APA 10-Q 2021-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 1-40144

APA CORPORATION

(Exact name of registrant as specified in its charter)

Delaware			86-1430562
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

(713) 296-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, $0.625 par value						APA						Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer						☒						Accelerated filer						☐
Non-accelerated filer						☐						Smaller reporting company						☐
												Emerging growth company						☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of registrant’s common stock outstanding as of October 31, 2021			363,274,259

TABLE OF CONTENTS

Item									Page
			PART I - FINANCIAL INFORMATION
1.			FINANCIAL STATEMENTS						1
			STATEMENT OF CONSOLIDATED OPERATIONS						1
			STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)						2
			STATEMENT OF CONSOLIDATED CASH FLOWS						3
			CONSOLIDATED BALANCE SHEET						4
			STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTEREST						5
			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS						7
2.			MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS						32
3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK						48
4.			CONTROLS AND PROCEDURES						49
			PART II - OTHER INFORMATION
1.			LEGAL PROCEEDINGS						50
1A.			RISK FACTORS						50
2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS						50
6.			EXHIBITS						51

FORWARD-LOOKING STATEMENTS AND RISKS

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Company’s future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on the Company’s examination of historical operating trends, the information that was used to prepare its estimate of proved reserves as of December 31, 2020, and other data in the Company’s possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable under the circumstances, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, its assumptions about:

• the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically, the coronavirus disease 2019 (COVID-19) pandemic and any related variants) and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors, and suppliers, in response to such epidemics or pandemics;

• the mandate, availability, and effectiveness of vaccine programs and therapeutics related to the treatment of COVID-19;

• the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or services;

• the Company’s commodity hedging arrangements;

• the supply and demand for oil, natural gas, NGLs, and other products or services;

• production and reserve levels;

• drilling risks;

• economic and competitive conditions;

• the availability of capital resources;

• capital expenditures and other contractual obligations;

• currency exchange rates;

• weather conditions;

• inflation rates;

• the availability of goods and services;

• legislative, regulatory, or policy changes, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring, or water disposal;

• the Company’s performance on environmental, social, and governance measures;

• terrorism or cyberattacks;

• the occurrence of property acquisitions or divestitures;

• the integration of acquisitions;

• the Company’s ability to access the capital markets;

• market-related risks, such as general credit, liquidity, and interest-rate risks;

• the Company’s expectations with respect to the new operating structure implemented pursuant to the Holding Company Reorganization (as defined in the Notes to the Company’s Consolidated Financial Statements set forth in Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q) and the associated disclosure implications;

• other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, Item 7A—Quantitative and Qualitative Disclosures About Market Risk and elsewhere in the Annual Report on Form 10-K of Apache Corporation, the Company’s predecessor registrant, for the fiscal year ended December 31, 2020;

• other risks and uncertainties disclosed in the Company’s third-quarter 2021 earnings release;

• other factors disclosed under Part II, Item 1A—Risk Factors in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021;

• other factors disclosed under Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q; and

• other factors disclosed in the other filings that the Company makes with the Securities and Exchange Commission.

Other factors or events that could cause the Company’s actual results to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all such factors or events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, the Company disclaims any obligation to update or revise these statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.

DEFINITIONS

All defined terms under Rule 4-10(a) of Regulation S-X shall have their statutorily prescribed meanings when used in this Quarterly Report on Form 10-Q. As used herein:

“3-D” means three-dimensional.

“4-D” means four-dimensional.

“b/d” means barrels of oil or natural gas liquids per day.

“bbl” or “bbls” means barrel or barrels of oil or natural gas liquids.

“bcf” means billion cubic feet of natural gas.

“bcf/d” means one bcf per day.

“boe” means barrel of oil equivalent, determined by using the ratio of one barrel of oil or NGLs to six Mcf of gas.

“boe/d” means boe per day.

“Btu” means a British thermal unit, a measure of heating value.

“Liquids” means oil and natural gas liquids.

“LNG” means liquefied natural gas.

“Mb/d” means Mbbls per day.

“Mbbls” means thousand barrels of oil or natural gas liquids.

“Mboe” means thousand boe.

“Mboe/d” means Mboe per day.

“Mcf” means thousand cubic feet of natural gas.

“Mcf/d” means Mcf per day.

“MMbbls” means million barrels of oil or natural gas liquids.

“MMboe” means million boe.

“MMBtu” means million Btu.

“MMBtu/d” means MMBtu per day.

“MMcf” means million cubic feet of natural gas.

