<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-57785
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 26, 1998)
1,000,000 DEPOSITARY SHARES
[APACHE CORPORATION LOGO]
EACH REPRESENTING 1/10TH OF A SHARE OF 5.68% CUMULATIVE
PREFERRED STOCK, SERIES B
------------------
Each Depositary Share (a "Depositary Share") represents ownership of
1/10th of a share of 5.68% Cumulative Preferred Stock Series B, no par value per
share ("Series B Preferred Stock"), of Apache Corporation, a Delaware
Corporation ("Apache" or the "Company"), to be deposited with Norwest Bank
Minnesota, National Association, as depositary (the "Depositary"), and through
the Depositary, entitles the holder, proportionately, to all rights, preferences
and privileges of the Series B Preferred Stock represented thereby, including
dividend, voting, redemption and liquidation rights and preferences. The
proportionate stated value of each Depositary Share is $100. See "Description of
Depositary Shares."
The Series B Preferred Stock will not be redeemable prior to August 25,
2008, except as described below. On or after such date, the Series B Preferred
Stock will be redeemable at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at a redemption price equal to
$1,000 per share of Series B Preferred Stock (equivalent to $100 per Depositary
Share) plus dividends accrued and unpaid to the redemption date. In addition,
the Series B Preferred Stock is redeemable in the event of certain amendments to
the Internal Revenue Code of 1986, as amended (the "Code"), prior to 18 months
after the date of the original issuance of the Series B Preferred Stock, in
respect of the dividends received deduction. See "Description of Series B
Preferred Stock -- Redemption."
Dividends on the Series B Preferred Stock will be cumulative from the date
of issuance and are payable quarterly, commencing October 30, 1998. The amount
of dividends payable in respect of the Series B Preferred Stock will be adjusted
in the event of certain amendments to the Code in respect of the dividends
received deduction. See "Description of Series B Preferred Stock -- Dividends."
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) COMPANY(1)(3)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Depositary Share................... $100 $2.00 $98.00
- ----------------------------------------------------------------------------------------------------------------
Total.................................. $100,000,000 $2,000,000 $98,000,000
- ----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued dividends, if any, from August 25, 1998.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting estimated expenses payable by the Company of $129,800. See
"Underwriting."
------------------
The Depositary Shares are offered by the Underwriter, subject to prior
sale, when, as and if issued to and accepted by the Underwriter, subject to
approval of certain legal matters by counsel for the Underwriter. The
Underwriter reserves the right to reject orders in whole or in part. It is
expected that delivery of the Depositary Receipts (as defined) will be only in
book-entry form through the facilities of The Depository Trust Company, on or
about August 25, 1998, against payment therefor in immediately available funds.
------------------
SALOMON SMITH BARNEY
August 20, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEPOSITARY SHARES.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF DEPOSITARY SHARES
TO COVER SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
S-2
<PAGE> 3
INFORMATION INCORPORATED BY REFERENCE
In addition to the documents expressly incorporated by reference in the
accompanying Prospectus under "Information Incorporated by Reference" the
following documents are expressly incorporated in and made a part of this
Prospectus Supplement by reference:
a. Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1998.
b. Current Report on Form 8-K dated August 18, 1998.
c. Amendment No. 1 on Form 8-K/A to Current Report on Form 8-K dated August
18, 1998.
THE COMPANY
Apache, a Delaware corporation formed in 1954, is an independent energy
company that primarily explores for, develops and produces natural gas and crude
oil. In North America, Apache's exploration and production interests are focused
on the Gulf Coast, the Gulf of Mexico, the Anadarko Basin, the Permian Basin,
East Texas and the Western Sedimentary Basin of Canada. Outside of North
America, Apache has exploration and production interests offshore Western
Australia and in Egypt, and exploration interests in Poland, offshore the
People's Republic of China, offshore the Ivory Coast and in Indonesia. Apache
common stock, par value $1.25 per share ("Apache Common Stock"), has been listed
on the New York Stock Exchange since 1969 and on the Chicago Stock Exchange
since 1960. The Company's principal executive offices are located at One Post
Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400. The
Company's telephone number is (713) 296-6000.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
Depositary Shares offered hereby are estimated to be $98,000,000. See
"Underwriting." The Company intends to use the net proceeds from the offering to
repay debt outstanding under several money market lines of credit (estimated to
be approximately $30,000,000 at the end of August 1998) with any remaining
proceeds to be used to reduce the Canadian portion of its global credit
facility. On June 30, 1998, the Company had outstanding $38,600,000 under
several money market lines of credit bearing interest at a weighted average
interest rate of 6.4 percent issued to finance operations and to repurchase
shares of Apache Common Stock for use in connection with either employee benefit
plans or acquisitions. On June 30, 1998, Apache Canada Ltd. had outstanding
$118,000,000 under the Canadian portion of the global credit facility bearing
interest at a weighted average interest rate of 5.9 percent issued to finance
operations. The Company intends to continue incurring short-term indebtedness to
finance operations.
RECENT DEVELOPMENTS
In June 1998, Apache formed a strategic alliance with Cinergy Corporation
("Cinergy") to market substantially all the Company's natural gas production
from North America and sold its 57 percent interest in Producers Energy
Marketing LLC ("ProEnergy") for 771,258 shares of Cinergy common stock valued at
$26.5 million, subject to adjustment. ProEnergy will continue to market Apache's
North American natural gas production for 10 years, with an option to terminate
after six years, under an amended and restated gas purchase agreement effective
July 1, 1998. During this period, Apache is generally obligated to deliver most
of its North American gas production to Cinergy and, under certain
circumstances, may have to make payments to Cinergy if certain production quotas
are not met. Accordingly, Apache recorded a deferred gain of $20.6 million on
the sale of ProEnergy that will be amortized over six years.
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<PAGE> 4
QUARTER-END OPERATING RESULTS
On August 12, 1998, the Company filed its quarterly report on Form 10-Q for
the quarter ended June 30, 1998. A brief summary of the information in such
report appears in the table and discussion below. The information should be read
in conjunction with the Company's consolidated financial statements and the
notes thereto incorporated by reference in the accompanying Prospectus. See
"Available Information" and "Information Incorporated by Reference" in the
accompanying Prospectus. The financial and operating data presented below are
not audited and are not necessarily indicative of the results that may be
expected for future periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
AND OPERATIONS DATA)
<S> <C> <C> <C> <C>
FINANCIAL DATA:
Revenues........................................... $220,132 $258,841 $466,073 $580,669
Net income......................................... $ 9,236 $ 25,746 $ 26,592 $ 78,623
Basic net income per common share.................. $ .09 $ .29 $ .27 $ .87
Diluted net income per common share................ $ .09 $ .28 $ .27 $ .84
Weighted average common shares outstanding......... 98,599 90,288 98,093 90,216
OPERATIONS DATA:
Average Daily Production:
Oil (bbls)....................................... 74,245 63,944 76,158 63,401
Natural gas (Mcf)................................ 597,131 608,962 604,060 597,389
Average Sales Price:
Oil (per bbl).................................... $ 13.00 $ 18.44 $ 13.55 $ 19.93
Natural gas (per Mcf)............................ 1.99 1.96 1.99 2.27
</TABLE>
BALANCE SHEET DATA (PERIOD END):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
---------- ------------
<S> <C> <C>
Total Debt.................................................. $1,445,977 $1,518,580
Shareholders' Equity........................................ 1,898,657 1,729,177
</TABLE>
Net income for the second quarter of 1998 was $9.2 million, 64 percent
lower than for the same period in 1997. Basic net income per common share of
$.09 per share for the second quarter of 1998 was 69 percent less than for the
second quarter of 1997. Falling crude oil prices contributed to the decline.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The Company's ratios of earnings to combined fixed charges and preferred
stock dividends were as follows for the respective periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
- ----------------- --------------------------------
1998 1997 1997 1996 1995 1994 1993
- ------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.36 3.17 2.93 2.72 1.15 2.34 2.37
</TABLE>
The Company's ratios of earnings to combined fixed charges and preferred
stock dividends were computed based on: (a) consolidated income or losses from
continuing operations before income taxes, fixed charges (excluding interest
capitalized) and preferred stock dividends; and (b) consolidated fixed charges,
which consist of interest on indebtedness (including amounts capitalized),
amortization of debt discount and
S-4
<PAGE> 5
expense, the estimated portion of rental expense attributable to interest, and
preferred stock dividends. On May 17, 1995, Apache acquired DEKALB Energy
Company ("DEKALB", now known as DEK Energy Company) through a merger which
resulted in DEKALB becoming a wholly-owned subsidiary of Apache. The merger was
accounted for as a "pooling of interests." As a result, Apache's financial
information for all preceding periods was restated.
No shares of Preferred Stock were outstanding during any of the periods
presented. Accordingly, the ratios of earnings to combined fixed charges and
preferred stock dividends for each of the periods presented above is the same as
the ratios of earnings to fixed charges for such periods.
CAPITALIZATION
The following table sets forth as of June 30, 1998, (i) the actual
capitalization of the Company and (ii) the as adjusted capitalization of the
Company after giving effect to the application of the net proceeds from the sale
of Depositary Shares as described under "Use of Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1998
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current maturities):
Apache:
7.95% notes due 2026...................................... $ 178,538 $ 178,538
7.625% debentures due 2096................................ 149,175 149,175
7.375% debentures due 2047................................ 147,984 147,984
9.25% notes due 2002...................................... 99,823 99,823
7.7% notes due 2026....................................... 99,640 99,640
7.0% notes due 2018....................................... 148,224 148,224
Money market lines of credit.............................. 38,600 --
---------- ----------
861,984 823,384
---------- ----------
Subsidiary and other obligations:
Global credit facility -- Australia....................... 131,000 131,000
Global credit facility -- Canada.......................... 118,000 58,600
Apache Finance 6.5% notes due 2007........................ 168,768 168,768
Revolving credit facility -- Egypt........................ 137,000 137,000
DEKALB 9.875% notes due 2000.............................. 29,225 29,225
---------- ----------
583,993 524,593
---------- ----------
Total debt (including current maturities)............ 1,445,977 1,347,977
---------- ----------
Shareholders' Equity
Preferred stock........................................... -- 98,000
Common stock.............................................. 124,723 124,723
Paid-in capital........................................... 1,238,140 1,238,140
Retained earnings......................................... 574,769 574,769
Treasury stock............................................ (15,497) (15,497)
Accumulated other comprehensive income.................... (23,478) (23,478)
---------- ----------
Total shareholders' equity........................... 1,898,657 1,996,657
---------- ----------
Total capitalization................................. $3,344,634 $3,344,634
========== ==========
</TABLE>
S-5
<PAGE> 6
OIL AND GAS RESERVE INFORMATION AS OF DECEMBER 31, 1997
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. The Company's estimates of proved reserve
quantities of its U.S., Canadian and international properties are subject to
review by Ryder Scott Company Petroleum Engineers, independent petroleum
engineers. In 1996, the proved reserve quantities of certain of the Company's
Egyptian properties were subject to review by Netherland, Sewell & Associates,
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. The following table is taken from
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
<TABLE>
<CAPTION>
CRUDE OIL, CONDENSATE AND NATURAL GAS LIQUIDS NATURAL GAS
------------------------------------------------------- -----------------------------
(THOUSANDS OF BARRELS) (MILLIONS OF CUBIC FEET)
UNITED IVORY UNITED
STATES CANADA EGYPT AUSTRALIA COAST TOTAL STATES CANADA EGYPT
------- ------ ------ --------- ----- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL PROVED RESERVES:
Balance December 31, 1994..... 94,445 10,716 -- 5,463 -- 110,624 984,288 299,896 --
Extensions, discoveries and
other additions........... 6,685 306 -- 3,058 -- 10,049 85,032 26,488 --
Purchases of minerals
in-place.................. 99,148 119 -- -- -- 99,267 335,865 4,662 --
Revisions of previous
estimates................. 12,172 (388) -- 10 -- 11,794 56,281 (18,141) --
Production.................. (17,011) (937) -- (1,139) -- (19,087) (182,661) (24,485) --
Sales of properties......... (42,318) -- -- -- -- (42,318) (138,464) -- --
------- ------ ------ ------ ----- ------- --------- ------- -------
Balance December 31, 1995..... 153,121 9,816 -- 7,392 -- 170,329 1,140,341 288,420 --
Extensions, discoveries and
other additions........... 9,065 1,123 18,909 14,562 -- 43,659 140,208 44,584 59,329
Purchases of minerals
in-place.................. 3,547 128 30,706 -- -- 34,381 88,023 3,039 12,964
Revisions of previous
estimates................. 12,547 320 -- (1,679) -- 11,188 35,026 (25,747) --
Production.................. (15,338) (955) (3,036) (849) -- (20,178) (172,815) (27,303) (111)
Sales of properties......... (4,019) (66) -- -- -- (4,085) (29,231) (2,576) --
------- ------ ------ ------ ----- ------- --------- ------- -------
Balance December 31, 1996..... 158,923 10,366 46,579 19,426 -- 235,294 1,201,552 280,417 72,182
Extensions, discoveries and
other additions........... 32,530 2,677 10,492 12,814 393 58,906 187,270 68,877 58,685
Purchases of minerals
in-place.................. 1,818 278 -- 9,116 -- 11,212 13,295 13,897 --
Revisions of previous
estimates................. (7,283) (379) 4,696 -- -- (2,966) (56,632) 4,257 13,584
Production.................. (15,448) (1,003) (7,071) (1,612) -- (25,134) (179,796) (32,740) (205)
Sales of properties......... (2,923) (611) -- -- -- (3,534) (33,940) (6,500) --
------- ------ ------ ------ ----- ------- --------- ------- -------
Balance December 31, 1997..... 167,617 11,328 54,696 39,744 393 273,778 1,131,749 328,208 144,246
======= ====== ====== ====== ===== ======= ========= ======= =======
PROVED DEVELOPED RESERVES:
December 31, 1994........... 84,085 10,612 -- 5,322 -- 100,019 888,039 274,611 --
December 31, 1995........... 123,726 9,597 -- 4,141 -- 137,464 1,003,853 274,306 --
December 31, 1996........... 129,551 10,351 38,213 5,106 -- 183,221 1,087,694 274,498 6,977
December 31, 1997........... 133,035 11,313 42,714 15,690 393 203,145 1,009,080 326,237 8,825
<CAPTION>
NATURAL GAS
------------------------------
(MILLIONS OF CUBIC FEET)
IVORY
AUSTRALIA COAST TOTAL
--------- ------ ---------
<S> <C> <C> <C>
TOTAL PROVED RESERVES:
Balance December 31, 1994..... 31,971 -- 1,316,155
Extensions, discoveries and
other additions........... 42,332 -- 153,852
Purchases of minerals
in-place.................. -- -- 340,527
Revisions of previous
estimates................. 2,342 -- 40,482
Production.................. (3,486) -- (210,632)
Sales of properties......... -- -- (138,464)
------- ------ ---------
Balance December 31, 1995..... 73,159 -- 1,501,920
Extensions, discoveries and
other additions........... 8,346 -- 252,467
Purchases of minerals
in-place.................. -- -- 104,026
Revisions of previous
estimates................. (5,276) -- 4,003
Production.................. (5,076) -- (205,305)
Sales of properties......... -- -- (31,807)
------- ------ ---------
Balance December 31, 1996..... 71,153 -- 1,625,304
Extensions, discoveries and
other additions........... 42,936 26,208 383,976
Purchases of minerals
in-place.................. 136,817 -- 164,009
Revisions of previous
estimates................. -- -- (38,791)
Production.................. (9,496) -- (222,237)
Sales of properties......... -- -- (40,440)
------- ------ ---------
Balance December 31, 1997..... 241,410 26,208 1,871,821
======= ====== =========
PROVED DEVELOPED RESERVES:
December 31, 1994........... 22,265 -- 1,184,915
December 31, 1995........... 20,308 -- 1,298,467
December 31, 1996........... 66,174 -- 1,435,343
December 31, 1997........... 183,962 26,208 1,554,312
</TABLE>
Under the full cost accounting rules of the Securities and Exchange
Commission, 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 income taxes. Application of these rules
generally requires pricing future production at the unescalated oil and gas
prices in effect at the end of each fiscal quarter and requires a write-down if
the "ceiling" is exceeded, even if prices declined for only a short period of
time. The Company did not have a write-down due to ceiling test limitations as
of June 30, 1998. Under current pricing there is the potential, while not a
certainty, that a write-down may occur. If a write-down is required, the
one-time charge to earnings would not impact cash flow from operating
activities.
