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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[MARK ONE]
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993,
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM __________ TO ___________
COMMISSION FILE NUMBER 1-4300
APACHE CORPORATION
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A DELAWARE IRS EMPLOYER
CORPORATION NO. 41-0747868
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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:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $1.25 Par Value New York Stock Exchange
Chicago Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
9.25% Notes due 2002 New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
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Aggregate market value of the voting stock held by non-affiliates
of registrant as of March 17, 1994 $1,599,465,322
Number of shares of registrant's common stock outstanding
as of March 17, 1994 61,223,553
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DOCUMENTS INCORPORATED BY REFERENCE:
Portions of registrant's proxy statement relating to registrant's 1994
annual meeting of shareholders have been incorporated by reference into Part III
hereof.
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TABLE OF CONTENTS
DESCRIPTION
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ITEM PAGE
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PART I
1. BUSINESS.......................................................................... 1
2. PROPERTIES........................................................................ 8
3. LEGAL PROCEEDINGS................................................................. 12
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................... 12
PART II
5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS......... 12
6. SELECTED FINANCIAL DATA........................................................... 13
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................................................................ 14
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................... 20
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE........................................................................ 20
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................................ 20
11. EXECUTIVE COMPENSATION............................................................ 20
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................... 20
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................... 20
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.......................................................................... 21
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ALL DEFINED TERMS UNDER RULE 4-10(A) OF REGULATION S-X SHALL HAVE THEIR
STATUTORILY-PRESCRIBED MEANINGS WHEN USED IN THIS REPORT. QUANTITIES OF NATURAL
GAS ARE EXPRESSED IN THIS REPORT IN TERMS OF THOUSAND CUBIC FEET (MCF), MILLION
CUBIC FEET (MMCF) OR BILLION CUBIC FEET (BCF). OIL IS QUANTIFIED IN TERMS OF
BARRELS (BBLS), THOUSANDS OF BARRELS (MBBLS) AND MILLIONS OF BARRELS (MMBBLS).
NATURAL GAS IS COMPARED TO OIL IN TERMS OF BARRELS OF OIL 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 PRODUCTION IS EXPRESSED IN TERMS OF
BARRELS OF OIL PER DAY (BOPD) AND THOUSANDS OF CUBIC FEET OF GAS PER DAY (MCFD),
RESPECTIVELY. WITH RESPECT TO INFORMATION RELATING TO THE COMPANY'S WORKING
INTEREST IN WELLS OR ACREAGE, "NET" OIL AND GAS WELLS OR ACREAGE IS DETERMINED
BY MULTIPLYING GROSS WELLS OR ACREAGE BY THE COMPANY'S WORKING INTEREST THEREIN.
UNLESS OTHERWISE SPECIFIED, ALL REFERENCES TO WELLS AND ACRES ARE GROSS.
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PART I
ITEM 1. BUSINESS
GENERAL
Apache Corporation (Apache or the Company), a Delaware corporation formed
in 1954, is an independent energy company that explores for, develops, produces,
gathers, processes and markets natural gas and crude oil. Domestically, Apache's
exploration and production interests are spread over 18 states, focusing on the
Gulf of Mexico, the Anadarko Basin of Oklahoma, the Permian Basin of West Texas
and New Mexico, the Gulf Coast and the Rocky Mountain region. Internationally,
Apache has production interests in Australia and is currently focusing its
international exploration efforts offshore Western Australia and along the
Pacific Rim. Apache's common stock has been listed on the New York Stock
Exchange since 1969.
Apache holds interests in many of its domestic and international properties
through operating subsidiaries, such as MW Petroleum Corporation, Hadson Energy
Resources Corporation, Hadson Energy Limited and Apache International, Inc.
Properties referred to in this document may be held by those subsidiaries.
Apache treats all operations as one segment of business.
1993 RESULTS
In 1993, Apache had net income of $37.3 million, or $.70 per share, on
total revenues of $466.6 million. Net cash provided by operating activities
during 1993 was $225.1 million.
The year represents Apache's sixteenth consecutive year of production
growth and sixth consecutive year of oil and gas reserves growth. Apache's
average daily production was approximately 34 Mbbls of oil and 303 MMcf of
natural gas for the year. The Company's estimated proved reserves at December
31, 1993, were 231 MMboe, of which 61 percent was natural gas. Apache's growth
in reserves during the year reflects the replacement of 238 percent of the
Company's 1993 production. Over half of the newly added reserves were acquired
through Apache's ongoing acquisition efforts. The remainder was attributable to
Apache's active drilling and workover program, which yielded 210 new producing
domestic wells out of 266 attempts, and involved 368 workover and recompletion
projects during the year.
At December 31, 1993, Apache had interests in approximately 3,184 net oil
and gas wells and 680,893 net developed acres of oil and gas properties. In
addition, the Company had interests in 549,833 net undeveloped acres under
domestic leases and 7,532,102 net undeveloped acres under international
exploration and production rights.
APACHE'S GROWTH STRATEGY
Apache grows production, reserves and cash flow through a combination of
acquisitions, moderate-risk drilling and development of its inventory of
existing projects. The Company also emphasizes reducing operating costs per unit
produced and selling marginal and non-strategic properties in order to increase
its profit margins.
For Apache, property acquisition is only one phase in a continuing cycle of
business growth. Apache's aim is to follow each acquisition cycle with a cycle
of reserve enhancement, property consolidation and cash flow acceleration,
facilitating asset growth and debt reduction. This approach requires
well-planned and carefully executed property development and a commitment to a
selective program of ongoing property dispositions. It motivates Apache to
target acquisitions that have 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 properties so that it can best influence their
development, and the Company therefore operates properties constituting over 75
percent of its production.
Pursuing its acquire-and-develop strategy, Apache increased its total
reserves more than four-fold and production almost three-fold during the six
years ended 1993. In addition to its acquisition strategy, Apache continues to
develop and exploit its existing inventory of workover, recompletion and other
development
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projects to increase reserves and production. During 1993, Apache acquired
$324.6 million of additional properties and replaced over 100 percent of its
domestic production through its drilling, workover and recompletion program.
Apache's international investments supplement its long-term growth
strategy. Although international exploration is recognized as higher-risk than
most of Apache's domestic activities, it offers potential for higher rewards and
significant reserve additions. Apache refocused its international efforts in
1993 on the acquisition and development of properties in Western Australia and
the Pacific Rim, where it believes that reserve additions may be made through
higher-risk exploration and through improved production practices and recovery
techniques.
RECENT ACQUISITIONS AND DISPOSITIONS
In late 1992, Apache purchased a 93-percent working interest in
Matagorda Island Blocks 681 and 682, located off the Texas Gulf Coast, for
$57.4 million, including $1.8 million for a 14-mile gathering line. This
transaction approximately doubled Apache's offshore gas production, adding six
producing wells, and reserves of an estimated 73.5 Bcf of gas and 158 Mbbls of
condensate. Apache and an affiliate now own all of the working interest in the
blocks.
In 1993, Apache entered into two agreements to purchase a combined 103.7
Bcfe of proved reserves in the Gulf of Mexico from Hall-Houston Oil Company
(Hall-Houston) for an aggregate consideration of $113.7 million. In June 1993,
Apache closed the first of the two transactions, paying $29.3 million for Hall-
Houston's interest in Mustang Island Blocks 787 and 805. Apache acquired
substantially all of Hall-Houston's other producing properties in the Gulf of
Mexico for an additional $84.4 million in the second transaction which closed on
August 31, 1993. With the Hall-Houston acquisitions, Apache again more than
doubled its interest in offshore gas production, acquiring interests in 63
producing fields and 12 fields under development or awaiting pipeline
connections.
Apache acquired Hadson Energy Resources Corporation (HERC) through a series
of private transactions and subsequent merger, effective November 12, 1993. The
aggregate consideration paid for the acquisition was $98.0 million, including
the issuance of 307,977 shares of Apache common stock. Apache acquired HERC and
its subsidiaries subject to approximately $67.6 million of net liabilities at
the time of the merger. Through the acquisition of HERC, Apache added proved
reserves of 66 Bcfe domestically and 64 Bcfe in Australia.
The HERC and Hall-Houston acquisitions complement Apache's existing
operations, and represent the Company's emphasis on the acquisition of natural
gas properties and an increased commitment to the Gulf of Mexico and Australian
regions. The addition of the Hall-Houston properties makes the Gulf of Mexico
the Company's largest producing region. HERC's reserves fit well with Apache's
existing interests in Oklahoma and the Carnarvon Basin offshore Western
Australia. Domestically, nearly two-thirds of the value of HERC's properties are
concentrated in Oklahoma, where Apache is already the largest independent gas
producer. HERC's operations in Western Australia, including the Harriet complex
of oil and natural gas fields, provide Apache with the reserves and
infrastructure required for the commercial development of its other Australian
interests.
During 1993, Apache also acquired 11 MMboe of proved reserves through 71
smaller, non-strategic acquisitions for an aggregate consideration of $76.5
million. Apache also sold $3.3 million of its non-strategic properties during
1993.
EXPLORATION AND PRODUCTION
The Company's domestic exploration and production activities are divided
into five operating regions, the Gulf of Mexico, Midcontinent, Permian Basin,
Gulf Coast and Rocky Mountain regions. Approximately 95 percent of the Company's
proved reserves are located in its five domestic operating regions.
Internationally, the Company conducts its Australian exploration and production
and its Indonesian exploration through its
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Australian region. Apache's other international interests are directed by the
Company and its subsidiaries through the Company's principal offices located in
Houston, Texas.
GULF OF MEXICO. As a result of Apache's acquisitions of Matagorda Island
Blocks 681 and 682 in late 1992 and the Hall-Houston acquisition in 1993, the
Gulf of Mexico has become Apache's largest producing region. Because of the
growth resulting from these acquisitions, Apache divided its former Gulf Coast
region into two regions: Gulf of Mexico and Gulf Coast. The Gulf of Mexico
region encompasses all of Apache's interests in properties offshore Texas,
Louisiana and Alabama. As a result of acquisitions, Apache's reserves in the
region increased 77 percent during 1993. Apache increased its production in the
Gulf of Mexico to 150 MMcf of gas per day by year end, double that of a year
earlier.
The Gulf of Mexico region encompasses 219,009 net acres, located in both
state and federal waters, and accounts for 47.9 MMboe, or 21 percent, of the
Company's year-end 1993 reserves. Apache participated in 23 wells which were
drilled in the region during the year, 15 of which were completed as producers.
The Company performed 11 workover and recompletion operations in the region
during 1993.
MIDCONTINENT. Apache's Midcontinent region is known for its sizeable
position in the Anadarko Basin. Apache has drilled and operated in the
Anadarko Basin for over three decades, developing an extensive database of
geologic information and a substantial acreage position. In 1993, Apache
enhanced its position through the acquisition of HERC, a company with
significant acreage and producing interests in the Anadarko Basin.
At December 31, 1993, Apache held an interest in 236,063 net acres in the
region, which accounted for approximately 62 MMboe, or 27 percent, of Apache's
total proved reserves. Apache participated in 101 wells which were drilled in
the Midcontinent region during the year, 91 of which were completed as producing
wells. The Company performed 26 workover and recompletion operations in the
region during 1993.
PERMIAN BASIN. The Permian Basin of West Texas and New Mexico remained an
important region to Apache in 1993, generating 19 percent of the Company's
production revenues for the year. As of December 31, 1993, Apache held an
interest in 167,529 net acres in the region, which accounted for 49.1 MMboe, or
21 percent, of the Company's total proved reserves. Apache operations in the
Permian Basin focused primarily on workovers and recompletions, which totaled 76
for the year. Compared with 1992, Apache nearly doubled its drilling activity in
the region during 1993, with 14 of the 19 wells drilled in the region completed
as producers.
GULF COAST. The Gulf Coast region encompasses the Texas and Louisiana
coasts and central Texas. In 1993, the region was one of the most prominent in
the Company in the number of workover and recompletion projects completed and
the number of wells drilled. Apache participated in 77 wells drilled in the Gulf
Coast region during the year, 64 of which were completed as producers, including
40 Austin Chalk wells in central Texas, 38 of which were productive. The Company
performed 140 workover and recompletion operations during 1993 in the Gulf Coast
region. The region encompasses approximately 126,485 net acres, and accounts for
33.5 MMboe, or 14 percent, of the Company's year-end 1993 total proved reserves.
ROCKY MOUNTAIN. In the Rocky Mountain region, Apache currently emphasizes
oil enhancement opportunities, having conducted 115 development projects in
1993. At year-end 1993, Apache held an interest in 429,090 net acres in the
region, which accounted for approximately 26.9 MMboe, or 12 percent, of the
Company's total proved reserves. Apache participated in 46 wells in the region
during the year, 26 of which were productive.
AUSTRALIA. The state of Western Australia has become an important region to
Apache following the successful completion of the HERC acquisition. For
additional operating efficiencies, Apache consolidated its Australian
properties, acquired in 1991, with HERC's operations, which are headquartered in
Perth, Western Australia, during the fourth quarter of 1993.
As of December 31, 1993, Apache held 3,297,310 net developed and
undeveloped acres in Western Australia. Australian reserves accounted for 11.6
MMboe, or five percent, of the Company's total proved reserves at year end.
Through HERC and its subsidiaries, Apache also owns a 22.5-percent interest in
and
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operates the Harriet Gas Gathering Project, a gas processing and compression
facility with a throughput capacity of 80 MMcfd, and a 60-mile, 12-inch offshore
pipeline with a throughput capacity of 175 MMcfd. The facilities are located in
close proximity to HERC's producing properties offshore in the Carnarvon Basin.
HERC acts as operator for most of its properties in Western Australia through
its Australian subsidiary, Hadson Energy Limited.
During 1993, Apache's international subsidiary, Apache International, Inc.,
focused primarily on exploratory drilling in Western Australia, participating in
three wells for the year, two of which were productive. Although the wells
indicated the presence of a new natural gas and gas condensate field, the
economic potential of the field cannot be determined until completion of a
feasibility study currently in progress.
OTHER INTERNATIONAL OPERATIONS. Outside of Australia, Apache's
international interests currently consist only of exploration interests. In
1993, Apache continued to emphasize activities in Indonesia, expanded into
Egypt, and continued to reduce its focus on France, Angola, and The Congo, while
retaining an interest in the Foxtrot project offshore the Ivory Coast.
In early 1993, Apache took over as operator and increased its interest in
the Java Sea IV block offshore Indonesia and the Padang Panjang block on the
island of Sumatra, Indonesia. Following the HERC merger, operations for both
blocks were consolidated with those for the Bentu block on Sumatra which are
conducted by a subsidiary of HERC. Three exploratory wells are expected to be
drilled in Indonesia in 1994.
In May 1993, Apache acquired a 50-percent interest in the two-million acre
Qarun block in the western desert of Egypt which is operated by Phoenix
Resources Company of Qarun. The acquisition of seismic data has concluded and an
exploratory well is scheduled to be drilled in 1994.
In January 1994, Apache entered into an agreement with XCL-China, Ltd., a
subsidiary of The Exploration Company of Louisiana, to acquire a one-third
interest in the Zhao Dong block located in the Bohai Bay shallow water area
offshore the People's Republic of China. The contract area contains
approximately 48,670 undeveloped acres (16,200 acres net to Apache) and involves
a work commitment to acquire new seismic data and drill three exploratory wells
during the exploratory phase which began in May 1993. Under the contract, the
first exploratory well must be spudded within 15 months of May 1993 and is
planned for the second quarter of 1994.
OIL AND NATURAL GAS MARKETING
Apache markets approximately 85 percent of its domestic natural gas on the
spot market through Natural Gas Clearinghouse (NGC) or through market responsive
contracts with other parties; the remaining 15 percent is sold into long-term,
premium-priced contracts. Sales to NGC accounted for 36 percent of the Company's
oil and gas revenues in 1993. Effective April 1, 1993, Apache and NGC agreed to
extend the term of their existing natural gas marketing agreement under which
NGC will continue to market substantially all of Apache's domestic spot market
gas production. The Company believes that if the NGC contract were terminated,
it would not have a material adverse effect on the Company due to the existence
of alternative purchasers.
In 1992, Apache assumed its own domestic crude oil marketing operations.
Most of Apache's crude oil production is sold through lease-level marketing to
refiners, traders and transporters, generally under 30-day contracts that renew
automatically until canceled. Although effective January 1, 1993, Apache ended
its prior arrangement to sell to Amoco Production Company (Amoco) substantially
all of the oil produced from the MW Petroleum Corporation (MW) properties, sales
to Amoco constituted 11-percent of the Company's oil and gas revenues during the
year. Oil production from the MW properties is now marketed through Apache's
internal crude oil marketing group.
In Australia, HERC's existing proved gas reserves are dedicated to the
State Energy Commission of Western Australia (SECWA) under a long-term contract
that provides for the sale of 123 Bcf (approximately 28 Bcf net to HERC) over an
initial period of up to 10 years. The agreement contains take-or-pay provisions
that require SECWA to purchase a minimum of 26 MMcfd (approximately 6 MMcfd net
to HERC) through
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July 1994, and 35 MMcfd through the remainder of the contract term at a stated
minimum price that escalates with the Western Australia consumer price index. If
for any reason the SECWA contract were canceled, HERC might not be able to find
other markets for its Carnarvon Basin gas.
HERC markets all oil and natural gas liquids produced from its interests in
the Harriet field through a contract with Marubeni International Petroleum
(Singapore) Pte Limited (Marubeni), which was extended in 1993. Pricing under
the contract represents a fixed premium to the average of the quoted spot market
prices of Tapis and Dubai crude oil, with payment made in U.S. dollars.
Production sold under this contract in 1993 realized an average price of $18.53
per barrel (exclusive of the impact of hedging activities). The Company believes
that if this contract were terminated, it would not have a material adverse
effect on the Company due to the demand for Australian crude oil and the
existence of alternative purchasers.
OIL AND NATURAL GAS PRICES
Natural gas prices remained volatile and continued to behave independently
of historical seasonal patterns in 1993. Until recently, demand for natural gas
has tended to be seasonal in nature, with peak demand and higher prices
occurring in the colder winter months. In 1992, this linkage was lost: after
plummeting to a 13-year low near the peak of the winter heating season, prices
defied normal summer and fall seasonal patterns, climbing to a seven-year high.
Although natural gas prices remained volatile in 1993, Apache's average realized
gas price of $2.03 per Mcf for the year was 15 percent above the prior-year
average of $1.76 per Mcf.
Due to the escalating price contract with SECWA, HERC's natural gas
production in Western Australia is not subject to the same degree of price
volatility as is its domestic gas production, however, natural gas sales under
the SECWA contract represented only about two percent of the Company's total
natural gas sales at year end. In 1993, the price received for production under
the contract averaged $1.79 per Mcf.
Oil prices, especially vulnerable to unpredictable political and economic
forces, remained volatile in 1993 and declined steeply in the fourth quarter of
1993. Management believes that, absent a comprehensive U.S. energy policy, oil
prices will continue to fluctuate in response to changes in the policies of the
Organization of Petroleum Exporting Countries (OPEC) and events in the Middle
East. Although levels of production maintained by OPEC member countries and
other major oil producing countries continue to impede crude oil price
improvements in the near term, management is unable to determine whether the
sharply lower oil prices prevailing in the fourth quarter of 1993 will be a
relatively short-term experience or if such prices represent a longer-term shift
in the crude oil market.
Apache's worldwide crude oil price averaged $16.78 per barrel in 1993,
eight percent lower than the average price of $18.16 per bbl in 1992. Apache's
average crude oil price for its Australian production, including production sold
under the Marubeni contract, was $19.24 per barrel in 1993.
Terms of the acquisition of MW from Amoco included a crude oil price
support mechanism that expired in mid-1993 and that buffered the Company from
price volatility during the peak debt exposure from the acquisition financing.
The transaction also created an oil and gas price sharing provision under which
certain price sharing payments are due to Amoco. Pursuant to this provision, to
the extent that oil prices exceed specified reference prices that rise to $33.13
per barrel over the eight-year period ending June 30, 1999, and to the extent
that gas prices exceed specified reference prices that rise to $2.68 per Mcf
over the five-year period ending June 30, 1996, Apache will share the excess
price realization with Amoco on a portion of the MW production.
From time to time, Apache buys or sells contracts for the future delivery
of oil or gas to hedge a limited portion of its production against exposure to
spot market price changes. See Note 8 to the Company's financial statements
under Item 8 below.
The Company's business will be affected by future worldwide changes in oil
and gas prices and the relationship between the prices of oil and gas. No
assurance can be given as to the trend in, or level of, future oil and gas
prices.
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RESERVE VALUE CEILING TEST
Under the Securities and Exchange Commission's full cost accounting rules,
the Company reviews the carrying value of its oil and gas properties each
quarter on a country-by-country basis. Under full cost accounting rules,
capitalized costs of oil and gas properties may not exceed the present value of
estimated future net revenues from proved reserves, discounted at 10 percent,
plus the lower of cost or fair market value of unproved properties, as adjusted
for related tax effects and deferred tax reserves. Application of this rule
generally requires pricing future production at the unescalated oil and gas
prices in effect at the end of each fiscal quarter and requires a write-down if
the "ceiling" is exceeded, even if prices declined for only a short period of
time. If a write-down is required, the one-time charge to earnings would not
impact cash flow from operating activities. The Company had no write-downs
because of ceiling test limitations during 1993.
GOVERNMENT REGULATION OF THE OIL AND GAS INDUSTRY
The Company's exploration, production and marketing operations are
regulated extensively at the federal, state and local levels, as well as by
other countries in which the Company does business. Oil and gas exploration,
development and production activities are subject to various laws and
regulations governing a wide variety of matters. For example,
hydrocarbon-producing states have statutes or regulations addressing
conservation practices and the protection of correlative rights, and such
regulations may affect Apache's operations and limit the quantity of
hydrocarbons Apache may produce and sell. Other regulated matters include
marketing, pricing, transportation, and valuation of royalty payments.
Among other regulated matters on the federal level, the Federal Energy
Regulatory Commission (FERC) regulates interstate transportation of natural gas
under the Natural Gas Act and regulates the maximum selling prices of certain
categories of gas sold in "first sales" in interstate and intrastate commerce
under the Natural Gas Policy Act (NGPA). Apache, as a producer and seller of
gas, remains subject to FERC's jurisdiction only to a limited extent as a result
of a few remaining regulated gas sales. Apache's other gas sales are deregulated
under the NGPA or Natural Gas Wellhead Decontrol Act.
Apache's gas sales are affected by regulation of intrastate and interstate
gas transportation. In an attempt to promote competition, the FERC has issued a
series of orders which have altered significantly the marketing and
transportation of natural gas. The effect of these orders has been to enable the
Company to market its natural gas production to purchasers other than the
interstate pipelines located in the vicinity of its producing properties. The
Company is not able to fully determine what impact the new regulations will have
on its operations, but it generally believes that the changes will improve the
Company's access to transportation and enhance the marketability of its natural
gas production. To date, Apache has not experienced any material adverse effect
on gas marketing as a result of these FERC orders; however, the Company cannot
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.
ENVIRONMENTAL MATTERS
Apache, as an owner or lessee and operator of oil and gas properties, is
subject to various federal, 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 pollution
clean-up resulting from operations, subject the lessee to liability for
pollution damages, require suspension or cessation of operations in affected
areas and impose restrictions on the injection of liquids into subsurface
aquifers that may contaminate groundwater.
Apache maintains insurance coverages which it believes are customary in the
industry, although it is not fully insured against all environmental risks. The
Company is not aware of any environmental claims existing as of December 31,
1993, which would have a material impact upon the Company's financial position
or results of operations.
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Apache has made and will continue to make expenditures in its efforts to
comply with these requirements, which it believes are necessary business costs
in the oil and gas industry. Apache has established policies for continuing
compliance with environmental laws and regulations, including regulations
applicable to its operations in Australia and other countries. Apache has also
established operational procedures designed to limit the environmental impact of
its field facilities. The costs incurred by these policies and procedures are
inextricably connected to normal operating expenses such that the Company is
unable to separate the expenses related to environmental matters; however, the
Company does not believe any such additional expenses are material to its
financial position or results of operations.
Although environmental requirements do have a substantial impact upon the
energy industry, generally these requirements do not appear to affect Apache any
differently, or to any greater or lesser extent, than other companies in the
industry. Apache does not believe that compliance with federal, state, local or
foreign country provisions regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, will
have a material adverse effect upon the capital expenditures, earnings or
competitive position of the Company or its subsidiaries, but there is no
assurance that changes in or additions to laws or regulations regarding the
protection of the environment will not have such an impact.
COMPETITION
The oil and gas industry is highly competitive. Because oil and gas are
fungible commodities, the principal form of competition with respect to product
sales is price competition. Apache strives to maintain the lowest finding and
production costs possible to maximize profits.
As an independent oil and gas company, Apache 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 strong governmental relationships in
countries in which the Company may seek new entry. Apache expects this high
degree of competition to continue.
EMPLOYEES
On December 31, 1993, Apache had 984 full-time employees.
OFFICES
Apache's principal executive office is located at One Post Oak Central,
2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400. The Company
maintains regional exploration and production offices in Tulsa, Oklahoma;
Houston, Texas; Denver, Colorado; and Perth, Western Australia.
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ITEM 2. PROPERTIES
OIL AND GAS EXPLORATION AND PRODUCTION PROPERTIES AND RESERVES
ACREAGE
The developed and undeveloped acreage, including both domestic leases and
international production and exploration rights that Apache held as of December
31, 1993, are as follows:
<TABLE>
<CAPTION>
UNDEVELOPED ACREAGE DEVELOPED ACREAGE
------------------------ ---------------------
GROSS NET GROSS NET
ACRES ACRES ACRES ACRES
---------- --------- --------- -------
<S> <C> <C> <C> <C>
GULF OF MEXICO
Alabama.................................... -- -- 37,469 7,704
Louisiana.................................. 45,095 26,739 278,678 81,263
Texas...................................... 86,463 41,808 233,934 61,495
---------- --------- --------- -------
Total...................................... 131,558 68,547 550,081 150,462
---------- --------- --------- -------
MIDCONTINENT
Arkansas................................... 40 10 2,549 9
Louisiana.................................. 1,711 1,126 14,648 10,681
Oklahoma................................... 56,376 20,182 424,260 158,389
Texas...................................... 24,808 13,401 54,031 32,265
---------- --------- --------- -------
Total...................................... 82,935 34,719 495,488 201,344
---------- --------- --------- -------
PERMIAN BASIN
New Mexico................................. 14,830 7,188 78,175 25,278
Texas...................................... 103,584 53,601 104,039 81,462
---------- --------- --------- -------
Total...................................... 118,414 60,789 182,214 106,740
---------- --------- --------- -------
GULF COAST
Alabama.................................... 780 167 483 204
Florida.................................... 1,810 240 -- --
Louisiana.................................. 10,759 6,656 49,658 21,059
Mississippi................................ 7,470 1,324 9,945 1,992
New Mexico................................. 640 640 3,632 1,510
Texas...................................... 47,925 21,229 189,441 71,464
---------- --------- --------- -------
Total...................................... 69,384 30,256 253,159 96,229
---------- --------- --------- -------
ROCKY MOUNTAIN
California................................. 968 575 480 178
Colorado................................... 48,619 22,127 1,040 920
Kansas..................................... 14,515 5,351 750 713
Michigan................................... 160 22 40 6
Montana.................................... 46,539 19,286 6,064 2,350
Nebraska................................... 11,699 4,787 80 10
Nevada..................................... 145,099 64,979 1,720 913
New Mexico................................. 72,391 47,527 34,671 27,037
North Dakota............................... 155,443 62,613 53,890 21,784
South Dakota............................... 4,639 1,196 3,480 2,330
Utah....................................... 6,997 1,763 1,680 1,018
Wyoming.................................... 276,990 125,296 31,101 16,309
---------- --------- --------- -------
Total...................................... 784,059 355,522 134,996 73,568
---------- --------- --------- -------
TOTAL DOMESTIC............................... 1,186,350 549,833 1,615,938 628,343
---------- --------- --------- -------
INTERNATIONAL
Australia.................................. 6,613,500 3,244,760 280,460 52,550
The Congo.................................. 236,228 47,245 -- --
Indonesia.................................. 5,250,258 3,276,407 -- --
Egypt...................................... 1,927,380 963,690 -- --
---------- --------- --------- -------
TOTAL INTERNATIONAL.......................... 14,027,366 7,532,102 280,460 52,550
---------- --------- --------- -------
TOTAL COMPANY................................ 15,213,716 8,081,935 1,896,398 680,893
---------- --------- --------- -------
---------- --------- --------- -------
</TABLE>
8
<PAGE> 11
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, 1993, is set forth below.
<TABLE>
<CAPTION>
GAS OIL
----------------- -----------------
GROSS NET GROSS NET
----- ----- ----- -----
<S> <C> <C> <C> <C>
Gulf of Mexico...................................... 430 85 40 14
Midcontinent........................................ 1,511 447 275 82
Permian Basin....................................... 455 131 2,240 782
Gulf Coast.......................................... 626 289 1,088 832
Rocky Mountain...................................... 113 83 782 434
International....................................... 5 1 25 4
----- ----- ----- -----
Total............................................... 3,140 1,036 4,450 2,148
===== ===== ===== =====
</TABLE>
GROSS WELLS DRILLED
The following table sets forth the number of gross exploratory and gross
development wells drilled in the last three fiscal years in which the Company
participated. The number of wells drilled refers to the number of wells
commenced at any time during the respective fiscal year. "Productive" wells are
either producing wells or wells capable of commercial production. At December
31, 1993, the Company was participating in 26 wells in the process of drilling.
<TABLE>
<CAPTION>
EXPLORATORY DEVELOPMENTAL
----------------------------- -----------------------------
1993 PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL
- ---------------------------------------- ---------- ---- ----- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Domestic................................ 12 19 31 198 37 235
International........................... 3 5 8 -- -- --
--- ---- ----- ----- ---- -----
Total................................... 15 24 39 198 37 235
=== === === ===== ==== =====
1992
- ----------------------------------------
Domestic................................ 10 32 42 145 16 161
International........................... -- 6 6 -- -- --
--- ---- ----- ----- ---- -----
Total................................... 10 38 48 145 16 161
=== === === ===== ==== =====
1991
- ----------------------------------------
Domestic................................ 18 11 29 73 18 91
International........................... 1 1 2 2 -- 2
--- ---- ----- ----- ---- -----
Total................................... 19 12 31 75 18 93
=== === === ===== ==== =====
</TABLE>
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.
<TABLE>
<CAPTION>
EXPLORATORY DEVELOPMENTAL
----------------------------- -----------------------------
1993 PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL
- ---------------------------------------- ---------- ---- ----- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Domestic................................ 4.2 10.4 14.6 90.4 22.2 112.6
International........................... 0.6 1.3 1.9 -- -- --
--- ---- ----- ----- ---- -----
Total................................... 4.8 11.7 16.5 90.4 22.2 112.6
=== === === ===== ==== =====
1992
- ----------------------------------------
Domestic................................ 3.2 16.6 19.8 60.1 8.0 68.1
International........................... -- 1.1 1.1 -- -- --
--- ---- ----- ----- ---- -----
Total................................... 3.2 17.7 20.9 60.1 8.0 68.1
=== === === ===== ==== =====
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
EXPLORATORY DEVELOPMENTAL
----------------------------- -----------------------------
1991 PRODUCTIVE DRY TOTAL PRODUCTIVE DRY TOTAL
- ---------------------------------------- ---------- ---- ----- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Domestic................................ 9.3 7.5 16.8 32.0 10.1 42.1
International........................... 0.1 0.2 0.3 0.2 -- 0.2
--- ---- ----- ----- ---- -----
Total................................... 9.4 7.7 17.1 32.2 10.1 42.3
==== ==== ===== ===== ==== =====
</TABLE>
PRODUCTION AND PRICING DATA
The following table describes, for each of the last three fiscal years,
oil, natural gas liquids (NGLs) and gas production for the Company, average
production costs and average sales prices.
<TABLE>
<CAPTION>
PRODUCTION AVERAGE SALES PRICE
---------------------------- AVG. -----------------------------------------
YEAR ENDED OIL NGLS GAS PRODUCTION OIL NGLS GAS
DECEMBER 31, (MBBLS) (MBBLS) (MMCF) COST PER BOE (PER BBL) (PER BBL) (PER MCF)
- ------------ ------ ------- ------- ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1993........................ 12,294 486 110,622 $ 4.10 $ 16.78 $ 12.35 $2.03
1992........................ 12,056 533 95,982 4.38 18.16 12.34 1.76
1991........................ 7,764 630 104,621 3.54 18.40 11.23 1.58
</TABLE>
ESTIMATED RESERVES AND RESERVE VALUE INFORMATION
The following information relating to estimated reserve quantities, reserve
values and discounted future net revenues is derived from, and qualified in its
entirety by reference to, the more complete reserve and revenue information and
assumptions included in the Company's financial statements under Item 8 below.
The Company's estimates of proved reserve quantities of its domestic properties
and certain international properties have been subject to review by Ryder Scott
Company Petroleum Engineers. The Company's estimates of proved reserve
quantities of its Western Australia properties held through Hadson Energy
Limited have been subject to review by Intera Information Technologies Inc.
There are numerous uncertainties inherent in estimating quantities of proved
reserves and projecting future rates of production and timing of development
expenditures. The following reserve information represents estimates only and
should not be construed as being exact. See Supplemental Oil and Gas Disclosures
under Item 8 below.
The following table sets forth the Company's estimated proved developed and
undeveloped reserves as of December 31, 1993, 1992 and 1991.
<TABLE>
<CAPTION>
OIL, NGLS AND
NATURAL GAS CONDENSATE
1993 (BCF) (MMBBLS)
------------------------------------------------- ----------- -------------
<S> <C> <C>
Developed........................................ 720.7 79.4
Undeveloped...................................... 127.5 10.3
----- ----
Total............................................ 848.2 89.7
===== ====
1992
-------------------------------------------------
Developed........................................ 585.4 73.1
Undeveloped...................................... 57.9 7.6
----- ----
Total............................................ 643.3 80.7
===== ====
1991
-------------------------------------------------
Developed........................................ 549.7 69.2
Undeveloped...................................... 52.3 10.6
----- ----
Total............................................ 602.0 79.8
===== ====
</TABLE>
10
<PAGE> 13
The following table sets forth the estimated future value of all proved
reserves of the Company, and proved developed reserves of the Company, as of
December 31, 1993, 1992 and 1991. 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 based on
current costs with no escalations.
<TABLE>
<CAPTION>
PRESENT VALUE OF
ESTIMATED
FUTURE NET REVENUES
BEFORE INCOME TAXES
ESTIMATED FUTURE (DISCOUNTED AT 10
NET REVENUES PERCENT)
------------------------- -------------------------
PROVED PROVED
DECEMBER 31, PROVED DEVELOPED PROVED DEVELOPED
- ------------ ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1993.............................. $2,074,505 $1,783,187 $1,359,117 $1,189,268
1992.............................. 1,747,113 1,581,853 1,062,558 987,497
1991.............................. 1,611,044 1,447,025 997,973 930,038
</TABLE>
At December 31, 1993, estimated future net revenues expected to be received
from all proved reserves of the Company, and from proved developed reserves of
the Company, were as follows:
<TABLE>
<CAPTION>
PROVED
DECEMBER 31, PROVED DEVELOPED
- ------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C>
1994...................................................... $ 321,507 $ 332,722
1995...................................................... 312,749 258,091
1996...................................................... 258,554 206,130
Thereafter................................................ 1,181,695 986,244
----------- -----------
Total..................................................... $ 2,074,505 $ 1,783,187
=========== ===========
</TABLE>
The Company believes that no major discovery or other favorable or adverse
event has occurred since December 31, 1993, which would cause a significant
change in the estimated proved reserves reported herein. The estimates above are
based on year-end pricing in accordance with the Securities and Exchange
Commission (Commission) guidelines and do not reflect current prices. Since
January 1, 1993, 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
Commission and the Energy Information Administration (EIA). The basis of
reporting reserves to the EIA for the Company's 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 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 Company's operations. The interests owned by the Company
may be subject to one or more royalty, overriding royalty and other outstanding
interests customary in the industry. The interests may additionally be subject
to burdens such as net profits interests, liens incident to operating agreements
and 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
Company's operations.
11
<PAGE> 14
ITEM 3. LEGAL PROCEEDINGS
The information set forth under the caption "Litigation" in Note 8 to the
Company's financial statements under Item 8 below is incorporated herein by
reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted for a vote of security holders during the fourth
quarter of 1993.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Apache common stock, par value $1.25 per share, is traded on the New York
Stock Exchange and the Chicago Stock Exchange under the symbol APA. The table
below provides certain information regarding Apache common stock for 1993 and
1992. Prices shown are from the New York Stock Exchange Composite Transactions
Reporting System.