“MMcf/d” means MMcf per day.

“NGL” or “NGLs” means natural gas liquids, which are expressed in barrels.

“NYMEX” means New York Mercantile Exchange.

“oil” includes crude oil and condensate.

“PUD” means proved undeveloped.

“SEC” means United States Securities and Exchange Commission.

“Tcf” means trillion cubic feet of natural gas.

“U.K.” means United Kingdom.

“U.S.” means United States.

With respect to information relating to our working interest in wells or acreage, “net” oil and gas wells or acreage is determined by multiplying gross wells or acreage by our working interest therein. Unless otherwise specified, all references to wells and acres are gross.

References to “APA,” the “Company,” “we,” “us,” and “our” refer to APA Corporation and its consolidated subsidiaries, including Apache Corporation, unless otherwise specifically stated. References to “Apache” refer to Apache Corporation, the Company’s wholly-owned subsidiary, and its consolidated subsidiaries, unless otherwise specifically stated.

PART I – FINANCIAL INFORMATION

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

						For the Quarter Ended September 30,												For the Nine Months Ended September 30,
						2021						2020						2021						2020
						(In millions, except share data)
REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues						$	1,685					$	1,046					$	4,630					$	2,979
Purchased oil and gas sales						374						74						1,056						237
Total revenues						2,059						1,120						5,686						3,216
Derivative instrument gains (losses), net						—						16						45						(262)
Gain (loss) on divestitures, net						(2)						(1)						65						24
Loss on previously sold Gulf of Mexico properties						(446)						—						(446)						—
Other, net						40						9						175						41
						1,651						1,144						5,525						3,019
OPERATING EXPENSES:
Lease operating expenses						316						259						891						858
Gathering, processing, and transmission						68						63						187						206
Purchased oil and gas costs						396						75						1,152						207
Taxes other than income						54						34						149						90
Exploration						34						58						109						187
General and administrative						70						52						239						214
Transaction, reorganization, and separation						4						7						8						44
Depreciation, depletion, and amortization						335						398						1,028						1,382
Asset retirement obligation accretion						29						27						85						81
Impairments						18						—						18						4,492
Financing costs, net						205						99						422						168
						1,529						1,072						4,288						7,929
NET INCOME (LOSS) BEFORE INCOME TAXES						122						72						1,237						(4,910)
Current income tax provision						183						58						463						120
Deferred income tax benefit						(31)						(27)						(54)						(71)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS						(30)						41						828						(4,959)
Net income (loss) attributable to noncontrolling interest - Egypt						49						24						132						(138)
Net income (loss) attributable to noncontrolling interest - Altus						4						2						32						(7)
Net income attributable to Altus Preferred Unit limited partners						30						19						73						56
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK						$	(113)					$	(4)					$	591					$	(4,870)
NET INCOME (LOSS) PER COMMON SHARE:
Basic						$	(0.30)					$	(0.01)					$	1.56					$	(12.89)
Diluted						$	(0.30)					$	(0.02)					$	1.53					$	(12.89)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic						379						378						378						378
Diluted						379						378						379						378

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Unaudited)

						For the Quarter Ended September 30,												For the Nine Months Ended September 30,
						2021						2020						2021						2020
						(In millions)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS						$	(30)					$	41					$	828					$	(4,959)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Share of equity method interests other comprehensive income						—						1						1						—
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS						(30)						42						829						(4,959)
Comprehensive income (loss) attributable to noncontrolling interest - Egypt						49						24						132						(138)
Comprehensive income (loss) attributable to noncontrolling interest - Altus						4						2						32						(7)
Comprehensive income attributable to Altus Preferred Unit limited partners						30						19						73						56
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK						$	(113)					$	(3)					$	592					$	(4,870)

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)

						For the Nine Months Ended September 30,
						2021						2020
						(In millions)
CASH FLOWS FR

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The following discussion relates to APA Corporation (APA or the Company) and its consolidated subsidiaries and should be read together with the Company’s Consolidated Financial Statements and accompanying notes included in Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q, as well as related information set forth in Apache Corporation’s Consolidated Financial Statements, accompanying Notes to Consolidated Financial Statements, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Apache’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

On January 4, 2021, Apache Corporation announced plans to implement a holding company reorganization (the Holding Company Reorganization), which was thereafter completed on March 1, 2021. In connection with the Holding Company Reorganization, Apache Corporation became a direct, wholly-owned subsidiary of APA Corporation, and all of Apache Corporation’s outstanding shares were automatically converted into equivalent corresponding shares of APA. Pursuant to the Holding Company Reorganization, APA became the successor issuer to Apache Corporation pursuant to Rule 12g-3(a) under the Exchange Act and replaced Apache Corporation as the public company trading on the Nasdaq Global Select Market under the ticker symbol “APA.” The Holding Company Reorganization modernized the Company’s operating and legal structure to more closely align with its growing international presence, making it more consistent with other companies that have subsidiaries operating around the globe.

