1、FORM 10-K APACHE CORP(Annual Report)Filed 3/29/2000 For Period Ending 12/31/1999Address2000 POST OAK BLVD ONE POST OAK CENTER STE 100HOUSTON,Texas 77056-4400Telephone713-296-6000 CIK0000006769IndustryOil&Gas OperationsSectorEnergyFiscal Year12/31SECURITIES AND EXCHANGE COMMISSION Washington,D.C.2054
2、9 FORM 10-K (MARK ONE)X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,1999,OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1
3、-4300 APACHE CORPORATION ONE POST OAK CENTRAL 2000 POST OAK BOULEVARD,SUITE 100 HOUSTON,TEXAS 77056-4400 TELEPHONE NUMBER(713)296-6000 Securities Registered Pursuant to Section 12(b)of the Act:Securities Registered Pursuant to Section 12(g)of the Act:NONE Indicate by check mark whether the registran
4、t(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes X N
5、o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amend
6、ment to this Form 10-K.A DELAWARE CORPORATION IRS EMPLOYER NO.41-0747868 NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED -Common Stock,$1.25 par Value New York Stock Exchange Chicago Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange Chicago Stock Exchange Automatic
7、ally Convertible Equity Securities New York Stock Exchange Conversion Preferred Stock,Series C Chicago Stock Exchange 9.25%Notes due 2002 New York Stock Exchange Apache Finance Canada Corporation New York Stock Exchange 7.75%Notes Due 2029 Irrevocably and Unconditionally Guaranteed by Apache Corpora
8、tion DOCUMENTS INCORPORATED BY REFERENCE:Portions of registrants proxy statement relating to registrants 2000 annual meeting of stockholders have been incorporated by reference into Part III hereof.Aggregate market value of the voting stock held by non-affiliates of registrant as of February 29,1999
9、.$4,147,883,616 Number of shares of registrants common stock outstanding as of February 29,1999.113,640,647 TABLE OF CONTENTS DESCRIPTION All defined terms under Rule 4-10(a)of Regulation S-X shall have their statutorily prescribed meanings when used in this report.Quantities of natural gas are expr
10、essed in this report in terms of thousand cubic feet(Mcf),million cubic feet(MMcf)or billion cubic feet(Bcf).Oil is quantified in terms of barrels(bbls);thousands of barrels(Mbbls)and millions of barrels(MMbbls).Natural gas is compared to oil in terms of barrels of oil equivalent(boe)or million barr
11、els of oil equivalent(MMboe).Oil and natural gas liquids are compared with natural gas in terms of million cubic feet equivalent(MMcfe)and billion cubic feet equivalent(Bcfe).One barrel of oil is the energy equivalent of six Mcf of natural gas.Daily oil and gas production is expressed in terms of ba
12、rrels of oil per day(b/d)and thousands or millions of cubic feet of gas per day(Mcf/d and MMcf/d,respectively)or millions of British thermal units per day(MMBtu/d),respectively.Gas sales volumes may be expressed in terms of one million British thermal units(MMBtu),which is approximately,equal to one
13、 Mcf.With respect to information relating to the Companys working interest in wells or acreage,net oil and gas wells or acreage is determined by multiplying gross wells or acreage by the Companys working interest therein.Unless otherwise specified,all references to wells and acres are gross.ITEM PAG
14、E-PART I 1.BUSINESS.1 2.PROPERTIES.11 3.LEGAL PROCEEDINGS.15 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.15 PART II 5.MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.15 6.SELECTED FINANCIAL DATA.17 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RE
15、SULTS OF OPERATIONS.18 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.28 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.28 PART III 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.29 11.EXECUTIVE COMPENSATION.29 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
16、 OWNERS AND MANAGEMENT.29 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.29 PART IV 14.EXHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON FORM 8-K.29 PART I ITEM 1.BUSINESS GENERAL Apache Corporation(Apache or the Company),a Delaware corporation formed in 1954,is an independent energy company
17、that explores for,develops and produces natural gas,crude oil and natural gas liquids.In North America,Apaches exploration and production interests are focused on the Gulf of Mexico,the Anadarko Basin,the Permian Basin,the Gulf Coast and the Western Sedimentary Basin of Canada.Outside of North Ameri
18、ca,Apache has exploration and production interests offshore Western Australia and in Egypt and exploration interests in Poland and offshore The Peoples Republic of China(China).Apache common stock,par value$1.25 per share,has been listed on the New York Stock Exchange since 1969,and on the Chicago S
19、tock Exchange since 1960.Apache holds interests in many of its U.S.,Canadian and international properties through operating subsidiaries,such as Apache Canada Ltd.,DEK Energy Company(DEKALB,formerly known as DEKALB Energy Company),Apache Energy Limited(formerly known as Hadson Energy Limited),Apache
20、 International,Inc.,and Apache Overseas,Inc.Properties referred to in this document may be held by those subsidiaries.Apache treats all operations as one line of business.1999 RESULTS In 1999,Apache had record net income attributable to common stock of$186.4 million,or$1.73 per share,on total revenu
21、es of$1.3 billion.Net cash provided by operating activities during 1999 was$638.2 million,a 35 percent increase from 1998.Apache reported its 22nd consecutive year of production growth(up 17 percent)and 12th consecutive year of oil and gas reserves growth(up 32 percent)in 1999.Apaches average daily
22、production was 95 Mbbls of oil and natural gas liquids and 656 MMcf of natural gas for the year.Giving effect to 1999 production,acquisitions,dispositions,revisions and drilling activity,the Companys estimated proved reserves increased by 194 MMboe in 1999 over the prior year to 807 MMboe,of which a
23、pproximately 49 percent was natural gas.Based on 613 MMboe reported at year-end 1998,Apaches reserve additions(including revisions)during the year reflect replacement of 416 percent of the Companys 1999 production.Apaches drilling and production-enhancement program yielded 190 new producing wells ou
24、t of 252 attempts and involved 579 major North American workover and recompletion projects during the year.At December 31,1999,Apache held interests in approximately 4,307 net oil and gas wells and 2,148,620 net developed acres of oil and gas properties worldwide.In addition,the Company had approxim
25、ately 977,292 net undeveloped acres under North American leases and 18,755,419 net undeveloped acres under international exploration and production rights.APACHES GROWTH STRATEGY Apaches growth strategy is to increase oil and gas reserves,production,cash flow and earnings through a combination of ex
26、ploratory drilling,development of its inventory of existing projects,and property acquisitions meeting defined financial parameters.The Companys drilling program emphasizes reserve additions through low to moderate-risk drilling primarily on its North American interests,and exploratory and subsequen
27、t development drilling primarily on its international interests.The Company also emphasizes reducing operating costs per unit produced and selling marginal and non-strategic properties in order to enhance its profit margins.Apaches international exploration activities are an emerging component of it
28、s long-term growth strategy.In addition to active,low to moderate-risk drilling and exploration activities in Apaches North American focus areas,higher-risk international exploration offers potential for greater rewards and significant reserve additions.Apache directed its international efforts in 1
29、999 toward development of certain discoveries offshore Western Australia and in Egypt and toward further exploration efforts in those areas and on its concessions in 1 Poland.Apache believes that reserve additions in these international areas are likely to continue through higher-risk exploration an
30、d through appraisal and development drilling of prior exploratory discoveries.For Apache,property acquisition is only one phase in a continuing cycle of business growth.Apaches aim is to follow each acquisition with a cycle of reserve enhancement,property consolidation and cash flow acceleration,fac
31、ilitating asset growth and debt reduction.This approach requires a well planned and carefully executed property development program and,where appropriate,a selective program of property dispositions.It motivates Apache to target acquisitions that have ascertainable additional reserve potential and t
32、o 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;as a result,the Company operates properties accounting for 82
33、percent of its production.1999 ACQUISITIONS AND DISPOSITIONS On February 1,1999,the Company acquired oil and gas properties located in the Gulf of Mexico from Petsec Energy Inc.(Petsec)for an adjusted purchase price of$67.7 million.The Petsec transaction included estimated proved reserves of approxi
34、mately 10.2 MMboe as of the acquisition date.On May 18,1999,Apache acquired from Shell Offshore Inc.and affiliated Shell entities(Shell Offshore)its interest in 22 producing fields and 16 undeveloped blocks located in the Gulf of Mexico.The transaction also included certain production-related assets
35、 and proprietary 2-D and 3-D seismic data covering approximately 1,000 blocks in the Gulf of Mexico.The purchase price was$687.7 million in cash and one million shares of Apache common stock(valued at$28.125 million).The Shell Offshore acquisition included approximately 123.2 MMboe of proved reserve
36、s as of the acquisition date.On June 18,1999,Apache acquired a 10 percent interest in the East Spar Joint Venture and an 8.4 percent interest in the Harriet Joint Venture,both located in the Carnarvon Basin(offshore Western Australia),from British-Borneo Oil and Gas Plc(British-Borneo)for$83.6 milli
37、on cash and working interests in 11 leases in the Gulf of Mexico.The British-Borneo transaction included approximately 16.8 MMboe of proved reserves as of the acquisition date.On November 30,1999,Apache acquired from Shell Canada Limited(Shell Canada)producing properties and other assets for C$761 m
38、illion(US$517.8 million).The producing properties consisted of 150,400 net acres and comprised 20 fields with an average working interest of 55 percent and proved reserves of 87.2 MMboe as of the acquisition date.Apache also acquired 294,294 net acres of undeveloped leaseholdings,a 100 percent inter
39、est in a gas processing plant with a potential throughput capacity of 160 MMcf per day,and 52,700 square miles of 2-D seismic and 884 square miles of 3-D seismic.In 1999,the Company also completed tactical regional acquisitions for cash consideration totaling$17.7 million.These acquisitions added ap
40、proximately 8.8 MMboe to the Companys proved reserves.On September 3,1999,Apache sold its holdings in the Ivory Coast by selling its wholly owned subsidiary,Apache Cote dIvoire Petroleum LDC,for a total sales price of$46.1 million to a consortium consisting of Mondoil Cote dIvoire LLC and Saur Energ
41、ie Cote dIvoire.The sale consisted of 13.7 MMboe of proved reserves and a gain was recorded to other revenues in the accompanying statement of consolidated operations.Also,during 1999,Apache sold 27.9 MMboe of proved reserves in several transactions from largely marginal North American properties fo
42、r$110 million.EXPLORATION AND PRODUCTION The Companys North American exploration and production activities are diversified among four operating regions:Offshore,Midcontinent,Southern and Canada.In July 1999,the Company combined its former Western region and the onshore properties from its former Gul
43、f region to form the new Southern region,leaving its offshore properties in the renamed Offshore region.Approximately 73 percent of the Companys proved reserves are located in these North American regions.Egypt and Australia are the Companys most important international regions.The Companys Egyptian
44、 operations are headquartered in Cairo,and Apache conducts its Australian exploration and production operations from Perth.Information concerning the amount of revenue,operating income(loss)and total assets attributable to U.S.,Canadian and 2 international operations is set forth in Note 12 to the C
45、ompanys consolidated financial statements under Item 8 below.Offshore.The Offshore region comprises the Companys interests in the Gulf of Mexico,offshore Louisiana and Texas.In 1999,the Offshore region was Apaches leading region for production and production revenues contributing approximately$346.2
46、 million in revenues from production of 21.3 MMboe for the year.The Company performed 110 workover and recompletion operations during 1999 in the offshore region and participated in drilling 24 wells,16 of which were completed as producers.As of December 31,1999,the region encompassed 482,204 net ac
