1、FORM 10-K APACHE CORP(Annual Report)Filed 3/28/1997 For Period Ending 12/31/1996Address2000 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 31,1996,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 NUMBE
3、R 1-4300 APACHE CORPORATION A DELAWARE CORPORATION IRS EMPLOYER NO.41-0747868 ONE POST OAK CENTRAL 2000 POST OAK BOULEVARD,SUITE 100 HOUSTON,TEXAS 77056-4400 TELEPHONE NUMBER(713)296-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(B)OF THE ACT:SECURITIES REGISTERED PURSUANT TO SECTION 12(g)OF THE
4、ACT:None Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to
5、such filing requirements for the past 90 days.Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by
6、 reference in Part III of this Form 10-K or any amendment to this Form 10-K.X 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 9.25
7、%Notes due 2002 New York Stock Exchange Aggregate market value of the voting stock held by non-affiliates of registrant as of February 28,1997.$2,920,499,216 Number of shares of registrants common stock outstanding as of February 28,1997.90,208,470 DOCUMENTS INCORPORATED BY REFERENCE:Portions of reg
8、istrants proxy statement relating to registrants 1997 annual meeting of shareholders have been incorporated by reference into Part III hereof.TABLE OF CONTENTS DESCRIPTION All defined terms under Rule 4-10(a)of Regulation S-X shall have their statutorily prescribed meanings when used in this report.
9、Quantities of natural gas are expressed in this report in terms of thousand cubic feet(Mcf),million cubic feet(MMcf)or billion cubic feet(Bcf).Oil is quantified in terms of barrels(bbls),thousands of barrels(Mbbls)and millions of barrels(MMbbls).Natural gas is compared to oil in terms of barrels of
10、oil equivalent(boe)or million barrels of oil equivalent(MMboe).Oil and natural gas liquids are compared with natural gas in terms of million cubic feet equivalent(MMcfe)and billion cubic feet equivalent(Bcfe).One barrel of oil is the energy equivalent of six Mcf of natural gas.Daily oil and gas prod
11、uction is expressed in terms of barrels of oil per day(b/d)and thousands of cubic feet of gas per day(Mcf/d)or millions of British thermal units per day(MMBtu/d),respectively.Gas sales volumes may be expressed in terms of one million British thermal units(MMBtu),which is approximately equal to one M
12、cf.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 PAGE
13、-PART I 1.BUSINESS.1 2.PROPERTIES.10 3.LEGAL PROCEEDINGS.14 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.14 PART II 5.MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.14 6.SELECTED FINANCIAL DATA.15 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RES
14、ULTS OF OPERATIONS.16 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.24 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.24 PART III 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.25 11.EXECUTIVE COMPENSATION.25 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
15、OWNERS AND MANAGEMENT.25 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.25 PART IV 14.EXHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON FORM 8-K.25 PART I ITEM 1.BUSINESS GENERAL Apache Corporation(Apache or the Company),a Delaware corporation formed in 1954,is an independent energy company t
16、hat 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 Americ
17、a,Apache has exploration and production interests offshore Western Australia and in Egypt,and exploration interests in Indonesia,offshore The Peoples Republic of China and offshore the Ivory Coast.Apache common stock,par value$1.25 per share,has been listed on the New York Stock Exchange since 1969,
18、and on the Chicago Stock Exchange since 1960.Apache holds interests in many of its U.S.,Canadian and international properties through operating subsidiaries,such as MW Petroleum Corporation(MW),Apache Canada Ltd.,DEK Energy Company(DEKALB,formerly known as DEKALB Energy Company),Apache Energy Limite
19、d(AEL,formerly known as Hadson Energy Limited),Apache International,Inc.,Apache Overseas,Inc.and The Phoenix Resource Companies,Inc.Properties referred to in this document may be held by those subsidiaries.Apache treats all operations as one segment of business.1996 RESULTS In 1996,Apache had net in
20、come of$121.4 million,or$1.42 per share,on total revenues of$977.2 million.Net cash provided by operating activities during 1996 was$490.5 million.The year 1996 was Apaches 19th consecutive year of production growth and ninth consecutive year of oil and gas reserves growth.Apaches average daily prod
21、uction was 53.2 Mbbls of oil and 561 MMcf of natural gas for the year.Giving effect to 1996 acquisitions,dispositions and drilling activity,the Companys estimated proved reserves increased by 85.6 MMboe in 1996 over the prior year to 506.2 MMboe,of which approximately 54 percent of total reserves wa
22、s natural gas.Based on 420.6 MMboe reported at year-end 1995,Apaches reserve growth during the year reflects replacement of 257 percent of the Companys 1996 production,including approximately 179 percent through drilling,revisions,recompletions,workovers and other production enhancement projects.Apa
23、ches active drilling and production-enhancement program yielded 279 new producing U.S.and Canadian wells out of 370 attempts and involved 344 major North American workover and recompletion projects during the year.At December 31,1996,Apache had interests in approximately 4,564 net oil and gas wells
24、and 1,523,405 net developed acres of oil and gas properties.In addition,the Company had approximately 791,627 net undeveloped acres under U.S.and Canadian leases and 6,881,900 net undeveloped acres under international exploration and production rights.APACHES GROWTH STRATEGY Apaches growth strategy
25、is to increase oil and gas reserves,production,and cash flow through a combination of exploratory drilling,development of its inventory of existing projects and,principally in North America,tactical acquisitions meeting defined financial parameters.The Companys drilling program emphasizes reserve ad
26、ditions through exploratory drilling primarily on its international interests,and moderate-risk drilling primarily on its North American interests.The Company also emphasizes reducing operating costs per unit produced and selling marginal and non-strategic properties in order to increase its profit
27、margins.Apaches international investments and exploration activities are an important component of its long-term growth strategy.Although international exploration is recognized as higher-risk than most of Apaches U.S.and Canadian activities,it offers potential for greater rewards and significant re
28、serve additions.Apache directed its international efforts in 1996 toward development of certain discoveries offshore Western Australia 1 and in Egypt,and toward further exploration efforts on its concessions in Egypt,offshore The Peoples Republic of China,in Indonesia,and offshore the Ivory Coast of
29、 western Africa.Apache believes that reserve additions in these international areas may be made through higher-risk exploration and through improved production practices and recovery techniques.For Apache,property acquisition is only one phase in a continuing cycle of business growth.Apaches aim is
30、to follow each acquisition with a cycle of reserve enhancement,property consolidation and cash flow acceleration,facilitating asset growth and debt reduction.This approach requires a well-planned and carefully executed property development program and,where appropriate,a selective program of propert
31、y dispositions.It motivates Apache to target acquisitions that have ascertainable additional reserve potential and to apply an active drilling,workover and recompletion program to realize the potential of the acquired undeveloped and partially developed properties.Apache prefers to operate its prope
32、rties so that it can best influence their development;as a result,the Company operates properties accounting for over 75 percent of its production.1996 ACQUISITIONS AND DISPOSITIONS The Company entered into the Agreement and Plan of Merger dated March 27,1996(the Merger Agreement)with The Phoenix Re
33、source Companies,Inc.(Phoenix),providing for a merger in which Phoenix would become a wholly owned subsidiary of the Company(the Merger).On May 20,1996,the transaction was approved by the Phoenix shareholders and the Merger was consummated.Pursuant to the Merger Agreement,each of the 16.2 million sh
34、ares of Phoenix common stock then outstanding was converted into the right to receive.75 shares of Apache common stock,with any fractional shares paid in cash,without interest,and$4.00 in cash,resulting in a total of 12.2 million shares of Apache common stock being issued and approximately$65 millio
35、n being paid in respect of the Phoenix common stock.Phoenixs principal assets are its interest in the Khalda and Qarun oil and gas concessions located in the Western Desert of Egypt,which in the aggregate contain 18 oil fields and six gas fields.Phoenixs oil and gas operations are currently conducte
36、d through Egyptian operating companies owned jointly by the Egyptian General Petroleum Corporation(EGPC),Phoenix and certain other participants,including the Company in the Qarun concession.In conjunction with the Merger,George D.Lawrence Jr.,former president and chief executive officer of Phoenix,j
37、oined Apaches board of directors.During 1996,Apache also acquired oil and gas properties and seismic data in North America and Egypt in transactions whose purchase prices totaled approximately$115 million,the most significant of which was the purchase of interests in offshore blocks in the Gulf of M
38、exico from Hall-Houston Oil Company(Hall-Houston)and related entities in August for approximately$46 million.In 1996,Apache also disposed of oil and gas properties and gas plants in transactions whose sales proceeds totaled approximately$30.1 million.In addition,Apache monetized certain gas properti
39、es entitled to Internal Revenue Code Section 29 Tax Credits in two transactions with the Apache Series 1996-A Trust,whose managing trustee is Apache and whose non-managing trustee is FC Energy Finance I,Inc.Total net proceeds from these two transactions were approximately$23 million.EXPLORATION AND
40、PRODUCTION The Companys North American exploration and production activities are divided into five operating regions Offshore,Midcontinent,Western,Gulf Coast and Canadian regions.Approximately 82 percent of the Companys proved reserves are located in the five North American regions.Following the Pho
41、enix Merger,Egypt became an important region for Apache.The Companys Egyptian operations are headquartered in Cairo.Apache conducts its Australian exploration and production and its Indonesian exploration through its Australian region.Information concerning the amount of revenue,operating income and
42、 identifiable assets attributable to U.S.,Canadian and international operations,respectively,is set forth in the Supplemental Oil and Gas Disclosures under Item 8 below.Offshore.The Offshore region(referred to as the Gulf of Mexico region in 1995)includes all of Apaches interests in properties offsh
43、ore Texas,Louisiana and Alabama.In 1996,Offshore produced approximately 11.8 MMboe and$181 million in production revenue for the year.At December 31,1996,the 2 Offshore region held 346,806 net acres,located in both state and federal waters,and accounted for 45.8 MMboe,or nine percent,of the Companys
44、 year-end 1996 total estimated proved reserves.Apaches operations in the Offshore region focused on workovers and recompletions,which totaled 33 in the region for 1996.Apache participated in 19 wells which were drilled in the region during the year,10 of which were completed as producers.For 1996,Ap
45、aches gas production from the Offshore region was approximately 61,554 MMcf.Midcontinent.Apaches Midcontinent region operates in Oklahoma,eastern Texas and northern Louisiana.The region has focused operations on its sizable position in the Anadarko Basin of western Oklahoma.Apache has drilled and op
46、erated in the Anadarko Basin for nearly four decades,developing an extensive database of geologic information and a substantial acreage position.The Midcontinent region produced approximately 12 MMboe for the year,creating$167 million in production revenue for the Company.At December 31,1996 Apache
47、held an interest in 409,033 net acres in the region,which accounted for approximately 106.5 MMboe,or 21 percent,of Apaches total estimated proved reserves.Apache participated in drilling 103 wells in the Midcontinent region during the year,85 of which were completed as producing wells.The Company pe
