this report.Quant

9、ities of natural gas are expressed in this report in terms of thousand cubic feet(Mcf),million cubic feet(MMcf)or billion cubic feet(Bcf).Oil is quantified in terms of barrels(bbls);thousands of barrels(Mbbls)and millions of barrels(MMbbls).Natural gas is compared to oil in terms of barrels of oil e

10、quivalent(boe)or million barrels of oil equivalent(MMboe).Oil and natural gas liquids are compared with natural gas in terms of million cubic feet equivalent(MMcfe)and billion cubic feet equivalent(Bcfe).One barrel of oil is the energy equivalent of six Mcf of natural gas.Daily oil and gas productio

11、n is expressed in terms of barrels of oil per day(b/d)and thousands of cubic feet of gas per day(Mcf/d)or millions of British thermal units per day(MMBtu/d),respectively.Gas sales volumes may be expressed in terms of one million British thermal units(MMBtu),which is approximately,equal to one Mcf.Wi

12、th respect to information relating to the Companys working interest in wells or acreage,net oil and gas wells or acreage is determined by multiplying gross wells or acreage by the Companys working interest therein.Unless otherwise specified,all references to wells and acres are gross.ITEM PAGE-PART

13、I 1.BUSINESS.1 2.PROPERTIES.11 3.LEGAL PROCEEDINGS.15 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.15 PART II 5.MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.15 6.SELECTED FINANCIAL DATA.17 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS O

14、F OPERATIONS.18 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.28 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.28 PART III 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.28 11.EXECUTIVE COMPENSATION.28 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

15、 AND MANAGEMENT.28 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.28 PART IV 14.EXHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON FORM 8-K.29 PART I ITEM 1.BUSINESS GENERAL Apache Corporation(Apache or the Company),a Delaware corporation formed in 1954,is an independent energy company that ex

16、plores for,develops and produces natural gas,crude oil and natural gas liquids.In North America,Apaches exploration and production interests are focused on the Gulf of Mexico,the Anadarko Basin,the Permian Basin,the Gulf Coast and the Western Sedimentary Basin of Canada.Outside of North America,Apac

17、he has exploration and production interests offshore Western Australia,in Egypt and offshore the Ivory Coast,and exploration interests in Poland and offshore The Peoples Republic of China(China).Apache common stock,par value$1.25 per share,has been listed on the New York Stock Exchange since 1969,an

18、d on the Chicago Stock Exchange since 1960.Apache holds interests in many of its U.S.,Canadian and international properties through operating subsidiaries,such as Apache Canada Ltd.,DEK Energy Company(DEKALB,formerly known as DEKALB Energy Company),Apache Energy Limited(formerly known as Hadson Ener

19、gy Limited),Apache International,Inc.,and Apache Overseas,Inc.Properties referred to in this document may be held by those subsidiaries.Apache treats all operations as one line of business.1998 RESULTS In 1998,Apache had a loss attributable to common stock of$131.4 million,or$1.34 per share,on total

20、 revenues of$875.7 million.The loss reflected,in large part,the effects of a$158 million after-tax,non-cash charge resulting from a$243 million price-related reduction in Apaches proved oil and gas reserves in the United States.Net cash provided by operating activities during 1998 was$471.5 million.

21、Apache had its 21st consecutive year of production growth and 11th consecutive year of oil and gas reserves growth in 1998.Apaches average daily production was 75.8 Mbbls of oil and natural gas liquids and 590 MMcf of natural gas for the year.Giving effect to 1998 production,acquisitions,disposition

22、s,revisions and drilling activity,the Companys estimated proved reserves increased by 27.3 MMboe in 1998 over the prior year to 613 MMboe,of which approximately 59 percent was natural gas.Based on 585.7 MMboe reported at year-end 1997,Apaches reserve growth from drilling activity during the year ref

23、lects replacement of 236 percent of the Companys 1998 production.Apaches active drilling and production-enhancement program yielded 276 new producing wells out of 383 attempts and involved 590 major North American workover and recompletion projects during the year.At December 31,1998,Apache held int

24、erests in approximately 4,086 net oil and gas wells and 1,803,932 net developed acres of oil and gas properties worldwide.In addition,the Company had approximately 593,204 net undeveloped acres under North American leases and 22,566,883 net undeveloped acres under international exploration and produ

25、ction rights.APACHES GROWTH STRATEGY Apaches growth strategy is to increase oil and gas reserves,production,cash flow and earnings through a combination of exploratory drilling,development of its inventory of existing projects and property acquisitions meeting defined financial parameters.The Compan

26、ys drilling program emphasizes reserve additions through moderate-risk drilling primarily on its North American interests,and exploratory drilling primarily on its international interests.The Company also emphasizes reducing operating costs per unit produced and selling marginal and non-strategic pr

27、operties in order to enhance its profit margins.Apaches international investments and exploration activities are an emerging component of its long-term growth strategy.In addition to an active,moderate-risk drilling program in Apaches North American focus areas,higher-risk international exploration

28、offers potential for greater rewards and significant reserve additions.Apache directed its international efforts in 1998 toward development of certain discoveries offshore Western Australia,offshore the Ivory Coast,in Egypt and offshore China,and toward further exploration 1 efforts in those areas a

29、nd on its concessions in Poland.Apache believes that reserve additions in these international areas are likely to continue through higher-risk exploration and through improved production practices and recovery techniques.For Apache,property acquisition is only one phase in a continuing cycle of busi

30、ness growth.Apaches aim is to follow each acquisition with a cycle of reserve enhancement,property consolidation and cash flow acceleration,facilitating asset growth and debt reduction.This approach requires a well planned and carefully executed property development program and,where appropriate,a s

31、elective program of property dispositions.It motivates Apache to target acquisitions that have ascertainable additional reserve potential and to apply an active drilling,workover and recompletion program to realize the potential of the acquired undeveloped and partially developed properties.Apache p

32、refers to operate its properties so that it can best influence their development;as a result,the Company operates properties accounting for over 80 percent of its production.1998 ACQUISITIONS AND DISPOSITIONS On November 13,1998,the Company entered into agreements to acquire certain oil and gas inte

33、rests and companies holding oil and gas interests in the Carnarvon Basin,offshore Western Australia,from subsidiaries of Novus Petroleum Limited(Novus)for approximately$55 million.The interests have estimated proved reserves of approximately 5.8 MMboe and daily production of 2,400 barrels of oil equ

34、ivalent.They are within the Apache-operated Harriet Joint Venture(which includes production,processing and pipeline infrastructure associated with the Varanus Island hub),the Airlie Joint Venture(in which the Company held a prior interest and became operator)and three other exploration permit areas.

35、The transaction closed in two stages,on December 18,1998(approximately$49 million),and on January 29,1999(approximately$6 million).Under the terms of an agreement with Novus,the Company may be required to make additional payments to Novus based on proved and probable recoverable oil and condensate r

36、eserves,as determined by independent engineers,on a defined geological structure in the Gipsy-Rose-Lee area,offshore Western Australia.If required,such payments would be calculated using$2.50 for each barrel of proved and$1.25 for each barrel of probable oil and condensate reserves.A payment becomes

37、 due if and when a decision is made to construct facilities for the production of oil or condensate from the designated area.On February 1,1999,the Company acquired oil and gas properties located in the Gulf of Mexico from Petsec Energy Inc.(Petsec)for an adjusted purchase price of approximately$66.

38、7 million.The Petsec transaction included estimated proved reserves of approximately 10.4 MMboe on the effective date.In several transactions with various buyers,Apache also sold largely marginal properties containing 29.6 MMboe of proved reserves for$131.1 million.Following the Ampolex Group Transa

39、ction described in Apaches 1997 Annual Report on Form 10-K,the Company entered into an agreement with Hardy Petroleum Limited(Hardy)pursuant to which Hardy agreed to purchase a 10 percent interest in the companys East Spar field and related production facilities.This transaction closed in January 19

40、98 with a total sales price of approximately$63 million in cash.The Ampolex Group Transaction was recorded net of these interests.In June 1998,Apache formed a strategic alliance with Cinergy Corp.(Cinergy)to market substantially all the Companys natural gas production from North America and sold its

41、 57 percent interest in Producers Energy Marketing LLC(ProEnergy)for 771,258 shares of Cinergy common stock,subsequently sold for$26.1 million.ProEnergy will continue to market Apaches North American natural gas production for 10 years,with an option to terminate after six years,under an amended and

42、 restated gas purchase agreement effective July 1,1998.During this period,Apache is generally obligated to deliver most of its North American gas production to Cinergy and,under certain circumstances,reimburse Cinergy if certain gas throughput thresholds are not met.Accordingly,Apache recorded a def

43、erred gain of$20 million,subject to adjustment,on the sale of ProEnergy that is being amortized over six years.EXPLORATION AND PRODUCTION The Companys North American exploration and production activities are diversified among four operating regions:Gulf,Midcontinent,Western and Canada.Approximately

44、62 percent of the Companys 2 proved reserves are located in these North American regions.Egypt and Australia are the Companys most important international regions.The Companys Egyptian operations are headquartered in Cairo,and Apache conducts its Australian exploration and production operations from

45、 Perth.Information concerning the amount of revenue,operating income(loss)and total assets attributable to U.S.,Canadian and international operations is set forth in Note 12 to the Companys consolidated financial statements under Item 8 below.Gulf.The Gulf region encompasses the Texas and Louisiana

46、coasts,central Texas and the Companys interests in the Gulf of Mexico,offshore Louisiana and Texas.In 1998,the Gulf region was Apaches leading region for production and production revenues contributing approximately$224 million in revenues from production of 17.9 MMboe for the year.The Company perfo

47、rmed 182 workover and recompletion operations during 1998 in the Gulf region and participated in drilling 30 wells,11 of which were completed as producers.As of December 31,1998,the region encompassed 482,546 net acres,and accounted for 81.3 MMboe,or 13 percent,of the Companys year-end 1998 total es

48、timated proved reserves.Midcontinent.Apaches Midcontinent region operates in Oklahoma,eastern and northern Texas,Arkansas and northern Louisiana.The region has focused operations on its sizable position in the Anadarko Basin of western Oklahoma.Apache has drilled and operated in the Anadarko Basin f

49、or over four decades,developing an extensive database of geologic information and a substantial acreage position.In 1998,the Midcontinent region had approximately 11.8 MMboe of production generating$144 million in revenue for the Company.At December 31,1998,Apache held an interest in 413,690 net acr

50、es in the region,which accounted for approximately 101.8 MMboe,or 17 percent,of Apaches total estimated proved reserves.Apache participated in drilling 105 wells in the Midcontinent region during the year,86 of which were completed as producing wells.The Company performed 45 workover and recompletio

