1、FORM 10-K APACHE CORP(Annual Report)Filed 3/7/1995 For Period Ending 12/31/1994Address2000 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.20549
2、 FORM 10-K MARK ONE X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 FEE REQUIRED FOR THE FISCAL YEAR ENDED DECEMBER 31,1994,OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 NO FEE REQUIRED FOR THE TRANSITION PERIOD FROM
3、_ TO _ COMMISSION FILE NUMBER 1-4300 APACHE CORPORATION A DELAWARE IRS EMPLOYER CORPORATION NO.41-0747868 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 PURS
4、UANT TO SECTION 12(g)OF THE ACT:NONE Indicate by check mark whether the registrant(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
5、),and(2)has been subject to such filing requirements for the past 90 days.Yes X No 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 informatio
6、n statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K./DOCUMENTS INCORPORATED BY REFERENCE:Portions of registrants proxy statement relating to registrants 1995 annual meeting of shareholders have been incorporated by reference into Part III hereof.NA
7、ME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED -Common Stock,$1.25 Par Value New York Stock Exchange Chicago Stock Exchange Common 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
8、held by non-affiliates of registrant as of February 28,1995$1,536,184,325 Number of shares of registrants common stock outstanding as of February 28,1995 61,447,373 TABLE OF CONTENTS DESCRIPTION All defined terms under Rule 4-10(a)of Regulation S-X shall have their statutorily-prescribed meanings wh
9、en used in this report.Quantities 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
10、in terms of barrels of oil equivalent (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 ga
11、s.Daily oil and gas production is expressed in terms of barrels of oil per day(bopd)and thousands of cubic feet of gas per day(Mcfd),respectively.Gas sales volumes may be expressed in terms of one million British thermal units(MMBtu),which is approximately equal to one Mcf.With respect to informatio
12、n 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 I 1.BUSINESS .1 2.PROPER
13、TIES .9 3.LEGAL PROCEEDINGS .13 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .13 PART II 5.MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS .14 6.SELECTED FINANCIAL DATA .15 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .16 8.
14、FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .25 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE .25 PART III 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT .26 11.EXECUTIVE COMPENSATION .26 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMEN
15、T .26 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .26 PART IV 14.EXHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON FORM 8-K .27 PART I ITEM 1.BUSINESS GENERAL Apache Corporation(Apache or the Company),a Delaware corporation formed in 1954,is an independent energy company that explores for,
16、develops,produces,gathers,processes and markets natural gas and crude oil.Domestically,Apaches exploration and production interests are spread over 15 states,focusing on the Gulf of Mexico,the Anadarko Basin of Oklahoma,the Permian Basin of West Texas and New Mexico,the Gulf Coast and the Rocky Moun
17、tain regions.Internationally,Apache has production interests in Australia and is currently focusing its international exploration efforts offshore Western Australia,along the Pacific Rim and in Africa.Apaches common stock has been listed on the New York Stock Exchange since 1969,and on the Chicago S
18、tock Exchange since 1960.Apache holds interests in many of its domestic and international properties through operating subsidiaries,such as MW Petroleum Corporation(MW),Apache Energy Resources Corporation(AERC,formerly known as Hadson Energy Resources Corporation),Apache Energy Limited(AEL,formerly
19、known as Hadson Energy 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 segment of business.1994 RESULTS In 1994,Apache had net income of$42.8 million,or$.70 per share,on total reve
20、nues of$545.6 million.Net cash provided by operating activities during 1994 was$335.6 million.The year represents Apaches seventeenth consecutive year of production growth and seventh consecutive year of oil and gas reserves growth.Apaches average daily production was approximately 36 Mbbls of oil a
21、nd 427 MMcf of natural gas for the year.The Companys estimated proved reserves at December 31,1994,were 269 MMboe,of which approximately 63 percent was natural gas.Apaches growth in reserves during the year reflects the replacement of 197 percent of the Companys 1994 production.Approximately 46 perc
22、ent of the newly added reserves were acquired through Apaches ongoing acquisition efforts.The remainder was attributable to Apaches active drilling and workover program,which yielded 243 new producing domestic wells out of 299 attempts,and involved 390 domestic workover and recompletion projects dur
23、ing the year.At December 31,1994,Apache had interests in approximately 3,677 net oil and gas wells and 781,336 net developed acres of oil and gas properties.In addition,the Company had interests in 603,802 net undeveloped acres under domestic leases and 4,239,290 net undeveloped acres under internat
24、ional exploration and production rights.APACHES GROWTH STRATEGY Apaches growth strategy is to increase production,reserves and cash flow through a combination of acquisitions,moderate-risk drilling and development of its inventory of existing projects.The Company also emphasizes reducing operating c
25、osts per unit produced and selling marginal and non-strategic properties in order to increase its profit margins.For Apache,property acquisition is only one phase in a continuing cycle of business growth.Apaches aim is to follow each acquisition cycle with a cycle of reserve enhancement,property con
26、solidation and cash flow acceleration,facilitating asset growth and debt reduction.This approach requires well-planned and carefully executed property development and a commitment to a selective program of ongoing property dispositions.It motivates Apache to target acquisitions that have ascertainab
27、le 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 prefers to operate its properties so that it can best influence their development,and the Company therefore
28、 operates properties accounting for over 75 percent of its production.Pursuing its acquire-and-develop strategy,Apache increased its total proved reserves more than 240 MMboe,or nearly eight-fold,in the last ten years.In addition to its acquisition strategy,Apache continues to develop and exploit it
29、s existing inventory of workover,recompletion and other development projects to increase reserves and production.During 1994,Apache acquired$180 million of additional properties and replaced over 106 percent of its domestic production through its drilling,workover and recompletion program.1 Apaches
30、international investments supplement its long-term growth strategy.Although international exploration is recognized as higher-risk than most of Apaches domestic activities,it offers potential for greater rewards and significant reserve additions.Apache directed its international efforts in 1994 towa
31、rds the exploration and development of properties in Western Australia,China,Indonesia,Egypt,The Congo and the Ivory Coast of Western Africa,where it believes that reserve additions may be made through higher-risk exploration and through improved production practices and recovery techniques.RECENT A
32、CQUISITIONS AND DISPOSITIONS 1994 ACQUISITIONS.On December 30,1994,Apache purchased substantially all of the U.S.oil and gas properties of Crystal Oil Company(Crystal)for approximately$95.8 million.The producing properties acquired from Crystal are located primarily along the Arkansas-Louisiana bord
33、er and in southern Louisiana,and daily production at the time of acquisition was approximately 20 MMcf of gas and 2,700 bbls of oil.The acquisition also included approximately 32,000 net undeveloped mineral acres in southern Louisiana.Apache acquired an average 80-percent working interest in the pro
34、perties overall,including a 97-percent working interest in two fields that account for approximately 60 percent of the value.During 1994,Apache also acquired approximately 15 MMboe of proved reserves through 87 smaller,tactical acquisitions for an aggregate consideration of$84.2 million.Apache also
35、sold$5.9 million of its non-strategic properties during 1994.TRANSACTIONS IN EARLY 1995.On March 1,1995,Apache purchased certain oil and gas properties from Texaco Exploration and Production Inc.(Texaco)for an adjusted purchase price of$571 million,effective January 1,1995.The transaction is subject
36、 to customary closing and post-closing adjustments,and includes proved reserves at the effective date of approximately 113 million barrels of energy equivalent,of which approximately 70 percent is oil.The most recently reported average current daily production on the acquired properties is approxima
37、tely 20 Mbbls of oil and 85 MMcf of gas.The Texaco properties are highly concentrated,with approximately two-thirds of the reserves located in 54 fields,and are in producing regions where Apache has existing operations-the Permian Basin,the Gulf Coast of Texas and Louisiana,western Oklahoma,eastern
38、Texas,the Rocky Mountains and the Gulf of Mexico.Apache will operate approximately two-thirds of the production and acquire an average working interest of 70 percent in the operated properties.The total acquisition includes approximately 500,000 net mineral acres,as well as a substantial quantity of
39、 seismic data.On December 21,1994,Apache entered into a merger agreement with DEKALB Energy Company(DEKALB),under which the shareholders of DEKALB will receive,in the aggregate,between 8.0 and 8.9 million shares of Apache common stock and DEKALB will become a wholly-owned subsidiary of Apache.The tr
40、ansaction will be accounted for using the pooling of interests method of accounting.Apache and DEKALB estimate that the cost required to complete the transaction will total between$8 and$10 million.DEKALBs reported oil and gas reserves,located almost entirely in Canada,were estimated to be approxima
41、tely 364 Bcfe,and included approximately 300 Bcf of natural gas and 11 MMbbls of hydrocarbon liquids.DEKALB also has approximately 150,000 net undeveloped mineral acres,and has ownership interests in 14 gas processing plants,six of which it operates.Upon completion,the DEKALB merger will provide Apa
42、che with a substantial presence in North Americas largest natural gas basin,together with the infrastructure,including skilled professionals,to conduct Canadian operations,and properties with significant further development potential.The merger has been approved by the board of directors of Apache a
43、nd DEKALB,and holders of a majority of DEKALBs voting stock have agreed to vote their shares to approve the merger.Consummation of the DEKALB merger is subject to the satisfaction of certain conditions including the receipt of necessary regulatory approvals and certain other consents,and is currentl
44、y expected to be completed in the second quarter of 1995.In early 1995,Apache announced plans to accelerate the disposition of approximately$200 million of lower margin and non-strategic properties,including sales of a substantial portion of its Rocky Mountain properties and non-strategic assets in
45、its other regions.2 1993 ACQUISITIONS.In 1993,Apache entered into two agreements to purchase a combined 104 Bcfe of proved reserves in the Gulf of Mexico from Hall-Houston Oil Company(Hall-Houston)for an aggregate consideration of$113.7 million.In June 1993,Apache closed the first of the two transac
46、tions,paying$29.3 million for Hall-Houstons interest in Mustang Island Blocks 787 and 805.Apache acquired substantially all of Hall-Houstons other producing properties in the Gulf of Mexico for an additional$84.4 million in the second transaction which closed on August 31,1993.With the Hall-Houston
47、acquisitions,Apache more than doubled its existing interest in offshore gas production,acquiring interests in 63 producing fields and 12 fields under development or awaiting pipeline connections.Apache acquired Hadson Energy Resources Corporation(now AERC)through a series of private transactions and
48、 a subsequent merger on November 12,1993.The aggregate consideration paid for the acquisition was approximately$98 million,including the issuance of 307,977 shares of Apache common stock.Apache acquired AERC and its subsidiaries subject to approximately$67.6 million of net liabilities at the time of
49、 the merger.Through the acquisition of AERC,Apache added proved reserves of 66 Bcfe domestically and 64 Bcfe in Australia.AERCs reserves fit well with Apaches existing interests in Oklahoma and the Carnarvon Basin offshore Western Australia.Domestically,nearly two-thirds of the value of AERCs proper
50、ties are concentrated in Oklahoma,where Apache was already the largest independent gas producer.AERCs operations in Western Australia,including the Harriet complex of oil and natural gas fields,provide Apache with the reserves and infrastructure required for the commercial development of certain oth
51、er Australian interests.During 1993,Apache also acquired 11 MMboe of proved reserves through 71 smaller,tactical acquisitions for an aggregate consideration of$76.5 million.Apache also sold$3.3 million of its non-strategic properties during 1993.EXPLORATION AND PRODUCTION The Companys domestic explo
52、ration and production activities are divided into five operating regions,the Gulf of Mexico,Midcontinent,Permian Basin,Gulf Coast and Rocky Mountain regions.Approximately 96 percent of the Companys proved reserves are located in these five domestic operating regions.Internationally,the Company condu
53、cts its Australian exploration and production and Indonesian exploration through its Australian region.Apaches other international interests are directed by the Company and its subsidiaries through the Companys principal offices located in Houston,Texas.GULF OF MEXICO.As a result of Apaches acquisit
54、ions of Matagorda Island Blocks 681 and 682 in late 1992 and the Hall-Houston acquisition in 1993,the Gulf of Mexico became Apaches largest producing region.Due to the growth resulting from these acquisitions,Apache divided its former Gulf Coast region into two regions:Gulf of Mexico and Gulf Coast.