48、rformed 26 major workover and recompletion operations in the region during 1996.Western.The Western region includes assets in the Permian Basin of western Texas and New Mexico,the Green River Basin of Colorado and Wyoming and the San Juan Basin of New Mexico.The Western region was Apaches leading re
49、gion for oil and gas sales for 1996,producing approximately 10.4 MMboe and$185 million in oil and gas revenue,22 percent of the Companys production revenues during 1996.At December 31,1996,the Company held 649,820 net acres in the region,which accounted for 137.4 MMboe,or 27 percent,of the Companys
50、total estimated proved reserves.Apache participated in drilling 128 wells in the Western region,103 of which were productive wells.Apache performed 30 major workovers and recompletions in the Western region during the year.Gulf Coast.The Gulf Coast region encompasses the Texas and Louisiana coasts,c
51、entral Texas and Mississippi.In 1996,the Gulf Coast region contributed approximately$182 million in revenues from production of 9.9 MMboe for the year.The region was one of the most active in the Company in the number of workover and recompletion projects completed and the number of wells drilled.Th
52、e Company performed 226 major workover and recompletion operations during 1996 in the Gulf Coast region and participated in drilling 43 wells,31 of which were completed as producers.As of December 31,1996,the region encompassed 273,568 net acres,and accounted for 69.5 MMboe,or 14 percent,of the Comp
53、anys year-end 1996 total estimated proved reserves.Canada.Exploration and development activity in the Canadian region is concentrated in the Provinces of Alberta and British Columbia.The region produced approximately 5.5 MMboe,83 percent of which was natural gas,and generated$48 million in oil,gas a
54、nd natural gas liquids sales,six percent of the Companys production revenues in 1996.Apache participated in drilling 77 wells in this region during the year,50 of which were completed as producers.The Company performed 29 workovers and recompletions on operated wells during 1996.At December 31,1996,
55、the region encompassed approximately 409,120 net acres,and accounted for 57.1 MMboe,or 11 percent,of the Companys year-end 1996 total estimated proved reserves.Egypt.At year end,Apache held 6,051,867 net acres in Egypt,accounting for 58.6 MMboe of estimated proved reserves or 12 percent of Apaches t
56、otal estimated proved reserves.As a result of the acquisition of Phoenix in May 1996(see 1996 Acquisitions and Dispositions),Apache owns a 75 percent interest in the Qarun Block and a 40 percent interest in the Khalda Block,both in the Western Desert of Egypt.At year end,the Qarun Block,which Apache
57、 operates,consisted of approximately 1,927,000 acres,of which approximately 46,500 were classified as developed.Currently,the Qarun Block is producing approximately 27,000 b/d from 13 wells,which is being sold to EGPC.The Khalda Block consists of approximately 2,416,000 acres,of which approximately
58、318,500 were classified as developed as of year end.The Khalda Block is currently producing approximately 33,000 b/d from 78 wells,which is transported to market by pipeline to a point west of Alexandria,Egypt.Future production of gas from Khalda is expected to be delivered for sale to EGPC at a poi
59、nt west of Alexandria,Egypt,via a 34-inch gas pipeline,construction of which is scheduled to commence in 3 1997 and to be completed by 1999.The costs of building the pipeline will be borne by Apache,the other Khalda participants and the owners of a neighboring block.Construction costs paid by Apache
60、 and the other Khalda participants will be recoverable from oil and gas production from the Khalda Block.Both the Khalda and Qarun Concession Agreements provide that Apache and its partners in the concessions will pay all of the operating and capital costs for developing the concessions,while the pr
61、oduction will be split between EGPC and the partners.Up to 40 percent of the oil and gas produced from each of the concessions is available to the Company and its partners to recover operating and capital costs for the applicable concession.To the extent eligible costs exceed 40 percent of the oil a
62、nd gas produced and sold from a concession in any given quarter,such excess costs may be carried into future quarters without limit.The remaining 60 percent of all oil and gas produced from the concessions is divided between EGPC and Apache and its partners,with the percentage received by Apache and
63、 its partners reducing as the gross daily average of oil and gas produced on a quarterly basis increases.Under the Khalda Agreement,capital costs are amortized over four years,while the Qarun agreement provides for a five year amortization.In addition to the Qarun and Khalda Blocks,Apache holds a 50
64、 percent interest in 459,600 acres in the Darag Block in the northern Gulf of Suez,and a 50 percent interest in the 6,820,000 acre East Beni Suef Block immediately to the south of the Qarun Block.Both the Darag and East Beni Suef Blocks are in the early stages of evaluation,and exploratory drilling
65、is expected to begin in the latter part of 1997.In January 1997,Apache completed the purchase from Mobil Exploration Egypt,Inc.of interests in three blocks in the Western Desert of Egypt;a 24 percent interest in the 3,212,000-acre North East Abu Gharadig Block,a 50 percent interest in the 1,384,000-
66、acre East Bahariya Block,and a one-third interest in the 3,100,000-acre West Mediterranean Block No.1(partly onshore and partly offshore).Australia.Western Australia became an important region for Apache after the 1993 acquisition of Hadson Energy Resources Corporation(subsequently known as Apache E
67、nergy Resources Corporation or AERC).In 1996,the region generated three percent of the Companys revenues for the year.Natural gas production in the region increased by 45 percent from the prior year to approximately 13.9 MMcf/d in 1996.Average daily oil production decreased by 26 percent to approxim
68、ately 2,318 b/d in 1996,primarily as a result of natural depletion.As of December 31,1996,Apache held 64,410 net developed acres and 607,878 net undeveloped acres in Western Australia.Apache acts as operator for most of its properties in Western Australia through a wholly owned subsidiary,AEL.During
69、 1996,Apaches estimated proved reserves in Australia increased by 60 percent to 31.3 MMboe,six percent of the Companys total estimated proved reserves at year end.The increase in Australia reserves was primarily attributable to natural gas reserves booked at the East Spar discovery which were record
70、ed only after the Company had entered into agreements for the sale and delivery of such gas.Through AEL and its subsidiaries,Apache operates the Harriet Gas Gathering Project,a gas processing and compression facility with a throughput capacity of 100 MMcf/d,and a 60-mile,12-inch offshore pipeline wi
71、th a throughput capacity of 175 MMcf/d.See Oil and Natural Gas Marketing.Other International Operations.Outside of Canada,Egypt and Australia,Apache currently has exploration interests in Indonesia,offshore The Peoples Republic of China and offshore the Ivory Coast.In Indonesia,Apache holds a 39 per
72、cent interest in and operates the Bentu Segat Block on Central Sumatra,on which an undeveloped gas field is located.Negotiations with potential buyers for the gas are continuing.Apache is also the operator,with a 50 percent interest,of the Zhao Dong Block in the Bohai Bay,offshore The Peoples Republ
73、ic of 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 involves a commitment to drill two additional exploratory wells.In early 1997,a new well tested at rates up to
74、 11,571 b/d of oil,and the Company is currently evaluating the discovery areas for commercial potential.In March 1997,Apache gave XCL-China Ltd.,which is the owner of the remaining 50 percent interest in the Zhao Dong Block,default notices of nonpayment totaling approximately$7.8 million(not includi
75、ng interest)owed on its share of joint account expenses.4 In the Ivory Coast,Apache drilled an exploratory well in 1996 on the CI-27 offshore Block,confirming the existence of substantial reserves of gas in the Foxtrot field and the produceability of some oil from the fields lower horizons.Apache is
76、 the operator of the block,holding a 40 percent interest.Discussions with potential gas buyers are taking place.OIL AND NATURAL GAS MARKETING On October 27,1995,wholly owned affiliates of each of Apache,Oryx Energy Company and Parker&Parsley Petroleum Company formed Producers Energy Marketing,LLC,a
77、Delaware limited liability company(ProEnergy).ProEnergy became fully operational on April 1,1996,and markets substantially all of its members domestic natural gas pursuant to member gas purchase agreements having an initial term of 10 years,subject to early termination following specified events.The
78、 price of gas purchased by ProEnergy from its members is based upon agreed to published indexes.ProEnergy also provides its members with certain contract administration and other services.ProEnergys limited liability company agreement provides that capital funding obligations,allocations of profit a
79、nd loss and voting rights are calculated based upon the members respective throughputs of natural gas sold to ProEnergy.Each members liability with respect to future capital funding obligations is subject to certain limitations.Natural gas throughputs are calculated,profit distributed,and/or capital
80、 called on a quarterly basis.As of December 31,1996,the Company held an approximate 44 percent interest in ProEnergy.Apache is delivering natural gas under several long-term supply agreements with terms greater than one-year.In connection with the acquisition of substantially all of the oil and natu
81、ral gas assets(the Aquila Assets)of Aquila Energy Resources Corporation(Aquila)in September 1995,the Company entered into a five-year,four-month premium-price gas contract under which Aquila Energy Marketing Corporation agreed to purchase 20 to 25 MMcf of gas per day from Apache at a price of$2.80 p
82、er Mcf in 1997,escalating to$3.20 per Mcf in the year 2000.In December 1994,the Company signed a long-term gas contract under which Apache received an advance payment of$67.4 million.Apache will supply the purchaser with approximately 43 Bcf of gas over a six-year period which began in January 1995,
83、with volumes averaging 20 MMcf/d.Apache is also delivering natural gas under several such contracts with various cogeneration facilities.One such agreement provides that Apache will supply a minimum of 51.1 Bcf over 10 years for use in electric power generation from a cogeneration facility located i
84、n northeast Texas.Under the agreement,deliveries of approximately 20 MMcf/d began in early 1997.Another such agreement,which expires at the end of September 2005,requires Apache to deliver 20 MMcf/d to a cogeneration facility at a price escalating yearly.In 1996,the price under this agreement was$3.
85、08 per MMcf.Apache is also a party to an agreement that provides for delivery of up to 9.6 MMcf/d to a cogeneration facility at a price that escalates yearly.As of the end of 1996,the price under this agreement was$3.10 per MMcf.The final agreement,which will terminate at the end of 2001,calls for A
86、pache to supply up to 12 MMcf/d.Apache assumed its own U.S.crude oil marketing operations in 1992.Most of Apaches 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
87、 Canadian properties is sold to crude oil purchasers or refiners at market prices which depend on world-wide 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
88、and short-term contracts.The oil and gas contracts provide for sales at specified prices,or at prices which are subject to change due to market conditions.The Company diversifies the markets for its Canadian gas production by selling directly or indirectly to customers through aggregators and broker
89、s in the United States and Canada.Apache transports 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 s
90、elling five MMcf/d of natural gas to the Hermiston Cogeneration Project,5 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.Sales under
91、 the contract are contingent on regulatory approval of the required pipeline expansion,and are expected to begin in 1998.In Australia,the Company has two contracts to deliver 32 Bcf of gas from the East Spar field for industrial uses,including mining operations,a power station and a nickel refinery.