51、n operations in the region during 1998.Western.The Western region includes assets in the Permian Basin of western Texas and New Mexico and the San Juan Basin of New Mexico.In 1998,the Western region produced approximately 9.9 MMboe and generated$114 million in production revenue.At December 31,1998,

52、the Company held 422,914 net acres in the region,which accounted for 127.8 MMboe or 21 percent,of the Companys total estimated proved reserves.Apache participated in drilling 98 wells in the Western region,86 of which were productive wells.Apache performed 294 workovers and recompletions in the West

53、ern region during the year.Canada.Exploration and development activity in the Canadian region is concentrated in the Provinces of Alberta and British Columbia.The region produced approximately 7.4 MMboe and generated$64 million in production revenue in 1998.Apache participated in drilling 66 wells i

54、n this region during the year,47 of which were completed as producers.The Company performed 69 workovers and recompletions on operated wells during 1998.At December 31,1998,the region encompassed approximately 372,720 net acres,and accounted for 67.3 MMboe,or 11 percent,of the Companys year-end 1998

55、 total estimated proved reserves.Egypt.At year end,Apache held 13,279,201 net acres in Egypt with 87.6 MMboe of estimated proved reserves or 14 percent of Apaches total estimated proved reserves.In 1998,Apache had 10.3 MMboe of production in Egypt,which generated$129 million in production revenues.A

56、pache owns a 75 percent interest in the Qarun Block and a 40 percent interest in the Khalda Block,both in the Western Desert of Egypt.Future production of gas from Khalda is expected to be delivered for sale to the Egyptian General Petroleum Corporation(EGPC)at a point west of Alexandria,Egypt,via a

57、 34-inch gas pipeline,construction of which commenced in 1997 with completion of the pipeline projected to occur in 1999.The costs of building the pipeline will be borne by Apache,the other Khalda participants,and the owners of a neighboring block.Construction costs paid by Apache and the other Khal

58、da participants are recoverable from oil and gas production from the Khalda Block.Both the Khalda and Qarun Concession Agreements provide that Apache and its partners in the concessions will pay all of the operating and capital costs for developing the concessions,while the production will be split

59、between EGPC and the partners.Up to 40 percent of the oil and gas produced from each of the concessions is available to the Company and its partners to recover operating and capital costs for the applicable concession.To the extent eligible costs exceed 40 percent of the oil and gas produced and sol

60、d from 3 a concession in any given quarter,such excess costs may be carried into future quarters without limit.The remaining 60 percent of all oil and gas produced from the concessions is divided between EGPC and Apache and its partners,with the percentage received by Apache and its partners reducin

61、g as the gross daily average of oil and gas produced on a quarterly basis increases.Under the Khalda Agreement,capital costs are amortized over four years,while the Qarun agreement provides for a five-year amortization.In addition to the Qarun and Khalda Blocks,Apache holds interests in the East Ben

62、i Suef and Asyout Blocks to the south of the Qarun Block,and three other blocks in the Western Desert of Egypt,the North East Abu Gharadig Block,the East Bahariya Block,and the West Mediterranean Block No.1(partly onshore and partly offshore).Apache also acquired interests in the Ras El Hekma and Ra

63、s Kanayes concessions from Repsol Exploracion Egipto S.A.in December 1997,and during 1998,Apache became the operator of the W.Mediterranean and East Beni Suef Blocks.Exploratory drilling on the East Beni Suef Block commenced in 1997 with a significant discovery made on the#1 well.Delineation drillin

64、g continued in 1998.Due to conflicting governmental requirements regarding the placement of drilling rigs on the Darag Block,the Company relinquished the Darag concession in the Gulf of Suez and received a refund of a portion of its expenses related to the concession.Australia.Western Australia beca

65、me an important region for Apache after the 1993 acquisition of Hadson Energy Resources Corporation(subsequently known as Apache Energy Resources Corporation).In 1998,natural gas production in the region increased by 95 percent from the prior year to approximately 51 MMcf/d.Apache acts as operator f

66、or most of its Western Australia properties through its wholly-owned subsidiary,Apache Energy Limited(AEL).During 1998,Apache had 6.3 MMboe of production generating$70 million of production revenue.Estimated proved reserves in Australia increased by 66 percent to 132.7 MMboe,or 22 percent of the Com

67、panys year-end total estimated proved reserves.The increase reflects,among other matters,the acquisition from Novus of three companies with holdings in the East Spar and Harriet fields.As of December 31,1998,Apache held 226,720 net developed acres and 1,421,290 net undeveloped acres offshore Western

68、 Australia.Through AEL and its subsidiaries,Apache also operates the Harriet Gas Gathering Project,a gas processing and compression facility with a throughput capacity of 175 MMcf/d,and a 60-mile,12-inch offshore pipeline with a throughput capacity of 175 MMcf/d that connects to a pipeline grid onsh

69、ore.The Company and the other participants in the East Spar and Harriet joint ventures are currently building a second 60 mile,16-inch,natural gas pipeline from Varanus Island to a connection with the existing Dampier to Banbury gas pipelines,which is expected to be completed in March 1999.See 1998

70、Acquisitions and Dispositions and Oil and Natural Gas Marketing.Other International Operations.Outside of Canada,Egypt and Australia,Apache currently has exploration and production interests offshore the Ivory Coast,and exploration interests in Poland and offshore China.Apache obtained its first pro

71、perties in Poland on April 16,1997 when the Company assumed operatorship and a 50 percent interest in over 5.5 million acres in Poland located near Lublin,southeast of Warsaw,from FX Energy,Inc.(FX Energy).The Company has since acquired additional acreage in Poland,including approximately 1.8 millio

72、n acres in the Carpathian area near the southern border of Poland and participation in a further 2.275 million acres in the Pomeranian area of northwest Poland,giving Apache interests in 12,038,676 total gross undeveloped acres and 7,494,122 net undeveloped acres as of December 31,1998.The concessio

73、ns in Poland include requirements for Apache to drill at least eleven wells and to shoot at least 1,290 miles of seismic data.At year end,two wells were being drilled in Poland,but were abandoned in the first quarter of 1999.Subsequent to year end,Apache and FX Energy entered into an Area of Mutual

74、Interest Agreement,which covers virtually all of Poland,and plan to enter into further exploration and production agreements with the Polish Oil and Gas Company(POGC),the national oil company of Poland.Apaches operations in Poland are headquartered in Warsaw.Apache is also the operator,with a 50 per

75、cent interest,of the Zhao Dong Block in Bohai Bay,offshore China.In 1994 and 1995,discovery wells tested at rates between 1,300 and 4,000 b/d of oil.The Company elected to proceed with the second exploration phase,commencing in May 1996,which involved a commitment to drill two additional exploratory

76、 wells.In early 1997,one well tested at rates up to 11,571 b/d 4 of oil and another tested at rates up to 15,359 b/d.An overall development plan for the C and D Fields in the Zhao Dong Block was submitted to Chinese authorities in late 1997 and is awaiting approval.In the Ivory Coast,Apache,as opera

77、tor of the block and holding a 24 percent interest,completed in January 1999 the development of the Foxtrot offshore gas field and installed a platform and pipeline to shore.In March 1997,Apache and its partners signed a 10 year take or pay contract to supply approximately 168 Bcf of gas to a power

78、plant in Abidjan at 30 MMcf/d initially,rising to 50 MMcf/d in the third year.Gas deliveries are expected to commence in the second quarter of 1999.OIL AND NATURAL GAS MARKETING On October 27,1995,wholly owned affiliates of each of Apache,Oryx Energy Company and Parker&Parsley Petroleum Company(Park

79、er&Parsley)formed ProEnergy,a Delaware limited liability company.ProEnergy became fully operational on April 1,1996,and marketed substantially all of its members domestic natural gas pursuant to member gas purchase agreements having an initial term of 10 years,subject to early termination following

80、specified events.The price of gas purchased by ProEnergy from its members was based upon agreed to published indexes.Effective January 1,1998,Parker&Parsley withdrew from ProEnergy.As more fully described in 1998 Acquisitions and Dispositions above,in June 1998,Apache sold its interest in ProEnergy

81、to Cinergy and formed a strategic alliance with Cinergy to market substantially all the Companys natural gas production from North America.ProEnergy will continue to market Apaches North American natural gas production for 10 years,with an option to terminate after six years,under an amended and res

82、tated gas purchase agreement effective July 1,1998.During this period,Apache is generally obligated to deliver most of its North American gas production to Cinergy and,under certain circumstances,may have to make payments to Cinergy if certain gas throughput thresholds are not met.Separate from its

83、arrangements with Cinergy,Apache is also delivering natural gas under several long-term supply agreements with terms greater than one year.In 1998,Apache delivered an average of 35 MMcf/d under such contracts at an average price of$2.63 per Mcf.Apache assumed its own U.S.crude oil marketing operatio

84、ns in 1992.Most of Apaches U.S.crude oil production is sold through lease-level marketing to refiners,traders and transporters,generally under 30 day contracts that renew automatically until canceled.Oil produced from Canadian properties is sold to crude oil purchasers or refiners at market prices,w

85、hich depend on worldwide crude prices adjusted for transportation and crude quality.Natural gas produced from Canadian properties is sold to major aggregators of natural gas,gas marketers and direct users under long-term and short-term contracts.The oil and gas contracts provide for sales at specifi

86、ed prices,or at prices that are subject to change due to market conditions.The Company diversifies the markets for its Canadian gas production not presently committed to Cinergy by selling directly or indirectly to customers through aggregators and brokers in the United States and Canada.Apache tran

87、sports natural gas via the Companys firm transportation contracts to California(12 MMcf/d)and to the Province of Ontario,Canada(four MMcf/d)through end-users firm transportation contracts.Pursuant to an agreement entered into in 1994,the Company is also selling five MMcf/d of natural gas to the Herm

88、iston Cogeneration Project,located in the Pacific Northwest of the United States.In 1996,the Company entered into an agreement with Westcoast Gas Services,Inc.for the sale of 5,000 MMBtu/d for delivery in the United States for a 10 year term.In Australia,the Company entered into several gas sales co

89、ntracts during 1998,bringing its total to 16 contracts,with terms of four to 12 years,to deliver 311 Bcf of AELs gas from its Harriet and East Spar fields for mining,power generation,nickel refining,ammonia production and other industrial and domestic uses.Under these contacts AEL is required to del

90、iver its gas at contract rates of approximately 60 MMcf/day increasing to 92 MMcf/day by the year 2000,with take or pay provisions,net to AEL,of approximately 20 Bcf/year increasing to 23 Bcf/year by the year 2000.Apache operates both the Harriet and the East Spar Joint Ventures,holding a 60 percent

91、 interest in Harriet and a 45 percent interest in East Spar.AEL marketed all oil and natural gas liquids produced from its interests in the Harriet and East Spar fields during 1998 through a contract with Mitsui Oil(Asia)Pty.Ltd.Pricing under the contract in 1998 5 represented a fixed premium to the

92、 quoted market prices of Tapis crude oil,with payment made in U.S.dollars.In 1998,the weighted average realized price based on regional production was$13.07 per barrel.In January 1999,the Mitsui contract terminated and was replaced by a similar contract with Marubeni International Petroleum Company.