55、The Gulf of Mexico region encompasses all of Apaches interests in properties offshore Texas,Louisiana and Alabama.By year-end 1994,Apache increased its production in the Gulf of Mexico to approximately 203 MMcf of gas per day.At December 31,1994,the Gulf of Mexico region encompassed 282,302 net acre
56、s,located in both state and federal waters,and accounted for 48.1 MMboe,or 18 percent,of the Companys year-end 1994 reserves.Apache participated in 28 wells which were drilled in the region during the year,21 of which were completed as producers.The Company performed 36 workover and recompletion ope
57、rations in the region during 1994.MIDCONTINENT.Apaches Midcontinent region is known for its sizable position in the Anadarko Basin.Apache has drilled and operated in the Anadarko Basin for over three decades,developing an extensive database of geologic information and a substantial acreage position.
58、In 1993,Apache enhanced its position through the acquisition of AERC with its significant acreage and producing interests in the Anadarko Basin.At December 31,1994,Apache held an interest in 271,770 net acres in the region,which accounted for approximately 75.7 MMboe,or 28 percent,of Apaches total p
59、roved reserves.Apache participated in 103 wells which were drilled in the Midcontinent region during the year,90 of which were completed as producing wells.The Company performed 36 workover and recompletion operations in the region during 1994.3 PERMIAN BASIN.The Permian Basin of West Texas and New
60、Mexico remained an important region to Apache in 1994,generating 17 percent of the Companys production revenues for the year.As of December 31,1994,Apache held an interest in 103,247 net acres in the region,which accounted for 57.6 MMboe,or 21 percent,of the Companys total proved reserves.Apaches op
61、erations in the Permian Basin focused primarily on workovers and recompletions,which totaled 51 for the year.Compared with 1993,Apache nearly doubled its drilling activity in the region during 1994,with 32 of the 38 wells drilled in the region completed as producers.GULF COAST.The Gulf Coast region
62、encompasses the Texas and Louisiana coasts,central Texas,Mississippi and Alabama.In 1994,the region was one of the most prominent in the Company in the number of workover and recompletion projects completed and the number of wells drilled.Apache participated in 85 wells drilled in the Gulf Coast reg
63、ion during the year,74 of which were completed as producers,including 30 Austin Chalk wells in central Texas,all of which were productive.The Company performed 173 workover and recompletion operations during 1994 in the Gulf Coast region.As of December 31,1994,the region encompassed approximately 19
64、4,107 net acres,and accounted for 43 MMboe,or 16 percent,of the Companys year-end 1994 total proved reserves.ROCKY MOUNTAIN.In the Rocky Mountain region,Apache emphasized oil enhancement opportunities during 1994,conducting 94 development projects.At year-end,Apache held an interest in 481,162 net a
65、cres in the region,which accounted for approximately 34.2 MMboe,or 13 percent,of the Companys total proved reserves.Apache participated in 45 wells in the region during the year,26 of which were productive.Apache has announced the Companys intention to sell in 1995 substantially all of its Rocky Mou
66、ntain properties in connection with its property rationalization program,which emphasizes the disposition of lower margin properties.The Company currently intends to close its Rocky Mountain regional office,located in Denver,Colorado,and redeploy those employees to provide support for its Gulf Coast
67、 and Permian Basin operations and the Companys operations in Canada following the DEKALB merger.AUSTRALIA.The state of Western Australia has become an important region for Apache following the completion of the AERC acquisition.In the fourth quarter of 1993,Apache consolidated the operation of its A
68、ustralian properties with AERCs Australian subsidiary,AEL,headquartered in Perth,Western Australia.During 1994,AEL participated in two successful horizontal development wells in the Harriet field offshore Western Australia and also participated in nine exploratory wells.Average oil production in the
69、 region increased by 70 percent from 1993 to approximately 3,200 bbls per day for 1994,primarily as a result of the addition of the AERC properties in the second half of 1993.As of December 31,1994,Apache held 3,373,150 net developed and undeveloped acres in Western Australia.Australian reserves acc
70、ounted for 10.8 MMboe,or four percent,of the Companys total proved reserves at year end.Through AEL and its subsidiaries,Apache also owns a 22.5-percent interest in and operates the Harriet Gas Gathering Project,a gas processing and compression facility with a throughput capacity of 80 MMcfd,and a 6
71、0-mile,12-inch offshore pipeline with a throughput capacity of 175 MMcfd.The facilities are located in close proximity to AELs producing properties offshore in the Carnarvon Basin.During 1994,AEL produced 2.9 bcf of natural gas.Through AEL,Apache acts as operator for most of its properties in Wester
72、n Australia.In early 1993,Apache took over as operator and increased its interest in the Java Sea IV block offshore Indonesia and the Padang Panjang block on the island of Sumatra,Indonesia.In early 1994,operations for Indonesia were consolidated under the direction of AEL out of its offices in Pert
73、h,Western Australia.In 1994,two exploratory wells were drilled in Indonesia,one of which was a discovery.OTHER INTERNATIONAL OPERATIONS.Outside of Australia,Apaches international interests currently consist only of exploration interests.In 1994,Apache Overseas,Inc.,Apache International,Inc.and their
74、 subsidiaries(excluding Australia and Indonesia as referred to above)drilled three gross exploratory wells-one each in Egypt,China and The Congo,resulting in two discoveries.One discovery well was in Zhao Dong block in the Bohai Bay,offshore the Peoples Republic of China,where Apache has a 33-percen
75、t interest in an area containing approximately 48,677 undeveloped acres(16,225 acres net to Apache).The well tested at a rate of over 2,000 bbls per day and was confirmed by an appraisal well which tested at over 3,500 bbls per day.Future plans call for at least one additional appraisal well which,i
76、f successful,would lead to field development of the block.4 Apache holds a 25-percent interest in the two-million acre Qarun block in the western desert of Egypt which is operated by Phoenix Resource Companies of Qarun.In 1994,Apache participated in an apparent discovery well in the Qarun block whic
77、h was plugged and abandoned when well bore problems developed.Plans call for an appraisal well on the same structure.In February 1995,Apache and its partners announced the discovery of a second field in the Qarun block approximately two kilometers from its first apparent discovery.The second well te
78、sted at rates up to 1,370 bopd.In the Congo,an Apache subsidiary participated in a discovery well that tested at a rate over 2,000 bbls per day.Through its subsidiary,Apache holds a 20-percent working interest in the well.An appraisal well and an additional exploratory well are planned for 1995.OIL
79、AND NATURAL GAS MARKETING During 1994,Apache sold approximately 89 percent of its domestic natural gas on the spot market through Natural Gas Clearinghouse(NGC)or through market responsive contracts with other parties;the remaining 11 percent was sold into long-term,premium-priced contracts.Sales to
80、 NGC accounted for 40 percent of the Companys oil and gas revenues in 1994.Apache and NGC have agreed that NGC will market substantially all of Apaches domestic spot market gas production under terms of their agreement which is effective through September 1995.The Company believes that if the NGC co
81、ntract were terminated,it would not have a material adverse effect on the Company due to the existence of alternative marketing arrangements and purchasers.In December 1994,the Company signed a long-term gas contract under which Apache received an advance payment of$67.4 million.Apache will supply t
82、he purchaser with approximately 43 Bcf of gas over six years,with volumes averaging 20 MMcfd.Initial deliveries began in January 1995.Apache also signed a long-term gas supply agreement with a cogeneration company in August 1994,under which Apache will supply a minimum of 51.1 Bcf over ten years for
83、 use in electric power generation from its cogeneration facility located in Northeast Texas.Deliveries of approximately 20 MMcfd are scheduled to begin in early 1997.Apache assumed its own domestic crude oil marketing operations in 1992.Most of Apaches crude oil production is sold through lease-leve
84、l marketing to refiners,traders and transporters,generally under 30-day contracts that renew automatically until canceled.In Australia,approximately 22 Bcf of AELs proved gas reserves are dedicated to the Gas Corporation of Western Australia,a corporation owned by the government of Western Australia
85、,doing business as AlintaGas(formerly SECWA),under a long-term contract with a remaining period of 7 1/2 years.The agreement contains take-or-pay provisions that require AlintaGas to purchase a minimum of 35 MMcfd(approximately eight MMcfd net to AEL)through the remainder of the contract term at a s
86、tated minimum price that escalates with the Western Australia consumer price index.Payments received under this contract are in Australian dollars.If for any reason the AlintaGas contract was canceled,AEL might not be able to find other markets for its gas produced from the Harriet field.AEL markets
87、 all oil and natural gas liquids produced from its interests in the Harriet field through a contract with Marubeni International Petroleum(Singapore)Pte Limited(Marubeni),which was extended in 1994.Pricing under the contract in 1994 represented a fixed premium to the average of the quoted spot marke
88、t prices of Tapis and Dubai crude oil,with payment made in U.S.dollars.Production sold under this contract in 1994 realized an average price of$18.23 per barrel(exclusive of the impact of hedging activities).In 1995,pricing under this contract will represent a fixed premium of the quoted spot market
89、 price of Tapis crude oil.The Company believes that if this contract were terminated,it would not have a material adverse effect on the Company due to the demand for Australian crude oil and the existence of alternative purchasers.OIL AND NATURAL GAS PRICES Natural gas prices remained volatile in 19
90、94 with Apaches average gas prices during the year ranging from$1.48 per Mcf in October to$2.15 per Mcf in February.Fluctuations are largely due to natural gas supply and demand perceptions.Apaches average realized gas price of$1.81 per Mcf for 1994 declined 11 percent from the prior-year average of
91、$2.03 per Mcf.Apaches 1993 average realized natural gas price increased 15 percent above the 1992 average of$1.76 per Mcf.5 Due to the escalating price contract with AlintaGas,AELs natural gas production in Western Australia is not subject to the same degree of price volatility as is its domestic ga
92、s production,however,natural gas sales under the AlintaGas contract represented only about two percent of the Companys total natural gas sales at year end.In 1994,the price received for production under the contract averaged$1.94 per Mcf.Total Australian gas sales in 1994,including sales under the A