<TABLE>
<CAPTION>
1993 1992
-------------------------- -------------------------
PRICE RANGE PRICE RANGE
-------------- DIVIDENDS ----------- DIVIDENDS
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
First Quarter............................... $26 1/4 $17 5/8 $0.07 $15 7/8 $ 12 $0.07
Second Quarter.............................. 30 1/4 24 3/8 0.07 18 1/8 13 7/8 0.07
Third Quarter............................... 33 1/2 26 3/8 0.07 22 1/8 15 1/2 0.07
Fourth Quarter.............................. 31 1/4 20 3/8 0.07 21 3/8 17 1/8 0.07
</TABLE>
The closing price per share of Apache common stock as reported on the New
York Stock Exchange Composite Transactions Reporting System for March 17, 1994,
was $26 1/8. At December 31, 1993, there were 61,085,414 shares of Apache common
stock outstanding, held by 10,970 shareholders of record and approximately
30,000 beneficial owners.
Each share of Apache common stock also represents one common stock purchase
right which, under certain circumstances, would entitle the holder to acquire
additional shares of common stock. See Note 5 to the Company's financial
statements under Item 8 below.
The Company has paid cash dividends on its common stock for 108 consecutive
quarters and intends to continue the payment of dividends at current levels,
although future dividend payments will depend upon the Company's level of
earnings, financial requirements and other relevant factors.
12
<PAGE> 15
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data of the Company and
its consolidated subsidiaries for each of the years in the five-year period
ended December 31, 1993, which information has been derived from the Company's
audited financial statements. This information should be read in connection with
and is qualified in its entirety by the more detailed information and financial
statements under Item 8 below.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1993(1) 1992 1991(2) 1990 1989
---------- ---------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Total revenues....................... $ 466,638 $ 454,300 $ 356,930 $273,410 $246,850
Net income........................... 37,334 47,776 34,615 40,297 22,122
Net income per common share.......... .70 1.02 .76 .90 .64
Cash dividends per common share...... .28 .28 .28 .28 .28
BALANCE SHEET DATA
Working capital (deficit)............ $ (62,450) $ (43,775) $ (55,023) $ 15,678 $ 24,585
Total assets......................... 1,592,407 1,218,704 1,209,291 829,634 764,368
Long-term debt....................... 453,009 454,373 490,988 194,781 195,622
Shareholders' equity................. 785,854 475,209 439,941 386,780 350,263
Common shares outstanding at end of
year............................... 61,085 46,936 46,855 44,694 43,949
</TABLE>
- ---------------
(1) Includes financial data for HERC after June 30, 1993, and for Hall-Houston
after July 31, 1993. See Note 1 to the Company's financial statements under
Item 8 below.
(2) Includes financial data for MW after June 30, 1991. See Note 1 to the
Company's financial statements under Item 8 below.
Reference is made to Item 7, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS," for a discussion of significant
acquisitions and to the Summary of Significant Accounting Policies and Notes 1
and 2 to the Company's financial statements under Item 8 below.
13
<PAGE> 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Apache's financial performance during 1993 is best understood in light of
the following factors:
GAIN FROM SALE IN PRIOR YEAR -- The Company's 1992 income reflects an $18.5
million after-tax gain on the sale of the Company's interest in NGC and $2.7
million attributable to the Company's equity in NGC's earnings.
NON-CASH CHARGES -- With a reduced probability of establishing commercial
operations on certain West African concessions, Apache took a $6.7 million
third-quarter write-down that reduced net income by $4.3 million, or $.08 per
share. Due to the third quarter enactment of tax legislation increasing the
federal corporate income tax rate, Apache also took a $3.5 million third-quarter
charge to income in restating deferred taxes as required under Statement of
Financial Accounting Standards No. 109. The one-time charge reduced net income
by $.07 per share.
COMMODITY PRICES -- As compared to 1992, the current year's performance
benefitted from generally higher natural gas prices but suffered from a steep
decline in oil prices during the fourth quarter. Although natural gas prices
remained volatile and continued to deviate from seasonal patterns, Apache's
average realized natural gas price for 1993 was up 15 percent over 1992.
Improved gas prices were significantly offset by a downturn in oil prices in the
fourth quarter, which caused Apache's 1993 average realized oil price to decline
to a five-year low of $16.78 per barrel.
PUBLIC STOCK OFFERING; DEBT CONVERSION -- In March 1993, the Company
received net proceeds of $131.8 million from its public offering of
approximately 5.8 million shares of Apache common stock, and applied proceeds to
repay all outstanding debt under its revolving bank credit facility. In
September 1993, holders converted approximately $150 million of Apache's
7 1/2-percent convertible subordinated debentures due 2000 into approximately
7.8 million shares of Apache common stock. These transactions increased the
weighted average shares of Apache common stock outstanding during the year by
6.6 million shares and reduced outstanding debt by $281.8 million, with a
corresponding reduction in interest expense. This debt reduction was offset,
however, by bank debt incurred to fund acquisitions during 1993.
ACQUISITIONS -- In 1993, Apache acquired HERC and substantially all of
Hall-Houston's producing properties in the Gulf of Mexico for an aggregate of
$211.7 million. Although the impact of these acquisitions on 1993 performance
was not as dramatic as the impact of the MW acquisition on 1992's performance,
the production, expenses and cash flow from the newly acquired properties
nonetheless contributed significantly to the year's outcome, combining to add
approximately $34 million to 1993 revenue. In addition, the Company's 1993
performance reflects a full 12 months of ownership of Apache's 93-percent
working interest in Matagorda Island Blocks 681 and 682 in the Gulf of Mexico
acquired from Shell Offshore Inc. during the fourth quarter of 1992.
RESULTS OF OPERATIONS
NET INCOME AND REVENUES
The Company reported net income for the year of $37.3 million, or $.70 per
share, a 22-percent decrease from 1992 earnings of $47.8 million, or $1.02 per
share. Significant factors contributing to the lower earnings were after-tax
charges to earnings of $7.8 million, or $.15 per share, taken in the third
quarter related to international impairments and changes in tax laws, the
decline in the Company's realized oil prices during 1993, and the gain
recognized during 1992 on the sale of NGC. Excluding only the gain on the 1992
NGC sale, the Company's 1993 earnings increased 28 percent over 1992.
Revenues for 1993 totaled $466.6 million, or three percent higher than a
year ago. Production revenues in 1993 totaled $437.3 million compared to $394.6
million in 1992. Oil and gas revenues were influenced by improved gas prices
over 1992, declining second-half oil prices, and the acquisition of HERC and the
Hall-
14
<PAGE> 17
Houston properties in the second half of the year. Revenues from international
operations increased 93 percent to $15.5 million with six months of Australian
production from the HERC acquisition.
Natural gas sales contributed $225 million to revenues, up 33 percent from
1992, the result of sustained higher prices and higher production during 1993.
During 1992, Apache's average realized gas price ranged from $1.17 per Mcf in
February, the lowest price in 13 years, to a high of $2.40 per Mcf in October.
Apache's average realized price for 1992 was $1.76 per Mcf. In 1993, prices
remained in the higher range established in the latter half of 1992. Apache's
average realized price for 1993 was $2.03 per Mcf, up 15 percent over the 1992
average, positively affecting 1993 gas sales by $30.4 million.
The impact of higher gas prices was augmented by higher gas production in
1993 as compared with 1992. Gas production for the year averaged 303.1 MMcf per
day, up 16 percent from 1992, positively affecting gas sales by $25.8 million.
This increase is principally the result of production from newly acquired
properties, the most significant of which were the offshore properties acquired
from Hall-Houston, the additional 93-percent working interest in Matagorda
Island Blocks 681 and 682 acquired in 1992, and the properties acquired in the
merger with HERC. Combined, these three acquisitions comprised 332 Bcfe of
proved reserves at year end and contributed 68 MMcf of gas per day to Apache's
1993 average daily production.
The impact of increased oil production was offset by lower oil prices in
1993. Oil production contributed $206.3 million to revenues during 1993, six
percent below Apache's record $218.9 million in oil sales in 1992. Average daily
oil production of approximately 33.7 Mbbls barrels of oil increased two percent
over the prior year, positively affecting oil sales by $4.3 million, as
acquisitions, continuing workover and recompletion operations, and new drilling
in the Permian Basin and along the Austin Chalk trend offset the effects of
natural depletion. The Company's average realized oil price of $16.78 per barrel
declined eight percent from 1992, negatively affecting oil sales by $16.9
million. Oil sales represented 47 percent of total oil and gas sales in 1993
compared to 55 percent of total oil and gas sales in 1992.
Revenues from the sale of natural gas liquids and sulfur declined 12
percent from 1992 to $6.0 million, a result of lower prices for natural gas
liquids and the sale of the Whitney Canyon gas processing plant in 1992. The
sale of natural gas liquids declined from 1.5 Mbbls per day in 1992 to 1.3 Mbbls
per day in 1993.
Revenues from gas gathering, processing and marketing were $25.9 million in
1993, down 10 percent from 1992. The decline primarily reflects the sale of
Apache's interest in a gas gathering system in Western Oklahoma in March 1993.
As a result, gross margins from gathering, processing and marketing were $4.9
million in 1993, a decline of 32 percent from 1992.
COSTS AND EXPENSES
Operating costs were up two percent in 1993 to $128.1 million, as a decline
in operating costs per barrel of oil equivalent was offset by the impact of
increased production. Operating costs include lifting costs, workover expense,
and applicable domestic or foreign production taxes. On an equivalent unit of
production basis, operating costs declined six percent in 1993 to $4.10 per boe,
down from $4.38 per boe in 1992. Apache's declining costs per boe reflect
increasing natural gas production and lower production costs associated with the
operation of gas-bearing properties as compared with oil-bearing properties.
Apache's operating costs were also reduced by refunds of well-control insurance
totaling $.7 million and production tax refunds totaling $1.8 million during
1993.
Depreciation, depletion and amortization (DD&A) expense rose 12 percent
year-over-year to $176.3 million due to increased sales of natural gas and
increased Australian production. Although Apache's domestic amortization rate of
38.7 percent of sales for 1993 was down slightly from 1992, declining oil prices
and the higher costs associated with newly acquired offshore properties, which
reflect shorter reserve lives and faster expected payouts, combined to increase
Apache's domestic amortization rate in the second half of 1993. Recurring
international DD&A increased as a result of substantially increased Australian
production.
International impairments, which rose to $23.2 million in 1993 from $12
million in 1992, included $6.7 million of the Company's investments in West
Africa which the Company wrote off in the third quarter of 1993 when it
recognized a reduced probability of establishing commercial operations on two of
Apache's
15
<PAGE> 18
concessions. The 1993 impairments also included provisions for Apache's
investment in the Java Sea (Indonesia) and Nanteau (France).
Administrative, selling and other costs were down five percent from those
incurred in 1992, despite the Company's acquisitions during 1993. The reduction
reflects the Company's sustained efforts to contain costs, the incremental
administrative costs incurred in the 1992 corporate relocation to Houston, and
the integration of MW. In 1993, Apache successfully assimilated the HERC and
Hall-Houston properties with minimal additions to its administrative staff.
Administrative cost reductions were partially offset, however, by expenses
associated with an employee benefit plan based on Apache common stock, which
increased in price by approximately 25 percent from year-end 1992 to year-end
1993.
Net financing costs declined 17 percent in 1993 despite the use of bank
debt to fund the HERC and Hall-Houston acquisitions. The decline is primarily
attributable to a decline of approximately 100 basis points in Apache's
effective interest rate in 1993 as compared with 1992, reflecting a general
decline in interest rates and the conversion of Apache's 7 1/2-percent
convertible subordinated debentures due 2000 into shares of Apache common stock
in September 1993. Interest expense also declined as a result of Apache's
repayment of bank debt from a portion of the $131.8 million in net proceeds of
its public offering of common stock in March 1993, the successful conversion of
approximately $150 million of its 7 1/2-percent convertible subordinated
debentures due 2000 and through the redemption of $7 million of 9-percent
convertible subordinated debentures due 2001. Debt reductions attributable to
the public offering and debt conversion in 1993 were offset by debt incurred in
connection with acquisitions. On December 31, 1993, Apache's outstanding debt
balance was $462 million, an increase of one percent from $455.5 million on
December 31, 1992.
PRIOR-YEAR COMPARATIVE INFORMATION
The Company's net income for 1992 increased 38 percent over 1991 to $47.8
million, or $1.02 per share. Revenues for 1992 totaled $454.3 million, or 27
percent higher than revenues for 1991. Production revenues for 1992 totaled
$394.6 million compared to $316.1 million in 1991. Oil and gas revenues in
1992 were influenced by strong second-half gas prices, a decrease in natural
gas production resulting from the disposition of largely gas-bearing properties
in 1991 and from curtailments in 1992, and the effect of a full year of oil
production from properties included in the MW acquisition.
Natural gas sales contributed $168.8 million to revenues in 1992, up two
percent from 1991, primarily the result of the surge in prices in the second
half of the year. For 1992, Apache's average realized gas price was $1.76 per
Mcf, up 11 percent over 1991, positively affecting 1992 revenues by $16.9
million.
Gas production for 1992 totaled 262.2 MMcf per day, down nine percent from
1991, negatively affecting 1992 revenues by $13.7 million. Production declined
for several reasons, the most significant of which was Apache's disposition of
approximately $187 million of largely gas-bearing properties during 1991 and
1992 following the MW acquisition. The net effect of Apache's compliance with
prorationing legislation enacted during 1992 accounted for an approximate
11-MMcf decrease in average daily gas production. Ordinary reserve depletion and
the voluntary curtailment of gas production in Oklahoma and the Gulf of Mexico
during the first quarter of 1992 due to low gas prices also reduced production.
Increased oil production contributed to a record $218.9 million in oil
sales during 1992, a 53-percent increase over 1991. Total oil production of 12.1
MMbbls increased 55 percent over the prior year due to the inclusion of a full
year's production volumes from the MW properties. The Company's average realized
oil price of $18.16 declined one percent from 1991.
Revenues from the sale of natural gas liquids and sulfur declined 11
percent from 1991 to $6.9 million in 1992, reflecting the sale of the Spindle
gas processing plant in late 1991 and the Whitney Canyon plant in 1992.
Apache's gross margin from gathering, processing and marketing, excluding
NGC, was $7.1 million in 1992, which was unchanged from 1991.
The major nonrecurring factor affecting 1992 revenues was Apache's mid-year
sale of its interest in NGC. The Company recognized a gain on the NGC sale of
$28.3 million, or $18.5 million after tax. Apache's
16
<PAGE> 19
investment in NGC, which was accounted for using the equity method, contributed
$2.7 million to Apache's 1992 net income prior to the sale and $8.2 million to
Apache's net income in 1991.
In July 1991, Apache completed its acquisition of MW for $511.4 million in
cash, the assumption of $4.1 million in net liabilities and the issuance of two
million shares of Apache common stock. At closing, MW had net proved reserves of
63 MMbbls of oil and 288 Bcf of gas. With the MW acquisition and subsequent
disposition of non-strategic properties, Apache effectively doubled its proved
reserves and increased the proportion of oil in its total reserves from 21
percent to 44 percent. Also in 1991, the Company accrued the cost of relocating
its corporate headquarters to Houston, Texas, resulting in a one-time charge
that reduced net income by $7.1 million. Included in other revenues in 1991 was
$5.6 million related to a favorable take-or-pay settlement.
Operating costs, up 37 percent to $125.3 million, reflected 12 months of
ownership of the MW properties. On an equivalent unit of production basis,
production costs and production taxes rose to $4.38 per boe, up from $3.54 per
boe in 1991, reflecting the higher costs associated with MW's predominantly
oil-bearing properties.
In 1992, DD&A expense rose 19 percent from the previous year to $157.5
million due to higher domestic oil and gas sales while the Company's
international impairments rose to $12 million. The increase in amortization
expense due to higher sales was mitigated, however, by the favorable impact of
the MW acquisition, the effect of which decreased the domestic amortization rate
on oil and gas production revenues from 40.8 percent in 1991 to 38.8 percent in
1992.
Administrative, selling and general costs were down 15 percent in 1992 from
those incurred in 1991, which included an $11.1 million pre-tax provision for
the relocation of the Company's headquarters. Excluding the impact of the 1991
relocation provision, the Company's administrative, selling and other costs for
1992 increased 16 percent over 1991, reflecting the cost of administering MW's
properties for a full year, the continued cost of integrating the MW properties,
and the incurrence of $2.7 million in additional relocation expenses in 1992.
Although Apache reduced its outstanding debt from $495.7 million at
year-end 1991 to $455.5 million at year-end 1992, interest expense rose 15
percent in 1992 as compared with 1991, which included only six months of
interest on the MW acquisition debt. Debt reduction during the year and lower
interest rates contributed to a 22-percent decrease in average monthly interest
expense in 1992 as compared to the second half of 1991. Amortization of loan
costs nearly doubled in 1992, reflecting costs of the MW debt and the issuance
of additional senior debt in 1992.
CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
CAPITAL COMMITMENTS
Apache's primary needs for cash are for exploration, development and
acquisition of oil and gas properties, repayment of principal and interest on
outstanding debt, and payment of dividends. The Company generally funds its
exploration and development activities through internally generated cash flows
and budgets its capital expenditures based upon projected cash flows. Apache
routinely adjusts its capital expenditures in response to changes in oil and gas
prices and corresponding changes in cash flow.
Expenditures for exploration and development increased to $218.9 million in
1993 from $136.7 million in 1992. Apache completed 213 producing wells out of
274 wells drilled during the year compared with 209 wells drilled in 1992, of
which 155 were completed as producers. Expenditures for exploration and
development in 1994, including workover and recompletion operations, are
anticipated to be $240 million, including $25 million relating to international
operations, and will be reviewed quarterly in light of oil and gas prices.
Cash expenditures for acquisitions during 1993 were $260.9 million,
compared to $63 million in 1992, which included the $57.4-million acquisition of
an additional 93-percent working interest in Matagorda Island Blocks 681 and 682
from Shell Offshore Inc. in November 1992. The cost of acquisitions, including
the value of the shares issued and liabilities added through the merger of HERC,
totaled $324.6 million in 1993. Apache's most significant transactions during
1993 were its acquisitions of oil and gas properties from Hall-
17
<PAGE> 20
Houston for $113.7 million in cash and the acquisition of HERC. Apache acquired
all of the outstanding stock of HERC for approximately $98 million, which
included the issuance of 307,977 shares of Apache common stock (305,003 shares
in 1993) and cash payments to HERC stockholders. Net cash outlays attributable
to the acquisition of HERC totaled $70.7 million in 1993. Apache also acquired
more than $76.5 million of other properties during 1993, primarily representing
purchases of additional working interests in existing Apache properties,
including the purchase of Key Production Company's interest in certain
properties held by Apache Operating Partnership L.P. prior to its dissolution
during the first quarter of 1993.
Other capital expenditures for 1993 include the purchase of NGC's interest
in a gas gathering system in western Oklahoma which was sold in March 1993, in a
transaction described under "Capital Resources" below.
Funds for the 1993 acquisitions were obtained principally from borrowings
under the Company's revolving bank credit agreement. The Company aggressively
pursues acquisition opportunities as part of its reserve growth strategy. The
amount and timing of future funding requirements for acquisitions are dependent
upon several factors, including the market for oil and gas properties, and
cannot be predicted for the upcoming year.
At December 31, 1993, Apache had outstanding $240.0 million under its
revolving bank credit facility, $41.6 million in additional bank debt
consolidated through the HERC acquisition, and an aggregate of $180.4 million in
principal amount of other long-term debt, comprised principally of notes and
debentures maturing in the years 1997 through 2002. The Company's overall debt
increased $6.6 million from December 31, 1992, as borrowing for acquisitions
offset the impact of Apache's 1993 equity offering and debenture conversion. In
1993, Apache made cash payments on long-term debt totaling $162 million, of
which $1.1 million was scheduled under these debt obligations. Interest payments
on the Company's outstanding debt obligations during 1994 are projected (using
weighted average balances for floating rate obligations) to be approximately $27
million, while scheduled principal payments for 1994 currently total $9 million.
Dividends paid during 1993 totaled $14.9 million, up 14 percent from 1992,
primarily due to the issuance of approximately 5.8 million shares of Apache
common stock in connection with the Company's March 1993 equity offering and the
issuance of approximately 7.8 million shares upon conversion of its outstanding
7 1/2-percent convertible subordinated debentures due 2000. The Company's
dividend policy currently provides for the payment of regular quarterly
dividends at the rate of $.28 per share annually. Although no change in the
dividend policy is contemplated for 1994, the declaration and amount of future
dividends is dependent upon the Company's cash requirements, applicable debt
covenants and other factors deemed relevant by the Board of Directors.
CAPITAL RESOURCES
The Company's primary capital resources are net cash provided by operating
activities, proceeds from financing activities and proceeds from sales of
non-strategic assets.
Net cash provided by operating activities during 1993 was $225.1 million,
up $30.7 million from 1992. The 16-percent improvement in cash flows primarily
reflects increased gas production, higher gas prices and reduced interest costs.
Future cash flows will be influenced by product prices and production volumes
and are not presently ascertainable.
In March 1993, Apache and NGC completed the sale of their respective
interests in a gathering system in western Oklahoma. Apache received gross cash
proceeds of approximately $32.2 million in the transaction, of which $16.4
million was attributable to NGC's interest in the system.
Also in March 1993, Apache completed the public offering of approximately
5.8 million shares of Apache common stock for net proceeds of $131.8 million. In
April 1993, Apache applied the proceeds to repay all outstanding debt under its
revolving bank credit facility. In October 1993, the borrowing base under
Apache's revolving bank credit facility was increased to $400 million. As of
December 31, 1993, the Company had reborrowed $240 million under the facility,
largely to fund the purchase of the Hall-Houston properties and the HERC
acquisition.
18
<PAGE> 21
The availability of funds under Apache's $400-million revolving bank credit
facility is subject to the maintenance of certain financial covenants by the
Company and to periodic redetermination by its bank group based upon the
Company's estimated oil and gas reserve values and forecast rates of production.
The Company has complied with its financial covenants at all times since the
inception of the revolving credit facility in July 1991. The facility matures on
April 30, 1996, and, with the lenders' consent, may be extended in one-year
increments or converted into a term loan.
At December 31, 1993, HERC and its wholly-owned subsidiary, Hadson Energy
Limited (HEL), each had a credit facility with Bank of Montreal. At year end,
credit available under the HERC facility was $26 million, of which $19.6 million
was outstanding. The HEL facility had a total of $22 million outstanding at
year-end 1993 with repayment to be made in quarterly installments of $2 million
each plus interest until repaid in full in July 1996.
In September 1993, Apache completed the conversion of its 7 1/2-percent
convertible subordinated debentures due 2000, resulting in the issuance of
approximately 7.8 million shares of Apache common stock. Primarily as a result
of the conversion and Apache's March 1993 equity offering, Apache's debt as a
percentage of capital declined to 37 percent at December 31, 1993, despite
increased bank debt incurred for 1993 acquisitions.
In May 1992, Apache issued 9.25-percent notes due 2002 in the principal
amount of $100 million. Proceeds from the offering were used to reduce bank
debt, pay off the 9.5-percent convertible debentures due 1996 and for general
corporate purposes. In December 1992, the Company privately placed 3.93-percent
convertible notes due 1997 in the principal amount of $75 million. The
3.93-percent notes are not redeemable before maturity and are convertible into
Apache common stock at the option of the holders at any time prior to maturity
at a conversion price of $27.00 per share. Proceeds from the sale of the
3.93-percent notes were used to repay bank debt.
LIQUIDITY
The Company had $17.1 million in cash and cash equivalents on hand at
December 31, 1993, down from $26.1 million at the end of 1992. The Company's
ratio of current assets to current liabilities at year end of .7:1 was unchanged
from year-end 1992.
Management believes that cash on hand at year end, net cash generated from
operations and unused available borrowing capacity under the revolving credit
facility will be adequate to meet future liquidity needs for at least the next
two fiscal years, including satisfying the Company's financial obligations and
funding exploration and development operations and routine acquisitions.
FUTURE TRENDS
Apache intends to continue increasing production and reserves through
drilling and property acquisitions. Apache is considering increasing its current
borrowing capacity to enhance its ability to pursue additional growth
opportunities. Although the Company's future performance is difficult to
predict, the following factors are likely to impact its operating results and
financial condition in the future.
CONTINUING VOLATILITY OF PRODUCT PRICES
In 1993, spot market natural gas prices remained volatile and continued to
behave independently of historical seasonal patterns, although in a relatively
higher range of average monthly prices from approximately $1.79 per Mcf in
February to $2.26 per Mcf in December. Spot market oil prices, which are
especially vulnerable to complex and unpredictable political and economic
forces, also remained volatile in 1993, as Apache's average realized price
fluctuated from $18.97 per barrel in April to $12.88 per barrel in December. The
recent failure of OPEC to reduce production quotas and the addition of more than
one million barrels of oil per day of North Sea crude production suggest that
oil prices will not improve in the near term. Management believes that, absent a
comprehensive U.S. energy policy, oil prices will continue to fluctuate in
response to changes in the policies of OPEC, events in the Middle East and
events in certain non-OPEC
19
<PAGE> 22
countries. Management also believes that gas prices will remain volatile and may
not necessarily conform to historical cycles based on heating seasons.
ENVIRONMENTAL REGULATION
The Company operates under numerous state and federal laws regulating the
discharge of materials into, and the protection of, the environment. In the
ordinary course of business, Apache conducts an ongoing review of the effects of
these various environmental laws on its business and operations. The estimated
cost of continued compliance with current environmental laws, based upon the
information currently available, is not material to the Company's financial
position or results of operations. It is impossible to determine whether and to
what extent Apache's future performance may be affected by environmental laws;
however, management does not believe that such laws will have a material adverse
effect on the Company's financial position or results of operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial information required
to be filed under this item are presented on pages F-1 through F-30 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.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Information About Nominees
for Election as Directors," "Continuing Directors," "Executive Officers of the
Company," and "Voting Securities and Principal Holders" in the Company's proxy
statement relating to the Company's 1994 annual meeting of shareholders (the
"Proxy Statement") is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the captions "Summary Compensation Table,"
"Option/SAR Grants Table," "Options/SAR Exercises and Year-End Value Table,"
"Employment Contracts and Termination of Employment and Change-in-Control
Arrangements," and "Director Compensation" in the Proxy Statement is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Voting Securities and
Principal Holders" in the Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Transactions with Officers and
Directors" in the Proxy Statement is incorporated herein by reference.
20
<PAGE> 23
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) DOCUMENTS INCLUDED IN THIS REPORT:
1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of independent public accountants....................................... F-1
Report of management........................................................... F-2
Statement of consolidated income for each of the three years in the period
ended December 31, 1993....................................................... F-3
Statement of consolidated cash flows for each of the three years in the period
ended December 31, 1993....................................................... F-4
Consolidated balance sheet as of December 31, 1993 and 1992.................... F-5
Statement of consolidated shareholders' equity for each of the three years in
the period ended December 31, 1993............................................ F-7
Summary of significant accounting policies..................................... F-8
Notes to consolidated financial statements..................................... F-10
Supplemental oil and gas disclosures........................................... F-21
Supplemental quarterly financial data.......................................... F-27
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
Schedules V, VI and X are included as pages F-28 through F-30 of this
Form 10-K. Schedules I, II, III, IV, VII, VIII, IX, XI, XII and XIII
have been omitted because they are either not required, not applicable
or the information required to be presented is included in the Company's
financial statements and related notes.
21
<PAGE> 24
3. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
2.1 -- Stock Purchase Agreement, dated July 1, 1991, between the Registrant
and Amoco Production Company (incorporated by reference to Exhibit
10.1 to Registrant's Current Report on Form 8-K, dated July 1, 1991,
Commission File No. 1-4300, filed on July 19, 1991).
2.2 -- Form of Acquisition Agreement between Apache Corporation, 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 Registrant's Registration Statement on
Form S-4, Registration No. 33-67954, filed on September 29, 1993).
2.3 -- Purchase and Sale Agreement between Hall-Houston Oil Company, as
seller, and Registrant, as buyer, dated as of June 2, 1993
(incorporated by reference to Exhibit 10.1 to Registrant's Current
Report on Form 8-K, dated August 31, 1993, Commission File No.
1-4300, filed on September 7, 1993).
2.4 -- Purchase and Sale Agreement between Hall-Houston Oil Company, as
seller, and Registrant, as buyer, dated as of August 13, 1993
(incorporated by reference to Exhibit 10.2 to Registrant's Current
Report on Form 8-K, dated August 31, 1993, Commission File No.
1-4300, filed on September 7, 1993).
2.5 -- Matagorda Island 681 Field Purchase and Sale Agreement with Option to
Exchange, dated November 24, 1992, between Shell Offshore Inc., SOI
Royalties Inc., and Registrant (incorporated by reference to Exhibit
10.7 to Apache Offshore Investment Partnership's Annual Report on
Form 10-K for the year ended December 31, 1992, Commission File No.
0-13546, filed March 31, 1993).
*3.1 -- Restated Certificate of Incorporation of the Registrant, dated
December 1, 1993, as filed with the Secretary of State of Delaware on
December 16, 1993.
3.2 -- Bylaws of the Registrant, dated as of December 9, 1992 (incorporated
by reference to Exhibit 3.3 of Registrant's Annual Report on Form
10-K for the year ended December 31, 1992, Commission file 1-4300,
filed on March 10, 1993).
4.1 -- Form of common stock certificate (incorporated by reference to the
Registrant's Registration Statement on Form S-3, Registration No.
33-5097, filed on April 23, 1986).
4.2 -- Rights Agreement, dated as of January 10, 1986, between the
Registrant and First Trust Company, Inc., rights agent, relating to
the declaration of Rights to the Registrant's common stockholders of
record on January 24, 1986 (incorporated by reference to Exhibit 4.9
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1985, Commission File No. 1-4300, filed on March 31,
1986).
10.1 -- Amended and Restated Credit Agreement, dated April 15, 1992, among
Registrant, the lenders named therein and The First National Bank of
Chicago and Chemical Bank, as agents (incorporated by reference to
Exhibit 10.01 to Registrant's Registration Statement on Form S-3,
Registration No. 33-47363, filed on April 21, 1992).
10.2 -- Third Amendment to Amended and Restated Credit Agreement, dated April
30, 1993, among Registrant, the lenders named therein and The First
National Bank of Chicago and Chemical Bank, as agents (incorporated
by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1993, Commission File No. 1-4300,
filed August 16, 1993).
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
*10.3 -- Fourth Amendment to Amended and Restated Credit Agreement, dated July
13, 1993, among Registrant, the lenders named therein and The First
National Bank of Chicago and Chemical Bank, as agents.
10.4 -- Credit Agreement, dated as of July 24, 1992, between Registrant, the
lenders named therein and The First National Bank of Chicago, as
agent (incorporated by reference to Exhibit 10.1 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1992,
Commission File No. 1-4300, filed on August 14, 1992).
10.5 -- Credit Agreement, dated as of December 18, 1990, by and between
Hadson Energy Resources Corporation, the lenders named therein and
Bank of Montreal, as agent (incorporated by reference to Exhibit 10.1
to Hadson Energy Resources Corporation's Annual Report on Form 10-K
for the year ended December 31, 1990, Commission File No. 0-18236,
filed March 11, 1991).
*10.6 -- Second Amendment to Credit Agreement, dated as of December 22, 1993,
by and between Hadson Energy Resources Corporation, the lenders named
therein and Bank of Montreal, as agent.
10.7 -- Acceptance Agreement, dated as of June 6, 1991, by and between Hadson
Energy Limited, the lenders named therein and Bank of Montreal, as
agent (incorporated by reference to Hadson Energy Resources
Corporation's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1991, Commission File No. 0-18236, filed August 13, 1991).
*10.8 -- Second Amendment to Acceptance Agreement, dated as of December 22,
1993, by and between Hadson Energy Limited, the lenders named therein
and Bank of Montreal, as agent.
10.9 -- Stock Purchase Agreement, dated July 1, 1991, between the Registrant
and Amoco Production Company (incorporated by reference to Exhibit
10.1 to Registrant's Current Report on Form 8-K, dated July 1, 1991,
Commission File No. 1-4300, filed on July 19, 1991).
10.10 -- Oil and Gas Hedging Agreement, dated as of July 1, 1991, between the
Registrant and Amoco Production Company (incorporated by reference to
Exhibit 10.4 to Registrant's Current Report on Form 8-K, dated July
1, 1991, Commission File No. 1-4300, filed on July 19, 1991).
10.11 -- Geotechnical Data Agreement and License, dated July 1, 1991, between
the Registrant and Amoco Production Company (incorporated by
reference to Exhibit 10.5 to Registrant's Current Report on Form 8-K,
dated July 1, 1991, Commission File No. 1-4300, filed on July 19,
1991).
+10.12 -- 1982 Employee Stock Option Plan, as updated in January 1987 to
conform to the Tax Reform Act of 1986 (incorporated by reference to
Exhibit 10.7 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990, Commission File No. 1-4300, filed on March
27, 1991).
+10.13 -- Apache Corporation Corporate Administrative Group Incentive Plan,
effective as of January 1, 1989 (incorporated by reference to Exhibit
10.8 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990, Commission File No. 1-4300, filed on March 27,
1991).
*+10.14 -- First Amendment, dated October 22, 1990, to the Apache Corporation
Corporate Administrative Group Incentive Plan.
</TABLE>
23
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<S> <C>
+10.15 -- Apache Corporation 401(k) Retirement/Savings Plan, dated November 16,
1989, amended July 9, 1992, effective January 1, 1989 (incorporated
by reference to Exhibit 10.16 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992, Commission File No.
1-4300, filed on March 10, 1993).
*+10.16 -- Amendment to the Apache Corporation 401(k) Retirement/Savings Plan,
dated December 31, 1993.
+10.17 -- Apache International, Inc. Common Stock Award Plan, dated February
12, 1990 (incorporated by reference to Exhibit 10.13 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1989,
Commission File No. 1-4300, filed on April 2, 1990).
+10.18 -- Apache Corporation 1990 Phantom Stock Appreciation Plan, dated as of
September 28, 1990 (incorporated by reference to Exhibit 10.17 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1990, Commission File No. 1-4300, filed on March 27, 1991).
+10.19 -- Apache Corporation 1990 Stock Incentive Plan, dated as of September
28, 1990 (incorporated by reference to Exhibit 10.18 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1990,
Commission File No. 1-4300, filed on March 27, 1991).
+10.20 -- Amendment No. 1 to the Apache Corporation 1990 Stock Incentive Plan,
dated as of July 17, 1992 (incorporated by reference to Exhibit 4.4
to Registrant's Registration Statement on Form S-8, Registration No.
33-53442, filed on October 19, 1992).
+10.21 -- Apache Corporation Income Continuance Plan, including Amendment Nos.
1 and 2, restated as of February 24, 1988 (incorporated by reference
to Exhibit 10.19 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, Commission File No. 1-4300, filed on
March 27, 1991).
+10.22 -- Apache Corporation 1986 Phantom Stock Appreciation Plan (incorporated
by reference to Exhibit 10.20 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1990, Commission File No.
1-4300, filed on March 27, 1991).
+10.23 -- Apache Corporation Directors' Deferred Compensation Plan
(incorporated by reference to Exhibit 10.21 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1990, Commission
File No. 1-4300, filed on March 27, 1991).
+10.24 -- Apache Corporation Phantom Stock Appreciation Plan for Directors,
effective as of May 4, 1989 (incorporated by reference to Exhibit
10.22 to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990, Commission File No. 1-4300, filed on March 27,
1991).
+10.25 -- Apache Corporation Outside Directors' Retirement Plan, effective
December 15, 1992 (incorporated by reference to Exhibit 10.25 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1992, Commission File No. 1-4300, filed on March 10, 1993).
*+10.26 -- Apache Corporation Equity Compensation Plan for Non-Employee
Directors, adopted February 9, 1994, and form of Restricted Stock
Award Agreement.
+10.27 -- Amended and Restated Employment Agreement, dated December 5, 1990,
between the Registrant and Raymond Plank (incorporated by reference
to Exhibit 10.9 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, Commission File No. 1-4300, filed on
March 27, 1991).
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
+10.28 -- Amended and Restated Employment Agreement, dated December 20, 1990,
between the Registrant and John A. Kocur (incorporated by reference
to Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, Commission File No. 1-4300, filed on
March 27, 1991).
+10.29 -- Employment Agreement, dated March 20, 1991, between the Registrant
and William J. Johnson (incorporated by reference to Exhibit 10.15 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1992, Commission File No. 1-4300, filed on March 10, 1993).
*+10.30 -- Consulting Agreement, dated November 1, 1993, between the Registrant
and John A. Kocur.
*+10.31 -- Consulting Agreement, dated November 10, 1993, between the Registrant
and George J. Morgenthaler.
*+10.32 -- Consulting Agreement, dated March 15, 1994, between the Registrant
and Bijan Mossavar-Rahmani.
*11.1 -- Statement regarding computation of earnings per share of the
Registrant's common stock for the year ended December 31, 1993.
*21.1 -- Subsidiaries of the Registrant.
*23.1 -- Consent of Arthur Andersen & Co.
*23.2 -- Consent of Ryder Scott Company Petroleum Engineers.
*23.3 -- Consent of Intera Information Technologies Inc.
</TABLE>
- ---------------
* Filed herewith.
+ Management contracts or compensatory plans or arrangements required to be
filed herewith pursuant to Item 14 hereof.