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<PAGE> 7
PRODUCTION AND PRICING DATA
The following table which is taken from the Company's Annual Report on Form
10-K for the year ended December 31, 1997, describes, for each of the last three
fiscal years, oil, natural gas liquids ("NGLs") and gas production for the
Company, average production costs (excluding severance taxes) and average sales
prices.
<TABLE>
<CAPTION>
PRODUCTION AVERAGE SALES PRICE
----------------------------- AVERAGE -----------------------------------
YEAR ENDED OIL NGLS GAS PRODUCTION OIL NGLS GAS
DECEMBER 31, (MBBLS) (MBBLS) (MMCF) COST PER BOE (PER BBL) (PER BBL) (PER MCF)
------------ ------- ------- ------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1997............... 24,291 843 222,237 $3.07 $19.20 $14.08 $2.28
1996............... 19,465 713 205,305 3.43 20.84 16.41 2.02
1995............... 18,324 763 210,632 3.34 17.09 12.05 1.57
</TABLE>
For a discussion of property divestitures during the six month period ended
June 30, 1998 and recent production volume and price information, see the
discussion and tables in the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, under "Notes to Consolidated Financial
Statements -- Divestitures," and "Management's Discussion and
Analysis -- Overview" and "-- Results of Operations."
DESCRIPTION OF SERIES B PREFERRED STOCK
The following description of the particular terms of the 100,000 shares of
Series B Preferred Stock supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of Preferred Stock
set forth in the accompanying Prospectus, to which description reference is
hereby made. The description of certain provisions of the Series B Preferred
Stock set forth below does not purport to be complete and is subject to and
qualified in its entirety by reference to the provisions of the Certificate of
Designation, Preferences and Rights relating to the Series B Preferred Stock, a
form of which will be filed with the Securities and Exchange Commission at or
prior to the time of sale of the Depositary Shares. Capitalized terms used but
not defined herein have the meanings assigned to such terms in the Prospectus.
The shares of the Series B Preferred Stock will be deposited with the
Depositary under a deposit agreement, dated as of August 25, 1998 (the "Deposit
Agreement"), among the Company, the Depositary and the holders from time to time
of the depositary receipts (the "Depositary Receipts") issued by the Depositary
thereunder. The Depositary Receipts will evidence the Depositary Shares. Subject
to the terms of the Deposit Agreement, each holder of a Depositary Receipt will
be entitled, proportionately, to all the rights, preferences and privileges of,
and subject to all of the limitations of, the interest in the Series B Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights and preferences). See "Depositary Shares."
GENERAL
The Series B Preferred Stock is a single series consisting of 100,000
shares. The holders of Series B Preferred Stock will have no preemptive rights.
The Series B Preferred Stock will not be convertible into shares of Apache
Common Stock. The Series B Preferred Stock will be fully paid and
non-assessable.
The Series B Preferred Stock will rank prior and superior to all of the
Apache Common Stock, now or hereafter outstanding, and the Series A Junior
Participating Preferred Stock of the Company as to payment of dividends and
distribution of assets upon dissolution, liquidation or winding up of the
Company.
DIVIDENDS
General. Cumulative cash dividends will be payable on each share of Series
B Preferred Stock when, as and if declared by the Board of Directors of the
Company or a duly authorized committee thereof, out of the assets of the Company
legally available therefor.
The initial dividend for the dividend period commencing on August 25, 1998,
to but excluding October 30, 1998, will be $10.26 per share (equivalent to
$1.026 per Depositary Share) and will be payable on October 30, 1998.
Thereafter, dividends on the Series B Preferred Stock will be payable quarterly,
when, as, and if declared by the Board of Directors of the Company or a duly
authorized committee thereof on the last business day of January, April, July
and October of each year (each a "Dividend Payment Date") at the
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<PAGE> 8
annual rate of 5.68% or $56.80 per share (equivalent to $5.68 per Depositary
Share). The amount of dividends payable on each share of Series B Preferred
Stock for each full quarterly period will be computed by dividing the annual
dividend rate by four. The amount of dividends payable for any other period that
is shorter or longer than a full quarterly dividend period will be computed on
the basis of a 360-day year consisting of twelve 30-day months.
If a Dividend Payment Date is not a business day, dividends (if declared)
on the Series B Preferred Stock will be paid on the next business day, without
interest. A dividend period with respect to a Dividend Payment Date is the
period commencing on the preceding Dividend Payment Date and ending on the day
immediately prior to the next Dividend Payment Date. Dividends payable, if
declared, on a Dividend Payment Date will be payable to holders of record as
they appear on the stock books of the Company on the record date, which shall be
the fifteenth day of the calendar month in which the applicable Dividend Payment
Date falls (each, a "Dividend Record Date").
Dividends on the Series B Preferred Stock will be cumulative if the Company
fails to declare one or more dividends on the Series B Preferred Stock in any
amount, whether or not the earnings or financial condition of the Company were
sufficient to pay such dividends in whole or in part.
Holders of shares of Series B Preferred Stock will not be entitled to any
dividend, whether payable in cash, property or stock, in excess of full
dividends (including accrued dividends, if any) on shares of Series B Preferred
Stock. No interest or sum of money in lieu of interest will be payable in
respect of any dividend or payments which may be in arrears.
Dividends in arrears on the Series B Preferred Stock payable, if declared,
but not declared for payment or paid on any Dividend Payment Date may be
declared by the Board of Directors of the Company or a duly authorized committee
thereof and paid on any date fixed by the Board of Directors of the Company or a
duly authorized committee thereof, whether or not a Dividend Payment Date, to
the holders of record of the shares of Series B Preferred Stock, as they appear
on the stock register of the Company on such record date, which will be not less
than ten nor more than 30 days prior to the payment date therefor, as fixed by
the Board of Directors of the Company or a duly authorized committee thereof.
Changes in the Dividends Received Percentage. If, prior to 18 months after
the date of the original issuance of the Series B Preferred Stock, one or more
amendments to the Code are enacted which change the percentage of the dividends
received deduction (currently 70%) as specified in Section 243(a)(1) of the Code
or any successor provision (the "Dividends Received Percentage"), the amount of
each dividend on each share of the Series B Preferred Stock for dividend
payments made on or after the date of enactment of such change will be adjusted
by multiplying the amount of the dividend payable determined as described above
under "-- General" (before adjustment) by a factor, which will be the number
determined in accordance with the following formula (the "DRD Formula"), and
rounding the result to the nearest cent (with one-half cent and above rounded
up):
1 - [.35(1 - .70)]
1 - [.35(1 - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question; provided however, that if the
Dividends Received Percentage applicable to the dividend in question shall be
less than 50%, then the DRP shall equal .50. No amendment to the Code, other
than a change in the percentage of the dividends received deduction set forth in
Section 243(a)(1) of the Code or any successor provision, will give rise to such
an adjustment. Notwithstanding the foregoing provision, in the event that, with
respect to any such amendment, the Company receives either an unqualified
opinion from a nationally recognized independent tax counsel selected by the
Company or a private letter ruling or similar form of authorization from the
Internal Revenue Service to the effect that such an amendment does not apply to
dividends payable on the Series B Preferred Stock, then any such amendment will
not result in the adjustment provided for pursuant to the DRD Formula. The
opinion referenced in the previous sentence will be based upon a specific
exception in the legislation amending the DRP or upon a published pronouncement
of the Internal Revenue Service addressing such legislation. Unless the context
otherwise requires, references to dividends in this Prospectus Supplement will
mean dividends as adjusted by the DRD
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Formula. The Company's calculation of the dividends payable as so adjusted and
as certified accurate as to calculation and reasonable as to method by the
independent certified public accountants then regularly engaged by the Company,
will be final and not subject to review.
If any amendment to the Code which reduces the Dividends Received
Percentage is enacted after a Dividend Record Date and before the next Dividend
Payment Date, the amount of dividend payable on such Dividend Payment Date will
not be increased; but instead, an amount equal to the excess of (x) the product
of the dividends paid by the Company on such Dividend Payment Date and the DRD
Formula (where the DRP used in the DRD Formula would be equal to the greater of
the Dividends Received Percentage applicable to the dividend in question and
.50) over (y) the dividends paid by the Company on such Dividend Payment Date,
will be payable (if declared) to holders of record on the next succeeding
Dividend Payment Date in addition to any other amounts payable on such date.
In addition, if any such amendment to the Code is enacted that reduces the
Dividends Received Percentage and such reduction retroactively applies to a
Dividend Payment Date as to which the Company previously paid dividends on the
Series B Preferred Stock (each an "Affected Dividend Payment Date"), the Company
will pay (if declared) additional dividends (the "Additional Dividends") on the
next succeeding Dividend Payment Date (or if such amendment is enacted after the
dividend payable on such Dividend Payment Date has been declared, on the second
succeeding Dividend Payment Date following the date of enactment) to holders of
record on such succeeding Dividend Payment Date following the date of enactment)
to holders of record on such succeeding Dividend Payment Date in an amount equal
to the excess of (x) the product of the dividends paid by the Company on each
Affected Dividend Payment Date and the DRD Formula (where the DRP used in the
DRD Formula would be equal to the greater of the Dividends Received Percentage
and .50 applied to each Affected Dividend Payment Date) over (y) the dividends
paid by the Company on each Affected Dividend Payment Date.