93、lintaGas contract and spot sales to other parties,averaged$1.90 per Mcf,six percent above the 1993 average of$1.79 per Mcf.Oil prices remained vulnerable due to unpredictable political and economic forces during 1994,but partially recovered from the five-year low that Apache experienced in the fourt
94、h quarter of 1993.Management believes that,absent a comprehensive U.S.energy policy,oil prices will continue to fluctuate in response to changes in the policies of the Organization of Petroleum Exporting Countries(OPEC),events in the Middle East and other factors associated with the world political
95、environment.As a result of the many uncertainties associated with levels of production maintained by OPEC and other oil producing countries,the availabilities of world-wide energy supplies and the competitive relationships and consumer perceptions of various energy sources,management is unable to pr
96、edict what changes will occur in crude oil and natural gas prices.Apaches worldwide crude oil price averaged$15.66 per barrel in 1994,seven percent lower than the average price of$16.78 per barrel in 1993,and 14 percent lower than the average price of$18.16 per barrel in 1992.Apaches average crude o
97、il price for its Australian production,including production sold under the Marubeni contract,was$17.95 per barrel in 1994,seven percent lower than the average price in 1993.Terms of the acquisition of MW from Amoco Production Company(Amoco)included an oil and gas price sharing provision under which
98、certain price sharing payments may be payable to Amoco.Pursuant to this provision,to the extent that oil prices exceed specified reference prices that rise to$33.12 per barrel over the eight-year period ending June 30,1999,and to the extent that gas prices exceed specified reference prices that rise
99、 to$2.68 per Mcf over the five-year period ending June 30,1996,Apache will share the excess price realization with Amoco on a portion of the MW production.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
100、price changes.(See Note 8 to the Companys financial statements under Item 8 below.)The Companys business has been and will continue 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
101、level of,future oil and gas prices.RESERVE VALUE CEILING TEST Under the Securities and Exchange Commissions full cost accounting rules,the Company reviews the carrying value of its oil and gas properties each quarter on a country-by-country basis.Under full cost accounting rules,capitalized costs of
102、 oil and gas properties may not exceed the present value of estimated future net revenues from proved reserves,discounted at 10 percent,plus the lower of cost or fair market value of unproved properties,as adjusted for related tax effects and deferred tax reserves.Application of this rule generally
103、requires pricing future production at the unescalated oil and gas prices in effect at the end of each fiscal quarter and requires a write-down if the ceiling is exceeded,even if prices declined for only a short period of time.If a write-down is required,the one-time charge to earnings would not impa
104、ct cash flow from operating activities.The Company had no write-downs due to ceiling test limitations during 1994,but a further weakening of oil and gas prices from year-end levels would likely result in a write-down of oil and gas properties during 1995.GOVERNMENT REGULATION OF THE OIL AND GAS INDU
105、STRY 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 production activities are subject to various laws and regulations
106、 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 and limit the quantity of hydrocarbons Apache may produce and sell.
107、Other regulated matters include marketing,pricing,transportation,and valuation of royalty payments.6 At the federal level,the Federal Energy Regulatory Commission(FERC)regulates interstate transportation of natural gas under the Natural Gas Act and regulates the maximum selling prices of certain cat
108、egories of gas sold in first sales in interstate and intrastate commerce under the Natural Gas Policy Act(NGPA).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.A
109、s a result,all sales of the Companys domestically produced natural gas may be sold at market prices,unless 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
110、 orders which have altered significantly the marketing and transportation of natural gas.The effect of 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 be
111、lieves that these changes have generally improved the Companys access to transportation and have enhanced the marketability of its natural gas production.To date,Apache has not experienced any material adverse effect on gas marketing as a result of these FERC orders;however,the Company cannot predic
112、t what new regulations may be adopted by the FERC and other regulatory authorities,or what effect subsequent regulations may have on its future gas marketing.ENVIRONMENTAL MATTERS Apache,as an owner or lessee and operator of oil and gas properties,is subject to various federal,state,local and foreig
113、n country laws and regulations relating to discharge of materials into,and protection of,the environment.These laws and regulations 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 liab
114、ility for pollution damages,require suspension or cessation of operations in affected areas and impose restrictions on the injection of liquids into subsurface aquifers that may contaminate groundwater.Apache maintains insurance coverage which it believes are customary in the industry,although it is
115、 not fully insured against all environmental risks.The Company is not aware of any environmental claims existing as of December 31,1994,which would have a material impact upon the Companys financial position or results of operations.Apache has made and will continue to make expenditures in its effor
116、ts to comply with these requirements,which it believes are necessary business costs in the oil and gas industry.Apache has established policies for continuing compliance with environmental laws and regulations,including regulations applicable to its operations in Australia and other countries.Apache
117、 has also established operational procedures designed to limit the environmental impact of its field facilities.The costs incurred by these policies and procedures are inextricably connected to normal operating expenses such that the Company is unable to separate the expenses related to environmenta
118、l matters;however,the Company does not believe any such additional expenses are material to its financial position or results of operations.Although environmental requirements do have a substantial impact upon the energy industry,generally these requirements do not appear to affect Apache any differ
119、ently,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 materials into the environment,or otherwise relating to the protection of the environment,will have
120、 a material adverse effect upon the capital expenditures,earnings or competitive position of the Company or its subsidiaries,but there is no assurance that changes in or additions to laws or regulations regarding the protection of the environment will not have such an impact.COMPETITION The oil and
121、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 lowest finding and production costs possible to maximize profits.As an independent oil and gas company,A
122、pache frequently competes for reserve acquisitions,exploration leases,licenses,concessions and marketing agreements against companies with substantially larger financial and other resources than Apache possesses.Moreover,many competitors have established strategic long-term positions and maintain st
123、rong governmental relationships in countries in which the Company may seek new entry.Apache expects this high degree of competition to continue.7 EMPLOYEES On December 31,1994,Apache had 1,086 full-time employees.OFFICES Apaches principal executive offices are located at One Post Oak Central,2000 Po
124、st Oak Boulevard,Suite 100,Houston,Texas 77056-4400.During 1994,the Company maintained regional exploration and production offices in Tulsa,Oklahoma;Houston,Texas;Denver,Colorado;and Perth,Western Australia.In 1995,the Company intends to close its Denver,Colorado office and open a new office in Calg
125、ary,Alberta to oversee exploration and production activities in Canada following the DEKALB merger.8 ITEM 2.PROPERTIES OIL AND GAS EXPLORATION AND PRODUCTION PROPERTIES AND RESERVES ACREAGE The developed and undeveloped acreage,including both domestic leases and international production and explorat
126、ion rights that Apache held as of December 31,1994,are as follows:9 UNDEVELOPED ACREAGE DEVELOPED ACREAGE -GROSS NET GROSS NET ACRES ACRES ACRES ACRES -GULF OF MEXICO Alabama.-54,749 13,432 Louisiana.113,933 51,755 240,371 99,056 Texas.96,543 58,805 130,889 59,254 -Total.210,476 110,560 426,009 171,
127、742 -MIDCONTINENT Arkansas .833 637 3,900 1,824 Kansas .40 40 -Louisiana.11,905 6,427 82,360 37,668 Oklahoma .40,657 15,555 445,935 166,976 Texas.4,939 3,679 74,382 38,964 -Total.58,374 26,338 606,577 245,432 -PERMIAN BASIN New Mexico .4,801 2,026 62,613 19,036 Texas.73,548 37,206 67,650 44,979 -Tot
128、al.78,349 39,232 130,263 64,015 -GULF COAST Alabama.1,153 678 483 204 Florida.162 14 -Louisiana.5,686 4,678 67,090 26,961 Mississippi.2,042 781 12,944 3,686 New Mexico .-7,698 3,676 Texas.48,620 27,103 181,314 126,326 -Total.57,663 33,254 269,529 160,853 -ROCKY MOUNTAIN Colorado .57,845 34,035 3,001
129、 2,412 Kansas .6,190 2,047 160 -Michigan .-40 6 Montana.27,862 10,177 10,952 7,444 Nebraska .658 329 80 10 Nevada .149,493 65,674 1,880 881 New Mexico .10,975 10,421 39,290 27,999 North Dakota .48,950 20,214 43,371 23,318 South Dakota .720 146 3,640 2,835 Utah .200 200 1,680 1,034 Wyoming.461,137 25
130、1,175 35,516 20,805 -Total.764,030 394,418 139,610 86,744 -TOTAL DOMESTIC.1,168,892 603,802 1,571,988 728,786 -PRODUCTIVE OIL AND GAS WELLS The number of productive oil and gas wells,operated and non-operated,in which Apache had an interest as of December 31,1994,is set forth below.GROSS WELLS DRILL
131、ED 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.The number of wells drilled refers to the number of wells commenced at any time during the respective fiscal year.Productive wells ar
132、e either producing wells or wells capable of commercial production.At December 31,1994,the Company was participating in 29 domestic wells and one international well in the process of drilling.10 UNDEVELOPED ACREAGE DEVELOPED ACREAGE -GROSS NET GROSS NET ACRES ACRES ACRES ACRES -INTERNATIONAL Austral
133、ia.6,833,430 3,320,600 280,460 52,550 China.48,677 16,225 -The Congo.236,228 47,245 -Egypt.1,927,380 481,845 -Indonesia.722,290 280,890 -Ivory Coast.269,338 92,485 -TOTAL INTERNATIONAL.10,037,343 4,239,290 280,460 52,550 -TOTAL COMPANY.11,206,235 4,843,092 1,852,448 781,336 =GAS OIL -GROSS NET GROSS
134、 NET -Gulf of Mexico .440 122 40 4 Midcontinent .1,580 515 344 139 Permian Basin.452 100 2,195 813 Gulf Coast .568 382 1,441 1,034 Rocky Mountain .232 142 772 420 International.3 1 27 5 -Total.3,275 1,262 4,819 2,415 =EXPLORATORY DEVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL -1994 Domesti
135、c .20 17 37 223 39 262 International.7 8 15 2 -2 -Total .27 25 52 225 39 264 =1993 Domestic .12 19 31 198 37 235 International.3 5 8 -Total.15 24 39 198 37 235 =1992 Domestic .10 32 42 145 16 161 International.-6 6 -Total.10 38 48 145 16 161 =NET WELLS DRILLED The following table sets forth,for each
136、 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(NGLs)and gas production for the Company,average production costs and a
137、verage 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 reserve and revenue information an