Note: Debt instruments of the Registrant defining the rights of long-term debt
holders in principal amounts not exceeding 10 percent of the Registrant's
consolidated assets have been omitted and will be provided to the
Commission upon request.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fiscal quarter ended December
31, 1993.
25
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
APACHE CORPORATION
By: /s/ RAYMOND PLANK
-------------------------------
Raymond Plank,
Date: March 21, 1994 Chairman and Chief Executive Officer
</TABLE>
POWER OF ATTORNEY
The officers and directors of Apache Corporation, whose signatures appear
below, hereby constitute and appoint William J. Johnson, Mark A. Jackson and
Clyde E. McKenzie, and each of them (with full power to each of them to act
alone), the true and lawful attorney-in-fact to sign and execute, on behalf of
the undersigned, any amendment(s) to this report and each of the undersigned
does hereby ratify and confirm that all said attorneys shall do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.*
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -----------------
<S> <C> <C>
/s/ RAYMOND PLANK Chairman and Chief Executive March 21, 1994
- --------------------------------------------- Officer (Principal Executive
Raymond Plank Officer)
/s/ MARK A. JACKSON Vice President and Chief March 21, 1994
- --------------------------------------------- Accounting Officer
Mark A. Jackson (Principal Accounting
Officer)
/s/ FREDERICK M. BOHEN Director March 21, 1994
- ---------------------------------------------
Frederick M. Bohen
/s/ VIRGIL B. DAY Director March 21, 1994
- ---------------------------------------------
Virgil B. Day
/s/ RANDOLPH M. FERLIC Director March 21, 1994
- ---------------------------------------------
Randolph M. Ferlic
/s/ EUGENE C. FIEDOREK Director March 21, 1994
- ---------------------------------------------
Eugene C. Fiedorek
/s/ W. BROOKS FIELDS Director March 21, 1994
- ---------------------------------------------
W. Brooks Fields
/s/ ROBERT V. GISSELBECK Director March 21, 1994
- ---------------------------------------------
Robert V. Gisselbeck
/s/ STANLEY K. HATHAWAY Director March 21, 1994
- --------------------------------------------
Stanley K. Hathaway
/s/ WILLIAM J. JOHNSON Director March 21, 1994
- --------------------------------------------
William J. Johnson
/s/ JOHN A. KOCUR Director March 21, 1994
- --------------------------------------------
John A. Kocur
/s/ JAY A. PRECOURT Director March 21, 1994
- --------------------------------------------
Jay A. Precourt
/s/ JOSEPH A. RICE Director March 21, 1994
- --------------------------------------------
Joseph A. Rice
</TABLE>
* Apache Corporation does not have a Principal Financial Officer.
<PAGE> 29
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Shareholders of Apache Corporation:
We have audited the accompanying consolidated balance sheet of Apache
Corporation (a Delaware corporation) and Subsidiaries as of December 31, 1993
and 1992, and the related statements of consolidated income, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1993. These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Apache
Corporation and Subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in Item
14(a)2 are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic consolidated financial
statements. These schedules have been subjected to the auditing procedures
applied in our audits of the basic consolidated financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial statements
taken as a whole.
ARTHUR ANDERSEN & CO.
Houston, Texas
February 8, 1994
F-1
<PAGE> 30
REPORT OF MANAGEMENT
The financial statements and related financial information of Apache
Corporation and Subsidiaries were prepared by and are the responsibility of
management. The statements have been prepared in conformity with generally
accepted accounting principles and include amounts that are based on
management's best estimates and judgments.
Management maintains and places reliance on systems of internal control
designed to provide reasonable assurance, weighing the costs with the benefits
sought, that all transactions are properly recorded in the Company's books and
records, that policies and procedures are adhered to and that assets are
safeguarded. The systems of internal controls are supported by written policies
and guidelines, internal audits and the selection and training of qualified
personnel.
The consolidated financial statements have been audited by Arthur Andersen
& Co., independent public accountants. Their audits included developing an
overall understanding of the Company's accounting systems, procedures and
internal controls and conducting tests and other auditing procedures sufficient
to support their opinion on the fairness of the consolidated financial
statements.
The Board of Directors exercises its oversight responsibility for the
financial statements through its Audit Committee, composed solely of directors
who are not employed by Apache. The Audit Committee meets periodically with
management, internal auditors and the independent public accountants to ensure
that they are successfully completing designated responsibilities. The internal
auditors and independent public accountants have open access to the Audit
Committee to discuss auditing and financial reporting issues.
Raymond Plank
Chairman of the Board
and Chief Executive Officer
Mark A. Jackson
Vice President and Chief Accounting Officer
F-2
<PAGE> 31
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUES:
Oil and gas production revenues........................... $437,342 $394,552 $316,062
Gathering, processing and marketing revenues.............. 25,862 28,594 25,970
Equity in income of affiliates............................ 624 2,695 8,642
Gain on sale of investment in affiliate................... -- 28,345 --
Other revenues............................................ 2,810 114 6,256
-------- -------- --------
466,638 454,300 356,930
-------- -------- --------
OPERATING EXPENSES:
Depreciation, depletion and amortization.................. 176,335 157,508 132,230
International impairments................................. 23,200 12,000 3,600
Operating costs........................................... 128,113 125,337 91,514
Gathering, processing and marketing costs................. 21,010 21,452 18,909
Administrative, selling and other......................... 33,193 35,010 41,207
Financing costs:
Interest expense....................................... 28,102 35,314 30,737
Amortization of deferred loan costs.................... 3,896 3,888 1,988
Capitalized interest................................... (4,764) (6,035) (4,967)
Interest income........................................ (352) (652) (2,449)
-------- -------- --------
408,733 383,822 312,769
-------- -------- --------
INCOME BEFORE INCOME TAXES.................................. 57,905 70,478 44,161
Provision for income taxes................................ 20,571 22,702 9,546
-------- -------- --------
NET INCOME.................................................. $ 37,334 $ 47,776 $ 34,615
-------- -------- --------
-------- -------- --------
NET INCOME PER COMMON SHARE................................. $ .70 $ 1.02 $ .76
-------- -------- --------
-------- -------- --------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING.................. 53,534 46,904 45,777
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying summary of significant accounting policies and notes
to consolidated financial statements are integral parts of this statement.
F-3
<PAGE> 32
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................. $ 37,334 $ 47,776 $ 34,615
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization............ 176,335 157,508 132,230
International impairments........................... 23,200 12,000 3,600
Amortization of deferred loan costs................. 3,896 3,888 1,988
Provision for deferred income taxes................. 20,571 14,034 4,234
--------- --------- ---------
261,336 235,206 176,667
Gain on sale of investment in affiliate................ -- (28,345) --
Cash distributions in excess of (less than) earnings of
affiliates.......................................... (662) 2,650 (2,435)
Changes in operating assets and liabilities, net of
effects of acquisitions:
(Increase) decrease in receivables.................. (9,590) 356 (12,596)
(Increase) decrease in advances to oil and
gas ventures and other............................ 137 (3,598) 2,881
(Increase) decrease in deferred charges and other... (3,904) (1,415) (710)
Increase (decrease) in payables..................... (4,152) 2,187 (32,328)
Increase (decrease) in accrued operating costs...... (8,177) (8,660) 13,370
Increase (decrease) in deferred credits and
noncurrent liabilities............................ (9,915) (3,983) 11,735
--------- --------- ---------
Net cash provided by operating activities...... 225,073 194,398 156,584
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Exploration and development expenditures............... (218,930) (136,691) (111,566)
Acquisition of oil and gas properties.................. (190,181) (62,955) (568,345)
Noncash portion of net oil and gas property
additions........................................... 7,104 2,434 28,240
MW working capital and accrued acquisition costs....... -- 74 9,068
Purchase of HERC stock, net of cash acquired........... (70,692) -- --
Proceeds from sale of oil and gas properties........... 3,255 37,167 157,018
Future operating costs for royalty interest sold....... -- -- (17,000)
Proceeds from sale of gas gathering system............. 32,201 -- --
Other capital expenditures, net........................ (30,471) (7,495) (3,747)
Proceeds from sale of investment in affiliate.......... -- 50,700 --
Other, net............................................. 1,145 (1,247) 2,675
--------- --------- ---------
Net cash used by investing activities.......... (466,569) (118,013) (503,657)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings................................... 275,424 266,378 468,005
Payments on long-term debt............................. (162,000) (306,565) (172,275)
Dividends paid......................................... (14,919) (13,130) (12,671)
Proceeds from issuance of common stock................. 134,223 630 1,383
Payments to acquire treasury stock..................... (25) (3) (15)
Costs of debt and equity transactions.................. (270) (3,971) (16,136)
--------- --------- ---------
Net cash provided (used) by financing
activities................................... 232,433 (56,661) 268,291
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................................... (9,063) 19,724 (78,782)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR................................... 26,127 6,403 85,185
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR............... $ 17,064 $ 26,127 $ 6,403
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying summary of significant accounting policies and notes
to consolidated financial statements are integral parts of this statement.
F-4
<PAGE> 33
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1992
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................ $ 17,064 $ 26,127
Receivables...................................................... 91,840 75,777
Inventories...................................................... 7,152 6,202
Advances to oil and gas ventures and other....................... 6,884 5,749
---------- ----------
122,940 113,855
---------- ----------
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full cost accounting:
Proved properties............................................. 2,516,801 1,996,590
Unproved properties and properties under development,
not being amortized......................................... 105,597 85,532
Gas gathering, transmission and processing facilities............ 25,809 23,357
Other............................................................ 36,938 24,045
---------- ----------
2,685,145 2,129,524
Less: Accumulated depreciation, depletion and amortization....... (1,248,685) (1,057,651)
---------- ----------
1,436,460 1,071,873
OTHER ASSETS:
Investments in affiliates........................................ 5,677 5,053
Deferred charges and other....................................... 27,330 27,923
---------- ----------
33,007 32,976
---------- ----------
$1,592,407 $1,218,704
---------- ----------
---------- ----------
</TABLE>
The accompanying summary of significant accounting policies and notes
to consolidated financial statements are integral parts of this statement.
F-5
<PAGE> 34
APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1993 1992
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt............................. $ 9,017 $ 1,103
Current portion of advances on gas contracts..................... -- 20,142
Accounts payable................................................. 118,447 82,064
Accrued operating expense........................................ 17,371 16,446
Accrued income taxes............................................. 6,048 5,158
Accrued interest................................................. 2,010 9,011
Accrued exploration and development.............................. 15,083 7,979
Accrued compensation and benefits................................ 9,170 7,405
Other accrued expenses........................................... 8,244 8,322
---------- ----------
185,390 157,630
---------- ----------
LONG-TERM DEBT..................................................... 453,009 454,373
---------- ----------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes..................................................... 128,554 83,220
Advances on gas contracts........................................ 3,914 3,039
Future operating costs for royalty interest sold................. 10,389 13,222
Other............................................................ 25,297 32,011
---------- ----------
168,154 131,492
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY:
Common stock, $1.25 par, 215,000,000 shares authorized,
62,334,241 and 48,304,154 shares issued, respectively......... 77,918 60,380
Paid-in capital.................................................. 540,155 269,296
Retained earnings................................................ 182,195 160,763
Treasury stock, at cost, 1,248,827 and 1,367,914 shares,
respectively.................................................. (14,414) (15,230)
---------- ----------
785,854 475,209
---------- ----------
$1,592,407 $1,218,704
---------- ----------
---------- ----------
</TABLE>
The accompanying summary of significant accounting policies and notes
to consolidated financial statements are integral parts of this statement.
F-6
<PAGE> 35
APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON PAID-IN RETAINED TREASURY SHAREHOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
------- -------- -------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990......... $57,727 $241,272 $104,329 $(16,548) $ 386,780
Net income....................... -- -- 34,615 -- 34,615
Dividends ($.28 per common
share)........................ -- -- (12,822) -- (12,822)
Common shares issued............. 2,576 27,945 -- -- 30,521
Treasury shares issued........... -- (251) -- 1,113 862
Treasury shares purchased........ -- -- -- (15) (15)
------- -------- -------- -------- -------------
BALANCE, DECEMBER 31, 1991......... 60,303 268,966 126,122 (15,450) 439,941
Net income....................... -- -- 47,776 -- 47,776
Dividends ($.28 per common
share)........................ -- -- (13,135) -- (13,135)
Common shares issued............. 77 382 -- -- 459
Treasury shares issued........... -- (52) -- 223 171
Treasury shares purchased........ -- -- -- (3) (3)
------- -------- -------- -------- -------------
BALANCE, DECEMBER 31, 1992......... 60,380 269,296 160,763 (15,230) 475,209
Net income....................... -- -- 37,334 -- 37,334
Dividends ($.28 per common
share)........................ -- -- (15,902) -- (15,902)
Common shares issued............. 17,538 270,859 -- -- 288,397
Treasury shares issued........... -- -- -- 841 841
Treasury shares purchased........ -- -- -- (25) (25)
------- -------- -------- -------- -------------
BALANCE, DECEMBER 31, 1993......... $77,918 $540,155 $182,195 $(14,414) $ 785,854
------- -------- -------- -------- -------------
------- -------- -------- -------- -------------
</TABLE>
The accompanying summary of significant accounting policies and notes
to consolidated financial statements are integral parts of this statement.
F-7
<PAGE> 36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Apache Corporation (Apache or the Company) and its subsidiaries after
elimination of intercompany balances and transactions. The Company's interests
in oil and gas ventures and partnerships are proportionately consolidated.
Investments in incorporated affiliates in which Apache owns less than a
50-percent interest are accounted for using the equity method.
INVENTORIES
Inventories consist principally of tubular goods and production equipment
stated at the lower of weighted average cost or market.
PROPERTY AND EQUIPMENT
The Company uses the full cost method of accounting for its investment in
oil and gas properties. Under this method, the Company capitalizes all
acquisition, exploration and development costs incurred for the purpose of
finding oil and gas reserves, including salaries, benefits and other internal
costs directly attributable to these activities. Apache capitalized $25.4
million, $24 million and $24.9 million of internal costs in 1993, 1992 and 1991,
respectively. Interest costs related to development projects in progress for an
extended period are also capitalized to oil and gas properties. Costs associated
with production and general corporate activities are expensed in the period
incurred. Unless significant reserves are involved, proceeds from the sale of
oil and gas properties are accounted for as reductions to capitalized costs and
gains or losses are not recognized.
Apache computes the provision for depreciation, depletion and amortization
(DD&A) of oil and gas properties on a quarterly basis using the future gross
revenue method. The quarterly provision is calculated on a country-by-country
basis by multiplying the quarter's oil and gas revenues by an overall rate which
is determined by dividing the unamortized cost of proved oil and gas properties
by the total estimated future oil and gas revenues from proved reserves. The
amortizable base includes estimated dismantlement, restoration and abandonment
costs, net of estimated salvage values. These costs are generally estimated by
engineers employed by Apache.
Apache limits, on a country-by-country basis, the capitalized costs of
proved oil and gas properties, net of accumulated DD&A, to the estimated future
net cash flows from proved oil and gas reserves, net of related tax effects,
discounted at 10 percent. If capitalized costs exceed this limit, the excess is
charged to DD&A expense. The Company has not recorded any write downs of
capitalized costs in any of the periods presented.
The costs of certain unevaluated domestic and foreign leasehold acreage and
wells in the process of being drilled are not being amortized. Costs not being
amortized are periodically assessed for possible impairments or reductions in
value. If a reduction in value has occurred, costs being amortized are increased
or a charge is made against earnings for those international operations where a
reserve base is not yet established.
Buildings, equipment, gas gathering, transmission and processing facilities
are depreciated on a straight-line basis over the estimated useful lives of the
assets which range from three to 20 years. Accumulated depreciation for these
assets totaled $17.2 million and $19.9 million at December 31, 1993 and 1992,
respectively.
ACCOUNTS PAYABLE
Included in accounts payable at December 31, 1993 and 1992, are liabilities
of approximately $38.6 million and $27.5 million, respectively, representing the
amount by which checks issued but not presented to the Company's banks for
collection exceeded balances in bank accounts.
F-8
<PAGE> 37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
ADVANCES ON GAS CONTRACTS
Advances represent payments received from purchasers of natural gas under
provisions of take-or-pay contracts. Such advances will be recognized as income
if gas production, under the terms of the contracts, is applied against the
advances. In the event advances are not reduced by gas production, the advances
will be repaid under the terms of the contracts.
REVENUE RECOGNITION
Apache uses the sales method of accounting for natural gas revenues. Under
this method, revenues are recognized based on actual volumes of gas sold to
purchasers. The volumes of gas sold may differ from the volumes to which Apache
is entitled based on its interests in the properties. Differences between
volumes sold and volumes based on entitlements create gas imbalances which are
generally reflected as adjustments to reported gas reserves and future cash
flows. Adjustments for gas imbalances totaled less than three percent of
Apache's proved gas reserves at December 31, 1993. Revenue is deferred and a
liability is recorded for those properties where the estimated remaining
reserves will not be sufficient to enable the underproduced owner to recoup
their entitled share through production.
HEDGING ACTIVITIES
The Company periodically may buy and sell commodity derivative contracts in
order to either fix or support oil and gas prices at targeted levels and to
minimize the impact of price fluctuations. Gains or losses on these hedging
activities are recognized in revenues for the periods production was hedged.
Estimates of future liabilities and receivables applicable to oil and gas
commodity hedges are reflected in future cash flows from proved reserves with
such estimates based on prices in effect as of the date of the reserve report.
The Company also purchases interest rate caps and enters into interest rate
swap transactions. Gains or losses on these activities are recognized in
interest expense in the period hedged by the agreements.
INCOME TAXES
The Company provides deferred income taxes for all temporary differences
between financial and income tax reporting. Effective January 1, 1993, the
Company implemented the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." Under the liability
method specified by SFAS No. 109, deferred taxes are determined based on the
estimated future tax effect of differences between the financial statement and
tax bases of assets and liabilities given the provisions of enacted tax laws.
The adoption of SFAS No. 109 did not have a material effect on the accompanying
financial statements.
FOREIGN CURRENCY TRANSLATION
The U.S. dollar is considered the functional currency for each of the
Company's international operations. Translation gains or losses are recognized
in current net income and were not material in any of the periods presented.
INCOME PER COMMON SHARE
Income per common share amounts are based on the weighted average number of
common shares outstanding. The effects of common equivalent shares, which would
include shares from the assumed conversion of the 3.93-percent notes, were
immaterial or were not dilutive for all of the periods presented. Furthermore,
fully diluted earnings per share, assuming conversion of certain of the
convertible debentures, was not significantly different than primary earnings
per share for all periods presented.
STATEMENT OF CONSOLIDATED CASH FLOWS
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. These
investments are carried at cost which approximates market.
F-9
<PAGE> 38
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACQUISITIONS AND DIVESTITURES
In 1993, Apache purchased the stock of Hadson Energy Resources Corporation
(HERC) for approximately $98 million through a series of privately negotiated
transactions and a merger offer approved by a majority of HERC stockholders. In
July 1993, Apache completed the purchase of 4.2 million shares of HERC's
outstanding common stock, or approximately 68 percent of the HERC common stock
then outstanding, for $59.2 million. The Company agreed to pay an additional
$1.00 per share ($4.2 million) to the selling stockholders if the Company
increased its ownership in HERC to 80 percent or more. Pursuant to a merger
agreement approved by HERC stockholders on November 12, 1993, HERC stockholders
other than Apache could elect to receive, for each share of HERC common stock,
either $15 in cash or .574 share of Apache common stock. Through the end of
1993, Apache issued 305,003 shares of Apache common stock valued at $7.8 million
and paid a total of $76.1 million to former stockholders of HERC as
consideration for the merger. At December 31, 1993, Apache reflected a liability
of $13.9 million accrued for HERC shares which had not yet been surrendered to
Apache.
Also in 1993, Apache entered into two agreements to purchase 104 Bcfe of
proved reserves from Hall-Houston Oil Company (Hall-Houston) for an aggregate
consideration of $113.7 million. In June 1993, Apache closed the first of the
two transactions, paying $29.3 million for Hall-Houston's interest in Mustang
Island Blocks 787 and 805. The second transaction, encompassing substantially
all of Hall-Houston's producing properties in the Gulf of Mexico for an
additional $84.4 million, was completed in August 1993. The acquisitions
included interests in 63 producing fields and 12 fields under development or
awaiting pipeline connections.
Effective November 1, 1992, Apache completed the acquisition of Shell
Offshore Inc.'s 93-percent working interest in Matagorda Island Blocks 681 and
682 in the Gulf of Mexico. Apache paid $57.4 million for properties, which
included 14 miles of gathering lines and approximately 11,500 net acres of
leases.
Effective May 1, 1992, Apache sold its 31.67-percent general partnership
interest in Natural Gas Clearinghouse (NGC) for $50.7 million. The Company
recognized a gain on the sale of approximately $28.3 million or $18.5 million
after tax.
On July 1, 1991, Apache completed its acquisition of MW Petroleum
Corporation (MW), a wholly owned subsidiary of Amoco Production Company (Amoco).
Apache paid $511.4 million in cash, assumed net liabilities of approximately
$4.1 million and issued two million shares of Apache common stock valued at $30
million. At the time of closing, MW had estimated net proved reserves of
approximately 63 million barrels of oil and 288 Bcf of natural gas.
As part of a plan to reduce debt from the MW acquisition, Apache sold
approximately 1,700 oil and gas properties in 1991 for $157 million. Apache
recorded $17 million of these proceeds as a deferred credit on its balance sheet
for future operating costs associated with gas production relating to the sale
of an overriding royalty interest.
All of the above acquisitions have been accounted for using the purchase
method of accounting and have been included in the financial statements of
Apache since the dates of acquisition. The following unaudited pro forma summary
of the Company's consolidated results of operations for 1993 was prepared as if
the Hall-Houston and HERC acquisitions occurred as of January 1, 1993. The pro
forma data for 1992 assumes that
F-10
<PAGE> 39
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Hall-Houston and HERC acquisitions and the NGC sale occurred as of or prior
to January 1, 1992. The pro forma data is based on numerous assumptions and is
not necessarily indicative of future operations.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-----------------------
(UNAUDITED) 1993 1992
----------- -------- --------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Oil and gas production revenues.............................. $481,754 $472,914
Total revenues............................................... 515,071 507,502
Net income................................................... 36,970 27,016
Income per share............................................. $ .69 $ .57
Weighted average shares outstanding.......................... 53,812 47,212
</TABLE>
2. INVESTMENTS IN AFFILIATES
At December 31, 1993, Apache owned approximately 20 percent of the
outstanding common stock of Key Production Company (Key). Until May 1, 1992,
Apache also owned 31.67 percent of NGC. (See Note 1.) Apache's investments in
affiliates at December 31, 1993 and 1992 are presented below.
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
------ ------
(IN THOUSANDS)
<S> <C> <C>
Investments:
Key Production Company............................................... $5,677 $5,053
</TABLE>
The Company recorded dividends and distributions totaling $3.8 million and
$5 million from affiliates in 1992 and 1991, respectively. No dividends were
received in 1993. Earnings from affiliates for each of the last three years is
presented below.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
---- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Income from affiliates:
Key Production Company....................................... $624 $ 4 $ 486
Natural Gas Clearinghouse.................................... -- 2,691 8,156
---- ------ ------
$624 $2,695 $8,642
---- ------ ------
---- ------ ------
</TABLE>
F-11
<PAGE> 40
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. DEBT
LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1993 1992
-------- --------
<S> <C> <C>
(IN THOUSANDS)
Senior debt:
Apache bank facility............................................... $240,000 $115,000
9.25-percent notes due 2002, net of discount....................... 99,688 99,665
3.93-percent convertible notes due 1997............................ 75,000 75,000
-------- --------
414,688 289,665
-------- --------
Subordinated debt:
7 1/2-percent convertible debentures due 2000...................... -- 150,000
9-percent convertible debentures due 2001, net of discount......... -- 6,431
-------- --------
-- 156,431
-------- --------
Other obligations:
HERC bank facility................................................. 19,550 --
HEL acceptance facility............................................ 22,000 --
Share of offshore partnership financing............................ 4,636 7,195
1986 limited recourse notes........................................ 1,115 1,650
Other notes payable................................................ 37 535
-------- --------
47,338 9,380
-------- --------
Total debt........................................................... 462,026 455,476
Less: Current maturities............................................. (9,017) (1,103)
-------- --------
Long-term debt....................................................... $453,009 $454,373
-------- --------
-------- --------
</TABLE>
The Company's debt at December 31, 1993, was structured in two parts:
(1) Senior financing consisting of the Apache bank facility, the
9.25-percent notes and the 3.93-percent convertible notes;
(2) Credit facilities assumed in the HERC acquisition and other
amortizing obligations primarily related to partnership
activities.
Apache's senior arrangements are subject to an intercreditor agreement
under which each obligation is secured by the MW common stock held by the
Company. If the administrative agent under the bank facility elects to access
this collateral, lenders under these three obligations would participate prorata
in the proceeds of any liquidation. There is no other collateral.
The Apache Bank Facility is a $400-million revolving agreement funded by a
group of banks. The maximum amount available is subject to periodic
redetermination of a borrowing base, determined solely at the discretion of the
banks, predicated upon the Company's oil and gas reserve values and forecast
rate of production. As of December 31, 1993, the borrowing base was $400 million
and the principal amount outstanding was $240 million. The next redetermination
of the borrowing base is scheduled for April 1994. This bank facility matures on
April 30, 1996, and the agreement provides for perpetual one-year extensions as
requested year-by-year by the Company and subject to the approval of the banks.
Interest on amounts borrowed is charged at the First National Bank of Chicago's
base rate or at London Interbank Offered Rates (LIBOR) plus .75 percent, at the
Company's option. The Company pays a .25-percent fee on the average unused
portion of the borrowing base in return for the banks' obligation to maintain
the availability of those funds.
F-12
<PAGE> 41
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The 9.25-percent Notes were issued in May 1992 and will mature in June
2002. The notes are not redeemable prior to maturity.
The 3.93-percent Convertible Notes were issued in December 1992. They
mature in November 1997 and are not redeemable prior to maturity. They are
convertible into Apache common stock at $27 per share, subject to adjustment
under certain circumstances.
The indentures for the two note issues impose substantially similar
obligations on the Company including limits on the Company's ability to incur
debt secured by certain liens and on its ability to enter into certain sale and
leaseback transactions. Upon certain changes in control of the Company, both
issues are subject to mandatory repurchase (or conversion at the option of the
noteholders in the case of the 3.93-percent notes).
In addition, financial covenants of the bank facility and the 3.93-percent
notes require the Company to maintain minimum consolidated tangible net worth of
$555 million, as of December 31, 1993, which will be adjusted quarterly for
subsequent earnings and securities transactions and to maintain a ratio of (i)
earnings before interest expense, state and federal taxes and depreciation to
(ii) consolidated interest expense of not less than 3.7:1 for the banks and
3.5:1 for the lenders under the 3.93-percent notes. The banks also require the
Company to maintain a ratio of (i) consolidated current assets, plus the unused
portion of the facility to (ii) consolidated current liabilities, excluding
current maturities of the facility, of not less than 1:1.
In conjunction with the HERC acquisition, Apache assumed two bank credit
agreements outstanding at the time it acquired a majority interest in HERC.
Recourse under these credit facilities is limited to assets acquired from HERC.
The HERC Bank Facility is a $60 million revolving credit agreement with
Bank of Montreal (BMO). The agreement established a credit facility comprised of
a three-year revolving credit loan which matures October 31, 1995, and a term
loan equal to the balance outstanding on the revolving credit loan at maturity.
The term loan is repayable in five equal quarterly installments commencing
January 31, 1996, with any remaining balance due at maturity on January 31,
1997. Amounts available for borrowing are limited based on certain formulas
related to oil and gas reserves. Interest is payable at prime or certain other
fixed rate options (LIBOR plus one percent or certificate of deposit rate plus
1.25 percent). The interest rate in effect at December 31, 1993, was 4.875
percent. The Company pays a commitment fee of .375 percent per annum on the
unused portion of the borrowing base. At December 31, 1993, the amount available
for borrowing under the agreement was $26 million, of which $19.6 million was
outstanding.
The HEL Acceptance Facility is a separate credit facility with BMO which
provided funding for the construction of an offshore gas gathering project by
Hadson Energy Limited (HEL), a wholly-owned subsidiary of HERC, and the
refinancing of an existing HEL credit facility. A total of $32 million was
advanced under the agreement, of which $22 million was outstanding at December
31, 1993. The loan is repayable in 16 equal quarterly installments which
commenced October 12, 1992, and bears interest at the discount rate for U.S.
dollar bankers' acceptances plus a 1.3-percent stamping fee. The stamping fee
changes to 1.125 percent effective January 1, 1994.
The HERC agreements contain certain covenants which restrict, with respect
to HERC, the amount of additional borrowings, the payment of dividends, and the
purchase and disposition of assets. The facility is secured by the stock of
certain wholly-owned subsidiaries of HERC.
The 7 1/2 percent Convertible Subordinated Debentures, issued in 1990 and
scheduled to mature in 2000, were converted to equity in September 1993 with the
issuance of approximately 7.8 million shares of Apache common stock at $19.18
per share.
The 9-percent Convertible Subordinated Debentures, scheduled to mature in
2001, were redeemed by Apache July 15, 1993, for $7 million.
F-13
<PAGE> 42
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In July 1992, the Company arranged a $35 million banking facility on behalf
of the Apache Offshore Investment Partnership. At December 31, 1993, $17.4
million was outstanding on the facility, of which Apache's share was $4.6
million. Availability under this facility is reduced quarterly by $1.5 million.
To finance property acquisitions made during 1986, Apache (through a former
partnership) placed certain Limited Recourse Notes due 2031. These notes are
secured by interests in the acquired properties and bear interest at eight
percent.
The Company has entered into various Interest Rate Swap Agreements. On
December 31, 1993, the Company's weighted average interest rate on its total
long-term debt was 5.2 percent. When all existing interest rate swaps are
factored in, the effective rate at December 31, 1993, was five percent. An open
interest rate swap agreement against the $100 million 9.25-percent notes was
terminated in February 1994.
As of December 31, 1993, the Company had approximately $14 million of
unamortized costs associated with its various debt obligations. These costs are
reflected as deferred charges and other in the accompanying balance sheet and
are being amortized over the life of the related debt.
AGGREGATE MATURITIES OF DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1994............................................. $ 9,017
1995............................................. 27,653
1996............................................. 246,243
1997............................................. 76,602
1998............................................. 1,602
Thereafter....................................... 100,909
--------------
$462,026
--------------
--------------
</TABLE>
4. INCOME TAXES
As discussed in the Summary of Significant Accounting Policies, effective
January 1, 1993, the Company adopted SFAS No. 109 "Accounting for Income Taxes."
The cumulative effect of adopting this statement was not material to the
accompanying financial statements.
The total provision for income taxes consists of the following:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
(IN THOUSANDS)
Current taxes:
Federal................................. $ -- $ 8,949 $ 9,438
State................................... -- 856 85
Foreign................................. -- 110 377
Deferred taxes............................ 20,571 14,034 4,234
------- ------- -------
$20,571 $23,949 $14,134
------- ------- -------
------- ------- -------
</TABLE>
The 1993 provision for income taxes includes a $3.5 million charge for the
change in federal statutory rates from 34 percent to 35 percent enacted under
the Omnibus Budget Reconciliation Act of 1993 (OBRA).
The 1992 and 1991 provision for income taxes included approximately $1.2
million and $4.6 million, respectively, for Apache's tax provision related to
its share of NGC's partnership income. This provision was reflected as a
reduction of equity in income of affiliates in the Statement of Consolidated
Income.
F-14
<PAGE> 43
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the federal statutory income tax rates to the effective
rate is as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory income tax rate.......................................... 35.0% 34.0% 34.0%
State income tax, less federal benefit............................. 1.9 2.0 1.9
Tax benefit of state net operating loss carryforwards not
previously recognized............................................ -- -- (2.1)
Reversal of prior period timing differences at rates in excess of
current statutory rates.......................................... -- (1.8) (3.4)
Utilization of federal income tax credits.......................... (3.7) -- --
Increase in corporate income tax rate provided for in OBRA......... 6.0 -- --
All other, net..................................................... (3.3) (.8) (1.4)
---- ---- ----
35.9% 33.4% 29.0%
---- ---- ----
---- ---- ----
</TABLE>
Deferred taxes are determined based on the estimated future tax effects of
differences between the financial statement and tax bases of assets and
liabilities using the provisions of enacted tax laws. The net deferred tax
liability as of December 31, 1993, is comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1993
-------------
(IN
THOUSANDS)
<S> <C>
Deferred tax assets:
Accrued expenses...................................................... $ (8,696)
Deferred income....................................................... (3,287)
Deferred compensation................................................. (2,380)
Net operating loss carryforwards...................................... (18,392)
Alternative minimum tax credits....................................... (20,734)
Other................................................................. (4,238)
-------------
Total deferred tax assets.......................................... $ (57,727)
-------------
Deferred tax liabilities:
Depreciation, depletion and amortization.............................. $ 181,981
Other................................................................. 4,300
-------------
Total deferred tax liabilities..................................... $ 186,281
-------------
Deferred income tax (asset) liability................................... $ 128,554
-------------
-------------
</TABLE>
No valuation allowance has been recorded against deferred tax assets at
December 31, 1993.
U.S. deferred taxes have not been provided on foreign earnings totaling $29
million which are permanently reinvested abroad.
At December 31, 1993, the Company has U.S. federal net operating loss
carryforwards of $30 million and statutory depletion carryforwards of $6.6
million available to reduce future U.S. federal taxable income. The net
operating loss carryforwards will expire unless otherwise utilized, beginning in
1995. The statutory depletion may be carried forward indefinitely. The Company
has alternative minimum tax (AMT) credit carryforwards of $20.7 million. AMT
credits can be carried forward indefinitely and may only be used to reduce
regular tax liabilities in excess of AMT liabilities. The Company also has
foreign net operating loss carryforwards of $10.7 million and foreign capital
loss carryforwards of $2.4 million which may be carried forward indefinitely.
These may be utilized to reduce future foreign taxable income.
F-15
<PAGE> 44
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. CAPITAL STOCK
COMMON STOCK OUTSTANDING
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Balance, beginning of year................. 46,936,240 46,854,794 44,694,410
Treasury shares issued (acquired), net..... 119,087 19,791 99,084
Shares issued:
Acquisition of MW........................ -- -- 2,000,000
Public offering.......................... 5,795,000 -- --
Acquisition of HERC...................... 305,003 -- --
Conversion of 7 1/2-percent debentures... 7,816,453 -- --
Stock options............................ 113,631 61,655 61,300
--------- --------- ---------
Balance, end of year....................... 61,085,414 46,936,240 46,854,794
--------- --------- ---------
--------- --------- ---------
</TABLE>
Public Offering -- In March 1993, Apache completed the public offering of
approximately 5.8 million shares of Apache common stock for net proceeds of
$131.8 million.
Stock Option Plans -- At December 31, 1993, common shares totaling
2,031,650 were reserved for issuance under stock option plans for officers and
key employees. The outstanding options expire at various dates through 2003 and
are exercisable at prices ranging from $7.31 to $26.62 with an aggregate
exercise price of $17 million. The following table summarizes the changes in
stock options for the year and the number of common shares available for grant
at year end.
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Outstanding, beginning of year................ 846,550 666,650 507,250
Exercised ($7.313 to $19.625)................. (115,200) (94,050) (161,300)
Granted ($13.375 to $26.625).................. 264,600 326,700 361,000
Cancelled or expired ($13.75 to $26.625)...... (86,075) (52,750) (40,300)
-------- -------- --------
Outstanding, end of year...................... 909,875 846,550 666,650
-------- -------- --------
-------- -------- --------
Available for grant, end of year.............. 1,121,775 1,300,300 84,050
-------- -------- --------
-------- -------- --------
</TABLE>
Rights to Purchase Common Stock -- In 1986, the Company declared a dividend
of one right to purchase one share of common stock at $50 per share (subject to
adjustment) on each outstanding share of common stock (the Rights). The Rights
are exercisable only if certain persons or groups acquire 20 percent or more of
the common stock or commence a tender offer for 30 percent or more of the common
stock. If the Company engages in certain business combinations or a 20-percent
stockholder engages in certain transactions with the Company, the Rights become
exercisable for Apache common stock or common stock of the corporation acquiring
the Company (as the case may be) at 50 percent of the then-market price. Any
Rights that are or were beneficially owned by a person who has acquired 20
percent or more of the common stock and who engages in certain transactions or
realizes the benefits of certain transactions with the Company will become void.
The Company may redeem the Rights at a specified price at any time until 10
business days after public announcement that a person has acquired 20 percent or
more of the outstanding shares of common stock. The Rights will expire on
January 31, 1996, unless earlier redeemed by the Company. Unless the Rights have
been previously redeemed, all shares of common stock issued by the Company will
include Rights.
Preferred Stock -- The Company has authorized five million shares of no par
preferred stock. None are outstanding.
F-16
<PAGE> 45
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. NONCASH INVESTING AND FINANCING ACTIVITIES
A summary of noncash investing and financing activities is presented below.