47、res,and accounted for 146.8 MMboe,or 18 percent,of the Companys year-end 1999 total estimated proved reserves.Midcontinent.Apaches Midcontinent region operates in Oklahoma,eastern and northern Texas,Arkansas and northern Louisiana.The region has focused operations on its sizable position in the Anad
48、arko Basin of western Oklahoma.Apache has drilled and operated in the Anadarko Basin for over four decades,developing an extensive database of geologic information and a substantial acreage position.In 1999,the Midcontinent region had approximately 10.5 MMboe of production generating$143.7 million i
49、n revenue for the Company.At December 31,1999,Apache held an interest in 391,935 net acres in the region,which accounted for approximately 88.1 MMboe,or 11 percent,of Apaches total estimated proved reserves.Apache participated in drilling 48 wells in the Midcontinent region during the year,40 of whi
50、ch were completed as producing wells.The Company performed 50 workover and recompletion operations in the region during 1999.Southern.The Southern region includes assets in the Permian Basin of western Texas and New Mexico,the San Juan Basin of New Mexico,Central Texas,and the Texas and Louisiana co
51、asts.In 1999,the Southern region produced approximately 14.1 MMboe and generated$212.3 million in production revenue.At December 31,1999,the Company held 626,241 net acres in the region,which accounted for 206.3 MMboe,or 26 percent,of the Companys total estimated proved reserves.Apache participated
52、in drilling 58 wells in the Southern region,52 of which were productive wells.Apache performed 350 workovers and recompletions in the Southern region during the year.Canada.Exploration and development activity in the Canadian region is concentrated in the Provinces of Alberta and British Columbia.Th
53、e region produced approximately 7.4 MMboe and generated$86.9 million in production revenue in 1999.Apache participated in drilling 49 wells in this region during the year,32 of which were completed as producers.The Company performed 69 workovers and recompletions on operated wells during 1999.At Dec
54、ember 31,1999,the region encompassed approximately 896,701 net acres,and accounted for 150.9 MMboe,or 19 percent,of the Companys year-end 1999 total estimated proved reserves.Egypt.At year end,Apache held 11,803,569 net acres in Egypt with 65.1 MMboe of estimated proved reserves or eight percent of
55、Apaches total estimated proved reserves.In 1999,Apache had 12.6 MMboe of production in Egypt,which generated$235.9 million in production revenues.Apache owns a 75 percent interest in the Qarun Block and a 40 percent interest in the Khalda Block,both located in the Western Desert of Egypt.Production
56、of gas from Khalda is delivered for sale to the Egyptian General Petroleum Corporation(EGPC)at a point west of Alexandria,Egypt,via a 34-inch gas pipeline,construction of which commenced in 1997 and was completed in August 1999.Additional gas will be delivered via a southern line expected to be comp
57、leted mid-year 2000.The costs of building the pipeline were borne by Apache,the other Khalda participants,and the owners of a neighboring block and are recoverable from oil and gas production from the Khalda Block.In addition to the Qarun and Khalda Blocks,Apache holds interests in the East Beni Sue
58、f and Asyout Blocks to the south of the Qarun Block,and three other blocks in the Western Desert of Egypt,the North East Abu Gharadig Block,the East Bahariya Block,and the West Mediterranean Block No.1(partly onshore and partly offshore).Apache also acquired interests in the Ras El Hekma and Ras Kan
59、ayes concessions from Repsol Exploracion Egipto S.A.in December 1997.3 On November 30,1999 Apache acquired from Amoco Egypt 100 percent of the working interest in the WD-19 area in the Western Desert.This area has produced oil in the past,but is currently inactive.Apache intends to drill additional
60、wells and,if successful,to tie them into adjoining Qarun facilities.Both the Khalda and Qarun Concession Agreements provide that Apache and its partners in the concessions will pay all of the operating and capital costs for developing the concessions,while the production will be split between EGPC a
61、nd the partners.Up to 40 percent of the oil and gas produced from each of the concessions is available to the Company and its partners to recover operating and capital costs for the applicable concession.To the extent eligible costs exceed 40 percent of the oil and gas produced and sold from a conce
62、ssion in any given quarter,such excess costs may be carried into future quarters without limit.The remaining 60 percent of all oil and gas produced from the concessions is divided between EGPC and Apache and its partners,with the percentage received by Apache and its partners reducing as the gross d
63、aily average of oil and gas produced on a quarterly basis increases.Under the Khalda Agreement,capital costs are amortized over four years,while the Qarun agreement provides for a five-year amortization.Australia.Western Australia became an important region for Apache after the 1993 acquisition of H
64、adson Energy Resources Corporation(subsequently known as Apache Energy Resources Corporation).In 1999,natural gas production in the region increased by 51 percent from the prior year to approximately 76 MMcf/d.Apache acts as operator for most of its Western Australian properties through its wholly-o
65、wned subsidiary,Apache Energy Limited(AEL).During 1999,Apache had 8.5 MMboe of production generating$118.5 million of production revenue.Estimated proved reserves in Australia increased by 13 percent to 150.1 MMboe,or 19 percent of the Companys year-end total estimated proved reserves.The increase r
66、eflects,among other matters,the 1999 acquisition from British-Borneo of holdings in the East Spar and Harriet fields.As of December 31,1999,Apache held 259,240 net developed acres and 1,664,440 net undeveloped acres offshore Western Australia.Through AEL and its subsidiaries,Apache also operates the
67、 Varanus Island gas hub with a throughput capacity of 240 MMcf/d and two 60-mile(12-inch and 16-inch)pipelines from Varanus Island to connections with the Dampier to Bunbury and Goldfields Gas Transmission pipelines.See 1999 Acquisitions and Dispositions and Oil and Natural Gas Marketing.Other Inter
68、national Operations.Outside of Canada,Egypt and Australia,Apache currently has exploration interests in Poland and offshore China.Apache obtained its first properties in Poland on April 16,1997,when the Company assumed operatorship and a 50 percent interest in over 5.5 million acres in Poland locate
69、d near Lublin,southeast of Warsaw,from FX Energy,Inc.(FX Energy).The Company has since acquired additional acreage in Poland,including approximately 1.8 million acres in the Carpathian area near the southern border of Poland and participation in a further 2.275 million acres in the Pomeranian area o
70、f northwest Poland,giving Apache interests in 11,468,335 total gross undeveloped acres and 5,734,169 net undeveloped acres as of December 31,1999.Apache is obligated to drill at least ten wells and to shoot at least 1,250 miles of seismic data in Poland.At year end,drilling operations on the first f
71、ive exploratory wells had been completed,and all were determined to be exploratory dry holes.Subsequent to year end,a sixth well,known as the Wilga well,tested at a combined rate of 16.9 MMcf of gas and 570 barrels of condensate per day.The well is located on Block 255 of the Vistula Concession in t
72、he Lublin basin.Apache and FX Energy plan to enter into further exploration and production agreements with the Polish Oil and Gas Company(POGC),the national oil company of Poland.Apaches operations in Poland are headquartered in Warsaw.Apache is also the operator,with a 50 percent interest,of the Zh
73、ao Dong Block in Bohai Bay,offshore China.In 1994 and 1995,discovery wells tested at rates between 1,300 and 4,000 b/d of oil.The Company elected to proceed with the second exploration phase,commencing in May 1996,which involved a commitment to drill two additional exploratory wells.In early 1997,on
74、e well tested at rates up to 11,571 b/d of oil and another tested at rates up to 15,359 b/d.An overall development plan for the C and D Fields in the Zhao Dong Block was submitted to Chinese authorities in late 1997 and is awaiting approval.On May 28,1999,Apache China Corporation LDC(Apache China,an
75、 indirect wholly owned subsidiary of the Company)sent a notice of default to XCL-China,Ltd.(XCL-China),a participant with Apache China in the Zhao Dong Block offshore the Peoples Republic of China,and its parent company,XCL,Ltd.,4 for the failure to pay approximately$10 million of costs pursuant to
76、the agreements governing the project.Prior to the expiration of the cure period,XCL-China and XCL,Ltd.filed petitions initiating arbitration proceedings against Apache China.The actions seek to disallow approximately$17 million in costs expended by Apache China related to developing the Zhao Dong Bl
77、ock,including the$10 million in costs billed by Apache China to XCL-China that have not been paid.In addition,XCL-China has advised Apache China of XCL-Chinas intent to seek the removal of Apache China as operator of the Block.Apache China has denied the allegations made by XCL-China in its petition
78、 and is vigorously contesting them.On November 30,1999 the arbitration proceedings were stayed in connection with the bankruptcy proceeding described below.On June 25,1999,Apache China filed a petition in U.S.Bankruptcy Court in Opelousas,Louisiana,to place XCL-China into involuntary bankruptcy unde
79、r Chapter 7 of the Bankruptcy Code on account of XCL-Chinas failure to pay its share of costs related to development of the Zhao Dong Block.On December 21,1999,the holders of XCL,Ltd.s senior secured notes,acting through their Trustee,exercised their remedial rights under their indenture and removed
80、 the existing Board of Directors of XCL-China,electing a new Board.The new Board of Directors of XCL-China voted to withdraw XCL-Chinas opposition to Apache Chinas Chapter 7 bankruptcy petition filed against XCL-China and on December 22,1999 obtained an order of the Court converting the proceeding i
81、nto a voluntary Chapter 11 bankruptcy proceeding.Apache China has entered into negotiations with the Chinese authorities concerning the terms and conditions of the development of the Zhao Dong Block including,among other things the portion of XCL-Chinas future development costs to be paid by the Chi
82、nese.Apache China is prepared to move forward as soon as these negotiations are satisfactorily concluded.In September 1999,Apache sold its interests in the Ivory Coast as detailed in 1999 Acquisitions and Dispositions above.OIL AND NATURAL GAS MARKETING On October 27,1995,wholly owned affiliates of
83、each of Apache,Oryx Energy Company and Parker&Parsley Petroleum Company(Parker&Parsley)formed Producers Energy Marketing LLC(ProEnergy),a Delaware limited liability company.ProEnergy became fully operational on April 1,1996,and marketed substantially all of its members domestic natural gas pursuant
84、to member gas purchase agreements having an initial term of 10 years,subject to early termination following specified events.The price of gas purchased by ProEnergy from its members was based upon agreed to published indexes.Effective January 1,1998,Parker&Parsley withdrew from ProEnergy.In June 199
85、8,Apache sold its interest in ProEnergy to Cinergy Corp.(Cinergy)and formed a strategic alliance with Cinergy to market substantially all the Companys natural gas production from North America.ProEnergy,renamed Cinergy Marketing&Trading,LLC in June 1999,will continue to market Apaches North American
86、 natural gas production for 10 years,with an option to terminate after six years,under an amended and restated gas purchase agreement effective July 1,1998.During this period,Apache is generally obligated to deliver most of its North American gas production to Cinergy and,under certain circumstances
87、,may have to make payments to Cinergy if certain gas throughput thresholds are not met.Separate from its arrangements with Cinergy,Apache is also delivering natural gas under several long-term supply agreements with terms greater than one year.Apache assumed its own U.S.crude oil marketing operation
88、s in 1992.Most of Apaches U.S.crude oil production is sold through lease-level marketing to refiners,traders and transporters,generally under 30 day contracts that renew automatically until canceled.Oil produced from Canadian properties is sold to crude oil purchasers or refiners at market prices,wh
89、ich depend on worldwide crude prices adjusted for transportation and crude quality.Natural gas produced from Canadian properties is sold to major aggregators of natural gas,gas marketers and direct users under long-term and short-term contracts.The oil and gas contracts provide for sales at specifie
90、d prices,or at prices that are subject to change due to market conditions.The Company diversifies the markets for its Canadian gas production not presently committed to Cinergy by selling directly or indirectly to customers through aggregators and brokers in the United States and Canada.5 Apache tra