138、d assumptions included in the Companys financial statements under Item 8 below.The Companys estimates of proved reserve quantities of its domestic properties and certain international properties have been subject to review by Ryder Scott Company Petroleum Engineers.There are numerous uncertainties i
139、nherent in estimating quantities of proved reserves and projecting future rates of production and timing of development expenditures.The following reserve information represents estimates only and should not be construed as being exact.See Supplemental Oil and Gas Disclosures under Item 8 below.11 E
140、XPLORATORY DEVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL -1994 Domestic .10.7 10.4 21.1 100.1 27.0 127.1 International.2.3 2.4 4.7 .4 -.4 -Total .13.0 12.8 25.8 100.5 27.0 127.5 =1993 Domestic .4.2 10.4 14.6 90.4 22.2 112.6 International.0.6 1.3 1.9 -Total.4.8 11.7 16.5 90.4 22.2 112.6 =1
141、992 Domestic .3.2 16.6 19.8 60.1 8.0 68.1 International.-1.1 1.1 -Total.3.2 17.7 20.9 60.1 8.0 68.1 =Production Average Sales Price -Average -Year Ended Oil NGLs Gas Production Oil NGLs Gas December 31,(Mbbls)(Mbbls)(MMcf)Cost per boe (per bbl)(per bbl)(per Mcf)-1994 .13,084 493 155,905$3.48$15.66$1
142、2.39$1.81 1993 .12,294 486 110,622 4.10 16.78 12.35 2.03 1992 .12,056 533 95,982 4.38 18.16 12.34 1.76 The following table sets forth the Companys estimated proved developed and undeveloped reserves as of December 31,1994,1993 and 1992:The following table sets forth the estimated future value of all
143、 proved reserves of the Company,and proved developed reserves of the Company,as of December 31,1994,1993 and 1992.Future reserve values are based on year-end prices except in those instances where the sale of gas and oil is covered by contract terms providing for determinable escalations.Operating c
144、osts,production and ad valorem taxes,and future development costs are based on current costs with no escalations.At December 31,1994,estimated future net revenues expected to be received from all proved reserves of the Company,and from proved developed reserves of the Company,were as follows:The Com
145、pany believes that no major discovery or other favorable or adverse event has occurred since December 31,1994,which would cause a significant change in the estimated proved reserves reported herein.The estimates above are based on year-end pricing in accordance with the Securities and Exchange Commi
146、ssion(SEC)guidelines and do not reflect current prices.Since January 1,1994,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(EIA).The basis of reporting reserves to the EIA for
147、the Companys reserves is identical to that set forth in the foregoing table.12 Oil,NGLs and Natural Gas Condensate 1994 (Bcf)(MMbbls)-Developed .910.3 89.4 Undeveloped .106.0 10.5 -Total .1,016.3 99.9 =1993 -Developed .720.7 79.4 Undeveloped .127.5 10.3 -Total .848.2 89.7 =1992 -Developed .585.4 73.
148、1 Undeveloped .57.9 7.6 -Total .643.3 80.7 =Present Value of Estimated Future Net Revenues Estimated Future Before Income Taxes Net Revenues (Discounted at 10 Percent)-Proved Proved Proved Developed Proved Developed -(In thousands)December 31,1994 .$2,201,585$2,016,523$1,396,844$1,311,591 1993 .2,07
149、4,505 1,783,187 1,359,117 1,189,268 1992 .1,747,113 1,581,853 1,062,558 987,497 Proved Proved Developed -(In thousands)December 31,1995 .$325,137$354,516 1996 .296,704 277,788 1997 .244,404 218,053 Thereafter .1,335,340 1,166,166 -Total .$2,201,585$2,016,523 =TITLE TO INTERESTS The Company believes
150、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 interests or materially interfere with their use in
151、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 burdens such as net profits interests,liens incident to operating agreements and
152、current taxes,development obligations under oil and gas leases and other encumbrances,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 un
153、der the caption Litigation in Note 9 to the Companys financial statements under 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 1994.13 PART II ITEM 5.MAR
154、KET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Apaches common 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 1994 and 199
155、3.Prices shown are from the New York Stock Exchange Composite Transactions Reporting System.The closing price per share of Apache common stock,as reported on the New York Stock Exchange Composite Transactions Reporting System for February 28,1995,was$25.00.At December 31,1994,there were 61,440,004 s
156、hares of Apache common stock outstanding,held by approximately 10,400 shareholders of record and 30,000 beneficial owners.Each share of Apache common stock also represents one common stock purchase right which,under certain circumstances,would entitle the holder to acquire additional shares of commo
157、n stock.See Note 6 to the Companys financial statements under Item 8 below.The Company has paid cash dividends on its common stock for 112 consecutive quarters and intends to continue the payment of dividends at current levels,although future dividend payments will depend upon the Companys level of
158、earnings,financial requirements and other relevant factors.14 1994 1993 -PRICE RANGE PRICE RANGE -DIVIDENDS -DIVIDENDS HIGH LOW PER SHARE HIGH LOW PER SHARE -First Quarter.$26 7/8$22 1/2$0.07$26 1/4$17 5/8$0.07 Second Quarter .29 22 1/4 0.07 30 1/4 24 3/8 0.07 Third Quarter.29 1/4 23 0.07 33 1/2 26
159、3/8 0.07 Fourth Quarter .28 7/8 23 5/8 0.07 31 1/4 20 3/8 0.07 ITEM 6.SELECTED FINANCIAL DATA The following table sets forth selected financial data of the Company and its consolidated subsidiaries for each of the years in the five-year period ended December 31,1994,which information has been derive
160、d from the Companys audited financial statements.This information should be read in connection with and is qualified in its entirety by the more detailed information and financial statements under Item 8 below.*Includes financial data for AERC after June 30,1993,and for Hall-Houston after July 31,19
161、93.See Note 1 to the Companys financial statements under Item 8 below.*Includes financial data for MW after June 30,1991.Reference is made to Item 7,MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,for a discussion of significant acquisitions and to the Summary of
162、 Significant Accounting Policies and Note 1 to the Companys financial statements under Item 8 below.15 At or for the Year Ended December 31,-1994 1993*1992 1991*1990 -(In thousands,except per share amounts)INCOME STATEMENT DATA Total revenues$545,621$466,638$454,300$356,930$273,410 Net income 42,837
163、 37,334 47,776 34,615 40,297 Net income per common share .70 .70 1.02 .76 .90 Cash dividends per common share .28 .28 .28 .28 .28 BALANCE SHEET DATA Working capital(deficit)$(12,891)$(62,450)$(43,775)$(55,023)$15,678 Total assets 1,879,022 1,592,407 1,218,704 1,209,291 829,634 Long-term debt 657,486
164、 453,009 454,373 490,988 194,781 Shareholders equity 816,180 785,854 475,209 439,941 386,780 Common shares outstanding at end of year 61,440 61,085 46,936 46,855 44,694 ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Apaches financial performance
165、during 1994 is best understood in light of the following factors:PRODUCTION INCREASES;COMMODITY PRICES-The current years performance was affected by substantial increases in natural gas production partially offset by lower average oil and natural gas prices for the year.Apaches natural gas productio
166、n increased by 41 percent over the prior year,attributable principally to developmental drilling,recompletions and acquisitions completed in 1993.These gains were partially offset as Apaches average realized natural gas price declined 11 percent from the prior year.Apaches oil production increased b
167、y six percent over the prior year.Although oil prices improved from the five-year low experienced in the fourth quarter of 1993,Apaches average realized oil price in 1994 was seven percent lower than in 1993.ACQUISITIONS-Apache continued to acquire properties in 1994,acquiring$180 million of oil and
168、 gas properties in the current year following its mid-1993 acquisition of Hadson Energy Resources Corporation(now known as Apache Energy Resources Corporation or AERC)and substantially all of the producing properties of Hall-Houston Oil Company(Hall-Houston)in the Gulf of Mexico for an aggregate of$
169、211.7 million.The Companys 1994 performance reflects a full 12 months of ownership of AERC and the Hall-Houston properties;however,over half of the 1994 acquisitions were booked in the fourth quarter,too late to have a significant impact on the Companys 1994 performance.Acquisitions which closed in
170、1993 and 1994 accounted for approximately 40 percent of the overall increase in gas production from a year ago.INCREASE IN AVERAGE COMMON SHARES OUTSTANDING-The weighted average number of shares of Apache common stock outstanding in 1994 increased by 7.8 million shares(15 percent)over 1993,primarily
171、 as a result of the issuance of 5.8 million shares in connection with a public stock offering in March 1993 and the issuance of 7.8 million shares in connection with the conversion of$150 million of subordinated debentures in September 1993.Proceeds from these transactions reduced outstanding debt b
172、y$281.8 million.RESULTS OF OPERATIONS NET INCOME AND REVENUES The Company reported net income for the year of$42.8 million,a 15-percent increase from 1993 earnings of$37.3 million.Net income of$.70 per share was unchanged from 1993,as the increase in 1994 net income was offset by the increase in the
173、 weighted average number of shares of Apache common stock outstanding.Significant factors contributing to the higher earnings were increased oil production and substantially increased natural gas production partially offset by decreases in oil and natural gas prices.Volume and price information conc
174、erning the Companys 1994 and 1993 oil and gas production is summarized in the following table:16 Selected Oil and Gas Increase Operating Statistics 1994 1993 (Decrease)-Gas volume-Mcf per day:Domestic .419,161 299,486 40%International .7,975 3,589 122%-Total .427,136 303,075 41%=Average Gas Price-Pe
175、r Mcf .$1.81$2.03 (11)%Revenues for 1994 totaled$545.6 million,or 17 percent higher than a year ago.Oil and gas revenues in 1994 totaled$493.5 million,an increase of 13 percent over production revenues of$437.3 million in 1993.Production revenues were influenced by record natural gas production,decl
176、ining natural gas prices,increased oil production and lower average oil prices for the year.In addition,Apaches gathering,processing and marketing revenues increased 71 percent to$44.3 million in 1994 from$25.9 million in 1993.Revenues from international operations increased 70 percent to$26.3 milli
177、on with a full twelve months of Australian production from the AERC acquisition.Natural gas sales contributed$282.5 million to revenues,up 26 percent from 1993,the result of higher annual production partially offset by lower prices during 1994.Gas production for the year averaged 427 MMcf per day,up
178、 41 percent from 1993,positively affecting gas sales by$92.1 million.This increase is principally the result of production increases from developmental drilling and the contribution from 12 months of operations from properties acquired in 1993,the most significant of which were the offshore properti
179、es acquired from Hall-Houston and the properties acquired in the merger with AERC.Acquisitions added approximately 49 MMcfd of production increases for the year,whereas developmental drilling and recompletions accounted for nearly 75 MMcfd.Apaches average realized price for its natural gas was$1.81
