10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the Quarterly Period Ended June 30, 2007

OR

o 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 1-4300

APACHE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	41-0747868
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Suite 100, One Post Oak Central 2000 Post Oak Boulevard, Houston, TX	77056-4400
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (713) 296-6000

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 þ      NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o      NO þ

Number of shares of registrant’s common stock, outstanding as of June 30, 2007 332,007,074

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	ITEM 1 — FINANCIAL STATEMENTS
	ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4 — CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 1A. RISK FACTORS
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS
SIGNATURES
EXHIBIT INDEX
Executive Restricted Stock Plan, as amended
2003 Stock Appreciation Rights Plan
2005 Stock Option Plan
Statement of Computation of Ratio of Earnings to Fixed Charges
Certification of CEO Pursuant to Rule 13a-14(a)
Certification of CFO Pursuant to Rule 13a-14(a)
Certification of CEO & CFO Pursuant to Section 1350

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)

	For the Quarter						For the Six Months
	Ended June 30,						Ended June 30,
	2007			2006			2007			2006
	(In thousands, except per common share data)
REVENUES AND OTHER:
Oil and gas production revenues	$	2,444,031		$	2,085,127		$	4,467,098		$	4,035,425
Other		23,636			(23,609	)		(2,090	)		25,195
		2,467,667			2,061,518			4,465,008			4,060,620
OPERATING EXPENSES:
Depreciation, depletion and amortization		591,107			441,438			1,122,020			814,015
Asset retirement obligation accretion		24,134			20,861			48,198			41,506
Lease operating expenses		418,816			312,402			811,325			604,016
Gathering and transportation costs		30,185			25,809			58,210			51,913
Severance and other taxes		131,015			168,402			228,287			314,816
General and administrative		70,798			52,191			138,660			97,863
Financing costs:
Interest expense		81,816			50,136			147,548			92,999
Amortization of deferred loan costs		852			521			1,546			1,029
Capitalized interest		(15,898	)		(15,882	)		(37,674	)		(30,075	)
Interest income		(3,412	)		(3,267	)		(5,999	)		(9,631	)
		1,329,413			1,052,611			2,512,121			1,978,451
INCOME BEFORE INCOME TAXES		1,138,254			1,008,907			1,952,887			2,082,169
Provision for income taxes		504,716			285,282			826,400			697,623
NET INCOME		633,538			723,625			1,126,487			1,384,546
Preferred stock dividends		1,420			1,420			2,840			2,840
INCOME ATTRIBUTABLE TO COMMON STOCK	$	632,118		$	722,205		$	1,123,647		$	1,381,706
NET INCOME PER COMMON SHARE:
Basic	$	1.91		$	2.19		$	3.39		$	4.19
Diluted	$	1.89		$	2.17		$	3.37		$	4.14

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

1

APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)

	For the Six Months Ended
	June 30,
	2007			2006
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,126,487		$	1,384,546
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		1,122,020			814,015
Asset retirement obligation accretion		48,198			41,506
Provision for deferred income taxes		342,820			214,883
Other		19,956			34,929
Changes in operating assets and liabilities:
(Increase) decrease in receivables		(18,774	)		42,240
(Increase) decrease in drilling advances and other		(4,812	)		(2,824	)
(Increase) decrease in inventories		21,900			4,927
(Increase) decrease in deferred charges and other		(18,822	)		(30,876	)
Increase (decrease) in accounts payable		(45,686	)		(137,483	)
Increase (decrease) in accrued expenses		(88,565	)		(129,392	)
Increase (decrease) in advances from gas purchasers		(18,487	)		(12,245	)
Increase (decrease) in deferred credits and noncurrent liabilities		(36,230	)		1,082
Net cash provided by operating activities		2,450,005			2,225,308
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(2,205,671	)		(1,873,238	)
Acquisition of Anadarko properties		(1,000,000	)		—
Acquisition of BP plc properties		—			(821,282	)
Acquisition of Pioneer’s Argentine operations		—			(702,629	)
Acquisition of Amerada Hess properties		—			(229,095	)
Additions to gas gathering, transmission and processing facilities		(202,824	)		(144,489	)
Proceeds from sale of Egyptian properties		—			409,197
Proceeds from sale of oil and gas properties		11,149			—
Other, net		(96,392	)		(138,268	)
Net cash used in investing activities		(3,493,738	)		(3,499,804	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings		3,366,881			1,356,648
Payments on debt		(2,200,657	)		(72,574	)
Dividends paid		(102,152	)		(68,888	)
Common stock activity		18,919			16,460
Treasury stock activity, net		10,476			(155,552	)
Cost of debt and equity transactions		(16,145	)		(1,158	)
Other		14,529			12,626
Net cash provided by financing activities		1,091,851			1,087,562
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		48,118			(186,934	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		140,524			228,860
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	188,642		$	41,926