91、nsports natural gas via the Companys firm transportation contracts to California(12 MMcf/d)and to the Province of Ontario,Canada(four MMcf/d)through end-users firm transportation contracts.Pursuant to an agreement entered into in 1994,the Company is also selling five MMcf/d of natural gas to the Her
92、miston Cogeneration Project,located in the Pacific Northwest of the United States.In 1996,the Company entered into an agreement with Westcoast Gas Services,Inc.for the sale of 5,000 MMBtu/d for delivery in the United States for a 10 year term.In Australia,the Company entered into two gas sales contr
93、acts during 1999,bringing its total to 18 contracts,with terms of four to 12 years to deliver 323 Bcf of AELs gas from its Harriet and East Spar fields for mining,power generation,nickel refining,ammonia production and other industrial and domestic uses.Under these contracts AEL is required to deliv
94、er its gas at contract rates of approximately 111 MMcf/day increasing to 135 MMcf/d by mid 2000,with take or pay provisions,net to AEL,of approximately 28 Bcf/year increasing to 49 Bcf/year by the end of 2001.Apache operates both the Harriet and East Spar Joint Ventures,holding a 68.5 percent intere
95、st in Harriet and a 55 percent interest in East Spar.In Egypt,oil from the Qarun Block is delivered by pipeline to tanks owned by the Company and its partners in the Qarun Concession at the Dashour pumping station northeast of the Qarun Block or by truck to the Tebbin refinery south of Alexandria,Eg
96、ypt.At the discretion of the operator of the pipelines,oil from the Qarun Block is put into the two 42-inch diameter SUMED pipelines,which transport significant quantities of Egyptian and other crude oil from the Gulf of Suez to Sidi Kherir,west of Alexandria,Egypt,on the Mediterranean Coast.All Qar
97、un and Khalda crude oil is currently sold to EGPC.In 1996,the Company and its partners in the Khalda Block entered into a take or pay contract with EGPC,which obligates EGPC to pay for 75 percent of 200 MMcf/d of future production of gas from the Khalda Block.Sales of gas under the contract began in
98、 1999 upon completion of a gas pipeline from the Khalda Block.In late 1997,the same sellers entered into a supplement to the contract with EGPC to sell an additional 50 MMcf/d through a southern gas line being constructed by the Company and its partners from the Khalda Block to a point near the Qaru
99、n Block to tie into an existing gas pipeline.This southern line is expected to complete tie-in in mid-year 2000.OIL AND NATURAL GAS PRICES Natural gas prices remained volatile during 1999,with Apaches realized prices ranging from$1.60 per Mcf in March to$2.74 per Mcf in November.Fluctuations are lar
100、gely due to market perceptions about natural gas supply and demand.Apaches average realized gas price of$2.16 per Mcf for 1999 was up 13 percent from the prior-year average of$1.92 per Mcf,and its 1998 average realized natural gas price was 16 percent lower than the 1997 average price of$2.28 per Mc
101、f.As a result of minimum price contracts which escalate at an average of 80 percent of the Australian consumer price index,AELs natural gas production in Western Australia is not subject to price volatility as is Apaches U.S.and Canadian gas production;however,natural gas sales under such Australian
102、 minimum price contracts represented approximately 10.3 percent of the Companys total natural gas sales at the end of 1999.Total Australian gas sales in 1999,including long-term contracts and spot sales averaged$1.51 per Mcf,equal to the 1998 average.In Egypt,all oil production from the East Beni Su
103、ef,Khalda,West Mediterranean and Qarun Blocks is currently sold to EGPC on a spot basis at a Western Desert price,which is applied to virtually all production from the area and is announced periodically by EGPC.In 1999,the average price was$18.63 per barrel.Discussions with EGPC regarding the possib
104、ility of exporting Qarun oil production are continuing.Gas sales from the Khalda Block commenced in 1999 based on a contract price that is equivalent to 85 percent of the price of Suez Blend crude oil,FOB Mediterranean.Oil prices remained subject to unpredictable political and economic forces during
105、 1999 and experienced fluctuations similar to those seen in natural gas prices for the year,but showing a significant upward trend.Apache believes that oil prices will continue to fluctuate in response to changes in the policies of the Organization of Petroleum Exporting Countries(OPEC),demand from
106、Asian countries,events in the Middle East and other factors associated with the world political and economic environment.As a result of the many 6 uncertainties associated with levels of production maintained by OPEC and other oil producing countries,the availabilities of worldwide energy supplies a
107、nd the competitive relationships and consumer perceptions of various energy sources,the Company is unable to predict what changes will occur in crude oil and natural gas prices.In 1999,Apaches realized worldwide crude oil price ranged from$10.09 per barrel in February to$24.11 per barrel in December
108、.The average crude oil price of$18.43 per barrel in 1999 was up 46 percent from the average price of$12.66 per barrel in 1998,and four percent lower than the average price of$19.20 per barrel in 1997.The Companys average crude oil price for its Australian production was$19.70 per barrel in 1999,51 p
109、ercent more than the average price in 1998.From time to time,Apache buys or sells contracts to hedge a limited portion of its future oil and gas production against exposure to spot market price changes.See Note 9 to the Companys consolidated financial statements under Item 8 below.The Companys busin
110、ess 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 level of,future oil and gas prices.WRITE-DOWNS UNDER THE FULL COST CEILING TEST RULES Under the full
111、cost accounting rules of the Securities and Exchange Commission(SEC),the Company reviews the carrying value of its proved oil and gas properties each quarter on a country-by-country basis.Under these rules,capitalized costs of proved oil and gas properties,net of accumulated depreciation,depletion a
112、nd amortization,and deferred income taxes,may not exceed the present value of estimated future net cash flows from proved oil and gas reserves,discounted at 10 percent,plus the lower of cost or fair value of unproved properties included in the costs being amortized,net of related tax effects.These r
113、ules generally require pricing future oil and gas production at the unescalated oil and gas prices in effect at the end of each fiscal quarter and require a write-down if the ceiling is exceeded,even if prices declined for only a short period of time.The Company recorded a write-down in 1998,but had
114、 no write-downs due to ceiling test limitations in 1999.Given the volatility of oil and gas prices,it is reasonably possible that the Companys estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term.If oil and gas prices decline significantly in th
115、e future,even if only for a short period of time,it is possible that additional write-downs of oil and gas properties could occur.Write-downs required by these rules do not impact cash flow from operating activities.VOLATILE PRICES CAN MATERIALLY AFFECT THE COMPANY The Company continually analyzes,f
116、orecasts and updates its estimates of energy prices for its internal use in planning,budgeting,and estimating and valuing reserves.The Companys future financial condition and results of operations will depend upon the prices received for the Companys oil and natural gas production and the costs of a
117、cquiring,finding,developing and producing reserves.Prices for oil and natural gas are subject to fluctuations in response to relatively minor changes in supply,market uncertainty and a variety of additional factors that are beyond the control of the Company.These factors include worldwide political
118、instability(especially in the Middle East and other oil-producing regions),the foreign supply of oil and gas,the price of foreign imports,the level of drilling activity,the level of consumer product demand,government regulations and taxes,the price and availability of alternative fuels and the overa
119、ll economic environment.A substantial or extended decline in oil and gas prices would have a material adverse effect on the Companys financial position,results of operations,quantities of oil and gas that may be economically produced,and access to capital.Oil and natural gas prices have historically
120、 been and are likely to continue to be volatile.This volatility makes it difficult to estimate with precision the value of producing properties in acquisitions and to budget and project the return on exploration and development projects involving the Companys oil and gas properties.In addition,unusu
121、ally volatile prices often disrupt the market for oil and gas properties,as buyers and sellers have more difficulty agreeing on the purchase price of properties.7 UNCERTAINTY IN CALCULATING RESERVES;RATES OF PRODUCTION;DEVELOPMENT EXPENDITURES;CASH FLOWS There are numerous uncertainties inherent in
122、estimating quantities of oil and natural gas reserves of any category and in projecting future rates of production and timing of development expenditures,which underlie the reserve estimates,including many factors beyond the Companys control.Reserve data represent only estimates.In addition,the esti
123、mates of future net cash flows from the Companys proved reserves and their present value are based upon various assumptions about future production levels,prices and costs that may prove to be incorrect over time.Any significant variance from the assumptions could result in the actual quantity of th
124、e Companys reserves and future net cash flows from them being materially different from the estimates.In addition,the Companys estimated reserves may be subject to downward or upward revision based upon production history,results of future exploration and development,prevailing oil and gas prices,op
125、erating and development costs and other factors.ACQUISITION OR DISCOVERIES OF ADDITIONAL RESERVES IS NEEDED TO AVOID A MATERIAL DECLINE IN RESERVES AND PRODUCTION The rate of production from oil and gas properties generally declines as reserves are depleted.Except to the extent that the Company acqu
126、ires additional properties containing proved reserves,conducts successful exploration and development activities or,through engineering studies,identifies additional behind-pipe zones or secondary recovery reserves,the Companys proved reserves will decline materially as reserves are produced.Future
127、oil and gas production is,therefore,highly dependent upon the Companys level of success in acquiring or finding additional reserves.SUBSTANTIAL COSTS INCURRED TO CONFORM TO GOVERNMENT REGULATION OF THE OIL AND GAS INDUSTRY The Companys exploration,production and marketing operations are regulated ex
128、tensively at the federal,state and local levels,as well as by other countries in which the Company does business.The Company has made and will continue to make large expenditures in its efforts to comply with the requirements of environmental and other regulations.Further,the oil and gas regulatory
129、environment could change in ways that might substantially increase these costs.Hydrocarbon-producing states regulate conservation practices and the protection of correlative rights.These regulations affect the Companys operations and limit the quantity of hydrocarbons the Company may produce and sel
130、l.In addition,at the U.S.federal level,the Federal Energy Regulatory Commission regulates interstate transportation of natural gas under the Natural Gas Act.Other regulated matters include marketing,pricing,transportation and valuation of royalty payments.SUBSTANTIAL COSTS INCURRED RELATED TO ENVIRO
131、NMENTAL MATTERS The Company,as an owner or lessee and operator of oil and gas properties,is subject to various federal,provincial,state,local and foreign country laws and regulations relating to discharge of materials into,and protection of,the environment.These laws and regulations may,among other
132、things,impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations,subject the lessee to liability for pollution damages,and require suspension or cessation of operations in affected areas.The Company maintains insurance coverage,which it be
133、lieves is customary in the industry,although it is not fully insured against all environmental risks.The Company is not aware of any environmental claims existing as of December 31,1999,which would have a material impact upon the Companys financial position or results of operations.The Company has m