93、In Egypt,oil from the Qarun Block is delivered by pipeline to tanks owned by the Company and its partners in the Qarun Concession at the Dashour pumping station northeast of the Qarun Block or by truck to the Tebbin refinery south of Alexandria,Egypt.At the discretion of the operator of the pipeline

94、s,oil from the Qarun Block is put into the two 42-inch diameter SUMED pipelines,which transport significant quantities of Egyptian and other crude oil from the Gulf of Suez to Sidi Kherir,west of Alexandria,Egypt,on the Mediterranean Coast.All Qarun and Khalda crude oil is currently sold to EGPC.In

95、1996,the Company and its partners in the Khalda Block entered into a take or pay contract with EGPC,which obligates EGPC to pay for 75 percent of 200 MMcf/d of future production of gas from the Khalda Block.Sales of gas under the contract are expected to begin in May 1999 upon completion of a gas pi

96、peline from the Khalda Block.In late 1997,the same sellers entered into a supplement to the contract with EGPC to sell an additional 50 MMcf/d through a southern gas line being constructed by the Company and its partners from the Khalda Block to a point near the Qarun Block to tie into an existing g

97、as pipeline.OIL AND NATURAL GAS PRICES Natural gas prices remained volatile during 1998,with Apaches realized prices ranging from$2.08 per Mcf in July to$1.73 per Mcf in September.Fluctuations are largely due to market perceptions about natural gas supply and demand.Apaches average realized gas pric

98、e of$1.92 per Mcf for 1998 was down 16 percent from the prior-year average of$2.28 per Mcf,and its 1997 average realized natural gas price was 13 percent higher than the 1996 average price of$2.02 per Mcf.As a result of minimum price contracts which escalate at an average of 80 percent of the Austra

99、lian consumer price index,AELs natural gas production in Western Australia is not subject to the same degree of price volatility as Apaches U.S.and Canadian gas production;however,natural gas sales under such Australian minimum price contracts represent less than two percent of the Companys total na

100、tural gas sales at the end of 1998.Total Australian gas sales in 1998,including long-term contracts and spot sales averaged$1.51 per Mcf,down 15 percent from the 1997 average of$1.78 per Mcf due to devaluation of the Australian dollar.In Egypt,all oil production from the Khalda and Qarun Blocks is c

101、urrently sold to EGPC on a spot basis at a Western Desert price,which is applied to virtually all production from the area and is announced periodically by EGPC.In 1998,the average price was$12.57 per barrel.Discussions with EGPC regarding the possibility of exporting Qarun oil production are contin

102、uing.Once gas sales from the Khalda Block commence,the gas is expected to be sold for a price which,on a Btu basis,is equivalent to 85 percent of the price of Suez Blend crude oil,FOB Mediterranean.Oil prices remained subject to unpredictable political and economic forces during 1998 and experienced

103、 fluctuations similar to those seen in natural gas prices for the year,but showing a general downward trend.Apache believes that oil prices will continue to fluctuate in response to changes in the policies of the Organization of Petroleum Exporting Countries(OPEC),demand from Asian countries,events

104、in the Middle East and other factors associated with the world political and economic environment.As a result of the many uncertainties associated with levels of production maintained by OPEC and other oil producing countries,the availabilities of worldwide energy supplies and the competitive relati

105、onships and consumer perceptions of various energy sources,the Company is unable to predict what changes will occur in crude oil and natural gas prices.In 1998,Apaches realized worldwide crude oil price ranged from$15.11 per barrel in January to$9.42 per barrel in December.The average crude oil pric

106、e of$12.66 per barrel in 1998 was down 34 percent from the average price of$19.20 per barrel in 1997,and 39 percent lower than the average price of$20.84 per barrel in 1996.The Companys average crude oil price for its Australian production was$13.07 per barrel in 1998,36 percent less than the averag

107、e price in 1997.6 From time to time,Apache buys or sells contracts to hedge a limited portion of its future oil and gas production against exposure to spot market price changes.See Note 9 to the Companys consolidated financial statements under Item 8 below.The Companys business has been and will con

108、tinue to be affected by future worldwide changes in oil and gas prices and the relationship between the prices of oil and gas.No assurance can be given as to the trend in,or level of,future oil and gas prices.FULL COST CEILING TEST Under the full cost accounting rules of the Securities and Exchange

109、Commission(SEC),the Company reviews the carrying value of its proved oil and gas properties each quarter on a country-by-country basis.Under these rules,capitalized costs of proved oil and gas properties,net of accumulated depreciation,depletion and amortization and deferred income taxes,may not exc

110、eed the present value of estimated future net cash flows from proved oil and gas reserves,discounted at 10 percent,plus the lower of cost or fair value of unproved properties included in the costs being amortized,net of related tax effects.These rules generally require pricing future oil and gas pro

111、duction at the unescalated oil and gas prices in effect at the end of each fiscal quarter and require a write-down if the ceiling is exceeded,even if prices declined for only a short period of time.The Company recorded a$243.2 million pre-tax($158.1 million net of tax)non-cash write-down of the carr

112、ying value of the Companys U.S.proved oil and gas properties as of December 31,1998,due to these ceiling test limitations.If oil and gas prices deteriorate from the Companys year-end realized prices,it is likely that additional write-downs will occur in 1999.Write-downs required by these rules do no

113、t impact cash flow from operating activities.EFFECT OF VOLATILE PRICES The Company continually analyzes forecasts and updates its estimates of energy prices for its internal use in planning,budgeting,and estimating and valuing reserves.The Companys future financial condition and results of operation

114、s will depend upon the prices received for the Companys oil and natural gas production and the costs of acquiring,finding,developing and producing reserves.Prices for oil and natural gas are subject to fluctuations in response to relatively minor changes in supply,market uncertainty and a variety of

115、 additional factors that are beyond the control of the Company.These factors include worldwide political instability(especially in the Middle East and other oil-producing regions),the foreign supply of oil and gas,the price of foreign imports,the level of drilling activity,the level of consumer prod

116、uct demand,government regulations and taxes,the price and availability of alternative fuels and the overall economic environment.A substantial or extended decline in oil and gas prices would have a material adverse effect on the Companys financial position,results of operations,quantities of oil and

117、 gas that may be economically produced and access to capital.In addition,the sale of the Companys oil and gas production depends on a number of factors beyond the Companys control,including the availability and capacity of transportation and processing facilities.Oil and natural gas prices have hist

118、orically been and are likely to continue to be volatile.Such volatility makes it difficult to estimate with precision the value of producing properties in acquisitions and to budget and project the return on exploration and development projects involving the Companys oil and gas properties.In additi

119、on,unusually volatile prices often disrupt the market for oil and gas properties,as buyers and sellers have more difficulty agreeing on the purchase price of properties.RESERVES;RATES OF PRODUCTION;DEVELOPMENT EXPENDITURES;CASH FLOW There are numerous uncertainties inherent in estimating quantities

120、of oil and natural gas reserves of any category and in projecting future rates of production and timing of development expenditures,which underlie such reserve estimates,including many factors beyond the control of the Company.Reserve data represents only estimates.In addition,the estimates of futur

121、e net cash flows from proved reserves of the Company and the present value thereof are based upon various assumptions about future production levels,prices and costs that may prove to be incorrect over time(see below).Any significant variance from the assumptions could result in the actual quantity

122、of the Companys reserves and future net cash flows therefrom being materially different from the estimates.In addition,the Companys estimated reserves may be subject to downward or 7 upward revision based upon production history,results of future exploration and development,prevailing oil and gas pr

123、ices,operating and development costs,and other factors.The rate of production from oil and gas properties declines as reserves are depleted.Except to the extent that the Company acquires additional properties containing proved reserves,conducts successful exploration and development activities or,th

124、rough engineering studies,identifies additional behind-pipe zones or secondary recovery reserves,the proved reserves of the Company will decline materially as reserves are produced.Future oil and gas production is,therefore,highly dependent upon the Companys level of success in acquiring or finding

125、additional reserves.GOVERNMENT REGULATION OF THE OIL AND GAS INDUSTRY The Companys exploration,production and marketing operations are regulated extensively at the federal,state and local levels,as well as by other countries in which the Company does business.Oil and gas exploration,development and

126、production activities are subject to various laws and regulations governing a wide variety of matters.For example,hydrocarbon-producing states have statutes or regulations addressing conservation practices and the protection of correlative rights,and such regulations may affect Apaches operations an

127、d limit the quantity of hydrocarbons Apache may produce and sell.Other regulated matters include marketing,pricing,transportation,and valuation of royalty payments.At the U.S.federal level,the Federal Energy Regulatory Commission(FERC)regulates interstate transportation of natural gas under the Natu

128、ral Gas Act.Effective January 1,1993,the Natural Gas Wellhead Decontrol Act deregulated natural gas prices for all first sales of natural gas,which includes all sales by Apache of its own production.As a result,all sales of the Companys natural gas produced in the U.S.may be sold at market prices,un

129、less otherwise committed by contract.Apaches gas sales are affected by regulation of intrastate and interstate gas transportation.In an attempt to promote competition,the FERC has issued a series of orders,which have altered significantly the marketing and transportation of natural gas.The effect of

130、 these orders has been to enable the Company to market its natural gas production to purchasers other than the interstate pipelines located in the vicinity of its producing properties.The Company believes that these changes have generally improved the Companys access to transportation.To date,Apache

131、 has not experienced any material adverse effect on its gas marketing activities as a result of these FERC orders;however,the Company cannot predict what new regulations may be adopted by the FERC and other regulatory authorities,or what effect subsequent regulations may have on its future gas marke

132、ting activities.ENVIRONMENTAL MATTERS Apache,as an owner or lessee and operator of oil and gas properties,is subject to various federal,provincial,state,local and foreign country laws and regulations relating to discharge of materials into,and protection of,the environment.These laws and regulations

133、 may,among other things,impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations,subject the lessee to liability for pollution damages,and require suspension or cessation of operations in affected areas.Apache maintains insurance coverage

134、,which it believes is customary in the industry,although it is not fully insured against all environmental risks.The Company is not aware of any environmental claims existing as of December 31,1998,which would have a material impact upon the Companys financial position or results of operations.Apach

