2. Julimar-1
Jade 1-x
07 discoveries
star Julimar-1 Alexandrite 1-x
Australia discovery test flows
85 MMcf of gas per day
star Jade 1-x
Well in Egypt’s Western Desert
tests 26 MMcf of gas per day
from Jurassic formation
star Alexandrite 1-x
Egypt well tests 19.8 MMcf of gas,
4,045 barrels of condensate per day
star Brunello-1
Discovery on Australia block
tests 73 MMcf of gas per day
star Ootla
Apache tests commercial potential of
vast shale play in British Columbia
3. Brunello-1
Ootla
exploration
innovation
through
When it comes to discovery, Apache Corporation took its
global exploration to new heights in 2007.
Apache’s portfolio of seven regions in six nations, including leasehold of 42 million acres, provided
a platform for 12 percent production growth, a 6 percent increase in proved reserves,
and a greater potential into the next decade.
Apache’s values – integrity, respect for human dignity and a sense of urgency –
along with a strong work ethic, an unwillingness to accept
conventional thinking and the determination
to overcome challenges are the keys
to “finding a way.”
4. 2007
a deliberate
and determined journey
2
“finding a way”
embodies Apache Corporation’s 53-year quest to build a significant and profitable oil
and gas company, providing energy to meet constantly increasing global demand for
the long-term benefit of our shareholders.
From scraping together $250,000 to launch the company in 1954, to acquiring 1,050 square miles of
three-dimensional seismic data at the environmentally sensitive tip of South America during 2007,
Apache’s work ethic and its values have been the guiding principles behind “finding a way.”
These are the year’s key statistics. The rest of the story lies in
In 2007, your company:
the underlying asset value and future resource potential that
• Increased production 12 percent to
the company has built. With 42 million gross acres in seven core
561,000 barrels of oil equivalent (boe)
operating regions, Apache has a deep inventory of opportunities
per day, the 28th annual increase in the
across our portfolio that will enable the company to continue to
last 29 years;
grow profitably into the next decade.
• Grew proved reserves by 6 percent to
Over the course of a half century, a company is confronted with countless
2.4 billion boe, the 22nd consecutive year
challenges and constant change. Most of all, “finding a way” means not
of reserve growth;
giving in to conventional thinking while having the determination
• Earned a record $2.8 billion, or $8.39 to overcome any challenge to continue our record of profitable
per diluted common share. Excluding growth. The difference between success and failure is measured in
the non-cash impact of foreign currency inches, not miles, and to continue on our path of progress, we must
fluctuations and tax rate changes constantly find new opportunities to fuel our growth – most recently,
on deferred tax balances, Apache’s through exploration.
2007 adjusted earnings* were $8.65 per
In 2007, our exploration and development program provided significant
share, or 25 percent above 2006 adjusted
momentum for future growth. Apache’s “ACE” core growth areas of
earnings; and
Australia, Canada and Egypt will further that momentum.
• Generated a record $6.2 billion of cash
from operations before changes in
operating assets and liabilities.*
*Non-GAAP
5. In Australia, we discovered natural gas with the Julimar-1 well on
the WA-356-P block in the Carnarvon Basin. With two additional
discoveries, Apache booked our share of 650 billion cubic feet
(Bcf) of estimated proved reserves. Five additional appraisal wells
are planned for 2008, and we believe the ultimate size of this gas
accumulation could be in the range of 2 to 4 trillion cubic feet
(Tcf). Apache is developing our Reindeer discovery at a time of strong
demand for Carnarvon Basin natural gas; industry prices recently
have risen to a multiple of the company’s average price of $1.89 per
thousand cubic feet (Mcf) in 2007. We hope to sanction the Julimar
gas development in late 2008.
In Canada, Apache had encouraging results in the Ootla area of
Apache employees thrive in a culture that values
British Columbia, where we are continuing to test the commercial
and rewards them for growth that is both profitable
and geological potential of the Muskwa Shale. With our partner,
and sustainable.
EnCana, we have amassed 417,000 gross acres – the largest single
acreage position in this sizable emerging play. As this report was being prepared, our employees
achieved a goal that, when established in 2005,
In Egypt, we made several deep Jurassic oil and gas discoveries,
appeared to be an impossible dream: doubling the
including the Jade, Alexandrite and Imhotep discoveries in the
company’s share price by the end of 2008.
Matruh Concession on the northern side of the Khalda area.