Notwithstanding the foregoing, Additional Dividends will not be paid as a
result of the enactment of any amendment to the Code 18 months or more after the
date of original issuance of the Series B Preferred Stock which retroactively
reduces the Dividends Received Percentage, or if such amendment would not result
in an adjustment due to the Company having received either an opinion of counsel
or tax ruling referred to in the third preceding paragraph. The Company will
make only one payment of Additional Dividends.
In the event that the amount of dividends payable per share of the Series B
Preferred Stock will be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, the Company will cause notice of each adjustment and,
if applicable, any Additional Dividends, to be sent to the holders of the Series
B Preferred Stock with the payment of dividends on the next Dividend Payment
Date after the date of such adjustment.
In the event that, prior to 18 months after the date of the original
issuance of the Series B Preferred Stock, the Dividends Received Percentage is
reduced to 50% or less, the Company may, at its option, redeem the Series B
Preferred Stock in whole, but not in part, as described below. See "Redemption."
Payment Restrictions. The Company may not declare or pay any dividend or
make any distribution of assets (other than dividends paid or other
distributions made in stock of the Company ranking junior to the Series B
Preferred Stock as to the payment of dividends and the distribution of assets
upon liquidation, dissolution or winding up) on, or redeem, purchase or
otherwise acquire (except upon conversion or exchange for stock of the Company
ranking junior to the Series B Preferred Stock as to the payment of dividends
and the distribution of assets upon liquidation, dissolution or winding up),
shares of Apache Common Stock, of Series A Junior Participating Preferred Stock
or of any other stock of the Company ranking junior to the Series B Preferred
Stock as to the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, unless all accrued and unpaid dividends
on the Series B Preferred Stock for all prior dividend periods have been or
contemporaneously are declared and paid and the full quarterly dividend on the
Series B Preferred Stock for the current dividend period has been or
contemporaneously is declared and set apart for payment.
Whenever all accrued dividends on the Series B Preferred Stock are not paid
in full, the Company may not declare or pay dividends or make any distribution
of assets (other than dividends paid or other
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distributions made in stock of the Company ranking junior to the Series B
Preferred Stock as to the payment of dividends and the distribution of assets
upon liquidation, dissolution or winding up) on any other stock of the Company
ranking on a parity with the Series B Preferred Stock as to the payment of
dividends unless (i) all accrued and unpaid dividends on the Series B Preferred
Stock for all prior dividend periods are contemporaneously declared and paid or
(ii) all dividends declared and paid or set apart for payment or other
distributions made on the Series B Preferred Stock and any other stock of the
Company ranking on a parity with the Series B Preferred Stock as to the payment
of dividends are declared and paid or set apart for payment or made pro rata so
that the amount of dividends declared and paid or set apart for payment or other
distributions made per share on the Series B Preferred Stock and such other
stock of the Company will bear the same ratio that accrued and unpaid dividends
per share on the Series B Preferred Stock and such other stock of the Company
bear to each other.
Whenever all accrued dividends on the Series B Preferred Stock are not paid
in full, the Company may not redeem, purchase or otherwise acquire (except upon
conversion or exchange for stock of the Company ranking junior to the Series B
Preferred Stock as to the payment of dividends and the distribution of assets
upon liquidation, dissolution or winding up) other stock of the Company ranking
on a parity with the Series B Preferred Stock as to the payment of dividends or
the distribution of assets upon liquidation, dissolution or winding up unless
(i) all outstanding shares of the Series B Preferred Stock are contemporaneously
redeemed or (ii) a pro rata redemption is made of shares of Series B Preferred
Stock and such other stock of the Company, with the amount allocable to each
series of such stock determined on the basis of the aggregate liquidation
preference of the outstanding shares of each series and the shares of each
series being redeemed only on a pro rata basis.
LIQUIDATION PREFERENCE
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of shares of Series B Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made on
Apache Common Stock or any other class or series of stock of the Company ranking
junior to the Series B Preferred Stock, upon liquidation, a liquidating
distribution in the amount of $1,000 per share (equivalent to $100 per
Depositary Share), plus an amount equal to the sum of all accrued and unpaid
dividends including any increase in dividends payable due to changes in the
Dividends Received Percentage and Additional Dividends (whether or not earned or
declared) for the then-current dividend period and all dividend periods prior
thereto. See "Description of Capital Stock" in the accompanying Prospectus.
Neither the sale of all or substantially all of the property or business of
the Company, nor the merger or consolidation of the Company into or with any
other corporation, nor the merger or consolidation of any other corporation into
or with the Company will constitute a liquidation, dissolution or winding up,
voluntary or involuntary, for the purposes of the foregoing paragraph. After the
payment to the holders of the shares of Series B Preferred Stock of the full
preferential amounts provided above, the holders of the shares of Series B
Preferred Stock as such will have no right or claim to any of the remaining
assets of the Company.
In the event the assets of the Company available for distribution to the
holders of the shares of Series B Preferred Stock upon any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled as provided above, no such distribution will be made on account of any
other stock of the Company ranking on a parity with the Series B Preferred Stock
as to the distribution of assets upon such liquidation, dissolution or winding
up unless a pro rata distribution is made on the Series B Preferred Stock and
such other stock of the Company, with the amount allocable to each series of
such stock determined on the basis of the aggregate liquidation preference of
the outstanding shares of each series and distributions to the shares of each
series being made on a pro rata basis.
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VOTING RIGHTS
The holders of shares of Series B Preferred Stock will not be entitled to
vote, except as set forth below or as expressly required by applicable law. In
exercising any such vote, each outstanding share of Series B Preferred Stock
will be entitled to one vote.
If the equivalent of six quarterly dividends payable on the Preferred Stock
or any other class or series of preferred stock ranking on a parity with the
Series B Preferred Stock as to the payment of dividends have not been paid, the
Company has resolved to increase the number of directors of the Company by two
(without duplication of any increase made pursuant to the terms of any other
series of preferred stock of the Company), and the holders of the Series B
Preferred Stock, voting as a single class with the holders of shares of any
other class of the Company's preferred stock ranking on a parity with the Series
B Preferred Stock either as to dividends or distribution of assets and upon
which like voting rights have been conferred and are exercisable will be
entitled to elect two directors at any meeting of stockholders of the Company at
which directors are to be elected during the period such dividends remain in
arrears. Each class or series of stock entitled to vote for the additional
directors will have a number of votes proportionate to the aggregate liquidation
preference of its outstanding shares. Such voting right shall continue until
full cumulative dividends for all past dividend periods on all such preferred
stock of the Company, including any shares of the Series B Preferred Stock, have
been paid or declared and set apart for payment. Any such elected directors
shall serve until the Company's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the right to elect directors
shall cease to exist) or until their respective successors shall be elected and
qualify.
So long as any Series B Preferred Stock is outstanding, the affirmative
vote or consent of the holders of at least 80% of the outstanding shares of the
Series B Preferred Stock will be required for any amendment of the Restated
Certificate of Incorporation of the Company (or any certificate supplemental
thereto) which will adversely affect the powers, preferences, privileges or
rights of the Series B Preferred Stock. The affirmative vote or consent of the
holders of at least 80% of the outstanding shares of the Series B Preferred
Stock and any other series of the Company's preferred stock ranking on a parity
with the Series B Preferred Stock either as to dividends or upon liquidation,
voting as a single class without regard to series, will be required to issue,
authorize or increase the authorized amount of, or issue or authorize any
obligation or security convertible into or evidencing a right to purchase, any
additional class or series of stock ranking prior to the Series B Preferred
Stock as to dividends or upon liquidation, or to reclassify any authorized stock
of the Company into such prior shares, but such vote will not be required for
the Company to take any such actions with respect to any stock ranking on a
parity with or junior to the Series B Preferred Stock.
The affirmative vote or consent of the holders of a majority of all the
outstanding shares of Series B Preferred Stock, voting or consenting separately
as a class, is required to approve any merger, consolidation or compulsory share
exchange to which the Company is a party, unless (i) the terms of such merger,
consolidation or compulsory share exchange do not provide for a change in the
terms of the Series B Preferred Stock and (ii) the Series B Preferred Stock is
on a parity with or prior to (in respect of dividends and the distribution of
assets upon liquidation, dissolution or winding up) any other class or series of
capital stock authorized by the surviving corporation, other than any class or
series of stock of the Company ranking senior as to the Series B Preferred Stock
either as to dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Company and previously authorized with the
consent of holders of Series B Preferred Stock as described herein (or other
than any capital stock into which such prior stock is converted as a result of
such merger, consolidation or compulsory share exchange).
In addition, if the holders of the shares of Series B Preferred Stock are
entitled to vote upon or consent to a merger, consolidation or compulsory share
exchange of the Company, and if the Company offers to purchase all of the
outstanding shares of Series B Preferred Stock (the "Offer"), then each holder
of Series B Preferred Stock who does not sell its shares of Series B Preferred
Stock pursuant to the Offer shall be deemed irrevocably to have voted or
consented all shares of Series B Preferred Stock owned by such holder in favor
of the merger or consolidation of the Company without any further action by the
holder. The Offer shall be at a price of $1,000 per share (equivalent to $100
per Depositary Share), together with accrued and unpaid dividends (whether or
not declared) to the date fixed for repurchase, including any increase in
dividends
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payable due to changes in the Dividend Received Percentage and Additional
Dividends. The Offer will remain open for acceptance for a period of at least 30
days.
REDEMPTION
Prior to August 25, 2008, the Series B Preferred Stock is not redeemable,
except as described below. On or after such date, each share of Series B
Preferred Stock will be redeemable, in whole or in part, at the option of the
Company, at any time and from time to time, out of funds legally available
therefor, at $1,000 (equivalent to $100 per Depositary Share) per share, plus
accrued and unpaid dividends (whether or not declared) to the date fixed for
redemption, including any increase in dividends payable due to changes in the
Dividends Received Percentage and Additional Dividends. If fewer than all the
outstanding shares of Series B Preferred Stock are to be redeemed, the Company
will select those to be redeemed by lot or pro rata or by any other method as
may be determined by the Board of Directors to be equitable.
If, prior to 18 months after the date of the original issuance of the
Series B Preferred Stock, one or more amendments to the Code are enacted which
results in a reduction of the Dividend Received Percentage to 50% or less, the
Company, at its option may redeem all, but not less than all, of the outstanding
shares of the Series B Preferred Stock provided that, within 60 days of the date
on which an amendment to the Code is enacted which changes the Dividends
Received Percentage to 50% or less, the Company sends notice to holders of the
Series B Preferred Stock of such redemption. Any redemption of the Series B
Preferred Stock pursuant to this paragraph will take place on the date specified
in the notice, which date shall be not less than 30 nor more than 60 days from
the date such a notice is sent to holders of the Series B Preferred Stock. Any
redemption of the Series B Preferred Stock in accordance with this paragraph
shall be at a redemption price equal to the greater of (i) $1,000 per share of
the Series B Preferred Stock (equivalent to $100 per Depositary Share) (the
"Liquidation Value") to be redeemed or (ii) the sum of the present values of the
Remaining Scheduled Dividends prior to August 25, 2028 and the Liquidation Value
assuming payment on August 25, 2028, discounted to the redemption date on a
quarterly basis (assuming a 360-day year consisting of twelve 30 day months) at
the Treasury Yield plus 0 basis points, excluding any increase in dividends
payable due to changes in the Dividend Received Deduction Percentage, if any,
plus in the case of (i) or (ii) accrued and unpaid dividends (whether or not
declared) to the date fixed for redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Rate for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity of August 25,
2028 that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
maturing on or about August 25, 2028. "Independent Investment Banker" means
Smith Barney Inc. or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, and independent investment banking institution of
national standing appointed by the Company.
"Comparable Treasury Rate" means, as of any date of determination, the
yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York
City time) on the second business day preceding such date of determination on
the display designated as "Page 678" on the Telerate Access Service (or such
other display as may replace Page 678 on Telerate Access Service) for actively
traded U.S. Treasury securities having a 30-year maturity as of such date of
determination, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second business day preceding the date of
determination in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a 30-year constant maturity as of such date of determination.
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"Remaining Scheduled Dividends" means cumulative cash dividends at the rate
of 5.68% of the Liquidation Value per share of Series B Preferred Stock
equivalent to $56.80 per annum per share of Series B Preferred Stock from the
date specified in the notice until August 25, 2028.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of shares of Series B
Preferred Stock to be redeemed at the address shown on the books of the Company.
After the redemption date, dividends will cease to accrue on the shares of
Series B Preferred Stock called for redemption and all rights of the holders of
such shares as such will terminate except the right to receive the redemption
price without interest (unless the Company defaults in the payment of the
redemption price).