In 1993, Apache purchased HERC for approximately $98 million in cash and
Apache common stock. The accompanying financial statements included the
following attributable to the HERC acquisition:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Value of properties acquired, including gathering facilities....... $159,996
Common stock issued (305,003 shares)............................... (7,777)
Liability for HERC shares not surrendered as of December 31,
1993............................................................. (13,906)
Cash paid, net of cash acquired.................................... (70,692)
--------
Net HERC liabilities added through consolidation................. $ 67,621
========
</TABLE>
In September 1993, Apache called for the redemption of its 7 1/2-percent
convertible subordinated debentures due 2000. Following receipt of the notice of
redemption, nearly all holders of the debentures elected to convert the
principal amount of their debentures into shares of Apache common stock. Holders
of less than one-tenth of one percent of the debentures elected to receive cash
($.1 million).
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Long-term debt converted into common stock......................... $149,900
Unamortized debt issue costs charged to equity..................... (2,686)
--------
Increase to shareholders' equity (common stock issued, 7.8 million
shares).......................................................... $147,214
========
</TABLE>
On July 1, 1991, Apache completed the acquisition of MW for cash and Apache
common stock. Net liabilities assumed and the value of properties acquired are
subject to adjustments as specified in the stock purchase agreement.
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Value of properties acquired....................................... $545,515
Common stock issued (two million shares)........................... (30,000)
Cash paid.......................................................... (511,373)
--------
Net liabilities assumed............................................ $ 4,142
========
</TABLE>
Cost incurred to complete the MW transaction and capitalized as part of the
acquisition totaled $13.1 million, of which $8.2 million had been paid in cash
and $4.9 million was accrued at December 31, 1991.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1993 1992 1991
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid (received) during the year for:
Interest, net of amounts capitalized........................ $30,379 $27,373 $22,933
Income taxes, net of refunds................................ (780) 19,642 4,216
</TABLE>
F-17
<PAGE> 46
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. FINANCIAL INSTRUMENTS
In accordance with SFAS No. 107, the table below sets forth the estimated
fair value of the Company's significant financial instruments.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
-----------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
-------- ----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Bank debt.................................................... $281,550 $281,550
9.25-percent notes due 2002.................................. 99,688 100,311
3.93-percent convertible notes due 1997...................... 75,000 87,323
</TABLE>
The fair value of the 9.25-percent notes was based on the quoted market
price for that issue. The fair value of the 3.93-percent notes was estimated
based on quotes obtained from private investment firms. The difference between
the carrying amount and the fair value of the Company's other debt obligations
was not significant.
The fair value of the Amoco agreement discussed in Note 8 was not readily
determinable.
8. COMMITMENTS AND CONTINGENCIES
Investment in Program Operations -- Prior to 1989, the Company organized
numerous oil and gas limited partnerships. At December 31, 1993, Apache was
contingently liable for $12.8 million of bank financing arranged by the Company
on behalf of the Apache Offshore Investment Partnership (See Note 3).
As compensation for its services as general partner and operator, the
Company shares in oil and gas revenues, receives a management fee in accordance
with formulas described in each limited partnership agreement, and is reimbursed
for administrative, exploration and production expenses incurred on behalf of
the partnerships. These reimbursements ($.6 million, $4.8 million and $6 million
in the years 1993, 1992 and 1991, respectively) have been netted against
operating expenses in the accompanying financial statements.
Litigation -- The Company is involved in litigation and is subject to
governmental and regulatory controls arising in the ordinary course of business.
It is the opinion of the Company's management that all claims and litigation
involving the Company are not likely to have a material adverse effect on its
financial position or results of operations.
Environmental -- Apache, as an owner and operator of oil and gas
properties, is subject to various federal, state, local and foreign country laws
and regulations relating to discharge of materials into the environment. These
laws and regulations may, among other things, impose liability on the lessee
under an oil and gas lease for the cost of pollution clean-up resulting from
operations, subject the lessee to liability for pollution damages, require
suspension or cessation of operations in affected areas and impose restrictions
on the injection of liquids into subsurface aquifers that may contaminate ground
water. Apache maintains insurance coverages which it believes are customary in
the industry, although it is not fully insured against all environmental risks.
The Company is not aware of any environmental claims existing as of December 31,
1993, which would have a material impact on its financial position or results of
operations.
Hedging -- In connection with the MW purchase in mid-1991, the Company and
Amoco entered into a hedging agreement. Under the terms of this agreement,
Apache would receive support payments in the event oil prices fell below
specified reference prices for any year during the two-year period ended June
30, 1993, and Amoco will receive payments in the event oil prices rose above
specified reference prices for any year during the eight-year period ending June
30, 1999, or in the event gas prices exceeded specified reference prices for any
year during the five-year period ending June 30, 1996.
F-18
<PAGE> 47
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Oil price sharing payments due Amoco for the contract years ending June 30,
1994 through June 30, 1999, would be based on per barrel oil prices starting at
$24.75 and increasing to $33.13, while annual oil volumes would decline from
approximately 3.3 million barrels to 1.4 million barrels over the remaining
term. Gas price sharing payments would be based on gas volumes starting from
approximately 13.4 Bcf for the contract year ended June 30, 1994, and declining
to 10.5 Bcf in 1996, while the referenced gas price would increase from $2.18
per Mcf in 1994 to $2.68 per Mcf in the final year of the gas agreement. In the
event price sharing payments are due to Amoco, the volumes listed above would be
doubled until Amoco recovers its net payments to Apache ($5.8 million through
the contract year ended June 30, 1993) plus interest.
International Commitments -- The Company, through its subsidiaries, has
acquired or has been conditionally or unconditionally granted exploration rights
in Australia, The Congo, Egypt and Indonesia. In order to comply with the
contracts and agreements granting these rights, the Company, through Apache
International, Inc., expects to expend approximately $15.8 million through 1997.
Concentration of Credit Risk -- The proved gas reserves in the Carnarvon
Basin of Western Australia acquired in the HERC acquisition are dedicated for
sale to the State Energy Commission of Western Australia (SECWA) pursuant to a
long-term, take-or-pay contract. If for some reason the SECWA contract were
terminated, the Company might not be able to find other markets for the gas
produced from these fields. Although the Company considers such an occurrence
highly unlikely, the loss of the SECWA contract might force the Company to
write-down the value of these fields.
Retirement and Deferred Compensation Plans -- The Company provides a 401(k)
retirement/savings plan and a non-qualified retirement/savings plan for
employees. These plans allow participating employees to elect to contribute up
to 10 percent of their salaries, with Apache making matching contributions up to
a maximum of six percent of each employee's salary. In addition, the Company
annually contributes a percentage of each participating employee's compensation,
as defined, to the plan. Vesting in the Company's contributions occurs at the
rate of 20 percent per year. Total expenses under these plans were $5 million,
$4.2 million and $3.8 million for 1993, 1992 and 1991, respectively.
Gas Settlement Contracts -- In March 1991, Apache agreed to modify the
terms of certain contracts for the sale of natural gas and repay interest-free
advances earlier than contractually obligated in exchange for a non-refundable
cash payment, of which Apache's share was $5.6 million. Under the terms of the
contract settlement, the Company repaid $20.1 million of advances in January
1993. Advances received from purchasers under provisions of take-or-pay
contracts, if not recouped from production, are scheduled to be repaid in 1995.
Apache's share of outstanding take-or-pay advances totaled $3.9 million at
December 31, 1993.
Lease Commitments -- The Company has leases for office space with varying
expiration dates through 2007. Net rental expense was $4.6 million, $5.7 million
and $4.1 million for 1993, 1992 and 1991, respectively.
As of December 31, 1993, minimum rental commitments under long-term
operating leases are as follows:
<TABLE>
<CAPTION>
NET
MINIMUM
RENTAL SUBLEASE RENTAL
COMMITMENTS RENTALS COMMITMENTS
----------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
1994................................................ $ 8,024 $ (2,090) $ 5,934
1995................................................ 6,138 (1,311) 4,827
1996................................................ 5,907 (1,156) 4,751
1997................................................ 4,009 (482) 3,527
1998................................................ 3,705 -- 3,705
Thereafter.......................................... 37,635 -- 37,635
----------- -------- -----------
$65,418 $ (5,039) $60,379
----------- -------- -----------
----------- -------- -----------
</TABLE>
F-19
<PAGE> 48
APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. CUSTOMER INFORMATION
NGC has been the sole purchaser of Apache's spot market gas production
since April 1990. Sales to NGC accounted for 36 percent, 27 percent and 36
percent of the Company's oil and gas revenues in 1993, 1992 and 1991,
respectively. Sales to Amoco represented 11 percent, 27 percent and 17 percent
of the Company's 1993, 1992 and 1991 oil and gas revenues, respectively.
The Company's revenues are derived principally from uncollateralized sales
to customers in the oil and gas industry; therefore, customers may be similarly
affected by changes in economic and other conditions within the industry. Apache
has not experienced significant credit losses on such sales.
F-20
<PAGE> 49
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DISCLOSURES
(UNAUDITED)
Oil and Gas Operations -- The following table sets forth revenue and direct
cost information relating to the Company's oil and gas exploration and
production activities. Apache has no long-term supply or purchase agreements
with governments or authorities under which it acts as producer.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
UNITED STATES
Oil and gas revenues....................................... $421,845 $386,533 $311,487
-------- -------- --------
Operating costs:
Depreciation, depletion and amortization................. 163,285 149,909 127,156
Lease operating.......................................... 102,830 99,934 73,163
Production taxes......................................... 21,218 23,803 17,652
Income tax............................................... 50,035 39,045 30,312
-------- -------- --------
337,368 312,691 248,283
-------- -------- --------
Results of operations...................................... $ 84,477 $ 73,842 $ 63,204
-------- -------- --------
-------- -------- --------
Amortization rate.......................................... 38.7% 38.8% 40.8%
-------- -------- --------
-------- -------- --------
FOREIGN
Oil and gas revenues....................................... $ 15,497 $ 8,019 $ 4,575
-------- -------- --------
Operating costs:
Depreciation, depletion and amortization................. 7,214 3,883 1,992
Impairments.............................................. 23,200 12,000 3,600
Lease operating.......................................... 3,456 1,600 699
Production taxes......................................... 609 -- --
Income tax (benefit)..................................... (6,264) (3,181) (446)
-------- -------- --------
28,215 14,302 5,845
-------- -------- --------
Results of operations...................................... $(12,718) $ (6,283) $ (1,270)
-------- -------- --------
-------- -------- --------
Amortization rate-recurring................................ 46.6% 48.7% 43.1%
-------- -------- --------
-------- -------- --------
TOTAL
Oil and gas revenues....................................... $437,342 $394,552 $316,062
-------- -------- --------
Operating costs:
Depreciation, depletion and amortization................. 170,499 153,792 129,148
Impairments.............................................. 23,200 12,000 3,600
Lease operating.......................................... 106,286 101,534 73,862
Production taxes......................................... 21,827 23,803 17,652
Income tax............................................... 43,771 35,864 29,866
-------- -------- --------
365,583 326,993 254,128
-------- -------- --------
Results of operations...................................... $ 71,759 $ 67,559 $ 61,934
-------- -------- --------
-------- -------- --------
</TABLE>
F-21
<PAGE> 50
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONTINUED)
(UNAUDITED)
Costs Not Being Amortized -- The following table sets forth a summary of
oil and gas property costs not being amortized at December 31, 1993, by the year
in which such costs were incurred.
<TABLE>
<CAPTION>
1990 AND
TOTAL 1993 1992 1991 PRIOR
-------- ------- ------ ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Leasehold and seismic.................... $ 82,358 $34,472 $3,739 $37,935 $6,212
Exploration and development.............. 4,634 4,634 -- -- --
International............................ 18,605 18,593 12 -- --
-------- ------- ------ ------- --------
Total.......................... $105,597 $57,699 $3,751 $37,935 $6,212
-------- ------- ------ ------- --------
-------- ------- ------ ------- --------
</TABLE>
Capitalized Costs Incurred -- The following table sets forth the
capitalized costs incurred in oil and gas producing activities.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1992 1991
-------- -------- ---------
<S> <C> <C> <C>
(IN THOUSANDS)
UNITED STATES
Acquisition of proved properties.......................... $242,659 $ 62,955 $ 561,780
Acquisition of unproved properties........................ 14,342 8,226 6,294
Exploration............................................... 16,979 17,074 17,523
Development............................................... 164,839 93,277 74,469
Capitalized interest...................................... 4,764 6,035 4,967
Property sales............................................ (3,255) (37,167) (157,018)
Future operating costs for royalty interest sold.......... -- -- 17,000
-------- -------- ---------
$440,328 $150,400 $ 525,015
-------- -------- ---------
FOREIGN
Acquisition of proved properties.......................... $ 81,942 $ -- $ 6,565
Acquisition of unproved properties........................ -- -- --
Exploration............................................... 18,006 10,091 6,907
Development............................................... -- 1,988 1,406
-------- -------- ---------
$ 99,948 $ 12,079 $ 14,878
-------- -------- ---------
TOTAL
Acquisition of proved properties.......................... $324,601 $ 62,955 $ 568,345
Acquisition of unproved properties........................ 14,342 8,226 6,294
Exploration............................................... 34,985 27,165 24,430
Development............................................... 164,839 95,265 75,875
Capitalized interest...................................... 4,764 6,035 4,967
Property sales............................................ (3,255) (37,167) (157,018)
Future operating costs for royalty interest sold.......... -- -- 17,000
-------- -------- ---------
$540,276 $162,479 $ 539,893
-------- -------- ---------
-------- -------- ---------
</TABLE>
- ---------------
Foreign acquisitions in 1993 included $16.8 million of unevaluated costs added
through the merger of HERC.
F-22
<PAGE> 51
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONTINUED)
(UNAUDITED)
Capitalized Costs -- The following table sets forth the capitalized costs
and related accumulated depreciation, depletion and amortization, including
impairments, relating to the Company's oil and gas production, exploration and
development activities.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1993 1992
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
UNITED STATES
Proved properties.................................................. $ 2,390,644 $ 1,962,896
Unproved properties................................................ 86,992 74,413
----------- -----------
2,477,636 2,037,309
Accumulated depreciation, depletion and amortization............... (1,171,227) (1,007,942)
----------- -----------
$ 1,306,409 $ 1,029,367
----------- -----------
FOREIGN
Proved properties.................................................. $ 126,157 $ 33,694
Unproved properties................................................ 18,605 11,119
----------- -----------
144,762 44,813
Accumulated depreciation, depletion and amortization............... (60,216) (29,802)
----------- -----------
$ 84,546 $ 15,011
----------- -----------
TOTAL
Proved properties.................................................. $ 2,516,801 $ 1,996,590
Unproved properties................................................ 105,597 85,532
----------- -----------
2,622,398 2,082,122
Accumulated depreciation, depletion and amortization............... (1,231,443) (1,037,744)
----------- -----------
$ 1,390,955 $ 1,044,378
----------- -----------
----------- -----------
</TABLE>
F-23
<PAGE> 52
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONTINUED)
(UNAUDITED)
Oil and Gas Reserve Information -- Proved oil and gas reserve quantities
are based on estimates prepared by the Company's engineers in accordance with
guidelines established by the Securities and Exchange Commission (SEC). The
Company's estimates of proved reserve quantities of its domestic properties and
certain international properties are subject to review by Ryder Scott Company
Petroleum Engineers, independent petroleum engineers. The Company's estimates of
proved reserve quantities of its Western Australia properties held through
Hadson Energy Limited are subject to review by Intera Information Technologies
Inc., independent petroleum engineers.
There are numerous uncertainties inherent in estimating quantities of
proved reserves and projecting future rates of production and timing of
development expenditures. The following reserve data represents estimates only
and should not be construed as being exact.
<TABLE>
<CAPTION>
1993 1992 1991
----------------------------- ----------------------------- -----------------------------
OIL, CONDENSATE AND UNITED UNITED UNITED
NATURAL GAS LIQUIDS STATES FOREIGN TOTAL STATES FOREIGN TOTAL STATES FOREIGN TOTAL
------------------- ------ ------- ------- ------ ------- ------- ------- ------- -------
(THOUSANDS OF BARRELS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total proved reserves:
Beginning of year.............. 80,195 464 80,659 79,166 648 79,814 22,740 -- 22,740
Extensions, discoveries and
other additions.............. 10,885 -- 10,885 7,112 -- 7,112 3,463 -- 3,463
Purchases of minerals
in-place..................... 9,871 5,095 14,966 226 -- 226 62,722 858 63,580
Revisions of previous
estimates.................... (3,215) 1,125 (2,090) 7,796 206 8,002 9,032 -- 9,032
Production..................... (12,096) (684) (12,780) (12,199) (390) (12,589) (8,184) (210) (8,394)
Sales of properties............ (1,917) -- (1,917) (1,906) -- (1,906) (10,607) -- (10,607)
------- ------- ------- ------- ------- ------- ------- ------- -------
End of year.................... 83,723 6,000 89,723 80,195 464 80,659 79,166 648 79,814
------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- -------
Proved developed reserves:
Beginning of year.............. 72,596 464 73,060 68,573 648 69,221 19,387 -- 19,387
End of year.................... 74,288 5,113 79,401 72,596 464 73,060 68,573 648 69,221
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
----------------------------------- ------- -------
NATURAL GAS UNITED STATES FOREIGN TOTAL TOTAL TOTAL
----------- ------------- ------- -------- ------- -------
(MILLION CUBIC FEET)
<S> <C> <C> <C> <C> <C>
Total proved reserves:
Beginning of year............................................... 643,299 -- 643,299 602,048 500,336
Extensions, discoveries and other additions..................... 119,210 -- 119,210 68,650 47,878
Purchases of minerals-in-place.................................. 174,115 33,343 207,458 68,685 289,760
Revisions of previous estimates................................. (7,335) 1,327 (6,008) 34,042 (20,163)
Production...................................................... (109,312) (1,310) (110,622) (95,982) (104,621)
Sales of properties............................................. (5,118) -- (5,118) (34,144) (111,142)
-------- ------- -------- ------ --------
End of year..................................................... 814,859 33,360 848,219 643,299 602,048
-------- ------- -------- ------ --------
-------- ------- -------- ------ --------
Proved developed reserves:
Beginning of year............................................... 585,424 -- 585,424 549,742 472,777
End of year..................................................... 696,421 24,251 720,672 585,424 549,742
</TABLE>
- ---------------
Prior to 1993, all of Apache's natural gas reserves were located in the United
States.
F-24
<PAGE> 53
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONTINUED)
(UNAUDITED)
Future Net Cash Flows -- Future revenues are based on year-end prices
except in those instances where the sale of natural gas is covered by contract
terms providing for determinable escalations. Operating costs, production and ad
valorem taxes and future development costs are based on current costs with no
escalation.
The following table sets forth unaudited information concerning future net
cash flows for oil and gas reserves, net of income tax expense. Income tax
expense has been computed using expected future tax rates and giving effect to
permanent differences and credits which, under current laws, relate to oil and
gas producing activities. This information does not purport to present the fair
market value of the Company's oil and gas assets, but does present a
standardized disclosure concerning possible future net cash flows that would
result under the assumptions used.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1993 1992 1991
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
UNITED STATES
Cash inflows..................................... $3,062,525 $2,789,334 $2,573,631
Production and development costs................. (1,085,205) (1,045,549) (969,928)
Income tax expense............................... (362,353) (338,177) (302,331)
---------- ---------- ---------
Net cash flows................................... 1,614,967 1,405,608 1,301,372
10-percent annual discount rate.................. (550,887) (542,118) (488,495)
---------- ---------- ---------
Discounted future net cash flows................. 1,064,080 863,490 812,877
---------- ---------- ---------
FOREIGN
Cash inflows..................................... 154,466 9,231 13,656
Production and development costs................. (57,281) (5,903) (6,315)
Income tax expense............................... (24,680) (588) (754)
---------- ---------- ---------
Net cash flows................................... 72,505 2,740 6,587
10-percent annual discount rate.................. (21,209) (26) (261)
---------- ---------- ---------
Discounted future net cash flows................. 51,296 2,714 6,326
---------- ---------- ---------
TOTAL
Cash inflows..................................... 3,216,991 2,798,565 2,587,287
Production and development costs................. (1,142,486) (1,051,452) (976,243)
Income tax expense............................... (387,033) (338,765) (303,085)
---------- ---------- ---------
Net cash flows................................... 1,687,472 1,408,348 1,307,959
10-percent annual discount rate.................. (572,096) (542,144) (488,756)
---------- ---------- ---------
Discounted future net cash flows*................ $1,115,376 $ 866,204 $ 819,203
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
- ---------------
* Estimated future net cash flows before income tax expense, discounted 10
percent, totaled approximately $1.36 billion, $1.06 billion and $1.0 billion
as of December 31, 1993, 1992 and 1991, respectively.
F-25
<PAGE> 54
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DISCLOSURES -- (CONTINUED)
(UNAUDITED)
The following table sets forth the principal sources of change in the
discounted future net cash flows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------
1993 1992 1991
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales, net of production costs...................... $(309,229) $(269,215) $(224,548)
Net change in prices and production costs........... (78,162) (23,318) (189,346)
Discoveries and improved recovery, net of related
costs............................................. 205,255 113,467 73,107
Change in future development costs.................. 450 16,913 6,329
Revision of quantities.............................. (29,360) 78,020 43,183
Purchases........................................... 347,860 99,228 528,204
Accretion of discount............................... 106,256 99,797 83,245
Change in income taxes.............................. (47,387) (17,609) 15,825
Sales of properties................................. (3,500) (40,413) (132,123)
Change in production rates and other................ 56,989 (9,869) (22,526)
--------- --------- ---------
$ 249,172 $ 47,001 $ 181,350
--------- --------- ---------
--------- --------- ---------
</TABLE>
Impact of Pricing -- The estimates of cash flows and reserve quantities
shown above are based on year-end oil and gas prices, except in those cases
where future gas sales are covered by contracts at specified prices. Estimates
of future liabilities and receivables applicable to oil and gas commodity hedges
are reflected in future cash flows from proved reserves with such estimates
based on prices in effect as of the date of the reserve report. Fluctuations are
largely due to the seasonal pricing nature of natural gas, supply perceptions
for natural gas and significant worldwide volatility in oil prices.
Under SEC rules, companies that follow full cost accounting methods are
required to make quarterly "ceiling test" calculations. Under this test,
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, as adjusted
for related tax effects and deferred tax reserves. Application of these rules
during periods of relatively low oil and gas prices, even if of short-term
duration, may result in write-downs.
F-26
<PAGE> 55
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL QUARTERLY FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
1993
Revenues............................ $108,592 $111,270 $122,013 $124,763 $466,638
Expenses, net....................... 97,000 99,775 120,932 111,597 429,304
-------- -------- -------- -------- --------
Net income.......................... $ 11,592 $ 11,495 $ 1,081 $ 13,166 $ 37,334
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income per common share......... $ .24 $ .22 $ .02 $ .22 $ .70
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
1992
Revenues............................ $ 92,195 $131,230 $111,305 $119,570 $454,300
Expenses, net....................... 88,146 107,203 102,829 108,346 406,524
-------- -------- -------- -------- --------
Net income.......................... $ 4,049 $ 24,027 $ 8,476 $ 8,476 $ 47,776
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income per common share......... $ .09 $ .51 $ .18 $ .24 $ 1.02
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
F-27
<PAGE> 56
SCHEDULE V
APACHE CORPORATION AND SUBSIDIARIES
PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
OIL AND
GAS OTHER TOTAL
PROPERTIES PROPERTY PROPERTY
--------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1990............................. $1,379,750 $36,408 $1,416,158
Additions, at cost..................................... 679,911 6,190 686,101
Deduct sales or retirements, at cost................... (140,018) (2,558) (142,576)
--------- ------- ---------
BALANCE, DECEMBER 31, 1991............................. 1,919,643 40,040 1,959,683
Additions, at cost..................................... 199,646 7,386 207,032
Deduct sales or retirements, at cost................... (37,167) (24) (37,191)
--------- ------- ---------
BALANCE, DECEMBER 31, 1992............................. 2,082,122 47,402 2,129,524
Additions, at cost..................................... 543,531 39,171 582,702
Deduct sales or retirements, at cost................... (3,255) (23,826) (27,081)
--------- ------- ---------
BALANCE, DECEMBER 31, 1993............................. $2,622,398 $62,747 $2,685,145
--------- ------- ---------
--------- ------- ---------
</TABLE>
F-28
<PAGE> 57
SCHEDULE VI
APACHE CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
TOTAL
OIL AND GAS OTHER ACCUMULATED
PROPERTIES -- PROPERTY -- DEPRECIATION
DEPLETION DEPRECIATION AND DEPLETION
----------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1990.............................. $ 739,204 $ 13,598 $ 752,802
Additions charged to income as depreciation and
depletion............................................. 132,748 2,830 135,578
Deduct retirements, renewals and replacements........... -- (73) (73)
----------- ------------ -------------
BALANCE, DECEMBER 31, 1991.............................. 871,952 16,355 888,307
Additions charged to income as depreciation and
depletion............................................. 165,792 3,576 169,368
Deduct retirements, renewals and replacements........... -- (24) (24)
----------- ------------ -------------
BALANCE, DECEMBER 31, 1992.............................. 1,037,744 19,907 1,057,651
Additions charged to income as depreciation and
depletion............................................. 193,699 5,596 199,295
Deduct retirements, renewals and replacements........... -- (8,261) (8,261)
----------- ------------ -------------
BALANCE, DECEMBER 31, 1993.............................. $1,231,443 $ 17,242 $1,248,685
----------- ------------ -------------
----------- ------------ -------------
</TABLE>
F-29
<PAGE> 58
SCHEDULE X
APACHE CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
(IN THOUSANDS)
Repairs and maintenance................................... $ 3,937 $ 2,890 $ 3,525
Taxes other than payroll and income taxes:
Production taxes........................................ 21,827 23,803 17,652
Ad valorem taxes........................................ 7,716 10,042 3,631
</TABLE>
The amounts of repairs and maintenance to oil and gas operations are
included in operating expenses and are not readily available nor are they
considered material in amount. Other repairs and maintenance are summarized
above. Advertising and royalty expenses and personal property taxes are each
less than one percent of total revenues as reported in the related income
statement.
F-30
<PAGE> 1
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
APACHE CORPORATION
APACHE CORPORATION, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Apache Corporation and the name
under which the corporation was originally incorporated was Apache Oil
Corporation. The date of filing of its original Certificate of Incorporation
with the Secretary of State was the 6th day of December, 1954.
2. This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of this corporation as heretofore amended or supplemented, and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation, as amended or
supplemented heretofore, is hereby restated without further amendments or
changes to read as herein set forth in full:
FIRST. The name of the corporation is APACHE CORPORATION.
SECOND. The Registered Office in the state of Delaware is located at
the Corporation Trust Center, 1209 Orange Street, in the county of New Castle,
Wilmington, Delaware 19801. The Registered Agent at that address is The
Corporation Trust Company.
THIRD. The nature of the business, or objects or purposes to be
transacted, promoted or carried on are: To engage in the leasing as principal,
trustee, agent and/or nominee of lands believed to contain petroleum, oils, and
gas; the improving, mortgaging, leasing, assigning, and otherwise disposing of
the same; the prospecting, drilling, pumping, piping, storing, refining, and
selling, both at wholesale and retail, of oils and gas; the buying, otherwise
acquiring, selling, and otherwise disposing of any and all real estate and
personal property for use in the business of the company; the construction of
any and all buildings, pipe lines, pumping stations, and storage tanks, and any
and all other buildings required in carrying on the business of the company;
the acting as trustee or agent for holders of oil lands in the receiving and
disbursement of funds to be used in drilling for the common benefit of the land
holders.
To buy, acquire, sell, retain, deal in, or otherwise dispose of
absolutely or contingently, petroleum and/or gas properties and interests
(whether like or different), and any right, title, or interest therein.
<PAGE> 2
To purchase, sell and own royalties in oil and gas lands and leases;
to pay mortgages, notes, taxes, assessments, and other charges that are or may
become a lien or charge against any lands or leases in which this company may
have a royalty interest.
To engage in the purchasing, leasing or otherwise acquiring, owning,
holding, operating, developing, mortgaging, pledging, exchanging, selling,
transferring, or otherwise disposing of, and investing, trading or dealing in
real and personal property of every kind and description or any interest
therein; the acting as trustee or agent for holders of interests in such real
and personal property in the receiving and disbursement of funds to be used in
connection therewith.
To act as agent for others in purchasing, selling, renting and
managing real estate and leasehold or other interests therein; in negotiating
loans on real estate and leasehold or other interests therein, in lending money
secured by bonds or notes secured by mortgages or trust deeds on such real
estate or leasehold or other interest therein, or on the mortgage bonds of
industrial or railroad companies or of any public service corporation, or on
any state, municipal or quasi-municipal bonds, or in the buying, selling,
pledging, mortgaging or otherwise dealing in any such securities, and to act as
trustee in connection with any of the foregoing securities.
To carry on the business of a telephone, telegraph, radio, television,
electrical light, heat and power, natural gas heat and power, and/or water
supply company, and in establishing, working, managing, controlling and
regulating exchanges and works for the supply and transmission of telephone,
telegraph, radio and television impulses, and for the supply of electric light,
heat and power, natural gas heat and power, and/or water for public or private
purposes, use and consumption.
To engage in the underwriting, buying, selling and rediscounting of
notes, drafts, bills of exchange, stocks, bonds, securities and chooses in
action as a broker and dealer in securities.
To acquire, and pay for in cash, stock or bonds of this Corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses, franchises and privileges,
inventions, improvements and processes, copyrights, trademarks and trade names,
relating to or useful in connection with any business of this corporation.
To acquire by purchase subscription, participation, or otherwise, and
to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in and with any of the shares of the
capital stock, or any voting trust certificates in respect of the shares of
capital stock, script, warrants, rights, bonds, debentures, notes, trust
receipts, and other securities, obligations, chooses in action and evidences of
indebtedness or interest issued or created by any corporations, joint stock
companies, partnerships, limited partnerships, syndicates, associations, firms,
trusts or persons, public or private, or by the government of the United States
of America, or by any foreign government, or by any state, territory, province,
municipality or other political subdivision or by any governmental agency, and
as owner thereof
2
<PAGE> 3
to possess and exercise all the rights, powers and privileges of ownership,
including the right to execute consents and vote thereon and to do any and all
acts and things necessary or advisable for the preservation, protection,
improvement and enhancement in value thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation, municipality,
county, state, body politic or government or colony or dependency thereof.
To borrow or raise monies for any of the purposes of the Corporation
and, from time to time to draw, make, accept, endorse, execute and issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures and
other negotiable or non-negotiable instruments and evidences of indebtedness,
and to secure the payment of any thereof and of the interest thereon by
mortgage upon or pledge, conveyance or assignment in trust of the whole or any
part of the property of the Corporation, whether at the time owned or
thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or
other obligations of the Corporation for its corporate purposes.
To purchase, hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital except as otherwise permitted by law, and provided further that shares
of its own capital stock belonging to it shall not be voted upon directly or
indirectly.
To have one or more offices, to carry on all or any of its operations
and business and to purchase or otherwise acquire, hold, own, mortgage, sell,
convey or otherwise dispose of, real and personal property of every class and
description in any of the states, districts, territories or colonies of the
United States, and in any and all foreign countries, subject to the laws of
such state, district, territory, colony or country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the
State of Delaware, and to do any or all things hereinbefore set forth to the
same extent as natural persons might or could do.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in no wise limited or restricted by
reference from, the terms of any other clause in this Certificate of
Incorporation, but the objects and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent objects and purposes.
FOURTH. The total number of shares of all classes of stock which this
corporation shall have authority to issue is 220,000,000 which shall be divided
into (a) 215,000,000 shares of common stock having a par value of $1.25 per
share and (b) 5,000,000 shares of no par value preferred stock.
A description of the different classes of stock of the Corporation, a
statement of the relative rights of the holders of stock of such classes, and a
statement of the voting powers and the designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, of the various classes of stock are as
follows:
3
<PAGE> 4
A. Shares of the Preferred Stock may be issued by the Board of
Directors of the Corporation with such voting powers, full or limited or
without voting powers and in such classes and series and with such
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions providing for
the issue of such stock adopted by the Board of Directors of the Corporation.
B. A holder of the Common Stock of the Corporation shall be entitled
to one vote for each and every share of Common Stock standing in his name at
any and all meetings of stockholders of the Corporation.
C. Shares of the voting stock of the Corporation shall not be voted
cumulatively.
D. Except as provided in Paragraph A of this Article FOURTH, shares
of stock of the Corporation do no carry pre-emptive rights.
E. There shall be set forth on the face or back of each certificate
for shares of stock of the Corporation a statement that the Corporation will
furnish without charge to each stockholder who so requests, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights, provided, however, that there
shall be no lien in favor of the Corporation upon the shares represented by any
such certificate and there shall be no restriction upon the transfer of shares
so represented by virtue of any by-law of the Corporation unless such lien or
restriction is stated upon the certificate.
FIFTH. The minimum amount of capital with which the Corporation will
commence business is One thousand Dollars ($1,000.00).
SIXTH. The names and places of residence of the original
incorporators were as follows:
NAMES RESIDENCES
H. K. Webb Wilmington, Delaware
H. C. Broadt Wilmington, Delaware
A. D. Atwell Townsend, Delaware
SEVENTH. The Corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatever.
NINTH. The number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the directors then in office.
4
<PAGE> 5
At each annual meeting of shareholders commencing in 1986, the terms
of office for which candidates are nominated and elected shall be divided so
that as nearly as numerically possible the terms of office of one-third of the
total number of directors elected and serving upon completion of such election
will expire at the annual meeting of shareholders next following the date of
such election, and one-third each at each of the two next ensuing annual
meetings of shareholders.
A majority of the directors then in office, in their sole discretion
and whether or not constituting less than a quorum, may elect a replacement
director to serve during the unexpired term of any director previously elected
whose office is vacant as a result of death, resignation, retirement,
disqualification, removal or otherwise, and may elect directors to fill any
newly created directorships created by the Board. At any election of directors
by the Board of Directors to fill any vacancy caused by an increase in the
number of directors, the terms of office for which candidates are nominated and
elected shall be divided as set forth in the immediately preceding paragraph.
Each director shall be elected and serve until his successor shall
have been duly elected and qualified unless he shall have resigned, become
disqualified, deceased or disabled, or shall otherwise have been removed from
office.
In furtherance and not in limitations of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends, a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By resolution passed by a majority of the whole Board, to designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation, which, to the extent provided in the resolution
or in the by-laws of the Corporation, shall have and may exercise the powers of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be stated in the by-laws of the Corporation or as may be
determined from time to time by resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, to sell, lease or exchange
all of the property and assets of the Corporation, including its good will and
its corporate franchises, upon such terms and conditions and for such
consideration which may be in whole or in part shares of stock in, and/or other
securities of, any other corporation or corporations, as its Board of Directors
shall deem expedient and for the best interest of the Corporation.
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<PAGE> 6
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of four-
fifths of all classes of stock of the Corporation entitled to vote in the
election of directors, considered as one class, shall be required to alter,
amend, or adopt any provision inconsistent with or repeal this Article NINTH.
In the absence of fraud no contract or other transaction between this
Corporation and any other corporation shall be affected by the fact that any
director of this Corporation is interested in, or is a director or officer of,
such other corporation, and any director, individually or jointly, may be a
party to, or may be interested in, any contract or transaction of this
Corporation or in which this Corporation is interested; and no contract, or
other transaction of this Corporation with any person, firm, or corporation,
shall be affected by the fact that any director of this Corporation is a party
to, or is interested in, such contract, act, or transaction, or in any way
connected with such person, firm, or corporation, and every person who may
become a director of this Corporation is hereby relieved from any liability
that might otherwise exist from contracting with the Corporation for the
benefit of himself or any firm, association, or corporation in which he may be
in any way interested.
TENTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code, or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
ELEVENTH. Meetings of stockholders may be held outside the state of
Delaware, if the by-laws so provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the state of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation. Election of directors
need not be by ballot unless the by- laws of the Corporation shall so provide.
TWELFTH. A. Except as set forth in this article, the affirmative
vote or consent of the holders of four-fifths of all classes of stock of the
Corporation entitled to vote in elections of directors, considered for the
purposes of this article as one class, shall be required (a) for the adoption
of any agreement for the merger or consolidation of the Corporation with or
into any other corporation, or (b) to authorize any sale or lease of all or any
substantial part of the assets
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<PAGE> 7
of the Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the Corporation of any assets
(except assets having an aggregate fair market value of less than $5,000,000)
of, any other corporation, person or other entity if, in either case, as of the
record date for the determination of stockholders entitled to vote thereon or
consent thereto, such other corporation, person or entity is the beneficial
owner, directly or indirectly, of more than 5% of the outstanding shares of
stock of the Corporation entitled to vote in elections of directors considered
for the purposes of this article as one class. Such affirmative vote or
consent shall be in addition to the vote or consent of the holders of the stock
of the Corporation otherwise required by law or any agreement between the
Corporation and any national securities exchange.