Since kicking off the 2005 Share Appreciation Plan,
Behind each of these discoveries are teams of experienced, creative
our long-term shareholders have seen the value
geologists, geophysicists and engineers equipped with Apache’s
of the company more than double, increasing
sense of urgency, the best technological tools, and a determination to
market capitalization by more than $19 billion. For
find a way to overcome obstacles.
this achievement, 2,800 Apache employees will
For example, when the wheels of 3-D seismic survey equipment
receive approximately 2 million shares with total
became bogged down in the muddy terrain of Argentina’s Tierra del
value equal to about 1 percent of the market value
Fuego, Apache’s exploration group brought in tracked vehicles used
growth. More than 90 percent of the incentives
in the Canadian Arctic Region to accelerate the completion of the
will be paid to non-executives, with employees
seismic survey in this environmentally sensitive area. This survey
receiving shares equivalent to at least half of their
already is yielding results in added production.
annual salaries. The shares will be paid in four
Apache also tested a new method of acquiring 3-D seismic annual installments, providing a strong retention
information that speeds the job while increasing the quality of the incentive at a time when the competition for good
data. Using 12 large, independently controlled Vibroseis seismic people is considerable.
source trucks in Egypt’s Western Desert, we set a new record for
acquiring data with more than 6,000 shots in just over eight hours.
One essential element of Apache’s progress over the last 53 years is
our commitment to long-term growth over short-term gratification.
It seems that every week, another large institution is crippled
by the impact of short-term thinking that disregards long-term
consequences. The sub-prime credit debacle that has dragged
the U.S. economy into recession is one such example. Essentially,
mortgage brokers and bankers were rewarded for taking excessive
risks by originating loans with little regard for the borrowers’ ability
to repay.
6. A New Era For Energy Our Role in the New Era
While Apache focuses on its long-term goals, we are Apache’s primary responsibility is to find and develop oil and natural gas
faced with unprecedented short-term volatility in that will provide a competitive return for our shareholders, fuel economic
global crude oil markets. The phenomenal rise of growth, and help raise living standards. We applaud the recent trends
crude oil prices – from $61 per barrel in January toward conservation and development of viable alternatives to fossil
2007 to $110 per barrel in March 2008 – is the fuels. However, these alternatives will not ebb the world’s demand
product of many complex factors and signals the for fossil fuels for many years.
emergence of a new competitive era for energy
In 2007, in addition to our effective exploration program, we pushed
across the globe.
ahead on six large development projects that are expected to add
Population growth and emerging economies such over 100,000 barrels of oil equivalent per day of new production
as China and India have pushed oil demand from in 2009, 2010 and 2011. These projects include the Van Gogh and
65 million barrels per day to 85 million barrels Pyrenees oil developments and Reindeer and Julimar gas projects
per day in 20 years. At current prices, the nations offshore Western Australia, as well as expansion of the Salam gas
of the world are spending more than $3 trillion plant and secondary oil recovery projects in Egypt.
annually to secure crude oil. The fastest-growing
Apache has traversed enough price cycles over our 53 years to recognize
demand is from less-developed countries to fuel
that it would be imprudent to base our investment decisions on $100
progress and advance their standards of living.
per barrel oil. We use conservative price forecasts, and, when
appropriate, have employed hedges to protect the economic viability
For U.S. consumers, the recent rise in energy prices
of acquisitions and development projects with long lead times.
has been startling, because the nation had become
accustomed to inexpensive energy after the price In addition to building a profitable corporation that provides
spikes in the 1970s and 1980s. At the end of the essential energy supplies, we have a responsibility to be stewards
1990s, energy took a smaller bite out of disposable of the environment in which we operate and to do our part
income than it did at the end of World War II. to improve living standards. Our operations in Egypt – where
we are the third-largest producer and an important source of
While increased demand, turmoil in the oil-
foreign investment – illustrate the many ways we try to meet
rich Middle East and the weak U.S. dollar play
our responsibilities.
large roles in rising oil prices, many analysts
have concluded that the tremendous increase in We provide direct employment for 2,000 Egyptians, $9 million in
speculation in oil futures markets by hedge funds, revenue for the government each day, and energy supplies for the
pension funds and other investors has become one growing economy. In the Western Desert, we are converting diesel
of the significant factors in setting oil prices. generators to cleaner-burning, less-expensive natural gas. We also
tapped the spirit of our workforce, along with the generosity of our
Speculative trading brings liquidity to commodity
officers, employees, directors, industry colleagues and friends, to
markets, allowing companies to hedge their
build 200 one-room schools for girls from rural villages who had
exposure to commodity prices. Apache has used
not been able to attend school.
this strategy to lock in the economic returns of
acquisitions and development projects. Elsewhere in this annual report, we describe other aspects of
Apache’s stewardship commitment, including some exciting
But large-scale speculation can hurt the economy
new initiatives.
by distorting market signals regarding supply
and demand in the physical market and lead to At Apache, “finding a way” also means avoiding the beaten path. Our
excessive price volatility. We believe today’s trading initial investment in Egypt, at a time when other operators were
volume of oil futures contracts – 15 times that of leaving, set the stage for the emergence of one of the company’s
physical demand – is excessive and has had an core growth areas. We see similar opportunities for growth in
undue influence on today’s lofty prices. Australia, Canada and Argentina.