92、The contracts provide for an average daily rate of 15 MMcf/d net to the Company.To provide deliveries under the contracts while the East Spar development is under construction,the Harriet and East Spar joint ventures,in both of which a subsidiary of the Company is a participant,entered into a gas sa
93、les agreement under which the Harriet Joint Venture is supplying 42 MMcf of gas per day to East Spars industrial customers.Apache operates the Harriet Joint Venture and acts as contractor for the East Spar Joint Venture,holding a 22.5 percent interest in Harriet and a 20 percent interest in East Spa
94、r.In 1995,the Harriet Joint Venture entered into a take-or-pay contract to supply natural gas under which AEL has committed 14 Bcf of reserves for delivery over a 10-year period.Approximately 20 Bcf of AELs proved gas reserves are dedicated to the Gas Corporation of Western Australia,a corporation o
95、wned by the government of Western Australia doing business as AlintaGas,under a long-term contract which will expire in 2001.The agreement contains take-or-pay provisions that require AlintaGas to purchase a minimum of 35 MMcf/d(approximately eight MMcf/d net to AEL)through the remainder of the cont
96、ract term.Payments received under this contract are in Australian dollars.AEL marketed all oil and natural gas liquids produced from its interests in the Harriet field during 1996 through a contract with Marubeni International Petroleum(Singapore)Pte Limited(Marubeni).Pricing under the contract in 1
97、996 represented a fixed premium to the quoted market prices of Tapis crude oil,with payment made in U.S.dollars.In 1996,production sold under this contract realized an average price of$22.33 per barrel(exclusive of the impact of hedging activities).At the beginning of January 1997,the Marubeni contr
98、act was terminated and replaced by a similar contract with Glencore International AG,which includes East Spar liquids production.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
99、of the Qarun Block or by truck to the Tebbin refinery south of Alexandria,Egypt.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 Sue
100、z to Sidi Kherir,west of Alexandria,Egypt,on the Mediterranean Coast.All Qarun 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 prod
101、uction of gas from the Khalda Block.Sales of gas under the contract are expected to begin in 1999 upon completion of the gas pipeline from the Khalda Block.OIL AND NATURAL GAS PRICES Natural gas prices remained volatile during 1996 with New York Mercantile Exchange(NYMEX)spot-market prices at the He
102、nry Hub ranging from$1.89 per MMbtu in October to$3.61 per MMbtu in December.Fluctuations are largely due to natural gas supply and demand perceptions.Apaches average realized gas price of$2.02 per Mcf for 1996 increased 29 percent from the prior-year average of$1.57 per Mcf.Apaches 1995 average rea
103、lized natural gas price was 12 percent lower than the 1994 average price of$1.78 per Mcf.Due to minimum price contracts which escalate at an average of 80 percent of the Australian consumer price index,AELs natural gas production in Western Australia is not subject to the same degree of price volati
104、lity as Apaches U.S.and Canadian gas production;however,natural gas sales under such Australian minimum price contracts represent less than two percent of the Companys total natural gas sales at the end of 1996.Total Australian gas sales in 1996,including long-term contracts and spot sales averaged$
105、1.96 per Mcf,a five percent increase over the 1995 average of$1.86 per Mcf.6 In Egypt,all oil production from the Khalda 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 Western Desert and is announced from tim
106、e to time by EGPC.On December 31,1996,that price was$23.74 per barrel.Discussions with EGPC regarding the possibility of exporting Qarun oil production are continuing.Once gas sales from the Khalda Block commence,the gas is expected to be sold for a price which on a Btu basis is equivalent to 85 per
107、cent of the price of Suez Blend crude oil,FOB Mediterranean.Based on this pricing formula,the price of Khalda gas per Mcf(at 1000 Btu per Mcf)would have been roughly$3.80 at the end of 1996.Oil prices remained vulnerable to unpredictable political and economic forces during 1996,but did not experien
108、ce the wide fluctuations seen in natural gas prices during the year.Apache believes that oil prices will continue to fluctuate in response to changes in the policies of the Organization of Petroleum Exporting Countries(OPEC),events in the Middle East and other factors associated with the world polit
109、ical environment.As a result of the many uncertainties associated with levels of production maintained by OPEC and other oil producing countries,the availabilities of world-wide energy supplies and the competitive relationships and consumer perceptions of various energy sources,the Company is unable
110、 to predict what changes will occur in crude oil and natural gas prices.Apaches worldwide crude oil price averaged$20.84 per barrel in 1996,up 22 percent from the average price of$17.09 per barrel in 1995,and 33 percent higher than the average price of$15.65 per barrel in 1994.The Companys average c
111、rude oil price for its Australian production,including production sold under the Marubeni contract,was$22.33 per barrel in 1996,20 percent higher than the average price in 1995.Terms of the acquisition of MW from Amoco Production Company(Amoco)included an oil and gas price sharing provision under wh
112、ich certain price sharing payments may be payable to Amoco.Under this provision,to the extent that oil prices exceed specified reference prices that rise to$33.12 per barrel over the eight-year period ending June 30,1999,and to the extent that gas prices exceeded specified reference prices that rose
113、 to$2.68 per Mcf over the five-year period ended June 30,1996,Apache will share the excess price realization with Amoco on a portion of the MW production.Apache was not required to make any price sharing payments to Amoco in 1996.From time to time,Apache buys or sells contracts to hedge a limited po
114、rtion of its future oil and gas production against exposure to spot market price changes.See Note 9 to the Companys consolidated financial statements under Item 8 below.The Companys business has been and will continue to be affected by future worldwide changes in oil and gas prices and the relations
115、hip 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.RESERVE VALUE CEILING TEST Under the full cost accounting rules of the Securities and Exchange Commission(SEC),the Company reviews the carrying value of its oil and gas properties
116、 each quarter on a country-by-country basis.Under full cost accounting rules,capitalized costs of oil and gas properties may not exceed the present value of estimated future net revenues from proved reserves,discounted at 10 percent,plus the lower of cost or fair market value of unproved properties,
117、as adjusted for related tax effects and deferred income taxes.Application of these rules generally requires pricing future production at the unescalated oil and gas prices in effect at the end of each fiscal quarter and requires a write-down if the ceiling is exceeded,even if prices declined for onl
118、y a short period of time.If a write-down is required,the one-time charge to earnings would not impact cash flow from operating activities.The Company had no write-downs due to ceiling test limitations during 1996.GOVERNMENT REGULATION OF THE OIL AND GAS INDUSTRY The Companys exploration,production a
119、nd marketing operations are regulated extensively at the federal,state and local levels,as well as by other countries in which the Company does business.Oil and gas exploration,development and production activities are subject to various laws and regulations governing a wide variety of matters.For e
120、xample,hydrocarbon-producing states have statutes or regulations addressing 7 conservation practices and the protection of correlative rights,and such regulations may affect Apaches operations and limit the quantity of hydrocarbons Apache may produce and sell.Other regulated matters include marketin
121、g,pricing,transportation,and valuation of royalty payments.At the U.S.federal level,the Federal Energy Regulatory Commission(FERC)regulates interstate transportation of natural gas under the Natural Gas Act.Effective January 1,1993,the Natural Gas Wellhead Decontrol Act deregulated natural gas price
122、s for all first sales of natural gas,which includes all sales by Apache of its own production.As a result,all sales of the Companys natural gas produced in the U.S.may be sold at market prices,unless otherwise committed by contract.Apaches gas sales are affected by regulation of intrastate and inter
123、state gas transportation.In an attempt to promote competition,the FERC has issued a series of orders which have altered significantly the marketing and transportation of natural gas.The effect of these orders has been to enable the Company to market its natural gas production to purchasers other tha
124、n the interstate pipelines located in the vicinity of its producing properties.The Company believes that these changes have generally improved the Companys access to transportation.To date,Apache has not experienced any material adverse effect on its gas marketing activities as a result of these FER
125、C orders;however,the Company cannot predict what new regulations may be adopted by the FERC and other regulatory authorities,or what effect subsequent regulations may have on its future gas marketing activities.ENVIRONMENTAL MATTERS Apache,as an owner or lessee and operator of oil and gas properties
126、,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 things,impose liability on the lessee under an oil and gas lease for the cost of polluti
127、on clean-up resulting from operations,subject the lessee to liability for pollution damages,and require suspension or cessation of operations in affected areas.Apache maintains insurance coverage which it believes is customary in the industry,although it is not fully insured against all environmenta
128、l risks.The Company is not aware of any environmental claims existing as of December 31,1996,which would have a material impact upon the Companys financial position or results of operations.Apache has made and will continue to make expenditures in its efforts to comply with these requirements,which
129、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 applicable to its operations in Canada,Australia and other countries.Apache also has established operation
130、al 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 operating expenses such that the Company is unable to separate the expenses related to environmental matt
131、ers;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 the energy industry,generally these requirements do not appear to affect Apache any differently,or
132、to any greater or lesser extent,than other companies in the industry.Apache does not believe that compliance with federal,state,local or foreign country provisions regulating the discharge of materials into the environment,or otherwise relating to the protection of the environment,will have a materi
133、al 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 regulations regarding the protection of the environment will not have such an impact.COMPETITION The oil and gas i
134、ndustry is highly competitive.Because oil and gas are fungible commodities,the principal form of competition with respect to product sales is price competition.Apache strives to maintain the lowest finding and production costs possible to maximize profits.8 As an independent oil and gas company,Apac