The Series B Preferred Stock is not subject to any mandatory redemption,
sinking fund or other similar provisions.
TRANSFER AGENT AND REGISTRAR
The transfer agent, and registrar for the Series B Preferred Stock is
Norwest Bank Minnesota, National Association.
DESCRIPTION OF DEPOSITARY SHARES
General. Each Depositary Share represents one-tenth share of Series B
Preferred Stock. The shares of Series B Preferred Stock represented by the
Depositary Shares will be deposited with the Depositary under the Deposit
Agreement among the Company, the Depositary and the holders from time to time of
the Depositary Receipts issued by the Depositary thereunder. Depositary Receipts
will be distributed to those persons purchasing Depositary Shares in accordance
with the terms of the offering. Subject to the terms of the Deposit Agreement,
each owner of a Depositary Share will be entitled, in proportion to one-tenth of
a share of the Series B Preferred Stock represented by such Depositary Share, to
all the rights and preferences of the Series B Preferred Stock represented
thereby (including dividend, voting, redemption and liquidation rights, if any).
Dividends and Other Distributions. The Depositary will distribute all cash
dividends and other cash distributions received in respect of the Series B
Preferred Stock to the record holders of Depositary Receipts relating to such
Series B Preferred Stock in proportion to the number of such Depositary Shares
owned by such holders on the relevant Dividend Record Date. The amount
distributed by the Depositary will be reduced by any amounts required to be
withheld by the Company or the Depositary on account of taxes.
Redemption of Depositary Shares. If the Series B Preferred Stock is
redeemed, the Depositary Shares will be redeemed from the proceeds received by
the Depositary resulting from the redemption, in whole or in part, of shares of
Series B Preferred Stock held by the Depositary. The redemption prices per
Depositary Shares will be one-tenth of the respective redemption prices per
share of Series B Preferred Stock. Whenever the Company redeems shares of Series
B Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing shares of
Series B Preferred Stock so redeemed. If less than all the Depositary Shares are
to be redeemed, the Depositary Shares to be redeemed will be selected on a pro
rata basis (with adjustments to avoid fractional shares).
Voting the Depositary Shares. Upon receipt of notice of any meeting at
which the owners of the Series B Preferred Stock are entitled to vote, the
Depositary will mail the information contained in such notice of meeting to the
record holders of Depositary Receipts. Each record holder of Depositary Receipts
on the record date (which will be the same date as the record date for the
Series B Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the amount of the Series B Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, and the Company has agreed to take all action that may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of the Series B Preferred Stock to
the extent it does not receive specific instructions from the holders of
Depositary Shares representing such Series B Preferred Stock.
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Amendment and Termination of the Depositary Agreement. The form of
Depositary Receipts evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Depositary. However, any amendment which materially and adversely alters
the rights of the existing holders of Depositary Shares will not be effective
unless such amendment has been approved by the record holders of at least a
majority of the Depositary Shares then outstanding. The Deposit Agreement may be
terminated by the Company or the Depositary only if (i) all outstanding
Depositary Shares relating thereto have been redeemed, or (ii) there has been a
final distribution in respect of the Series B Preferred Stock in connection with
any liquidation, dissolution or winding up of the Company and such distribution
has been distributed to the holders of the Depositary Shares.
Charges of Depositary. The Company will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. The Company will pay charges of the Depositary in connection with
the initial deposit of the Series B Preferred Stock and the issuance of the
Depositary Receipts will pay other transfer and other taxes and governmental
charges and such other charges as are expressly provided in the Deposit
Agreement to be for their accounts.
Resignation and Removal of Depositary. The Depositary may resign at any
time by delivering to the Company notice of its election to do so, and the
Company may at any time remove the Depositary, any such resignation or removal
to take effect upon the appointment of a successor Depositary and its acceptance
of such appointment. Such successor Depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
DTC BOOK-ENTRY-ONLY SYSTEMS
The Depositary Shares will be registered under a book-entry-only system
maintained by The Depository Trust Company, New York, New York ("DTC"). The
book-entry-only system will evidence ownership interests in the Depository
Shares in book-entry-only form. Purchasers of ownership interests in the
Depositary Shares will not receive certificates representing their interests in
the Depositary Shares purchased. Transfers of ownership interests will be
effected on the records of DTC and its participating organizations (the "DTC
Participants") pursuant to rules and procedures established by DTC.
Certain of the following information concerning the procedures and record
keeping with respect to ownership interests in the Depositary Shares, payment of
dividends and other payments on the Depositary Shares to DTC Participants or
Beneficial Owners (as hereafter defined), confirmation and transfer of ownership
interests in the Depositary Shares and other related transactions by and between
DTC, the DTC Participants and Beneficial Owners is based solely on information
contained in a published report of DTC.
DTC, an automated clearinghouse for securities transactions, will act as
securities depository for the Depositary Shares. DTC is a limited-purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of New York banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities of the DTC Participants and to facilitate the clearance and
settlement of securities transactions among DTC Participants in such securities
through electronic book-entry changes in accounts of the DTC Participants,
thereby eliminating the need for physical movement of security certificates.
"DTC Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations, some of which
(and/or their representatives) own DTC. Access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a DTC Participant,
either directly or indirectly (the "Indirect Participants"). The rules
applicable to DTC and its participants are on file with the SEC.
The Depositary Shares will be issued in the form of a single global
Depositary Receipt registered in the name of the nominee of DTC. The ownership
of the fully-registered Depositary Shares will be registered in the name of Cede
& Co., as nominee for DTC. Ownership interests in the Depositary Shares may be
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purchased by or through DTC Participants and will be recorded on the records of
the DTC Participants, whose interests in turn will be recorded on a computerized
book-entry-only system operated by DTC. Such DTC Participants and the person for
whom they acquire interests in the Depositary Shares as nominees ("Beneficial
Owner") will not receive Depositary Share certificates, but each such DTC
Participant will receive a credit balance in the records of DTC in the amount of
such DTC Participant's interest in the Depositary Shares, which will be
confirmed in accordance with DTC's standard procedures. Each such Beneficial
Owner for whom a DTC Participant acquires an interest in the Depositary Shares,
as nominee, may desire to make arrangements with such DTC Participant to have
all communications of the Company to DTC which may affect such Beneficial Owner
forwarded in writing by such DTC Participant and to have notifications made of
all payments of liquidation value and made with respect to his beneficial
interest. The Company and the Transfer Agent will treat DTC (or its nominee) as
the sole and exclusive owner of the Depositary Shares registered in its name for
the purposes of payment of liquidation value, dividends and other distributions
on the Depositary Shares, giving any notice permitted or required to be given to
holders registering the transfer of Depositary Shares, and for all other
purposes whatsoever, and shall not be affected by any notice to the contrary.
The Company shall not have any responsibility or obligation to any DTC
Participant, any person claiming a beneficial ownership interest in the
Depositary Shares under or through DTC or any DTC Participant, or any other
person which is not shown on the registration books of the Transfer Agent as
being a holder, with respect to: (i) the accuracy of any records maintained by
DTC or any DTC Participant; (ii) the payment by DTC or any DTC Participant of
any amount in respect of the liquidation value, dividends or other distributions
on Depositary Shares; (iii) any notice which is permitted or required to be
given to holders thereunder or under the conditions to transfers or exchanges
adopted by the Company; or (iv) any other action taken by DTC as a holder.
Disbursement of payments to the DTC Participants is the responsibility of DTC
and disbursement of such payments to the Beneficial Owners is the responsibility
of the DTC Participants or the Indirect Participants. THE COMPANY WILL NOT HAVE
ANY RESPONSIBILITY OR OBLIGATIONS TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR
WHOM THEY ACT AS NOMINEES WITH RESPECT TO THE PAYMENTS TO OR THE PROVIDING OF
NOTICE FOR THE DTC PARTICIPANTS, OR THE INDIRECT PARTICIPANTS, OR THE BENEFICIAL
OWNERS.
SO LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE
DEPOSITARY RECEIPT, REFERENCES HEREIN TO THE SECURITY HOLDERS OR REGISTERED
OWNERS OF THE DEPOSITARY SHARES SHALL MEAN CEDE & CO., AND SHALL NOT MEAN THE
BENEFICIAL OWNERS.
For every transfer and exchange of beneficial ownership of Depositary
Shares, a Beneficial Owner may be charged a sum sufficient to cover any tax, fee
or other governmental charge that may be imposed in relation thereto.
When reference is made to any action which is required or permitted to be
taken by the Beneficial Owners, such reference shall only relate to action by
such Beneficial Owner, or others permitted to act (by statute, regulation or
otherwise) on behalf of such Beneficial Owners for such purposes. When notices
are given, they shall be to DTC only. Conveyance of notices and other
communications by DTC to DTC Participants and Indirect Participants and in turn
by DTC Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory and regulatory
requirements then in effect.
Payments of liquidation value, dividends or other distributions on the
Depositary Shares will be made to DTC or its nominee, Cede & Co., as registered
owner of the Depositary Shares. Upon receipt of any such payments, DTC's current
practice is to immediately credit the accounts of the DTC Participants in
accordance with their respective holdings shown on the records of DTC. Payments
by DTC Participants and Indirect Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such DTC Participant or
Indirect Participant.
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DTC may determine to discontinue providing its services with respect to the
Depositary Shares at any time by giving notice to the Company and discharging
its responsibilities with respect thereto under applicable law. In addition, the
Company may determine that continuation of the system of book-entry-only
transfers through DTC (or a successor securities depository) is not in the best
interests of the Beneficial Owners or is burdensome to the Company. If for
either reason the book-entry-only system is discontinued, certificates for the
Depositary Shares will be delivered to the Beneficial Owners thereof.
Certain of the information contained in this sub-section has been extracted
from a report from DTC. No representation is made by the Company as to the
completeness or the accuracy of such information or as to the absence of
material adverse changes in such information subsequent to the date hereof.
Same-Day Settlement and Payment
Settlement for the Depositary Shares will be made by a purchaser in
immediately available funds. While the Depositary Shares are in the
book-entry-only system described above, all payments with respect to the
Depositary Shares will be made by the Company to DTC in immediately available
funds.
While the Depositary Shares are in the book-entry-only system described
above, they will trade in DTC's Same-Day Fund Settlement System. During such
period, secondary market trading activity in the Depositary Shares will settle
in immediately available funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on the trading activity in the
Depositary Shares.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Series B
Preferred Stock. It is the opinion of Woodard, Hall & Primm, P.C., special tax
counsel to the Company, that the following summary addresses the material
Federal income tax considerations of the acquisition, ownership and disposition
of the Series B Preferred Stock. This summary is based upon laws, regulations,
rulings and decisions now in effect, all of which are subject to change or
possible differing interpretations. It deals only with the Series B Preferred
Stock held as capital assets and does not purport to deal with persons in
special tax situations. It also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons considering the
purchase of the Series B Preferred Stock should consult their tax advisors
concerning the application of United States Federal income tax laws to their
particular situations as well as any consequences of the purchase, ownership and
disposition of the Series B Preferred Stock arising under the laws of any other
taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of shares
of the Series B Preferred Stock that is for United States Federal income tax
purposes (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or the District of Columbia, (iii) an estate
the income of which is subject to United States Federal income taxation
regardless of its source, or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have authority to control all substantial
decisions of the trust; or (v) other person whose income or gain in respect of
the Preferred Stock is effectively connected with the conduct of a United States
trade or business. As used herein, the term "non-U.S. Holder" means a holder of
the Series B Preferred Stock, as the case may be, that is not a U.S. Holder.
U.S. HOLDERS OF PREFERRED STOCK
Dividends on Series B Preferred Stock. For United States Federal income tax
purposes, a U.S. Holder of any series of the Series B Preferred Stock entitled
to receive dividends from earnings and profits of the Company will generally
recognize taxable gain on the amount of such dividends at ordinary income rates.
Eligible corporations which are U.S. Holders may be entitled to exclude some or
all of such dividend income under the Dividends Received Percentage. U.S.
Holders which receive dividend amounts for which such deduction is not
available, including any additional amounts payable pursuant to the DRD Formula
and any
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<PAGE> 17
Additional Dividends required by reductions of the Dividends Received Percentage
through amendments to the Code (see "Description of Series B Preferred
Stock -- Changes in the Dividends Received Percentage"), will also generally
recognize taxable gain on such additional amounts at ordinary income rates.
Disposition of Series B Preferred Stock. Upon the sale or exchange of the
Series B Preferred Stock, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on such sale, exchange,
or redemption and such U.S. Holder's adjusted tax basis in the Series B
Preferred Stock. Such gain or loss will be long-term capital gain or loss if the
Series B Preferred Stock were held for more than one year.