Apache’s 2007 was an outstanding year by most measures for our
shareholders and our skilled and dedicated team. Although we
anticipate turbulent times ahead as the U.S. economy struggles
to right itself, we remain dedicated to adding value for our
shareholders.
G. Steven Farris
Raymond Plank
President, Chief Executive Officer and
Chairman and Founder
Chief Operating Officer
7. performance
highlights
Year Ended December 31
(dollars in millions, except per-share data)
2007 2006 2005
Financial Highlights
Revenues $9, 978 $8,289 $7,584
Income Attributable to Common Stock 2,807 2,547 2,618
Diluted Net Income per Common Share 8.39 7.64 7.84
Cash from Operations before Changes in
Operating Assets and Liabilities (a):
Net Cash Provided by Operating Activities 5,677 4,313 4,332
Changes in Operating Assets and Liabilities 518 755 412
Cash from Operations Before Changes in $6,195 $5,068 $4,744
Operating Assets and Liabilities
Total Assets $28,635 $24,308 $19,272
Long-Term Debt 4,012 2,020 2,192
Shareholders’ Equity 15,378 13,191 10,541
Cash Dividends paid per Common Share 0.60 0.45 0.34
Operational Highlights
Oil and Gas Expenditures $5,802 $6,420 $3,857
(including acquisitions, gas gathering,
transmission and processing facilities and
capitalized interest)
Natural Gas Production (MMcf/d) 1,796 1,589 1,264
Oil and Condensate Production (Mbbls/d) 262 236 244
Proved Reserves (MMboe) 2,446 2,313 2,117
(a) NON-GAAP FINANCIAL MEASURE:
The annual report discusses Apache’s cash from operations before changes in
operating assets and liabilities. Management believes the information is useful for
investors because it is used internally and widely accepted by those following the
oil and gas industry as a financial indicator of a company’s ability to generate cash
to internally fund exploration and development activities, fund dividend programs,
and service debt. It is also used by research analysts to value and compare oil and
gas exploration and production companies, and is frequently included in published
research when providing investment recommendations. Cash from operations
before changes in operating assets and liabilities, therefore, is an additional
measure of liquidity, but is not a measure of financial performance under GAAP
and should not be considered as an alternative to cash flows from operating,
investing, or financing activities.
8. darwin
making
Stellar
discoveries
down under
alice springs
perth
9. 7
Successful exploration and continuing
development of several earlier
discoveries were highlights
of Apache’s activities
in Australia.
australia
With 7.6 million acres and an active drilling Australia also provides a good example of
the evolution of international gas markets as
program, Apache has several catalysts for growth
domestic users face competition for supply from
in Australia. Development of the Van Gogh and
international markets through the development
Pyrenees oil fields in the Exmouth Basin are
of liquefied natural gas (LNG) facilities. Natural
expected to add significant production volumes
gas prices in the Carnarvon Basin increased from
by the end of the decade, and the Julimar and
under $2 per Mcf to more than $7 per Mcf in the
Reindeer fields in the Carnarvon Basin are
past year as demand increased from the Western
expected to contribute to future gas volumes. Australia mining industry and large takeaway
In 2007, oil production increased 16 percent and gas capacity from LNG facilities. Apache expects
production rose 5 percent from the prior year. Proved to sign a contract to sell gas from the Reindeer
reserves increased 31 percent to an estimated 268 million development during 2008, with first production
barrels of oil equivalent. in 2010.
In 2008, Apache is planning to drill five additional wells at
Julimar – an April 2007 Carnarvon discovery with estimated
gross recoverable resource potential of 2 to 4 Tcf of natural
gas. Also in the Carnarvon, Apache plans to drill two key
exploration wells at Halyard and Marley.
The 2008 exploration program includes a seven-well
program planned in the Gippsland Basin, across a large
offshore acreage position adjacent to some of Australia’s most
prolific producing fields. Estimated resource potential in this
program is more than 500 million barrels of oil equivalent.
10. In Canada, Apache’s 2007 drilling
program targeted the Muskwa Shale
in the Ootla area, shallow gas reserves
and significant coal bed methane
resource potential.
canada
Exploration and development activity in Apache’s 2008 winter drilling program includes nine wells in
the Ootla area of British Columbia in the Muskwa Shale play
Apache’s Canadian Region reaches across
with 50-percent partner EnCana. The program is designed
6.8 million gross acres in the provinces of
to determine the commerciality of the play and will include
Alberta, British Columbia, Saskatchewan
experiments with multi-stage fracture stimulation programs
and the Northwest Territories.
to enhance flow rates. The potential recoverable resource from the
Production and reserves declined somewhat combined holdings of 417,000 acres is an estimated 9 to 16 Tcf of
in 2007 as a result of a reduction in capital gas net to Apache.
spending associated with cost inflation and
The region continues to target shallow gas accumulations,
reduced gas-price realizations. The reduction
including coal bed methane (CBM) in fields such as Provost and
in capital did not reflect our belief in the vast
Nevis; Apache is one of Canada’s largest producers of CBM.
hydrocarbon potential in Western Canada.