135、he frequently competes for reserve acquisitions,exploration leases,licenses,concessions and marketing agreements against companies with substantially larger financial and other resources than Apache possesses.Moreover,many competitors have established strategic long-term positions and maintain stron
136、g governmental relationships in countries in which the Company may seek new entry.Apache expects this high degree of competition to continue.INSURANCE Exploration for and production of oil and natural gas can be hazardous,involving unforeseen occurrences such as blowouts,cratering,fires and loss of
137、well control,which can result in damage to or destruction of wells or production facilities,injury to persons,loss of life or damage to property or the environment.The Company maintains insurance against certain losses or liabilities arising from its operations in accordance with customary industry
138、practices and in amounts that management believes to be prudent;however,insurance is not available to the Company against all operational risks.EMPLOYEES On December 31,1996,Apache had 1,256 employees.OFFICES Apaches principal executive offices are located at One Post Oak Central,2000 Post Oak Boule
139、vard,Suite 100,Houston,Texas 77056-4400.At year-end 1996,the Company maintained regional exploration and production offices in Tulsa,Oklahoma;Houston,Texas;Calgary,Alberta;Cairo,Egypt;and Perth,Western Australia.9 ITEM 2.PROPERTIES OIL AND GAS EXPLORATION AND PRODUCTION PROPERTIES AND RESERVES ACREA
140、GE The undeveloped and developed acreage including both domestic leases and international production and exploration rights that Apache held as of December 31,1996,are as follows:10 UNDEVELOPED ACREAGE DEVELOPED ACREAGE -GROSS NET GROSS NET ACRES ACRES ACRES ACRES -OFFSHORE Alabama.-34,560 9,457 Lou
141、isiana.135,049 67,230 250,437 117,076 Texas.92,775 53,638 224,514 99,405 -TOTAL.227,824 120,868 509,511 225,938 -MIDCONTINENT Arkansas.1,581 1,051 4,530 4,015 Kansas.280 136 -Louisiana.7,607 6,024 46,559 34,366 Oklahoma.138,074 57,678 508,984 208,986 Pennsylvania.-796 38 Texas.41,204 25,029 127,325
142、71,710 -TOTAL.188,746 89,918 688,194 319,115 -WESTERN Colorado.58,054 48,017 14,859 14,484 Illinois.140 56 -Michigan.120 16 -New Mexico.94,290 52,152 91,306 51,416 Ohio.21 11 -Texas.112,834 49,360 257,400 196,851 Utah.1,400 867 6,647 6,220 Wyoming.392,205 218,218 25,589 12,152 -TOTAL.659,064 368,697
143、 395,801 281,123 -GULF COAST Alabama.7,656 1,136 -Florida.162 23 -Louisiana.20,618 15,047 93,085 74,244 Mississippi.8,349 4,361 5,832 3,293 Texas.85,700 43,639 207,700 131,825 -TOTAL.122,485 64,206 306,617 209,362 -TOTAL UNITED STATES.1,198,119 643,689 1,900,123 1,035,538 -INTERNATIONAL Canada.225,5
144、59 147,938 391,108 261,182 Egypt.11,258,320 5,889,592 365,000 162,275 Australia.2,796,480 607,878 339,770 64,410 China.48,680 24,340 -Indonesia.722,290 280,890 -Ivory Coast.198,000 79,200 -TOTAL INTERNATIONAL.15,249,329 7,029,838 1,095,878 487,867 -TOTAL COMPANY.16,447,448 7,673,527 2,996,001 1,523,
145、405 =PRODUCTIVE OIL AND GAS WELLS The number of productive oil and gas wells,operated and non-operated,in which Apache had an interest as of December 31,1996,is set forth below.GROSS WELLS DRILLED The following table sets forth the number of gross exploratory and gross development wells drilled in t
146、he last three fiscal years in which the Company participated.The number of wells drilled refers to the number of wells commenced at any time during the respective fiscal year.Productive wells are either producing wells or wells capable of commercial production.At December 31,1996,the Company was par
147、ticipating in 52 wells in the U.S.,nine Canadian wells,seven Egyptian wells,two wells in China and one Australian well in the process of drilling.11 GAS OIL -GROSS NET GROSS NET -Offshore.255 90 70 30 Midcontinent.1,810 696 550 169 Western.355 116 3,340 1,760 Gulf Coast.385 301 1,130 927 Canada.470
148、333 660 89 Egypt.10 4 94 43 Australia.10 2 21 4 Other International.-Total.3,295 1,542 5,865 3,022 =EXPLORATORY DEVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL -1996 United States.28 33 61 201 31 232 Canada.23 25 48 27 2 29 Egypt.7 4 11 12 -12 Australia.4 6 10 1 1 2 Other International.-1 1
149、 -Total.62 69 131 241 34 275 =1995 United States.9 15 24 129 21 150 Canada.16 13 29 14 5 19 Egypt.4 2 6 3 -3 Australia.4 6 10 1 1 2 Other International.-4 4 -1 1 -Total.33 40 73 147 28 175 =1994 United States.20 17 37 223 39 262 Canada.18 12 30 35 3 38 Egypt.-Australia.1 5 6 2 -2 Other International
150、.6 3 9 -Total.45 37 82 260 42 302 =NET WELLS DRILLED The following table sets forth,for each of the last three fiscal years,the number of net exploratory and net developmental wells drilled by Apache.PRODUCTION AND PRICING DATA The following table describes,for each of the last three fiscal years,oi
151、l,natural gas liquids(NGLs)and gas production for the Company,average production costs(excluding severance taxes)and average sales prices.ESTIMATED RESERVES AND RESERVE VALUE INFORMATION The following information relating to estimated reserve quantities,reserve values and discounted future net reven
152、ues is derived from,and qualified in its entirety by reference to,the more complete reserve and revenue information and assumptions included in the Companys supplemental oil and gas disclosures under Item 8 below.The Companys estimates of proved reserve quantities of its U.S.,Canadian and certain in
153、ternational properties have been subject to review by Ryder Scott Company Petroleum Engineers,while the proved reserve quantities of the Companys Egyptian properties are reviewed by Netherland,Sewell&Associates,Inc.There are numerous uncertainties inherent in estimating quantities of proved reserves
154、 and projecting future rates of production and timing of development expenditures.The following reserve 12 EXPLORATORY DEVELOPMENTAL -PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL -1996 United States.17.2 22.8 40.0 77.9 19.1 97.0 Canada.18.8 21.5 40.3 24.1 1.4 25.5 Egypt.3.2 3.0 6.2 9.0 -9.0 Australia.1
155、.1 1.5 2.6 0.2 0.1 0.3 Other International.-0.4 0.4 -Total.40.3 49.2 89.5 111.2 20.6 131.8 =1995 United States.3.7 6.2 9.9 57.3 14.0 71.3 Canada.14.0 9.4 23.4 13.4 3.4 16.8 Egypt.1.0 0.5 1.5 0.6 -0.6 Australia.1.4 1.8 3.2 0.2 0.7 0.9 Other International.-0.7 0.7 -0.7 0.7 -Total.20.1 18.6 38.7 71.5 1
156、8.8 90.3 =1994 United States.10.7 10.4 21.1 100.1 27.0 127.1 Canada.13.0 7.0 20.0 28.0 2.0 30.0 Egypt.-Australia.0.3 1.9 2.2 0.4 -0.4 Other International.2.0 0.5 2.5 -Total.26.0 19.8 45.8 128.5 29.0 157.5 =PRODUCTION AVERAGE SALES PRICE -AVERAGE -YEAR ENDED OIL NGLS GAS PRODUCTION OIL NGLS GAS DECEM
157、BER 31,(MBBLS)(MBBLS)(MMCF)COST PER BOE (PER BBL)(PER BBL)(PER MCF)-1996.19,465 713 205,305$3.43$20.84$16.41$2.02 1995.18,324 763 210,632 3.34 17.09 12.05 1.57 1994.13,815 724 176,396 2.85 15.65 11.28 1.78 information represents estimates only and should not be construed as being exact.See the Suppl
158、emental Oil and Gas Disclosures under Item 8 below.The following table sets forth the Companys estimated proved developed and undeveloped reserves as of December 31,1996,1995 and 1994:The following table sets forth the estimated future value of all the Companys proved reserves,and proved developed r
159、eserves,as of December 31,1996,1995 and 1994.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 costs are
160、 based on current costs with no escalations.At December 31,1996,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 occurred sinc
161、e December 31,1996,which would cause a significant change in the estimated proved reserves reported herein.13 OIL,NGLS NATURAL AND GAS CONDENSATE (BCF)(MMBBLS)-1996 Developed.1,435.3 183.2 Undeveloped.190.0 52.1 -Total.1,625.3 235.3 =1995 Developed.1,298.5 137.5 Undeveloped.203.4 32.8 -Total.1,501.9
162、 170.3 =1994 Developed.1,184.9 100.0 Undeveloped.131.3 10.6 -Total.1,316.2 110.6 =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)1996.$7,936,924$6,7
163、13,252$4,568,475$4,041,065 1995.4,043,024 3,390,103 2,344,357 2,056,558 1994.2,581,459 2,390,126 1,600,927 1,512,305 PROVED DECEMBER 31,PROVED DEVELOPED -(IN THOUSANDS)1997.$860,323$943,576 1998.913,919 873,976 1999.823,479 715,934 Thereafter.5,339,203 4,179,766 -Total.$7,936,924$6,713,252 =The esti
164、mates above are based on year-end pricing in accordance with the SEC guidelines and do not reflect current prices.Since January 1,1996,no oil or gas reserve information has been filed with,or included in any report to,any U.S.authority or agency other than the SEC and the Energy Information Administ
165、ration(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 generally accepted
166、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 royalty and other
167、 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 profits interests,
168、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 operations.ITEM 3.LEG
169、AL 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 holders during the
170、fourth quarter of 1996.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 information regar
171、ding Apache common stock for 1996 and 1995.Prices shown are from the New York Stock Exchange Composite Transactions Reporting System.The closing price per share of Apache common stock,as reported on the New York Stock Exchange Composite Transactions Reporting System for February 28,1997,was$32.375.A
172、t December 31,1996,there were 90,058,797 shares of Apache common stock outstanding,held by approximately 11,000 shareholders of record and 38,000 beneficial owners.Each share of Apache common stock also represents one preferred share purchase right which,when exercisable,would entitle the holder to
173、purchase one ten-thousandth of a share of Series A Junior Participating Preferred Stock for a purchase price of$100 and,under certain circumstances,would entitle the holder to acquire additional shares of Apache common stock.See Note 7 to the Companys financial statements under Item 8 below.14 1996
174、1995 -PRICE RANGE PRICE RANGE -DIVIDENDS -DIVIDENDS HIGH LOW PER SHARE HIGH LOW PER SHARE -First Quarter.$29 1/2$24 3/8$.07$27 3/8$22 1/4$.07 Second Quarter.33 1/2 26 3/8 .07 31 25 3/8 .07 Third Quarter.34 5/8 27 3/4 .07 30 1/4 25 3/4 .07 Fourth Quarter.37 7/8 29 1/2 .07 29 5/8 23 1/8 .07 The Compan
175、y has paid cash dividends on its common stock for 120 consecutive quarters through December 31,1996,and expects to continue the payment of dividends at current levels,although future dividend payments will depend upon the Companys level of earnings,financial requirements and other relevant factors.I
176、TEM 6.SELECTED FINANCIAL DATA The following table sets forth selected financial data of the Company and its consolidated subsidiaries for each of the years in the five-year period ended December 31,1996,which information has been derived from the Companys audited financial statements.Apaches previou
177、sly reported data for 1994,1993 and 1992 has been restated to reflect the merger with DEKALB in May 1995 under the pooling of interests method of accounting.This information should be read in connection with and is qualified in its entirety by the more detailed information in the Companys financial
178、statements under Item 8 below.(1)Includes financial data for Phoenix after May 20,1996.(2)Includes the results of the acquisitions of certain oil and gas properties from Texaco Exploration and Production,Inc.(Texaco)and Aquila after March 1,1995 and September 1995,respectively,and the sale of a subs