NON-U.S. HOLDERS OF PREFERRED STOCK
Dividends paid out of current or accumulated earnings and profits of the
Company will be subject on repatriation to a United States Federal withholding
rate of thirty percent, unless such non-U.S. Holder is able to take advantage of
an applicable lower withholding rate by virtue of a double income taxation
treaty between the non-U.S. Holder's country of domicile and the United States.
Generally, a non-U.S. Holder will not be subject to Federal income tax on
any amount which constitutes capital gain upon disposition of the Series B
Preferred Stock, provided the gain is not effectively connected with the conduct
of a trade or business in the United States by the non-U.S. Holder. Certain
other exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Series B Preferred Stock classified as equity of the Company for United
States tax purposes will be includible in the estate of a deceased individual
who was a non-U.S. Holder unless the estate of such individual is able to claim
the benefits of an applicable double estate tax treaty between the individual's
country of domicile and the United States. The estate of a non-U.S. Holder
should consult its tax advisor in this regard.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Series B Preferred Stock to registered
owners who are not "exempt recipients" and who fail to provide certain
identifying information (such as the registered owner's taxpayer identification
number) in the required manner. Generally, individuals are not exempt
recipients, whereas corporations and certain other entities generally are exempt
recipients. Payments made in respect of the Series B Preferred Stock to a U.S.
Holder must be reported to the IRS, unless the U.S. Holder is an exempt
recipient or establishes an exemption. Compliance with the identification
procedures described in the preceding section would establish an exemption from
backup withholding for those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of any Series B Preferred Stock to (or through)
a broker, the broker must withhold 31% of the entire purchase price, unless
either (i) the broker determines that the seller is a corporation or other
exempt recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions are met). Such a
sale must also be reported by the broker to the IRS, unless either (i) the
broker determines that the seller is an exempt recipient or (ii) the seller
certifies its non-U.S. status (and certain other conditions are met).
Certification of the registered owner's non-U.S. status would be made normally
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
S-17
<PAGE> 18
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
and terms agreement (the "Underwriting Agreement") by and among the Company and
Smith Barney Inc. (the "Underwriter"), the Company has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase, the Depositary Shares
offered hereby.
In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all the Depositary Shares
offered hereby if any Depositary Shares are purchased and to pay the Company
$838,100 at the time it purchases the Depositary Shares. The Company has been
advised by the Underwriter that the Underwriter proposes initially to offer the
Depositary Shares to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of $1.20 per Depositary Share. The Underwriter
may allow, and such dealers may reallow, a discount not in excess of $1.00 per
Depositary Share to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
The Depositary Shares will not be listed on any securities exchange, and
there can be no assurance that there will be a secondary market for the
Depositary Shares. From time to time the Underwriter may make a market in the
Depositary Shares. However, at this time no determination has been made as to
whether or not the Underwriter will make a market in the Depositary Shares.
In order to facilitate the offering of the Depositary Shares, the
Underwriter may engage in transactions that stabilize, maintain or otherwise
affect the price of the Depositary Shares.
Until the distribution of the Depositary Shares is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriter and
certain selling group members to bid for and purchase the Depositary Shares. As
an exception to these rules, the Underwriter is permitted to engage in certain
transactions that stabilize the price of the Depositary Shares. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Depositary Shares. If the Underwriter creates a
short position in the Depositary Shares in connection with the offering, i.e.,
if it sells more Depositary Shares than are set forth on the cover page of this
Prospectus Supplement, the Underwriter may reduce that short position by
purchasing Depositary Shares in the open market. In general, purchases of a
security for the purpose of stabilization or to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases.
Neither the Company nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Depositary Shares. In addition,
neither the Company nor the Underwriter makes any representation that the
Underwriter will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Underwriter and/or certain of its affiliates have engaged and may in
the future engage in investment banking and/or commercial banking transactions
with the Company and certain of its affiliates in the ordinary course of
business.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriter may be required to make in respect
of such liabilities.
S-18
<PAGE> 19
LEGAL MATTERS
Certain legal matters regarding the Depositary Shares offered hereby have
been passed upon for the Company by its Vice President and General Counsel, Z.
S. Kobiashvili. As of the date of this Prospectus, Mr. Kobiashvili owns 1,593
shares of Apache Common Stock through the Company's 401(k) savings plan; holds
employee stock options to purchase 41,100 shares of Apache Common Stock, of
which options to purchase 19,200 shares are currently exercisable, and holds a
conditional grant under the Company's 1996 Share Price Appreciation Plan
relating to 18,900 shares of Apache Common Stock, none of which is vested.
Certain legal matters will also be passed upon for the Company by Woodard, Hall
& Primm, P.C., Houston, Texas, and for the Underwriter by Brown & Wood LLP, New
York, New York.
S-19
<PAGE> 20
PROSPECTUS
$500,000,000
APACHE CORP. LOGO
DEBT SECURITIES
PREFERRED STOCK
Apache Corporation (the "Company" or "Apache") may from time to time offer
unsecured senior debt securities in one or more series ("Debt Securities"),
and/or preferred stock, no par value per share, in one or more series
("Preferred Stock" and together with the Debt Securities, the "Securities"), at
an aggregate initial offering price not to exceed $500,000,000, in amounts, at
prices and on terms to be determined at the time of sale and, to the extent not
set forth herein, set forth in an accompanying Prospectus Supplement. The terms
of the Debt Securities, including, where applicable, the specific designation,
aggregate principal amount, currency, denominations, maturity, interest rate
(which may be fixed or variable), method of distribution, and any prepayment
and, original issue discount or other variable terms with regard to time of
payment of interest, if any, terms for redemption at the option of the Company
or the holder, the initial public offering price, and the other specific terms
of the series of the Debt Securities in respect of which this Prospectus is
being delivered, to the extent not set forth herein, will be set forth in the
applicable Prospectus Supplement. The specific designation, rights, preferences,
privileges and restrictions, including, where applicable, the dividend rate (or
manner of calculation thereof), time of payment of dividends, liquidation value,
listing (if any) on a securities exchange, terms for mandatory or optional
redemption and any other specific terms of the series of the Preferred Stock in
respect of which this Prospectus is being delivered, to the extent not set forth
herein, will be set forth in the applicable Prospectus Supplement. If so
specified in the applicable Prospectus Supplement, the Preferred Stock may be
represented by Depositary Shares entitling the holders proportionally to all
rights and preferences of the Preferred Stock.
The applicable Prospectus Supplement will contain information, where
applicable, concerning certain United States federal income tax considerations
relating to the Securities covered by such Prospectus Supplement, any listing or
proposed listing of such Securities on a securities exchange and, if the
Securities are issued in fully registered book-entry form, a description of the
depository arrangements.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The Securities may be sold (i) through underwriters or dealers, (ii)
directly by the Company to a limited number of institutional purchasers or to a
single purchaser, (iii) through agents designated from time to time, or (iv)
through any combination of the above. If any agents of the Company or any
underwriters are involved in the sale of the Securities, the names of such
agents or underwriters and any applicable commissions or discounts will be set
forth in the applicable Prospectus Supplement. See "Plan of Distribution" for
indemnification arrangements which the Company may make available to
underwriters and agents for the sale of the Securities.
The date of this Prospectus is June 26, 1998.
<PAGE> 21
AVAILABLE INFORMATION
Apache is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information filed by
Apache can be inspected and copied at the public reference facilities maintained
by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices at Seven World Trade Center, 13th Floor, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained by mail from
the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Also, the SEC maintains a web site that
contains reports, proxy statements and other information regarding the Company
at http://www.sec.gov. In addition, reports, proxy statements and other
information concerning Apache may be inspected at the offices of The New York
Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005, and
also at the offices of the Chicago Stock Exchange ("CSE"), One Financial Place,
440 S. LaSalle Street, Chicago, Illinois 60605-1070. The address of the
Company's principal executive offices and its telephone number are 2000 Post Oak
Boulevard, Suite 100, Houston, Texas 77056-4400 and (713) 296-6000.
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities. This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
SEC. For further information, reference is hereby made to the Registration
Statement. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the SEC are not necessarily complete, and in each instance reference is
made to the copy of such document so filed, each such statement being qualified
in its entirety by such reference.
---------------------
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company (SEC File No.
1-4300) with the SEC pursuant to the Exchange Act are incorporated in and made a
part of this Prospectus:
a. Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
b. Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998.
c. Current Report on Form 8-K dated January 29, 1998.
d. Current Report on Form 8-K dated June 18, 1998.
All documents which the Company files pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering described herein shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement contained in a document
incorporated by reference, or deemed to be incorporated by reference, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document or in any accompanying Prospectus Supplement modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company undertakes to provide without charge, upon the written or oral
request of any person to whom a copy of this Prospectus has been delivered, a
copy of any or all of the documents referred to above which are incorporated in
this Prospectus by reference, other than exhibits to such documents. Requests
should be directed to Cheri L. Peper, Corporate Secretary, Apache Corporation,
2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400; (713) 296-6000.
2
<PAGE> 22
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Certain forward-looking information contained in this Prospectus and
certain material incorporated by reference herein is being provided, and certain
forward-looking information in each Prospectus Supplement will be provided, in
reliance upon the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 as set forth in Section 27A of the Securities Act and Section
21E of the Exchange Act. Such information includes, without limitation,
discussions as to estimates, expectations, beliefs, plans, strategies and
objectives concerning the Company's future financial and operating performance.
Such forward-looking information is subject to assumptions and beliefs based on
current information known to the Company and factors that could yield actual
results differing materially from those anticipated. Such factors include,
without limitation, the prices received for the Company's oil and natural gas
production, the costs of acquiring, finding, developing and producing reserves,
the rates of production of the Company's hydrocarbon reserves, the Company's
success in acquiring or finding additional reserves, unforeseen operational
hazards, significant changes in tax or regulatory environments, and the
political, economic and financial uncertainties of foreign operations.
---------------------
All defined terms under Rule 4-10(a) of Regulation S-X promulgated under
the Securities Act shall have their statutorily-prescribed meanings when used in
this Prospectus. Quantities of natural gas are expressed in this Prospectus and
will be expressed in each Prospectus Supplement in terms of thousand cubic feet
("Mcf"), million cubic feet ("MMcf") or billion cubic feet ("Bcf"). Oil (which
includes condensate) is quantified in terms of barrels ("bbls"), thousands of
barrels ("Mbbls") and millions of barrels ("MMbbls"). One barrel of oil is
treated as the energy equivalent of six Mcf of natural gas, expressed as a
barrel of oil equivalent. Natural gas is compared to oil in terms of thousand
barrels of oil equivalent ("Mboe") and in million barrels of oil equivalents
("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"). 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. The Company's "net" working interest in 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. Unless otherwise specifically provided herein or in any accompanying
Prospectus Supplement, references to "$" or dollars in this Prospectus or any
such Prospectus Supplement shall mean United States dollars.
THE COMPANY
Apache, a Delaware corporation formed in 1954, is an independent energy
company that explores for, develops and produces crude oil and natural gas. In
North America, the Company's exploration and production interests are focused on
the Gulf of Mexico, the Anadarko Basin, the Permian Basin, the Gulf Coast and
the Western Sedimentary Basin of Canada. Outside of North America, the Company
has exploration and production interests offshore Western Australia and in
Egypt, and exploration interests in Poland, offshore the People's Republic of
China, offshore the Ivory Coast and in Indonesia. The Company's common stock,
par value $1.25 per share ("Apache Common Stock"), has been listed on the NYSE
since 1969, and on the CSE since 1960.
The Company holds interests in many of its North American and international
properties through operating subsidiaries, such as Apache Canada Ltd., MW
Petroleum Corporation, Apache Energy Limited, Apache International, Inc., Apache
Overseas, Inc., and Apache PHN Company, Inc. The Company treats all operations
as one segment of business.
3
<PAGE> 23
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used to refinance outstanding
indebtedness and for other general corporate purposes. To the extent proceeds
are used to refinance outstanding indebtedness, certain terms of the
indebtedness being refinanced will be set forth in the applicable Prospectus
Supplement.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The Company's ratios of earnings to combined fixed charges and preferred
stock dividends were as follows for the respective periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
- ------------------- --------------------------------
1998 1997 1997 1996 1995 1994 1993
- -------- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.60 4.07 2.93 2.72 1.15 2.34 2.37
</TABLE>
The Company's ratios of earnings to combined fixed charges and preferred
stock dividends were computed based on: (A) consolidated income or losses from
continuing operations before income taxes, fixed charges (excluding interest
capitalized) and preferred stock dividends; and (B) consolidated fixed charges,
which consist of interest on indebtedness (including amounts capitalized),
amortization of debt discount and expense, the estimated portion of rental
expense attributable to interest and preferred stock dividends. On May 17, 1995,
Apache acquired DEKALB Energy Company ("DEKALB", now known as DEK Energy
Company) through a merger which resulted in DEKALB becoming a wholly-owned
subsidiary of Apache. The merger was accounted for as a "pooling of interests."