Overview

APA is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids (NGLs). The Company’s upstream business currently has exploration and production operations in three geographic areas: the U.S., Egypt, and offshore the U.K. in the North Sea (North Sea). APA also has active exploration and planned appraisal operations ongoing in Suriname, as well as interests in other international locations that may, over time, result in reportable discoveries and development opportunities. The Company’s midstream business is operated by Altus Midstream Company (Nasdaq: ALTM) through its subsidiary Altus Midstream LP (collectively, Altus). Altus owns, develops, and operates a midstream energy asset network in the Permian Basin of West Texas.

The Company’s mission is to grow in an innovative, safe, environmentally responsible, and profitable manner for the long-term benefit of its stakeholders. The Company is focused on rigorous portfolio management, disciplined financial structure, and optimization of returns.

The global economy and the energy industry have been deeply impacted by the effects of the coronavirus disease 2019 (COVID-19) pandemic and related governmental actions. Uncertainty in the commodity and financial markets during 2020 and 2021 continue to impact oil supply and demand. Despite these uncertainties, the Company remains committed to its longer-term objectives: (1) to maintain a balanced asset portfolio, including advancement of ongoing exploration and appraisal activities offshore Suriname; (2) to invest for long-term returns over production growth; and (3) to budget conservatively to generate cash flow in excess of its capital program that can be directed on a priority basis to debt reduction. The Company continues to aggressively manage its cost structure regardless of the oil price environment and closely monitors hydrocarbon pricing fundamentals to reallocate capital as part of its ongoing planning process.

In the third quarter of 2021, the Company reported a net loss of $113 million, or $0.30 per diluted common share, compared to a net loss of $4 million, or $0.01 per diluted common share, in the third quarter of 2020. The increase in net loss compared to the prior-year period is primarily the result of a non-cash $446 million loss on previously sold Gulf of Mexico properties, which represents the Company’s estimate of decommissioning Apache may be required to perform or pay for on assets sold to Fieldwood in 2013 in excess of securities available to the Company to recover costs incurred with respect to such decommissioning. For additional details of this loss, please refer to Note 11—Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. Absent this charge, the quarter benefited from significantly improved commodity prices that had collapsed in the prior year when the COVID-19 pandemic negatively affected economic activity and the oil markets. In response to lower commodity prices, the Company materially reduced its upstream capital investment budget and drilling activity during 2020. Daily production decreased 13 percent from an average of 445 Mboe/d in the third quarter of 2020 to an average of 389 Mboe/d in the third quarter of 2021.

The Company generated $2.4 billion of cash from operating activities during the first nine months of 2021, a 171 percent increase from the first nine months of 2020, driven by higher commodity prices and associated revenues. Since year-end 2020, the Company reduced its outstanding debt by $1.4 billion, and it had $377 million of cash at the end of the third quarter of 2021.

Following this progress and considering the ongoing constructive price environment, the Company has adjusted its cash allocation approach, as follows:

• The capital investment program will be increased to a level intended to sustain or slightly grow global production volumes. This will be primarily accomplished through a gradual ramp in activity over the next few quarters, primarily in Egypt, but also in the U.S. Onshore.

• The Company currently plans to return a minimum of 60 percent of its free cash flow to shareholders through dividends, share buybacks, or a combination thereof. In the third quarter of 2021, the Company announced a quarterly dividend increase from $0.025 per share to $0.0625 per share and, in the fourth quarter, announced a further increase to $0.125 per share. During the fourth quarter of 2021, the Company’s Board of Directors authorized the purchase of up to 40 million shares of the Company’s common stock. The Company repurchased 14.7 million shares in October 2021, and as of October 31, 2021, the Company had remaining authorization to repurchase up to 65.3 million shares under Company’s share repurchase programs. The optimal balance of cash return through dividends and share repurchases will be reviewed on a regular basis.