179、tantial portion of the Companys Rocky Mountain properties in September 1995.(3)Includes financial data for AERC after June 30,1993,and the results of the acquisition of certain oil and gas properties from Hall-Houston after July 31,1993.(4)The net loss in 1992 resulted from the sale of substantially
180、 all of DEKALBs United States assets for a loss of$25.6 million after-tax.DEKALB also reported Canadian ceiling test write-downs of$15.9 million after-tax and United States ceiling test write-downs of$24.7 million after-tax.(5)No cash dividends were paid on outstanding DEKALB common stock in 1995,19
181、94,1993 and 1992.Reference is made to Item 7,MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,for a discussion of significant acquisitions and to Note 2 to the Companys consolidated financial statements under Item 8 below.15 AT OR FOR THE YEAR ENDED DECEMBER 31,-1
182、996(1)1995(2)1994 1993(3)1992(4)-(IN THOUSANDS,EXCEPT PER SHARE AMOUNTS)INCOME STATEMENT DATA Total revenues.$977,151$750,702$592,626$512,632$517,403 Income(loss)from continuing operations.121,427 20,207 45,583 41,421 (14,632)Income(loss)per common share-continuing operations.1.42 .28 .65 .67 (.26)C
183、ash dividends per common share(5).28 .28 .28 .28 .28 BALANCE SHEET DATA Working capital(deficit).$(41,501)$(22,013)$(3,203)$(55,538)$(32,775)Total assets.3,432,430 2,681,450 2,036,627 1,759,203 1,774,767 Long-term debt.1,235,706 1,072,076 719,033 504,334 524,098 Shareholders equity.1,518,516 1,091,8
184、05 891,087 868,596 554,524 Common shares outstanding at end of year.90,059 77,379 69,666 69,504 55,361 ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Apaches results of operations and financial position during 1996 were significantly impacted by
185、the following factors:Commodity Prices-Higher oil and natural gas prices contributed to record earnings and cash flow in 1996.Apaches average realized natural gas price for 1996 was up 29 percent over 1995,favorably impacting revenues by$93.4 million.The Companys average realized oil price for 1996
186、increased 22 percent from 1995,contributing$73.0 million to the increase in revenues.Phoenix Acquisition-On May 20,1996,Apache acquired Phoenix,through a merger which resulted in Phoenix becoming a wholly owned subsidiary of Apache.The assets acquired in the Phoenix acquisition contributed 6,260 b/d
187、 of oil production during 1996.Debt Refinancing-During 1996,Apache offered three issues of senior unsecured notes and debentures with principal amounts of$100 million in February,$180 million in April and$150 million in November.In October 1996,Apache replaced its existing$1 billion revolving bank c
188、redit facility with a global credit arrangement(global credit facility)that provides Apache with greater borrowing availability,increased tax efficiency and a lower cost of bank debt.Additionally,in September and October 1996,Apache received rating upgrades on its long-term debt from Moodys Investor
189、s Service and Duff and Phelps.RESULTS OF OPERATIONS NET INCOME AND REVENUE Apache reported 1996 net income of$121.4 million,up from$20.2 million in 1995.Net income per common share rose to$1.42,a five-fold increase from$.28 a year earlier,despite additional shares outstanding.Higher oil and gas pric
190、es and increased oil production drove the increase in earnings but were partially offset by lower natural gas production and higher lease operating expenses.Additionally,1995 results were negatively impacted by a one-time after-tax charge of$8.7 million,or$.12 per share,associated with merger costs.
191、Revenues increased 30 percent in 1996 to$977.2 million as compared to$750.7 million for the same period in 1995.Crude oil and natural gas production revenue increased 28 percent compared to 1995 with crude oil contributing 49 percent and natural gas contributing 50 percent of total oil and gas produ
192、ction revenue.16 Volume and price information concerning the Companys oil and gas production is summarized below:Natural gas sales for 1996 of$415.7 million increased$85.0 million,or 26 percent,when compared to 1995,as the impact of favorable natural gas prices more than offset production declines.A
193、$.53 per Mcf increase in realized price attributable to United States natural gas production,which comprised 84 percent of the Companys worldwide gas production,contributed$92.0 million to the increase in sales.Offsetting this increase was a$16.2 million reduction in sales due to a decline in United
194、 States production compared to the same period in 1995,due primarily to the natural decline of older properties in the Companys Offshore and Gulf Coast regions and the sale of producing properties in late 1995.Canadian and Australian gas sales contributed$5.3 million and$3.5 million,respectively,to
195、the increase in revenue as a result of higher realized prices and increased production in both countries.The Companys net hedging activity,including fixed-price physical contracts and financial contracts,reduced realized prices by$.09 per Mcf during the year ended December 31,1996,compared to a$.07
196、per Mcf gain during 1995.The 1995 gain was driven substantially by higher margins on the Companys premium-price gas contracts,given low spot market prices during 1995.17 FOR THE YEAR ENDED DECEMBER 31,-1996 1995 1994 -Natural Gas Volume-Mcf per day:United States.472,171 500,441 419,161 Canada.74,598
197、 67,083 56,142 Egypt.302 -Australia.13,869 9,551 7,975 -Total.560,940 577,075 483,278 =Average Natural Gas Price-Per Mcf:United States.$2.17$1.64$1.81 Canada.1.09 1.00 1.54 Egypt.3.21 -Australia.1.96 1.86 1.90 Total.2.02 1.57 1.78 Oil Volume-Barrels per day:United States.40,600 45,084 32,669 Canada.
198、1,969 1,999 2,003 Egypt.8,295 -Australia.2,318 3,120 3,177 -Total.53,182 50,203 37,849 =Average Oil Price-Per barrel:United States.$20.67$17.00$15.44 Canada.20.84 16.90 15.51 Egypt.21.29 -Australia.22.33 18.56 17.95 Total.20.84 17.09 15.65 Natural Gas Liquids(NGL)-Barrels per day:United States.1,308
199、 1,521 1,352 Canada.641 569 633 -Total.1,949 2,090 1,985 =Average NGL Price-Per barrel:United States.$17.23$12.83$12.39 Canada.14.73 9.96 8.88 Total.16.41 12.05 11.28 For the year ended December 31,1996,oil sales increased 30 percent to$405.7 million due primarily to the assets acquired in the Phoen
200、ix Merger.Egyptian oil sales contributed$64.6 million,or 70 percent,of the increase in oil sales compared to 1995,and comprised 16 percent of total oil production.United States oil sales were favorably impacted by a 22 percent increase in realized prices,which contributed$54.5 million to the increas
201、e in revenue compared to 1995.Partially offsetting the impact due to higher realized domestic prices was a 10 percent decline in domestic oil production resulting from property sales in late 1995,which reduced revenues by$27.1 million.Canadian oil sales contributed$2.7 million of the increase in oil
202、 sales compared to 1995 due primarily to higher realized prices.Australian oil sales were impacted by a 26 percent decline in production compared to 1995,partially offset by higher realized prices,resulting in a net decrease in revenue of$2.2 million.For 1996,natural gas liquid revenues increased 27
203、 percent to$11.7 million.Compared to the prior year,realized prices increased 36 percent,contributing$3.1 million to the increase in revenues,while production declined seven percent,decreasing revenues$.6 million.OTHER REVENUES AND OPERATING EXPENSES During 1996,Apaches gas gathering,processing and
204、marketing revenues increased 47 percent to$142.9 million driven primarily by increased product prices.Although revenues have increased with respect to these activities,lower margins were realized for the year ended December 31,1996 compared to the same period in 1995.For 1996,other revenue of$1.4 mi
205、llion included a gain on the sale of stock held for investment of$.8 million and Canadian royalty credits of$1.2 million.Offsetting these revenues was the impact of$.9 million of currency transaction loss related to Canadian exchange rate fluctuations.Prior year other revenue was$1 million lower tha
206、n 1996 and included$4.3 million in proceeds received from settlements,$2.2 million in gains from the sales of non-oil and gas assets,$1.1 million of Canadian royalty credits and$2.1 million of other income,offset by$9.3 million in losses from the decoupling of NYMEX and wellhead prices.The Companys
207、depreciation,depletion and amortization(DD&A)expense for 1996 totaled$315.1 million up from$297.5 million in 1995.On an equivalent barrel basis,full cost DD&A expense increased$.12 per boe,from$5.32 per boe in 1995 to$5.44 per boe in 1996.Operating costs totaled$225.5 million in 1996,an increase of$
208、13.8 million,or seven percent,from 1995.Lease operating expense(LOE),excluding severance taxes,totaled$186.4 million,a 2.9 percent increase from 1995.On an equivalent barrel basis,LOE for the year ended December 31,1996,averaged$3.43 per boe,a three percent increase from$3.34 per boe in 1995.The inc
209、rease was driven by a flat cost structure with declining production in the Gulf Coast region and the impact of the Phoenix acquisition,partially offset by decreasing LOE per boe in the Midcontinent region resulting from incremental production added through the drillbit.Administrative,selling and oth
210、er costs in 1996 decreased$.6 million,or two percent.The decline is a result of the Companys continuing efforts to control costs and its ability to integrate the assets and operations acquired in 1995 and 1996 with a minimal increase in administrative staff.On an equivalent barrel basis,general and
211、administrative expense declined two percent from 1995 to$.66 per boe in 1996.Net financing costs for 1996 decreased$9.0 million,or 13 percent,from the prior year due to higher amounts of capitalized interest,partially offset by higher gross interest costs.Capitalized interest,which is based on the c
212、arrying value of unproved properties,increased$11.7 million for 1996 due to the acquisitions made in 1995 and 1996 and the resulting increase in the unproved property base.Gross interest incurred increased$1.8 million for 1996 as compared to 1995.Average corporate debt increased$78.8 million compare
213、d to 1995,increasing interest expense by$6.1 million.Offsetting this increase was a decline of.36 percent in Apaches weighted average interest rate,resulting in a decrease in interest expense of$4.3 million.18 HEDGING ACTIVITY The Company periodically enters into hedging activities with respect to a
214、 portion of its projected oil and natural gas production through a variety of financial and physical arrangements intended to support oil and natural gas prices at targeted levels and to manage its exposure to oil and gas price fluctuations.Apache uses futures contracts,swaps,options and fixed-price
215、 physical contracts to hedge its commodity prices.Realized gains or losses from the Companys price risk management activities are recognized in oil and gas production revenues when the associated production occurs.In 1996,Apache recognized net losses from hedging activities,including both financial
216、and fixed price physical gas contracts,which decreased oil and gas production revenues by approximately$5.1 million and$18.7 million,respectively.These losses decreased the Companys average realized oil and natural gas prices in 1996 by$.26 per barrel and$.09 per Mcf,respectively.PRIOR-YEAR COMPARAT
217、IVE INFORMATION Apache reported net income for 1995 of$20.2 million,or$.28 per share,compared with$45.6 million,or$.65 per share in 1994.The decline was due to lower natural gas realizations and non-recurring charges.Absent one-time after-tax charges for merger costs of$8.7 million and losses recogn