As a result, Apache's financial information for all preceding periods was
restated.
No shares of Preferred Stock were outstanding during any of the periods
presented. Accordingly, the ratios of earnings to combined fixed charges and
preferred stock dividends for each of the periods presented above is the same as
the ratios of earnings to fixed charges for such periods.
DESCRIPTION OF DEBT SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities will be issued under an indenture (as supplemented from time to
time, the "Indenture") entered into between the Company and The Chase Manhattan
Bank, as trustee (the "Trustee"). References herein to "Sections" are references
to Sections of the Indenture unless otherwise indicated. The Debt Securities to
be offered by this Prospectus are limited to an aggregate initial offering price
not to exceed $500,000,000. However, the Indenture does not limit the amount of
Debt Securities which can be issued thereunder and provides that additional Debt
Securities of any series may be issued thereunder up to the aggregate principal
amount which may be authorized from time to time by the Company. The payment of
principal of, and premium, if any, and interest on the Debt Securities will rank
pari passu with all other unsecured unsubordinated indebtedness of the Company.
Unless otherwise indicated herein or in the applicable Prospectus Supplement,
the Debt Securities will be issued in denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
The Indenture is listed as an exhibit to the Registration Statement of
which this Prospectus is a part. The information herein includes a summary of
certain provisions of the Indenture and does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all provisions of
the Indenture, including the definition therein of certain terms. The following
summaries set forth certain general terms and provisions of the Debt Securities
to which any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Debt Securities so offered will be
described, to the extent not described herein, in the Prospectus Supplement
relating to such Debt Securities.
4
<PAGE> 24
GENERAL
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for the following terms and other information with respect to the
Debt Securities being offered thereby, to the extent not described herein: (i)
the designation, aggregate principal amount and authorized denominations of such
Debt Securities; (ii) the percentage of the principal amount at which such Debt
Securities will be issued; (iii) the date (or the manner of determining or
extending the date or dates) on which the principal of such Debt Securities will
be payable; (iv) whether such Debt Securities will be issued in fully registered
form or in bearer form or any combination thereof; (v) whether such Debt
Securities will be issued in the form of one or more global securities and
whether such global securities are to be issuable in a temporary global form or
permanent global form; (vi) if other than U.S. dollars, the currency or
currencies or currency unit or units in which Debt Securities may be denominated
and purchased and the currency or currencies or currency units in which
principal, premium (if any) and any interest may be payable; (vii) if the
currency or currencies or currency unit or units for which Debt Securities may
be purchased or in which principal, premium (if any) and any interest may be
payable is at the election of the Company or the purchaser, the manner in which
such an election may be made and the terms of such election; (viii) the rate or
rates per annum at which such Debt Securities will bear interest, if any, or the
method or methods of determination of such rate or rates and the basis upon
which interest will be calculated if other than that of a 360-day year
consisting of twelve 30-day months; (ix) the date or dates from which such
interest, if any, on such Debt Securities will accrue or the method or methods,
if any, by which such date or dates are to be determined, the date or dates on
which such interest, if any, will be payable, the date on which payment of such
interest, if any, will commence and the regular record dates for such interest
payment dates, if any; (x) the date or dates, if any, on or after which, or the
period or periods, if any, within which, and the price or prices at which such
Debt Securities may, pursuant to any optional redemption provisions, be redeemed
at the option of the Company or of the holder thereof and the other terms and
provisions of such optional redemption; (xi) information with respect to
book-entry procedures relating to global Debt Securities; (xii) whether and
under what circumstances the Company will pay Additional Amounts (as defined in
the Indenture) as contemplated by Section 1004 of the Indenture (the term
"interest," as used in this Prospectus, shall include such Additional Amounts)
on such Debt Securities to any holder who is a United States Alien (as defined
in the Indenture) (including any modification to the definition of such terms
contained in the Indenture as originally executed) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have the
option to redeem such Debt Securities rather than pay such Additional Amounts
(and the terms of any such option); (xiii) any deletions from, modifications of
or additions to the Events of Default or covenants of the Company with respect
to any of such Debt Securities; (xiv) if either or both of Section 402(2)
relating to defeasance or Section 402(3) relating to covenant defeasance shall
not be applicable to such Debt Securities or any covenants in addition to those
specified in Section 402(3) relating to such Debt Securities shall be subject to
covenant defeasance, and any deletions from, or modifications or additions to,
the provisions of Article Four of the Indenture relating to satisfaction and
discharge in respect of such Debt Securities; (xv) any index or other method
used to determine the amount of payments of principal, premium (if any) and any
interest on such Debt Securities; (xvi) if a trustee other than The Chase
Manhattan Bank is named for such Debt Securities, the name of such trustee; and
(xvii) any other specific terms of the such Debt Securities. All Debt Securities
of any one series need not be issued at the same time and all the Debt
Securities of any one series need not bear interest at the same rate or mature
on the same date. (Section 301.)
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of, or premium, if any, or interest, if any,
on any series of Debt Securities is payable in foreign currencies or foreign
currency units, the restrictions, elections, tax consequences, specific terms
and other information with respect to such Debt Securities and such foreign
currencies or foreign currency units will be set forth in the applicable
Prospectus Supplement. (Section 302.)
Other than as described below under "Limitation on Liens," "Limitation on
Sale/Leaseback Transactions" and "Company's Obligation to Purchase Debt
Securities on Change in Control," the Indenture does not contain any provision
that would limit the ability of the Company to incur indebtedness or that would
afford holders of Debt Securities protection in the event of a decline in the
credit quality of the Company or a
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takeover, recapitalization or highly leveraged or similar transaction involving
the Company. Reference is made to the Prospectus Supplement relating to the
particular series of Debt Securities offered thereby, to the extent not
otherwise described herein, for any information with respect to any deletions
from, modifications of or additions to the Events of Default described below and
contained in the Indenture, including any addition of a covenant or other
provision providing event risk or similar protection.
INTEREST RATES
The Debt Securities will earn interest at a fixed or floating rate or rates
for the period or periods of time specified in the applicable Prospectus
Supplement. Unless otherwise specified in the applicable Prospectus Supplement,
the Debt Securities shall bear interest on the basis of a 360-day year
consisting of twelve 30-day months.
DISCOUNT, SERIES, MATURITIES, REGISTRATION AND PAYMENT
The Debt Securities may be sold at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate that at the
time of issuance is below market rates. Federal income tax consequences and
special considerations applicable to any such series will be described in the
Prospectus Supplement relating thereto.
The Debt Securities may be issued in one or more series with the same or
various maturities. (Section 301.) Debt Securities may be issued solely in fully
registered form without coupons ("Registered Securities"), solely in bearer form
with or without coupons ("Bearer Securities"), or as both Registered Securities
and Bearer Securities. (Section 301.) Registered Securities may be exchangeable
for other Debt Securities of the same series, registered in the same name, for a
like aggregate principal amount in authorized denominations and will be
transferable at any time or from time to time at the office mentioned below. No
service charge will be made to the holder for any such exchange or transfer,
except for any tax or governmental charge incidental thereto. If Debt Securities
of any series are issued as Bearer Securities, the applicable Prospectus
Supplement will contain any restrictions applicable to the offer, sale or
delivery of Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series and, if
permitted by applicable laws and regulations, the terms upon which Registered
Securities of the series may be exchanged for Bearer Securities of the series,
whether such Debt Securities are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests in any such
permanent global security may exchange such interests for Debt Securities of
such series and the circumstances under which any such exchanges may occur.
Unless otherwise specified in the applicable Prospectus Supplement,
principal and interest, if any, on the Debt Securities offered thereby are to be
payable at the office or agency of the Company maintained for such purposes in
the city where the principal corporate trust office of the Trustee is located,
and will initially be the principal corporate trust office of the Trustee,
provided that payment of interest, if any, may be made (subject to collection)
at the option of the Company by check mailed to the persons in whose names the
Debt Securities are registered at the close of business on the day specified in
the applicable Prospectus Supplement.
FORM, EXCHANGE AND REGISTRATION OF TRANSFER
Debt Securities will be exchangeable for other Debt Securities of the same
series and of like tenor, in any authorized denominations and of a like
aggregate principal amount and Stated Maturity (as defined in the Indenture).
Registered Securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed) at the office of the Trustee or
at the office of any transfer agent designated by the Company for such purpose,
without service charge and upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the books of the Trustee or such transfer agent contingent upon
such Trustee or transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. (Section 305.)
In the event of any redemption of Debt Securities, the Company shall not be
required to: (i) issue, register the transfer of or exchange such Debt
Securities during a period beginning at the opening of business
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15 days before any selection of such Debt Securities to be redeemed and ending
at the close of business on the day of mailing of the relevant notice of
redemption; or (ii) register the transfer of or exchange any such Debt Security,
or portion thereof, called for redemption, except the unredeemed portion of any
such Debt Security being redeemed in part. (Section 305.)
LIMITATION ON LIENS
Nothing in the Indenture or the Debt Securities will in any way limit the
amount of indebtedness or securities which may be incurred or issued by the
Company or any of its Subsidiaries (as defined in the Indenture). The Indenture
provides that neither the Company nor any Subsidiary will issue, assume or
guarantee any notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed secured by a mortgage, lien, pledge, security
interest or other encumbrance (defined in the Indenture as "Liens") upon any of
its property, subject to certain exceptions set forth in the Indenture, without
making effective provisions whereby any and all Debt Securities then outstanding
shall be secured by a Lien equally and ratably with any and all other
obligations thereby secured. Such restrictions will not, however, apply to (a)
Liens existing on the date of the Indenture or provided for under the terms of
agreements existing on the date thereof; (b) Liens securing (i) all or part of
the cost of exploring, producing, gathering, processing, marketing, drilling or
developing any properties of the Company or any of its Subsidiaries, or securing
indebtedness incurred to provide funds therefor or (ii) indebtedness incurred to
finance all or part of the cost of acquiring, constructing, altering, improving
or repairing any such property or assets, or securing indebtedness incurred to
provide funds therefor; (c) Liens which secure only indebtedness owing by a
Subsidiary to the Company, or to one or more Subsidiaries, or the Company and
one or more Subsidiaries; (d) Liens on the property of any corporation or other
entity existing at the time such corporation or entity becomes a Subsidiary; (e)
Liens on any property to secure indebtedness incurred in connection with the
construction, installation or financing of pollution control or abatement
facilities or other forms of industrial revenue bond financing or indebtedness
issued or guaranteed by the United States, any state or any department, agency
or instrumentality of either or indebtedness issued to or guaranteed for the
benefit of a foreign government, any state or any department, agency or
instrumentality of either or an international finance agency or any division or
department thereof, including the World Bank, the International Finance Corp.
and the Multilateral Investment Guarantee Agency; (f) any extension, renewal or
replacement (or successive extensions, renewals or replacements) of any Lien
referred to in the foregoing clauses (a) through (e) existing on the date of the
Indenture; (g) certain Liens incurred in the ordinary course of business or (h)
Liens which secure Limited Recourse Indebtedness (as defined in the Indenture).
The following types of transactions, among others, shall not be deemed to create
indebtedness secured by Liens: (i) the sale or other transfer of crude oil,
natural gas or other petroleum hydrocarbons in place for a period of time until,
or in an amount such that, the transferee will realize therefrom a specified
amount (however determined) of money or such crude oil, natural gas or other
petroleum hydrocarbons, or the sale or other transfer of any other interest in
property of the character commonly referred to as a production payment,
overriding royalty, forward sale or similar interest and (ii) Liens required by
any contract or statute in order to permit the Company or a Subsidiary to
perform any contract or subcontract made by it with or at the request of the
United States government or any foreign government or international finance
agency, any state or any department thereof, or any agency or instrumentality of
either, or to secure partial, progress, advance or other payments to the Company
or any Subsidiary by any such entity pursuant to the provisions of any contract
or statute. (Section 1005.)
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Indenture provides that neither the Company nor any Subsidiary will
enter into any arrangement with any person (other than the Company or a
Subsidiary) providing for the leasing to the Company or a Subsidiary for a
period of more than three years of any property which has been, or is to be,
sold or transferred by the Company or such Subsidiary to such person or to any
person (other than the Company or a Subsidiary) to which funds have been or are
to be advanced by such person on the security of the leased property unless
either (a) the Company or such Subsidiary would be entitled, pursuant to the
provisions described under "Limitation on Liens" above, to incur indebtedness in
a principal amount equal to or exceeding the value of such sale/leaseback
transaction, secured by a Lien on the property to be leased; (b) since the date
of the
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Indenture and within a period commencing six months prior to the consummation of
such arrangement and ending six months after the consummation thereof, the
Company or such Subsidiary has expended or will expend for any property
(including amounts expended for the acquisition, exploration, drilling or
development thereof, and for additions, alterations, improvements and repairs
thereto) an amount equal to all or a portion of the net proceeds of such
arrangement and the Company elects to designate such amount as a credit against
such arrangement (with any such amount not being so designated to be applied as
set forth in (c) below); or (c) the Company, during or immediately after the
expiration of the 12 months after the effective date of such transaction,
applies to the voluntary defeasance or retirement of the Debt Securities and its
other Senior Indebtedness (as defined in the Indenture) an amount equal to the
greater of the net proceeds of the sale or transfer of the property leased in
such transaction or the fair value, in the opinion of the board of directors of
the Company of such property at the time of entering into such transaction (in
either case adjusted to reflect the remaining term of the lease and any amount
utilized by the Company as set forth in (b) above), less an amount equal to the
principal amount of Senior Indebtedness voluntarily retired by the Company
within such 12-month period. (Section 1006.)
