DEBT AND FINANCING COSTS

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

DEBT AND FINANCING COSTS

DEBT AND FINANCING COSTS

The following table presents the carrying values of the Company’s debt:

	September 30, 2021		December 31, 2020
	(In millions)
Apache notes and debentures before unamortized discount and debt issuance costs(1)	$	6,344	$	8,052
Altus credit facility(2)	657		624
Apache credit facility(2)	440		150
Apache finance lease obligations	36		38
Unamortized discount	(29)		(35)
Debt issuance costs	(40)		(57)
Total debt	7,408		8,772
Current maturities	(215)		(2)
Long-term debt	$	7,193	$	8,770

(1)    The fair values of the Apache notes and debentures were $7.0 billion and $8.5 billion as of September 30, 2021 and December 31, 2020, respectively.

The Company uses a market approach to determine the fair values of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).

(2)    The carrying value of borrowings on credit facilities approximates fair value because interest rates are variable and reflective of market rates.

As of September 30, 2021, current debt included $213 million, net of discount, of 3.25% senior notes due April 15, 2022 and $2 million of finance lease obligations. As of December 31, 2020, current debt included $2 million of finance lease obligations.

During the quarter ended September 30, 2021, Apache closed cash tender offers for certain outstanding notes and accepted for purchase $1.7 billion aggregate principal amount of certain notes. Apache paid holders an aggregate $1.8 billion, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a $105 million loss on extinguishment of debt, including $98 million of unamortized debt discount and issuance costs, in connection with the note purchases.

During the nine months ended September 30, 2021, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $22 million for an aggregate purchase price of $20 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $2 million. The Company recognized a $1 million net gain on extinguishment of debt as part of these transactions.

In March 2018, Apache entered into a revolving credit facility with commitments totaling $4.0 billion. In March 2019, the term of this facility was extended by one year to March 2024 (subject to Apache’s remaining one-year extension option) pursuant to Apache’s exercise of an extension option. Apache can increase commitments up to $5.0 billion by adding new lenders or obtaining the consent of any increasing existing lenders. The facility includes a letter of credit subfacility of up to $3.0 billion, of which $2.08 billion was committed as of September 30, 2021. The facility is for general corporate purposes. As of September 30, 2021, there were $440 million of borrowings and an aggregate £478 million and $20 million in letters of credit outstanding under this facility. As of December 31, 2020, there were $150 million of borrowings and an aggregate £633 million and $40 million in letters of credit outstanding under this facility. The outstanding letters of credit denominated in pounds were issued to support North Sea decommissioning obligations, the terms of which required such support after Standard & Poor’s reduced Apache’s credit rating from BBB to BB+ on March 26, 2020.

There were no borrowings outstanding under Apache’s commercial paper program as of September 30, 2021 and December 31, 2020. Apache did not use its commercial paper program during the first six months of 2021 and terminated the program during the third quarter of 2021.

Apache, from time to time, has and uses uncommitted credit and letter of credit facilities for working capital and credit support purposes. As of September 30, 2021, there were no borrowings and £118 million and $17 million in letters of credit outstanding under these facilities. As of December 31, 2020, there were no borrowings and £34 million and $17 million in letters of credit outstanding under these facilities.

In November 2018, Altus Midstream LP entered into a revolving credit facility for general corporate purposes that matures in November 2023 (subject to Altus Midstream LP’s two, one-year extension options). The agreement for this facility, as amended, provides aggregate commitments from a syndicate of banks of $800 million. All aggregate commitments include a letter of credit subfacility of up to $100 million and a swingline loan subfacility of up to $100 million. Altus Midstream LP may increase commitments up to an aggregate $1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders. As of September 30, 2021, there were $657 million of borrowings and a $2 million letter of credit outstanding under this facility. As of December 31, 2020, there were $624 million of borrowings and no letters of credit outstanding under this facility. The Altus Midstream LP credit facility is unsecured and is not guaranteed by Apache, APA Corporation, or any of its subsidiaries.

Financing Costs, Net

The following table presents the components of the Company’s financing costs, net:

	For the Quarter Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(In millions)
Interest expense	$	102	$	113	$	324	$	327
Amortization of debt issuance costs	1		2		6		6
Capitalized interest	(2)		(3)		(6)		(9)
Loss (gain) on extinguishment of debt	105		(12)		104		(152)
Interest income	(1)		(1)		(6)		(4)
Financing costs, net	$	205	$	99	$	422	$	168