135、e has made and will continue to make expenditures in its efforts to comply with these requirements,which it believes are necessary business costs in the oil and gas industry.The Company has established policies for continuing compliance with environmental laws and regulations,including regulations a

136、pplicable to its operations in Canada,Australia and other countries.Apache also has established operational procedures and training programs designed to minimize the environmental impact of its field facilities.The costs incurred by these policies and procedures are inextricably connected to normal

137、operating expenses such that the Company is unable to separate the expenses related to environmental matters;however,the Company does not believe any such additional expenses are material to its financial position or results of operations.8 Although environmental requirements have a substantial impa

138、ct upon the energy industry,generally these requirements do not appear to affect Apache any differently,or to any greater or lesser extent,than other companies in the industry.Apache does not believe that compliance with federal,state,local or foreign country provisions regulating the discharge of m

139、aterials into the environment,or otherwise relating to the protection of the environment,will have a material adverse effect upon the capital expenditures,earnings or competitive position of the Company or its subsidiaries;however,there is no assurance that changes in or additions to laws or regulat

140、ions regarding the protection of the environment will not have such an impact.COMPETITION The oil and gas industry is highly competitive.Because oil and gas are fungible commodities,the principal form of competition with respect to product sales is price competition.Apache strives to maintain the lo

141、west finding and production costs possible to maximize profits.As an independent oil and gas company,Apache frequently competes for reserve acquisitions,exploration leases,licenses,concessions and marketing agreements against companies with financial and other resources substantially larger than Apa

142、che possesses.Moreover,many competitors have established strategic long-term positions and maintain strong governmental relationships in countries in which the Company may seek new entry.Apache expects this high degree of competition to continue.INSURANCE Exploration for and production of oil and na

143、tural gas can be hazardous,involving unforeseen occurrences such as blowouts,cratering,fires and loss of well control,which can result in damage to or destruction of wells or production facilities,injury to persons,loss of life,or damage to property or the environment.The Company maintains insurance

144、 against certain losses or liabilities arising from its operations in accordance with customary industry practices and in amounts that management believes to be prudent;however,insurance is not available to the Company against all operational risks.HEDGING To the extent that the Company engages in h

145、edging activities,it may be prevented from realizing the benefits of price increases above the levels of the hedges.In addition,the Company is subject to basis risk when it engages in hedging transactions,particularly where transportation constraints restrict the Companys ability to deliver oil and

146、gas volumes to the delivery point to which the hedging transaction is indexed.ACQUISITION RISKS The Company from time to time acquires oil and gas properties.Although the Company performs a review of the acquired properties that it believes is consistent with industry practices,such reviews are inhe

147、rently incomplete.It generally is not feasible to review in depth every individual property involved in each acquisition.Ordinarily the Company will focus its review efforts on the higher-value properties and will sample the remainder.However,even a detailed review of records and properties may not

148、necessarily reveal existing or potential problems,nor will it permit a buyer to become sufficiently familiar with the properties to assess fully their deficiencies and potential.Inspections may not always be performed on every well,and environmental problems,such as ground water contamination,are no

149、t necessarily observable even when an inspection is undertaken.Even when problems are identified,the Company often assumes certain environmental and other risks and liabilities in connection with acquired properties.There are numerous uncertainties inherent in estimating quantities of proved oil and

150、 gas reserves and actual future production rates and associated costs with respect to acquired properties,and actual results may vary substantially from those assumed in the estimates(see above).In addition,there can be no assurance that acquisitions will not have an adverse effect upon the Companys

151、 operating results,particularly during the periods in which the operations of acquired businesses are being integrated into the Companys ongoing operations.9 GENERAL ECONOMIC CONDITIONS Virtually all of the Companys operations are subject to the risks and uncertainties of adverse changes in general

152、economic conditions(domestically,in specific regions of the United States and Canada,and internationally),the outcome of pending and/or potential legal or regulatory proceedings,changes in environmental,tax,labor and other laws and regulations to which the Company is subject,and the condition of the

153、 capital markets utilized by the Company to finance its operations.RISKS OF NON-U.S.OPERATIONS The Companys non-U.S.oil and natural gas exploration,development and production activities are subject to political and economic uncertainties(including but not limited to changes,sometimes frequent or mar

154、ked,in governmental energy policies or the personnel administering them),expropriation of property,cancellation or modification of contract rights,foreign exchange restrictions,currency fluctuations,royalty and tax increases and other risks arising out of foreign governmental sovereignty over the ar

155、eas in which the Companys operations are conducted,as well as risks of loss due to civil strife,acts of war,guerrilla activities and insurrection.These risks may be higher in the developing countries in which the Company conducts such activities.Consequently,the companys non-U.S.exploration,developm

156、ent and production activities may be substantially affected by factors beyond the Companys control,any of which could materially adversely affect the Companys financial position or results of operations.Furthermore,in the event of a dispute arising from non-U.S.operations,the Company may be subject

157、to the exclusive jurisdiction of courts outside the U.S.or may not be successful in subjecting non-U.S.persons to the jurisdiction of the courts in the U.S.,which could adversely affect the outcome of such dispute.EMPLOYEES On December 31,1998,Apache had 1,281 employees.OFFICES Apaches principal exe

158、cutive offices are located at One Post Oak Central,2000 Post Oak Boulevard,Suite 100,Houston,Texas 77056-4400.At year-end 1998,the Company maintained regional exploration and production offices in Tulsa,Oklahoma;Houston,Texas;Calgary,Alberta;Cairo,Egypt;Perth,Western Australia;Beijing,China;Abidjan,

159、Cote d Ivoire;and Warsaw,Poland.10 ITEM 2.PROPERTIES OIL AND GAS EXPLORATION AND PRODUCTION PROPERTIES AND RESERVES Acreage The undeveloped and developed acreage including both domestic leases and international production and exploration rights that Apache held as of December 31,1998,are as follows:

160、11 UNDEVELOPED ACREAGE DEVELOPED ACREAGE -GROSS NET GROSS NET ACRES ACRES ACRES ACRES -GULF Louisiana.180,047 102,800 267,808 142,541 Texas.145,529 64,313 322,799 172,892 -Total.325,576 167,113 590,607 315,433 -MIDCONTINENT Arkansas.3,983 3,046 4,625 3,354 Kansas.200 93 -Louisiana.11,809 9,535 48,82

161、0 33,823 Michigan.5,052 4,022 -Oklahoma.138,613 51,650 492,790 192,515 Pennsylvania.-796 38 Texas.70,821 44,906 136,998 70,708 -Total.230,478 113,252 684,029 300,438 -WESTERN Alaska.14,262 -Colorado.13,974 12,228 10,979 10,715 Illinois.140 56 -New Mexico.89,746 47,905 101,780 53,475 Ohio.21 11 -Texa

162、s.131,081 62,099 253,626 183,116 Utah.140 35 60 15 Wyoming.60,040 52,968 1,160 291 -Total.309,404 175,302 367,605 247,612 -Total United States.865,458 455,667 1,642,241 863,483 -INTERNATIONAL Australia.3,269,200 1,421,290 425,280 226,720 Canada.190,632 137,537 303,016 235,183 China.1,554,930 777,510

163、 5,911 1,448 Egypt.26,197,294 12,811,058 842,863 468,143 Ivory Coast.157,258 62,903 37,312 8,955 Poland.12,038,676 7,494,122 -Total International.43,407,990 22,704,420 1,614,382 940,449 -Total Company.44,273,448 23,160,087 3,256,623 1,803,932 =Productive Oil and Gas Wells The number of productive oi

164、l and gas wells,operated and non-operated,in which Apache had an interest as of December 31,1998,is set forth below.Gross Wells Drilled The following table sets forth the number of gross exploratory and gross development wells drilled in the last three fiscal years in which the Company participated.

165、The number of wells drilled refers to the number of wells commenced at any time during the respective fiscal year.Productive wells are either producing wells or wells capable of commercial production.At December 31,1998,the Company was participating in 14 wells in the U.S.,14 Canadian wells,14 Egypt

166、ian wells,three Australian wells and two Polish wells in the process of drilling.12 GAS OIL -GROSS NET GROSS NET -Midcontinent.1,745 644 515 141 Western.260 143 3,635 1,855 Gulf.405 260 560 394 Canada.680 425 367 130 Egypt.21 8 137 71 Australia.7 4 20 11 -Total.3,118 1,484 5,234 2,602 =EXPLORATORY D

167、EVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL -1998 United States.20 16 36 163 34 197 Canada.17 12 29 30 7 37 Egypt.11 24 35 27 5 32 Australia.7 8 15 -Other International.-1 1 1 -1 -Total.55 61 116 221 46 267 =1997 United States.27 25 52 234 32 266 Canada.19 14 33 41 7 48 Egypt.7 19 26 23

168、4 27 Australia.3 6 9 6 1 7 Other International.1 2 3 1 -1 -Total.57 66 123 305 44 349 =1996 United States.28 33 61 201 31 232 Canada.23 25 48 27 2 29 Egypt.7 4 11 12 -12 Australia.4 6 10 1 1 2 Other International.-1 1 -Total.62 69 131 241 34 275 =Net Wells Drilled The following table sets forth,for

169、each of the last three fiscal years,the number of net exploratory and net developmental wells drilled by Apache.Production and Pricing Data The following table describes,for each of the last three fiscal years,oil,natural gas liquids(NGL)and gas production for the Company,average production costs(ex

170、cluding severance taxes)and average sales prices.Estimated Reserves and Reserve Value Information The following information relating to estimated reserve quantities,reserve values and discounted future net revenues is derived from,and qualified in its entirety by reference to,the more complete reser

171、ve and revenue information and assumptions included in the Companys Supplemental Oil and Gas Disclosures under Item 8 below.The Companys estimates of proved reserve quantities of its U.S.,Canadian and international properties have been subject to review by Ryder Scott Company Petroleum Engineers.In

172、1996,the proved reserve quantities of certain of the Companys Egyptian properties were reviewed by Netherland,Sewell&Associates,Inc.There are numerous uncertainties inherent in estimating quantities of proved reserves and projecting future rates of production and timing of development expenditures.T

173、he following reserve information represents estimates only and should not be construed as being exact.13 EXPLORATORY DEVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL -1998 United States.9.9 11.1 21.0 64.0 18.8 82.8 Canada.16.2 11.0 27.2 28.3 6.1 34.4 Egypt.5.6 13.5 19.1 11.9 2.8 14.7 Austral

174、ia.3.5 3.4 6.9 -Other International.-.2 .2 .2 -.2 -Total.35.2 39.2 74.4 104.4 27.7 132.1 =1997 United States.11.5 11.9 23.4 107.5 19.0 126.5 Canada.14.5 10.1 24.6 29.0 6.0 35.0 Egypt.3.7 12.3 16.0 14.4 2.0 16.4 Australia.1.0 1.0 2.0 1.8 .2 2.0 Other International.5 1.4 1.9 .5 -.5 -Total.31.2 36.7 67