180、per Mcf during 1994,11 percent lower than the average price of$2.03 per Mcf during 1993,which negatively affected gas sales by$34.6 million.During 1994,Apaches average realized gas prices ranged from$1.48 per Mcf in October to$2.15 per Mcf in February.Gas prices remained depressed during the second
181、half of 1994 due to warmer than usual weather in the northeastern United States and higher volumes of gas held in inventory by utilities and gas storage facilities.Hedging activities increased Apaches 1994 gas price by$.01 per Mcf($1.6 million in sales)compared to$.05 per Mcf decrease($5.4 million i
182、n sales)in 1993.The 1994 hedging was in the form of floating for fixed price swap agreements,with hedged volumes ranging from 10,000 MMBtud to 40,000 MMBtud.Hedging activities in 1993 included a$3.8 million net loss from swap agreements and a$1.6 million payment to Amoco Production Company(Amoco)und
183、er the terms of the price support hedging agreement described in Footnote 8 to the Companys financial statements.With natural gas spot prices rising significantly during the second and third quarters of 1993,the 1993 hedging activities in effect mitigated the upside potential of improving prices.The
184、 impact of increased oil production was offset by lower oil prices in 1994.Oil production contributed$204.9 million to revenues during 1994,less than one percent below Apaches oil sales in 1993.Average daily oil production of approximately 35.8 Mbbls of oil increased six percent over the prior year,
185、positively affecting oil sales by$13.3 million,as acquisitions offset the effects of natural depletion.Oil sales represented 42 percent of total oil and gas sales in 1994 compared to 47 percent of total oil and gas sales in 1993.17 Selected Oil and Gas Increase Operating Statistics 1994 1993 (Decrea
186、se)-Oil volume-Barrels per day:Domestic .32,669 31,809 3%International .3,177 1,874 70%-Total .35,846 33,683 6%=Average Oil Price-Per barrel .$15.66$16.78 (7)%Natural Gas Liquids(NGL)-Barrels per day:.1,352 1,331 2%Average NGL Price-Per barrel .$12.39$12.35 -The Companys average realized oil price o
187、f$15.66 per barrel declined seven percent from 1993,negatively affecting oil sales by$14.7 million.Apaches average realized oil prices in 1994 ranged from$12.65 per barrel in March to$17.77 per barrel in July.Hedging activities increased Apaches average realized oil price by$.20 per barrel($2.6 mill
188、ion in sales)as compared to a$.39 per barrel increase($4.8 million in sales)in 1993.The 1994 hedges were in the form of floating for fixed price swap agreements with respect to the sale of oil,whereas 1993 sales hedges were due to the price support hedging agreement with Amoco.Revenues from the sale
189、 of natural gas liquids increased one percent from 1993,to$6.1 million in 1994.The higher revenue reflects slightly increased volumes incidental to Apaches increased gas production.Revenues from gas gathering,processing and marketing were$44.3 million in 1994,up 71 percent from 1993.The revenue incr
190、ease primarily reflects additional volumes sold under crude oil and natural gas contracts,an activity that generally creates relatively low margins.Gross margins from gathering,processing and marketing were$6.4 million in 1994,an increase of 32 percent from 1993.Other revenues increased to$7.4 milli
191、on in 1994,up from$2.8 million in 1993.Non-recurring revenues in 1994 included$4 million from the favorable resolution of take-or-pay contract issues and$2.2 million in gains from the sale of stock held for investment.COSTS AND EXPENSES Operating costs per equivalent unit of production declined 14 p
192、ercent in 1994,as a 27-percent increase in production volumes more than offset an eight-percent increase in operating costs.Aggregate operating costs increased from$128.1 million in 1993 to$137.8 million in 1994.Operating costs include lifting costs,workover expense,and applicable domestic or foreig
193、n production taxes.On an equivalent unit of production basis,operating costs in 1994 declined to$3.48 per boe,down from$4.10 per boe in 1993.Apaches declining costs per boe reflect increasing natural gas production and lower production costs associated with the operation of gas-bearing properties as
194、 compared with oil-bearing properties.The decline in unit cost reflects the Companys continued cost saving efforts and the addition of offshore properties which are not subject to production taxes and traditionally have lower unit lifting costs.Depreciation,depletion and amortization(DD&A)expense ro
195、se 32 percent year-over-year to$232.6 million due to increased domestic sales of oil and natural gas and a higher domestic amortization rate expressed as a percentage of sales.Apaches domestic amortization rate of 45.5 percent of sales for 1994 increased from 38.7 percent in 1993.The increase in DD&
196、A as a percentage of sales is a result of lower natural gas and oil prices during 1994 and a higher average finding cost in 1993 compared to recent years.Recurring international DD&A increased as a result of substantially increased Australian production.Although Apache increased its international ex
197、ploration activity in 1994,international impairments declined to$7.3 million in 1994 from$23.2 million in 1993,reflecting the Companys successful international exploration efforts in China,Egypt,The Congo and Indonesia during 1994.Administrative,selling and other costs increased$1.7 million in 1994,
198、or five percent from 1993.Administrative,selling and other costs,on an equivalent unit of production basis,declined 17 percent from the prior year to$.88 per boe in 1994 from$1.06 per boe in 1993,reflecting the increase in production over the prior year and results of the Companys sustained efforts
199、to contain costs.The Company integrated AERC and the Hall-Houston properties with minimal increases in administrative staff.18 Net financing costs of$30.7 million were 14 percent higher than 1993.This was primarily as a result of increasing interest rates and increased debt in 1994 related to the AE
200、RC and Hall-Houston acquisitions which were funded in the second half of 1993.By year end,effective interest rates on Apaches floating rate debt,which includes all advances under its bank credit facility,increased approximately 59 percent over year-end 1993 as market rates increased at six different
201、 times during the year.Apaches average effective interest rate during 1994 increased to 6.65 percent from 4.96 percent during 1993.On an equivalent unit of production basis,net financing costs declined to$.78 per boe in 1994 from$.86 per boe in 1993,as increased production offset the rising cost of
202、financing.On December 31,1994,Apaches outstanding debt balance was$658 million,an increase of 42 percent from$462 million on December 31,1993.PRIOR-YEAR COMPARATIVE INFORMATION The Company reported net income for 1993 of$37.3 million,or$.70 per share,a 22-percent decrease from 1992 earnings of$47.8
203、million,or$1.02 per share.Significant factors contributing to the lower earnings were after-tax charges to earnings of$7.8 million,or$.15 per share,taken in the third quarter related to international impairments and changes in tax laws,the decline in the Companys realized oil prices during 1993,and
204、the$18.5 million after-tax gain recognized during 1992 on the sale of the Companys interest in Natural Gas Clearinghouse(NGC).Excluding only the gain on the 1992 NGC sale,the Companys 1993 earnings increased 28 percent over 1992.Volume and price information concerning the Companys 1993 and 1992 oil
205、and gas production is summarized in the following table:Revenues for 1993 totaled$466.6 million,a three-percent increase over the Companys 1992 revenues.Production revenues in 1993 totaled$437.3 million compared to$394.6 million in 1992.Oil and gas revenues were influenced by improved gas prices ove
206、r 1992,declining second-half oil prices,and the acquisition of AERC and the Hall-Houston properties in the second half of the year.Revenues from international operations increased 93 percent in 1993,to$15.5 million,with six months of Australian production from the 1993 AERC acquisition.19 Selected O
207、il and Gas Increase Operating Statistics 1993 1992 (Decrease)-Gas volume-Mcf per day:Domestic .299,486 262,245 14%Foreign .3,589 -Total .303,075 262,245 16%=Average Gas Price-Per Mcf .$2.03$1.76 15%Oil volume-Barrels per day:Domestic .31,809 31,874 -Foreign .1,874 1,066 76%-Total .33,683 32,940 2%=A
208、verage Oil Price-Per Barrel .$16.78$18.16 (8)%Natural Gas Liquids(NGL)-Barrels per day .1,331 1,458 (9)%Average NGL Price-Per barrel .$12.35$12.34 -Natural gas sales in 1993 contributed$225 million to revenues,up 33 percent from 1992,the result of sustained higher prices and higher production during
209、 1993.During 1992,Apaches average realized gas price ranged from$1.17 per Mcf in February,the lowest price in 13 years,to a high of$2.40 per Mcf in October.Apaches average realized price for 1992 was$1.76 per Mcf.In 1993,prices remained in the higher range established in the latter half of 1992.Apac
210、hes average realized price for 1993 was$2.03 per Mcf,up 15 percent over the 1992 average,positively affecting 1993 gas sales by$30.4 million.Hedging activities decreased gas sales by$5.4 million($.05 per Mcf)in 1993 as compared to a$2.5 million decrease in 1992.Both years included losses on swap agr
211、eements and price sharing obligations with Amoco.The impact of higher gas prices was augmented by higher gas production in 1993 as compared with 1992.Gas production for the year averaged 303.1 MMcf per day,up 16 percent from 1992,positively affecting gas sales by$25.8 million.This increase is princi
212、pally the result of production from newly acquired properties,the most significant of which were the offshore properties acquired from Hall-Houston,the additional 93-percent working interest in Matagorda Island Blocks 681 and 682 acquired in 1992,and the properties acquired in the merger with AERC.C
213、ombined,these three acquisitions comprised 332 Bcfe of proved reserves at year end 1993 and contributed 68 MMcf of gas per day to Apaches 1993 average daily production.The impact of increased oil production in 1993 was offset by lower oil prices.Oil production contributed$206.3 million to revenues d
214、uring 1993,six percent below Apaches record$218.9 million in oil sales in 1992.Average daily oil production of approximately 33.7 Mbbls of oil increased two percent over the prior year,positively affecting oil sales by$4.3 million,as acquisitions,continuing workover and recompletion operations,and n
215、ew drilling in the Permian Basin and Austin Chalk trend offset the effects of natural depletion.The Companys average realized oil price of$16.78 per barrel declined eight percent from 1992,negatively affecting oil sales by$16.9 million.Hedging activities boosted Apaches average realized oil price in
216、 1993 by$.39 per barrel($4.8 million in sales)as compared to a$.44 per barrel increase($5.3 million in sales)in 1992.These were due to Amoco price support hedging activities.Revenues from the sale of natural gas liquids and sulfur in 1993 declined 12 percent from 1992 to$6.0 million,a result of lowe
217、r prices for natural gas liquids and the sale of the Whitney Canyon gas processing plant in 1992.The sale of natural gas liquids declined from 1.5 Mbbls per day in 1992 to 1.3 Mbbls per day in 1993.Revenues from gas gathering,processing and marketing were$25.9 million in 1993,down 10 percent from 19