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

2

APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)

	June 30,			December 31,
	2007			2006
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	188,642		$	140,524
Receivables, net of allowance		1,686,979			1,651,664
Inventories		406,024			320,386
Drilling advances		85,942			78,838
Derivative instruments		31,548			139,756
Prepaid assets and other		141,524			159,103
		2,540,659			2,490,271
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full cost accounting:
Proved properties		32,411,426			29,107,921
Unproved properties and properties under development, not being amortized		1,319,361			1,284,743
Gas gathering, transmission and processing facilities		1,928,443			1,725,619
Other		381,941			358,605
		36,041,171			32,476,888
Less: Accumulated depreciation, depletion and amortization		(12,251,643	)		(11,130,636	)
		23,789,528			21,346,252
OTHER ASSETS:
Goodwill, net		189,252			189,252
Deferred charges and other		412,492			282,400
	$	26,931,931		$	24,308,175

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

3

APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)

	June 30,			December 31,
	2007			2006
	(In thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	607,662		$	644,889
Accrued operating expense		81,465			70,551
Accrued exploration and development		635,243			534,924
Accrued compensation and benefits		121,653			127,779
Accrued interest		75,330			30,878
Accrued income taxes		98,598			2,133
Current debt		975,761			1,802,094
Asset retirement obligation		378,026			376,713
Derivative instruments		41,224			70,128
Other		121,544			151,523
		3,136,506			3,811,612
LONG-TERM DEBT		4,011,147			2,019,831
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		3,586,929			3,618,989
Advances from gas purchasers		24,680			43,167
Asset retirement obligation		1,335,590			1,370,853
Derivative instruments		63,659			—
Other		668,232			252,670
		5,679,090			5,285,679
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value, 5,000,000 shares authorized – Series B, 5.68% Cumulative Preferred Stock,   100,000 shares issued and outstanding		98,387			98,387
Common stock, $0.625 par, 430,000,000 shares authorized, 340,571,408 and 339,783,392 shares issued, respectively		212,857			212,365
Paid-in capital		4,320,640			4,269,795
Retained earnings		9,874,555			8,898,577
Treasury stock, at cost, 8,564,334 and 9,045,967 shares, respectively		(243,071	)		(256,739	)
Accumulated other comprehensive loss		(158,180	)		(31,332	)
		14,105,188			13,191,053
	$	26,931,931		$	24,308,175

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

4

APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED SHAREHOLDERS’ EQUITY
(Unaudited)

																Accumulated
				Series B												Other			Total
	Comprehensive			Preferred		Common		Paid-In		Retained			Treasury			Comprehensive			Shareholders’
	Income			Stock		Stock		Capital		Earnings			Stock			Income (Loss)			Equity
	(In thousands)
BALANCE AT DECEMBER 31, 2005				$	98,387	$	210,623	$	4,170,714	$	6,516,863		$	(89,764	)	$	(365,608	)	$	10,541,215
Comprehensive income (loss):
Net income	$	1,384,546			—		—		—		1,384,546			—			—			1,384,546
Commodity hedges, net of income tax expense of $42,486		77,195			—		—		—		—			—			77,195			77,195
Comprehensive income	$	1,461,741
Dividends:
Preferred					—		—		—		(2,840	)		—			—			(2,840	)
Common ($.20 per share)					—		—		—		(66,084	)		—			—			(66,084	)
Common shares issued					—		751		46,661		—			—			—			47,412
Treasury shares issued, net					—		—		3,944		—			(155,552	)		—			(151,608	)
Compensation Expense					—		—		—		—			—			—			—
Other					—		—		57		—			—			—			57
BALANCE AT JUNE 30, 2006				$	98,387	$	211,374	$	4,221,376	$	7,832,485		$	(245,316	)	$	(288,413	)	$	11,829,893
BALANCE AT DECEMBER 31, 2006				$	98,387	$	212,365	$	4,269,795	$	8,898,577		$	(256,739	)	$	(31,332	)	$	13,191,053
Comprehensive income (loss):
Net income	$	1,126,487			—		—		—		1,126,487			—			—			1,126,487
Commodity hedges, net of income tax benefit of $70,660		(126,848	)		—		—		—		—			—			(126,848	)		(126,848	)
Comprehensive income	$	999,639
Dividends:
Preferred					—		—		—		(2,840	)		—			—			(2,840	)
Common ($.30 per share)					—		—		—		(99,419	)		—			—			(99,419	)
Common shares issued					—		492		26,908		—			—			—			27,400
Treasury shares issued, net					—		—		2,438		—			13,668			—			16,106
Compensation Expense					—		—		21,422		—			—			—			21,422
FIN 48 Adoption					—		—		—		(48,502	)		—			—			(48,502	)
Other					—		—		77		252			—			—			329
BALANCE AT JUNE 30, 2007				$	98,387	$	212,857	$	4,320,640	$	9,874,555		$	(243,071	)	$	(158,180	)	$	14,105,188