With joint-venture partner EnCana, Apache is evaluating the
commercial potential of the Mannville coals in the Nevis and
Provost areas with net resource potential exceeding 1 Tcf. The
North and South Grant Lands obtained through farm-ins in
2004 and 2005 provide additional CBM potential.
13. Apache has exploration opportunities
across its 19 million gross acres
in Egypt.
egypt
Growth in Apache’s Egypt Region continued in 2007, By year-end 2008, Apache expects to complete
construction of two new processing plants at the
with net oil production increasing 7 percent and
Salam gas plant which are expected to add net
net gas production climbing 11 percent. The region
production of 90 MMcf to 100 Mcf of gas and 4,500
is on track to achieve its goal of doubling operated
barrels of condensate per day. Continued expansion
production from 2005 levels by 2010.
of several water-flood projects, with additional
Apache drilled several deep Jurassic oil and gas discoveries drilling and increased water injection capacity, is
with substantial flow rates during 2007, including the expected to build toward net production of 20,000
Jade, Alexandrite, and Imhotep discoveries in the Matruh barrels of oil per day.
Concession in the northern part of the Khalda area. Other
discoveries were recorded in the Northeast Abu Gharadig
Concession operated by Shell, and on the East Ras Budran
Concession, an onshore area near the Gulf of Suez, where a
well tested more than 1,900 barrels of oil per day. Appraisals
of all of these discoveries are planned during 2008.
The 2008 exploration program reaches across a range of plays
and prospects that highlights the extent of Apache’s portfolio,
including prospects from the shallow Upper Bahariya and Abu
Roash to the Cretaceous Alem el Bueib to the deep Jurassic
formations. The region plans to drill four wildcats on the 9-million-
acre Tharwa farm-in acquired during 2007.
14. The Central Region drilled 335 productive
wells in West Texas, New Mexico
and Oklahoma.
2
united states
Apache’s Central Region brings the balance of long-lived
reserves and consistent drilling results in the Permian
Basin of West Texas and New Mexico, East Texas and the
Anadarko Basin of Western Oklahoma.
The Gulf Coast Region consistently delivers high returns on invested
capital and cash flow significantly in excess of its exploration and
development spending.
In 2007, the Central Region increased production 18 percent by
drilling 335 productive wells and augmented the region’s asset
base with the acquisition of producing properties in the Permian
Basin with estimated proved reserves of 70 million barrels of oil
equivalent. In 2008, the region will continue to actively exploit fields in
the Permian Basin and Western Oklahoma.
The Gulf Coast Region, the company’s largest in terms of production
volume and revenues, comprises Apache’s interests in and along the
Gulf of Mexico, in the areas on- and offshore Louisiana and Texas.
Apache has been the largest held-by-production acreage holder and
the second-largest producer in Gulf waters less than 1,200 feet deep
since 2004.
Gulf Coast activities in 2007 focused on an active drilling program,
completing 65 out of 84 wells drilled, and restoring production
impacted by the 2005 hurricanes. In 2008, the region will continue to
develop opportunities near the company’s extensive production base.
15. tulsa
houston
Reliable
tapping
streams
of production
16. aberdeen
north sea
Apache’s investments at the Forties Field
were focused on enhancing the operating
efficiency of the platforms and looking
ahead to increasing the ultimate recovery
from the largest field ever discovered in the
United Kingdom sector of the North Sea,
with an estimated 5 billion barrels of original
oil in place.
Several key facilities projects were commissioned
during 2007, including new power generation and
Improvements of topside facilities
multi-platform gas and power distribution systems,
enhanced the operating efficiency
export pumping, produced water-handling and
of the Forties Field.
injection systems, and drilling rig-package upgrades.
Although operating efficiency improved 11 percent
from 2006, production was 8 percent below
2006 levels as drilling was deferred to focus on
completing topside projects. In 2008, completion of
several facilities upgrades is planned, as well as 15 new
wells that will add to the field’s productive capacity.
The inventory of future drilling projects was updated
with a newly reprocessed seismic survey that identified
bypassed oil in the main reservoir units.
17. Apache has found abundant opportunities
for exploration and development
drilling in Argentina’s
producing basins.
buenos aires
argentina
Activity increased in Argentina in 2007, the first full year of
operation for Apache’s newest core area.