218、92.The decline primarily reflects the sale of Apaches interest in a gas gathering system in western Oklahoma in March 1993.As a result,gross margins from gathering,processing and marketing were$4.9 million in 1993,a decline of 32 percent from 1992.Operating costs were up two percent in 1993 to$128.1
219、 million,as a decline in operating costs per barrel of oil equivalent was offset by the impact of increased production.Operating costs include lifting costs,workover expense,and applicable domestic or foreign production taxes.On an equivalent unit of production basis,operating costs declined six per
220、cent in 1993 to$4.10 per boe,down from$4.38 per boe in 1992.Apaches declining costs per boe reflect increasing natural gas production and lower production costs associated with operating gas-bearing properties as compared to oil-bearing properties.Apaches operating costs were also reduced by refunds
221、 of well-control insurance totaling$.7 million and production tax refunds totaling$1.8 million during 1993.DD&A expense rose 12 percent year-over-year to$176.3 million due to increased sales of natural gas and increased Australian production.Although Apaches domestic amortization rate of 38.7 percen
222、t of sales for 1993 was down slightly from 1992,declining oil prices and the higher costs associated with newly acquired offshore properties,which reflect shorter reserve lives and faster expected payouts,combined to increase Apaches domestic amortization rate in the second half of 1993.Recurring in
223、ternational DD&A increased as a result of substantially increased Australian production.20 International impairments,which rose to$23.2 million in 1993 from$12 million in 1992,included$6.7 million of the Companys investment in West Africa which the Company wrote-off in the third quarter of 1993 when
224、 it recognized a reduced probability of establishing commercial operations on two of Apaches concessions.The 1993 impairments also included provisions for Apaches investment in the Java Sea(Indonesia)and Nanteau(France).Administrative,selling and other costs were down five percent from those incurre
225、d in 1992,despite the Companys acquisitions during 1993.The reduction reflects the Companys sustained efforts to contain costs,the non-recurring administrative costs incurred in the 1992 corporate relocation to Houston,and the integration of MW.In 1993,Apache successfully assimilated the AERC and Ha
226、ll-Houston properties with minimal additions to its administrative staff.Administrative cost reductions were partially offset,however,by expenses associated with an employee benefit plan based on Apache common stock,which increased in price by approximately 25 percent from year-end 1992 to year-end
227、1993.Net financing costs declined 17 percent in 1993 despite the use of bank debt to fund the AERC and Hall-Houston acquisitions.The decline is primarily attributable to a decline of approximately 100 basis points in Apaches effective interest in 1993 as compared with 1992,reflecting a general decli
228、ne in interest rates and the conversion of Apaches 7 1/2-percent convertible subordinated debentures due 2000 into shares of Apache common stock in September 1993.Interest expense also declined as a result of Apaches repayment of bank debt from a portion of the$131.8 million in net proceeds of its p
229、ublic offering of common stock in March 1993,the successful conversion of approximately$150 million of its 7 1/2-percent convertible subordinated debentures due 2000 and through the redemption of$7 million of 9-percent convertible subordinated debentures due 2001.Debt reductions attributable to the
230、public offering and debt conversion in 1993 were offset by debt incurred in connection with acquisitions.On December 31,1993,Apaches outstanding debt balance was$462 million,an increase of one percent from$455.5 million on December 31,1992.CASH FLOW,LIQUIDITY AND CAPITAL RESOURCES CAPITAL COMMITMENT
231、S Apaches primary needs for cash are for exploration,development and acquisition of oil and gas properties,repayment of principal and interest on outstanding debt,and payment of dividends.The Company generally funds its exploration and development activities through internally generated cash flows.A
232、pache budgets its capital expenditures based upon projected cash flows and routinely adjusts its capital expenditures in response to changes in oil and gas prices and corresponding changes in cash flow.Expenditures for exploration and development increased to$302.5 million in 1994 from$218.9 million
233、 in 1993.Domestically,Apache completed 243 producing wells out of 299 gross wells drilled during the year compared with 266 gross wells drilled in 1993,of which 210 were completed as producers.Internationally,the Company had discoveries on nine of 17 wells drilled in 1994,while completing three of e
234、ight wells as producers in 1993.Domestic expenditures for exploration and development in 1995,including workover and recompletion operations,are expected to decline to approximately$170 million as additional funds are used to reduce debt.The Company will step-up its international activities in 1995
235、with exploration and development expenditures expected to rise to approximately$45 million,up from$32 million in 1994.Cash expenditures for acquisitions during 1994 were$180 million,compared to$260.9 million in 1993.The most significant acquisition that Apache closed during 1994 was the purchase of
236、substantially all of the U.S.oil and gas properties of Crystal Oil Company for$95.8 million.Apache also acquired approximately$84.2 million of other oil and gas properties through a number of different transactions during 1994.Funds for the 1994 acquisitions were obtained principally from borrowings
237、 under the Companys revolving bank credit facility.21 During the fourth quarter of 1994,Apache entered into a merger agreement with DEKALB Energy Company(DEKALB),with DEKALB to survive as a wholly-owned subsidiary of Apache and DEKALB shares to be converted into the right to receive shares of Apache
238、 common stock.The Company contemplates that between 8.0 and 8.9 million shares of Apache common stock will be issued in connection with the merger.On March 1,1995,Apache purchased certain oil and gas properties from Texaco Exploration and Production Inc.(Texaco)for approximately$571 million in cash,
239、subject to adjustment.Apache delivered a$25 million deposit,representing a portion of the purchase price,upon execution of the purchase and sale agreement with Texaco in December 1994,and delivered the balance in cash at closing.Funds for the Texaco transaction were obtained from several sources,inc
240、luding increased borrowing capacity under the Companys bank credit facility and proceeds of Apaches$172.5 million 6-percent Convertible Subordinated Debentures due 2002(6-percent debentures),which were issued on January 4,1995.On March 1,1995,lenders increased the Apache revolving credit facility to
241、$1 billion,subject to borrowing base availability.The Company aggressively pursues acquisition opportunities as part of its reserve growth strategy.The amount and timing of future funding requirements for acquisitions are dependent upon several factors,including the market for oil and gas properties
242、,and cannot be predicted for the upcoming year.The aggregate cost of acquisitions in 1993,including the value of the shares issued and liabilities added through the merger of AERC,totaled$324.6 million.Apaches most significant transactions during 1993 were its acquisitions of oil and gas properties
243、from Hall-Houston for$113.7 million in cash and the acquisition of AERC for approximately$98 million in cash and the issuance of 307,977 shares of Apache common stock.Apache also acquired more than$76.5 million of other properties during 1993,primarily representing purchases of additional working in
244、terests in properties in which Apache already held an interest,including the purchase of Key Production Companys interest in certain properties held by Apache Operating Partnership L.P.prior to its dissolution during the first quarter of 1993.Other capital expenditures for 1993 include the purchase
245、of NGCs interest in a gas gathering system in western Oklahoma which was sold in March 1993,in a transaction described under Capital Resources and Liquidity below.At December 31,1994,Apache had outstanding$454 million under its revolving bank credit facility,$25.8 million in additional bank debt con
246、solidated through the AEL bankers acceptance facility,and an aggregate of$177.8 million in principal amount of other long-term debt,comprised principally of notes and debentures maturing in the years 1997 through 2002.The Companys overall debt at December 31,1994,had increased$195.6 million from Dec
247、ember 31,1993,partly the result of borrowing to fund acquisitions and the purchase of approximately$15 million of AERC shares tendered to the Company in the first quarter of 1994.Apache made cash payments on long-term debt totaling$28.7 million in 1994,of which$9 million was scheduled under the Comp
248、anys debt obligations and the remaining amount was paid due to the termination of AERCs bank credit facility.Interest payments on the Companys outstanding debt obligations during 1995 are projected(using weighted average balances for floating rate obligations)to be approximately$89 million,while sch
249、eduled principal payments for 1995 currently total$.1 million.Dividends paid during 1994 totaled$17.1 million,up 15 percent from 1993,primarily due to the issuance of approximately 5.8 million shares in connection with the Companys March 1993 common stock offering,and the issuance of approximately 7
250、.8 million shares in September 1993 upon the conversion of its subordinated debentures.The Companys dividend policy currently provides for the payment of regular quarterly dividends at the rate of$.28 per share annually.Although no change in the dividend policy is contemplated for 1995,the declarati
251、on and amount of future dividends is dependent upon the Companys cash requirements,applicable debt covenants and other factors deemed relevant by the Board of Directors.22 CAPITAL RESOURCES AND LIQUIDITY The Companys primary capital resources are net cash provided by operating activities,proceeds fr
252、om financing activities and proceeds from sales of non-strategic assets.Net cash provided by operating activities during 1994 was$335.6 million,up$110.5 million from 1993.The 49-percent improvement in cash flows primarily reflects increased natural gas production and a$67.4 million advance on future
253、 gas deliveries related to the Companys sale of approximately 43.8 Bcf of natural gas for delivery over a six-year period.(See Note 5 to the Companys financial statements).Eliminating the effects of forward sale transactions,net cash provided by operating activities increased by 19 percent over 1993
254、,reflecting the results of increased production partially offset by lower oil and gas prices.The Company anticipates that it will engage in additional forward sale transactions in the future if sales can be made under terms and conditions that are favorable to the Company in light of market conditio
255、ns.Future cash flows will be influenced by product prices and production volumes and are not presently ascertainable.On January 4,1995,Apache completed the issuance of$172.5 million principal amount of its 6-percent debentures to reduce bank debt,provide funding for acquisitions and general corporat