175、.9 153.2 27.2 180.4 =1996 United States.17.2 22.8 40.0 77.9 19.1 97.0 Canada.18.8 21.5 40.3 24.1 1.4 25.5 Egypt.3.2 3.0 6.2 9.0 -9.0 Australia.1.1 1.5 2.6 .2 .1 .3 Other International.-.4 .4 -Total.40.3 49.2 89.5 111.2 20.6 131.8 =PRODUCTION AVERAGE SALES PRICE -AVERAGE -OIL NGL GAS PRODUCTION OIL N

176、GL GAS YEAR ENDED DECEMBER 31,(MBBLS)(MBBLS)(MMCF)COST PER BOE (PER BBL)(PER BBL)(PER MCF)-1998.26,611 1,052 215,389$2.88$12.66$7.94$1.92 1997.24,291 843 222,237 3.07 19.20 14.08 2.28 1996.19,465 713 205,305 3.43 20.84 16.41 2.02 The following table sets forth the Companys estimated proved developed

177、 and undeveloped reserves as of December 31,1998,1997 and 1996:The following table sets forth the estimated future value of all the Companys proved reserves,and proved developed reserves,as of December 31,1998,1997 and 1996.Future reserve values are based on year-end prices except in those instances

178、 where the sale of gas and oil is covered by contract terms providing for determinable escalations.Operating costs,production and ad valorem taxes,and future development costs are based on current costs with no escalations.At December 31,1998,estimated future net revenues expected to be received fro

179、m all the Companys proved reserves and proved developed reserves were as follows:The Company believes that no major discovery or other favorable or adverse event has occurred since December 31,1998,which would cause a significant change in the estimated proved reserves reported herein.The estimates

180、above are based on year-end pricing in accordance with the SEC guidelines and do not reflect current prices.Since January 1,1999,no oil or gas reserve information has been filed with,or included in any report to,any U.S.authority or agency other than the SEC and the Energy Information Administration

181、 14 OIL,NGL NATURAL AND GAS CONDENSATE (BCF)(MMBBLS)-1998 Developed.1,450.1 178.0 Undeveloped.722.1 73.0 -Total.2,172.2 251.0 =1997 Developed.1,554.3 203.1 Undeveloped.317.5 70.7 -Total.1,871.8 273.8 =1996 Developed.1,435.3 183.2 Undeveloped.190.0 52.1 -Total.1,625.3 235.3 =PRESENT VALUE OF ESTIMATE

182、D FUTURE NET REVENUES ESTIMATED FUTURE BEFORE INCOME TAXES NET REVENUES (DISCOUNTED AT 10 PERCENT)-PROVED PROVED DECEMBER 31,PROVED DEVELOPED PROVED DEVELOPED-(IN THOUSANDS)1998.$3,994,612$2,793,698$2,395,888$1,764,887 1997.5,347,892 4,301,768 3,272,618 2,728,747 1996.7,936,924 6,713,252 4,568,475 4

183、,041,065 PROVED DECEMBER 31,PROVED DEVELOPED-(IN THOUSANDS)1999.$394,777$441,946 2000.431,644 400,389 2001.446,532 305,005 Thereafter.2,721,659 1,646,358 -Total.$3,994,612$2,793,698 =(EIA).The basis of reporting reserves to the EIA for the Companys reserves is identical to that set forth in the fore

184、going table.Title to Interests The Company believes that its title to the various interests set forth above is satisfactory and consistent with the standards generally accepted in the oil and gas industry,subject only to immaterial exceptions which do not detract substantially from the value of the

185、interests or materially interfere with their use in the Companys operations.The interests owned by the Company may be subject to one or more royalty,overriding royalty and other outstanding interests customary in the industry.The interests may additionally be subject to obligations or duties under a

186、pplicable laws,ordinances,rules,regulations and orders of arbitral or governmental authorities.In addition,the interests may be subject to burdens such as net profits interests,liens incident to operating agreements and current taxes,development obligations under oil and gas leases and other encumbr

187、ances,easements and restrictions,none of which detract substantially from the value of the interests or materially interfere with their use in the Companys operations.ITEM 3.LEGAL PROCEEDINGS The information set forth under the caption Litigation in Note 10 to the Companys financial statements under

188、 Item 8 below is incorporated herein by reference.ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted for a vote of security holders during the fourth quarter of 1998.PART II ITEM 5.MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Apaches comm

189、on stock,par value$1.25 per share,is traded on the New York Stock Exchange and the Chicago Stock Exchange under the symbol APA.The table below provides certain information regarding Apache common stock for 1998 and 1997.Prices shown are from the New York Stock Exchange Composite Transactions Reporti

190、ng System.The closing price per share of Apache common stock,as reported on the New York Stock Exchange Composite Transactions Reporting System for February 26,1999,was$19.9375.At December 31,1998,there were 97,769,122 shares of Apache common stock outstanding,held by approximately 10,000 shareholde

191、rs of record and 45,000 beneficial owners.The Company has paid cash dividends on its common stock for 128 consecutive quarters through December 31,1998,and expects to continue the payment of dividends at current levels,although future dividend payments will depend upon the Companys level of earnings

192、,financial requirements and other relevant factors.In December 1995,the Company declared a dividend of one right(a Right)for each share of Apache common stock outstanding on January 31,1996.Each Right entitles the registered holder to purchase from the Company one ten-thousandth(1/10,000)of a share

193、of Series A Preferred Stock at a price of$100 per one ten-thousandth of a share,subject to adjustment.The Rights are exercisable 10 calendar days following a 15 1998 1997 -PRICE RANGE PRICE RANGE -DIVIDENDS -DIVIDENDS HIGH LOW PER SHARE HIGH LOW PER SHARE -First Quarter.$38 3/4$31 3/16$.07$39 3/8$31

194、 1/4$.07 Second Quarter.38 1/8 30 3/8$.07 35 5/8 30 1/8$.07 Third Quarter.32 3/8 22 1/2$.07 42 7/8 32 1/16$.07 Fourth Quarter.29 5/16 21 3/8$.07 45 1/16 32 11/16$.07 public announcement that certain persons or groups have acquired 20 percent or more of the outstanding shares of Apache common stock o

195、r 10 business days following commencement of an offer for 30 percent or more of the outstanding shares of Apache common stock.In addition,if the Company engages in certain business combinations or a 20 percent shareholder engages in certain transactions with the Company,the Rights become exercisable

196、 for Apache common stock or common stock of the corporation acquiring the Company(as the case may be)at 50 percent of the then-market price.Any Rights that are or were beneficially owned by a person who has acquired 20 percent or more of the outstanding shares of Apache common stock and who engages

197、in certain transactions or realizes the benefits of certain transactions with the Company will become void.The Company may redeem the Rights at$.01 per Right at any time until 10 business days after public announcement that a person has acquired 20 percent or more of the outstanding shares of Apache

198、 common stock.The Rights will expire on January 31,2006,unless earlier redeemed by the Company.Unless the Rights have been previously redeemed,all shares of Apache common stock issued by the Company after January 31,1996 will include Rights.Unless and until the Rights become exercisable,they will be

199、 transferred with and only with the shares of Apache common stock.In August 1998,the Company issued 100,000 shares of 5.68 percent Series B Cumulative Preferred Stock(the Series B Preferred Stock)in the form of one million depositary shares,each representing one-tenth(1/10)of a share of Series B Pre

200、ferred Stock.Neither the shares of Series B Preferred Stock nor the depositary shares are traded on any stock exchange.These shares are not convertible into common equity.16 ITEM 6.SELECTED FINANCIAL DATA The following table sets forth selected financial data of the Company and its consolidated subs

201、idiaries for each of the years in the five-year period ended December 31,1998,which information has been derived from the Companys audited financial statements.Apaches previously reported data for 1994 has been restated to reflect the merger with DEKALB in May 1995 under the pooling of interests met

202、hod of accounting.This information should be read in connection with,and is qualified in its entirety by,the more detailed information in the Companys financial statements under Item 8 below.For a discussion of significant acquisitions,reference is made to Item 7,Managements Discussion and Analysis

203、of Financial Condition and Results of Operations and to Note 2 to the Companys consolidated financial statements under Item 8 below.(1)Includes the results of the acquisitions of certain subsidiaries and oil and gas properties from Novus after December 18,1998.(2)Includes financial data after Novemb

204、er 20,1997,relating to the acquisition from Mobil of three companies owning interests in certain oil and gas properties and production facilities offshore Western Australia(the Ampolex Group Transaction.)(3)Includes financial data after May 20,1996,for Apache PHN Company,Inc.(Phoenix,formerly known

205、as The Phoenix Resource Companies,Inc.)(4)Includes the results of the acquisitions of certain oil and gas properties from Texaco Exploration and Production,Inc.(Texaco)and Aquila Energy Resources Corporation(Aquila)after March 1,1995 and September 1995,respectively,and the sale of a substantial port

206、ion of the Companys Rocky Mountain properties in September 1995.(5)No cash dividends were paid on outstanding DEKALB common stock in 1995 and 1994.17 AS OF OR FOR THE YEAR ENDED DECEMBER 31,-1998(1)1997(2)1996(3)1995(4)1994 -(IN THOUSANDS,EXCEPT PER SHARE AMOUNTS)INCOME STATEMENT DATA Total revenues

207、.$875,715$1,176,273$977,151$750,702$592,626 Net income(loss).(129,387)154,896 121,427 20,207 45,583 Income(loss)attributable to common stock.(131,391)154,896 121,427 20,207 45,583 Net income(loss)per common share Basic.(1.34)1.71 1.42 .28 .65 Diluted.(1.34)1.65 1.38 .28 .65 Cash dividends per common

208、 share(5).28 .28 .28 .28 .28 BALANCE SHEET DATA Working capital(deficit).$(78,804)$4,546$(41,501)$(22,013)$(3,203)Total assets.3,996,062 4,138,633 3,432,430 2,681,450 2,036,627 Long-term debt.1,343,258 1,501,380 1,235,706 1,072,076 719,033 Shareholders equity.1,801,833 1,729,177 1,518,516 1,091,805

209、891,087 Common shares outstanding at end of year.97,769 93,305 90,059 77,379 69,666 ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW In anticipation of lower commodity prices,Apache entered 1998 with a primary objective being to strengthen its bala

210、nce sheet in order to take advantage of lower cost drilling and acquisition opportunities that accompany cyclical downturns in product prices.To accomplish this,high cost properties were sold,drilling capital was curtailed,subordinated debentures were converted into common equity,and non-convertible