At year’s end, the Seccion Baños 2004 – the first significant well drilled
from a 700-square-mile (1,800-square-kilometer), 3-D seismic survey
in Argentina’s Tierra del Fuego – commenced production at a daily rate tierra
del fuego
of 1,635 barrels of oil and 1.3 MMcf of gas from the Lower Cretaceous
Springhill sandstone. The discovery followed two wells that developed the
previously unexploited discovery at Cabo Nombre Sur, located offshore
4.2 miles (7 km) to the south of the latest well. On the mainland, Apache
established the commerciality of two gas areas in the Neuquén Basin.
Apache receives low government-regulated pricing on a substantial
portion of its natural gas production – an average of 76 cents per Mcf.
Recently, we have signed contracts for the unregulated increment for
approximately $3 per Mcf, although for reduced volumes. In response
to gas shortages, the government has re-evaluated its gas pricing
regulations and recently announced a “new gas / old gas” policy similar
to U.S. regulations in the late 1970s. Gas shortages suggest that the
government eventually may allow even regulated prices to increase in
order to encourage more investments. No details have been published,
and the effectiveness of the new regulations remains unclear. However,
natural gas is in short supply and opportunities to find and develop it
are abundant.
In November 2007, Apache was awarded exploration rights on two
blocks comprising 1 million net acres on the Chilean side of Tierra del Fuego.
The acreage is adjacent to Apache’s 552,000 net acres on the Argentinean
side of the island and represents a natural extension of our expanding
exploration and production operations. Apache is finalizing the contracts
with the Chilean government and plans to acquire 3-D seismic data
in 2008.
18. canada
388 MMcf/day
Natural Gas Production
21,002 bbls/day
Liquid Hydrocarbon Production
567 MMboe
Proved Reserves
348 /287
Wells Drilled/Productive
6.8 million
Gross Acreage
2007 worldwide
operations
u.s. central region
Natural Gas Production 296 MMcf/day
Liquid Hydrocarbon Production 38,429 bbls/day
Proved Reserves 636 MMboe
Wells Drilled/Productive 343 /335
Gross Acreage 1.8 million
u.s. gulf coast region
Natural Gas Production 474 MMcf/day
Liquid Hydrocarbon Production 60,032 bbls/day
Proved Reserves 365 MMboe
Wells Drilled/Productive 84/65
Gross Acreage 3.2 million
argentina
201 MMcf/day
Natural Gas Production
14,240 bbls/day
Liquid Hydrocarbon Production
112 MMboe
Proved Reserves
94 /92
Wells Drilled/Productive
2.5 million
Gross Acreage
19. north sea
2 MMcf/day
Natural Gas Production
53,632 bbls/day
Liquid Hydrocarbon Production
206 MMboe
Proved Reserves
16/5
Wells Drilled/Productive
719,153
Gross Acreage
7
australia
195 MMcf/day
Natural Gas Production
13,778 bbls/day
Liquid Hydrocarbon Production
268 MMboe
Proved Reserves
24 /10
Wells Drilled/Productive
7.6 million
Gross Acreage
egypt
241 MMcf/day
Natural Gas Production
60,735 bbls/day
Liquid Hydrocarbon Production
292 MMboe
Proved Reserves
192 /161
Wells Drilled/Productive
18.9 million
Gross Acreage
20. considering
global
the
perspective
Stewardship In Canada, Apache’s Midale Field Enhanced Oil Recovery Project
is injecting 10 million tons of CO2 into oil reservoirs that would
The dictionary defines stewardship as “the
have been emitted from a coal gasification plant in North Dakota.
careful and responsible management of something
Also in Canada, Apache injects a mixture of CO2 and hydrogen
entrusted to one’s care.” Apache’s commitment
sulfide (H 2S) in an enhanced oil recovery project in the Keg
to stewardship spans five decades and reaches
River oil reservoir. The project injects 32,000 tons of CO2 and has
from environmental responsibility to the multi-
enabled Apache to cease operation of a sulfur plant. In a related
faceted goal of leaving the world a better place.
development, the buoyant market for sulfur has enabled the
Environment company to sell a stockpile of 200,000 tons of sulfur for use
in fertilizer.
Because Apache is part of an industry that
derives benefit from the earth’s resources,
Leaving the World a Better Place
we maintain a commitment to operate in
Almost every week, across Apache’s operating regions, employees
an environmentally responsible manner
are volunteering or providing financial support for a wide range
throughout the world.
of educational, civic and charitable activities. The company’s
Apache incorporates voluntary, cost-effective
philanthropic activities place a special emphasis on education,
actions to reduce, sequester or offset greenhouse
the environment, and the arts.
gas emissions. Apache has identified emission
To foster the giving spirit, in 2007, Apache donated $683,000 to match
reduction projects that are clearly economic to
contributions from 700 employees to the organizations of their choice.
implement, yet result in significant reductions
of greenhouse gases. One initiative, which joins Apache’s environmental stewardship
with its philanthropic activities, gained significant momentum
In 2007, Apache commissioned the innovative
in 2007 and early 2008. The Apache Foundation Tree Program
Forties Field natural gas ring main system
is now about one-third of the way toward achieving its goal of
that permitted replacement of diesel-burning
planting 1 million trees, with a focus in areas near significant
electric generators with more efficient, cleaner-
Apache operations.
burning, natural gas electric generators. The
completion of a gas and power ring and the Trees are an effective way to improve communities and the
installation of new electric generators increased environment by reducing sound, producing oxygen, storing
the efficiency of the field, cut gas flaring and carbon, providing shade, reducing erosion and increasing
consumption of diesel fuel, and reduced property values. In 2007, the foundation donated trees to
emissions of carbon dioxide (CO2) by about schools, communities and conservation programs.