B. For the purpose of this article, (a) any corporation, person or
other entity shall be deemed to be the beneficial owner of any shares of stock
of the Corporation (i) which it has the right to acquire pursuant to any
agreement or upon exercise of conversion rights, warrants or options or
otherwise, or (ii) which are beneficially owned directly or indirectly
(including shares deemed owned through application of clause (i) above), by any
other corporation, person or entity with which it or its "affiliate" or
"associate" (as defined below) has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of stock of the
Corporation or which is its "affiliate" or "associate" as those terms are
defined in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934 as in effect at the date of adoption of this article by
the shareholders of the Corporation, and (b) the outstanding shares of any
class of stock of the Corporation shall include shares deemed owned through
application of clauses (i) and (ii) above but shall not include any other
shares which may be issuable pursuant to any agreement, or upon exercise of
conversion rights, warrants or options or otherwise.
C. The Board of Directors shall have the power and duty to determine
for the purposes of this article, on the basis of information known to the
Corporation, whether (a) such other corporation, person or entity beneficially
owns more than 5% of the outstanding shares of stock of the Corporation
entitled to vote in elections of directors, (b) a corporation, person or entity
is an "affiliate" or "associate" (as defined above) of another, (c) the assets
being acquired by the Corporation or any subsidiary thereof have the aggregate
fair market value of less than $5,000,000, and (d) the memorandum of
understanding referred to below is substantially consistent with the
transaction covered thereby. Any such determination shall be conclusive and
binding for all purposes of this article.
D. The provisions of this article shall not be applicable to (a) any
merger or consolidation of the Corporation with or into any other corporation,
or any sale or lease of all or any substantial part of the assets of the
Corporation or any subsidiary thereof in exchange for securities of the
Corporation or of any assets of, any corporation, if the Board of Directors of
the Corporation shall by resolution have approved a memorandum of understanding
with such other corporation with respect to and substantially consistent with
such transaction prior to the time that such other corporation shall have
become a holder of more than 5% of the outstanding shares of stock of the
Corporation entitled to vote in elections of directors; (b) any merger or
consolidation of the Corporation with, or any sale or lease to the Corporation
or any subsidiary thereof of any of the assets of, any corporation of which a
majority of the outstanding shares of all classes of stock entitled to vote in
elections of the directors is owned of record or beneficially by the
Corporation and its subsidiaries.
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E. No amendment to the Certificate of Incorporation of the
Corporation shall amend, alter, change or repeal any of the provisions of this
article, unless the amendment effecting such amendment, alteration, change or
repeal shall receive the affirmative vote or consent of the holders of
four-fifths of all classes of stock of the Corporation entitled to vote in
elections of directors, considered for the purposes of this article as one
class.
THIRTEENTH. The Corporation reserves the right, except as herein
provided, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are granted subject
to this reservation.
FOURTEENTH: A. Any resolution adopted by the Board of Directors in
connection with a Second Tier Transaction shall include provisions assuring
that each holder of Common Stock (other than a Related Person) shall have the
right (which right may be an alternative to other options offered to such
holder) to receive not less than the highest price paid by, and to receive
terms not less favorable than the most favorable terms granted by, any Related
Person in connection with the acquisition of Common Stock pursuant to a Tender
Offer.
B. The term "Related Person" means any corporation, person or other
entity that has Beneficial Ownership, directly or indirectly, of more than 5%
of the outstanding Voting Stock. In determining the outstanding Voting Stock,
there shall be included Voting Stock as to which a Related Person has
Beneficial Ownership, but there shall not be included any other Voting Stock
which may be issuable pursuant to any agreement, or upon exercise of conversion
rights, warrants or options or otherwise. The Board of Directors shall have
the power and duty to determine for the purposes of this article, on the basis
of information known to the Corporation, whether (a) such other corporation,
person or entity has Beneficial Ownership of more than 5% of the outstanding
Voting Stock, or (b) a corporation, person or entity is an "affiliate" or
"associate" (as defined below) of another for purposes of determining
Beneficial Ownership. Any such determination shall be conclusive and binding
for all purposes of this article.
The term "Beneficial Ownership" shall include without limitation: (i)
all Voting Stock directly or indirectly owned by a person or entity, by an
"affiliate" or "associate" of a person or entity, (as those terms are defined
in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, as in effect at the date of adoption of this
article); (ii) all Voting Stock which such person or entity, affiliate or
associate has the right to acquire (a) through the exercise of any option,
warrant or right (whether or not currently exercisable), (b) through the
conversion of a security, (c) pursuant to the power to revoke a trust,
discretionary account, or similar arrangement; and (iii) all Voting Stock as to
which such person or entity, affiliate or associate, directly or indirectly,
through any contract, arrangement, understanding, relationship, or otherwise
(including without limitation any written or unwritten agreement to act in
concert) has or shares voting power (which includes the power to vote or to
direct the voting of such Voting Stock) or investment power (which includes the
power to dispose or to direct the disposition of such Voting Stock) or both.
The term "Second Tier Transaction" means, at such time that there is a
Related Person which has acquired Voting Stock by means of a Tender Offer, (a)
the adoption, or submission to the shareholders of the Corporation for
approval, or any agreement or plan for the merger,
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<PAGE> 9
consolidation or reorganization of the Corporation with or into any other
corporation or entity, or (b) the authorization of any sale or lease of all or
substantially all of the assets of the Corporation or (c) the issuance or sale
by the Corporation of any equity security (as that term is defined in the
Securities Exchange Act of 1934, as amended) to a Related Person or any
affiliate or associate of a Related Person under circumstances that holders of
Voting Stock do not have the opportunity to purchase such equity on a pro rata
basis.
The term "Tender Offer" means any tender offer for, or request or
invitation for tenders of, Voting Stock, within the meaning of Section 14(d)(1)
of the Securities Exchange Act of 1934, as amended, and any purchase or series
of purchases of Voting Stock at or above then prevailing market prices for such
Voting Stock pursuant to which more than 5% of the outstanding Voting Stock is
acquired in any two-year period.
The term "Voting Stock" means securities of the Corporation entitled
under ordinary circumstances to vote in elections of directors, considered for
the purposes of this article as one class.
C. No amendment to the Certificate of Incorporation shall amend,
alter, change or repeal any of the provisions of this article, unless the
amendment effecting such amendment, alteration, change or repeal shall receive
the affirmative vote or consent of the holders of four- fifths of the Voting
Stock and shall receive the affirmative vote or consent of a majority of all
Voting Stock other than Voting Stock of which a Related Person has Beneficial
Ownership.
FIFTEENTH. A. Subject to Paragraph B below, the Corporation shall
not acquire, directly or indirectly, any Voting Stock, by purchase, exchange or
otherwise from any Related Person.
B. This article shall not be applicable to any acquisition of Voting
Stock (1) pursuant to a Tender Offer made to all holders of any class of Voting
Stock on the same price, terms and conditions and, if for less than all of the
Voting Stock, subject to pro rata acceptance (except as to holders of fewer
than 100 shares), (2) in compliance with Rule 10b-18 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, as in effect
at the date of adoption of this article, or (3) for a total consideration per
share, including payment for legal fees, investment banking fees, brokerage
fees and related costs and expenses of the holder in acquiring such Voting
Stock, not in excess of the Market Value Per Share.
C. The term "Related Person" means any corporation, person or entity
that has Beneficial Ownership, directly or indirectly, of more than 5% of the
outstanding Voting Stock. In determining the outstanding Voting Stock of the
Corporation, there shall be included Voting Stock as to which a Related Person
has Beneficial Ownership, but there shall not be included any other Voting
Stock which may be issuable pursuant to any agreement, or upon exercise of
conversion rights, warrants or options or otherwise. The Board of Directors
shall have the power and duty to determine for the purposes of this article, on
the basis of information known to the Corporation, whether (a) such other
corporation, person or entity has Beneficial Ownership of more than 5% of the
outstanding Voting Stock, or (b) a corporation, person or entity is an
"affiliate" or "associate" (as defined below) of another for purposes of
determining Beneficial Ownership. Any such determination shall be conclusive
and binding for all purposes of this article.
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The term "Beneficial Ownership" shall include without limitation: (i)
all Voting Stock directly or indirectly owned by a person or entity, by an
"affiliate" or "associate" of a person or entity, (as those terms are defined
in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act, as amended, as in effect at the date of adoption of this
article); (ii) all Voting Stock which such person or entity, affiliate or
associate has the right to acquire (a) through the exercise of any option,
warrant or right (whether or not currently exercisable), (b) through the
conversion of a security, (c) pursuant to the power to revoke a trust,
discretionary account, or similar arrangement; and (iii) all Voting Stock as to
which such person or entity, affiliate or associate, directly or indirectly,
through any contract, arrangement, understanding, relationship, or otherwise
(including without limitation any written or unwritten agreement to act in
concert) has or shares voting power (which includes the power to vote or to
direct the voting of such Voting Stock) or investment power (which includes the
power to dispose or to direct the disposition of such Voting Stock) or both.
The term "Market Value Per Share" means for the 30-day period
immediately preceding the date on which Voting Stock is acquired (i) the
average closing price on the Composite Tape for New York Stock Exchange Issues,
(ii) if the Voting Stock is not quoted on the Composite Tape or is not listed
on such Exchange, the average closing price on the principal United States
securities exchange registered under the Securities Exchange Act of 1934, on
which such stock is listed, (iii) if such stock is not listed on any such
exchange, the average closing bid quotation on the National Association of
Securities Dealers, Inc., Automated Quotations System or any comparable system
then in use, or (iv) if no such quotations are available, the fair market value
as determined by the Board of Directors in its discretion.
The term "Voting Stock" means securities of the Corporation entitled
under ordinary circumstances to vote in elections of directors, considered for
the purposes of this article as one class.
SIXTEENTH. Except as otherwise expressly provided in this Certificate
of Incorporation, any action required or permitted to be taken by the
shareholders of the Corporation must be effected at a duly called annual or
special meeting of the shareholders and may not be effected by any consent in
writing by shareholders, and the affirmative vote of the holders of four-fifths
of all classes of stock of the Corporation entitled to vote in elections of
directors, considered as one class, shall be required to alter, amend, or adopt
any provision inconsistent with, or to repeal, this Article SIXTEENTH.
SEVENTEENTH. No director shall be personally liable to the
Corporation or any stockholder for monetary damages for breach of fiduciary
duty as a director, except for any matter in respect to which such director
shall be liable under Section 174 of Title 8 of the Delaware Code (relating to
the Delaware General Corporation Law) or any amendment thereto or successor
provision thereto or shall be liable by reason that, in addition to any and all
other requirements for such liability, he (i) shall have breached his duty of
loyalty to the Corporation or its stockholders, (ii) shall not have acted in
good faith, or in failing to act, shall not have acted in good faith, (iii)
shall have acted in a manner involving intentional misconduct or a knowing
violation of law or, in failing to act, shall have acted in a manner involving
intentional misconduct or a knowing violation of law or (iv) shall have derived
an improper personal benefit. Neither the amendment nor repeal of this Article
SEVENTEENTH, nor the adoption
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of any provision of the Certificate of Incorporation inconsistent with this
Article SEVENTEENTH, shall eliminate or reduce the effect of this Article
SEVENTEENTH, in respect to any matter occurring, or any cause of action, suit
or claim that, but for this Article SEVENTEENTH would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent provision.
4. This Restated Certificate of Incorporation was duly adopted by
the Board of Directors in accordance with Section 245 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Apache Corporation has caused this Restated
Certificate of Incorporation to be signed by William J. Johnson, its President,
and attested by Cheri L. Peper, its Assistant Secretary, this 1st day of
December, 1993.
APACHE CORPORATION
By: /s/ WILLIAM J. JOHNSON
William J. Johnson, President
ATTEST:
By: /s/ CHERI L. PEPER
Cheri L. Peper
Assistant Secretary
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Exhibit 10.3
________________________________________________________________________________
FOURTH AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
dated as of July 13, 1993
among
APACHE CORPORATION
and
VARIOUS COMMERCIAL LENDING INSTITUTIONS,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent and Collateral Agent
and
CHEMICAL BANK,
as Co-Agent
________________________________________________________________________________
<PAGE> 2
FOURTH AMENDMENT TO AMENDED
AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated
as of July 13, 1993, (the Fourth Amendment"), is among APACHE CORPORATION, a
Delaware corporation (the "Company"), the various commercial lending
institutions as are or may become parties hereto (the "Lenders"), THE FIRST
NATIONAL BANK OF CHICAGO, as Administrative Agent (in such capacity, the
"Administrative Agent") and Collateral Agent (in such capacity, the"Collateral
Agent"), and CHEMICAL BANK, as Co-Agent (the "Co-Agent").
W I T N E S S E T H:
1. The Company, the Lenders, the Administrative Agent, the
Collateral Agent and the Co-Agent are parties to that certain Amended and
Restated Credit Agreement, dated as of April 15, 1992 (the "Original Amended
and Restated Credit Agreement").
2. The Original Amended and Restated Credit Agreement has been
amended prior to the date hereof (the Original Amended and Restated Credit
Agreement, as so amended, herein called the "Amended and Restated Credit
Agreement").
3. The Company has acquired capital stock in HERC (as hereinafter
defined).
4. As a result of the acquisition by the Company of stock in
HERC, the Company, the Lenders, the Administrative Agent, the Collateral Agent
and the Co-Agent wish to amend the Amended and Restated Credit Agreement as
follows:
I. AMENDMENTS TO AMENDED AND RESTATED CREDIT AGREEMENT.
A. Section 1.1 of the Amended and Restated Credit Agreement is
hereby amended by inserting the following definitions in proper alphabetical
order:
"HEL" means Hadson Energy Limited, a Western Australia
corporation.
"HERC" means Hadson Energy Resources Corporation, a Delaware
corporation.
B. The first sentence of the definition of "Affiliate" appearing
in Section 1.1 of the Amended and Restated Credit Agreement is hereby amended
in its entirety as follows:
<PAGE> 3
"Affiliate" of any Person means any Person directly or
indirectly controlling, controlled by, or under direct or indirect
common control of such Person and in the case of the Company or any
Subsidiary shall include Key, APCOP, and NGC, but shall not include
(except for the purposes of Sections 11.9 and 15.9) HERC or HEL.
C. The definition of "Subsidiary" appearing in Section 1.1 of the
Amended and Restated Credit Agreement is hereby amended in its entirety as
follows:
"Subsidiary" means MW Petroleum, MWJR, each Drilling
Partnership and any other person more than 50% of the outstanding
voting securities of which shall at the time be owned or controlled,
directly or indirectly, by the Company or by one or more subsidiaries
or by the Company and one or more Subsidiaries; provided, that not
withstanding the foregoing, the term Subsidiary shall not include
APCOP or, for the purposes of Article VIII (except for Sections 8.10,
8.15, and 8.16), Article IX, Article XI (except for Sections 11.2 and
11.9) and Article XII (except for Section 12.1 insofar as the
representation or warranty which is breached or shall be false was
made pursuant to Section 8.10, Section 8.15 or Section 8.16), HERC or
HEL.
D. Clause (b) of Section 9.1 of the Amended and Restated Credit
Agreement is hereby amended in its entirety as follows:
"(b) as soon as available and in any event within 45 days after the
close of the first three quarterly periods of each fiscal year, for
itself, consolidated unaudited balance sheets as of the close of each
such period and consolidated profit and loss and reconciliation of
surplus statements and a statement of cash flows for the period from
the beginning of such fiscal year to the end of such quarter."
II. EFFECTIVENESS. This Fourth Amendment shall become effective
as of the date hereof when the Administrative Agent shall have received (a)
counterparts hereof duly executed by the Company, the Lenders, the
Administrative Agent, the Collateral Agent and the Co-Agent (or, in the case of
any party as to which an executed counterpart shall not have been received,
telegraphic, telex, or other written confirmation from such party of execution
of a counterpart hereof by such party) and (b) the consent and acknowledgement
(herein called the "Consent"), substantially in the form of Exhibit A hereto,
of MW Petroleum Corporation, a Colorado corporation ("MW Petroleum").
III. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. To induce
the Lenders, the Administrative Agent, the Collateral Agent and the Co-Agent to
enter into this Fourth Amendment, the Company hereby reaffirms, as of the date
hereof, its representations and warranties in their entirety contained in
Article VIII of the Amended and Restated Credit Agreement (except with respect
to HERC and HEL except for the representations and warranties contained in
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<PAGE> 4
Sections 8.10, 8.15, and 8.16) and in all other documents executed pursuant
thereto (except to the extent such representations and warranties relate solely
to an earlier date) and additionally represents and warrants as follows:
(i) The Company is a corporation, and MW Petroleum, MWJR
Petroleum Corporation, a Delaware corporation ("MWJR"), and each other
Subsidiary (except for HERC and HEL) is a corporation or other legal
entity, in either case duly incorporated or otherwise properly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and has all requisite
authority, permits and approvals, and is in good standing to conduct
its business in each jurisdiction in which its business is conducted.
(ii) The Company has the corporate power and authority and
legal right to execute and deliver this Fourth Amendment and to
perform its obligations hereunder. MW Petroleum has the corporate
power and authority and legal right to execute and deliver its Consent
and to perform its obligations thereunder. The execution and delivery
by the Company of this Fourth Amendment, and the execution and
delivery by MW Petroleum of its Consent, and the performance of their
obligations hereunder and thereunder have been duly authorized by
proper corporate proceedings, and this Fourth Amendment and the
Amended and Restated Credit Agreement as amended hereby, with respect
to the Company, and its Consent, with respect to MW Petroleum,
constitute legal, valid and binding obligations of the Company and MW
Petroleum, enforceable against the Company and MW Petroleum in
accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
(iii) No Default or Unmatured Default has occurred and is
continuing as of the date hereof.
(iv) There has been no material adverse change (a) in the
businesses, assets, properties, operations, condition (financial or
otherwise) or results of operations or prospects of the Company and
its Subsidiaries (except for HERC and HEL) or MW Petroleum and its
Subsidiaries from April 15, 1992, (b) affecting the rights and
remedies of the Lenders under and in connection with this Fourth
Amendment, the Amended and Restated Credit Agreement as amended by
this Fourth Amendment, the Notes and the Collateral Documents or (c)
in the ability of the Company to perform its obligations under this
Fourth Amendment, the Amended and Restated Credit Agreement as amended
by this Fourth Amendment, the Notes or the Collateral Documents to
which it is a party, or the obligation of MW Petroleum to perform its
obligations pursuant to its Guaranty and the Collateral Documents to
which it is a party.
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<PAGE> 5
(v) There is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of
any of their officers threatened against or affecting the Company or
its Subsidiaries (except for HERC and HEL) or MW Petroleum or its
Subsidiaries which is or could have a Material Adverse Effect.
IV. DEFINED TERMS. Except as amended hereby, terms used herein
when defined in the Amended and Restated Credit Agreement shall have the same
meanings herein unless the context otherwise requires.
V. REAFFIRMATION OF CREDIT AGREEMENT. This Fourth Amendment
shall be deemed to be an amendment to the Amended and Restated Credit
Agreement, and the Amended and Restated Credit Agreement, as amended hereby, is
hereby ratified, approved and confirmed in each and every respect. All
references to the Amended and Restated Credit Agreement herein and in any other
document, instrument, agreement or writing shall hereafter be deemed to refer
to the Amended and Restated Credit Agreement as amended hereby.
VI. GOVERNING LAW. THIS FOURTH AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL LENDERS.
All obligations of the Company and rights of the Lenders, the Administrative
Agent, the Collateral Agent and the Co-Agent and any other holders of the Notes
expressed herein shall be in addition to and not in limitation of those
provided by applicable law.
VII. SEVERABILITY OF PROVISIONS. Any provision in this Fourth
Amendment that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Fourth Amendment are
declared to be severable.
VIII. COUNTERPARTS. This Fourth Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
IX. HEADINGS. Article and section headings in this Fourth
Amendment are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Fourth Amendment.
X. SUCCESSORS AND ASSIGNS. This Fourth Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
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XI. NOTICE. THIS WRITTEN FOURTH AMENDMENT TOGETHER WITH THE
AMENDED AND RESTATED CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Company, the Lenders, the Administrative
Agent, the Collateral Agent and the Co-Agent have executed this Fourth
Amendment as of the date first above written.
APACHE CORPORATION
By:/s/ CLYDE E. MCKENZIE
Name: Clyde E. McKenzie
Title: Vice President and Treasurer
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THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Administrative Agent
and Collateral Agent
By:/s/ T. THOMAS CHENG
Title: Vice President
CHEMICAL BANK, as Co-Agent
By:/s/ R. POTTER
Title: Managing Director
BANK OF MONTREAL, Individually and as
Lead Manager
By:/s/ ROBERT ROBERTS
Title: Director
NATIONSBANK, Individually and as Lead Manager
By:/s/ JO A. TAMALIS
Title: Senior Vice President
TEXAS COMMERCE BANK, N.A.
By:/s/ LORI VETTERS
Title: Vice President
6
<PAGE> 8
CHRISTIANIA BANK OF KREDITKASSE
By:/s/ DEBRA DICKAHUTH
Title: Vice President
By:/s/ JAHN O. ROISING
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ M. VANOTTERLOO
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By:/s/ BETTYLOU J. ROBERT
Title: Vice President
MIDLAND BANK PLC, NEW YORK BRANCH
By:/s/ PETER G. R. DODDS
Title: Executive Director
ROYAL BANK OF CANADA
GRAND CAYMAN (NORTH AMERICAN #2) BRANCH
By:/s/ MICHAEL A. COLE
Title: Manager
7
<PAGE> 9
NBD BANK, N.A.
By:/s/ DOUGLAS R. LIFTMAN
Title: 2nd Vice President
BANQUE INDOSUEZ
By:/s/ N. M. GAETZ
Title: Senior Vice President
By:/s/ EDWARD J. GILLIARD
Title: Vice President
BANQUE PARIBAS
By:/s/ D. W. MALEY, JR.
Title: Senior Vice President
By:/s/ KARIM RASHID
Title: Assistant Treasurer
CIBC, INC.
By:/s/ JULIA COLLINS
Title: Vice President
CENTRAL BANK DENVER
By:/s/ MONTE E. DECKERD
Title: Vice President
8
<PAGE> 10
THE FIRST NATIONAL BANK OF BOSTON
By:/s/ MICHAEL KANE
Title: Director
THE FUJI BANK, LIMITED - HOUSTON AGENCY
By:/s/ SOICHI YOSHIDA
Title: Vice President & Manager
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as successor by merger to Security
Pacific National Bank
By:/s/ JOHN ROBINSON
Title: Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY
By:/s/ RICHARD A. ERBERT
Title: Vice President
UNION BANK
By:/s/ RICHARD P. DEGREY
Title: Vice President
9
<PAGE> 11
UNITED BANK OF DENVER NATIONAL ASSOCIATION
By:/s/ TOM FONCANNON
Title: Vice President
ABN-AMRO BANK N.V. - HOUSTON AGENCY
By:/s/ MICHAEL N. OAKES
Title: Vice President
By:/s/ M. TRIBOLET
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ STEVEN A. TULIP
Title: Vice President
J.P. MORGAN DELAWARE
By:/s/ PHILIP S. DETJENS
Title: Vice President
CITIBANK, N.A.
By:/s/ CAROLYN R. BODMER
Title: Vice President
10
<PAGE> 12
EXHIBIT A TO FOURTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
CONSENT AND ACKNOWLEDGMENT
The undersigned, by its signature hereto, acknowledges and agrees to
the terms and conditions of that certain Fourth Amendment to Amended and
Restated Credit Agreement dated as of July 13, 1993 (the "Amendment"). The
undersigned acknowledges and reaffirms its obligations owing to the Lenders,
the Administrative Agent, the Collateral Agent and the Co-Agent under its
Guaranty and agrees that such Guaranty shall remain in full force and effect.
Although the undersigned has been informed by the Company of the matters set
forth in the Amendment, and the undersigned has acknowledged and agreed to
same, the undersigned understands that the Lenders have no duty to notify the
undersigned or to seek the undersigned's acknowledgment or agreement, and
nothing contained herein shall create such a duty as to any transactions
hereafter.
Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Amended and Restated Credit Agreement, dated as
of April 15, 1992, by and among Apache Corporation, the various commercial
lending institutions parties thereto, The First National Bank of Chicago, as
Administrative Agent and Collateral Agent, and Chemical Bank, as Co-Agent, as
amended.
MW PETROLEUM CORPORATION
By:/s/ CLYDE E. MCKENZIE
Name: Clyde E. McKenzie
Title: Vice President and Treasurer
11
<PAGE> 1
Exhibit 10.6
HADSON ENERGY RESOURCES CORPORATION
SECOND AGREEMENT TO CREDIT AGREEMENT
Bank of Montreal
Chicago, Illinois
Gentlemen:
We refer to the Credit Agreement dated as of December 18, 1990 as
amended and currently in effect between us (the "Credit Agreement"),
capitalized terms used without definition below to have the same meanings
herein as they have in the Credit Agreement. Upon your acceptance hereof in
the space provided for that purpose below and as of the dates provided for
below, the Credit Agreement and the Revolving Credit Note shall be amended as
follows:
1. Section 1.2 (the Term Credit). The third sentence of Section 1.2 of
the Credit Agreement shall be amended by striking the word "nine" appearing
therein and by substituting the word "five" therefor.
2. Section 3.1 (Commitment Fee). Section 3.1 of the Credit Agreement
shall be amended by striking the fraction "1/2" appearing therein and
substituting the fraction "3/8" therefor.
3. Section 8.5(a) (Financial Reports). Section 8.5(a) of the Credit
Agreement shall be amended and as so amended shall be restated in its entirety
to read as follows:
"(a) as soon as available, and in any event within 60 days after the
close of each quarterly fiscal period of the Company, a copy of the
balance sheet, statement of earnings and statement of changes in cash
flow of the Company and its Subsidiaries as of the last day of such
period (in the case of the balance sheet) and for the fiscal year to
date ending as of the last day of such period (in the case of the other
statements) prepared on a consolidated basis and certified to by the
president, chief financial officer, chief accounting officer or vice
president and treasurer thereof with such certificate to also (i)
state that the signer thereof has reexamined the provisions of this
Agreement and that no Default or Event of Default has occurred or is
continuing or if any of such has occurred or is continuing stating the
nature thereof and the action, if any, which the Company proposes to
take with respect thereto, (ii) set forth a computation in reasonable
detail of compliance with the proviso to Section 8.8 hereto, Section
8.10(h) hereof and Sections 8.9, 8.13 and 8.14 hereof, (iii) include a
statement of the current adjusted valuation of the principal balance of
the Petroleum Notes and (iv) include a statement of all sales of
Borrowing Base Assets during the fiscal year to date ending as of the
last day of such period;"
1
<PAGE> 2
4. Section 8.5(c) (Financial Reports). Section 8.5(c) of the Credit
Agreement shall be amended by deleting the phrase "on a month by month basis"
appearing in line 2 thereof and by deleting the phrase "by month and" in the
parenthetical clause at the end thereof.
5. Section 10 (Definition of the term "Applicable Base Rate Margin").
The definition of the term "Applicable Base Rate Margin" appearing in Section
10 of the Credit Agreement shall be amended and as so amended shall be restated
in its entirety to read as follows:
"The term "Applicable Base Rate Margin" shall mean 0% per annum
when applied to the indebtedness evidenced by the Revolving Credit
Notes and 1/4 of 1% per annum when applied to the indebtedness
evidenced by the Term Credit Notes, provided however that from and
after the occurrence of an Event of Default, the term "Applicable
Base Rate Margin" shall mean 2% per annum when applied to the
indebtedness evidenced by the Revolving Credit Notes and 2-1/4% per
annum when applied to the indebtedness evidenced by the Term Credit
Notes."
6. Section 10 (Definition of the term "Applicable CD Rate Margin").
The definition of the term "Applicable CD Rate Margin" appearing in Section 10
of the Credit Agreement shall be amended and as so amended shall be restated in
its entirety to read as follows:
"The term "Applicable Base Rate Margin" shall mean for each Interest
Period applicable to an Adjusted CD Rate Portion (i) 1-1/8% per annum
if as of the first day of such Interest Period the Outstandings are
equal to or less than 50% of the Borrowing Base as most recently
determined by the Banks, (ii) 1-1/4% per annum if as of the first day
of such Interest Period the Outstandings exceed 50% but are less than
75% of the Borrowing Base as most recently determined by the Banks
and (iii) 1-3/8% per annum if as of the first day of such Interest
Period the Outstandings equal or exceed 75% of the Borrowing Base as
most recently determined by the Banks; provided, however, that
(aa) the Applicable CD Rate Margin for any CD Rate Portion evidenced
by the Term Credit Notes shall be the rate per annum determined
pursuant to the foregoing plus 1/4 of 1% per annum, (ab) from and
after the occurrence of an Event of Default the Applicable CD Rate
Margin shall be the rate per annum determined pursuant to all of the
foregoing (including the foregoing proviso) plus the rate of 2% per
annum and (ac) through December 31, 1994 (but not thereafter) the
Applicable CD Rate Margin shall be reduced by 1/8 of 1% per annum
from such margin as computed pursuant to the applicable foregoing
provisions of this definition."
7. Section 10 (Definition of the term "Applicable LIBOR Rate Margin").
The definition of the term "Applicable LIBOR Rate Margin" appearing in Section
10 of the Credit Agreement shall be amended and as so amended shall be restated
in its entirety to read as follows:
2
<PAGE> 3
"The term "Applicable LIBOR Rate Margin" shall mean for each
Interest Period applicable to a LIBOR Portion (i) 7/8 of 1% per annum
if as of the first day of such Interest Period the Outstandings are
equal to or less than 50% of the Borrowing Base as most recently
computed by the Banks, (ii) 1% per annum if as of the first day of
such Interest Period the Outstandings exceed 50% but are less than 75%
of the Borrowing Base as most recently determined by the Banks and
(iii) 1-1/8% per annum if as of the first day of such Interest Period
the Outstandings equal or exceed 75% of the Borrowing Base as most
recently determined by the Banks; provided, however that (aa) the
Applicable LIBOR Rate Margin for any LIBOR Portion evidenced by the
Term Credit Notes shall be the rate per annum determined pursuant to
the foregoing plus 1/4 of 1% per annum, (ab) from and after the
occurrence of an Event of Default, the Applicable LIBOR Rate Margin
shall be the rate per annum determined pursuant to all of the
foregoing (including the foregoing proviso) plus the rate of 2% per
annum and (ac) through December 31, 1994 (but not thereafter) the
Applicable LIBOR Rate Margin shall be reduced by 1/8 of 1% per annum
from such margin as computed pursuant to the applicable foregoing
provisions of this definition."
8. Section 10 (Definition of the term "Termination Date"). The
definition of the term "Termination Date" appearing in Section 10 of the Credit
Agreement shall be amended by striking the date "October 31, 1994" appearing
therein and by substituting the date "October 31, 1995" therefor.
9. Section 10 (new definition). Section 10 of the Credit Agreement
shall be amended by adding the following additional definition thereto:
"The term "Outstandings" shall mean as of any time the same is
to be determined the sum of the then outstanding principal balance of
the Notes and the amount of all outstanding Letters of Credit."
10. The Revolving Credit Note. The first paragraph of the Revolving
Credit Note heretofore issued to Bank of Montreal shall be amended by striking
the date "October 31, 1994" appearing therein and by substituting the date
"October 31, 1995" therefor. If at any time Bank of Montreal requests the
issuance of a new revolving credit note to it in substitution for the Revolving
Credit Note currently outstanding, the Company agrees to issue such revolving
credit note to Bank of Montreal in the same form as the Revolving Credit Note
presently outstanding but with the foregoing amendment embodied therein upon
surrender of the presently outstanding Revolving Credit Note marked
"Superseded".
11. Exhibit B. The first paragraph of Exhibit B to the Credit
Agreement is hereby amended by striking the word "nine" appearing therein and
by substituting the word "five" therefor.
12. Section 12.7 (Notices). Section 12.7 of the Credit Agreement
shall be amended by striking the phrase "101 Park Avenue, Suite 1400, Oklahoma
City, Oklahoma 73126,
3
<PAGE> 4
Attention: William C. Rankin" and by substituting the following therefor
"2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400, Attention:
Daniel D. Hawk".
Except as specifically amended hereby all of the terms, conditions and
provisions of the Credit Agreement and Revolving Credit Note shall stand and
remain unchanged and in full force and effect. No reference to this Second
Amendment to Credit Amendment need be made in any instrument or document at any
time referring to the Credit Agreement or Revolving Credit Note, a reference to
the Credit Agreement or Revolving Credit Note in any of such to be deemed to be
a reference to the Credit Agreement or Revolving Credit Note as amended hereby.
This amendment shall be effective as of the date appearing immediately above
the signature of the Company hereon except that the amendment to Section 3.1
hereof shall be effective for all computations of the commitment fee accruing
from and after December 1, 1993, the amendment to the definition of the term
"Applicable Base Rate Margin" shall be effective from and after December 1,
1993 and the amendments to definition of the terms "Applicable CD Rate Margin"
and "Applicable LIBOR Rate Margin" shall become effective for all LIBOR
Portions and Adjusted CD Rate Portions created or continued through a new
Interest Period subsequent to the date hereof. This Second Amendment to Credit
Agreement shall be construed in accordance with and governed by the laws of the
State of Illinois.
Dated as of this 22nd day of December, 1993.
HADSON ENERGY RESOURCES CORPORATION
By: /s/ Clyde E. McKenzie
__________________________________________________
Its Vice President
Accepted and agreed to as of the date last above written.
BANK OF MONTREAL
By: /s/ Robert Roberts
__________________________________________________
Its Director
The undersigned confirms that it is aware of the terms and conditions
of this Second Amendment to Credit Amendment while it acknowledges that its
consent thereto is not required, it further acknowledges that it has no
objection to the terms and conditions thereof and that its Guaranty dated as of
December 18, 1990 of the indebtedness, obligations and liabilities of the
Company continues in full force and effect.
HADSON ENERGY LIMITED
By: /s/ David Nevis Hayes
__________________________________________________
Its Managing Director
4
<PAGE> 1
Exhibit 10.8
HADSON ENERGY LIMITED
SECOND AMENDMENT TO ACCEPTANCE AGREEMENT
Bank of Montreal
Chicago, Illinois
Gentlemen:
We refer to the Acceptance Agreement dated as of June 6, 1991 as
amended and currently in effect between us (the "Acceptance Agreement"),
capitalized terms used without definition below to have the same meanings
herein as they have in the Acceptance Agreement. Upon your acceptance
hereof in the space provided for that purpose below, the Acceptance
Agreement shall be amended as follows:
1. Section 7.5(a) (Financial Reports). Section 7.5(a) of the
Acceptance Agreement shall be amended and as so amended shall be restated
in its entirety to read as follows:
"(a) as soon as available, and in any event within 60 days
after the close of each quarterly fiscal period of the Company, a copy
of the balance sheet, statement of earnings and statement of changes
in cash flow of the Company and its Subsidiaries as of the last day of
such period (in the case of the balance sheet) and for the fiscal year
to date ending on the last day of such period (in the case of the
other statements) prepared on a consolidated basis and certified to by
the president, chief financial officer, chief accounting officer or
vice president and treasurer thereof with such certificate to also (i)
state that the signer thereof has reexamined the provisions of this
Agreement and that no Default or Event of Default has occurred or is
continuing or if any of such has occurred or is continuing stating the
nature thereto and the action, if any, which the Company proposes to
take with respect thereto and (ii) include a statement of all sales
of Borrowing Base Assets during the preceding twelve months;"
2. Section 7.5(d) (Financial Reports). Section 7.5(d) of the
Acceptance Agreement shall be amended and as so amended shall be restated in
its entirety to read as follows:
"(d) On or before the 15th day of each September and March a
report showing the gross proceeds received by the Company and the
Pledged Subsidiaries during the six-month period ending on the last
day of the preceding June (in the case of reports due on or before
September 15) or December (in the case of reports due on or before
March 15) from the sale of oil and gas from the wells included in the
Borrowing Base Assets and the quantities thereof sold (broken down (in
the case of quantities only) by well and computed as to the aggregate
interest of the Company and the Pledged Subsidiaries) from each well,
together with the gross amount of royalties and taxes paid or payable
on all of such and a statement of operating expenses for all of such
for the applicable six-month period."
1
<PAGE> 2
3. Section 9 (Definitions).
"The term "Stamping Fee" shall mean 1.30% per annum computed on
the face amount of each Acceptance for the period from the date of
Acceptance to its maturity date; provided, however, that for Drafts
with an Acceptance Date falling after December 31, 1993, the Stamping
Fee shall be computed at the rate of (i) 7/8 of 1% per annum if on
the Acceptance Date for the Draft in question the outstanding face
amount of the Acceptances is 50% or less of the Borrowing Base as
most recently determined by the Banks, (ii) 1% per annum if on the
Acceptance Date for the Draft in question the outstanding face amount
of the Acceptances is greater than 50% but less than 75% of the
Borrowing Base as most recently determined by the Banks and (iii)
1-1/8% per annum if on the Acceptance Date for the Draft in question
the outstanding face amount of the Acceptances is equal to or greater
than 75% of the Borrowing Base as then most recently determined by the
Banks."