256、e purposes.The debentures are convertible at the option of the holder into Apache common stock at a conversion price of$30.68 per share.On March 1,1995,in connection with the acquisition of certain oil and gas properties from Texaco,lenders increased the size of Apaches revolving credit facility fro
257、m$700 million to$1 billion,subject to borrowing base availability.The borrowing base is the estimated loan value of the Companys oil and gas reserves,not including reserves outside the United States and subject to certain other exclusions,based upon forecast rates of production,as periodically redet
258、ermined by the lenders.Upon closing the Texaco transaction on March 1,1995,Apache had approximately$840 million in loans outstanding under the facility with approximately$60 million remaining available.(See Note 3 to the Companys financial statements under Item 8 below.)Under terms of the credit agr
259、eement,as amended March 1,1995,the Company must(i)maintain a minimum tangible net worth of$650 million,which is adjusted quarterly for subsequent earnings and securities transactions,and (ii)maintain a ratio(A)earnings before interest,taxes,depreciation,depletion and amortization to(B)consolidated i
260、nterest expense,of not less than 3.7:1.Restrictive covenants under the facility include certain limitations on indebtedness and contingent obligations,as well as certain restrictions on liens and investments in international subsidiaries.The Company has complied with its financial ratios and restric
261、tive covenants at all times since the inception of the revolving credit facility in July 1991.The facility matures on March 1,2000,and may be extended in one-year increments with the lenders consent.In May 1994,Apache terminated AERCs bank credit facility and converted the bankers acceptance facilit
262、y of Apache Energy Limited(AEL),a wholly-owned Australian subsidiary of AERC,from a reducing term credit facility to a revolving credit facility with a commitment of$30 million,subject to financial covenants and borrowing base availability.The AEL facility provides for advances discounted at a varyi
263、ng rate over the discount rate prevailing in the Canadian bankers acceptance market.Under the terms of AELs revolving credit facility,AEL must maintain certain minimum financial ratios,including a current ratio(including funds available under the AEL credit facility)of 1.0 to 1.0,a ratio of consolid
264、ated cash flow to debt service of 1.1 to 1.0,and a ratio of consolidated cash flow to consolidated interest expense of 3.0 to 1.0.In addition,AEL must maintain a minimum tangible net worth of$30 million,which is adjusted quarterly for subsequent earnings,and satisfy restrictive covenants similar to
265、those under Apaches revolving credit facility.At year end,the borrowing base was$30 million of which$25.8 million was outstanding,and AEL was in compliance with the financial ratios and restrictive covenants under the facility.Apache and its subsidiaries(other than AEL and its subsidiaries)have not
266、guaranteed the AEL credit facility.In March 1993,Apache and NGC completed the sale of their respective interests in a gathering system in western Oklahoma.Apache received gross cash proceeds of approximately$32.2 million in the transaction,of which$16.4 million was attributable to NGCs interest in t
267、he system.23 Also in March 1993,Apache completed the public offering of approximately 5.8 million shares of Apache common stock for net proceeds of$131.8 million.Net proceeds of the offering were used to repay outstanding debt under Apaches revolving bank credit facility.In September 1993,Apache com
268、pleted the conversion of its 7 1/2-percent convertible subordinated debentures due 2000,resulting in the issuance of approximately 7.8 million shares of Apache common stock.Primarily as a result of the conversion and Apaches March 1993 equity offering,Apaches debt as a percentage of capital declined
269、 to 37 percent at December 31,1993.In May 1992,Apache issued 9.25-percent notes due 2002 in the principal amount of$100 million.Proceeds from the offering were used to reduce bank debt,pay off its 9 1/2-percent convertible debentures due 1996 and for general corporate purposes.In December 1992,the C
270、ompany privately placed 3.93-percent convertible notes due 1997 in the principal amount of$75 million.The 3.93-percent notes are not redeemable before maturity and are convertible into Apache common stock at the option of the holders at any time prior to maturity at a conversion price of$27.00 per s
271、hare.Proceeds from the sale of the 3.93-percent notes were used to repay bank debt.The Company had$15.1 million in cash and cash equivalents on hand at December 31,1994,down from$17.1 million at the end of 1993.The Companys ratio of current assets to current liabilities at year end of.9:1 improved f
272、rom a ratio of.7:1 from year-end 1993.Management believes that cash on hand at year end,net cash generated from operations,proceeds from the sale of the 6-percent debentures,and increased borrowing capacity under its revolving bank credit facility will be adequate to satisfy the Companys financial o
273、bligations,including its purchase obligation with respect to the Texaco properties(see Capital Commitments),and to meet future liquidity needs for at least the next two fiscal years.FUTURE TRENDS The closing of the acquisition of the Texaco properties and the DEKALB merger mark the completion of a m
274、ajor acquisition cycle which will be followed by property consolidation and rationalization.Apache is committed to reducing its debt to capitalization ratio through the selective disposition of marginal and non-strategic properties and through property development focused on cash flow and debt reduc
275、tion.In that regard,Apache announced on February 15,1995,the Companys plan to sell substantially all of the oil and gas properties in its Rocky Mountain region,which includes many lower margin properties.The Company anticipates that divestiture of the Rocky Mountain properties,together with disposal
276、 of non-strategic assets in other operating regions,will result in total proceeds of approximately$200 million.While total capital expenditures will be higher in 1995 due to the acquisition of properties from Texaco,domestic exploration and development costs will be reduced from their 1994 levels as
277、 a result of low product prices and the commitment to reduce debt.Property dispositions and reduced domestic exploration outlays in 1995 will likely result in lower production and reserves from the level achieved upon completion of the Texaco and DEKALB transactions.The following factors may also im
278、pact Apaches operating results and financial condition in the future.CONTINUING VOLATILITY OF PRODUCT PRICES In 1994,spot market natural gas prices remained volatile and continued to behave unpredictably.Spot market oil prices,which are especially vulnerable to complex and unpredictable political an
279、d economic forces,also remained volatile in 1994,as Apaches average realized price fluctuated from$12.65 per barrel in March to$17.77 per barrel in July.Management believes that,absent a comprehensive U.S.energy policy,oil prices will continue to fluctuate in response to changes in the policies of t
280、he Organization of Petroleum Exporting Countries(OPEC),events in the Middle East and events in certain non-OPEC countries.Management also believes that gas prices will remain volatile and may fluctuate due to supply and demand perceptions.24 MARKETING AND HEDGING In August 1994,Apache named a vice p
281、resident of marketing to a newly created position to oversee the marketing and sale of the Companys gas production.The Company expects to take a more active roll in the marketing of Apaches production in 1995.Also during 1994,Apache undertook a comprehensive review of its risk management policies an
282、d procedures,with emphasis on commodity hedging.At December 31,1994,Apache had two open swap agreements hedging a total of 30,000 MMBtud of natural gas.(See Note 8 to the Companys financial statements.)The Company is likely to increase the use of commodity derivatives contracts to either fix or supp
283、ort oil and gas prices at targeted levels,or to minimize the impact of price fluctuations.CEILING TEST FOR FULL COST COMPANIES Oil and gas producers that conduct their financial reporting under the full cost accounting rules are subject to Securities and Exchange Commission(SEC)rules that require qu
284、arterly ceiling test calculations.This test requires a write-down when the capitalized cost of oil and gas properties exceeds the present value of proved reserves,plus the lower of cost or market value for unproved properties.(See Supplemental Oil and Gas Disclosures to the Companys financial statem
285、ents).The test is applied at the end of each fiscal quarter on a country-by-country basis,and requires a write-down if the ceiling is exceeded,even if prices decline only for a short period of time.Many full cost companies,including Apache,are concerned about the impact of prolonged unfavorable gas
286、prices on their ceiling test calculations.A further deterioration of gas or oil prices from year-end levels would likely result in the Company recording a non-cash charge to earnings related to its oil and gas properties in the first quarter of 1995.SEC rules permit the exclusion of capitalized cost
287、s and present value of recently acquired properties in performing ceiling test calculations.Pursuant to these rules,Apache has requested waivers and the SEC has granted one-year waivers with respect to the properties acquired from Texaco and Crystal.If the ceiling is exceeded on all domestic propert
288、ies,Apache will be required to perform an additional ceiling test excluding the Texaco and Crystal properties and record a write-down of carrying value if the ceiling is still exceeded.ENVIRONMENTAL REGULATION The Company operates under numerous state and federal laws regulating the discharge of mat
289、erials into,and the protection of,the environment.In the ordinary course of business,Apache conducts an ongoing review of the effects of these various environmental laws on its business and operations.The estimated cost of continued compliance with current environmental laws,based upon the informati
290、on currently available,is not material to the Companys financial position or results of operations.It is impossible to determine whether and to what extent Apaches future performance may be affected by environmental laws;however,management does not believe that such laws will have a material adverse
291、 effect on the Companys financial position or results of operations.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-28 of this Form 10-K,and are incorporated
292、herein by reference.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.25 PART III ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth under the captions Information About Nominees for Election as Directors,Continuing Dir
293、ectors,Executive Officers of the Company,and Voting Securities and Principal Holders in the Companys proxy statement relating to the Companys 1995 annual meeting of shareholders(the Proxy Statement)is incorporated herein by reference.ITEM 11.EXECUTIVE COMPENSATION The information set forth under the
294、 captions Summary Compensation Table,Option/SAR Grants Table,Option/SAR Exercises and Year-End Value Table,Employment Contracts and Termination of Employment and Change-in-Control Arrangements,and Director Compensation in the Proxy Statement is incorporated herein by reference.ITEM 12.SECURITY OWNER
295、SHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information set forth under the caption Voting Securities and Principal Holders in the Proxy Statement is incorporated herein by reference.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information set forth under the caption Certain B