25 percent.
Apache’s support for the Ucross Foundation in Wyoming reaches
Similarly, Apache is replacing diesel-powered back to its founding more than 25 years ago. The foundation is
generators in Egypt’s Western Desert with gas- best known in the arts through the more than 1,100 fellowships
powered units, another effort that will reduce that have been granted through its Artists-in-Residence program.
emissions by 3,900 tons while cutting costs by Alumni of this program have received Broadway’s Tony Awards,
$20 million per year. Pulitzer Prizes and other national and international recognition.
21. Support for teacher sabbaticals through Fund for Teachers
and the Apache Foundation’s tree-planting programs
are among the ways the company aims to
leave the world a better place.
Fund for Teachers is now in its eighth year of providing summer
sabbaticals and growth experiences for teachers from pre-kindergarten
through high school across the nation. Teachers, chosen for the
creativity of proposals of their own design, return from their
experiences motivated to teach and transfer their enthusiasm and
commitment for lifetime learning to their bright-eyed pupils. Fund for
Teachers has created opportunities for more than 3,100 teachers, 550
of them in 2007, with awards of up to $5,000 each.
As noted earlier in this report, Apache partnered with Springboard –
Educating the Future, a U.S. non-profit; Egypt’s National Council for
Childhood and Motherhood; and Egyptian non-profit Sawiris Foundation
to build 200 schools to provide the first opportunity for many young
Egyptian girls – particularly in rural areas – to attend school and learn
to read, write and perform basic arithmetic.
Apache’s newest initiative grew from Chairman and Founder
Raymond Plank’s recent reunion with Dr. William T. Close, 65 years
after their first encounter in the U.S. Army Air Corps. Dr. Close, who
spent 16 years practicing medicine in Africa, provided keen insight
into the daily struggle to provide medical care in some of the poorest
Apache’s Safety Commitment
nations in the world.
Dr. Close and a group of dedicated professionals are developing a As the company’s operations have
new program that will send talented U.S.-trained nursing educators expanded across the globe, spreading
to poor countries for six to eight weeks, enabling them to immerse Apache’s safety culture has been an
themselves in the education system of the host country, and important objective, building on a
providing an interactive experience that will be valuable for the foundation of field-driven empowerment
educators and the students. With the agreement of this great of workers to accept personal responsibility
humanitarian, this new initiative will be called the W.T. Close Fund for safety. Apache believes that work-
for Teaching Nurses. related injuries and illnesses are prevent-
able, and continues to foster safety
As with any new venture, this program will need financial support to
leadership throughout the organization,
grow. If you are interested in joining us, please call 800.705.6410 or
engage employees and contractors in
713.296.7490 or e-mail info@wtclosefundforteachingnurses.org.
worker competency programs, and perform
To learn more about Apache’s outreach initiatives, please visit
critical self-evaluations to detect potential
this page on Apache’s Web site,
compliance issues.
www.apachecorp.com/about_us/our_commitments,
The number of injuries experienced that
or go to the following Web sites:
resulted in time away from work declined
www.ucrossfoundation.org, www.fundforteachers.org and
14 percent in 2007 from 2006, and the
www.springboarded.org. We invite you to join our employees,
rate of recordable injuries was 7 percent
directors, friends and others to support these worthy programs.
below 2006 levels. Driving safety programs
At Apache, stewardship is part of the culture and fabric. Raymond
resulted in 34 percent fewer accidents in
Plank distills the concept with these words: “You should leave the
2007 than in 2006.
world a better place than you found it.”
22. financial
highlights
Investors benefited from Apache’s record performance
Apache’s strategy is built on a
as Wall Street took notice of Apache’s visible catalysts
diversified portfolio that is balanced
20
for continued growth into the next decade.
geographically, geologically and by
product mix (oil vs. gas).
With 42 million acres, Apache has an
Year-End Share Price
asset base with opportunities that span
the globe. Operations are established ( $ dollars )
in areas with growing economies and
140
generally positive business and legal
environments. Our goal is to build core
areas that will support a sustainable
120
program of lower-risk, repeatable drilling
opportunities, balanced by higher-risk,
higher-reward exploration in core growth
100
areas such as Australia, Canada and Egypt.