134、ade and will continue to make expenditures in its efforts to comply with these requirements,which it believes are necessary business costs in the oil and gas industry.The Company has established policies for continuing compliance with environmental laws and regulations,including regulations applicab
135、le to its operations in Canada,Australia and other countries.Apache also has established operational procedures and training programs designed to minimize the environmental impact of its field facilities.The costs incurred by these policies and procedures are inextricably connected to normal operati
136、ng expenses such 8 that the Company is unable to separate the expenses related to environmental matters;however,the Company does not believe any such additional expenses are material to its financial position or results of operations.Although environmental requirements have a substantial impact upon
137、 the energy industry,generally these requirements do not appear to affect Apache any differently,or to any greater or lesser extent,than other companies in the industry.The Company does not believe that compliance with federal,state,local or foreign country provisions regulating the discharge of mat
138、erials into the environment,or otherwise relating to the protection of the environment,will have a material adverse effect upon the capital expenditures,earnings or competitive position of the Company or its subsidiaries;however,there is no assurance that changes in or additions to laws or regulatio
139、ns regarding the protection of the environment will not have such an impact.COMPETITION WITH OTHER COMPANIES COULD HARM THE COMPANY The oil and gas industry is highly competitive.The Companys business could be harmed by competition with other companies.Because oil and gas are fungible commodities,th
140、e Companys principal form of competition is price competition.The Company strives to maintain the lowest finding and production costs possible to maximize profits.In addition,as an independent oil and gas company,the Company frequently competes for reserve acquisitions,exploration leases,licenses,co
141、ncessions and marketing agreements against companies with financial and other resources substantially larger than the Company possesses.Many of the Companys competitors have established strategic long-term positions and maintain strong governmental relationships in countries in which the Company may
142、 seek new entry.INSURANCE DOES NOT COVER ALL RISKS Exploration for and production of oil and natural gas can be hazardous,involving unforeseen occurrences such as blowouts,cratering,fires and loss of well control,which can result in damage to or destruction of wells or production facilities,injury t
143、o persons,loss of life,or damage to property or the environment.The Company maintains insurance against certain losses or liabilities arising from its operations in accordance with customary industry practices and in amounts that management believes to be prudent;however,insurance is not available t
144、o the Company against all operational risks.HEDGING MAY PREVENT THE COMPANY FROM FULLY BENEFITING FROM PRICE INCREASES To the extent that the Company engages in hedging activities,it may be prevented from realizing the benefits of price increases above the levels of the hedges.In addition,the Compan
145、y is subject to basis risk when it engages in hedging transactions,particularly where transportation constraints restrict the Companys ability to deliver oil and gas volumes at the delivery point to which the hedging transaction is indexed.RISKS ARISING FROM THE FAILURE TO FULLY IDENTIFY POTENTIAL P
146、ROBLEMS RELATED TO ACQUIRED RESERVES OR TO PROPERLY ESTIMATE THOSE RESERVES The Company from time to time acquires oil and gas properties.Although the Company performs a review of the acquired properties that it believes is consistent with industry practices,such reviews are inherently incomplete.It
147、 generally is not feasible to review in depth every individual property involved in each acquisition.Ordinarily the Company will focus its review efforts on the higher-value properties and will sample the remainder.However,even a detailed review of records and properties may not necessarily reveal e
148、xisting or potential problems,nor will it permit a buyer to become sufficiently familiar with the properties to assess fully their deficiencies and potential.Inspections may not always be performed on every well,and environmental problems,such as ground water contamination,are not necessarily observ
149、able even when an inspection is undertaken.Even when problems are identified,the Company often assumes certain environmental and other risks and liabilities in connection with acquired properties.There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and ac
150、tual future production rates and associated costs with respect to acquired properties,and actual results may vary substantially from those assumed in the estimates(see above).In addition,there can be no assurance that acquisitions will not have an adverse effect 9 upon the Companys operating results
151、,particularly during the periods in which the operations of acquired businesses are being integrated into the Companys ongoing operations.GENERAL ECONOMIC CONDITIONS Virtually all of the Companys operations are subject to the risks and uncertainties of adverse changes in general economic conditions(
152、domestically,in specific regions of the United States and Canada,and internationally),the outcome of pending and/or potential legal or regulatory proceedings,changes in environmental,tax,labor and other laws and regulations to which the Company is subject,and the condition of the capital markets uti
153、lized by the Company to finance its operations.RISKS OF NON-U.S.OPERATIONS The Companys non-U.S.oil and natural gas exploration,development and production activities are subject to:political and economic uncertainties,including,among others,changes,sometimes frequent or marked,in governmental energy
154、 policies or the personnel administering them;expropriation of property;cancellation or modification of contract rights;foreign exchange restrictions;currency fluctuations;risks of loss due to civil strife,acts of war,guerrilla activities and insurrection;royalty and tax increases;and other risks ar
155、ising out of foreign governmental sovereignty over the areas in which the Companys operations are conducted.These risks may be higher in the developing countries in which the Company conducts these activities.Consequently,the Companys non-U.S.exploration,development and production activities may be
156、substantially affected by factors beyond the Companys control,any of which could materially adversely affect the Companys financial position or results of operations.Furthermore,in the event of a dispute arising from non-U.S.operations,the Company may be subject to the exclusive jurisdiction of cour
157、ts outside the United States or may not be successful in subjecting non-U.S.persons to the jurisdiction of the courts in the United States,which could adversely affect the outcome of the dispute.EFFECT OF CHANGES IN FOREIGN EXCHANGE RATES ON THE COMPANYS CASH FLOW The Companys cash flow stream relat
158、ing to certain international operations is based on the U.S.dollar equivalent of cash flows measured in foreign currencies.Australian gas production is sold under fixed-price Australian dollar contracts and over half the costs incurred are paid in Australian dollars.Revenue and disbursement transact
159、ions denominated in Australian dollars are converted to U.S.dollar equivalents based on the exchange rate on the transaction date.Reported cash flow relating to Canadian operations is based on cash flows measured in Canadian dollars converted to the U.S.dollar equivalent based on the average of the
160、Canadian and U.S.dollar exchange rates for the period reported.Substantially all of the Companys international transactions,outside of Canada and Australia,are denominated in U.S.dollars.The Companys Polish and Australian subsidiaries have net financial assets that are denominated in a currency othe
161、r than the functional reporting currency of the subsidiaries.The Company considers its current risk exposure to exchange rate movements,based on net cash flows,to be immaterial.EMPLOYEES On December 31,1999,Apache had 1,429 employees.OFFICES Apaches principal executive offices are located at One Pos
162、t Oak Central,2000 Post Oak Boulevard,Suite 100,Houston,Texas 77056-4400.At year-end 1999,the Company maintained regional exploration and/or production offices in Tulsa,Oklahoma;Houston,Texas;Calgary,Alberta;Cairo,Egypt;Perth,Western Australia;Beijing,China;and Warsaw,Poland.10 ITEM 2.PROPERTIES OIL
163、 AND GAS EXPLORATION AND PRODUCTION PROPERTIES AND RESERVES Acreage The undeveloped and developed acreage including both domestic leases and international production and exploration rights that Apache held as of December 31,1999,are as follows:11 UNDEVELOPED ACREAGE DEVELOPED ACREAGE -GROSS NET GROS
164、S NET ACRES ACRES ACRES ACRES -OFFSHORE Louisiana.190,259 138,863 378,885 245,075 Texas.46,992 22,301 151,200 75,965 -Total.237,251 161,164 530,085 321,040 -MIDCONTINENT Arkansas.3,004 2,122 4,299 3,190 Kansas.200 93 -Louisiana.8,600 5,922 38,088 26,254 Michigan.4,937 4,262 -Oklahoma.148,562 54,032
165、477,622 185,449 Pennsylvania.-796 38 Texas.60,939 39,605 132,854 70,968 -Total.226,242 106,036 653,659 285,899 -SOUTHERN Alaska.14,262 -Colorado.13,974 12,228 10,979 10,715 Illinois.140 56 -Louisiana.75,352 71,120 86,722 66,196 New Mexico.79,704 44,465 84,818 43,593 Texas.188,819 85,660 418,429 270,
166、162 Utah.140 35 60 15 Wyoming.29,076 21,769 680 227 -Total.401,467 235,333 601,688 390,908 -Total United States.864,960 502,533 1,785,432 997,847 -INTERNATIONAL Australia.3,234,060 1,664,440 445,050 259,240 Canada.785,189 474,759 604,083 421,942 China.42,678 21,384 5,911 1,448 Egypt.22,821,527 11,33
167、5,426 842,863 468,143 Ivory Coast.-Poland.11,468,335 5,734,169 -Total International.38,351,789 19,230,178 1,897,907 1,150,773 -Total Company.39,216,749 19,732,711 3,683,339 2,148,620 =Productive Oil and Gas Wells The number of productive oil and gas wells,operated and non-operated,in which Apache ha
168、d an interest as of December 31,1999,is set forth below:Gross Wells Drilled The following table sets forth the number of gross exploratory and gross development wells drilled in the last three fiscal years in which the Company participated.The number of wells drilled refers to the number of wells co
169、mmenced at any time during the respective fiscal year.Productive wells are either producing wells or wells capable of commercial production.At December 31,1999,the Company was participating in 27 wells in the U.S.,23 Canadian wells,seven Egyptian wells,one Australian well and one Polish well in the
170、process of drilling.12 GAS OIL -GROSS NET GROSS NET -Offshore.209 111 316 230 Midcontinent.1,692 571 532 141 Southern.417 230 3,518 1,895 Canada.654 468 851 562 Egypt.20 8 150 75 Australia.8 5 20 11 -Total.3,000 1,393 5,387 2,914 =EXPLORATORY DEVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL
171、-1999 United States.11 13 24 97 9 106 Canada.2 3 5 30 14 44 Australia.2 12 14 5 1 6 Egypt.3 2 5 38 3 41 Other International.-5 5 2 -2 -Total.18 35 53 172 27 199 =1998 United States.20 16 36 163 34 197 Canada.17 12 29 30 7 37 Egypt.11 24 35 27 5 32 Australia.7 8 15 -Other International.-1 1 1 -1 -Tot
172、al.55 61 116 221 46 267 =1997 United States.27 25 52 234 32 266 Canada.19 14 33 41 7 48 Egypt.7 19 26 23 4 27 Australia.3 6 9 6 1 7 Other International.1 2 3 1 -1 -Total.57 66 123 305 44 349 =Net Wells Drilled The following table sets forth,for each of the last three fiscal years,the number of net e
173、xploratory and net developmental wells drilled by Apache:Production and Pricing Data The following table describes,for each of the last three fiscal years,oil,natural gas liquids(NGL)and gas production for the Company,average production costs(excluding severance taxes)and average sales prices.Estima
174、ted 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 and assumptions included in
175、the Companys Supplemental Oil and Gas Disclosures under Item 8 below.The Companys estimates of proved reserve quantities of its U.S.,Canadian and international properties have been subject to review by Ryder Scott Company,L.P.Petroleum Consultants.There are numerous uncertainties inherent in estimat
176、ing 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.13 EXPLORATORY DEVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL -1999 Unit
177、ed States.4.1 8.2 12.3 59.1 4.8 63.9 Canada.1.3 2.3 3.6 26.2 12.1 38.3 Australia.2.0 5.4 7.4 2.6 .2 2.8 Egypt.1.6 1.2 2.8 15.6 1.2 16.8 Other International.-1.6 1.6 .5 -.5 -Total.9.0 18.7 27.7 104.0 18.3 122.3 =1998 United States.9.9 11.1 21.0 64.0 18.8 82.8 Canada.16.2 11.0 27.2 28.3 6.1 34.4 Egypt
178、.5.6 13.5 19.1 11.9 2.8 14.7 Australia.3.5 3.4 6.9 -Other International.-.2 .2 .2 -.2 -Total.35.2 39.2 74.4 104.4 27.7 132.1 =1997 United States.11.5 11.9 23.4 107.5 19.0 126.5 Canada.14.5 10.1 24.6 29.0 6.0 35.0 Egypt.3.7 12.3 16.0 14.4 2.0 16.4 Australia.1.0 1.0 2.0 1.8 .2 2.0 Other International.