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, any one
of the following events will constitute an "Event of Default" under the
Indenture with respect to the Debt Securities of any series: (a) failure to pay
any interest on any Debt Security of such series when due, continued for 30
days; (b) failure to pay principal of (or premium, if any) on the Debt
Securities of such series when due and payable, either at Maturity or, if
applicable, at 12:00 noon on the Business Day following a Change in Control
Purchase Date, as defined below; (c) failure to perform, or breach of, any other
covenant or warranty of the Company in the Indenture or the Debt Securities
(other than a covenant or warranty included in the Indenture solely for the
benefit of a series of securities other than the Debt Securities), continued for
60 days after written notice as provided in the Indenture; (d) the acceleration
of any Indebtedness (as defined in the Indenture) of the Company or any
Subsidiary in excess of an aggregate of $25,000,000 in principal amount under
any event of default as defined in any mortgage, indenture or instrument and
such acceleration has not been rescinded or annulled within 30 days after
written notice as provided in the Indenture specifying such Event of Default and
requiring the Company to cause such acceleration to be rescinded or annulled;
(e) failure to pay, bond or otherwise discharge within 60 days of entry, a
judgment, court order or uninsured monetary damage award against the Company or
any Subsidiary exceeding an aggregate of $25,000,000 in principal amount which
is not stayed on appeal or otherwise being appropriately contested in good
faith; (f) certain events of bankruptcy, insolvency or reorganization involving
the Company or any Subsidiary; and (g) any other Event of Default provided with
respect to the Debt Securities of that series. (Section 501.)
If an Event of Default with respect to the Debt Securities of any series
(other than an Event of Default described in (e) or (f) of the preceding
paragraph) occurs and is continuing, either the Trustee or the holders of at
least 25% in aggregate principal amount of the outstanding Debt Securities of
such series by notice as provided in the Indenture may declare the principal
amount of such Debt Securities to be due and payable immediately. At any time
after a declaration of acceleration has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, and subject to
applicable law and certain other provisions of the Indenture, the holders of a
majority in aggregate principal amount of the Debt Securities of such series
may, under certain circumstances, rescind and annul such acceleration. An Event
of Default described in (e) or (f) of the preceding paragraph shall cause the
principal amount and accrued interest (or such lesser amount as provided for in
the Debt Securities of such series) to become immediately due and payable
without any declaration or other act by the Trustee or any holder. (Section
502.)
The Indenture provides that, within 90 days after the occurrence of any
Event of Default thereunder with respect to the Debt Securities of any series,
the Trustee shall transmit, in the manner set forth in the Indenture, notice of
such Event of Default to the holders of the Debt Securities of such series
unless such Event of Default has been cured or waived; provided, however, that
except in the case of a default in the payment of principal of, or premium, if
any, or interest, if any, or additional amounts, if any, on any Debt Security of
such series, the Trustee may withhold such notice if and so long as the board of
directors, the
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executive committee or a trust committee of directors or Responsible Officers
(as defined in the Indenture) of the Trustee has in good faith determined that
the withholding of such notice is in the interest of the holders of Debt
Securities of such series. (Section 602.)
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of Debt Securities of such
series by all appropriate judicial proceedings. (Section 504.)
The Indenture provides that, subject to the duty of the Trustee during any
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders of Debt Securities, unless such
holders shall have offered to the Trustee reasonable indemnity. (Section 601.)
Subject to such provisions for the indemnification of the Trustee, and subject
to applicable law and certain other provisions of the Indenture, the holders of
a majority in aggregate principal amount of the outstanding Debt Securities of a
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Debt Securities of such
series. (Section 512.)
COMPANY'S OBLIGATION TO PURCHASE DEBT SECURITIES ON CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" as defined in the Indenture,
the Company shall mail within 15 days of the occurrence of such Change in
Control written notice regarding such Change in Control to the Trustee of the
Debt Securities of each series and to every holder thereof, after which the
Company shall be obligated, at the election of each holder thereof, to purchase
such Debt Securities. Under the Indenture, a "Change in Control" is deemed to
occur upon (a) the occurrence of any event requiring the filing of any report
under or in response to Schedule 13D or 14D-1 pursuant to the Exchange Act
disclosing beneficial ownership of either (i) 50% or more of the Apache Common
Stock then outstanding or (ii) 50% or more of the voting power of the voting
stock of the Company then outstanding; (b) the consummation of sale, transfer,
lease, or conveyance of the Company's properties and assets substantially as an
entirety to any Person or Persons who are not Subsidiaries (as such terms are
defined in the Indenture) of the Company; and (c) the consummation of any
consolidation of the Company with or merger of the Company into any other Person
in a transaction in which either (i) the Company is not the sole surviving
corporation or (ii) Apache Common Stock existing prior to such transaction is
converted into cash, securities or other property and those exchanging Apache
Common Stock do not receive either (x) 75% or more of the survivor's common
stock or (y) 75% or more of the voting power of the survivor's voting stock,
following the consummation of such transaction. The notice to be sent to the
Trustee and every holder upon a Change in Control shall, in addition, be
published at least once in an Authorized Newspaper (as defined in the Indenture)
and shall state (a) the event causing the Change in Control and the date
thereof, (b) the date by which notice of such Change in Control is required by
the Indenture to be given, (c) the date (which date shall be 35 business days
after the occurrence of the Change in Control) by which the Company shall
purchase Debt Securities to be purchased pursuant to the selling holder's
exercise of rights on Change in Control (the "Change in Control Purchase Date"),
(d) the price specified in such Debt Securities for their purchase by the
Company (the "Change in Control Purchase Price"), (e) the name and address of
the Trustee, (f) the procedure for surrendering Debt Securities to the Trustee
or other designated office or agent for payment, (g) a statement of the
Company's obligation to make prompt payment on proper surrender of such Debt
Securities, (h) the procedure for holders' exercise of rights of sale of such
Debt Securities by delivery of a "Change in Control Purchase Notice," and (i)
the procedures for withdrawing a Change in Control Purchase Notice. No purchase
of any Debt Securities shall be made if there has occurred and is continuing an
Event of Default under the Indenture (other than default in payment of the
Change in Control Purchase Price). In connection with any purchase of Debt
Securities under this paragraph, the Company will comply with all Federal and
state securities laws, including, specifically, Rule 13E-4, if applicable, of
the Exchange Act, and any related Schedule 13E-4 required to be submitted under
such Rule. (Section 1601.)
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or are scheduled for redemption within one year) by
depositing with the Trustee, in trust, funds in U.S. dollars or in the Foreign
Currency (as defined below) in which such Debt Securities are payable in an
amount sufficient to pay the entire indebtedness on such Debt Securities with
respect to principal (and premium, if any) and interest to the date of such
deposit (if such Debt Securities have become due and payable) or to the Maturity
thereof, as the case may be. (Section 401.)
The Indenture provides that, unless the provisions of Section 402 thereof
are made inapplicable to the Debt Securities of or within any series pursuant to
Section 301 thereof, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for, among other things, the obligation to pay Additional Amounts, if
any, upon the occurrence of certain events of taxation, assessment or
governmental charge with respect to payments on such Debt Securities and other
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency with respect to such Debt Securities and to hold
moneys for payment in trust) ("defeasance") or (b) to be released from its
obligations with respect to such Debt Securities under the covenants described
in "Limitation on Liens" and "Limitation on Sale/Leaseback Transactions" above
or, if provided pursuant to Section 301 of the Indenture, its obligations with
respect to any other covenant, and any omission to comply with such obligations
shall not constitute a default or an Event of Default with respect to such Debt
Securities ("covenant defeasance"). Defeasance or covenant defeasance, as the
case may be, shall be conditioned upon the irrevocable deposit by the Company
with the Trustee, in trust of an amount, in U.S. dollars or in the Foreign
Currency in which such Debt Securities are payable at Stated Maturity, or
Government Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities on
the scheduled due dates therefor. (Section 401.)
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the Indenture or any other material
agreement or instrument to which the Company is a party or by which it is bound,
(ii) no default or Event of Default with respect to the Debt Securities to be
defeased shall have occurred and be continuing on the date of the establishment
of such a trust and (iii) the Company has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of the Internal
Revenue Service received by the Company, a Revenue Ruling published by the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture. (Section 402.)
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the ECU, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments. (Section 101.)
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government or the governments in the
confederation which issued the Foreign Currency in which the Debt Securities of
a particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government or governments which issued the Foreign Currency in which the
Debt Securities of such series are payable, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government or governments, which, in the case of
clauses (i) and (ii), are not callable or redeemable at the option of the issuer
or issuers thereof, and shall also include a depository receipt issued by a bank
or trust company as
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custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of or any other amount with respect to any such
Government Obligation held by such custodian for the account of the holder of
such depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian with
respect to the Government Obligation or the specific payment of interest on or
principal of or any other amount with respect to the Government Obligation
evidenced by such depository receipt. (Section 101.)
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency other than that in which such deposit has been
made in respect of such Debt Security, or (b) a Conversion Event (as defined
below) occurs in respect of the Foreign Currency in which such deposit has been
made, the indebtedness represented by such Debt Security shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest, if any, on such Debt Security
as such Debt Security becomes due out of the proceeds yielded by converting the
amount or other properties so deposited in respect of such Debt Security into
the currency in which such Debt Security becomes payable as a result of such
election or such Conversion Event based on (x) in the case of payments made
pursuant to clause (a) above, the applicable market exchange rate for such
currency in effect on the second business day prior to such payment date, or (y)
with respect to a Conversion Event, the applicable market exchange rate for such
Foreign Currency in effect (as nearly as feasible) at the time of the Conversion
Event. (Section 402.)
"Conversion Event" means the cessation of use of (i) a Foreign Currency
other than the ECU both by the government of the country or the confederation
which issued such Foreign Currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Community or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that are payable in a Foreign Currency
that ceases to be used by the government or confederation of issuance shall be
made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than an Event of Default with
respect to Sections 1005 and 1006 of the Indenture (which Sections would no
longer be applicable to such Debt Securities after such covenant defeasance) or
with respect to any other covenant as to which there has been covenant
defeasance, the amount in such Foreign Currency in which such Debt Securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of the Stated
Maturity but may not be sufficient to pay amounts due on such Debt Securities at
the time of the acceleration resulting from such Event of Default. However, the
Company would remain liable to make payment of such amounts due at the time of
acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
Under the Indenture, the Company is required to furnish to the Trustee
annually a statement as to performance by the Company of certain of its
obligations under the Indenture and as to any default in such performance. The
Company is also required to deliver to the Trustee, within five days after
occurrence thereof, written notice of any event which after notice or lapse of
time or both would constitute an Event of Default. (Section 1009.)
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MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the holder of each Debt Security affected thereby, (a) change the
Stated Maturity of the principal of, or premium, if any, on, or any installment
of principal, if any, of or interest on, or any Additional Amounts with respect
to, any Debt Security, (b) reduce the principal amount of, or premium or
interest on, or any Additional Amounts with respect to, any Debt Security, (c)
change the coin or currency in which any Debt Security or any premium or any
interest thereon or any Additional Amounts with respect thereto is payable, (d)
impair the right to institute suit for the enforcement of any payment on or
after the Stated Maturity of any Debt Securities (or, in the case of redemption,
on or after the Redemption Date or, in the case of repayment at the option of
any holder, on or after the date for repayment or in the case of a change in
control, after the change in control purchase date), (e) reduce the percentage
and principal amount of the outstanding Debt Securities, the consent of whose
holders is required in order to take certain actions, (f) change any obligation
of the Company to maintain an office or agency in the places and for the
purposes required by the Indenture, or (g) modify any of the above provisions.
(Section 902.)