80
60
40
20
03 04 05 06 07
23. Apache’s seven core areas include five outside the United States that represent 60 percent of production and reserves.
No single basin contributes more than 25 percent of production. Virtually all core areas have large undeveloped acreage
with opportunities for future growth.
U.S. Gulf Coast
51
2007
Production 25%
( MMboe )
205 Egypt
2
(total) 37
18%
2007
Reserves
( MMboe )
Canada 15% 8% 2,446
Australia
31
(total)
17
U.S. Gulf Coast
365
10%
North Sea 15%
Canada
20
567
8%
23%
16%
Argentina Egypt
U.S. Central 17 12% 292
32
11% Australia
268
26%
8%
U.S. Central
North Sea
636 5% 206
Argentina
112
Drilling opportunities from Apache’s operating
regions are judged on rate of return using
conservative price assumptions. Cash flow
from the U.S. regions funds the company’s
U.S. Gulf Coast
international expansion.
994
24%
Egypt
Canada 605
14%
15%
651
Exploration
Development 12% Australia
Capital 516
( $ millions )
15%
13%
4,228
U.S. Central
(total)
7% North Sea
637
538
Argentina
287
24. Strong commodity prices and record production fueled
Liquid hydrocarbons represent about half of Apache’s
revenue growth. Record cash from operations provided
2007 production but two-thirds of revenues. Apache
funds for the company’s drilling program.
replaced 167 percent of its 2007 production, including
140 percent from drilling activity.
Annual Production Revenues
( MMboe ) ( $ billions )
Net Cash
250 10
Provided by
Operating Activities
225 9
( $ billions )
Proved Reserves
200 8
( MMboe ) 7
175 7
22
6
150 6
3000
5
125 5
2500
4
100 4
2000
3
75 3
1500
2
50 2
1000
1
25 1
500
03 04 05 06 07 03 04 05 06 07
03 04 05 06 07 03 04 05 06 07
gas gas
liquids liquids
Apache’s strong balance sheet, with debt at 22 percent Apache’s balanced product mix and growing production
of capitalization, provides financial flexibility to pursue profile in a rising commodity price environment fueled
its growth strategy in a time of economic uncertainty. record earnings and strong returns.
Earnings
per Diluted
Common Share
Return on Equity
($)
Returns (%)
9
on Average
Capital Employed Capitalization 40
8
(%) ( $ billions ) 35
7
30
6
30 30
25
5
25 25
20
4
20 20
15
3
15 15
10
2
10 10
5
1
5 5
03 04 05 06 07
03 04 05 06 07
03 04 05 06 07 03 04 05 06 07
equity
debt
25. board of
directors
George d. lawrence
Frederick m. Bohen
[1] [3]
[3] [5]
[ 1 ] Executive Committee
[ 2 ] Audit Committee
Private Investor;
Former Executive Vice President and
Former Chief Executive Officer, [ 3 ] Management Development and
Chief Operating Officer,
Compensation Committee
The Phoenix Resource Companies, Inc.
The Rockefeller University
[ 4 ] Corporate Governance and
f.h. Merelli
g. Steven Farris
[1] [2]
[1]
Nominating Committee
Chairman of the Board,
President, Chief Executive Officer and [ 5 ] Stock Option Plan Committee
Chief Executive Officer and President,
Chief Operating Officer,
Cimarex Energy Co.
Apache Corporation
Rodman d. Patton
Randolph m. Ferlic, md
[2]
[1] [2]
Former Managing Director,
Founder and Former President,
Merrill Lynch Energy Group
Surgical Services of the Great Plains, P.C.
Charles j. Pitman
Eugene c. Fiedorek
[4]
[2]
Former Regional President —
Private Investor, Former Managing Director,
2
Middle East/Caspian/Egypt/India,
EnCap Investments L.C.
BP Amoco plc
a.d. Frazier, Jr. [3] [5]
Raymond Plank [1]
Chairman and Chief Executive Officer,
Founder and Chairman of the Board,
Danka Business Systems PLC
Apache Corporation
Patricia Albjerg Graham [4]
Charles Warren Research Professor of the
History of American Education Emerita,
Harvard University
John a. Kocur [1] [3] [4]
Attorney at Law;
Former Vice Chairman of the Board,
Apache Corporation
corporate
officers
Jon a. Jeppeson Robert j. Dye
Raymond Plank
Senior Vice President Vice President — Investor Relations
Chairman of the Board
p. Anthony Lannie Margery m. Harris
g. Steven Farris
Senior Vice President and Vice President — Human Resources
President, Chief Executive Officer and
General Counsel
Chief Operating Officer
Rebecca a. Hoyt
w. Kregg Olson
Michael s. Bahorich Vice President and Controller
Senior Vice President —
Executive Vice President —
Janine j. McArdle
Corporate Reservoir Engineering
Exploration and
Production Technology Vice President — Oil and Gas Marketing
Sarah b. Teslik
John a. Crum Jon w. Sauer
Senior Vice President —
Policy and Governance
Executive Vice President and President, Vice President — Tax
Apache Canada Ltd.