179、5 1.4 1.9 .5 -.5 -Total.31.2 36.7 67.9 153.2 27.2 180.4 =PRODUCTION AVERAGE SALES PRICE -AVERAGE -OIL NGL GAS PRODUCTION OIL NGL GAS YEAR ENDED DECEMBER 31,(MBBLS)(MBBLS)(MMCF)COST PER BOE (PER BBL)(PER BBL)(PER MCF)-1999.33,223 1,437 239,484$2.56$18.43$9.42$2.16 1998.26,611 1,052 215,389 2.88 12.66
180、 7.94 1.92 1997.24,291 843 222,237 3.07 19.20 14.08 2.28 The following table sets forth the Companys estimated proved developed and undeveloped reserves as of December 31,1999,1998 and 1997:The following table sets forth the estimated future value of all the Companys proved reserves,and proved devel
181、oped reserves,as of December 31,1999,1998 and 1997.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 costs,production and ad valorem taxes,and future development cos
182、ts are based on current costs with no escalations.At December 31,1999,estimated future net revenues expected to be received from all the Companys proved reserves and proved developed reserves were as follows:The Company believes that no major discovery or other favorable or adverse event has occurre
183、d since December 31,1999,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 SEC guidelines and do not reflect current prices.Since January 1,2000,no oil or gas reserve information has been f
184、iled with,or included in any report to,any U.S.authority or agency other than the SEC and the Energy Information Administration 14 OIL,NGL NATURAL AND GAS CONDENSATE (BCF)(MMBBLS)-1999 Developed.1,873.7 302.0 Undeveloped.477.9 113.2 -Total.2,351.6 415.2 =1998 Developed.1,450.1 178.0 Undeveloped.722.
185、1 73.0 -Total.2,172.2 251.0 =1997 Developed.1,554.3 203.1 Undeveloped.317.5 70.7 -Total.1,871.8 273.8 =PRESENT VALUE OF ESTIMATED FUTURE NET REVENUES ESTIMATED FUTURE BEFORE INCOME TAXES NET REVENUES (DISCOUNTED AT 10 PERCENT)-PROVED PROVED DECEMBER 31,PROVED DEVELOPED PROVED DEVELOPED-(IN THOUSANDS
186、)1999.$10,392,116$8,638,015$6,068,013$4,890,340 1998.3,994,612 2,793,698 2,395,888 1,764,887 1997.5,347,892 4,301,768 3,272,618 2,728,747 PROVED DECEMBER 31,PROVED DEVELOPED -(IN THOUSANDS)2000.$1,128,516$1,178,935 2001.1,136,113 1,081,851 2002.1,077,281 902,930 Thereafter.7,050,206 5,474,299 -Total
187、.$10,392,116$8,638,015 =(EIA).The basis of reporting reserves to the EIA for the Companys reserves is identical to that set forth in the foregoing table.Title to Interests The Company believes that its title to the various interests set forth above is satisfactory and consistent with the standards g
188、enerally 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 the Companys operations.The interests owned by the Company may be subject to one or more royalty,overriding
189、 royalty and other outstanding interests customary in the industry.The interests may additionally be subject to obligations or duties under applicable laws,ordinances,rules,regulations and orders of arbitral or governmental authorities.In addition,the interests may be subject to burdens such as net
190、profits interests,liens incident to operating agreements and 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 ope
191、rations.ITEM 3.LEGAL PROCEEDINGS The information set forth under the caption Litigation in Note 10 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 h
192、olders during the fourth quarter of 1999.PART II ITEM 5.MARKET 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
193、 information regarding Apache common stock for 1999 and 1998.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 29
194、,2000,was$36 1/2.At December 31,1999,there were 113,996,464 shares of Apache common stock outstanding,held by approximately 10,000 shareholders of record and 45,000 beneficial owners.The Company has paid cash dividends on its common stock for 132 consecutive quarters through December 31,1999,and exp
195、ects to continue the payment of dividends at current levels.During 2000,the Company will implement a change in the payment dates for the dividends on its common stock from a quarterly basis to an annual basis.When,and if,declared by the Companys board of directors,future dividend payments will depen
196、d upon the Companys level of earnings,financial requirements and other relevant factors.In December 1995,the Company declared a dividend of one right(a Right)for each share of Apache common stock outstanding on January 31,1996.Each Right entitles the registered holder to purchase from 15 1999 1998 -
197、PRICE RANGE PRICE RANGE -DIVIDENDS -DIVIDENDS HIGH LOW PER SHARE HIGH LOW PER SHARE -First Quarter.$28 9/16$17 5/8$.07$38 3/4$31 3/16$.07 Second Quarter.39 7/8 25 1/16 .07 38 1/8 30 3/8 .07 Third Quarter.49 15/16 37 .07 32 3/8 22 1/2 .07 Fourth Quarter.44 30 .07 29 5/16 21 3/8 .07 the Company one te
198、n-thousandth(1/10,000)of a share of Series A Preferred Stock at a price of$100 per one ten-thousandth of a share,subject to adjustment.The Rights are exercisable 10 calendar days following a public announcement that certain persons or groups have acquired 20 percent or more of the outstanding shares
199、 of Apache common stock or 10 business days following commencement of an offer for 30 percent or more of the outstanding shares of Apache common stock.In addition,if a person or group becomes the beneficial owner of 20 percent or more of Apaches outstanding common stock(flip in event),each Right wil
200、l become exercisable for shares of Apaches common stock at 50 percent of the then market price of the common stock.If a 20 percent shareholder of Apache acquires Apache,by merger or otherwise,in a transaction where Apache does not survive or in which Apaches common stock is changed or exchanged(flip
201、 over event),the Rights become exercisable for shares of the common stock of the company acquiring Apache at 50 percent of the then market price for Apache common stock.Any Rights that are or were beneficially owned by a person who has acquired 20 percent or more of the outstanding shares of Apache
202、common stock and who engages in certain transactions or realizes the benefits of certain transactions with the Company will become void.The Company may redeem the Rights at$.01 per Right at any time until 10 business days after public announcement of a flip in event.The Rights will expire on January
203、 31,2006,unless earlier redeemed by the Company.Unless the Rights have been previously redeemed,all shares of Apache common stock issued by the Company after January 31,1996 will include Rights.Unless and until the Rights become exercisable,they will be transferred with and only with the shares of A
204、pache common stock.In August 1998,the Company issued 100,000 shares of 5.68 percent Series B Cumulative Preferred Stock(the Series B Preferred Stock)in the form of one million depositary shares,each representing one-tenth(1/10)of a share of Series B Preferred Stock.Neither the shares of Series B Pre
205、ferred Stock nor the depositary shares are traded on any stock exchange.The shares of Series B Preferred Stock are not convertible into common equity.Holders of the depositary shares are entitled to receive cumulative cash dividends at an annual rate of$5.68 per depositary share when,and if,declared
206、 by the Companys board of directors.In May 1999,the Company issued 14,950,000 shares of its common stock and 140,000 shares of 6.5 percent Automatically Convertible Equity Securities,Conversion Preferred Stock,Series C(Series C Preferred Stock)in the form of seven million depositary shares each repr
207、esenting 1/50th of a share of Series C Preferred Stock.The depositary shares are traded on the New York Stock Exchange and the Chicago Stock Exchange.The Series C Preferred Stock is not subject to a sinking fund or mandatory redemption.On May 15,2002,each depositary share will automatically convert,
208、subject to adjustments,into not more than one share and not less than 0.8197 of a share of the Companys common stock,depending on the market price of the common stock at that time.At any time prior to May 15,2002,holders of the depositary shares may elect to convert each of their shares,subject to a
209、djustments,into not less than 0.8197 of a share of the Companys common stock(5,737,900 common shares).Holders of the depositary shares are entitled to receive cumulative cash dividends at an annual rate of$2.015 per depositary share when,and if,declared by the Companys board of directors.16 ITEM 6.S
210、ELECTED 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 31,1999,which information has been derived from the Companys audited financial statements.This information shoul
211、d be read in connection with,and is qualified in its entirety by,the more detailed information in the Companys financial statements under Item 8 below.For a discussion of significant acquisitions,reference is made to Item 7,Managements Discussion and Analysis of Financial Condition and Results of Op
212、erations and to Note 2 to the Companys consolidated financial statements under Item 8 below.(1)Includes the results of the acquisitions of certain oil and gas properties from Petsec,Shell Offshore,British-Borneo and Shell Canada after February 1,1999,May 18,1999,June 18,1999 and November 30,1999,res
213、pectively.(2)Includes the results of the acquisitions of certain subsidiaries and oil and gas properties from Novus Petroleum Limited(Novus)after December 18,1998.Also includes a$243.2 million pre-tax($158.1 million net of tax)non-cash write-down of the carrying value of the Companys U.S.proved oil
214、and gas properties due to ceiling test limitations.(3)Includes financial data after November 20,1997,relating to the acquisition from Mobil Exploration&Producing Australia Pty Ltd(Mobil)of three companies owning interests in certain oil and gas properties and production facilities offshore Western A
215、ustralia(the Ampolex Group Transaction).(4)Includes financial data after May 20,1996,for Apache PHN Company,Inc.(Phoenix,formerly known as The Phoenix Resource Companies,Inc.).(5)Includes the results of the acquisitions of certain oil and gas properties from Texaco Exploration and Production,Inc.and
216、 Aquila Energy Resources Corporation after March 1,1995 and September 1995,respectively,and the sale of a substantial portion of the Companys Rocky Mountain properties in September 1995.17 AS OF OR FOR THE YEAR ENDED DECEMBER 31,-1999(1)1998(2)1997(3)1996(4)1995(5)-(IN THOUSANDS,EXCEPT PER SHARE AMO
217、UNTS)INCOME STATEMENT DATA Total revenues.$1,300,505$875,715$1,176,273$977,151$750,702 Net income(loss).200,855 (129,387)154,896 121,427 20,207 Income(loss)attributable to common stock.186,406 (131,391)154,896 121,427 20,207 Net income(loss)per common share:Basic.1.73 (1.34)1.71 1.42 .28 Diluted.1.7
218、2 (1.34)1.65 1.38 .28 Cash dividends per common share.28 .28 .28 .28 .28 BALANCE SHEET DATA Working capital(deficit).$6,290$(78,804)$4,546$(41,501)$(22,013)Total assets.5,502,543 3,996,062 4,138,633 3,432,430 2,681,450 Long-term debt.1,879,650 1,343,258 1,501,380 1,235,706 1,072,076 Shareholders equ
219、ity.2,669,427 1,801,833 1,729,177 1,518,516 1,091,805 Common shares outstanding at end of year.113,996 97,769 93,305 90,059 77,379 ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Apaches considerable progress in 1999 and favorable outlook for cont
220、inued growth were not fully reflected in the Companys stock price at year-end.While Wall Street turned its attention to technology stocks,Apache recorded its best year ever,paving the way for its 23rd consecutive year of production growth in 2000.1999 performance highlights include record:-Productio
221、n of 204.3 thousand barrels of oil equivalent per day,up 17 percent.-Proved reserves of 807.2 MMboe,up 32 percent.-Net cash provided by operating activities of$638.2 million,up 35 percent.-Net income attributable to common stock of$186.4 million,up$31.5 million over our 1997 record.More important th