The holders of at least a majority in aggregate principal amount of Debt
Securities of any series may, on behalf of the holders of all Debt Securities of
such series, waive compliance by the Company with certain restrictive provisions
of the Indenture. (Section 1008.) The holders of not less than a majority in
aggregate principal amount of Debt Securities of any series may, on behalf of
all holders of Debt Securities of such series, waive any past default and its
consequences under the Indenture with respect to the Debt Securities of such
series, except a default (a) in the payment of principal of (or premium, if any)
or any interest on or any Additional Amounts with respect to Debt Securities of
such series or (b) in respect of a covenant or provision of the Indenture that
cannot be modified or amended without the consent of the holder of each Debt
Security of any series. (Section 513.)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may, without the consent of the holders of the Debt Securities,
consolidate or merge with or into, or convey, transfer or lease its properties
and assets substantially as an entirety to, any Person that is a corporation,
limited liability company, partnership or trust organized and validly existing
under the laws of any domestic jurisdiction, or may permit any such Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, provided that
any successor Person assumes the Company's obligations on the Debt Securities
and under the Indenture, that after giving effect to the transaction no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing, and that certain
other conditions are met. (Section 801.)
CONCERNING THE TRUSTEE
Unless otherwise specified in the applicable Prospectus Supplement, The
Chase Manhattan Bank, New York, New York, successor to Chemical Bank, will be
the Trustee under the Indenture.
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DESCRIPTION OF CAPITAL STOCK
The following summaries of the Apache Common Stock, Preferred Stock and
Rights (defined below) do not purport to be complete and are qualified in their
entirety by reference to the Restated Certificate of Incorporation of the
Company and the Rights Agreement dated January 31, 1996, between the Company and
Norwest Bank Minnesota, N.A. (the "Rights Agreement"). The Restated Certificate
of Incorporation and the Rights Agreement are listed as exhibits to the
Registration Statement of which this Prospectus is a part. The summaries use
terms which are defined in such exhibits. The following summaries set forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of the Preferred Stock
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Preferred Stock so offered will, to the
extent not described herein, be described in the Prospectus Supplement relating
to such Preferred Stock.
GENERAL
Under the Company's Restated Certificate of Incorporation, the Company is
authorized to issue (i) 215,000,000 shares of Apache Common Stock, of which
97,581,000 shares were outstanding as of March 31, 1997, and (ii) 5,000,000
shares of preferred stock, no par value, none of which are issued and
outstanding as of the date of this Prospectus, although 25,000 shares have been
designated as Series A Junior Participating Preferred Stock and are reserved for
issuance upon exercise of the Rights.
COMMON STOCK
Holders of Apache Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and are entitled, subject to any
preferential rights of holders of preferred stock, to receive such dividends, if
any, as may be declared from time to time by the Board of Directors, in its
discretion, out of funds legally available therefor. Upon any liquidation or
dissolution of the Company, the holders of Apache Common Stock are entitled,
subject to any preferential rights of holders of preferred stock, to receive
pro-rata all assets remaining available for distribution to stockholders after
payment of all liabilities. Apache Common Stock has no preemptive or other
subscriptive rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to the Apache Common Stock.
All outstanding shares of Apache Common Stock are fully paid and
nonassessable. All holders of Apache Common Stock have full voting rights and
are entitled to one vote for each share held of record on all matters submitted
to a vote of the stockholders. The Board of Directors of the Company is
classified into three groups of approximately equal size, one-third elected each
year. The stockholders do not have the right to cumulate votes in the election
of directors.
The Company typically mails its annual reports to stockholders within 120
days after the end of its fiscal year. Notices of stockholder meetings are
mailed to record holders of Apache Common Stock at their addresses shown on the
books of the transfer agent and registrar. Norwest Bank Minnesota, N.A. is the
transfer agent and registrar for the Apache Common Stock.
PREFERRED STOCK
Under the Company's Restated Certificate of Incorporation, the Company is
authorized to issue 5,000,000 shares of preferred stock, 25,000 shares of which
have been designated as the Company's Series A Junior Preferred Stock, none of
which are outstanding as of the date of this Prospectus, however such shares of
preferred stock are reserved for issuance upon the exercise of the Rights. The
Board, without further action by the stockholders, is authorized to issue shares
of Preferred Stock with such designations, preferences and relative,
participating, optional or other special rights, qualifications, limitations or
restrictions, as may be stated and expressed in the resolution or resolutions
providing for the issuance of such Preferred Stock. The Preferred Stock will not
be convertible into shares of Apache Common Stock. The particular rights,
preferences and privileges of any series of Preferred Stock will be set forth in
the applicable Prospectus Supplement. Such preferences and rights as may be
established could have the effect of impeding the
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acquisition of control of the Company. If so specified in the applicable
Prospectus Supplement, the Preferred Stock may be represented by Depositary
Shares entitling the holder proportionally to all rights and preferences of the
Preferred Stock.
RIGHTS
In December 1995, the Company adopted the Rights Agreement and declared a
dividend of one right (a "Right") for each share of Apache Common Stock
outstanding on January 31, 1996. Each Right entitles the registered holder to
purchase from the Company one ten-thousandth (1/10,000) of a share of Series A
Junior Participating Preferred Stock at a price of $100 per one ten-thousandth
of a share, subject to adjustment. The Rights are exercisable (and transferable
apart from the Apache Common Stock) 10 calendar days following a public
announcement that certain persons or groups have acquired 20 percent or more of
the outstanding shares of Apache Common Stock or 10 business days following
commencement of an offer for 30 percent or more of the outstanding shares of
Apache Common Stock. In addition, if the Company engages in certain business
combinations or a 20 percent shareholder 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 outstanding shares of
Apache 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 in whole, but not in part, at a price of $.01 per Right at
any time until 10 business days after public announcement that a person has
acquired 20 percent or more of the outstanding shares of Apache Common Stock.
The Rights will expire on January 31, 2006, unless earlier redeemed by the
Company. Unless the Rights have been previously redeemed, all shares of Apache
Common Stock issued by the Company after January 31, 1996 will include Rights.
Unless and until the Rights become exercisable, they will be transferred with
and only with the shares of Apache Common Stock.
CHANGE OF CONTROL
The Company's Restated Certificate of Incorporation includes provisions
designed to prevent the use of certain tactics in connection with a potential
takeover of the Company. Article Twelve of the Restated Certificate of
Incorporation generally stipulates that the affirmative vote of 80 percent of
the Company's voting shares is required to adopt any agreement for the merger or
consolidation of the Company with or into any other corporation which is the
beneficial owner of more than 5 percent of the Company's voting shares. Article
Twelve further provides that such 80 percent approval is necessary to authorize
any sale or lease of assets between the Company and any beneficial holder of 5
percent or more of the Company's voting shares. Article Fourteen of the Restated
Certificate of Incorporation contains a "fair price" provision which requires
that any tender offer made by a beneficial owner of more than 5 percent of the
outstanding voting stock of the Company in connection with any plan of merger,
consolidation or reorganization, any sale or lease of substantially all of the
Company's assets, or any issuance of equity securities of the Company to the 5
percent stockholder must provide at least as favorable terms to each holder of
Common Stock other than the stockholder making the tender offer. Article Fifteen
of the Restated Certificate of Incorporation contains an "anti-greenmail"
mechanism which prohibits the Company from acquiring any voting stock from the
beneficial owner of more than 5 percent of the outstanding voting stock of the
Company, except for acquisitions pursuant to a tender offer to all holders of
voting stock on the same price, terms and conditions, acquisitions in compliance
with Rule 10b-18 of the Exchange Act and acquisitions at a price not exceeding
the market value per share. Article Sixteen of the Restated Certificate of
Incorporation prohibits the stockholders of the Company from acting by written
consent in lieu of a meeting.
Section 203 of the Delaware General Corporation Law prevents an "interested
stockholder" (defined in Section 203, generally, as a person owning 15 percent
or more of a corporation's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with a publicly-held Delaware
corporation for three years following the time such person became an interested
stockholder unless (i) before such person became an interested stockholder, the
board of directors of the corporation approved the
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<PAGE> 34
transaction in which the interested stockholder became an interested stockholder
or approved the business combination; (ii) upon consummation of the transaction
that resulted in the interested stockholder's becoming an interested
stockholder, the interested stockholder owned at least 85 percent of the voting
stock of the corporation outstanding at the time the transaction commenced
(excluding stock held by directors who are also officers of the corporation and
by employee stock plans that do not provide participants with the rights to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer); or (iii) following the transaction in
which such person became an interested stockholder, the business combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. The provisions of Section 203 may have the effect of delaying,
deferring or preventing a change of control of the Company.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through underwriters or dealers,
(ii) directly to a limited number of institutional purchasers or to a single
purchaser, (iii) through agents designated from time to time, or (iv) through
any combination of the above. An accompanying Prospectus Supplement will set
forth the terms of the offering of the Securities offered thereby, including the
name or names of any underwriters, the purchase price of the Securities and the
net proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in the sale of Securities, such Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the several obligations
of the underwriters to purchase any Securities offered thereby will be subject
to certain conditions precedent and the underwriters will be obligated to take
and pay for all of such Securities, if any are taken.
Any agent involved in the offer or sale of the Securities will be named,
and any commissions payable by the Company to such agents will be set forth, in
an accompanying Prospectus Supplement. Unless otherwise indicated in such
Prospectus Supplement, any such agent will be acting on a reasonable efforts
basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under such contract will be
subject to the condition that the purchase of the offered Securities shall not
at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect to the validity of performance of such
contracts.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act.
The place and time of delivery for Securities in respect of which this
Prospectus is delivered will be set forth in the accompanying Prospectus
Supplement.
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<PAGE> 35
LEGAL MATTERS
Certain legal matters regarding the Securities offered hereby have been
passed upon for the Company by its Vice President and General Counsel, Z. S.
Kobiashvili. As of the date of this Prospectus, Mr. Kobiashvili owns 1,586
shares of Apache Common Stock through the Company's 401(k) savings plan; holds
employee stock options to purchase 41,100 shares of Apache Common Stock, of
which options to purchase 17,475 shares are currently exercisable, and holds a
conditional grant under the Company's 1996 Share Price Appreciation Plan
relating to 18,900 shares of Apache Common Stock, none of which is vested.
Certain legal matters will also be passed upon for the Company by Woodard, Hall
& Primm, P.C., Houston, Texas, and for any of the underwriters or agents by
Brown & Wood LLP, New York, New York.
EXPERTS
The audited consolidated financial statements of the Company, incorporated
by reference into this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said report.
The information incorporated by reference herein regarding the total proved
reserves of the Company was prepared by the Company and reviewed by Ryder Scott
Company Petroleum Engineers ("Ryder Scott"), as stated in their letter reports
with respect thereto, and is so incorporated by reference in reliance upon the
authority of said firm as experts in such matters. The information incorporated
by reference herein regarding the total estimated proved reserves acquired from
Texaco Exploration and Production Inc. was prepared by the Company and reviewed
by Ryder Scott, as stated in their letter reports with respect thereto, and is
so incorporated by reference in reliance upon the authority of said firm as
experts in such matters. The information incorporated by reference herein
regarding the total proved reserves of DEKALB was prepared by DEKALB and for the
four years ended December 31, 1994 was reviewed by Ryder Scott, as stated in
their letter reports with respect thereto, and is so incorporated by reference
in reliance upon the authority of said firm as experts in such matters.
A portion of the information incorporated by reference herein regarding the
total proved reserves of Aquila Energy Resources Corporation ("Aquila") acquired
by the Company was prepared by Netherland, Sewell & Associates, Inc.
("Netherland, Sewell") as of December 31, 1994, as stated in their letter report
with respect thereto, and is so incorporated by reference in reliance upon the
authority of said firm as experts in such matters. Netherland, Sewell did not
review any of the reserves of Aquila acquired during 1995.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Information Incorporated by Reference... S-3
The Company............................. S-3
Use of Proceeds......................... S-3
Recent Developments..................... S-3
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................. S-4
Capitalization.......................... S-5
Oil and Gas Reserve Information as of
December 31, 1997..................... S-6
Production and Pricing Data............. S-7
Description of Series B Preferred
Stock................................. S-7
Description of Depositary Shares........ S-13
DTC Book Entry-Only Systems............. S-14
Certain United States Federal Income Tax
Considerations........................ S-16
Underwriting............................ S-18
Legal Matters........................... S-19
PROSPECTUS
Available Information................... 2
Information Incorporated by Reference... 2
Safe Harbor Statement under the Private
Securities Litigation Reform Act of
1995.................................. 3
The Company............................. 3
Use of Proceeds......................... 4
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................. 4
Description of Debt Securities.......... 4
Description of Capital Stock............ 13
Plan of Distribution.................... 15
Legal Matters........................... 16
Experts................................. 16
</TABLE>
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1,000,000 DEPOSITARY SHARES
[APACHE CORPORATION LOGO]
EACH REPRESENTING 1/10TH OF A
SHARE OF 5.68% CUMULATIVE
PREFERRED STOCK, SERIES B
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PROSPECTUS SUPPLEMENT
AUGUST 20, 1998
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SALOMON SMITH BARNEY
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