218、ized in connection with the decoupling of NYMEX and wellhead prices of$5.9 million($9.3 million before tax),1995 earnings would have totaled$.48 per share.Revenues increased 27 percent in 1995 to$750.7 million as compared to$592.6 million in 1994.Crude oil and natural gas production revenue increase
219、d 21 percent compared to 1994,with crude oil contributing 48 percent and natural gas contributing 51 percent of total oil and gas production revenues.Natural gas sales for 1995 of$330.7 million increased five percent from 1994 as production gains from acquisitions and drilling more than offset the i
220、mpact of a$.21 per Mcf decline in the Companys average realized gas price.Acquisitions boosted Apaches 1995 gas production by 92 MMcf/d,while drilling additions outpaced the impact of property divestitures and natural depletion.Apache realized production gains in each of its three operating areas:th
221、e United States,Canada and Australia.In addition to production gains from drilling,the Australian sales benefited from new markets for its natural gas.The Companys average realized natural gas price declined 12 percent from 1994,decreasing sales by approximately$44 million.Reflecting an increase in
222、both production and prices,oil sales increased 45 percent in 1995 to$313.2 million.Apaches oil production rose 12.4 Mb/d,or 33 percent,from 1994 as property divestitures and natural depletion partially offset the 17 Mb/d of production added through acquisitions.The Companys average realized oil pric
223、e increased nine percent in 1995 to$17.09 per barrel.Revenues from the sale of natural gas liquids totaled$9.2 million in 1995,up 13 percent from 1994 due to higher prices and a slight increase in volumes.During 1995,Apaches gas gathering,processing and marketing revenues more than doubled from 1994
224、 to$97.2 million.Revenues increased in 1995 with respect to these activities due to increased volumes;however,margins were lower due to the sale of the Companys interest in the Little Knife gas plant as part of Apaches divestiture of Rocky Mountain properties in September 1995.Other revenues in 1995
225、 of$.4 million reflects$4.3 million of settlement income,$2.2 million in gains from the sale of non-oil and gas assets,$1.1 million of Canadian royalty credits and$2.1 million of other income,offset by a$9.3 million loss from the decoupling of NYMEX futures and wellhead prices.The Companys DD&A expe
226、nse for 1995 totaled$297.5 million compared to$257.8 million in 1994.On an equivalent barrel basis,full cost DD&A declined six percent to$5.32 per boe,due to the favorable impact of reserve additions and revisions.Operating costs totaled$211.7 million in 1995,an increase of$62.3 million or 42 percen
227、t from 1994.LOE,excluding severance taxes,totaled$181.1 million,an increase of$55.8 million from 1994.On an equivalent unit of production basis,LOE for the year ended December 31,1995,averaged$3.34 per boe,a 19 17 percent increase from$2.85 per boe in 1994.The increase in unit cost reflects the high
228、 percentage of oil properties comprising the Texaco acquisition,as oil properties typically have a higher per-unit cost than gas properties.Administrative,selling and other costs in 1995 decreased$2.2 million,or six percent,due primarily to the elimination of duplicate administrative functions follo
229、wing the merger of DEKALB into Apache.On an equivalent unit of production basis,general and administrative expenses declined 24 percent from 1994 to$.67 per boe.Net financing costs of$70.6 million were more than double the 1994 amount due to increased debt levels from acquisitions and higher interes
230、t rates.Apaches average interest rate increased from 6.3 percent in 1994 to 7.4 percent in 1995 due to higher market rates and Apaches higher debt to total capitalization rate following the acquisition of properties from Texaco.CASH FLOW,LIQUIDITY AND CAPITAL RESOURCES CAPITAL COMMITMENTS Apaches pr
231、imary needs for cash are for exploration,development and acquisition of oil and gas properties,repayment of principal and interest on outstanding debt,payment of dividends,and capital obligations for affiliated ventures.The Company generally funds its exploration and development activities through i
232、nternally generated cash flows.Apache budgets its capital expenditures based upon projected cash flows and routinely adjusts its capital expenditures in response to changes in oil and natural gas prices and corresponding changes in cash flow.The Company is not in a position to predict future product
233、 prices.Capital Expenditures-A summary of oil and gas capital expenditures over the last three years is presented below:Expenditures for exploration and development totaled$493.7 million in 1996 compared to$312.2 million in 1995.Apaches drilling program in 1996 added 98 MMboe of reserves(including r
234、evisions),replacing 179 percent of production.In the United States,Apache completed 229 gross wells as producers out of 293 gross wells drilled during the year,compared with 138 gross producers out of 174 gross wells drilled in 1995.In Canada,Apache completed 50 gross wells as producers out of 77 gr
235、oss wells drilled during the year,compared with 30 gross producers out of 48 gross wells drilled in 1995.Internationally,the Company completed 24 gross producers of 36 gross wells drilled in 1996,compared to 12 gross producers out of 26 gross wells in 1995.The international wells drilled in 1996 inc
236、luded 19 successful wells in Egypt and five successful wells in Australia.United States and Canadian expenditures for exploration and development in 1997 operations,are expected to exceed the 1996 expenditures by approximately$60 million.The Company expects its other international exploration and de
237、velopment expenditures in 1997,exclusive of facilities,to total approximately$220 million.Acquisition costs of oil and gas properties,including the value assigned to shares issued and issuable and liabilities assumed in the Phoenix merger,totaled$446.2 million in 1996 compared to$820.9 million in 19
238、95.20 1996 1995 1994 -(IN THOUSANDS)Exploration and Development:United States.$302,494$216,430$270,588 Canada.58,768 27,788 41,595 Egypt.63,597 11,852 1,226 Australia.46,838 32,373 16,493 Other International.21,998 23,725 14,223 -Total.$493,695$312,168$344,125 =Acquisitions of Oil and Gas Properties
239、.$446,205$820,918$180,742 =Property acquired in the Phoenix merger totaled$386.2 million of which$331.2 million related to oil and gas properties and$55.0 million to facilities.Apache also acquired$115.0 million of other oil and gas properties during 1996,primarily representing tactical acquisitions
240、 of properties in the Companys existing focus areas,including the purchase of certain oil and gas properties from Hall-Houston for$46 million in cash.Funds for the acquisitions were obtained principally from borrowings under the Companys revolving bank credit facilities.Cash expenditures for acquisi
241、tions of oil and gas properties during 1995 totaled$820.9 million as the Company added 156 MMboe of oil and gas reserves through purchases.The most significant of the 59 transactions Apache completed during 1995 were the Companys acquisitions of properties from Texaco and Aquila.On March 1,1995,Apac
242、he purchased certain United States oil and gas properties from Texaco for approximately$567 million in cash,subject to adjustment.Funds for the Texaco transaction were obtained from several sources,including increased borrowing capacity under the Companys revolving bank credit facility and proceeds
243、of Apaches$172.5 million 6 percent Convertible Subordinated Debentures due 2002(6 percent debentures),which were issued on January 4,1995.In September 1995,Apache acquired the Aquila Assets for approximately$210 million.The oil and gas properties included approximately 107,000 developed and 49,000 u
244、ndeveloped net acres located primarily in Apaches Anadarko Basin and Gulf of Mexico core areas.Also included in the transaction was the purchase of a five-year,four-month premium-price gas contract and interests in four gas processing plants.Cash expenditures for 1994 acquisitions,excluding AERC,tot
245、aled$180.7 million.The most significant acquisition that Apache closed during 1994 was the purchase of substantially all of the United States oil and gas properties of Crystal Oil Company for$95.8 million.Apache also acquired approximately$84.9 million of other oil and gas properties through a numbe
246、r of separate transactions during 1994.Funds for the 1994 acquisitions were obtained principally from borrowings under the Companys revolving bank credit facility.Debt and Interest Commitments-At December 31,1996,Apache had outstanding debt of$376.5 million under its global credit facility and an ag
247、gregate of$861.2 million of other debt,comprised principally of notes and debentures maturing in the years 1997 through 2096.Debt outstanding at December 31,1996 of$1.2 billion was up 15 percent over the$1.1 billion outstanding at December 31,1995.The increase reflects the Phoenix Merger and other 1
248、996 property acquisitions.Although debt increased,the Companys debt-to-capitalization ratio decreased from 49.6 percent at December 31,1995 to 44.9 percent at December 31,1996.During 1996,the Company significantly extended maturity dates of its long-term debt with long-term offerings and reduced out
249、standing balances of its shorter-term,variable-rate debt.In February,Apache issued$100 million principal amount of 7.7 percent notes due 2026.In April,$180 million principal amount of 7.95 percent notes due 2026 was issued and,in November,Apache completed the issuance of 7.625 percent debentures due
250、 2096 for a principal amount of$150 million.Interest payments on the Companys outstanding debt obligations during 1997 are projected(using weighted average balances for floating rate obligations)to be approximately$99.5 million,while scheduled principal payments for 1997 total$77 million.However,the
251、$75 million principal amount of 3.93 percent convertible notes due in November 1997 is not reflected as current maturities in the Companys consolidated balance sheet,as such notes are expected to be refinanced with long-term debt if not converted into Apache common stock.Dividend Payments-Dividends
252、paid during 1996 totaled$23.4 million,up 24 percent from 1995,primarily due to the issuance of 12.2 million shares of Apache common stock in connection with the May 1996 acquisition of Phoenix.The Company has paid cash dividends on its common stock for 120 consecutive quarters through December 31,19
253、96,and expects to continue payment of dividends at current levels,although future dividend payments will depend on the Companys level of earnings,financial requirements and other relevant factors.21 CAPITAL RESOURCES AND LIQUIDITY The Companys primary capital resources are net cash provided by opera
254、ting activities,proceeds from financing activities and proceeds from sales of non-strategic assets.Net Cash Provided by Operating Activities-Apaches net cash provided by operating activities during 1996 totaled$490.5 million,an increase of 48 percent from the$332.1 million provided in 1995.This incr
255、ease was due primarily to higher product prices during 1996.Net cash provided by operating activities in 1995 was down$25.6 million from 1994 primarily due to the prior-year amounts including a$67.4 million advance of future gas deliveries.Long-Term Borrowings-During February 1996,Apache completed t