4. Section 11.7 (Notices). Section 11.7 of the Acceptance Agreement
shall be amended by striking the phrase "at 101 Park Avenue, Suite 1400,
Oklahoma City, Oklahoma 73126, Attention: William C. Rankin" and by
substituting the following therefor: "2000 Post Oak Boulevard, Suite 100,
Houston, Texas 77056-4400, Attention: Daniel D. Hawk".
Except as specifically amended hereby all of the terms, conditions and
provisions of the Acceptance Agreement shall stand and remain unchanged and in
full force and effect. No reference to this Second Amendment to Acceptance
Agreement need be made in any instrument or document at any time referring to
the Acceptance Agreement, a reference to the Acceptance Agreement in any of
such to be deemed to be a reference to the Acceptance Agreement as amended
hereby. This Second Amendment to Acceptance Agreement shall be construed in
accordance with and governed by the laws of the State of Illinois.
Dated and to become effective as of this 22nd day of December, 1993.
HADSON ENERGY LIMITED
By: /s/ David Nevis Hayes
___________________________________________
Its Managing Director
Accepted and agreed to as of the date last above written.
BANK OF MONTREAL
By: /s/ Robert Roberts
___________________________________________
Its Director
2
<PAGE> 3
The undersigned confirms that it is aware of the terms and conditions
of the Second Amendment to Acceptance Agreement and while it acknowledges that
its consent thereto is not required, it further acknowledges that it has no
objection to the terms and conditions thereof and that their Guaranty is each
dated as of June 6, 1991 of the indebtedness, obligations and liabilities of
the Company continue in full force and effect.
HADSON ENERGY RESOURCES CORPORATION
By: /s/ Clyde E. McKenzie
______________________________________________
Its Vice President
HADSON AUSTRALIA DEVELOPMENT PTY., LIMITED
By: /s/ David Nevis Hayes
______________________________________________
Its Director
PETRO ENERGY LIMITED
By: /s/ David Nevis Hayes
______________________________________________
Its Director
3
<PAGE> 1
Exhibit 10.14
FIRST AMENDMENT TO APACHE CORPORATION
CORPORATE ADMINISTRATIVE GROUP INCENTIVE PLAN
On January 1, 1990, Apache Corporation (the "Company") enacted the
Corporate Administrative Group Incentive Plan (the "Plan"). Pursuant to
Section 8 of the Plan, the Company reserved the right and power to amend the
Plan at any time. Pursuant to that right and power, the Plan is hereby
amended, effective as of April 10, 1990, as set forth below.
AMENDMENTS
1. Paragraph number one is hereby amended in its entirety to
provide as follows:
Apache Corporation (the "Company") adopts this Corporate
Administrative Group Incentive Plan (the "Plan") to provide incentives
to administrative officers, directors and managers of the Company and
its Affiliates to increase shareholder equity and maximize return on
investment while increasing after-tax profits. "Affiliate" is defined
as any and all entities in which the Company has at least a 75%
ownership interest of the shares having voting power for the election
of directors.
IN WITNESS WHEREOF, this first amendment has been executed this 22nd
day of October, 1990.
APACHE CORPORATION
ATTEST:
/s/ ROBERT A. SEAVY By: /s/ C. EUGENE DANIELS
Assistant Secretary C. Eugene Daniels, Vice President
<PAGE> 1
Exhibit 10.16
AMENDMENTS
TO THE
APACHE CORPORATION 401(K) RETIREMENT/SAVINGS PLAN
THIS AMENDMENT is made this 31st day of December 1993 by Apache
Corporation, a Delaware corporation, to be effective as set forth below.
RECITALS
1. Apache Corporation maintains the Apache Corporation 401(k)
Retirement/Savings Plan (the "Plan").
2. Section 10.4 of the Plan provides that Apache Corporation may modify
or amend the Plan at any time in any respect. Pursuant to that right and power
the Plan is hereby amended as set forth below, effective as of the dates set
forth below.
AMENDMENT
I. AMENDMENTS RELATING TO ERISA Section 404(C) COMPLIANCE
A. Effective January 1, 1994, the following definition shall be added to
Article I.
"Account Owner" means a Participant who has an Account balance, an
Alternate Payee who has an Account balance, or a beneficiary who has
obtained an interest in the Account(s) of the previous Account Owner
because of the previous Account Owner's death.
B. Effective February 1, 1994, Section 2.3 shall be replaced in its
entirety by the following.
2.3 Enrollment Procedure.
Notwithstanding Sections 2.1 and 2.2, a Covered Employee shall
not be eligible to participate in the Plan until after completing the
enrollment procedures specified by the Committee. Such enrollment
procedures may, for example, require the Covered Employee to complete
and sign an enrollment form or to complete a voice-response telephone
enrollment. The Covered Employee shall provide the initial investment
direction, the address and date of birth of the Employee, and the
name, address, and date of birth of each beneficiary of the Employee,
the initial rate of the Participant Before-Tax Contributions, and any
other information requested by the Committee. An election to make
Participant Before Tax Contributions shall not be effective until
after the Covered Employee has properly completed the enrollment
procedures. The Committee may require that the enrollment procedure
be completed a certain number of
<PAGE> 2
days prior to the date that a Covered Employee actually begins to
participate.
C. Effective February 1, 1994, Article IX shall be replaced in its
entirety by the following.
ARTICLE IX
Trust Agreement - Investments.
9.1 Trust Agreement.
Apache has entered into a Trust agreement to provide for the
holding, investment and administration of the funds of the Plan. The
Trust agreement shall be part of the Plan, and the rights and duties
of any individual under the Plan shall be subject to all terms and
provisions of the Trust agreement.
9.2 Expenses of Trust.
(a) Except as provided in Subsection (b) below,
all taxes upon or in respect of the Trust shall be paid by the Trustee
out of the Trust assets, and all expenses of administering the Trust
shall be paid by the Trustee out of the Trust assets, to the extent
such taxes and expenses are not paid by the Company or the Account
Owner. No fiduciary shall receive any compensation for services
rendered to the Plan if the fiduciary is being compensated on a full
time basis by the Company.
(b) All expenses of individually directed
transactions in Trust assets, including without limitation the
Trustee's transaction fee, brokerage commissions, transfer taxes,
interest on insurance policy loans, and any taxes and penalties that
may be imposed as a result of an individual's investment direction
shall be assessed against the Account(s) of the Account Owner
directing such transactions.
9.3 Investments.
(a) Section 404(c) Plan. The Plan is intended to
be a plan described in ERISA section 404(c). To the extent that an
Account Owner exercises control over the investment of his or her
Accounts, no person who is a fiduciary shall be liable for any loss,
or by reason of any breach, that is the direct and necessary result of
the Account Owner's exercise of control.
(b) Directed Investments. Accounts shall be
invested, upon the written or telephone voice-response
- 2 -
<PAGE> 3
direction of each Account Owner, in any one or more of a series of
investment funds designated by the Committee from time to time. One
or more such funds may, at the sole discretion of the Committee,
consist of shares of Company Stock. If so directed by Account Owners,
up to 100% of the Accounts under the Plan may be invested in Company
Stock. The funds available for investment and the principal features
thereof, including a general description of the investment objectives,
the risk and return characteristics, and the type and diversification
of the investment portfolio of each fund, shall be communicated to the
Account Owners in the Plan from time to time. Any changes in such
funds shall be immediately communicated to all Account Owners.
(c) Absence of Directions. To the extent that an
Account Owner fails to affirmatively direct the investment of his or
her Accounts, the Committee shall direct the Trustee in writing
concerning the investment of such Accounts. The Committee shall act
by majority vote. Any dissenting member of the Committee shall,
having registered his or her dissent in writing, thereafter cooperate
to the extent necessary to implement the decision of the Committee.
(d) Change in Investment Directions. Account
Owners may change their investment directions, with respect to
investment of new contributions and with respect to the investment of
existing amounts allocated to Accounts, every three months unless the
Committee determines that more frequent changes in investment
directions shall be made available with respect to one or more of the
investment funds. Such changes shall be effective, prospectively, as
of the time established by the Committee. The Committee shall
establish procedures for giving investment directions, which shall be
in writing and communicated to Account Owners. For example, the
procedures could permit an Account Owner to change the investment
direction of new contributions as of the first day of every calendar
quarter, provided that the Committee receives at least two weeks prior
written notice; the procedures could also permit an Account Owner to
change the investment direction of existing Account balances once in a
calendar quarter, on any business day, by giving telephone
voice-response instructions to the Trustee.
D. Effective February 1, 1994, Article XIV shall be added to the end of
the Plan.
- 3 -
<PAGE> 4
ARTICLE XIV
Matters Affecting Company Stock
14.1 Voting, Etc.
The shares of Company Stock in Accounts, whether or not
vested, may be voted by the Account Owner to the same extent as if
duly registered in the Account Owner's name. The Trustee or its
nominee in which the shares are registered shall vote the shares
solely as agent of the Account Owner and in accordance with the
instructions of the Account Owner. If no instructions are received,
the Trustee shall vote the shares of Company Stock for which it has
received no voting instructions in the same proportions as the Account
Owners affirmatively directed their shares of Company Stock to be
voted unless the Trustee determines that a pro rata vote would be
inconsistent with its fiduciary duties under ERISA. If the Trustee
makes such a determination, the Trustee shall vote the Company Stock
as it determines to be consistent with its fiduciary duties under
ERISA. Each Account Owner who has Company Stock allocated to his or
her Accounts shall direct the Trustee concerning the tender (as
provided below) and the exercise of any other rights appurtenant to
the Company Stock. The Trustee shall follow the directions of the
Account Owner with respect to the tender.
14.2 Notices.
Apache shall cause to be mailed or delivered to each Account
Owner copies of all notices and other communications sent to the
Apache shareholders at the same times so mailed or delivered by Apache
to its other shareholders.
14.3 Retention/Sale of Company Stock and Other Securities.
The Trustee is authorized and directed to retain the Company
Stock and any other Apache securities acquired by the Trust except as
follows:
(a) In the normal course of Plan administration,
the Trustee shall sell Company Stock to satisfy Plan administration
and distribution requirements as directed by the Committee or in
accordance with provisions of the Plan specifically authorizing such
sales.
- 4 -
<PAGE> 5
(b) In the event of a transaction involving the
Company Stock evidenced by the filing of Schedule 14D-1 with the
Securities and Exchange Commission ("SEC") or any other similar
transaction by which any person or entity seeks to acquire beneficial
ownership of 50% or more of the shares of Company Stock outstanding
and authorized to be issued from time to time under Apache's articles
of incorporation ("tender offer"), the Trustee shall sell, convey, or
transfer Company Stock pursuant to written instructions of Account
Owners delivered to the Trustee in accordance with the following
Sections 14.4 through 14.15. For purposes of such provisions, the
term "filing date" means the date relevant documents concerning a
tender offer are filed with the SEC or, if such filing is not
required, the date the Trustee receives actual notice that a tender
offer has commenced.
(c) If Apache makes any distribution of Apache
securities with respect to the shares of Company Stock held in the
Plan, other than additional shares of Company Stock (any such
securities are hereafter referred to as "stock rights"), the Trustee
shall sell, convey, transfer, or exercise such stock rights pursuant
to written instructions of Account Owners delivered to the Trustee in
accordance with the following Sections of this Article.
14.4 Tender Offers.
(a) Allocated Stock. In the event of any tender
offer, each Account Owner shall have the right to instruct the Trustee
to tender any or all shares of Company Stock, whether or not vested,
that are allocated to his or her Accounts under the Plan on or before
the filing date. The Trustee shall follow the instructions of the
Account Owner. The Trustee shall not tender any Company Stock for
which no instructions are received.
(b) Unallocated Stock. The Trustee shall tender
all shares of Company Stock that are not allocated to Accounts in the
same proportion as the Account Owners directed the tender of Company
Stock allocated to their Accounts unless the Trustee determines that a
pro rata tender would be inconsistent with its fiduciary duties under
ERISA. If the Trustee makes such a determination, the Trustee shall
tender or not tender the unallocated Company Stock as it determines to
be consistent with its fiduciary duties under ERISA.
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<PAGE> 6
(c) Suspension of Share Purchases. In the event
of a tender offer, the Trustee shall suspend all purchases of Company
Stock pursuant to the Plan unless the Committee otherwise directs.
Until the termination of such tender offer and pending such Committee
direction, the Trustee shall invest available cash pursuant to the
applicable provisions of the Plan and the Trust Agreement.
(d) Temporary Suspension of Certain Cash
Distributions. Notwithstanding anything in the Plan to the contrary,
no option to receive cash in lieu of Company Stock shall be honored
during the pendency of a tender offer unless the Committee otherwise
directs.
14.5 Stock Rights.
(a) General. If Apache makes a distribution of
stock rights with respect to the Company Stock held in the Plan and if
the stock rights become exercisable or transferable (the date on which
the stock rights become exercisable or transferable shall be referred
to as the "exercise date"), each Account Owner shall determine whether
to exercise the stock rights, sell the stock rights, or hold the stock
rights allocated to his or her Accounts. The provisions of this
Section shall apply to all stock rights received with respect to
Company Stock held in Accounts, whether or not the Company Stock with
respect to which the stock rights were issued are vested.
(b) Independent Fiduciary. The Independent
Fiduciary provided for in Section 14.15 below shall act with respect
to the stock rights. All Account Owner directions concerning the
exercise or disposition of the stock rights shall be given to the
Independent Fiduciary, who shall have the sole responsibility of
assuring that the Account Owners' directions are followed.
(c) Exercise of Stock Rights. If, on or after
the exercise date, an Account Owner wishes to exercise all or a
portion of the stock rights allocated to his or her Accounts, the
Independent Fiduciary shall follow the Account Owner's direction to
the extent that there is cash or other liquid assets available in his
or her Accounts to exercise the stock rights. Notwithstanding any
other provision of the Plan, each Account Owner who has stock rights
allocated to his or her Accounts shall have a period of five business
days following the exercise date in which he or she may give
instructions to the Committee to liquidate any of the assets held in
his or her Accounts (except shares of Company Stock or assets
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<PAGE> 7
such as guaranteed investment contracts or similar investments), but
only if he or she does not have sufficient cash or other liquid assets
in his or her Accounts to exercise the stock rights. The liquidation
of any necessary investments pursuant to an Account Owner's direction
shall be accomplished as soon as reasonably practicable, taking into
account any timing restrictions with respect to the investment funds
involved. The cash obtained shall be used to exercise the stock
rights, as the Account Owner directs. Any cash that is not so used
shall be invested in a cash equivalent until the next date on which
the Account Owner may change his or her investment directions under
the Plan.
(d) Sale of Stock Rights. On and after the
exercise date, the Independent Fiduciary shall sell all or a portion
of the stock rights allocated to Accounts, as the Account Owner shall
direct.
14.6 Other Rights Appurtenant to the Company Stock.
If there are any rights appurtenant to the Company Stock,
other than voting, tender, or stock rights, each Account Owner shall
exercise or take other appropriate action concerning such rights with
respect to the Company Stock, whether or not vested, that is allocated
to their Accounts in the same manner as the other holders of the
Company Stock, by giving written instructions to the Trustee. The
Trustee shall follow all such instructions, but shall take no action
with respect to allocated Company Stock for which no instructions are
received. The Trustee shall exercise or take other appropriate action
concerning any such rights appurtenant to unallocated Company Stock.
14.7 Information to Truste.
Promptly after the filing date, the exercise date, or any
other event that requires action with respect to the Company Stock,
the Committee shall deliver or cause to be delivered to the Trustee or
the Independent Fiduciary, as appropriate, a list of the names and
addresses of Account Owners showing (i) the number of shares of
Company Stock allocated to each Account Owner's Accounts under the
Plan, (ii) each Account Owner's pro rata portion of any unallocated
Company Stock, and (iii) each Account Owner's share of any stock
rights distributed by Apache. The Committee shall date and certify
the accuracy of such information, and such information shall be
updated periodically by the
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<PAGE> 8
Committee to reflect changes in the shares of Company Stock and other
assets allocated to Accounts.
14.8 Information to Account Owners.
The Trustee or the Independent Fiduciary, as appropriate,
shall distribute and/or make available to each affected Account Owner
the following materials:
(a) A copy of the description of the terms and
conditions of any tender offer filed with the SEC on Schedule 14D-1,
or any similar materials if such filing is not required, any material
distributed to shareholders generally with respect to the stock
rights, and any proxy statements and any other material distributed to
shareholders generally with respect to any action to be taken with
respect to the Company Stock.
(b) If requested by Apache, a statement from
Apache's management setting forth its position with respect to a
tender offer that is filed with the SEC on Schedule 14D-9 and/or a
communication from Apache given pursuant to 17 C.F.R. 240.14d-9(e),
as amended.
(c) An instruction form prepared by Apache and
approved by the Trustee or the Independent Fiduciary, to be used by
any Account Owner who wishes to instruct the Trustee to tender Company
Stock in response to the tender offer, to instruct the Independent
Fiduciary to sell or exercise stock rights, or to instruct the Trustee
or Independent Fiduciary with respect to any other action to be taken
with respect to the Company Stock. The instruction form shall state
that (i) if the Account Owner fails to return an instruction form to
the Trustee by the indicated deadline, the Trustee will not tender any
shares of Company Stock the Account Owner is otherwise entitled to
tender, (ii) the Independent Fiduciary will not sell or exercise any
right allocated to the Account except upon the written direction of
the Account Owner, (iii) the Trustee or Independent Fiduciary will not
take any other action that the Account Owner could have directed, and
(iv) Apache acknowledges and agrees to honor the confidentiality of
the Account Owner's directions to the Trustee.
(d) Such additional material or information as
the Trustee or the Independent Fiduciary may consider necessary to
assist the Account Owner in making an informed decision and in
completing or delivering the instruction form (and any amendments
thereto) to the Trustee or the Fiduciary on a timely basis.
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<PAGE> 9
14.9 Expenses.
The Trustee and the Independent Fiduciary shall have the right
to require payment in advance by Apache and the party making the
tender offer of all reasonably anticipated expenses of the Trustee and
the Independent Fiduciary, respectively, in connection with the
distribution of information to and the processing of instructions
received from Account Owners.
14.10 Former Account Owners.
Apache shall furnish former Account Owners who have received
distributions of Company Stock so recently as to not be shareholders
of record with the information furnished pursuant to Section 14.8.
The Trustee and the Independent Fiduciary are hereby authorized to
take action with respect to the Company Stock distributed to such
former Account Owners in accordance with appropriate instructions from
them. If the Trustee does not receive appropriate instructions, it
shall take no action with respect to the distributed Company Stock.
14.11 No Recommendations.
Neither the Committee, the Committee Fiduciary, the Trustee,
nor the Independent Fiduciary shall express any opinion or give any
advice or recommendation to any Account Owner concerning voting the
Company Stock, any tender offer, stock rights, or the exercise of any
other rights appurtenant to the Company Stock, nor shall they have any
authority or responsibility to do so. Neither the Trustee nor the
Independent Fiduciary has any duty to monitor or police the party
making a tender offer or Apache in promoting or resisting a tender
offer; provided, however, that if the Trustee or the Independent
Fiduciary becomes aware of activity that on its face reasonably
appears to the Trustee or Independent Fiduciary to be materially
false, misleading, or coercive, the Trustee or the Independent
Fiduciary, as the case may be, shall promptly demand that the
offending party take appropriate corrective action. If the offending
party fails or refuses to take appropriate corrective action, the
Trustee or the Independent Fiduciary, as the case may be, shall
communicate with affected Account Owners in such manner as it deems
advisable.
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<PAGE> 10
14.12 Trustee to Follow Instructions.
(a) So long as the Trustee and the Independent
Fiduciary, as the case may be, have determined that the Plan is in
compliance with ERISA section 404(c), the Trustee or the Independent
Fiduciary shall tender, deal with stock rights, and act with respect
to any other rights appurtenant to the Company Stock, pursuant to the
terms and conditions of the particular transaction or event, and in
accordance with instructions received from Account Owners. Except for
voting, the Trustee or the Independent Fiduciary shall take no action
with respect to Company Stock, stock rights, or other appurtenant
rights for which no instructions are received, and such Company Stock,
stock rights, or other appurtenant rights shall be treated like all
other Company Stock, stock rights, or other appurtenant rights for
which no instructions are received. The Trustee, or if an Independent
Fiduciary has been appointed, the Independent Fiduciary, shall vote
the allocated Company Stock that an Account Owner does not vote as
specified in Section 14.1.
(b) If the Trustee or Independent Fiduciary
determines that the Plan does not satisfy the requirements of ERISA
section 404(c), the Trustee or Independent Fiduciary shall follow the
instructions of the Account Owner with respect to voting, tender,
stock rights, or other rights appurtenant to the Company Stock unless
the Trustee or Independent Fiduciary determines that to do so would be
inconsistent with its fiduciary duties under ERISA. In such case, the
Trustee or the Independent Fiduciary shall take such action as it
determines to be consistent with its fiduciary duties under ERISA.
14.13 Confidentiality.
(a) The Committee shall designate one of its
members (the "Committee Fiduciary") to receive investment directions
and to transmit such directions to the Trustee or Independent
Fiduciary, as the case may be. The Committee Fiduciary shall also
receive all Account Owner instructions concerning voting, tender,
stock rights, and other rights appurtenant to the Company Stock. The
Committee Fiduciary shall communicate the instructions to the Trustee
or the Fiduciary, as appropriate.
(b) Neither the Committee Fiduciary, the Trustee,
nor the Independent Fiduciary shall reveal or release any instructions
received from Account Owners concerning the Company Stock to Apache,
an Affiliated
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<PAGE> 11
Entity, or the officers, directors, employees, agents, or
representatives of Apache and Affiliated Entities, except to the
extent necessary to comply with Federal or state law not preempted by
ERISA. If disclosure is required by Federal or state law, the
information shall be disclosed to the extent possible in the aggregate
rather than on an individual basis.
(c) The Committee Fiduciary shall be responsible
for reviewing the confidentiality procedures from time to time to
determine their adequacy. The Committee Fiduciary shall ensure that
the confidentiality procedures are followed. The Committee Fiduciary
shall also ensure that the Independent Fiduciary provided for in
Section 14.15 is appointed.
(d) Apache, with the Trustee's cooperation, shall
take such action as is necessary to maintain the confidentiality of
Account records including, without limitation, establishment of
security systems and procedures which restrict access to Account
records and retention of an independent agent to maintain such
records. If an independent recordkeeping agent is retained, such
agent must agree, as a condition of its retention by Apache, not to
disclose the composition of any Accounts to Apache, an Affiliated
Entity or an officer, director, employee, or representative of Apache
or an Affiliated Entity.
(e) Apache acknowledges and agrees to honor the
confidentiality of the Account Owners' instructions to the Committee
Fiduciary, the Trustee, and the Independent Fiduciary. If Apache, by
its own act or omission, breaches the confidentiality of Account Owner
instructions, Apache agrees to indemnify and hold harmless the
Committee Fiduciary, the Trustee, or the Independent Fiduciary, as the
case may be, against and from all liabilities, claims and demands,
damages, costs, and expenses, including reasonable attorneys' fees,
that the Committee Fiduciary, the Trustee, or the Independent
Fiduciary may incur as a result thereof.
14.14 Investment of Proceeds.
If Company Stock or the rights are sold pursuant to the tender
offer or the provisions of the rights, the proceeds of such sale shall
be invested in accordance with the provisions of the Plan and the
Trust Agreement.
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<PAGE> 12
14.15 Independent Fiduciary.
Apache shall appoint a fiduciary (the "Independent Fiduciary")
to act solely with respect to the Company Stock in situations which
the Committee Fiduciary determines involve a potential for undue
influence by Apache in connection with the Company Stock and the
exercise of any rights appurtenant to the Company Stock. If the
Committee Fiduciary so determines, it shall give written notice to the
Independent Fiduciary, which shall have sole responsibility for
assuring that Account Owners receive the information necessary to make
informed decisions concerning the Company Stock, are free from undue
influence or coercion, and that their instructions are followed to the
extent proper under ERISA. The Independent Fiduciary shall act until
it receives written notice to the contrary from the Committee
Fiduciary.
II. AMENDMENT TO CHANGE THE MATCHING FORMULA
A. The first four sentences of Section 3.1(b) shall remain unchanged.
Effective February 1, 1994, the remainder of Section 3.1(b) shall be replaced
by the following.
As of the last day of each pay period, the Committee shall allocate
Company Matching Contributions (including such forfeitures occurring
during the pay period that are treated as Company Matching
Contributions pursuant to Section 5.5) to each Participant who made
Participant Before-Tax Contributions during the pay period as follows.
The Company Matching Contribution allocated to a Participant shall
equal a "matching percentage" multiplied by that portion of the
Participant Before-Tax Contributions for the pay period that do not
exceed 6% of the Participant's Compensation for the pay period. The
matching percentage equals 100% unless one or more of the following
conditions applies, in which case the matching percentage equals 50%.
(i) The Participant is younger than age
59-1/2 on the first day of the pay period and the Participant has, in
the six months preceding the pay period, sold Company Stock from any
of his or her Accounts. Sales prior to January 1, 1994 shall be
ignored.
(ii) The Participant has elected to
invest any portion of the pay period's Company Matching Contribution
in an investment option other than Company Stock. The matching
percentage is 50% only to the extent that this condition applies.
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<PAGE> 13
(iii) The Participant has elected to
invest any portion of the pay period's Participant Before-Tax
Contribution in an investment other than Company Stock. The matching
percentage is 50% only to the extent that this condition applies. The
matching percentage shall be applied first to the Participant
Before-Tax Contributions that are invested in Company Stock. For
example, if Paragraphs (i) and (ii) do not apply, and if a Participant
contributes 10% of Compensation as a Participant Before-Tax
Contribution in the pay period and he or she elects to invest half the
contribution in Company Stock and half in another investment option,
then the Participant's allocation of Company Matching Contributions
for the pay period will equal 100% of 5% of the pay period's
Compensation plus 50% of 1% of the pay period's Compensation, for a
total match of 5-1/2% of Compensation; the remaining Participant
Before-Tax Contribution (of 4% of the Participant's Compensation) will
not be matched.
III. AMENDMENT TO ACCOMMODATE THE CAFETERIA PLAN.
A. Effective January 1, 1994, the first sentence of Section 3.4(b) shall
replaced by the following.
If, as a result of a reasonable error in estimating
Compensation, or as a result of the allocation of forfeitures, or as a
result of other facts and circumstances as provided in the regulations
under Code section 415, the Annual Additions to a Participant's
Account(s) would, but for this Subsection, exceed the foregoing
limits, the Annual Additions shall be reduced, to the extent
necessary, in the following order: unmatched Participant Before-Tax
Contributions, then matched Participant Before-Tax Contributions and
the corresponding Company Matching Contributions, and then Company
Mandatory Contributions.
IV. AMENDMENTS DEALING WITH CHANGES IN THE LAW.
A. Effective January 1, 1993, the references to Code section 402(a)(8)
(in Sections 1.12(d) and 1.36 of the Plan) shall be changed to Code section
402(e)(3).
B. Effective January 1, 1993, the following new section shall be added to
the Plan.
6.6 Direct Rollover Election.
This Section is effective January 1, 1993. A Participant, an
Alternate Payee who is the Spouse or former Spouse of the Participant,
or a surviving Spouse of a deceased Participant (collectively, the
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<PAGE> 14
"distributee") may direct the Trustee to pay all or any portion of his
or her "eligible rollover distribution" to an "eligible retirement
plan" in a "direct rollover." Within a reasonable period of time
before an eligible rollover distribution, the Committee shall inform
the distributee of this direct rollover option, the appropriate
withholding rules, other rollover options, the options regarding
income taxation, and any other information required by Code section
402(f).
An "eligible rollover distribution" is any distribution or
in-service withdrawal other than (a) distributions required under Code
section 401(a)(9), (b) distributions of amounts that have already been
subject to federal income tax (such as defaulted loans or after-tax
voluntary contributions), (c) installment payments in a series of
substantially equal payments made at least annually and (i) made over
a specified period of ten or more years, (ii) made for the life or
life expectancy of the distributee, or (iii) made for the joint life
or joint life expectancy of the distributee and his or her designated
beneficiary, (d) a distribution to satisfy the limits of Code section
415 or 402(g), (e) a distribution to satisfy the ADP, ACP, or multiple
use tests, or (f) any other actual or deemed distribution specified in
the regulations issued under Code section 402(c).
For a Participant or an Alternate Payee who is the Spouse or
former Spouse of the Participant, an "eligible retirement plan" is an
individual retirement account or annuity described in Code section
408(a) or 408(b), an annuity plan described in Code section 403(a), or
the qualified trust of a defined contribution plan that accepts
eligible rollover distributions. For a surviving Spouse of a deceased
Participant, an "eligible retirement plan" is an individual retirement
account or annuity.
A "direct rollover" is a payment by the Trustee to the
eligible retirement plan specified by the distributee.
C. Effective January 1, 1989, the following paragraph shall be added to
the end of Subsection 3.6(c).
(iv) Those vested Company Matching
Contributions and those Participant Before-Tax Contributions that are
taken into account for this ACP test for any Highly Compensated
Employee may be returned to such Highly Compensated Employee, without
the consent of either the Highly Compensated Employee or his or her
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<PAGE> 15
Spouse, subject to the rules of Subsection (d). Any such return of
Participant Before-Tax Contributions or vested Company Matching
Contributions shall be made within two and one-half months after the
close of the Plan Year if possible, and in no event later than 12
months after the close of the Plan Year.
D. Effective January 1, 1989, the phrase "Section 3.5 or 3.7" in the
fourth sentence of Subsection 3.2(b) shall be replaced by the phrase "Section
3.4, 3.5, or 3.7."
E. Effective January 1, 1989, subsection 3.8(d) shall be deleted.
F. Effective January 1, 1989, the following sentence shall be added to
the end of Paragraph 6.5(a)(iv).
However, distribution from a Participant Before-Tax Contribution
Account shall not occur pursuant to this Paragraph until either the
Participant has separated from service within the meaning of Code
section 401(k)(2)(B)(i)(I) or the Participant has been affected by a
corporate transaction described in Code section 401(k)(10)(A)(ii) or
Code section 401(k)(10)(A)(iii).
V. AMENDMENTS FOR QDROS.
A. Effective January 1, 1993, Sections 6.1 and 6.2 shall be replaced in
their entirety by the following.
6.1 Beneficiaries.
(a) Each Account Owner shall file with the
Committee a designation of the beneficiaries and contingent
beneficiaries to whom the distributable amount (determined pursuant to
Section 6.3) shall be paid in the event of his or her death. In the
absence of an effective beneficiary designation as to any portion of
the distributable amount after a Participant dies, such amount shall
be paid to the Participant's surviving Spouse, or, if none, to his or
her estate. In the absence of an effective beneficiary designation as
to any portion of the distributable amount after any non-Participant
Account Owner dies, such amount shall be paid to the Account Owner's
estate.
(b) A beneficiary designation may be changed by
the Account Owner at any time and without the consent of any
previously designated beneficiary. However, if the Account Owner is a
married Participant, his or her Spouse shall be his or her beneficiary
unless his or her Spouse has consented to the designation of a
different
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<PAGE> 16
beneficiary. To be effective, the Spouse's consent must be in
writing, witnessed by a notary public, and filed with the Committee.
Any such election shall be effective only as to the Spouse who signed
the election. Effective as of July 23, 1992, if a Participant has
designated his or her Spouse as his or her beneficiary, and the
Participant and that Spouse subsequently divorce, then the beneficiary
designation shall be void and of no effect on the day such divorce is
final.
6.2 Consent.
(a) Except for distributions identified in
Subsection (b), distributions may be made only after the appropriate
consent has been obtained under this Subsection. Distributions to a
Participant shall be made only with the Participant's consent to the
manner of distribution and the time of distribution. Distributions to
a beneficiary of a deceased Participant shall be made only with the
beneficiary's consent to the manner of distribution and the time of
distribution. Distributions to an Alternate Payee or his or her
beneficiary shall be made as specified in the QDRO. To be effective,
the consent must be in writing, signed by the distributee, and filed
with the Committee within 90 days before the distribution is to
commence. A consent once given shall be irrevocable after
distribution has begun. Nevertheless, if a distributee has elected to
receive his or her distribution in the form of installments, he or she
may elect to accelerate any or all remaining installments.
(b) Consent is not required for the following
distributions:
(i) Corrective distributions under
Article III that are returned to the Participant because the
contribution is not deductible by the Company or because the
contribution would exceed the limits of Code sections 415(c)(1),
415(e), 402(g), 401(k)(3), 401(m)(2), or 401(m)(9);
(ii) Distributions that are required to
comply with Code section 401(a)(9);
(iii) Immediate cashouts of less than
$3,500, if the aggregate value of the nonforfeitable portion of a
Participant's Accounts is $3,500 or less (calculated in accordance
with the applicable Treasury regulations) on the earliest date the
Participant (or his or her beneficiary if the Participant has not
received
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<PAGE> 17
any distributions) may elect to receive a distribution under Section
6.5 after the Participant has terminated employment;
(iv) Distributions pursuant to Code
section 401(a)(14); and
(v) Distributions after the later of the
Participant's Normal Retirement Age or age 62, provided that the
Participant has terminated employment before the distribution is made.
B. Effective January 1, 1993, the phrase "Paragraphs (f)(ii) and
(f)(iii)" in Subsection 13.9(c) shall be replaced with the phrase "Subsection
(f)."
C. Effective January 1, 1993, Subsection 13.9(d) shall be replaced in its
entirety with the following.
(d) In the case of any payment before an Employee
has separated from service, a Domestic Relations Order shall not be
treated as failing to meet the requirements of Subsection (c) solely
because such order requires that payment of benefits be made to an
Alternate Payee (i) on or after the dates specified in Subsection (f),
(ii) as if the Employee had retired on the date on which such payment
is to begin under such order (but taking into account only the Account
balance on such date), and (iii) in any form in which such benefits
may be paid under the Plan to the Employee. For purposes of this
Subsection, the Account balance as of the date specified in the QDRO
shall be the vested portion of the Employee's Account(s) on such date.
D. Effective January 1, 1993, Subsection 13.9(f) shall be replaced in its
entirety with the following.
(f) The Alternate Payee shall have the following
rights under the Plan:
(i) An Alternate Payee shall receive a
lump sum distribution of his or her Plan assets as soon as
administratively practicable after the Committee determines that the
Domestic Relations Order is a QDRO.
(ii) If the Alternate Payee cannot
receive an immediate distribution of his or her entire interest in the
Plan (which could occur if the Alternate Payee is awarded more than
the distributable amount in Section 6.3), then the Alternate Payee
shall receive an immediate lump sum distribution of the distributable
amount. The
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<PAGE> 18
Alternate Payee's remaining interest in the Plan shall be distributed
as soon as administratively practicable, in annual lump sums of the
distributable amount on the first day of the year. Upon the Alternate
Payee's death, his or her interest in the Plan shall be distributed in
a lump sum as soon as practicable.
(iii) Distribution to an Alternate Payee
must occur on or before the Participant's Required Beginning Date.
(iv) The Alternate Payee may bring claims
against the Plan in the same manner as a Participant pursuant to
Section 13.2.
VI. AMENDMENTS DEALING WITH HERC.
A. Effective January 1, 1994, the following paragraph shall be added to
the end of the Preamble to the Plan.
Each Appendix to this Plan is a part of the Plan document. It
is intended that an Appendix will be used to (1) describe which
business entities are actively participating in the Plan, (2) describe
any special participation, eligibility, vesting, or other provisions
that apply to the employees of a business entity, (3) describe any
special provisions that apply to Participants affected by a designated
corporate transaction, and (4) describe any special distribution rules
that apply to directly transferred benefits from other plans.
B. Effective January 1, 1994, the following Appendix A shall be added to
the end of the Plan.
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<PAGE> 19
APPENDIX A
PARTICIPATING COMPANIES
The following Affiliated Entities were actively participating in the
Plan as of the following dates:
Participation Participation
Business Began As Of Ended As Of
-------- ------------- -------------
Apache International, September 22, 1987 N/A
Inc.
Hadson Energy Resources January 1, 1994 N/A
Corporation
Hadson Energy Limited January 1, 1994 N/A
-- END OF APPENDIX A --
C. Effective January 1, 1994, the following Appendix B shall be added to
the end of the Plan.
APPENDIX B
HADSON ENERGY RESOURCES CORPORATION
Introduction
Through a merger effective November 12, 1993, Apache now holds
100% of the capital stock of Hadson Energy Resources Corporation
("HERC"). HERC and its wholly owned subsidiary, Hadson Energy Limited
("HEL"), maintained the Hadson Energy Resources Corporation Employee
401(k) Plan (the "HERC Plan"), a profit sharing plan containing a cash
or deferred arrangement. The HERC Plan was terminated as of December
31, 1993. Amounts will be transferred from the HERC Plan to this Plan
as soon as administratively feasible after the Internal Revenue
Service issues a favorable ruling with respect to the termination of
the HERC Plan. The transferred amounts will be accounted for
separately, and different distributional options will apply to them,
as described below. In addition, HERC and HEL have adopted this Plan,
and Apache has approved their adoption, as of January 1, 1994 for
HERC's and HEL's eligible employees. The employees will be given
credit in this Plan, for vesting and eligibility purposes, for their
prior service with HERC and HEL.