211、 preferred stock and public debt were issued.As a result of these efforts during 1998,Apache reduced debt by$160 million,from 47 percent to 43 percent of capitalization;the ratio would have been reduced to 41 percent absent the non-cash,full-cost ceiling write-down.Debt maturities were also lengthen

212、ed to an average of 26 years with approximately three percent of Apaches total debt due over the next three years.As a result,Apache is in its strongest financial position ever to take advantage of opportunities brought about by the current industry downturn.Apaches results of operations and financi

213、al position for 1998 were also significantly impacted by the following factors:Additional Depreciation,Depletion and Amortization(DD&A)Expense-Low oil and gas prices resulted in a non-cash full-cost ceiling write-down of$158.1 million after-tax($243.2 million pre-tax).There were no such charges in 1

214、997 and 1996.Commodity Prices-Apaches average realized oil price decreased$6.54 per barrel from$19.20 per barrel in 1997 to$12.66 per barrel in 1998,reducing revenues by$158.9 million.The average realized price for natural gas decreased$.36 per Mcf from$2.28 per Mcf in 1997 to$1.92 per Mcf in 1998,n

215、egatively impacting revenues by$78.6 million.RESULTS OF OPERATIONS Apache reported a 1998 loss attributable to common stock of$131.4 million as opposed to 1997 income attributable to common stock of$154.9 million.The 1998 loss resulted from a full-cost ceiling write-down at year end.Results for 1998

216、 were further hampered by sharp declines in oil and gas prices.Basic net income(loss)per common share was$(1.34)for 1998,as compared to$1.71 in 1997.Income attributable to common stock increased$33.5 million in 1997 from$121.4 million in 1996.Basic net income per common share increased 20 percent in

217、 1997 from$1.42 in 1996.Diluted net income per common share was$1.65 for 1997,20 percent above 1996.The increase from 1996 to 1997 was primarily due to higher oil and gas production,higher natural gas prices and lower operating costs per unit of production.Revenues declined$300.6 million in 1998,dri

218、ven by a 23 percent decrease in oil and gas production revenues.The decrease in oil and gas production revenues resulted from a 34 percent decrease in the average realized oil price,a 16 percent decrease in the average realized price for natural gas and a three percent decrease in gas production.Cru

219、de oil,including natural gas liquids,contributed 45 percent and natural gas contributed 55 percent of oil and gas production revenues during 1998.Revenues increased 20 percent in 1997 to$1.2 billion from$977.2 million in 1996.In 1997,crude oil and natural gas liquids contributed 49 percent and natur

220、al gas contributed 51 percent of oil and gas production revenues.18 The table below presents,for the years indicated,the revenues,production and average prices received from sales of natural gas,oil and natural gas liquids.Natural gas revenues decreased by 18 percent from 1997 to 1998 due to lower n

221、atural gas prices and production.The average realized gas price received in 1998 was$1.92 per Mcf,16 percent lower than 1997,negatively affecting revenue by$78.6 million.The Company periodically engages in hedging activities,including fixed-price physical contracts and financial contracts.Apache rea

222、lized gains from open hedging positions favorably impacting the gas price by$.01 per Mcf in 1998.Gains under long-term fixed-price physical contracts increased the gas price by$.05 per Mcf in 1998.Prices declined in the United States due to 19 YEAR ENDED DECEMBER 31,-1998 1997 1996 -Revenues(in thou

223、sands):Natural gas.$413,870$505,604$415,736 Oil.336,813 466,291 405,724 Natural gas liquids.8,355 11,878 11,704 -Total.$759,038$983,773$833,164 =Natural Gas Volume-Mcf per day:United States.432,059 492,594 472,171 Canada.105,871 89,699 74,598 Egypt.1,554 563 302 Australia.50,624 26,016 13,869 -Total

224、.590,108 608,872 560,940 =Average Natural Gas price-Per Mcf:United States.$2.11$2.47$2.17 Canada.1.36 1.33 1.09 Egypt.1.91 2.94 3.21 Australia.1.51 1.78 1.96 Total.1.92 2.28 2.02 Oil Volume-Barrels per day:United States.34,067 40,638 40,600 Canada.2,090 2,120 1,969 Egypt.27,911 19,372 8,295 Australi

225、a.8,838 4,417 2,318 -Total.72,906 66,547 53,182 =Average Oil Price-Per barrel:United States.$12.63$19.31$20.67 Canada.12.55 19.27 20.84 Egypt.12.57 18.65 21.29 Australia.13.07 20.51 22.33 Total.12.66 19.20 20.84 NGL Volume-Barrels per day:United States.2,267 1,684 1,308 Canada.616 627 641 -Total.2,8

226、83 2,311 1,949 =Average NGL Price-Per barrel:United States.$8.38$14.50$17.23 Canada.6.32 12.98 14.73 Total.7.94 14.08 16.41 unfavorable market conditions.Natural gas prices in Australia declined 15 percent from 1997 resulting from the devaluation of the Australian dollar.Natural gas production for t

227、he United States decreased 12 percent from 1997 to 1998 due to the impact of property sales in the Gulf and Midcontinent regions,tropical storms in the Gulf of Mexico and natural depletion.In Australia,natural gas production increased 95 percent driven by a full year of incremental production from p

228、roperties acquired in the year-end 1997 Ampolex Group Transaction.The 18 percent uplift in Canadian production resulted from development activity and Alberta royalty recoupments received for 1998.Alberta allows reduction in royalty for costs to build processing and transportation facilities.Natural

229、gas revenues increased 22 percent from 1996 to 1997.Average natural gas prices were$.26 per Mcf,or 13 percent,higher in 1997 than 1996.The Companys net hedging activity,including fixed-price physical contracts and financial contracts,had no impact on gas prices in 1997 and reduced prices by$.09 per

230、Mcf in 1996.Natural gas production increased nine percent from 1996 to 1997 from acquisitions and drilling activity.The Companys crude oil sales totaled$336.8 million in 1998,a 28 percent decrease from 1997 due to lower average realized oil prices,which were partially offset by production increases.

231、On a worldwide basis,average oil prices decreased 34 percent to$12.66 per barrel negatively impacting oil sales by$158.9 million.Oil production increased 6,359 barrels per day(approximately 10 percent),in 1998 due to increases in Egypt and Australia.Australian oil production increased 4,421 barrels

232、per day over 1997 with additional production from the Ampolex Group Transaction and initial sales from the Stag field.Egyptian oil production increased 8,539 barrels per day,or 44 percent,as a result of the price-driven dynamics of certain production sharing contracts and to a lesser extent,drilling

233、 and development activity.U.S.oil production decreased by 6,571 barrels per day,or 16 percent,primarily due to marginal property sales in the first half of 1998 and natural reservoir depletion of mature fields.Oil revenues increased 15 percent from 1996 to 1997.Egyptian oil production more than doub

234、led in 1997 due to development activity and the first full year of production from the Companys Egyptian properties acquired in 1996.Australian oil production increased 90 percent from 1996 to 1997 primarily due to first production at the Agincourt field.These production increases were partially off

235、set by an eight percent decrease in average oil prices received during 1997.Natural gas liquid revenues decreased 30 percent from 1997.Natural gas liquid production increased 572 barrels per day,or 25 percent,while natural gas liquid prices declined by$6.14 per barrel,or 44 percent due to deteriorat

236、ing market conditions.Natural gas liquid revenues were slightly higher in 1997 than in 1996.Natural gas liquid production increased 19 percent from 1996 to 1997,which was offset by a 14 percent decrease in average prices.Other Revenues and Operating Expenses Gas gathering,processing and marketing re

237、venues decreased 40 percent to$117.4 million in 1998 from 1997.Lower gas prices in 1998 contributed to the decrease.Gas gathering,processing and marketing costs decreased by 41 percent to$114.5 million resulting in a slight increase to 1998 margins.During 1997,gas gathering,processing and marketing

238、revenues increased 38 percent to$197.0 million.Lower margins were realized in 1997 as compared to 1996.Equity in loss of affiliates represents Apaches share of ProEnergy losses.Equity in loss of affiliates was$1.6 million,$1.7 million and$.3 million in 1998,1997 and 1996,respectively.Apache sold its

239、 57 percent interest in ProEnergy in June 1998.Recurring DD&A expense increased marginally to$382.8 million in 1998 from$381.4 million in 1997.On an equivalent barrel basis,recurring full cost DD&A expense decreased$.11 per boe,from$5.77 per boe in 1997 to$5.66 per boe in 1998.The Companys recurring

240、 DD&A expense increased to$381.4 million in 1997 from$315.1 million in 1996.On an equivalent barrel basis,recurring full cost DD&A expense increased$.33 per boe,from$5.44 per boe in 1996 to$5.77 per boe in 1997.Reserve revisions due to price declines and an increased cost environment in North Americ

241、a negatively impacted the 1997 rates.20 Apache limits,on a country-by-country basis,the capitalized cost of proved oil and gas properties,net of accumulated DD&A and deferred income taxes,to estimated future net cash flows from proved oil and gas reserves discounted at 10 percent,net of related tax

242、effects,plus the lower of cost or fair value of unproved properties included in the costs being amortized.As a result of low oil and gas prices at December 31,1998,Apaches capitalized costs of U.S.oil and gas properties exceeded the ceiling limitation and the Company reported a$243.2 million pre-tax

243、($158.1 million net of tax)non-cash write-down.No additional DD&A was recorded during 1997 or 1996.If oil and gas prices deteriorate from the Companys year-end realized prices,it is likely that additional write-downs will occur in 1999.Write-downs required by these rules do not impact cash flow from

244、 operating activities.Apaches operating costs decreased nine percent in 1998 to$211.6 million from$231.4 million in 1997.Lease operating expense(LOE),excluding severance taxes,decreased from$190.8 million in 1997 to$182.9 million in 1998.On an equivalent barrel basis,LOE for 1998 averaged$2.88 per b

245、oe,a$.19 decline from$3.07 per boe in 1997.Domestic per unit costs were significantly reduced by the sale of marginal North American properties,and by lower Western and Gulf region repairs and maintenance costs.Operating costs increased three percent to$231.4 million in 1997 from$225.5 million in 19

246、96.LOE,excluding severance taxes,increased from$186.4 million in 1996 to$190.8 million in 1997.LOE increased as a result of Egyptian oil production enhancements and North American gas production gains.On an equivalent barrel basis,LOE for 1997 averaged$3.07 per boe,a$.36 decline from$3.43 per boe in

247、 1996.Administrative,selling and other costs(G&A)increased$2.5 million,or seven percent from 1997 to 1998.On an equivalent barrel basis,G&A expense increased to$.64 per boe in 1998 compared to$.62 per boe in 1997.The increase in G&A expense was primarily the result of employee separation payments as