222、an these milestones is the position they have left Apache for continued progress ahead.-$1.8 billion of capital expenditures brought into our fold quality assets with low operating costs and high margins.The two acquisitions from Shell coupled with first production from major development projects in
223、 Egypt and Australia contributed to a$.32 per boe decline in Apaches lease operating expense per equivalent barrel produced.-Record 1999 earnings coupled with$654.8 million of equity offerings reduced Apaches debt to 41.4 percent of capitalization,among the strongest in our sector and capable of fun
224、ding substantial growth opportunities.-Rising production will generate substantial cash flow.While prices are always a wildcard,should they approximate levels indicated by the current New York Mercantile Exchange,Apache has the potential to achieve$1 billion of cash flow in 2000,adding fuel with whi
225、ch to act on opportunities that many of Apaches competitors are unable to capture.In short,despite only partial recognition in our stock price,Apaches progress in 1999 puts the company in its strongest financial position ever to carry out its business strategy and continue to build lasting sharehold
226、er value.Apaches results of operations and financial position for 1999 were also significantly impacted by the following factors:Commodity Prices-Apaches average realized oil price increased$5.77 per barrel from$12.66 per barrel in 1998 to$18.43 per barrel in 1999,increasing revenues by$153.6 millio
227、n.The average realized price for natural gas increased$.24 per Mcf from$1.92 per Mcf in 1998 to$2.16 per Mcf in 1999,positively impacting revenues by$50.7 million.Operations-Oil production increased 25 percent in 1999 compared to the prior year.The increase was primarily due to the acquisition of ce
228、rtain blocks in the Gulf of Mexico from Shell Offshore,included since mid-May of 1999,the full-period impact of the acquisition of certain oil and gas interests in the Carnarvon Basin,offshore Western Australia,from Novus in November 1998 and production from Australias Stag field which began in May
229、1998.The increase in oil production positively impacted revenues by$121.9 million.Gas production increased 11 percent,which increased revenues by$52.0 million.As with oil,gas increased in the U.S.due to the Shell Offshore acquisition.In Egypt,the Western Desert Gas Pipeline in the Khalda concession
230、was completed and first sales commenced in August 1999.RESULTS OF OPERATIONS Apache reported 1999 income attributable to common stock of$186.4 million,up from a loss attributable to common stock of$131.4 million in 1998.A significant increase in oil and gas production revenues was 18 partially offse
231、t by higher recurring depreciation,depletion and amortization(DD&A)expense,operating costs,preferred stock dividends,and administrative,selling and other(G&A)expense.Basic net income(loss)per common share was$1.73 for 1999,as compared to$(1.34)in 1998.A loss attributable to common stock of$131.4 mil
232、lion was reported in 1998 as opposed to income attributable to common stock of$154.9 million in 1997.The 1998 loss resulted from a full-cost ceiling write-down at year end.Results for 1998 were further hampered by sharp declines in oil and gas prices.Basic net income(loss)per common share was$(1.34)
233、for 1998,as compared to basic net income per share of$1.71 in 1997.Oil and gas production revenues increased 50 percent in 1999 to$1.1 billion as compared to$759.0 million in 1998.The increase resulted from a 46 percent increase in the average realized oil price,a 13 percent increase in the average
234、realized natural gas price,a 25 percent increase in oil production and an 11 percent increase in natural gas production.Crude oil,including natural gas liquids,contributed 55 percent and natural gas contributed 45 percent of total oil and gas production revenues during 1999.Oil and gas production re
235、venues decreased 23 percent in 1998 to$759.0 million as compared to$983.8 million in 1997.The decrease resulted from a 34 percent decrease in the average realized oil price,a 16 percent decrease in the average realized price for natural gas and a three percent decrease in gas production.Crude oil,in
236、cluding natural gas liquids,contributed 45 percent and natural gas contributed 55 percent of oil and gas production revenues during 1998.19 The table below presents,for the years indicated,the oil and gas production revenues,production and average prices received from sales of natural gas,oil and na
237、tural gas liquids.The Companys future financial condition and results of operations will depend upon prices received for its oil and natural gas production and the costs of finding,acquiring,developing and producing reserves.A 20 FOR THE YEAR ENDED DECEMBER 31,-1999 1998 1997 -Revenues(in thousands)
238、:Natural gas.$516,503$413,870$505,604 Oil.612,298 336,813 466,291 Natural gas liquids.13,535 8,355 11,878 -Total.$1,142,336$759,038$983,773 =Natural Gas Volume-Mcf per day:United States.461,444 432,059 492,594 Canada.99,791 105,871 89,699 Egypt.15,916 1,554 563 Australia.76,220 50,624 26,016 Ivory C
239、oast.2,749 -Total.656,120 590,108 608,872 =Average Natural Gas Price-Per Mcf:United States.$2.31$2.11$2.47 Canada.1.73 1.36 1.33 Egypt.3.45 1.91 2.94 Australia.1.51 1.51 1.78 Ivory Coast.1.72 -Total.2.16 1.92 2.28 Oil Volume-Barrels per day:United States.45,556 34,067 40,638 Canada.3,053 2,090 2,120
240、 Egypt.31,751 27,911 19,372 Australia.10,624 8,838 4,417 Ivory Coast.37 -Total.91,021 72,906 66,547 =Average Oil Price-Per barrel:United States.$17.94$12.63$19.31 Canada.19.35 12.55 19.27 Egypt.18.63 12.57 18.65 Australia.19.70 13.07 20.51 Ivory Coast.15.68 -Total.18.43 12.66 19.20 NGL Volume-Barrel
241、s per day:United States.3,308 2,267 1,684 Canada.630 616 627 -Total.3,938 2,883 2,311 =Average NGL Price-Per barrel:United States.$9.37$8.38$14.50 Canada.9.64 6.32 12.98 Total.9.42 7.94 14.08 substantial portion of the Companys production is sold under market-sensitive contracts.Prices for oil and n
242、atural gas are subject to fluctuations in response to changes in supply,market uncertainty and a variety of other factors beyond the Companys control.These factors include worldwide political instability(especially in the Middle East),the foreign supply of oil and natural gas,the price of foreign im
243、ports,the level of consumer demand,and the price and availability of alternative fuels.Natural gas revenues increased by 25 percent from 1998 to 1999 as a result of increased production volumes and realized prices.The average realized gas price increased 13 percent in 1999 positively affecting reven
244、ues by$50.7 million.U.S.natural gas production,which comprised 70 percent of the Companys worldwide gas production,sold at an average price of$2.31 per Mcf,nine percent higher than in 1998,positively impacting natural gas sales by$32.4 million.The Company periodically engages in hedging activities,i
245、ncluding fixed-price physical contracts and financial contracts.Gains under long-term fixed-price physical contracts increased the gas price by$.02 per Mcf in 1999 while realized losses from open hedging positions negatively impacted the gas price by$.01 per Mcf in 1999.Natural gas production increa
246、sed 66 million cubic feet per day(MMcf/d),or 11 percent,on a worldwide basis,favorably impacting revenue by$52.0 million in 1999.In the United States,gas production increased 29.4 MMcf/d due to acquisition activities,primarily the Shell Offshore acquisition in 1999.Development activities and the imp
247、act of producing property acquisitions during late 1998 increased natural gas production in Australia by 25.6 MMcf/d.Egyptian gas production increased ten fold in 1999 as a result of the completion of the northern portion of the Western Desert Gas Pipeline in the Khalda concession,with first sales c
248、ommencing in August.Natural gas revenues decreased by 18 percent from 1997 to 1998 due to lower natural gas prices and production.The average realized gas price received in 1998 was$1.92 per Mcf,16 percent lower than 1997,negatively affecting revenue by$78.6 million.The Company periodically engages
249、in hedging activities,including fixed-price physical contracts and financial contracts.Apache realized gains from open hedging positions favorably impacting the gas price by$.01 per Mcf in 1998.Gains under long-term fixed-price physical contracts increased the gas price by$.05 per Mcf in 1998.Prices
250、 declined in the United States due to unfavorable market conditions.Natural gas prices in Australia declined 15 percent from 1997 resulting from the devaluation of the Australian dollar.Natural gas production for the United States decreased 12 percent from 1997 to 1998 due to the impact of property
251、sales in the Southern and Midcontinent regions,tropical storms in the Gulf of Mexico and natural depletion.In Australia,natural gas production increased 95 percent driven by a full year of incremental production from properties acquired in the year-end 1997 Ampolex Group Transaction.The 18 percent u
252、plift in Canadian production resulted from development activity and Alberta royalty recoupments received for 1998.Alberta allows reduction in royalty for costs to build processing and transportation facilities.Crude oil revenues totaled$612.3 million in 1999,an 82 percent increase from 1998 due to h
253、igher average realized oil prices and production increases.On a worldwide basis,average oil prices increased 46 percent to$18.43 per barrel positively impacting oil sales by$153.6 million.Realized losses from open hedging positions negatively impacted the oil price by$.16 per barrel in 1999.Oil prod
254、uction increased 18,115 barrels per day,or 25 percent,in 1999 due primarily to increases in the United States.Domestic oil production increased 11,489 barrels per day,or 34 percent,primarily due to the Shell Offshore acquisition.Australian oil production increased 1,786 barrels per day,or 20 percent
255、,over 1998 with additional full-year production from the Stag field.Egyptian oil production increased 3,840 barrels per day,or 14 percent,as a result of the price-driven dynamics of certain production sharing contracts and development activity.Crude oil revenues totaled$336.8 million in 1998,a 28 pe
256、rcent decrease from 1997 due to lower average realized oil prices,which were partially offset by production increases.On a worldwide basis,average oil prices decreased 34 percent to$12.66 per barrel negatively impacting oil revenues by$158.9 million.Oil production increased 6,359 barrels per day(app
257、roximately 10 percent),in 1998 due to increases in Egypt and Australia.Australian oil production increased 4,421 barrels per day over 1997 with additional production from the Ampolex Group Transaction and initial sales from the Stag field.Egyptian oil production increased 8,539 barrels per day,or 44
258、 percent,as a result of the price-driven dynamics of certain production sharing 21 contracts and to a lesser extent,drilling and development activity.U.S.oil production decreased by 6,571 barrels per day,or 16 percent,primarily due to marginal property sales in the first half of 1998 and natural res
259、ervoir depletion of mature fields.Natural gas liquids revenues in 1999 increased 62 percent from 1998.Natural gas liquids production increased 1,055 barrels per day,or 37 percent and natural gas liquids prices increased by$1.48 per barrel,or 19 percent,due to improved market conditions.Natural gas l