This Appendix is intended to encompass all the protected
benefits and optional forms of benefit, as
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<PAGE> 20
required by Code section 411(d)(6), with respect to amounts
transferred from the HERC Plan and shall be interpreted consistently
with that intent.
Capitalized terms in this Appendix have the same meanings as
those given to them in the Plan.
Service
This Appendix applies to all individuals who are common-law
employees of HERC or HEL ("Current HERC Employees") as of January 1,
1994. A Period of Service for a Current HERC Employee shall include
any periods of employment with HERC, HEL, and any of HERC's
subsidiaries.
Participation
Notwithstanding Sections 2.1 and 3.1, a Current HERC Employee
who is a Covered Employee shall be eligible to begin to make
Participant Before-Tax Contributions, and shall be eligible to
participate in the Plan with respect to the 6% Company Mandatory
Contribution, on January 1, 1994.
Transfer of Accounts
The Trustee is authorized to accept the direct transfer of all
assets from the trustee of the HERC Plan. The assets may be
transferred in kind or in cash, as determined by the Committee. The
Trustee shall accept a direct transfer of any participant loan from
the HERC Plan; such loan shall continue to be administered according
to the terms of its promissory note. The Committee shall establish
such procedures, rules, and regulations as it deems necessary or
appropriate to accommodate the transfer of assets. The Trustee shall
separately account for all assets directly transferred to this Plan.
The Trustee shall establish the following accounts for each individual
whose account(s) are transferred to this Plan: a Voluntary
Contribution Account (containing participant after-tax contributions
and the investment earnings thereon); a Salary Deferral Account
(containing participant before-tax contributions and the investment
earnings thereon); a QNEC/QMAC Account (containing qualified
non-elective contributions, qualified matching contributions, and the
investment earnings thereon); and a HERC Contributions Account
(containing the employer's matching contributions, the employer's
discretionary contributions, and the
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<PAGE> 21
investment earnings thereon) (collectively, the "HERC Accounts").
Distributions
Unless waived in writing by the Participant or other
beneficiary after such person becomes entitled to a distribution from
the Plan by reason of a Participant's death, Disability, retirement,
or other termination of employment with the Company, or a termination
or partial termination of the Plan, then in addition to and
notwithstanding any other provisions of the Plan, the Participant or
other beneficiary shall have the right to receive his or her vested
interest in the balance of his or her HERC Accounts in the following
optional forms and at the following times. The annuity requirements,
below, however, are automatic with respect to the HERC Account
balances unless waived as provided for therein.
To the extent that this Appendix does not provide for an
alternative or contrary requirement or procedure for distribution of a
Participant's HERC Account, the provisions of the Plan shall control.
For example, all of the consent and beneficiary designation provisions
of the Plan govern the distribution of HERC Accounts to the extent not
inconsistent with the annuity requirements below, and all
distributions are subject to the direct rollover rules of Section 6.6.
Whether or not specifically stated hereinafter, the following
provisions apply only to the HERC Account balances.
1. Death or Disability.
Distributions pursuant to the Plan provisions control in the
case of distributions as a result of death or Disability, except to
the extent that the annuity requirements below are applicable, and
except that installment payments are not available.
2. Other than Death or Disability.
Distributions for reasons other than the Participant's death
or Disability shall be made in accordance with the following:
A Participant who has attained age 59-1/2 may withdraw any
vested amount from his or her HERC Accounts at any time, regardless of
whether the Participant has terminated employment with HERC.
- 21 -
<PAGE> 22
A Participant may elect to withdraw any vested amount from his
or her HERC Accounts at any time after separating from service (within
the meaning of Code section 401(k)(2)(B)(i)(I)) with Apache, HERC, and
all Affiliated Entities.
A Participant may elect to withdraw any amount from his or her
Voluntary Contributions Account at any time, regardless of whether the
Participant has terminated employment with HERC.
A Participant younger than 59-1/2 who has not separated from
service with Apache, HERC, and Affiliated Entities, may make a
hardship withdrawal from his or her Salary Deferral Account under the
same terms and conditions described in Section 7.1(b) of the Plan.
Notwithstanding any of the foregoing early distribution
options, a Participant whose vested interest in his or her HERC
Account balances are distributed pursuant to one of the options
contained in this Paragraph 2 shall forfeit his or her nonvested
interest in his or her HERC Account balances only as of the last day
of the Plan Year in which the Participant incurs a one-year Lapse in
Apache Employment.
All distributions made pursuant to this Paragraph 2 shall be
made in a manner that is consistent with, and satisfies the provisions
of, Paragraph 4 below, including, but not limited to, all notice and
consent requirements of Code sections 417 and 411(a)(11) and the
Treasury Regulations thereunder.
3. Qualified Single Life or Joint and Survivor Annuity.
(a) Eligibility and Conditions. Unless the Participant
elects, as provided in 3(c), not to receive benefits in the form of a
qualified joint and survivor annuity, benefits attributable to HERC
Account balances will be paid in a form having the effect of a
qualified joint and survivor annuity (as defined in 3(b)(2)) with
respect to any Participant who (1) is entitled to a distribution, and
(2) satisfies the marriage requirements provided in 3(d)(2). In a
similar fashion, if a Participant does not meet the marriage
requirements, such benefits will be paid in a form having the effect
of a single life annuity unless the Participant elects, similar to the
election pursuant to 3(c) but without the spousal consent requirement,
to waive the life annuity.
- 22 -
<PAGE> 23
(b) Definitions. As used in this Paragraph
(1) Life Annuity. The term "life annuity" means
an annuity that provides retirement payments and requires the survival
of the Participant or the Participant's spouse as one of the
conditions for any payment or possible payment under the annuity.
(2) Qualified Joint and Survivor Annuity. The
term "qualified joint and survivor annuity" means an annuity for the
life of the Participant with a survivor annuity for the life of the
Participant's spouse which is one-half of the amount of the annuity
payable during the joint lives of the Participant and his or her
spouse. A qualified joint and survivor annuity shall be the actuarial
equivalent of a life annuity for the life of the Participant. The
Committee shall direct the Trustee to apply the entire vested amount
in all of the Participant's HERC Accounts (whether vested before or
upon death, including the proceeds of insurance contracts) to the
purchase of an annuity contract that satisfies all of the requirements
of this Paragraph 3 and to distribute the contract to the Participant.
Payments to the spouse of a deceased Participant shall not be
terminated or reduced because of such spouse's remarriage.
(3) Normal Retirement Age. The term "normal
retirement age" means the Participant's 65th birthday.
(4) Annuity Starting Date. The term "annuity
starting date" means (i) the first day of the first period for which
an amount is payable as an annuity, whether by reason of retirement or
by reason of Disability, or (ii) in the case of a benefit not payable
in the form of an annuity, the first day on which all events have
occurred which entitled the Participant to such benefit.
(5) Day. The term "day" means a calendar day.
(c) Election Not to Take Joint and Survivor Annuity.
(1) In General. Each Participant may elect, at
any time during the election period described in 3(c)(3), not to
receive a qualified joint and survivor annuity. The election shall be
in writing and clearly indicate that the Participant is electing to
receive all of his or her benefits under the Plan in a form other than
that of a qualified joint and survivor annuity.
- 23 -
<PAGE> 24
(2) Consent of Spouse. An election under 3(c)(1)
above shall not be effective unless (i) the Participant's spouse
consents in writing to the election, (ii) the election designates a
beneficiary (or a form of benefits) which may not be changed without
spousal consent (or the consent of the spouse expressly permits
designations by the Participant without any requirement of further
consent by the spouse) and (iii) the spouse's consent acknowledges the
effect of the election and the consent is witnessed by a Committee
member or a notary public. The spouse's consent shall be filed with
the Committee at the same time that the Participant's election under
3(c)(1) is filed with the Committee. If a spousal consent is not
filed together with the Participant's election, the election shall
take effect nevertheless if it is established to the satisfaction of
the Committee that the Participant is not married, the Participant's
spouse cannot be located, or that other circumstances prescribed in
the Treasury Regulations exist. Any spousal consent or establishment
that spousal consent cannot be obtained shall be effective only with
respect to such spouse.
(3) Election period. The Participant shall have
an election period which shall be a 90-day period ending on the
annuity starting date. If a Participant makes a request for
additional information as provided in 3(c)(4) below on or before the
last day of the election period, the election period shall be extended
to the extent necessary to include the 90 calendar days immediately
following the day the requested additional information is personally
delivered or mailed to the Participant.
(4) Information to be Provided by Plan
Administrator.
(i) The Plan Administrator shall provide
to the Participants, at the time and in the manner specified
in 3(c)(4)(ii), the following information, as applicable to
the HERC Account balances under the Plan, written in
nontechnical language:
(A) A general explanation of the
terms and conditions of the qualified joint and survivor
annuity; the Participant's right to make, and the effect of,
an election to waive the joint and survivor annuity form of
benefit; the right of the Participant's spouse to consent to
any election to waive the joint and survivor annuity; the
right
- 24 -
<PAGE> 25
to revoke an election to waive; and the effect of such a
revocation; and
(B) A general explanation of the
relative financial effect on a Participant's annuity of the
election. Various methods may be used to explain such
relative financial effect, including information as to the
benefits the Participant would receive under the qualified
joint and survivor annuity stated as an arithmetic or
percentage reduction from a single life annuity; a table
showing the difference between a straight life annuity and a
qualified joint and survivor annuity in terms of a reduction
in dollar amounts or a table showing a percentage reduction
from the straight life annuity. The notice and explanation
required by this 3(c)(4)(i) must also inform the Participant
of the availability of the additional information specified in
3(c)(4)(iii) and how such information may be obtained.
(ii) The method or methods used to
provide the information may vary. If mail or personal
delivery is used, then, whether or not the information has
been previously provided, there must be a mailing or personal
delivery of the information by such time as to reasonably
assure that it will be received on a date that is no less than
30 days and no more than 90 days before the annuity starting
date. If a method other than mail or personal delivery is
used to provide Participants with some or all of such
information, it must be a method that is reasonably calculated
to reach the attention of a Participant on or about the date
prescribed in the immediately preceding sentence and to
continue to reach the attention of such Participant during the
election period applicable to the Participant for which the
information is being provided (as, for example, by permanent
posting, repeated publication, etc.).
(iii) The Plan Administrator must furnish
to a particular Participant, upon a timely written request, a
written explanation in nontechnical language of the terms and
conditions of the qualified joint and survivor annuity and the
financial effect upon the particular Participant's annuity of
making any election under this Paragraph. Such financial
effect shall be given in terms of dollars per annuity payment.
The Plan Administrator need not comply with more than one
- 25 -
<PAGE> 26
such request made by a particular Participant. This
explanation must be personally delivered or mailed (first
class mail, postage prepaid) to the Participant within 30 days
from the date of the Participant's written request.
(5) Election is Revocable. Any election made
under this 3(c) may be revoked in writing at any time during the
specified election period, and after such election has been revoked,
another election under this Paragraph may be made at any time during
the specified election period.
(6) Election by Surviving Spouse. The spouse of
a deceased Participant may elect to have the benefits attributable to
HERC Account balances paid in a form other than a survivor annuity.
The Plan Administrator must furnish to the spouse, within a reasonable
amount of time after a written request has been made by the spouse, a
written explanation in nontechnical language of the survivor annuity
and any other form of payment which may be selected. This explanation
must state the financial effect (in terms of dollars) of each form of
payment. The Plan Administrator need not respond to more than one
such request.
(d) Additional Plan Provisions.
(1) Claim for Benefits. As a condition precedent
to the payment of benefits, a Participant must express in writing to
the Plan Administrator the form in which he or she prefers benefits to
be paid and provide all the information reasonably necessary for the
payment of such benefits. However, if a Participant files a claim for
benefits with the Plan Administrator and provides the Plan
Administrator with all the information necessary for the payment of
benefits but does not indicate a preference as to the form for the
payment of benefits, benefits attributable to HERC Account balances
must be paid in the form of a qualified joint and survivor annuity if
the Participant has attained normal retirement age unless such
Participant has made an effective election not to receive benefits in
such form.
(2) Marriage Requirements.
(i) In General. A joint and survivor
annuity will be paid only if
(A) the Participant and his or
her spouse have been married to each other throughout a
- 26 -
<PAGE> 27
period of one year ending on the annuity starting date; and
(B) the Participant shall notify
the Plan Administrator of his or her marital status within 30
days after request is made for such information.
(ii) Special Rule. If a Participant
marries within one year before his or her annuity starting
date and if the Participant and such spouse have been married
for at least a one year period that ends on or before the
Participant's date of death, the Participant and such spouse
shall be treated as having been married throughout the
one-year period ending on the Participant's annuity starting
date.
(3) Effect of Participant's Death on an
Election or Revocation of Election. The effect of an election or a
revocation of an election timely made under 3(c) shall not be altered
by the death of the Participant within any particular time period
after such election or revocation shall be made effective.
(e) Amount of Benefits. The amount of benefits shall be
as provided in 3(b).
(f) Commencement and Duration. The monthly surviving
spouse's benefit shall be payable to the spouse for life, beginning as
of the first day of the calendar month coincident with or next
following the Participant's death.
4. Qualified Preretirement Survivor Annuity.
(a) Eligibility and Conditions. Unless the Participant elects, as
provided in 4(c), to waive death benefits in the form of a qualified
preretirement survivor annuity, death benefits attributable to HERC Account
balances will be paid in a form having the effect of a qualified preretirement
survivor annuity (as defined in Paragraph 4(b)(2)) with respect to any
Participant who (1) dies prior to the annuity starting date, and (2) satisfies
the marriage requirement of 4(d).
(b) Definitions. As used in this Paragraph
(1) Life Annuity. The term "life annuity" means an
annuity that provides retirement payments and requires the survival of the
Participant or the Participant's spouse as one of the conditions for any
payment or possible payment under the annuity.
- 27 -
<PAGE> 28
(2) Qualified Preretirement Survivor Annuity. The term
"qualified preretirement survivor annuity" means an annuity for the life of the
surviving spouse of the Participant, which is the actuarial equivalent of 100%
of the Participant's HERC Account balance as of his or her date of death. The
Committee shall direct the Trustee to purchase an annuity contract that
satisfies all of the requirements of this Paragraph 4 (provided that the
present value of the annuity contract is not less than 50% of the Participant's
vested amount in all of his or her HERC Accounts at his or her date of death,
whether vested before or upon death, including the proceeds of insurance
contracts) and to distribute the annuity contract to the surviving spouse.
(3) Normal Retirement Age. The term "normal retirement
age" means the Participant's 65th birthday.
(4) Annuity Starting Date. The term "annuity starting
date" means (i) the first day of the first period for which an amount is
payable as an annuity, whether by reason of retirement or by reason of
Disability or (ii) in the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred which entitled the
Participant to such benefit.
(5) Day. The term "day" means a calendar day.
(c) Election to Waive Qualified Preretirement Survivor Annuity.
(1) In General.
(i) Each Participant may elect, during the
election period described in 4(c)(3), to waive the payment of death
benefits in the form of a qualified preretirement survivor annuity.
(ii) The election shall be in writing and clearly
indicate that the Participant is electing to waive the payment of
death benefits in the form of a qualified preretirement survivor
annuity.
(2) Consent of Spouse. An election under 4(c)(1) shall
not be effective unless (i) the Participant's spouse consents in
writing to the election, (ii) the election designates a beneficiary
(or a form of benefits) which may not be changed without spousal
consent (or the consent of the spouse expressly permits the
designations by the Participant without any requirement of further
consent by the spouse) and (iii) the spouse's consent acknowledges the
effect of the election and the consent is witnessed by a Committee
member or a notary public.
- 28 -
<PAGE> 29
The spouse's consent shall be filed with the Committee at the same
time that the Participant's election under 4(c)(1) is filed with the
Committee. If a spousal consent is not filed together with the
Participant'selection, the election shall take effect nevertheless if
it is established to the satisfaction of the Committee that the
Participant is not married, the Participant's spouse cannot be
located, or that other circumstances prescribed in the Treasury
Regulations exist. Any spousal consent or establishment that spousal
consent cannot be obtained shall be effective only with respect to
such spouse.
(3) Election period. The Participant shall have an
election period which shall be a period that ends the later of (i) the
period beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35, (ii)
a reasonable time after the individual becomes a Participant, (iii) a
reasonable time after the preretirement survivor annuity ceases to be
a fully subsidized benefit, (iv) a reasonable time after the joint and
survivor rules become effective to the Participant or (v) a reasonable
time after the Participant separates from service before attaining age
35.
(4) Information to be Provided by Plan Administrator.
(i) The Plan Administrator shall provide to the
Participants, at the time and in the manner specified in 4(c)(4), the
following information, as applicable to the Plan, written in
nontechnical language:
(A) A general explanation of the
qualified preretirement survivor annuity; the Participant's right to
make, and the effect of, an election to waive the preretirement
survivor annuity form of death benefit; the right of the Participant's
spouse to consent to the election to waive the preretirement survivor
annuity; the right to revoke an election to waive; and the effect of
such a revocation.
(B) A general explanation of the
relative financial effect on a Participant's death benefits of the
election. Various methods may be used to explain such relative
financial effect.
- 29 -
<PAGE> 30
(ii) The method or methods used to provide the
information may vary. If mail or personal delivery is used, then,
whether or not the information has been previously provided, there
must be a mailing or personal delivery of the information by such time
as to reasonably assure that it will be received within the period
commencing with the first day of the Plan Year in which the
Participant attains age 32 and ending with the last day of the Plan
Year preceding the Plan Year in which the Participant attains age 35.
If a method other than mail or personal delivery is used to provide
Participants with some or all of such information, it must be a method
that is reasonably calculated to reach the attention of a Participant
on or about the date prescribed in the immediately preceding sentence
and to continue to reach the attention of such Participant during the
election period applicable to the Participant for which the
information is being provided (as, for example, by permanent posting,
repeated publication, etc.).
(4) Election is Revocable. Any election made under
this Paragraph 4 may be revoked in writing at any time during the specified
election period, and after such election has been revoked, another election
under this Paragraph may be made at any time during the specified election
period.
(5) Election by Surviving Spouse. The surviving
spouse may elect to have benefits paid in a form other than a preretirement
survivor annuity. The Plan Administrator must furnish to the spouse, within a
reasonable amount of time after a written request has been made by the spouse,
a written explanation in nontechnical language of the preretirement survivor
annuity and any other form of payment that may be selected. The explanation
must state the financial effect (in terms of dollars) of each form of payment.
The Plan Administrator need not respond to more than one such request.
(d) Marriage Requirement. A preretirement survivor annuity will
be paid only if the Participant and his or her spouse have been married to each
other throughout a period of one year ending on the date of the Participant's
death.
(e) Amount of Benefits. The amount shall be as provided in 4(b).
(f) Commencement and Duration. The monthly surviving spouse's
benefit shall be payable to the spouse for life, beginning as of the first day
of the calendar month coincident with or next following the Participant's
death.
-- END OF APPENDIX B --
- 30 -
<PAGE> 31
IN WITNESS WHEREOF, this Amendment has been executed the date and year
first set forth above.
APACHE CORPORATION
Attest:
/s/ JAMES E. SLOAN By: /s/ WILLIAM J. JOHNSON
Assistant Secretary President
- 31 -
<PAGE> 1
Exhibit 10.26
APACHE CORPORATION
EQUITY COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS
Apache Corporation, a Delaware corporation (the "Company"), hereby
establishes the Apache Corporation Equity Compensation Plan for Non- Employee
Directors (the "Plan") for those directors of the Company who are neither
officers nor employees of the Company (the "Directors") and hereby authorizes a
maximum of 50,000 shares of the Company's common stock, par value $1.25 per
share (the "Common Stock") for issuance thereunder during the term of the Plan,
which shares shall consist entirely of treasury stock. Each Director shall
receive automatic and non- discretionary grants of restricted stock
("Restricted Stock Awards") on the terms and conditions set forth under the
Plan. Each Director receiving a Restricted Stock Award shall enter into an
agreement (a "Restricted Stock Agreement") in such form as the Board of
Directors of the Company (the "Board") or a duly authorized committee of the
Board (the "Committee") shall determine to be consistent with the provisions of
the Plan and which may contain additional terms and conditions relating to the
Restricted Stock Awards. In the event of any inconsistency between the
provisions of the Plan and any Restricted Stock Agreement, the provisions of
the Plan shall govern.
The Committee shall be responsible for the administration of the Plan.
However, the Committee shall have no authority, discretion or power to (i)
select the Directors who will receive Restricted Stock Awards, (ii) determine
the terms of the Restricted Stock Awards to be granted pursuant to the Plan,
the number of shares of Common Stock to be issued thereunder or the time at
which such Restricted Stock Awards are to be granted, (iii) establish the
duration and nature of Restricted Stock Awards, or (iv) alter any other terms
or conditions specified in the Plan, except to administer the Plan in
accordance with its terms. Subject to the foregoing limitations, the Committee
is authorized to (A) interpret the Plan, (B) prescribe, amend and rescind rules
and regulations relating to the Plan, (C) provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company, and (D)
make all other determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express provisions of the
Plan. The Committee's authority shall include, but not be limited to, the
right to make equitable adjustments in the number or kind of shares subject to
outstanding Restricted Stock Awards, or which have been reserved for issuance
pursuant to the Plan but are not then subject to Restricted Stock Awards, to
reflect changes in the number or kind of outstanding shares of Common Stock due
to any stock dividend, stock split, merger, recapitalization or other
extraordinary or unusual event.
Beginning on July 1, 1994, and on July 1 of each fifth year thereafter
through and including July 1, 2009 (each, an "Award Date"), each Director shall
receive a Restricted Stock Award of 1,000 shares of Common Stock. Any Director
elected to the Board of Directors subsequent to an Award Date shall receive a
Restricted Stock Award of 1,000 shares of Common Stock on the next July 1
following the date of such election (a "Special Award Date"); provided,
however, that if such July 1 is an Award Date, such Award Date will constitute
such Director's Special Award Date. No Restricted Stock Awards shall be
granted to any Director subsequent to July 1, 2009.
<PAGE> 2
Restricted Stock Awards shall vest at the rate of 20 percent per year
on each of the first through the fifth anniversaries of each Award Date or
Special Award Date, as the case may be. Restricted Stock Awards, whether
vested or unvested, may not be sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of as long as a Director is serving as a
member of the Board. All restrictions on Restricted Stock Awards shall lapse
on the first business day following the date on which a Director ceases to be a
member of the Board; provided, however, that the unvested portion of any
Restricted Stock Award shall be automatically forfeited at such time.
Certificates issued pursuant to Restricted Stock Awards shall be
registered in the name of the recipient Director and shall bear an appropriate
restrictive legend referring to the terms, conditions and restrictions
applicable to such award. Certificates issued pursuant to Restricted Stock
Awards shall be held by the Corporate Secretary of the Company until the award,
or portion thereof, has vested and all applicable restrictions thereon shall
have lapsed. As a condition of any Restricted Stock Award, each Director shall
have delivered to the Corporate Secretary of the Company a stock power,
endorsed in blank, relating to the Common Stock issued pursuant to a Restricted
Stock Award. A Director shall have all voting, dividend, liquidation and other
rights of a stockholder of the Company with respect to the shares of Common
Stock issued pursuant to any Restricted Stock Award, notwithstanding that all
or a portion of such award shall be unvested, subject to the restrictions
described in the preceding paragraph.
The Board may at any time terminate, and from time to time may amend
or modify the Plan; provided, however, that no amendment or modification may
become effective without approval of such amendment or modification by the
stockholders of the Company, if stockholder approval is required to enable the
Plan to satisfy any applicable statutory or regulatory requirements, or if the
Company, on the advice of counsel, determines that stockholder approval is
otherwise necessary or desirable. Notwithstanding the foregoing, the Plan
shall not be amended or modified more than once every six months, other than to
comport with changes in the Internal Revenue Code, the Employment Retirement
Income Security Act, or the rules and regulations promulgated thereunder. The
Plan is expressly intended to comport with Rule 16b-3(c)(2)(ii) (or any
successor provision) as promulgated under the Securities Exchange Act of 1934,
as amended, and any ambiguities in the construction of the Plan or any
Restricted Stock Agreement shall be resolved so as to effectuate such intent.
2
<PAGE> 3
APACHE CORPORATION
EQUITY COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS
RESTRICTED STOCK AWARD AGREEMENT
This Agreement is made as of the 1st day of July, 1994, between Apache
Corporation, a Delaware corporation (the "Company"), and _______________
("Director").
1. Grant of Restricted Stock. Pursuant to the Apache Corporation
Equity Compensation Plan for Non-Employee Directors (the "Plan"), the Company
hereby grants to Director, as of the grant date specified above, a restricted
stock award (a "Restricted Stock Award") of 1,000 shares of the Company's
common stock, par value $1.25 per share (the "Common Stock"), which number of
shares may be adjusted pursuant to Paragraph 6 below, subject to the terms and
conditions set forth in this Agreement and in the Plan.
2. Director Bound by Plan. Attached is a copy of the Plan which
is incorporated herein by reference and made a part hereof. Director
acknowledges receipt of a copy of the Plan and agrees to be bound by all the
terms and provisions thereof. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Plan.
3. Restrictions. This Restricted Stock Award shall be subject to
the following restrictions:
(a) Shares of Common Stock issued pursuant to this
Restricted Stock Award may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of by Director until the first business day
following the date on which Director ceases to be a member of the Board. The
Common Stock will only be transferable to the extent such shares are vested and
not forfeited in accordance with Paragraphs 3(b) and 3(c) below.
(b) This Restricted Stock Award shall vest in accordance
with the following schedule as long as Director shall continue to serve as a
member of the Board:
<TABLE>
<CAPTION>
Cumulative
Date Shares Vested
---- -------------
<S> <C>
Prior to July 1, 1995 0
After July 1, 1995 and prior to July 1, 1996 200
After July 1, 1996 and prior to July 1, 1997 400
After July 1, 1997 and prior to July 1, 1998 600
After July 1, 1998 and prior to July 1, 1999 800
After July 1, 1999 1,000
</TABLE>
(c) Any unvested portion of this Restricted Stock Award
shall be forfeited automatically when Director ceases to be a member of the
Board.
<PAGE> 4
4. Enforcement of Restrictions.
(a) Each stock certificate issued in the name of Director
pursuant to this Restricted Stock Award shall bear the following restrictive
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS CONTAINED IN A RESTRICTED STOCK AGREEMENT DATED
AS OF JULY 1, 1994 BY AND BETWEEN APACHE CORPORATION AND
_______________________, A COPY OF WHICH IS ON FILE AT THE
OFFICE OF THE CORPORATE SECRETARY OF THE COMPANY.
(b) Director shall not be entitled to delivery of the
stock certificate which shall be held by the Corporate Secretary of the Company
until all restrictions thereon have lapsed.
(c) Director hereby agrees to execute a blank stock power
with respect to the stock certificate representing the shares of Common Stock
issued pursuant to this Restricted Stock Award, and to deliver such stock power
to the Corporate Secretary of the Company.
5. Privileges of a Stockholder. Director shall have all voting,
dividend, liquidation and other rights of a stockholder of the Company with
respect to the Common Stock issued pursuant to this Restricted Stock Award,
notwithstanding that all or a portion of such award shall be unvested, subject
to the restrictions set forth in Paragraph 3(a) above.
6. Adjustments. If the Company shall at any time increase or
decrease the number of outstanding shares of Common Stock or change in any way
the rights and privileges of such shares by means of the payment of a stock
dividend or any other distribution upon such shares payable in Common Stock, or
through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Common Stock, then in
relation to the Common Stock that is affected by one or more of the above
events, the numbers, rights and privileges of the shares of the Common Stock
issued pursuant to this Restricted Stock Award shall be increased, decreased or
changed in like manner as if they had been issued and outstanding, fully paid
and nonassessable at the time of such occurrence. In the event there shall be
any other change in the number or kind of outstanding shares of Common Stock,
or of any stock or other securities into which the Common Stock shall be
changed or for which it shall have been exchanged, and if the Committee shall
in its discretion determine that such change equitably requires an adjustment
in the number or kind of shares issued pursuant to this Restricted Stock Award,
then such adjustments shall be made by the Committee and shall be effective for
all purposes of the Plan and this Restricted Stock Award. Adjustments under
this Section 6 shall be made by the Committee, whose determinations with regard
thereto shall be final and binding upon Director.
2
<PAGE> 5
7. Withholding of Tax. To the extent required by applicable law
and regulation, each Director must arrange with the Company for the payment of
any federal, state or local income or other tax applicable to the shares of
Common Stock issued pursuant to this Restricted Stock Award before the Company
shall be required to deliver to Director a certificate for such Common Stock
free and clear of all restrictions under the Plan.
8. Plan Amendment, Modification and Termination. The Board may
at any time terminate, and from time to time may amend or modify the Plan;
provided however, that no amendment or modification may become effective
without approval of the amendment or modification by the stockholders of the
Company, if stockholder approval is required to enable the Plan to satisfy any
applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable. Notwithstanding the foregoing, the Plan shall not be amended or
modified more than once every six months, other than to comport with changes in
the Internal Revenue Code, the Employment Retirement Income Security Act, or
the rules and regulations promulgated thereunder. No amendment, modification
or termination of the Plan shall in any manner materially adversely affect the
Restricted Stock Award granted pursuant to this Agreement without the consent
of Director.
9. Administration. Any action taken or decision made by the
Company, the Board, or the Committee or its delegates arising out of or in
connection with the construction, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may
be, and shall be final, conclusive and binding on Director and all persons
claiming under or through Director. By accepting this Restricted Stock Award,
Director and all persons claiming under or through Director shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Board, or the
Committee or its delegates.
10. Investment Representation. Director hereby acknowledges that
the shares of Common Stock issued pursuant to this Restricted Stock Award shall
be acquired for investment without a view to distribution, within the meaning
of the Securities Act of 1933, as amended (the "Act"), and shall not be sold,
transferred, assigned, pledged or hypothecated in the absence of an effective
registration statement under the Act or an applicable exemption from the
registration requirements of the Act and any applicable state securities laws.
11. Listing and Registration of Common Stock. This Restricted
Stock Award shall be subject to the requirement that, if at any time counsel to
the Company shall determine that the listing, registration or qualification of
the shares of Common Stock issued pursuant to this Restricted Stock Award upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition
of, or in connection with, the issuance of shares of Common Stock thereunder,
this Restricted Stock Award may not be accepted in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration or qualification.
3
<PAGE> 6
12. No Right to Continue as Director. Nothing contained in the
Plan or in this Agreement shall interfere with or limit in any way the right of
the stockholders of the Company to remove Director from the Board pursuant to
the Bylaws or the Certificate of Incorporation of the Company, nor confers upon
Director any right to continue in the service of the Company.
13. Designation of Beneficiary. Director may name a beneficiary
or beneficiaries to receive any vested portion of this Restricted Stock Award,
which he would be otherwise entitled to receive pursuant to this Agreement in
the event of his death while serving as a member of the Board, on a written
form to be provided by and filed with the Corporate Secretary of the Company,
and in a manner determined by the Committee in its discretion. The Committee
reserves the right to review and approve beneficiary designations. Director
may change his beneficiary or beneficiaries from time to time in the same
manner, unless he has made an irrevocable designation. Any designation of
beneficiary under the Plan and this Agreement (to the extent it is valid and
enforceable under applicable law) shall be controlling over any other
disposition, testamentary or otherwise, as determined by the Committee in its
discretion. If no designated beneficiary survives Director and is living on
the date on which any vested part of this Restricted Stock Award becomes
payable to Director's beneficiary, such award will be made to the legal
representatives of the Director's estate, and the term "beneficiary" shall be
deemed to include such person or persons.
14. Notices. Any notice hereunder to the Company shall be
addressed to: Apache Corporation, One Post Oak Central, 2000 Post Oak
Boulevard, Suite 100, Houston, Texas 77056-4400, Attention: Corporate
Secretary, and any notice to Director shall be addressed to Director at
Director's last address on the records of the Company, subject to the right of
either party to designate at any time hereafter in writing some other address.
Any notice shall be deemed to have been duly given when delivered personally or
enclosed in a properly sealed envelope, addressed as set forth above, and
deposited (with first class postage prepaid) with the United States Postal
Service.
15. Counterparts. This Agreement may be executed in one or
several counterparts, each of which shall constitute one and the same
instrument.
16. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under or through Director.
17. Governing Law. The validity, construction, interpretation,
administration and effect of the Plan, and of its rules and regulations, and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Texas.
4
<PAGE> 7
IN WITNESS WHEREOF, the Company and Director have executed this
Agreement as of the 1st day of July, 1994.
APACHE CORPORATION
By: ________________________________
Its: ________________________________
DIRECTOR
_________________________________________
Signature
_________________________________________
Printed Name
_________________________________________
Social Security Number
5
<PAGE> 1
Exhibit 10.30
CONSULTING AGREEMENT
THIS AGREEMENT is between APACHE CORPORATION ("Apache") and JOHN A.
KOCUR ("Consultant"). The Effective Date of this Agreement is November 1,
1993.
RECITALS
1. Consultant is engaged in an independent occupation,
profession, and/or business related to services to be performed for Apache; and
2. The parties wish to enter into a service relationship to be
governed by the terms and conditions set forth herein;
TERMS AND CONDITIONS
THEREFORE, in consideration of the mutual promises set forth herein,
the sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Term. The term of this Agreement shall last from the
Effective Date until terminated by either party upon written notice.
2. Services to be Provided. Consultant shall provide Apache with
professional legal services, as requested by Apache.
3. Termination. Consultant's inability or failure to perform, or
its gross negligence in the performance of services under this Agreement shall
constitute a breach of this Agreement and allow for immediate termination
without notice.
4. Payment. Apache shall pay Consultant at the rate of $25,000
per month or partial month worked.
5. Expenses. Apache shall reimburse Consultant for all the
approved actual and reasonable expenses (such as travel, lodging and meals when
out-of-town) incurred in the course of performing services hereunder.
6. Contractual Relationship. Consultant shall be considered at
all times an independent contractor.
7. CONSULTANT IS AND SHALL BE SOLELY LIABLE FOR ANY FEDERAL AND
STATE INCOME AND WITHHOLDING TAXES, FICA TAXES APPLICABLE TO THIS AGREEMENT OR
ANY SERVICES PROVIDED HEREUNDER.
8. Applicable Law. This Agreement shall be interpreted in
accordance with the laws of the State of Texas.
<PAGE> 2
9. Severability of Terms. If any provision of this Agreement
shall be deemed void or unenforceable, the remainder of this Agreement shall
remain in full force and effect.
10. Entire Agreement. This Agreement represents the entire
agreement between the parties related to the services of Consultant, and no
representation, warranties, or other statements or promises have been made by
any party in connection with this Agreement.
11. Amendment. This Agreement can be modified or amended only by
written agreement signed by both parties.
APACHE CORPORATION CONSULTANT
By: /s/ ROGER B. RICE /s/ JOHN A. KOCUR
Roger B. Rice John A. Kocur
Vice President-Human Resources
<PAGE> 1
Exhibit 10.31
CONSULTING AGREEMENT
This agreement is entered into between Apache Corporation ("Apache"), a
Delaware corporation, and George J. Morgenthaler ("Morgenthaler") effective as
of 6:00 p.m. CST on November 10, 1993.
RECITALS
Since February 23, 1987, Morgenthaler has served Apache with diligence
and integrity as an officer and employee.
Apache and Morgenthaler wish to provide for the termination of
Morgenthaler's tenure as an officer and employee of Apache.
Apache wishes to provide for continued service by Morgenthaler as a
consultant to Apache.
Apache and Morgenthaler wish to establish standards of confidentiality
and conduct between them.
Apache and Morgenthaler wish to fully and finally settle all other
rights, matters and claims that may existing between them.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Apache and Morgenthaler agree as follows:
(1) Resignation. Effective 6:00 p.m. CST, November 10, 1993,
Morgenthaler's employment with Apache terminated and, as a
result, Morgenthaler resigns all positions as a director,
officer and committee member of Apache, its subsidiaries and
affiliated entities.
(2) Temporary Employment. From 7:00 a.m. CST, November 11, 1993,
through 6:00 p.m. CST, December 15, 1993 (the "Temporary
Employment Period"), Apache employs Morgenthaler as a
temporary employee at the pay rate of $17,083.33 per month
(pro-rated by the day).
(3) Consulting. Apache engages Morgenthaler to render consulting
services to Apache and its subsidiaries for a period
commencing December 16, 1993, and continuing through
December 15, 1995 (subject to early terminated as stated in
the next sentence, the "Consulting Period"). If Apache does
not pay 1993 incentive compensation bonuses to its executives
or provide for other additional compensation recognizing 1993
executive performance, then the Consulting Period shall
terminate on August 15, 1995.
<PAGE> 2
(4) Services. During the Temporary Employment Period and the Consulting
Period, Morgenthaler shall perform such consulting services as are
reasonably requested by the Chief Executive Officer of Apache (the
"CEO") and as are not inconsistent with Morgenthaler's prior duties and
responsibilities as an officer of Apache. Morgenthaler shall not be
required to maintain any office hours, nor shall Morgenthaler be
present at the offices of Apache except upon request of the CEO.