Operational Highlights

Key operational highlights for the quarter include:

United States

• Equivalent production from the Company’s U.S. assets accounted for 61 percent of its total production during the third quarter of 2021. After halting all drilling and completion activity for most of 2020, in early 2021 the Company re-activated one rig in the Permian Basin and one rig in the Austin Chalk. A second rig was added in the Permian Basin in late June 2021. The Company was also active in completing its backlog of Permian wells previously drilled but not completed. During the third quarter, the Company placed nine wells online in the Permian Basin. One additional well was drilled in the Austin Chalk, where the results are continuing to be evaluated, and a drilling rig was recently added to advance the characterization of the Company’s acreage position in the play.

• On October 11, 2021, the Company announced that it has ended routine flaring in its U.S. onshore operations, achieving one of its announced 2021 environmental, social and governance (ESG) goals, three months ahead of schedule.

• On October 21, 2021, ALTM announced that it will combine with privately-owned BCP Raptor Ho

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Commodity Price Risk

The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices the Company receives for its crude oil, natural gas, and NGLs, which have historically been very volatile because of unpredictable events such as economic growth or retraction, weather, political climate, and global supply and demand. These factors have only been heightened as the result of continuing negative demand implications of the COVID-19 pandemic became more apparent. The Company continually monitors its market risk exposure, including the impact and developments related to the COVID-19 pandemic, which introduced significant volatility in the financial markets subsequent to the year ended December 31, 2019.

The Company’s average crude oil price realizations increased 75 percent from $40.88 per barrel to $71.72 per barrel during the third quarters of 2020 and 2021, respectively. The Company’s average natural gas price realizations increased 104 percent from $1.90 per Mcf to $3.87 per Mcf during the third quarters of 2020 and 2021, respectively. The Company’s average NGL price realizations increased 133 percent from $13.51 per barrel to $31.42 per barrel during the third quarters of 2020 and 2021, respectively. Based on average daily production for the third quarter of 2021, a $1.00 per barrel change in the weighted average realized oil price would have increased or decreased revenues for the quarter by approximately $16 million, a $0.10 per Mcf change in the weighted average realized natural gas price would have increased or decreased revenues for the quarter by approximately $8 million, and a $1.00 per barrel change in the weighted average realized NGL price would have increased or decreased revenues for the quarter by approximately $7 million.

The Company periodically enters into derivative positions on a portion of its projected crude oil and natural gas production through a variety of financial and physical arrangements intended to manage fluctuations in cash flows resulting from changes in commodity prices. Such derivative positions may include the use of futures contracts, swaps, and/or options. The Company does not hold or issue derivative instruments for trading purposes. As of September 30, 2021, the Company had open natural gas derivatives, not designated as cash flow hedges, in a liability position with a fair value of approximately $2 million. A 10 percent increase in basis differential of the hedges would increase the liability by approximately $8 million, while a 10 percent decrease in basis differential of the hedges would move the derivatives to an asset position of approximately $6 million. As of September 30, 2021, the Company had open crude oil derivatives, not designated as cash flow hedges, in a liability position with a fair value of approximately $30 million. A 10 percent increase in oil prices would increase the liability by approximately $19 million, while a 10 percent decrease in oil prices would decrease the liability by approximately $19 million. These fair value changes assume volatility based on prevailing market parameters as of September 30, 2021. Refer to Note 4—Derivative Instruments and Hedging Activities in the Notes to Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q for notional volumes and terms with the Company’s derivative contracts.

Interest Rate Risk

As of September 30, 2021, the Company had $6.3 billion, net, in outstanding notes and debentures, all of which was fixed-rate debt, with a weighted average interest rate of 5.07 percent. Although near-term changes in interest rates may affect the fair value of fixed-rate debt, such changes do not expose the Company to the risk of earnings or cash flow loss associated with that debt. The Company is also exposed to interest rate risk related to its interest-bearing cash and cash equivalents balances and amounts outstanding under the indentures and credit facilities. As of September 30, 2021, the Company had approximately $377 million in cash and cash equivalents, approximately 55 percent of which was invested in money market funds and short-term investments with major financial institutions. As of September 30, 2021, there were $440 million and $657 million of borrowings outstanding under the Apache Corporation and Altus Midstream LP revolving credit facilities, respectively. A change in the interest rate applicable to short-term investments and credit facility borrowings would have an immaterial impact on earnings and cash flows but could impact interest costs associated with future debt issuances or any future borrowings.