260、iquids revenues decreased 30 percent in 1998.Natural gas liquids production increased 572 barrels per day,or 25 percent,while natural gas liquids prices declined by$6.14 per barrel,or 44 percent,due to deteriorating market conditions.Other Revenues and Operating Expenses Gas gathering,processing and
261、 marketing revenues increased 33 percent to$155.6 million in 1999 from 1998.Higher gas prices in 1999 contributed to the increase.Gas gathering,processing and marketing costs increased by 34 percent to$153.4 million resulting in a slight decrease to 1999 margins.During 1998,gas gathering,processing
262、and marketing revenues decreased 40 percent to$117.4 million.Slightly higher margins were realized in 1998 as compared to 1997.Recurring DD&A expense increased to$442.8 million in 1999 from$382.8 million in 1998.On an equivalent barrel basis,recurring full cost DD&A expense decreased$.09 per boe,fro
263、m$5.66 per boe in 1998 to$5.57 per boe in 1999.The decrease in the overall DD&A rate was the result of substantial increases in United States production volumes during 1999 and the ceiling test write-down in 1998,which lowered the carrying amount of those properties being depleted.The Companys recur
264、ring DD&A expense increased to$382.8 million in 1998 from$381.4 million in 1997.On an equivalent barrel basis,recurring full cost DD&A expense decreased$.11 per boe,from$5.77 per boe in 1997 to$5.66 per boe in 1998.Apache limits,on a country-by-country basis,the capitalized cost of oil and gas prope
265、rties,net of accumulated DD&A and deferred income taxes,to estimated future net cash flows from proved oil and gas reserves discounted at 10 percent,net of related tax effects,plus the lower of cost or fair value of unproved properties included in the costs being amortized.As a result of low oil and
266、 gas prices in the United States at December 31,1998,Apaches capitalized costs of oil and gas properties exceeded the ceiling limitation and the Company reported a$243.2 million pre-tax($158.1 million net of tax)non-cash write-down as additional DD&A expense.No additional DD&A expense was recorded d
267、uring 1999 or 1997.Write-downs required by these rules do not impact cash flow from operating activities.Apaches operating costs increased six percent in 1999 to$223.6 million from$211.6 in 1998.Lease operating expense(LOE),excluding severance taxes,increased from$182.9 million in 1998 to$191.2 mill
268、ion in 1999.On an equivalent barrel basis,LOE for 1999 averaged$2.56 per boe,a$.32 decline from$2.88 per boe in 1998.Domestic per unit costs were significantly reduced due to lower Southern region repairs,maintenance,power and fuel costs resulting from the sale of marginal properties partially offse
269、t by increases in the Offshore region due to workover costs associated with acquired properties located in the Gulf of Mexico from Petsec and Shell Offshore.Operating costs decreased nine percent to$211.6 million in 1998 from$231.4 million in 1997.LOE,excluding severance taxes,decreased from$190.8 m
270、illion in 1997 to$182.9 million in 1998.On an equivalent barrel basis,LOE for 1998 averaged$2.88 per boe,a$.19 decline from$3.07 per boe in 1997.Domestic per unit costs were significantly reduced from the sale of marginal North American properties,and by lower Southern region repairs and maintenance
271、 costs.G&A expense increased$13.2 million,or 32 percent,from 1998 to 1999.The Companys overall infrastructure was enlarged to properly handle increased responsibilities associated with 1999 North American producing property acquisitions.On an equivalent barrel basis,G&A expense increased to$.72 per
272、boe in 1999 compared to$.64 per boe in 1998.G&A expense increased$2.5 million,or seven percent from 1997 to 1998.On an equivalent barrel basis,G&A expense increased to$.64 per boe in 1998 compared to$.62 per boe in 1997.The increase in G&A expense was primarily the result of employee separation paym
273、ents associated with the sale of marginal North American properties.22 Net financing costs for 1999 increased$11.7 million,or 17 percent,from 1998 primarily due to higher interest expense and lower interest income,partially offset by higher capitalized interest.Gross interest expense increased$13.3
274、million resulting from higher average outstanding debt in 1999.The weighted average interest rate on outstanding debt increased to 7.5 percent at December 31,1999 from 7.2 percent at December 31,1998.The increase in capitalized interest is associated with Egyptian pipeline projects under constructio
275、n.The decrease in interest income was due to a lower average cash balance during 1999.Net financing costs for 1998 decreased$1.8 million,or two percent,from 1997 primarily due to higher capitalized interest.Gross interest expense increased$14.6 million due to a slightly higher interest rate on avera
276、ge outstanding debt in 1998 compared to 1997 and higher imputed interest on advances from gas purchasers.This was offset by an increase in capitalized interest,interest income and lower amortization of deferred loan costs.The Companys weighted average interest rate on outstanding debt was 7.2 percen
277、t at December 31,1998 compared to 7.1 percent at December 31,1997.MARKET RISK Commodity Risk The Companys major market risk exposure is in the pricing applicable to its oil and gas production.Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot prices applica
278、ble to its United States and Canadian natural gas production.Historically,prices received for oil and gas production have been volatile and unpredictable and price volatility is expected to continue.Monthly oil price realizations ranged from a low of$10.09 per barrel to a high of$24.11 per barrel du
279、ring 1999.Gas price realizations ranged from a monthly low of$1.60 per Mcf to a monthly high of$2.74 per Mcf during the same period.The Company periodically enters into hedging activities on a portion of its projected oil and natural gas production through a variety of financial and physical arrange
280、ments intended to support oil and natural gas prices at targeted levels and to manage its exposure to oil and gas price fluctuations.Apache may use futures contracts,swaps,options and fixed-price physical contracts to hedge its commodity prices.Realized gains or losses from the Companys price risk m
281、anagement activities are recognized in oil and gas production revenues when the associated production occurs.Apache does not hold or issue derivative instruments for trading purposes.In 1999,Apache recognized a net loss of$3.1 million from hedging activities that decreased oil and gas production rev
282、enues.The net loss in 1999 includes$6.7 million in derivatives losses and$3.6 million in gains from fixed-price physical gas contracts.Gains or losses on derivative contracts are expected to be offset by sales at the spot market price or to preserve the margin on existing physical gas contracts.At D
283、ecember 31,1999,the Company had open natural gas price swap positions with a positive fair value of$11.1 million.A 10 percent increase in natural gas prices would increase the fair value by$19.7 million.A 10 percent decrease in prices would decrease the fair value by$19.7 million.The Company also ha
284、d open oil price swap positions at December 31,1999 with a negative fair value of$(9.4)million.A 10 percent increase in oil prices would decrease the fair value by$18.3 million.A 10 percent decrease in oil prices would increase the fair value by$18.3 million.Discount rates used in arriving at fair v
285、alues range from 6.5 percent for 2000 to 7.3 percent for 2008.At December 31,1999,the Company also had natural gas commodity collars with a fair value of$.8 million and oil commodity collars with a fair value of$(4.9)million.A 10 percent increase in oil and gas prices would change the fair values of
286、 the gas collars and the oil collars by$(.9)million and$(5.2)million,respectively.A 10 percent decrease in oil and gas prices would change the fair values of the gas collars and the oil collars by$1.6 million and$3.9 million,respectively.The model used to arrive at the fair values for the commodity
287、collars is based on the Black commodity pricing model.Changes in fair value,assuming 10 percent price changes,assume non-constant volatility with volatility based on prevailing market parameters at December 31,1999.Notional volumes associated with the Companys derivative contracts are shown in Note
288、9 to the Companys consolidated financial statements.23 Interest Rate Risk The Company considers its interest rate risk exposure to be minimal as a result of fixing interest rates on approximately 83 percent of the Companys debt.Total debt at December 31,1999,included$318.7 million of floating-rate d
289、ebt.As a result,Apaches annual interest costs in 2000 will fluctuate based on short-term interest rates on approximately 17 percent of its total debt outstanding at December 31,1999.The impact on annual cash flow of a 10 percent change in the floating rate(approximately 69 basis points)would be appr
290、oximately$2.2 million.The Company did not have any open derivative contracts relating to interest rates at December 31,1999.Foreign Currency Risk The Companys cash flow stream relating to certain international operations is based on the U.S.dollar equivalent of cash flows measured in foreign currenc
291、ies.Australian gas production is sold under fixed-price Australian dollar contracts and over half the costs incurred are paid in Australian dollars.Revenue and disbursement transactions denominated in Australian dollars are converted to U.S.dollar equivalents based on the exchange rate on the transa
292、ction date.Reported cash flow relating to Canadian operations is based on cash flows measured in Canadian dollars converted to the U.S.dollar equivalent based on the average of the Canadian and U.S.dollar exchange rates for the period reported.Substantially all of the Companys international transact
293、ions,outside of Canada and Australia,are denominated in U.S.dollars.The Companys Polish and Australian subsidiaries have net financial assets that are denominated in a currency other than the functional reporting currency of the subsidiaries.A decrease in value of 10 percent in the Australian dollar
294、 and Polish zloty relative to the U.S.dollar from the year-end exchange rates would result in a foreign currency loss of approximately$.7 million,based on December 31,1999 amounts.The Company considers its current risk exposure to exchange rate movements,based on net cash flows,to be immaterial.The
295、Company did not have any open derivative contracts relating to foreign currencies at December 31,1999.CASH FLOW,LIQUIDITY AND CAPITAL RESOURCES Capital Commitments Apaches primary needs for cash are for exploration,development and acquisition of oil and gas properties,repayment of principal and inte
296、rest on outstanding debt,payment of dividends,and capital obligations for affiliated ventures.The Company funds its exploration and development activities primarily through internally generated cash flows.Apache budgets capital expenditures based upon projected cash flows.The Company routinely adjus
297、ts its capital expenditures in response to changes in oil and natural gas prices and cash flow.The Company cannot accurately predict future oil and gas prices.Capital Expenditures-Apaches oil and gas capital expenditures over the last three years are summarized below:24 1999 1998 1997 -(IN THOUSANDS
298、)Exploration and Development:United States.$217,476$222,750$359,272 Canada.45,691 69,757 56,263 Egypt.59,808 105,431 139,938 Australia.60,976 80,099 68,563 Ivory Coast.2,553 23,527 556 Other International.18,835 39,856 24,335 -405,339 541,420 648,927 Capitalized Interest.45,722 49,279 36,493 -Total.