296、usiness Relationships and Transactions in the Proxy Statement is incorporated herein by reference.26 PART IV ITEM 14.EXHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON FORM 8-K (a)DOCUMENTS INCLUDED IN THIS REPORT:1.FINANCIAL STATEMENTS 2.FINANCIAL STATEMENT SCHEDULES Financial statement schedule
297、s have been omitted because they are either not required,not applicable or the information required to be presented is included in the Companys financial statements and related notes.27 Report of independent public accountants.F-1 Report of management.F-2 Statement of consolidated income for each of
298、 the three years in the period ended December 31,1994.F-3 Statement of consolidated cash flows for each of the three years in the period ended December 31,1994.F-4 Consolidated balance sheet as of December 31,1994 and 1993 .F-5 Statement of consolidated shareholders equity for each of the three year
299、s in the period ended December 31,1994 .F-7 Summary of significant accounting policies.F-8 Notes to consolidated financial statements.F-10 Supplemental oil and gas disclosures.F-22 Supplemental quarterly financial data .F-28 3.EXHIBITS 28 EXHIBIT NO.DESCRIPTION-2.1-Stock Purchase Agreement,dated Jul
300、y 1,1991,between Registrant and Amoco Production Company(incorporated by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K,dated July 1,1991,SEC File No.1-4300,filed July 19,1991).2.2-Purchase and Sale Agreement between Hall-Houston Oil Company,as seller,and Registrant,as buyer,dat
301、ed as of June 2,1993(incorporated by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K,dated August 31,1993,SEC File No.1-4300,filed September 7,1993).2.3-Purchase and Sale Agreement between Hall-Houston Oil Company,as seller,and Registrant,as buyer,dated as of August 13,1993(incor
302、porated by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K,dated August 31,1993,SEC File No.1-4300,filed September 7,1993).2.4-Form of Acquisition Agreement between Registrant,HERC Acquisition Corporation and Hadson Energy Resources Corporation,dated August 26,1993,and amended Se
303、ptember 28,1993(incorporated by reference to Exhibit 2.1 to Registrants Registration Statement on Form S-4,Registration No.33-67954,filed September 29,1993).2.5-Purchase and Sale Agreement by and between Texaco Exploration and Production Inc.,as seller,and Registrant,as buyer,dated December 22,1994(
304、incorporated by reference to Exhibit 99.3 to Registrants Current Report on Form 8-K,dated November 29,1994,SEC File No.1-4300,filed December 29,1994).2.6-Agreement and Plan of Merger among Registrant,XPX Acquisitions,Inc.and DEKALB Energy Company,dated December 21,1994(incorporated by reference to E
305、xhibit 2.1 to Registrants Registration Statement on Form S-4,Registration No.33-57321,filed January 17,1995).2.7-Matagorda Island 681 Field Purchase and Sale Agreement with Option to Exchange,dated November 24,1992,between Shell Offshore Inc.,SOI Royalties Inc.,and Registrant (incorporated by refere
306、nce to Exhibit 10.7 to Apache Offshore Investment Partnerships Annual Report on Form 10-K for year ended December 31,1992,SEC File No.0-13546).3.1-Restated Certificate of Incorporation of Registrant,dated December 1,1993,as filed with the Secretary of State of Delaware on December 16,1993(incorporat
307、ed by reference to Exhibit 3.1 to Registrants Annual Report on Form 10-K for year ended December 31,1993,SEC File No.1-4300).3.2-Bylaws of Registrant,dated as of December 9,1992(incorporated by reference to Exhibit 3.3 to Registrants Annual Report on Form 10-K for year ended December 31,1992,SEC Fil
308、e No.1-4300).4.1-Form of common stock certificate(incorporated by reference to Exhibit 4.4 to Amendment No.1 to Registrants Registration Statement on Form S-3,Registration No.33-5097,filed May 16,1986).29 EXHIBIT NO.DESCRIPTION-4.2-Rights Agreement,dated as of January 10,1986,between Registrant and
309、First Trust Company,Inc.,rights agent,relating to the declaration of Rights to Registrants common stockholders of record on January 24,1986(incorporated by reference to Exhibit 4.9 to Registrants Annual Report on Form 10-K for year ended December 31,1985,SEC File No.1-4300).10.1-Second Amended and R
310、estated Credit Agreement,dated April 30,1994,among Registrant,the lenders named therein,and The First National Bank of Chicago and Chemical Bank,as agents(incorporated by reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10-Q for quarter ended June 30,1994,SEC File No.1-4300).*10.2-T
311、hird Amended and Restated Credit Agreement,dated March 1,1995,among Registrant,the lenders named therein,and The First National Bank of Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger.10.3-Fiscal Agency Agreement,dated as of January 4,1995,between Registrant a
312、nd Chemical Bank,as fiscal agent(incorporated by reference to Exhibit 99.2 to Registrants Current Report on Form 8-K,dated December 6,1994,SEC File No.1-4300,filed January 11,1995.)+10.4-1982 Employee Stock Option Plan,as updated in January 1987 to conform to the Tax Reform Act of 1986(incorporated
313、by reference to Exhibit 10.7 to Registrants Annual Report on Form 10-K for year ended December 31,1990,SEC File No.1-4300).+10.5-Apache Corporation Corporate Administrative Group Incentive Plan,effective as of January 1,1989(incorporated by reference to Exhibit 10.8 to Registrants Annual Report on F
314、orm 10-K for year ended December 31,1990,SEC File No.1-4300).+10.6-First Amendment to Apache Corporation Corporate Administrative Group Incentive Plan,effective January 1,1990(incorporated by reference to Exhibit 10.14 to Registrants Annual Report on Form 10-K for year ended December 31,1993,SEC Fil
315、e No.1-4300).*+10.7-Apache Corporation Retirement/401(k)Savings Plan,dated December 22,1994,effective January 1,1995.+10.8-Non-Qualified Retirement/Savings Plan of Apache Corporation,dated November 16,1989 (incorporated by reference to Exhibit 10.11 to Registrants Annual Report on Form 10-K for year
316、 ended December 31,1989,SEC File No.1-4300).+10.9-Apache International,Inc.Common Stock Award Plan,dated February 12,1990 (incorporated by reference to Exhibit 10.13 to Registrants Annual Report on Form 10-K for year ended December 31,1989,SEC File No.1-4300).+10.10-Apache Corporation 1990 Phantom S
317、tock Appreciation Plan,dated as of September 28,1990(incorporated by reference to Exhibit 10.17 to Registrants Annual Report on Form 10-K for year ended December 31,1990,SEC File No.1-4300).+10.11-Apache Corporation 1990 Stock Incentive Plan,dated as of September 28,1990 (incorporated by reference t
318、o Exhibit 10.18 to Registrants Annual Report on Form 10-K for year ended December 31,1990,SEC File No.1-4300).30 EXHIBIT NO.DESCRIPTION-+10.12-Amendment No.1 to the Apache Corporation 1990 Stock Incentive Plan,dated as of July 17,1992(incorporated by reference to Exhibit 4.4 to Registrants Registrat
319、ion Statement on Form S-8,Registration No.33-53442,filed October 19,1992).*+10.13-Apache Corporation 1995 Stock Option Plan,adopted February 9,1995.+10.14-Apache Corporation Income Continuance Plan,as amended and restated February 24,1988 (incorporated by reference to Exhibit 10.19 to Registrants An
320、nual Report on Form 10-K for year ended December 31,1990,SEC File No.1-4300).*+10.15-Apache Corporation Directors Deferred Compensation Plan,as amended and restated September 14,1994.+10.16-Apache Corporation Phantom Stock Appreciation Plan for Directors,effective as of May 4,1989(incorporated by re
321、ference to Exhibit 10.22 to Registrants Annual Report on Form 10-K for year ended December 31,1990,SEC File No.1-4300).+10.17-Apache Corporation Outside Directors Retirement Plan,effective December 15,1992 (incorporated by reference to Exhibit 10.25 to Registrants Annual Report on Form 10-K for year
322、 ended December 31,1992,SEC File No.1-4300).+10.18-Apache Corporation Equity Compensation Plan for Non-Employee Directors,adopted February 9,1994,and form of Restricted Stock Award Agreement(incorporated by reference to Exhibit 10.26 to Registrants Annual Report on Form 10-K for year ended December
323、31,1993,SEC File No.1-4300).+10.19-Amended and Restated Employment Agreement,dated December 5,1990,between Registrant and Raymond Plank(incorporated by reference to Exhibit 10.9 to Registrants Annual Report on Form 10-K for year ended December 31,1990,SEC File No.1-4300).+10.20-Amended and Restated
324、Employment Agreement,dated December 20,1990,between Registrant and John A.Kocur(incorporated by reference to Exhibit 10.10 to Registrants Annual Report on Form 10-K for year ended December 31,1990,SEC File No.1-4300).+10.21-Employment Agreement,dated March 20,1991,between Registrant and William J.Jo
325、hnson (incorporated by reference to Exhibit 10.15 to Registrants Annual Report on Form 10-K for year ended December 31,1992,SEC File No.1-4300).+10.22-Employment Agreement,dated June 6,1988,between Registrant and G.Steven Farris (incorporated by reference to Exhibit 10.6 to Registrants Annual Report
326、 on Form 10-K for year ended December 31,1989,SEC File No.1-4300).+10.23-Consulting Agreement,dated November 1,1993,between Registrant and John A.Kocur (incorporated by reference to Exhibit 10.30 to Registrants Annual Report on Form 10-K for year ended December 31,1993,SEC File No.1-4300).*+10.24-Co
327、nsulting Agreement,effective April 28,1994,between Registrant and William J.Johnson.*+10.25-Consulting Agreement,effective January 1,1995,between Registrant and John L.Moran.*11.1-Statement regarding computation of earnings per share of Registrants common stock for the year ended December 31,1994.*F
328、iled herewith.+Management contracts or compensatory plans or arrangements required to be filed herewith pursuant to Item 14 hereof.Note:Debt instruments of the Registrant defining the rights of long-term debt holders in principal amounts not exceeding 10 percent of the Registrants consolidated asset
329、s have been omitted and will be provided to the Commission upon request.(b)REPORTS ON FORM 8-K The following reports on Form 8-K were filed during the fiscal quarter ended December 31,1994:November 29,1994-Item 5.Other Events-Registrant entered into a memorandum of understanding,and subsequently int
330、o a purchase and sale agreement with Texaco Exploration and Production Inc.,under which Registrant will acquire Texacos interest in over 300 oil and gas fields for approximately$600 million,subject to certain adjustments.December 6,1994-Item 5.Other Events-Registrant issued$172.5 million principal a
331、mount of 6 percent Convertible Subordinated Debentures due 2002,which are convertible into the Registrants common stock at a conversion price of$30.68 per share.December 21,1994-Item 5.Other Events-Registrant entered into an agreement and plan of merger with DEKALB Energy Company pursuant to which(i
332、)each outstanding share of DEKALB stock will be converted into the right to receive between.85 and.90 shares of the Registrants common stock,and(ii)DEKALB will become a wholly-owned subsidiary of the Registrant.31 EXHIBIT NO.DESCRIPTION-*21.1-Subsidiaries of Registrant.*23.1-Consent of Arthur Anders
333、en LLP.*23.2-Consent of Ryder Scott Company Petroleum Engineers.*27.1-Financial Data Schedule.SIGNATURES Pursuant to the requirements of Section 13 or 15(d)of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.APACHE CORPORATION POWER OF ATTORNEY The officers and directors of Apache Corporation,whos
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