248、sociated with the sale of marginal North American properties.G&A expense increased$2.3 million,or six percent,from 1996 to 1997.A new bonus plan initiated in 1997,under which Apache provided incentive compensation to all employees based on the achievement of targeted performance,was the primary reas

249、on for the increase.On an equivalent barrel basis,G&A expense declined from$.66 per boe in 1996 to$.62 per boe in 1997.Production increases were not met with rising administrative costs.Net financing costs for 1998 decreased$1.8 million,or two percent,from 1997 primarily due to higher capitalized in

250、terest.Gross interest expense increased$14.6 million due to a slightly higher interest rate on average outstanding debt in 1998 compared to 1997 and higher imputed interest on advances from gas purchasers.This was offset by an increase in capitalized interest,interest income and lower amortization o

251、f deferred loan costs.The Companys weighted average interest rate on outstanding debt was approximately 7.2 percent at December 31,1998 compared to 7.1 percent at December 31,1997.The capitalized interest increase is associated with Egyptian pipeline projects under construction.The increase in inter

252、est income was due to a higher average cash balance during 1998.Net financing costs for 1997 increased$10.7 million,or 17 percent,over 1996.Gross interest expense increased by$15.3 million due to higher average aggregate debt outstanding at higher average interest rates,which resulted from the exten

253、sion of Apaches debt maturities.In 1997,Apache wrote off$1.2 million in deferred loan costs related to the Companys election to cancel two secured credit facilities with the International Finance Corporation(IFC).Additional capitalized interest of$5.8 million in 1997 mitigated these increases.Capita

254、lized interest associated with higher international unevaluated costs caused the increase in 1997.MARKET RISK Commodity Risk The Companys major market risk exposure is in the pricing applicable to its oil and gas production.Realized pricing is primarily driven by the prevailing worldwide price for c

255、rude oil and spot prices applicable to its United States and Canadian natural gas production.Historically,prices received for oil and gas production have been volatile and unpredictable.Pricing volatility is expected to continue.Oil price realizations ranged from a low of$9.42 per barrel to a high o

256、f$15.11 per barrel during 1998.Gas price realizations ranged from a monthly low of$1.73 per Mcf to a monthly high of$2.08 per Mcf during the same period.21 The Company periodically enters into hedging activities on a portion of its projected oil and natural gas production through a variety of financ

257、ial and physical arrangements intended to support oil and natural gas prices at targeted levels and to manage its exposure to oil and gas price fluctuations.Apache may use futures contracts,swaps,options and fixed-price physical contracts to hedge its commodity prices.Realized gains or losses from t

258、he Companys price risk management activities are recognized in oil and gas production revenues when the associated production occurs.Apache does not hold or issue derivative instruments for trading purposes.In 1998,Apache recognized a net gain of$11.5 million from hedging activities that increased o

259、il and gas production revenues.The net gain in 1998 includes$1.3 million in derivative income and$10.2 million in gains from fixed-price physical gas contracts.Gains or losses on natural gas derivative contracts are expected to be offset by sales at the spot market price or to preserve the margin on

260、 existing physical contracts.A 10 percent improvement in year-end spot market prices would increase the fair value of derivative contracts in effect at December 31,1998 by$21.4 million,while a 10 percent drop in spot prices would decrease the fair value of these instruments by$21.4 million.Interest

261、Rate Risk The Company considers its interest rate risk exposure to be minimal as a result of fixing interest rates on over three-fourths of the Companys debt.Total debt at December 31,1998,included about$337.3 million of floating-rate debt.As a result,Apaches annual interest costs in 1999 will fluct

262、uate based on short-term interest rates on approximately 25 percent of its total debt outstanding at December 31,1998.The impact on annual cash flow of a 10 percent change in the floating rate(approximately 57 basis points)would be$1.9 million.Foreign Currency Risk The Companys cash flow stream rela

263、ting to certain international operations is based on the U.S.dollar equivalent of cash flows measured in foreign currencies.Australian gas production is sold under fixed-price Australian dollar contracts and over half the costs incurred are paid in Australian dollars.Revenue and disbursement transac

264、tions denominated in Australian dollars are converted to U.S.dollar equivalents based on the exchange rate on the transaction date.Reported cash flow relating to Canadian operations is based on cash flows measured in Canadian dollars converted to the U.S.dollar equivalent based on the average of the

265、 Canadian and U.S.dollar exchange rates for the period reported.Substantially all of the Companys international transactions,outside of Canada and Australia,are denominated in U.S.dollars.The Companys Canadian and Australian subsidiaries have net financial obligations that are denominated in a curre

266、ncy other than the functional reporting currency of the subsidiaries.A decrease in value of 10 percent in the Australian and Canadian dollars relative to the U.S.dollar from the year-end exchange rates would result in a foreign currency loss of approximately$.4 million,based on December 31,1998 amou

267、nts.The Company considers its current risk exposure to exchange rate movements,based on net cash flows,to be immaterial.The Company did not have any open derivative contracts relating to foreign currencies at December 31,1998.CASH FLOW,LIQUIDITY AND CAPITAL RESOURCES Capital Commitments Apaches prim

268、ary needs for cash are for exploration,development and acquisition of oil and gas properties,repayment of principal and interest on outstanding debt,payment of dividends,and capital obligations for affiliated ventures.The Company funds its exploration and development activities primarily through int

269、ernally generated cash flows.Apache budgets capital expenditures based upon projected cash flows.The Company routinely adjusts its capital expenditures in response to changes in oil and natural gas prices and cash flow.The Company cannot accurately predict future product prices.22 Capital Expenditur

270、es-Apaches oil and gas capital expenditures over the last three years are summarized below:Expenditures for exploration and development totaled$590.7 million in 1998 compared to$685.4 million in 1997.Apaches drilling program in 1998 added 105.6 MMboe of proved reserves(including revisions)and replac

271、ed 166 percent of production.In the United States,Apache completed 183 gross wells as producers out of 233 gross wells drilled during the year,compared with 261 gross producers out of 318 gross wells drilled in 1997.In Canada,Apache completed 47 gross wells as producers out of 66 gross wells drilled

272、 during the year,compared with 60 gross producers out of 81 gross wells drilled in 1997.Internationally,the Company completed 46 gross producers out of 84 gross wells drilled in 1998,compared to 41 gross producers out of 73 gross wells in 1997.Successful international wells drilled in 1998 included

273、38 in Egypt,seven in Australia and one in China.The total capital expenditures budget for 1999 is$270.0 million,including$122.8 million for North America.Estimated U.S.exploration and development expenditures for 1999 are$89.1 million,which includes$37.3 million in the Gulf region,$36.2 million in t

274、he Midcontinent region and$15.6 million in the Western region.Apache expects to spend$33.7 million in Canada in 1999.The Company expects its other international exploration and development expenditures in 1999,exclusive of facilities,to total approximately$109.9 million.Capital expenditures will be

275、reviewed and possibly adjusted throughout the year in light of changing industry conditions.On November 13,1998,the Company entered into agreements to acquire certain oil and gas interests and companies holding oil and gas interests in the Carnarvon Basin,Western Australia,from subsidiaries of Novus

276、 for approximately$55 million.The interests have proved reserves of approximately 5.8 MMboe and daily production of 2,400 barrels of oil equivalent.They are within the Apache-operated Harriet Joint Venture(which includes production,processing and pipeline infrastructure associated with the Varanus I

277、sland hub),the Airlie Joint Venture(in which the Company held a prior interest and became operator)and three other exploration permit areas.The transaction closed in two stages,on December 18,1998 for approximately$49 million and on January 29,1999 for approximately$6 million.Under the terms of an a

278、greement with Novus,the Company may be required to make additional payments to Novus based on proved and probable recoverable oil and condensate reserves,as determined by independent engineers,on a defined geological structure in the Gipsy-Rose-Lee area,offshore Western Australia.If required,such pa

279、yments would be calculated using$2.50 for each barrel of proved and$1.25 for each barrel of probable oil and condensate reserves.A payment becomes due if and when a decision is made to construct facilities for the production of oil or condensate from the designated area.In 1998,the Company also comp

280、leted tactical regional acquisitions for cash consideration totaling$19.4 million.These acquisitions added approximately 9.1 MMboe to the Companys reserves.On November 20,1997,the Company acquired,in the Ampolex Group Transaction,all the capital stock of three companies owning interests in certain o

281、il and gas properties(including 31.9 MMboe of proved oil and natural gas reserves)and production facilities offshore Western Australia for approximately$300 million 23 1998 1997 1996 -(IN THOUSANDS)Exploration and Development:United States.$238,140$375,015$302,494 Canada.71,467 57,669 58,768 Egypt.1

282、24,657 152,564 63,597 Australia.86,453 70,802 46,838 Ivory Coast.24,356 1,077 7,914 Other International.45,626 28,293 14,084 -Total.$590,699$685,420$493,695 =Acquisitions of Oil and Gas Properties.$58,402$225,934$446,205 =pursuant to three agreements with subsidiaries of Mobil.Funds for the Ampolex

283、Group Transaction were obtained principally from borrowings under the Companys global credit facility.The Ampolex Group Transaction acquisition,net of the sale of certain properties to Hardy,increased the Companys interest to 47.5 percent from 22.5 percent in the Carnarvon Basins Harriet area,which

284、included the Varanus Island pipeline,processing and production complex and eight existing oil and gas fields.In addition,the Companys interest in the East Spar field,which produces through the Varanus Island facilities,increased to 45 percent from 20 percent.Apache operates both the Harriet and East

285、 Spar properties.In conjunction with the closing of the Ampolex Group Transaction on December 9,1997,the Company entered into an agreement under which Hardy agreed to purchase a 10 percent interest in the Companys East Spar gas field and related production facilities in Western Australia.The transac

286、tion closed on January 28,1998 with a total sales price of approximately$63 million in cash.In 1997,the Company also completed 45 tactical regional acquisitions for cash consideration totaling$33.6 million.These acquisitions added approximately 6.6 MMboe to the Companys proved reserves.Expenditures

287、for acquisitions of proved oil and gas properties during 1996 totaled$446.2 million.The Company added 52 MMboe of proved oil and gas reserves through purchases in 1996.The most significant transaction completed in 1996 was the merger with Phoenix.Apache acquired oil and gas properties totaling$331.2

288、 million from Phoenix.Apache also acquired$115.0 million of other oil and gas properties located primarily in the Companys existing focus areas.This amount included the purchase of certain oil and gas properties from Hall-Houston Oil Company for$46 million in cash.Funds for the acquisitions were obt

289、ained principally from borrowings under the Companys revolving bank credit facility.Debt and Interest Commitments-At December 31,1998,Apache had outstanding debt of$153.0 million under its global credit facility and an aggregate of$1.2 billion of other debt.This other debt included notes and debentu