Thomas p. Chambers Cheri l. Peper
Rodney j. Eichler Vice President — Corporate Planning Corporate Secretary
Executive Vice President and
John j. Christmann
General Manager,
Apache Egypt Companies Vice President —
Business Development
Roger b. Plank
Matthew w. Dundrea
Executive Vice President and
Chief Financial Officer Vice President and Treasurer
Floyd r. Price
Executive Vice President —
Eurasia, Latin America and
New Ventures
26. shareholder dividend reinvestment plan
information Shareholders of record may invest their dividends automatically
in additional shares of Apache common stock at the market
price. Participants may also invest up to an additional $25,000
in Apache shares each quarter through this service. All bank
service fees and brokerage commissions on purchases are paid
by Apache. A prospectus describing the terms of the Plan and an
authorization form may be obtained from the Company’s stock
Dividends
Price Range transfer agent, Wells Fargo Bank, N.A.
per Share
direct registration
High Low Declared Paid
Shareholders of record may hold their shares of Apache common
2007
stock in book-entry form. This eliminates costs related to
First Quarter $73.44 $63.01 $0.15 $0.15 safekeeping or replacing paper stock certificates. In addition,
shareholders of record may request electronic movement of
Second Quarter 87. 82 70.53 0.15 0.15
book-entry shares between your account with the Company’s
2
Third Quarter 91.25 73.41 0.15 0.15 stock transfer agent and your broker. Stock certificates may be
converted to book-entry shares at any time. Questions regarding
Fourth Quarter 109.32 87.44 0.15 0.15
this service may be directed to the Company’s stock transfer
agent, Wells Fargo Bank, N.A.
2006
annual meeting
First Quarter $76.25 $63.17 $0.10 $0.10
Apache will hold its annual meeting of shareholders at:
Second Quarter 75.66 56.50 0.10 0.10
Ballroom, Hilton Houston Post Oak
Third Quarter 72.40 59.18 0.15 0.10 2001 Post Oak Boulevard, Houston, Texas
Fourth Quarter 70.50 59.99 0.15 0.15 Thursday, May 8, 2008, 10 am
Apache plans to Web cast the annual meeting live; connect
through the Apache Web site: www.apachecorp.com
stock held in “street name”
The Company has paid cash dividends on its common stock for
43 consecutive years through December 31, 2007. Future dividend
The Company maintains a direct mailing list to ensure that
payments will depend upon the Company’s level of earnings,
shareholders with stock held in brokerage accounts receive
financial requirements and other relevant factors.
information on a timely basis. Shareholders wanting to be added
to this list should direct their requests to:
Apache common stock is listed on the New York and Chicago
stock exchanges and the NASDAQ Stock Market (symbol APA). Apache’s Public Affairs Department
At December 31, 2007, the Company’s shares of common stock 2000 Post Oak Boulevard, Suite 100
outstanding were held by approximately 7,000 shareholders of Houston, Texas 77056-4400
record and 363,000 beneficial owners. Also listed on the New York
or by calling 713.296.6157
Stock Exchange are:
or by registering on Apache’s Web site:
apache Finance Canada’s 7.75% notes, due 2029 (symbol APA 29)
www.apachecorp.com
corporate offices
form 10-k request
One Post Oak Central
2000 Post Oak Boulevard, Suite 100 Shareholders and other persons interested in obtaining, without
Houston, Texas 77056-4400 cost, a copy of the Company’s Form 10-K filed with the Securities
713.296.6000 and Exchange Commission may do so by writing to:
Cheri L. Peper, Corporate Secretary
independent public accountants 2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
Ernst Young llp
Five Houston Center
investor relations
1401 McKinney Street, Suite 1200
Houston, Texas 77010-2007
Shareholders, brokers, securities analysts or portfolio managers
Designed by: Origin, Houston, Texas
seeking information about the Company are welcome to contact:
stock transfer agent and registrar
Robert J. Dye, Vice President of Investor Relations
Wells Fargo Bank, N.A. 713.296.6662
Attn: Shareowner Services
www.origindesign.com
Members of the news media and others seeking information
PO Box 64854
about the Company should contact:
South St. Paul, Minnesota 55164-0854
651.450.4064 or 800.468.9716 Bill Mintz, Director of Public Affairs, at
713.296.7276
Communications concerning the transfer of shares, lost certificates,
web site
dividend checks, duplicate mailings or change of address should
be directed to the stock transfer agent. Shareholders can access
www.apachecorp.com
account information on the Web site:
www. shareowneronline.com