256、he issuance of$100 million principal amount,$99.6 million after discount,of senior unsecured 7.7 percent notes due March 15,2026.In April 1996,the Company issued$180 million principal amount,$178.5 million net of discount,of senior unsecured 7.95 percent notes due on April 15,2026.In November 1996,A
257、pache completed the issuance of$150 million,$149.2 million after discount,of senior unsecured 7.625 percent debentures due November 1,2096.The proceeds from these issuances were used to repay a portion of the Companys revolving bank credit facility and for general corporate purposes.The offerings of
258、 the two 30-year notes and the 100-year debentures were placed during periods when 30-year interest rates on Treasury bonds were near historic 20-year lows.Further,the 100-year debentures were issued following recent upgrades of the Companys long-term debt ratings which resulted in a significant nar
259、rowing in the spread over the Treasury bond yields.In addition to the benefits of securing longer-term financing at favorable interest rates and reducing Apaches exposure to future adverse interest rate fluctuations,the issuance of the 30-year notes improved the Companys liquidity as the borrowing b
260、ase under the Companys global credit facility was reduced by an amount less than the net proceeds received from issuing the notes.On October 31,1996,Apache replaced its existing$1 billion revolving bank credit facility with a global credit facility that provides Apache with greater borrowing availab
261、ility,increased tax efficiency and a lower cost of bank debt.Consisting of three separate bank facilities tied together by an intercreditor agreement,the new global credit facility adds Apaches oil and gas reserve values in Australia and Canada to those in the United States in determining the Compan
262、ys borrowing capacity.The facilities consist of$125 million of credit commitments each in Australia and Canada,and a$750 million credit commitment in the United States.In connection with securing the global credit facility,the Company repaid certain of its subsidiary debt,including DEKALBs 10 percen
263、t notes,the Apache Canada Ltd.facility(the Bank of Montreal facility)and the AEL acceptance facility,all of which had higher interest rates than those under the global credit facility.As of December 31,1996,Apaches borrowing base under the global credit facility was$947 million,of which defined borr
264、owing base debt was$733 million,leaving$214 million available for additional borrowings.During September 1996,Moodys Investors Service upgraded the Companys senior long-term debt rating from Baa3 to Baa1.Historically,such a two-notch rating improvement for an existing investment grade company is unc
265、ommon.In addition,Apaches subordinated debt rating was raised three levels,to Baa2 from Ba2.According to Moodys,the upgrade was the result of several recent developments,including the Companys lower debt-to-equity ratio,higher earnings and cash flow,lower interest expense,successful expansion in Egy
266、pt and Western Australia,and a shift in the Companys strategy toward growing reserves and production primarily through drilling.Also in September 1996,Standard&Poors revised its outlook to positive from stable on Apaches long-term debt.Standard&Poors subsequently upgraded the Companys senior long-te
267、rm debt from BBB to BBB+and subordinated debt from BBB-to BBB in January 1997.In October 1996,Duff&Phelps Credit Rating Co.upgraded the Companys senior long-term debt from BBB+to A-,its 6 percent subordinated debentures from BBB to BBB+,and its commercial paper from D-2 to D-1-(D-One-Minus).22 In Ja
268、nuary 1997,the Company established a$300 million commercial paper program.The program allows Apache to borrow funds for up to 270 days at attractive interest rates.The commercial paper program is supported by availability under the$750 million United States portion of the global credit facility.Stoc
269、k Transactions-On May 20,1996,Apache acquired Phoenix.Pursuant to the Merger Agreement,each share of Phoenix common stock then outstanding,and outstanding Phoenix stock options(which were assumed by Apache)were converted into the right to receive(a).75 shares of Apache common stock with any fraction
270、al shares paid in cash,without interest,and(b)$4.00 in cash.As a result,12.2 million shares of Apache common stock,valued at$26.00 per share,were issued in exchange for outstanding Phoenix stock with an additional.8 million shares issuable under options assumed.On September 27,1995,Apache closed an
271、equity offering of 7.45 million shares of Apache common stock.Net proceeds of approximately$195.5 million were used to repay existing indebtedness under the Companys revolving bank credit facility,to finance the Aquila transaction and for general corporate purposes.Asset Sales-During 1996,Apache rec
272、eived$30.1 million from the sale of non-strategic oil and gas properties in a number of separate transactions.In early 1995,Apache announced plans to accelerate the disposition of lower-margin and non-strategic properties,including the sale of a substantial portion of its Rocky Mountain properties.D
273、uring 1995,Apache received$271.9 million from the sale of such properties,utilizing the proceeds to reduce bank debt.Apache received$19.5 million from the sale of non-strategic oil and gas properties during 1994.Liquidity-The Company had$13.2 million in cash and cash equivalents on hand at December
274、31,1996,down slightly from the$13.6 million at December 31,1995.Apaches ratio of current assets to current liabilities decreased slightly from.90:1 at December 31,1995,to.87:1 at December 31,1996.Management believes that cash on hand,net cash generated from operations and unused committed borrowing
275、capacity under its global credit facility will be adequate to satisfy the Companys financial obligations to meet future liquidity needs for at least the next two fiscal years.FUTURE TRENDS Apaches growth strategy is to increase oil and gas reserves,production,and cash flow through a combination of e
276、xploratory drilling,development of its inventory of existing projects and,principally in North America,tactical acquisitions meeting defined financial parameters.The Companys drilling program emphasizes reserve additions through exploratory drilling primarily on its international interests,and moder
277、ate-risk drilling primarily on its North American interests.The Company also emphasizes reducing operating costs per unit produced and selling marginal and non-strategic properties in order to increase its profit margins.Apaches international investments and exploration activities are an important c
278、omponent of its long-term growth strategy.Although international exploration is recognized as higher-risk than most of Apaches U.S.and Canadian activities,it offers potential for greater rewards and significant reserve additions.Apache directed its international efforts in 1996 toward development of
279、 certain discoveries offshore Western Australia and in Egypt,and toward further exploration efforts on its concessions in Egypt,offshore The Peoples Republic of China,in Indonesia and offshore the Ivory Coast of western Africa.Apache believes that reserve additions in these international areas may b
280、e made through higher-risk exploration and through improved production practices and recovery techniques.For Apache,property acquisition is only one phase in a continuing cycle of business growth.Apaches aim is to follow each acquisition with a cycle of reserve enhancement,property consolidation and
281、 cash flow acceleration,facilitating asset growth and debt reduction.This approach requires a well-planned and carefully executed property development program and,where appropriate,a selective program of property dispositions.It motivates Apache to target acquisitions that have ascertainable additio
282、nal reserve potential and to apply an active drilling,workover and recompletion program to realize the potential of the acquired undeveloped and partially developed properties.Apache prefers to operate its properties so that it can best influence their development;as a result,the Company operates pr
283、operties accounting for over 75 percent of its production.23 In 1997,Apache expects North American exploration and development outlays to increase from 1996 levels as the Company focuses on increasing reserves,production and cash flow through exploratory drilling and development of its existing inve
284、ntory.Internationally,the Company projects capital expenditures to nearly double from 1996 as Apache continues to exploit its concessions in Egypt,Western Australia,China and Indonesia.Proposed exploration and development expenditures in 1997 will be reviewed at least every quarter in light of fluct
285、uating product prices and Apaches objective to fund operations through internally generated cash flow.On October 31,1996,subject to shareholder approval,Apaches Board of Directors adopted the 1996 Share Price Appreciation Plan for officers and certain key employees.The plan provides for awards denom
286、inated in shares of Apache common stock to become payable upon attainment of share price goals of$50 and$60 per share,respectively,before January 1,2000.Between 30 and 50 percent of the number of shares awarded will be paid in cash at the market value of the stock on the date of payments,and the bal
287、ance(up to a total of 2,000,000 shares in the aggregate)will be issued in Apache common stock.Generally,any payments will be made in three installments over 36 months.When and if payments are made,the Company will recognize compensation expense over the 36 month vesting period equal to the value of
288、the stock issued on the date the share price goal is attained(i.e.,$50 or$60,as appropriate)and the actual amount of cash paid.PRIVATE SECURITIES LITIGATION REFORM ACT DISCLOSURE Certain forward-looking information contained in this report is being provided in reliance upon the safe harbor provision
289、s of the Private Securities Litigation Reform Act of 1995,as set forth in Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as amended.Such information includes,without limitation,discussions as to estimates,expectations,beliefs,plans and obj
290、ectives concerning the Companys future financial and operating performance.Such forward-looking information is subject to assumptions and beliefs based on current information known to the Company and factors that could yield actual results differing materially from those anticipated.Such factors inc
291、lude,without limitation,the prices received for the Companys oil and natural gas production,the costs of acquiring,finding,developing and producing reserves,the rates of production of the Companys hydrocarbon reserves,the Companys success in acquiring or finding additional reserves,unforeseen operat
292、ional hazards,significant changes in tax or regulatory environments,and the political and economic uncertainties of foreign operations.ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary financial information required to be filed under this item are presente
293、d on pages F-1 through F-32 of this Form 10-K,and are incorporated herein by reference.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.24 PART III ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth under the captions
294、Information About Nominees for Election as Directors,Information About Continuing Directors,Executive Officers of the Company,and Voting Securities and Principal Holders in the Companys proxy statement relating to Apaches 1997 annual meeting of shareholders(the Proxy Statement)is incorporated herein