290、res maturing in the years 2000 through 2096.Debt outstanding at December 31,1998 of$1.4 billion was comparable to the$1.5 billion outstanding at December 31,1997.The Companys debt-to-capitalization ratio improved from 46.8 percent at December 31,1997 to 43.0 percent at December 31,1998.Interest paym

291、ents on the Companys debt for 1999 are projected to be$129.0 million(using weighted average balances for floating rate obligations).Scheduled principal payments for 1999 total$15.5 million.Dividend Payments-Apache paid$1.0 million in dividends during 1998 on its Series B Preferred Stock issued in Au

292、gust 1998.Common dividends paid during 1998 totaled$27.2 million,up 8 percent from 1997,due to the increased number of common shares outstanding.The Company has paid cash dividends on its common stock for 128 consecutive quarters through December 31,1998,and expects to continue payment of dividends

293、at current levels.Future dividend payments will depend on the Companys level of earnings,financial requirements and other relevant factors.Capital Resources and Liquidity The Companys primary capital resources are net cash provided by operating activities,proceeds from financing activities and proce

294、eds from sales of non-strategic assets.Net Cash Provided by Operating Activities-Apaches net cash provided by operating activities during 1998 totaled$471.5 million,a decrease of 35 percent from the$723.8 million provided in 1997.This decrease was due primarily to lower oil and gas prices and lower

295、gas production in 1998,offset by the receipt of$71.8 million from a purchaser as an advance.The advance was for future natural gas deliveries over a ten-year period commencing August 1998.Net cash provided by operating activities in 1997 rose$233.3 million from 1996 primarily due to higher product p

296、rices.The receipt of$115.2 million from a purchaser as an advance also impacted 1997 net cash provided by operating activities.This advance was for future natural gas deliveries of 20,000 MMBtu per day over a ten-year period commencing September 1997.Long-Term Borrowings-In February 1998,Apache issu

297、ed$150 million principal amount,$148.2 million net of discount,of senior unsecured 7-percent notes maturing on February 1,2018.The notes are not 24 redeemable prior to maturity.Net proceeds from the sale were used to reduce existing short-term obligations and for general corporate purposes.In March

298、1999,Apache Finance Pty Ltd,the Companys Australian finance subsidiary,issued$100 million principal amount,$99.3 million net of discount,of senior unsecured 7.0-percent notes due March 15,2009.The notes are irrevocably and unconditionally guaranteed by Apache.The Company has the right to redeem the

299、notes prior to maturity,under certain conditions related to changes in relevant tax laws.Stock Transactions-In January 1998,approximately 90 percent,or$155.6 million,of the Companys 6-percent debentures were converted into 5.1 million shares of Apache common stock at a conversion price of$30.68 per

300、share.The remaining$16.9 million principal amount was redeemed for$17.4 million in cash,plus accrued and unpaid interest.The Company recorded a$.8 million loss on the early extinguishment of debt in January 1998.Preferred Stock Issuance-In August 1998,Apache issued$100 million of Series B Preferred

301、Stock.The net proceeds of approximately$98.4 million were used to repay debt outstanding under money market lines of credit and to reduce outstanding borrowings under the Canadian portion of the Companys global credit facility.The Series B Preferred Stock has no stated maturity,is not subject to a s

302、inking fund and is not convertible into Apache common stock or any other securities of the Company.Apache has the option to redeem the Series B Preferred Stock at$1,000 per share on or after August 25,2008.Asset Sales-Apache received$131.1 million in 1998 and$30.1 million in 1997 from the sale of no

303、n-strategic oil and gas properties in a number of separate transactions.An additional$63 million was received in 1998 for a 10 percent interest in Apaches East Spar field and related production facilities.These assets were reported as assets held for resale at December 31,1997.The proceeds were used

304、 to reduce debt.Liquidity-The Company had$14.5 million in cash and cash equivalents on hand at December 31,1998,up from$9.7 million at December 31,1997.Apaches ratio of current assets to current liabilities decreased from 1.01:1 at December 31,1997,to.74:1 at December 31,1998.Management believes tha

305、t cash on hand,net cash generated from operations and unused committed borrowing capacity under its global credit facility will be adequate to satisfy the Companys financial obligations to meet future liquidity needs for at least the next two fiscal years.As of December 31,1998,Apaches available bor

306、rowing capacity under its global credit facility was$788 million.25 IMPACT OF THE YEAR 2000 ISSUE The inability of some computer programs and embedded computer chips to distinguish between the year 1900 and the year 2000(the Year 2000 issue)poses a serious threat of business disruption to any organi

307、zation that utilizes computer technology and computer chip technology in their business systems or equipment.Apache has formed a Year 2000 Task Force with representation from major business units to inventory and assess the risk associated with hardware,software,telecommunications systems,office equ

308、ipment,embedded chip controls and systems,process control systems,facility control systems and dependencies on external trading partners.The project phases,expected completion dates and percentage complete as of March 1999 are as follows:To date,the Company is not aware of any significant Year 2000

309、issues that would cause problems in the area of safety,environmental or business interruption.The Company will assess the risks associated with hardware,software,infrastructure,embedded chips and external trading partners that are not Year 2000 compliant.While Apache is confident that Year 2000 reme

310、diation efforts will succeed in minimizing exposure to business disruption,plans are being developed that will allow continuation of business in all but the worst case scenarios.All remediation and replacement efforts and contingency planning are expected to be complete by September 1999.All critica

311、l external trading partners have been contacted to determine Year 2000 readiness and contingency plans will be developed where assurance of Year 2000 compliance is not received by March 31,1999.In 1997,the Company initiated a project to replace existing business software as it relates to Apaches pro

312、duction,land,marketing,accounting and financial systems to more effectively and efficiently meet its business needs.Replacement computer systems selected by the Company from SAP America,Inc.,PricewaterhouseCoopers LLP,Innovative Business Solutions and Landmark Graphics will properly recognize dates

313、beyond December 31,1999.The Company plans to implement the replacement software by March 31,1999.The business system replacement project is 90 percent complete and the Company believes that the March 31,1999 deadline is attainable.The Company expects the cost to achieve Year 2000 compliance will not

314、 exceed$4 million excluding the cost of implementing business replacement systems.26 PERCENT PHASE COMPLETION DATE COMPLETE-Organization.July 1998 100%Assessment.November 1998 100%Desktop Computers Network Hardware Software Embedded Systems External Trading Partners Building/Infrastructure Systems T

315、elecommunications Systems Implementation/Replacement.September 1999 75%Computer Hardware Core Business Software Desktop Software Embedded Systems Building Systems Contact External Trading Partners.March 1999 100%Contingency Planning.April 1999 70%The Company presently believes that with conversions

316、to new software and completion of efforts planned by the Year 2000 Task Force,the risk associated with Year 2000 will be significantly reduced.However,the Company is unable to assure that the consequences of Year 2000 failures of systems maintained by the Company or by third parties will not materia

317、lly adversely impact the Companys results of operations,liquidity or financial condition.FUTURE TRENDS Apaches strategy is to increase its oil and gas reserves,production,cash flow and earnings by continuing to explore on and develop its inventory of existing projects and making carefully targeted a

318、cquisitions of new assets.Crude oil prices have fallen to the lowest level in over a decade.Drilling costs and acquisition prices have also declined.As one of few companies to have reduced debt in 1998,Apache is well positioned to execute the second phase of its long-term strategy,which is to comple

319、te a meaningful acquisition in 1999 that builds shareholder value.Accordingly,Apaches 1999 plans include:1.Controlling G&A and LOE expense;2.Curtailing drilling costs;and 3.Pursuing opportunities to acquire properties.Although no specific opportunity has as yet been identified as likely,the Company

320、believes that the number of quality acquisition,merger and joint venture opportunities has increased dramatically.Apaches international properties should continue to grow in importance with respect to Apaches financial results and future growth prospects.Apaches international efforts remain focused

321、on development of its discoveries in Egypt,offshore Western Australia,China and the Ivory Coast,and exploration efforts on the Companys concessions in Egypt and in Poland.While international exploration is recognized as higher risk than Apaches North American activities,the Company believes it offer

322、s potential for greater rewards and significant reserve additions.Apache also believes that reserve additions in these international areas may be made through higher risk exploration and through improved production practices and recovery techniques.Under the full cost accounting rules of the SEC,the

323、 Company reviews the carrying value of its proved oil and gas properties each quarter on a country-by-country basis.Under these rules,capitalized costs of proved oil and gas properties,net of accumulated DD&A and deferred income taxes,may not exceed the present value of estimated future net cash flo

324、ws from proved oil and gas reserves,discounted at 10 percent,plus the lower of cost or fair value of unproved properties included in the costs being amortized,net of related tax effects.These rules generally require pricing future oil and gas production at the unescalated oil and gas prices in effec

325、t at the end of each fiscal quarter and require a write-down if the ceiling is exceeded,even if prices declined for only a short period of time.The Company recorded a$243.2 million pre-tax($158.1 million net of tax)non-cash write-down of the carrying value of the Companys U.S.proved oil and gas prop

326、erties as of December 31,1998,due to these ceiling test limitations.If oil and gas prices deteriorate from the Companys year-end realized prices,it is likely that additional write-downs will occur in 1999.Write-downs required by these rules do not impact cash flow from operating activities.FORWARD-L

327、OOKING STATEMENTS AND RISK Certain statements in this report,including statements of the future plans,objectives,and expected performance of the Company,are forward-looking statements that are dependent upon certain events,risks and uncertainties that may be outside the Companys control,and which co

328、uld cause actual results to differ materially from those anticipated.Some of these include,but are not limited to,the market prices of oil and gas,economic and competitive conditions,inflation rates,legislative and regulatory changes,financial market conditions,political and economic uncertainties o

329、f foreign governments,future business decisions,and other uncertainties,all of which are difficult to predict.There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and in projecting future rates of production and the timing of development expenditures.The

330、total amount or timing 27 of actual future production may vary significantly from reserves and production estimates.The drilling of exploratory wells can involve significant risks,including those related to timing,success rates and cost overruns.Lease and rig availability,complex geology and other f

331、actors can affect these risks.Although Apache makes use of futures contracts,swaps,options and fixed-price physical contracts to mitigate risk,fluctuations in oil and gas prices,or a prolonged continuation of the current low price of crude oil,may substantially adversely affect the Companys financia

332、l position,results of operations and cash flows.ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary financial information required to be filed under this item are presented on pages F-1 through F-35 of this Form 10-K,and are incorporated herein by reference.

333、ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.PART III ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth under the captions Nominees for Election as Directors,Continuing Directors,Executive Officers of the Company,and Voting Securities and Principal Holders in the proxy statement relating to the Companys 1999 ann