299、$451,061$590,699$685,420 =Acquisitions of Oil and Gas Properties.$1,391,206$58,402$225,934 =Expenditures for exploration and development totaled$405.3 million in 1999 compared to$541.4 million in 1998.Apaches drilling program in 1999 added 64.1 MMboe of proved reserves(including revisions)and replac
300、ed 86 percent of production.In the United States,Apache completed 108 gross wells as producers out of 130 gross wells drilled during the year,compared with 183 gross producers out of 233 gross wells drilled in 1998.In Canada,Apache completed 32 gross wells as producers out of 49 gross wells drilled
301、during the year,compared with 47 gross producers out of 66 gross wells drilled in 1998.Internationally,the Company completed 50 gross producers out of 73 gross wells drilled in 1999,compared to 46 gross producers out of 84 gross wells in 1998.Successful international wells drilled in 1999 included 4
302、1 in Egypt and seven in Australia.The total capital expenditures budget for 2000 is$597.5 million,including$384.9 million for North America.Estimated North American exploration and development expenditures include$56.4 million in the Southern region,$67.1 million in the Midcontinent region,$151.5 mi
303、llion in the Offshore region and$109.9 million in Canada.The Company has estimated its other international exploration and development expenditures in 2000,exclusive of facilities,to total approximately$212.6 million.Capital expenditures will be reviewed and possibly adjusted throughout the year in
304、light of changing industry conditions.On February 1,1999,the Company acquired oil and gas properties located in the Gulf of Mexico from Petsec for an adjusted purchase price of$67.7 million.The Petsec transaction included estimated proved reserves of approximately 10.2 MMboe as of the acquisition da
305、te.On May 18,1999,Apache acquired from Shell Offshore its interest in 22 producing fields and 16 undeveloped blocks located in the Gulf of Mexico.The Shell Offshore acquisition also included certain production-related assets and proprietary 2D and 3D seismic data covering approximately 1,000 blocks
306、in the Gulf of Mexico.The purchase price was$687.7 million in cash and one million shares of Apache common stock(valued at$28.125 per share).The Shell Offshore acquisition included approximately 123.2 MMboe of proved reserves as of the acquisition date.On June 18,1999,the Company acquired a 10 perce
307、nt interest in the East Spar Joint Venture and an 8.4 percent interest in the Harriet Joint Venture,both located in the Carnarvon Basin(offshore Western Australia),from British-Borneo in exchange for$83.6 million cash and working interests in 11 leases in the Gulf of Mexico.The British-Borneo transa
308、ction included approximately 16.8 MMboe of proved reserves as of the acquisition date.On November 30,1999,Apache acquired from Shell Canada producing properties and other assets for C$761 million(US$517.8 million).The producing properties consist of 150,400 net acres and comprise 20 fields with an a
309、verage working interest of 55 percent and proved reserves of 87.2 MMboe as of the acquisition date.Apache also acquired 294,294 net acres of undeveloped leaseholdings,100 percent interest in a gas processing plant with a potential throughput capacity of 160 million cubic feet(MMcf)per day,and 52,700
310、 square miles of 2D seismic and 884 square miles of 3D seismic.In 1999,the Company also completed tactical regional acquisitions for cash consideration totaling$17.7 million.These acquisitions added approximately 8.8 MMboe to the Companys proved reserves.In January 2000,Apache completed the acquisit
311、ion of producing properties in Western Oklahoma and the Texas Panhandle,formerly owned by a subsidiary of Repsol YPF,for approximately$119 million,plus assumed liabilities of approximately$30 million.The acquisition included estimated proved reserves of 206 Bcfe as of the acquisition date.In Novembe
312、r 1998,the Company entered into agreements to acquire certain oil and gas interests and companies holding oil and gas interests in the Carnarvon Basin,offshore Western Australia,from subsidiaries of Novus for approximately$55 million.The interests have proved reserves of approximately 5.8 MMboe and
313、daily production of 2,400 barrels of oil equivalent.They are within the Apache-operated Harriet Joint Venture(which includes production,processing and pipeline infrastructure associated with the Varanus Island hub),the Airlie Joint Venture(in which the Company held a prior interest and became operat
314、or)and three other 25 exploration permit areas.The transaction closed in two stages,in December 1998 for approximately$49 million and in January 1999 for approximately$6 million.In 1998,the Company also completed tactical regional acquisitions for cash consideration totaling$19.4 million.These acqui
315、sitions added approximately 9.1 MMboe to the Companys reserves.In November 1997,the Company acquired,in the Ampolex Group Transaction,all the capital stock of three companies owning interests in certain oil and gas properties(including 31.9 MMboe of proved oil and natural gas reserves)and production
316、 facilities offshore Western Australia for approximately$300 million pursuant to three agreements with subsidiaries of Mobil.The Ampolex Group Transaction acquisition,net of the sale of certain properties to Hardy Petroleum Limited(Hardy),increased the Companys interest to 47.5 percent from 22.5 per
317、cent in the Carnarvon Basins Harriet area,which included the Varanus Island pipeline,processing and production complex and eight existing oil and gas fields.In addition,the Companys interest in the East Spar field,which produces through the Varanus Island facilities,increased to 45 percent from 20 p
318、ercent.Apache operates both the Harriet and East Spar properties.In conjunction with the closing of the Ampolex Group Transaction,in December 1997,the Company entered into an agreement under which Hardy agreed to purchase a 10 percent interest in the Companys East Spar gas field and related producti
319、on facilities in Western Australia.The transaction closed in January 1998 with a total sales price of approximately$63 million in cash.Debt and Interest Commitments-At December 31,1999,Apache had outstanding debt of$116 million under its global credit facility and an aggregate of$1.8 billion of othe
320、r debt.This other debt included notes and debentures maturing in the years 2000 through 2096.Debt outstanding at December 31,1999 of$1.9 billion was higher as compared to the$1.4 billion outstanding at December 31,1998,due to the Companys significant acquisition activity during 1999.Even so,the Comp
321、anys debt-to-capitalization ratio improved from 43.0 percent at December 31,1998 to 41.4 percent at December 31,1999.Interest payments on the Companys debt for 2000 are projected to be$162.0 million(using weighted average balances for floating rate obligations).Anticipated principal payments for 200
322、0 total$6.2 million.Dividend Payments-Apache paid a total of$12.6 million in dividends during 1999 on its Series B Preferred Stock issued in August 1998 and its Series C Preferred Stock issued in May 1999.Common dividends paid during 1999 totaled$29.7 million,up nine percent from 1998,due to the inc
323、reased number of common shares outstanding.The Company has paid cash dividends on its common stock for 132 consecutive quarters through December 31,1999.The Company expects to continue payment of dividends at current levels on an annual basis.Future dividend payments will depend on the Companys leve
324、l of earnings,financial requirements and other relevant factors.Capital Resources and Liquidity The Companys primary capital resources are net cash provided by operating activities,proceeds from financing activities and proceeds from sales of non-strategic assets.Net Cash Provided by Operating Activ
325、ities-Apaches net cash provided by operating activities during 1999 totaled$638.2 million,an increase of 35 percent over the$471.5 million reported in 1998.This increase was due primarily to higher oil and gas production and prices in 1999.Net cash provided by operating activities during 1998 declin
326、ed$252.3 million from 1997 due primarily to lower oil and gas prices and lower gas production in 1998,offset by the receipt of$71.8 million from a purchaser as an advance.The advance was for future natural gas deliveries over a ten-year period commencing in August 1998.Long-Term Borrowings-In March
327、1999,Apache Finance Pty Ltd,the Companys Australian finance subsidiary,issued$100 million principal amount,$99.3 million net of discount,of senior unsecured 7-percent notes due March 15,2009.The notes are irrevocably and unconditionally guaranteed by Apache.The Company has the right to redeem the no
328、tes prior to maturity,under certain conditions related to changes in relevant tax laws.Also,upon certain changes in control,these notes would be subject to mandatory repurchase.The proceeds were used to reduce outstanding indebtedness under the Australian portion of the global credit facility.26 In
329、June 1999,the Company issued$150 million principal amount,$149.1 million net of discount,of senior unsecured 7.625-percent notes due July 1,2019.The Company does not have the right to redeem the notes prior to maturity.Upon certain changes in control,these notes would be subject to mandatory repurch
330、ase.The proceeds were used to reduce the Companys outstanding amounts of commercial paper.In December 1999,Apache Finance Canada Corporation,the Companys Canadian finance subsidiary,issued$300 million principal amount,$296.9 million net of discount,of senior unsecured 7.75-percent notes due December
331、 15,2029.The notes are irrevocably and unconditionally guaranteed by Apache.The Company has the right to redeem the notes prior to maturity,under certain conditions related to changes in relevant tax laws.Also,upon certain changes in control,these notes would be subject to mandatory repurchase.The p
332、roceeds were used to repay commercial paper issued to finance the Shell Canada acquisition.Stock Transactions-In May 1999,Apache issued 14,950,000 shares of Apache common stock for net proceeds of$444.3 million and 140,000 shares($217 million)of Series C Preferred Stock in the form of seven million
333、depositary shares each representing one-fiftieth(1/50th)of a share of Series C Preferred Stock for net proceeds of$210.5 million.The Series C Preferred Stock is not subject to a sinking fund or mandatory redemption.On May 15,2002,each depositary share will automatically convert,subject to adjustments,into not more than one share and not less than 0.8197 of a share of Apache common stock,depending
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