(5) Other Activities. Morgenthaler's obligation to render consulting
services shall be subordinate to, and shall be rendered only to the
extent there is no interference with, his other business, employment
and personal activities. Morgenthaler shall be free to accept
full-time or part-time employment with any organization, and to engage
in any business enterprise on his own behalf during the Consulting
Period or thereafter, whether or not the organization or enterprise
competes with Apache, so long as Morgenthaler complies with paragraphs
(6) and (7) of this agreement. If Morgenthaler desires to accept
employment with another organization, and if that employment creates a
professional conflict of interest for Morgenthaler, then Morgenthaler
shall promptly inform Apache's CEO of that employment and Morgenthaler
shall be automatically released from all obligations under paragraphs
(3) and (4) of this agreement, but all other terms of this agreement,
including those relating to payments and benefits to Morgenthaler,
shall remain in effect.
(6) Goodwill. Morgenthaler shall generally foster, maintain and promote
the goodwill of Apache, its subsidiaries, affiliates, and their
respective directors, officers, employees and/or representatives, past
and present. Apache shall generally foster, maintain and promote the
reputation and image of Morgenthaler. Apache shall not hinder or
discourage the future employment of Morgenthaler.
(7) Confidentiality. In addition to his fiduciary responsibilities and his
responsibilities as an Officer and General Counsel of Apache and his
responsibilities under the Texas Disciplinary rules of Professional
Conduct not to disclose certain information of or relating to Apache,
Morgenthaler shall maintain the confidentiality of, and shall not
disclose, Apache's business dealings, trade secrets, supplier lists,
customer lists, properties, geographic or financial areas of interest,
exploration plans or techniques or any other confidential information
of or relating to Apache, its subsidiaries, affiliates and their
directors, officers, employees and/or representatives, past and
present, and Morgenthaler shall not use such information in any manner,
whether for his own benefit or for the benefit of any other person or
entity, or to the detriment of Apache, its subsidiaries, affiliates and
their directors, officers, employees and/or representatives, past and
present or otherwise.
2
<PAGE> 3
(8) Monthly Payments. On or before the 16th day of each calendar
month during the Consulting Period (commencing with December
16, 1993), Morgenthaler shall invoice Apache for services in
the amount of $17,083.33, and Apache shall pay Morgenthaler
the invoiced amount on or before the first day of the next
calendar month. The invoiced amounts shall continue to be
paid without regard to Morgenthaler's employment by another
organization, his participation in a partnership, or his
engagement in business for his own account. The invoiced
amounts shall continue to be paid if Morgenthaler is disabled,
and shall continue to be paid to Morgenthaler's estate, heirs,
and successors in the event of his death. The invoiced
amounts shall continue to be paid if Morgenthaler is released
from his obligations under paragraphs (3) and (4) of this
agreement. Failure or tardiness by Morgenthaler in invoicing
Apache shall not waive or release Morgenthaler's right to
payment, but amounts invoiced more than five business days
late by Morgenthaler shall not be due until ten business days
after invoice. Morgenthaler may invoice Apache for the
initial monthly payment prior to inception of the Consulting
Period.
(9) Expense Reimbursement. Subject to Apache's travel policies governing
its executives, Apache shall reimburse Morgenthaler for all travel,
airline, room, entertainment, meal, beverage, car rental and other
out-of-pocket expenses incurred by Morgenthaler in the course of
performing his consulting obligations under this agreement, provided
that such consulting expenses are approved in advance by Apache.
(10) Benefits. During the Temporary Employment Period, Morgenthaler shall
receive the same benefits as Apache provides its executive officers.
During the Consulting Period, Apache shall:
(a) provide medical, dental and vision benefits to Morgenthaler
and his dependents to the same extent, and subject to the same
premium co-payments, as are extended to Apache executives; and
(b) provide life insurance and disability benefits (including
supplemental group life insurance) to Morgenthaler to the same
extent as extended to Apache executives;
but the foregoing benefits shall terminate to the extent that
replacement benefits are offered by an employer with which Morgenthaler
accepts employment. Apache shall not impair the cash value of any life
insurance currently maintained by Apache for Morgenthaler, and that
cash value shall remain the property of Morgenthaler. Apache shall
cause its employees, insurance carriers and agents to cooperate fully
with Morgenthaler in managing and maintaining Morgenthaler's insurance
coverage, in responding to Morgenthaler's insurance claims and in
responding to Morgenthaler's inquiries concerning insurance coverages.
3
<PAGE> 4
(11) Plan Balances. Apache shall cooperate in the prompt rollover of
Morgenthaler's 401(k) account balances to an IRA account or other
account designated by Morgenthaler. On January 3, 1994, Apache shall
disburse to Morgenthaler, or direct the disbursement to Morgenthaler
of, the balance in Morgenthaler's non-qualified retirement plan
account.
(12) Options and Phantoms. Except as provided in this paragraph,
Morgenthaler's outstanding stock options and phantom stock units shall
be governed by the terms of the Apache Corporation 1990 Stock Incentive
Plan and the 1990 Phantom Stock Appreciation Plan (the "Phantom Plan")
and the stock option agreements entered into between Morgenthaler and
Apache. On January 3, 1994, Apache shall pay Morgenthaler the sums due
him under the Phantom Plan as a result of his November 10, 1993,
Termination of Employment without Disqualification (as defined in the
Phantom Plan). Morgenthaler waives his right to payment on or before
December 10, 1993, under the Phantom Plan.
(13) Databases. During the Consulting Period, Morgenthaler shall continue
to have free access to and reasonable use of the business and legal
databases now maintained by Apache and used by Morgenthaler as an
executive of Apache.
(14) Office Equipment. Apache shall, on December 16, 1993, and in exchange
for the payment of $2,000.00 to Apache by Morgenthaler, sell and convey
to Morgenthaler the office equipment now in Morgenthaler's possession,
being one cellular telephone, one telefax, one personal computer,
software and one printer.
(15) Consulting Payment. On January 3, 1994, Apache shall pay Morgenthaler
$352,000.00 as a non-refundable consulting payment.
(16) Financing Planning. Apache shall pay or reimburse Morgenthaler for
personal tax and financial planning by Arthur Andersen & Co. during the
Consulting Period as required to evaluate and plan the financial and
tax impact of this agreement and termination of his employment and as
required to prepare tax returns for 1993 and 1994.
(17) Independent Contractor and Taxes. Morgenthaler acknowledges that his
engagement under this agreement is as an independent contractor and not
as an employee of Apache or its subsidiaries or affiliates.
Accordingly, Morgenthaler will be responsible for the payment of all
income tax and other taxes on cash amounts payable to Morgenthaler, and
Apache will not withhold any amounts from payments made under this
agreement. If the Internal Revenue Service asserts that Apache should
have withheld federal income taxes and/or Morgenthaler's share of FICA
taxes from such payments, Morgenthaler will reimburse Apache for any
monies paid by Apache to the U.S. Government in compliance with such
assertion, except for payments of interest or penalties.
4
<PAGE> 5
(18) Releases. Morgenthaler releases Apache and each of its subsidiaries,
affiliates and their respective directors, officers, employees and/or
representatives, past and present (hereafter the "Company"), and the
Company releases Morgenthaler, from any and all rights and claims
arising in any way out of Morgenthaler's employment or the acts or
omissions of the Company or Morgenthaler which occurred during the term
of Morgenthaler's employment, or arose out of the termination of
Morgenthaler's employment. The Company and Morgenthaler further
release and hold harmless each other from and against any and all
claims against the other that they may have based on any negligent or
intentional acts or omissions of any character whatsoever, whether
related to Morgenthaler's employment or otherwise, including without
limitation statements made by, to or about Morgenthaler or the Company,
which occurred prior to the effective date of this agreement, whether
known or unknown by the Company or Morgenthaler. The foregoing release
includes without limitation any rights and claims under state, federal,
or local laws, including without limitation, the Age Discrimination in
Employment Act, the Texas Commission on Human Rights Act and the common
law of the states of Texas, Colorado and any other jurisdiction.
Morgenthaler and the Company further agree that they will not institute
any charge, complaint or litigation against the other based on such
released rights and/or claims. Apache indemnifies and holds harmless,
and agrees to indemnify and hold harmless, Morgenthaler against any
liability or expense, including attorneys' fees and costs, incurred by
Morgenthaler in evaluating, defending, compromising, settling or
satisfying any claim (excluding those actions determined to be
violative of applicable criminal laws) brought by any person or
organization that is included within the definition of Company but that
is not a signatory to this agreement. Notwithstanding the foregoing,
the releases contained herein shall not apply to any rights that
Morgenthaler may have under:
(a) Apache's 1990 Stock Incentive Plan and the Phantom Plan and
the option agreements issued under those plans to which
Morgenthaler is a party;
(b) Apache's 401(k) plan and non-qualified retirement plan;
(c) this agreement; or
(d) COBRA to receive continued medical insurance benefits.
(19) Non-Assignability. Neither this agreement nor any right or interest
herein may be assigned or transferred by Apache or Morgenthaler without
the other's written consent, except as to:
(a) the rights of Morgenthaler's estate, heirs and devisees to
certain benefits under this agreement; and
5
<PAGE> 6
(b) the sale of all or substantially all of Apache's
assets, or the merger or combination of Apache with
another organization, if the asset purchaser or
surviving organization assumes the full performance of
Apache's obligations under this agreement, but Apache
shall not be relieved of its obligations under this
agreement by that assumption.
(20) No Attachment. Except as required by law, Morgenthaler's right to
receive payments under this agreement shall not be subject to
anticipation, commutation, alienation, sale, encumbrance, pledge,
hypothecation, execution, attachment, levy, offset, deduction, setoff,
condition, or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect such action shall be null and void.
(21) Binding Effect. This agreement shall bind and inure to the benefit of
Morgenthaler, Apache and its subsidiaries and affiliates and their
permitted successors and assigns.
(22) Amendment, Modification, Waiver. This agreement shall not be amended
or modified except by an instrument in writing signed by the parties
hereto. No term of this agreement shall be deemed to have been waived,
nor shall there be an estoppel against enforcement of any provision of
this agreement, except by written instrument of the party charged with
such waiver or estoppel. No person or organization, including those
within the definition of Company, not a party to this agreement or a
permitted successor to a party to this agreement, shall be a
third-party beneficiary of this agreement or entitled to enforce its
terms. Morgenthaler acknowledges that he has had at least 21 days to
consider this agreement and has had legal advice with respect thereto.
(23) Remedies. Upon any material breach of this agreement by a party, the
other party shall be entitled to seek damages for the breach, and/or
shall be entitled to seek specific performance of this agreement.
Morgenthaler and Apache acknowledge and confess that there is no
adequate remedy at law for breach of obligations in this agreement
other than obligations for the payment of money. The prevailing party
in any litigation shall be entitled to an award of attorneys' fees by
the court. Interest on sums due from one party to another shall bear
interest at 18 percent per annum until paid.
(24) No Other Benefits. Except as provided in this agreement, Morgenthaler
shall not be entitled to any pension, profit-sharing, bonus,
disability, life insurance or similar plan or program of Apache,
whether now existing or hereafter adopted for the benefit of Apache's
employees or consultants.
(25) Headings and Meanings. The headings of paragraphs in this agreement
are for convenience only, and should not be considered in construing or
interpreting this agreement.
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<PAGE> 7
(26) Governing Law. This agreement has been executed and delivered in the
State of Texas, and its validity, interpretation, performance and
enforcement shall be governed by the laws of that State.
(27) Notices. Any notice contemplated or permitted by this agreement shall
be delivered as follows:
To Apache or the Company
Raymond Plank
Chairman and Chief Executive Officer
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056
The above addresses for notice may be changed by written notice from
the changing party to the other party.
(28) Revocation. Morgenthaler may rescind this agreement by written notice
to Apache delivered on or before 5:00 p.m. on the seventh day after is
execution by Apache and Morgenthaler and delivery to Morgenthaler. If
no such notice of recision is timely received by Apache, the effective
time of this agreement shall be as stated above. Upon recision of this
agreement, Morgenthaler shall repay to Apache all sums paid pursuant to
this agreement except salary for services rendered by Morgenthaler
prior to the effective time.
/S/ GEORGE J. MORGENTHALER Dated: 12/15/93
George J. Morgenthaler
Apache Corporation
By: /S/ R. B. RICE Dated: 12/15/93
Name: Roger B. Rice
Its: Vice President
7
<PAGE> 1
EXHIBIT 10.32
CONSULTING AGREEMENT
THIS AGREEMENT is entered into between APACHE CORPORATION ("Apache"), a
Delaware corporation and Bijan Mossavar-Rahmani ("BM-R") effective March 15,
1994.
RECITALS
Since January 1, 1988, BM-R has served Apache with diligence and
integrity as an officer and employee.
Apache and BM-R wish to provide for the termination of BM-R's tenure as
an officer and employee of Apache.
Apache wishes to provide for continued service by BM-R as a consultant
to Apache.
Apache and BM-R wish to establish standards of confidentiality and
conduct between them.
Apache and BM-R wish to fully and finally settle all other rights,
matters and claims that may exist between them.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Apache and BM-R agree as follows:
1. Resignation. Effective 6 P.M. Central Standard Time, March 15,
1994, BM-R's employment with Apache shall terminate and, as a result, BM-R
resigns all positions as director, officer and committee member of Apache, its
subsidiaries and affiliated companies except as set out in this agreement. To
facilitate the intent of this agreement, BM-R shall be entitled to use the
title President of Apache International, Inc. but shall have no management
responsibilities or authority subsequent to the effective date of this
agreement. BM-R shall also retain his position as a director of Compagnie des
Energies Nouvelles de Cote d'Ivoire and as president of Apache Cote d'Ivoire,
Inc.
2. Consulting. Apache engages BM-R to render consulting services to
Apache and its subsidiaries for the period commencing March 16, 1994 and
continuing through September 16, 1995 ("consulting period"). This period may
be extended by agreement of both parties in writing.
1
<PAGE> 2
3. Services. During the consulting period, BM-R shall perform such
consulting services as are reasonably requested by the Chief Operating Officer
of Apache ("the COO"). BM-R shall not be required to maintain any office
hours. BM-R shall provide consulting services in an attempt to commercialize
Apache International, Inc.'s Australian gas via export and to continue to
represent Apache International, Inc. in negotiations towards realization of the
Foxtrot project in Cote d'Ivoire. In carrying out his duties hereunder, BM-R
shall not enter into any new binding commitment on behalf of Apache
International, Inc. that is substantial or financially material without the
prior written consent of the COO. The parties anticipate that BM-R's
performance of requested services hereunder will consume no more than half of
his available working time in any given month. Apache will provide office
support services to BM-R in its Houston headquarters.
4. Other Activities. BM-R shall be free to accept employment with any
organization and to engage in any business enterprise on his own behalf during
the consulting period or thereafter, whether or not the organization or
enterprise competes with Apache, so long as BM-R complies with Section 2, 3,
5, and 6 of this agreement. If BM-R desires to accept employment with or
provide services to another organization, and if that employment creates a
conflict of interest with the services to be provided by BM-R in Section 3 or
with any ongoing fiduciary obligations to Apache, then BM-R shall promptly
inform the COO of that opportunity and obtain consent of the COO before
accepting conflicting employment, which consent will not be unreasonably
withheld. Nothing contained in this agreement shall be construed to prohibit
BM-R from practicing his profession in the future so long as BM-R honors the
continuing obligations of this agreement.
5. Goodwill. During the period of this agreement, BM-R shall generally
foster, maintain and promote the reputation and image of Apache, its
subsidiaries and affiliates. Apache shall generally foster, maintain and
promote the reputation and image of BM-R. Apache shall not hinder or
discourage the future employment of BM-R.
6. Confidentiality. In addition to his fiduciary responsibilities and
his responsibilities as an officer not to disclose certain information of or
relating to Apache, BM-R shall not disclose information of a nonpublic nature
relating to Apache's business or the business of Apache's subsidiaries and
affiliates. Notwithstanding the foregoing, BM-R shall be permitted to disclose
such nonpublic information relating to Apache as is in good faith necessary to
allow BM-R to effectively provide the services called for in Section 3 above.
In cases where it is reasonable and appropriate, BM-R shall first obtain
consent to a confidentiality agreement prepared by the General Counsel of
Apache from parties requesting nonpublic information from or relating to
Apache. Nothing in this confidentiality provision shall be construed to
prohibit BM-R from investing or participating in his individual capacity in, or
from assisting or advising other clients interested in pursuing, such deals,
projects, prospects or business opportunities that Apache, its subsidiaries and
affiliates have abandoned, rejected, sold, or have no continuing commitment,
obligation, financial or property interest, whether currently vested or
contingent.
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<PAGE> 3
7. Monthly Payment. On or before the 16th day of each calendar month
during the consulting period commencing March 1994, BM-R shall invoice Apache
for services in the amount of $13,333.33 and Apache shall pay BM-R the invoiced
amount on or before the first day of the next calendar month. The invoiced
amount shall continue to be paid without regard to BM-R's employment by another
organization in accordance with Section 4 above, his participation in a
partnership, or his engagement in business for his own account. Failure or
tardiness by BM-R in invoicing Apache shall not waive or release BM-R's right
to payment, but amounts invoiced more than 5 business days late by BM-R shall
not be due until 10 business days after invoice. BM-R may invoice Apache for
the initial monthly payment prior to inception of the consulting period.
8. Expense Reimbursement. Subject to Apache's travel policies
governing its executives, Apache shall promptly, but in no event more than 30
days after invoicing, reimburse BM-R for all travel, airline, room,
entertainment, meals, beverages, car rental, communications and other out-
of-pocket expenses incurred by BM-R in the course of performing his consulting
obligations under this agreement, provided that the general purpose for such
consulting expenses is approved in advance by Apache and when reasonable and
practical, airline ticketing and hotel accommodations are arranged for through
Apache's travel department. In the event BM-R incurs travel expenses for
another client while traveling for Apache, Apache shall pay only its
proportionate share of the expenses incurred based on a formula agreed upon in
advance by BM-R and Apache.
9. Benefits. During the consulting period (including any period of
disability or following death), Apache shall:
o a) provide medical, dental and vision benefits to BM-R and
his spouse and dependents to the same extent, and subject to the
same premium co-payments, as are extended to Apache executives;
o b) provide life insurance and disability benefits
(including supplemental group life insurance) to BM-R to the same
extent as extended to Apache executives;
o c) provide SOS, Control Risk (including kidnapping and political
risk protection coverage) and supplemental travel insurance
normally provided to Apache executives; and
o d) maintain coverage of BM-R under Apache's director and officer
liability insurance for activities undertaken by BM-R pursuant
to this agreement.
In addition to terminating at the conclusion of the consulting period,
the foregoing benefits shall terminate to the extent that comparable
replacement benefits are offered by an employer with which BM-R accepts
employment. Apache shall not impair the cash value of any life insurance
currently maintained by Apache for BM-R, and that cash value shall remain the
3
<PAGE> 4
property of BM-R. Apache shall cause its employees, insurance carriers and
agents to cooperate fully with BM-R in managing and maintaining BM-R's
insurance coverage, in responding to BM-R's insurance claims and in
responding to BM-R's inquiries concerning insurance coverages. Eligibility
of BM-R for continuation of coverage under COBRA shall not commence until the
termination of this agreement.
10. Plan Balances. Upon his request, Apache shall cooperate in the
prompt rollover of BM-R's 401(k) account balances to an IRA account or other
account designated by BM-R. Apache shall disburse to BM-R, or direct the
disbursement to BM-R of, the balance in BM-R's Non-qualified Retirement Plan
account pursuant to the terms of the Non-qualified Retirement Plan.
11. Apache International, Inc. Participant Stock. Apache and BM-R
acknowledge that BM-R has certain rights pursuant to the Apache International,
Inc. Common Stock Award Plan ("the Plan"). BM-R and Apache agree that the plan
is modified as set forth in this agreement. If both parties agree on price and
other terms, appraisal and purchase of BM-R's rights pursuant to the plan shall
occur on September 16, 1995, or on such other date and on such other terms as
to which Apache and BM-R may hereafter agree. If no appraisal and purchase can
be mutually agreed to at the end of the consulting period or such later date as
agreed to by Apache and BM-R, or if BM-R dies prior to appraisal and purchase
of BM-R's rights, BM-R's Apache International, Inc. Participant Stock will be
converted to an economic interest in all Apache International, Inc. properties
existing as of December 31, 1993, taking into account only such liabilities as
are incurred in connection with the exploration and exploitation of these
properties (a listing of which is attached hereto as "exhibit A" and
incorporated herein by reference), reflecting the same benefits, obligations,
and terms of the Plan as modified by this agreement, subject to the following:
If Apache directly or through its participation in a joint venture signs a
letter of intent to supply gas from any Apache International, Inc. Australian
property to an existing or prospective LNG project, then the value of BM-R's
Apache International, Inc. Participant Stock (or converted economic interest)
shall be adjusted by reducing intercompany payables due to Apache by Apache
International, Inc. by $25,000,000 in a manner that is tax-neutral to BM-R.
Apache shall provide BM-R with semiannual balance sheets, operating reports and
income statements for Apache International, Inc. and its subsidiaries that
reflect the activities and value of Apache International, Inc. and its
subsidiaries. Exhibit B provides a schedule of intercompany payables due to
Apache by Apache International, Inc. as of December 31, 1993. Future
intercompany payables due to Apache by Apache International, Inc. will be
adjusted to reflect only direct overheads allocable to Apache International,
Inc. properties existing as of December 31, 1993, excluding any allocation of
general and administrative Apache corporate overhead charges.
In the event that BM-R's Apache International, Inc. Participant Stock
is converted to an economic interest, the economic interest shall be freely
assignable except that BM-R or his heirs must first offer to sell the economic
interest to Apache, provided, however, that if Apache and BM-R or his heirs are
unable to agree upon the price and other terms of such sale, BM-R or his heirs
shall be free to sell such economic interest to a third party at any price and
other terms, notwithstanding this provision.
4
<PAGE> 5
12. Consulting Payment. On March 16, 1994, Apache shall pay BM-R
$565,833 as a nonrefundable consulting payment. Apache shall pay BM-R
$5,842.40 for any accrued but unused vacation on March 16, 1994.
13. Relocation. Apache agrees to provide interm storage and move, at
Apache's expense, BM-R's personal goods to any reasonable destinations in the
48 contiguous United States. To receive this benefit, BM-R must contact the
Apache purchasing department.
14. Office Furniture. BM-R shall be permitted to keep his office
furniture.
15. Credit Cards. While providing services pursuant to this agreement
BM-R shall be permitted to retain and use his corporate AT&T calling card.
This card must be returned to the company immediately upon the termination of
this agreement.
16. Independent Contractor and Taxes. BM-R acknowledges that his
engagement under this agreement is as an independent contractor and not as an
employee of Apache or its subsidiaries or affiliates. Accordingly, BM-R will
be responsible for the payment of all income tax and other taxes on cash
amounts payable to BM-R, and Apache will not withhold any amounts from payments
made under this agreement. If the Internal Revenue Service makes a final
determination that Apache should have withheld federal income taxes and/or
BM-R's share of FICA taxes from such payments, BM-R will reimburse Apache for
any monies paid by Apache to the U.S. Government in compliance with such
determination, except for payments of interest or penalties or Apache's share
of FICA taxes.
17. Releases. (a) BM-R releases Apache and each of its subsidiaries
and affiliates ("the Company"), from any and all rights or claims, known or
unknown, arising in any way out of BM-R's employment or the termination
thereof, regardless of whether such right or claim is based on any alleged
negligent or intentional act or omission. BM-R agrees that he will not
institute any charge, complaint, or litigation against the Company based on
such released rights and/or claims. The foregoing release includes without
limitation any rights and claims under federal, state, or local laws, including
but not limited to the Age Discrimination in Employment Act, the Texas
Commission on Human Rights Act, and the common law of the states of Texas,
Colorado, and any other jurisdiction.
(b) The Company releases BM-R from any and all rights or claims, known
or unknown, arising in any way out of BM-R's employment or the acts or
omissions of BM-R that occurred during the term of BM-R's employment or the
termination thereof, regardless of whether such right or claim is based on any
alleged negligent or intentional act or omission. The Company agrees that it
will not institute any charge, complaint, or litigation against BM-R based on
such released rights and/or claims. The Company indemnifies and holds
harmless, and agrees to indemnify and hold harmless, BM-R against any liability
or expense, including attorneys' fees and costs, incurred by BM-R in
evaluating, defending, compromising, settling, or satisfying any claim, except
claims for breach of this agreement.
5
<PAGE> 6
(c) Notwithstanding the releases and indemnities contained in Section
17(b), Apache shall not be obligated to release or indemnify BM-R for any
actions undertaken by BM-R during his employment without the knowledge of the
Company that a court of competent jurisdiction determines to have been
violative of applicable criminal laws, including the criminal provisions of the
U.S. Foreign Corrupt Practices Act of 1977.
NOTWITHSTANDING the foregoing, the releases contained herein shall not
apply to any rights BM-R shall have under:
o a) Apache's 401(k) Plan and Non-qualified Retirement Plan;
o b) this agreement;
o c) COBRA to receive continued medical benefits; or
o d) the Apache International, Inc. Common Stock Award Plan as
modified by this agreement.
18. Non-Assignability. Neither this agreement nor any right or
interest herein may be assigned or transferred by Apache or BM-R without the
other's written consent, except as to:
o a) the rights of BM-R's estate, heirs
and devises to certain benefits under this agreement;
o b) the sale of all or substantially all of Apache's assets, or the
merger or combination of Apache with another organization, if the
asset purchaser or surviving organization assumes the full
performance of Apache's obligations under this agreement, but Apache
shall not be relieved of its obligations under this agreement by
that assumption.
o c) BM-R may assign this contract to a corporation controlled by BM-R
so long as BM-R personally provides services required by this
agreement.
19. No Attachment Except as Required by Law. Except for economic
interests in Apache International, Inc. properties described in Section 11 of
this agreement, BM-R's right to receive payment under this agreement shall not
be subject to anticipation, commutation, alienation, sale, encumbrance, pledge,
hypothecation, execution, attachment, levy, offset, deduction, set off,
condition, or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect such action shall be null and void.
20. Binding Effect. This agreement shall bind and inure to the
benefit of BM-R, Apache and its subsidiaries and affiliates and their
authorized successors and assigns.
6
<PAGE> 7
21. Amendment, Modification, Waiver. This agreement shall not be
amended or modified except by an instrument in writing signed by the parties
hereto. No term of this agreement shall be deemed to have been waived, nor
shall there be an estoppel against enforcement of any provision of this
agreement, except by written instrument of the party charged with such waiver
or estoppel. No person or organization, including those within the definition
of company, not a party to this agreement or permitted successor to a party to
this agreement, shall be a third party beneficiary of this agreement or
entitled to enforce its terms. BM-R acknowledges that he has had at least 21
days to consider this agreement and has had legal advice with respect thereto
or has conscientiously determined not to consult with an attorney.
22. Arbitration. In the event of any dispute between Apache and BM-R
arising under or relating to this agreement, the aggrieved party's sole and
exclusive remedy shall be to demand the arbitration of such dispute pursuant to
the Commercial Arbitration Rules of the American Arbitration Association. All
claims, disputes, or other matters arising out of or relating to this agreement
shall be decided by a single arbitrator selected in accordance with such
Commercial Arbitration rules of the American Arbitration Association. The cost
of arbitration shall be borne equally by Apache and BM-R unless the arbitrator
determines that equity and fairness require that such costs be allocated in
some other way. The opinion and award of the arbitrator shall be made in
writing and shall be final and binding upon all parties. The arbitrator shall
have full authority to decide the issue(s) in dispute but shall have no
authority to amend, alter, modify, add to or subtract from the provisions of
this agreement. As to matters of business judgment, the arbitrator shall not
have the power or right to substitute his judgment for that of Apache or BM-R
so long as the party whose action is in question has not violated the express
terms of this agreement.
23. No Other Benefits. Except as provided in this agreement, BM-R
shall not be entitled to any pension, profit-sharing, bonus, disability, life
insurance or similar plan or program of Apache, whether now existing or
hereafter adopted for the benefit of Apache's employees or consultants. This
section shall not impair the rights of BM-R described in Section 9 of this
agreement.
24. Headings and Meanings. The headings of sections in this agreement
are for convenience only, and should not be considered in construing or
interpreting this agreement.
25. Governing Law. This agreement has been executed and delivered in
the State of Texas, and its validity, interpretation, performance and
enforcement shall be governed by the laws of that state. Any arbitrator shall
be bound to apply Texas law.
26. Notices. Any notice contemplated or permitted by this agreement
shall be delivered as follows: to Apache or the company: William J. Johnson,
Chief Operating Officer, Apache Corporation, 2000 Post Oak Blvd., Suite 100,
Houston, Texas 77056. The above addresses for notice may be changed by
written notice from the changing party to the other party.
7
<PAGE> 8
27. Revocation. BM-R may rescind this agreement by written notice to
Apache delivered on or before 5 P.M. on the 7th day after its execution by
Apache and BM-R and delivery to BM-R. If no such notice of recision is timely
received by Apache, the effective time of this agreement shall be as stated
above. Upon recision of this agreement BM-R shall repay to Apache all sums
paid pursuant to this agreement except salary for services rendered by BM-R
prior to the effective time.
CONSULTANT
March 11, 1994 /s/ B. Mossavar-Rahmani
____________________ _________________________________
Date Bijan Mossavar-Rahmani
APACHE CORPORATION
3/11/94 /s/ William J. Johnson
____________________ _________________________________
Date William J. Johnson
President and Chief Operating Officer
8
<PAGE> 9
EXHIBIT A
APACHE INTERNATIONAL, INC.
ASSETS AS OF DECEMBER 31, 1993
CONTRACT RIGHTS
<TABLE>
<CAPTION>
PROPERTY INTEREST SUBSIDIARY
-------- -------- ----------
<S> <C> <C>
Padang Panjang Block Onshore Sumatra, 90% * Apache Oil Sumatra, Inc.
Indonesia (2,219,946 gross acres)
Java Sea Block IV Offshore Indonesia 43.48% Apache Oil Java Sea, Inc.
(2,178,162 gross acres)
Qarun Block, Western Desert Egypt 50% Apache Oil Egypt, Inc.
(1,927,380 gross acres)
Angola Offshore Block 6 2.5% * Apache International, Inc.
(1,217,739 gross acres)
Congo Marine III Block 20% ** Apache Oil Congo, Inc.
(236,228 gross acres)
Australia: Producing Area TL-2 11.834% Apache Oil Australia Pty Ltd.
(98,570 gross acres)
Australia Exploration Permits
-----------------------------
WA-237 (3,580,000 gross acres) 50% Apache Oil Australia Pty Ltd.
WA-214 (330,000 gross acres) 14.76% Apache Oil Australia Pty Ltd.
TP-7 (308,220 gross acres) 14.76% Apache Oil Australia Pty Ltd.
EP-365 (19,650 gross acres) 14.76% Apache Oil Australia Pty Ltd.
WA-149-P (R-1) (198,670 gross acres) 14.76% Apache Oil Australia Pty Ltd.
Cote d'Ivoire - Stock Ownership in 15% Apache Cote d'Ivoire, Inc.
Compagnie des Energies Nouvelles de Cote
d'Ivoire (CENCI) which holds certain
unperfected rights in Foxtrot Field, Offshore
Angola, Cameroon, Congo, Gabon, Namibia, Apache International, Inc.
Trinidad-Tobago, Aruba, Ecuador, Vietnam.
Right to participate with Citizens Energy in
future ventures.
</TABLE>
- ------------------
* Option to participate on commerciality
** Paying interest, revenue interest will be less
<PAGE> 10
EXHIBIT B
APACHE INTERNATIONAL, INC.
ANALYSIS OF INTERCOMPANY BALANCE AT DECEMBER 31, 1993
<TABLE>
<S> <C>
Balance in the intercompany account
at 12/31/93 (per audited financial statements) $56,120,035
LESS: Corporate overhead charged to
Apache International for the years ended:
1988 $ 738,883
1989 574,602
1990 1,102,579
1991 2,127,666
1992 851,947
1993 2,033,487
7,429,164
LESS: Direct Argentina costs 2,100,494
---------
Net balance to recover at 12/31/93 $46,590,377
</TABLE>
<PAGE> 1
EXHIBIT 11.1
APACHE CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1993
-----------------
Fully
Primary Diluted
------- -------
<S> <C> <C>
Net income $37,334 $37,334
Assumed reduction of interest
expense upon conversion of
$75 million 3.93% convertible
notes, net of tax - 2,145
------- -------
Net income, as adjusted $37,334 $39,479
======= =======
Weighted average common shares
outstanding 53,534 53,534
Stock options; common stock
equivalents outstanding using
the treasury stock method - 242
Common shares issuable upon
assumed conversion of 3.93% notes - 2,778
------- -------
Common shares used for calculation
of earnings per share 53,534 56,554
======= =======
Earnings per share $ .70 $ .70
======= =======
</TABLE>
<PAGE> 1
Exhibit 21.1
APACHE CORPORATION
LISTING OF SUBSIDIARIES
<TABLE>
<CAPTION>
EXACT NAME OF SUBSIDIARY JURISDICTION OF
AND NAME UNDER WHICH INCORPORATION OR
SUBSIDIARY DOES BUSINESS ORGANIZATION
- -------------------------------------------------------- ----------------
<S> <C>
Apache China Corporation LDC Cayman Islands
Apache Foundation Minnesota
Apache Gathering Company Delaware
Apache International Finance N.V. Netherland Antilles
Apache International, Inc. Delaware
Apache Cote d'Ivoire, Inc. Delaware
Apache France Investment Management, Inc. Delaware
Apache Oil Angola, Inc. Delaware
Apache Oil Australia PTY Limited New South Wales, Australia
Apache Oil Azerbaijan, Inc. Delaware
Apache Oil Congo, Inc. Delaware
Apache Oil Egypt, Inc. Delaware
Apache Oil France, Inc. Delaware
Apache Oil Gabon, Inc. Delaware
Apache Oil Java Sea, Inc. Delaware
Apache Oil Myanmar, Inc. Delaware
Apache Oil Sumatra, Inc. Delaware
Societe Petroliere Apache France S.N.C. France
MW Petroleum Corporation Colorado
MWJR Petroleum Corporation Delaware
Ucross Land Company Delaware
Nagasco, Inc. Delaware
Apache NGC, Inc. Delaware
Apache Marketing, Inc. Delaware
Apache Transmission Corporation - Texas Texas
Apache Crude Oil Marketing, Inc. Delaware
Nagasco Marketing, Inc. Delaware
Apache Corporation (New Jersey) New Jersey
Apache-Beals Corporation New York
Apache Oil Corporation Texas
Burns Manufacturing Company Minnesota
Hadson Energy Resources Corporation Delaware
Hadson Bentu Limited Oklahoma
Hadson Bunyu Limited Oklahoma
Hadson Energy Limited Western Australia
Hadson Australia Development Pty Ltd. Western Australia
Petro Energy Limited New South Wales, Australia
Hadson Beagle Pty Ltd. Western Australia
Hadson Carnarvon Pty Ltd. Western Australia
Hadson Dampier Pty Ltd. Western Australia
Hadson Pacific Pty Ltd. Western Australia
Hadson Timor Sea Pty Ltd. Western Australia
Hadson WA-225 Pty Ltd. Western Australia
Mid Equipment, Incorporated Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K into Apache Corporation's previously
filed Registration Statements on Form S-3 (No. 33-51253) and Form S-8 (Nos.
33-53442, 33-37402 and 33-31407).
ARTHUR ANDERSEN & CO.
Houston, Texas
March 21, 1994
<PAGE> 1
EXHIBIT 23.2
{RYDER SCOTT COMPANY PETROLEUM ENGINEERS LETTERHEAD}
CONSENT OF PETROLEUM ENGINEERS
As independent petroleum engineers, we hereby consent to the reference to our
Firm's review of Apache's proved oil and gas reserve quantities as of January
1, 1994 included in the Company's Annual Report on Form 10-K for the fiscal
year ending December 31, 1993, and incorporated by reference into the Company's
Registration Statements on Form S-3 (No. 33-51253) and Form S-8 (Nos. 33-53442,
33-37402 and 33-31407).
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
March 21, 1994
<PAGE> 1
EXHIBIT 23.3
{INTERA INFORMATION TECHNOLOGIES INC. LETTERHEAD}
CONSENT OF PETROLEUM ENGINEERS
As independent petroleum engineers, we hereby consent to the reference to our
Firm's review of Apache's proved oil and gas reserve quantities as of January
1, 1994 included in the Company's Annual Report on Form 10-K for the fiscal
year ending December 31, 1993, and incorporated by reference into the Company's
Registration Statements on Form S-3 (No. 33-51253) and Form S-8 (Nos. 33-53442,
33-37402 and 33-31407).
/s/ OMER GURPINAR
Omer Gurpinar, Vice President
Reservoir Sumulation
INTERA Information Technologies Inc.
Petroleum Services Division
Houston, Texas
March 17, 1994