Foreign Currency Exchange Rate Risk

The Company’s cash activities relating to certain international operations is based on the U.S. dollar equivalent of cash flows measured in foreign currencies. The Company’s North Sea production is sold under U.S. dollar contracts, while the majority of costs incurred are paid in British pounds. The Company’s Egypt production is primarily sold under U.S. dollar contracts and the majority of costs incurred are denominated in U.S. dollars. Transactions denominated in British pounds are converted to U.S. dollar equivalents based on the average exchange rates during the period.

Foreign currency gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated at the end of each month. Foreign currency gains and losses are included as either a component of “Other” under “Revenues and Other” or, as is the case when the Company re-measures its foreign tax liabilities, as a component of the Company’s provision for income tax expense on the statement of consolidated operations. A foreign currency net gain or loss of $4 million would result from a 10 percent weakening or strengthening, respectively, in the British pound as of September 30, 2021.

The Company is subject to increased foreign currency risk associated with the effects of the U.K.’s withdrawal from the European Union. The Company has periodically entered into foreign exchange contracts in order to minimize the impact of fluctuating exchange rates for the British pound on the Company’s operating expenses. The Company had no outstanding foreign exchange derivative contracts as of September 30, 2021.

Disclosure Controls and Procedures

John J. Christmann IV, the Company’s Chief Executive Officer and President, in his capacity as principal executive officer, and Stephen J. Riney, the Company’s Executive Vice President and Chief Financial Officer, in his capacity as principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2021, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Company’s disclosure controls and procedures were effective, providing effective means to ensure that the information the Company is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

The Company periodically reviews the design and effectiveness of its disclosure controls, including compliance with various laws and regulations that apply to its operations, both inside and outside the United States. The Company makes modifications to improve the design and effectiveness of our disclosure controls, and may take other corrective action, if the Company’s reviews identify deficiencies or weaknesses in its controls.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Part I, Item 3—Legal Proceedings of Apache Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and Note 12—Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q (which is hereby incorporated by reference herein), for a description of material legal proceedings.

Refer to Part I, Item 1A—Risk Factors of Apache Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and Part II, Item 1A—Risk Factors of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021.

Given the nature of their respective businesses, Apache Corporation and Altus Midstream Company may be subject to different or additional risks than those applicable to the Company. For a description of these risks, refer to the applicable disclosures in Apache Corporation’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2021, June 30, 2021, and September 30, 2021 and Altus Midstream Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2021, June 30, 2021, and September 30, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the fourth quarter of 2018, Apache’s Board of Directors authorized the purchase of up to 40 million shares of the Company’s common stock. No shares were purchased under this authorization through September 30, 2021. During the fourth quarter of 2021, the Company’s Board of Directors authorized the purchase of an additional 40 million shares of the Company’s common stock. In both cases, shares may be purchased either in the open market or through privately held negotiated transactions.

The Company repurchased 14.7 million shares at an average price of $26.50 per share in October 2021, and as of October 31, 2021, the Company had remaining authorization to repurchase up to 65.3 million shares. The Company is not obligated to acquire any additional shares.

2.1			–			Agreement and Plan of Merger, dated as of March 1, 2021, by and among Apache Corporation, Registrant, and APA Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
3.1			–			Amended and Restated Certificate of Incorporation of Registrant, dated March 1, 2021, as filed with the Secretary of State of the State of Delaware on March 1, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed March 1, 2021, SEC File No. 001-40144).
3.2			–			Amended and Restated Bylaws of Registrant, dated September 14, 2021 (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed September 20, 2021, SEC File No. 001-40144).
*31.1			–			Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer.
*31.2			–			Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer.
*32.1			–			Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.
*101			–			The following financial statements from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL: (i) Statement of Consolidated Operations, (ii) Statement of Consolidated Comprehensive Income (Loss), (iii) Statement of Consolidated Cash Flows, (iv) Consolidated Balance Sheet, (v) Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling Interest and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
*101.SCH			–			Inline XBRL Taxonomy Schema Document.
*101.CAL			–			Inline XBRL Calculation Linkbase Document.
*101.DEF			–			Inline XBRL Definition Linkbase Document.
*101.LAB			–			Inline XBRL Label Linkbase Document.
*101.PRE			–			Inline XBRL Presentation Linkbase Document.
*104			–			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

• Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

									APA CORPORATION
Dated:			November 4, 2021						/s/ STEPHEN J. RINEY
									Stephen J. Riney
									Executive Vice President and Chief Financial Officer
									(Principal Financial Officer)
Dated:			November 4, 2021						/s/ REBECCA A. HOYT
									Rebecca A. Hoyt
									Senior Vice President, Chief Accounting Officer, and Controller
									(Principal Accounting Officer)