295、 by reference.ITEM 11.EXECUTIVE COMPENSATION The information set forth under the captions Summary Compensation Table,Option/SAR Grants Table,Option/SAR Exercises and Year-End Value Table,Long-Term Incentive Plans-Awards in Last Fiscal Year,Employment Contracts and Termination of Employment and Chang
296、e-in-Control Arrangements,and Director Compensation in the Proxy Statement is incorporated herein by reference.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information set forth under the caption Voting Securities and Principal Holders in the Proxy Statement is incorpor
297、ated herein by reference.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information set forth under the caption Certain Business Relationships and Transactions in the Proxy Statement is incorporated herein by reference.PART IV ITEM 14.EXHIBITS,FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON
298、 FORM 8-K (a)Documents included in this report:1.Financial Statements 2.Financial Statement Schedules 25 Report of independent public accountants.F-1 Auditors report.F-2 Report of management.F-3 Statement of consolidated income for each of the three years in the period ended December 31,1996.F-4 Sta
299、tement of consolidated cash flows for each of the three years in the period ended December 31,1996.F-5 Consolidated balance sheet as of December 31,1996 and 1995.F-6 Statement of consolidated shareholders equity for each of the three years in the period ended December 31,1996.F-7 Notes to consolidat
300、ed financial statements.F-8 Supplemental oil and gas disclosures.F-26 Supplemental quarterly financial data.F-32 Financial statement schedules have been omitted because they are either not required,not applicable or the information required to be presented is included in the Companys financial state
301、ments and related notes.3.Exhibits 26 EXHIBIT NO.DESCRIPTION-2.1 -Stock Purchase Agreement,dated July 1,1991,between Registrant and Amoco Production Company(incorporated by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K,dated July 1,1991,SEC File No.1-4300).2.2 -Form of Acquisit
302、ion Agreement between Registrant,HERC Acquisition Corporation and Hadson Energy Resources Corporation,dated August 26,1993,and amended September 28,1993(incorporated by reference to Exhibit 2.1 to Registrants Registration Statement on Form S-4,Registration No.33-67954,filed September 29,1993).2.3 -P
303、urchase and Sale Agreement by and between Texaco Exploration and Production Inc.,as seller,and Registrant,as buyer,dated December 22,1994 (incorporated by reference to Exhibit 99.3 to Registrants Current Report on Form 8-K,dated November 29,1994,SEC File No.1-4300).2.4 -Amended and Restated Agreemen
304、t and Plan of Merger among Registrant,XPX Acquisitions,Inc.and DEKALB Energy Company,dated December 21,1994(incorporated by reference to Exhibit 2.1 to Amendment No.3 to Registrants Registration Statement on Form S-4,Registration No.33-57321,filed April 14,1995).2.5 -Agreement and Plan of Merger amo
305、ng Registrant,YPY Acquisitions,Inc.and The Phoenix Resource Companies,Inc.,dated March 27,1996(incorporated by reference to Exhibit 2.1 to Registrants Registration Statement on Form S-4,Registration No.333-02305,filed April 5,1996).3.1 -Restated Certificate of Incorporation of Registrant,dated Decem
306、ber 1,1993,as filed with the Secretary of State of Delaware on December 16,1993(incorporated by reference to Exhibit 3.1 to Registrants Annual Report on Form 10-K for year ended December 31,1993,SEC File No.1-4300).3.2 -Certificate of Ownership and Merger Merging Apache Energy Resources Corporation
307、into Registrant,effective December 31,1995,as filed with the Secretary of State of Delaware on December 21,1995(incorporated by reference to Exhibit 3.2 to Registrants Annual Report on Form 10-K for year ended December 31,1995,SEC File No.1-4300).3.3 -Certificate of Designations,Preferences and Righ
308、ts of Series A Junior Participating Preferred Stock of Registrant,effective January 31,1996,as filed with the Secretary of State of Delaware on January 22,1996 (incorporated by reference to Exhibit 3.3 to Registrants Annual Report on Form 10-K for year ended December 31,1995,SEC File No.1-4300).3.4
309、-Bylaws of Registrant,as amended July 11,1996,effective May 2,1996(incorporated by reference to Exhibit 3.1 to Amendment No.1 on Form 8-K/A to Registrants Current Report on Form 8-K,dated May 20,1996,SEC File No.1-4300).4.1 -Form of Registrants common stock certificate (incorporated by reference to
310、Exhibit 4.1 to Registrants Annual Report on Form 10-K for year ended December 31,1995,SEC File No.1-4300).4.2 -Rights Agreement,dated January 31,1996,between Registrant and Norwest Bank Minnesota,N.A.,rights agent,relating to the declaration of a rights dividend to Registrants common shareholders of
311、 record on January 31,1996(incorporated by reference to Exhibit(a)to Registrants Registration Statement on Form 8-A,dated January 24,1996,SEC File No.1-4300).27 EXHIBIT NO.DESCRIPTION-10.1 -Third Amended and Restated Credit Agreement,dated March 1,1995,among Registrant,the lenders named therein,and
312、The First National Bank of Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger(incorporated by reference to Exhibit 10.2 to Registrants Annual Report on Form 10-K for year ended December 31,1994,SEC File No.1-4300).10.2 -First Amendment to Third Amended and Restat
313、ed Credit Agreement,dated April 14,1995,among Registrant,the lenders named therein,and The First National Bank of Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger(incorporated by reference to Exhibit 99.3 to Registrants Registration Statement on Form S-3,Regist
314、ration No.33-63923,filed November 2,1995).10.3 -Second Amendment to Third Amended and Restated Credit Agreement,dated October 23,1995,among Registrant,the lenders named therein,and The First National Bank of Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger(inco
315、rporated by reference to Exhibit 99.4 to Registrants Registration Statement on Form S-3,Registration No.33-63923,filed November 2,1995).10.4 -Third Amendment to Third Amended and Restated Credit Agreement,dated December 18,1995,among Registrant,the lenders named therein,and The First National Bank o
316、f Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger(incorporated by reference to Exhibit 10.5 to Registrants Annual Report on Form 10-K for year ended December 31,1995,SEC File No.1-4300).10.5 -Fourth Amendment to Third Amended and Restated Credit Agreement,date
317、d December 22,1995,among Registrant,the lenders named therein,and The First National Bank of Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger(incorporated by reference to Exhibit 10.6 to Registrants Annual Report on Form 10-K for year ended December 31,1995,SEC
318、 File No.1-4300).10.6 -Fifth Amendment to Third Amended and Restated Credit Agreement,dated January 22,1996,among Registrant,the lenders named therein,and The First National Bank of Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger(incorporated by reference to E
319、xhibit 10.7 to Registrants Annual Report on Form 10-K for year ended December 31,1995,SEC File No.1-4300).10.7 -Sixth Amendment to Third Amended and Restated Credit Agreement,dated April 18,1996,among Registrant,the lenders named therein,and The First National Bank of Chicago,as Administrative Agent
320、 and Arranger,and Chemical Bank,as Co-Agent and Arranger(incorporated by reference to Exhibit 99.1 to Registrants Current Report on Form 8-K,dated April 22,1996,SEC File No.1-4300).10.8 -Seventh Amendment to Third Amended and Restated Credit Agreement,dated May 8,1996,among Registrant,the lenders na
321、med therein,and The First National Bank of Chicago,as Administrative Agent and Arranger,and Chemical Bank,as Co-Agent and Arranger(incorporated by reference to Exhibit 99.3 to Amendment No.1 on Form 8-K/A to Registrants Current Report on Form 8-K,dated May 20,1996,SEC File No.1-4300).28 EXHIBIT NO.D
322、ESCRIPTION-10.9 -Fourth Amended and Restated Credit Agreement,dated October 31,1996,among Registrant,the lenders named therein,and The First National Bank of Chicago,as Global Administrative Agent,The Chase Manhattan Bank,as Co-Agent,First Chicago Capital Markets,Inc.,as Arranger,and Chase Securitie
323、s Inc.,as Arranger (incorporated by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K,dated October 31,1996,SEC File No.1-4300).10.10 -Credit Agreement dated October 31,1996,among Apache Canada Ltd.,a wholly-owned subsidiary of Registrant,the lenders named therein,and Bank of Montr
324、eal,as Canadian Administrative Agent,The First National Bank of Chicago,as Global Administrative Agent,First Chicago Capital Markets,Inc.,as Arranger,and Chase Securities Inc.,as Arranger(incorporated by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K,dated October 31,1996,SEC Fi
325、le No.1-4300).10.11 -Credit Agreement dated October 31,1996,among Apache Energy Limited and Apache Oil Australia Pty.Limited,wholly-owned subsidiaries of Registrant,the lenders named therein,and Chase Securities Australia Limited,as Australian Administrative Agent,The First National Bank of Chicago,
326、as Global Administrative Agent,First Chicago Capital Markets,Inc.,as Arranger,and Chase Securities Inc.,as Arranger(incorporated by reference to Exhibit 10.3 to Registrants Current Report on Form 8-K,dated October 31,1996,SEC File No.1-4300).10.12 -Fiscal Agency Agreement,dated January 4,1995,betwee
327、n Registrant and Chemical Bank,as fiscal agent,relating to Registrants 6%Convertible Subordinated Debentures due 2002(incorporated by reference to Exhibit 99.2 to Registrants Current Report on Form 8-K,dated December 6,1994,SEC File No.1-4300).10.13 -Concession Agreement for Petroleum Exploration an
328、d Exploitation in Khalda Area in Western Desert of Egypt by and among Arab Republic of Egypt,the Egyptian General Petroleum Corporation and Phoenix Resources Company of Egypt,dated April 6,1981(incorporated by reference to Exhibit 19(g)to Phoenixs Annual Report on Form 10-K for year ended December 3
329、1,1984,SEC File No.1-547).10.14 -Amendment,dated July 10,1989,to Concession Agreement for Petroleum Exploration and Exploitation in Khalda Area in Western Desert of Egypt by and among Arab Republic of Egypt,the Egyptian General Petroleum Corporation and Phoenix Resources Company of Egypt(incorporate
330、d by reference to Exhibit 10(d)(4)to Phoenixs Quarterly Report on Form 10-Q for quarter ended June 30,1989,SEC File No.1-547).10.15 -Farmout Agreement,dated September 13,1985 and relating to Khalda Area Concession,by and between Phoenix Resources Company of Egypt and Conoco Khalda Inc.(incorporated
331、by reference to Exhibit 10.1 to Phoenixs Registration Statement on Form S-1,Registration No.33-1069,filed October 23,1985).10.16 -Amendment,dated March 30,1989,to Farmout Agreement relating to Khalda Area Concession,by and between Phoenix Resources Company of Egypt and Conoco Khalda Inc.(incorporate
332、d by reference to Exhibit 10(d)(5)to Phoenixs Quarterly Report on Form 10-Q for quarter ended June 30,1989,SEC File No.1-547).29 EXHIBIT NO.DESCRIPTION-10.17 -Concession Agreement for Petroleum Exploration and Exploitation in the Qarun Area in Western Desert of Egypt,between Arab Republic of Egypt,t
333、he Egyptian General Petroleum Corporation,Phoenix Resources Company of Qarun and Apache Oil Egypt,Inc.,dated May 17,1993,(incorporated by reference to Exhibit 10(b)to Phoenixs Annual Report on Form 10-K for year ended December 31,1993,SEC File No.1-547).*10.18 -Agreement for Amending the Gas Pricing Provisions under the Concession Agreement for Petroleum Exploration and Exploitation in the Qarun A
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