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

5

APACHE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     These financial statements have been prepared by Apache Corporation (Apache or the company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to such rules and regulations, although the company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the summary of significant accounting policies and notes included in the company’s most recent annual report on Form 10-K.

Reclassifications

     Certain prior period amounts have been reclassified to conform with current year presentations.

1. ACQUISITIONS AND DIVESTITURES

2007 Acquisition

     U.S. Permian Basin

     On March 29, 2007, the company closed its acquisition of controlling interest in 28 oil and gas fields in the Permian Basin of West Texas from Anadarko Petroleum Corporation (Anadarko) for $1 billion. Apache estimates that these fields had proved reserves of 57 million barrels (MMbbls) of liquid hydrocarbons and 78 billion cubic feet (Bcf) of natural gas as of year end 2006. The company funded the acquisition with debt. Apache and Anadarko entered into a joint-venture arrangement to effect the transaction. The company entered into cash flow hedges for a portion of the crude oil and the natural gas production.

2. HEDGING AND DERIVATIVE INSTRUMENTS

     Apache uses a variety of strategies to manage its exposure to fluctuations in crude oil and natural gas commodity prices. As of June 30, 2007, the total outstanding positions of Apache’s natural gas and crude oil cash flow hedges were as follows:

          Costless Collars

		Total Volumes			Weighted Average		Fair Value
Production Period	Instrument Type	(MMBtu/Bbl/GJ)			Floor/Ceiling		Asset/(Liability)
							(In thousands)
2007	US Gas Collars		46,920,000	MMBtu	$	7.07 / 9.35	$	25,937
	Canadian Gas Collars		16,560,000	GJ	$	5.83 / 9.48	$	7,259
	US Oil Collars		6,440,000	Bbl	$	59.23 / 71.46	$	(29,716	)
2008	US Gas Collar		80,520,000	MMBtu	$	7.27 / 10.36	$	13,828
	Canadian Gas Collars		32,940,000	MMBtu	$	6.20 / 9.70	$	5,924
	US Oil Collars		10,797,000	MMBtu	$	62.59 / 74.58	$	(28,129	)
2009	US Gas Collars		5,475,000	MMBtu	$	7.17 / 8.60	$	(3,422	)
	Canadian Gas Collars		29,200,000	GJ	$	6.11 / 9.50	$	(1,100	)
	US Oil Collars		5,843,000	Bbl	$	58.07 / 70.62	$	(32,071	)
2010	US Gas Collars		1,350,000	MMBtu	$	7.17 / 10.58	$	(745	)
	US Oil Collars		2,179,000	Bbl	$	59.52 / 72.85	$	(8,154	)
2011	US Gas Collars		730,000	Bbl	$	65.00 / 76.92	$	(200	)
2012	US Gas Collars		364,000	Bbl	$	65.00 / 76.33	$	(143	)

6

          Fixed Price Swaps

		Total Volumes			Average		Fair Value
Production Period	Instrument Type	(MMBtu/Bbl)			Fixed Price		Asset/(Liability)
							(In thousands)
2007	US Fixed-Price Gas Swap		403,000	MMBtu	$	5.49	$	(551	)
	US Fixed-Price Oil Swap		2,229,000	Bbl	$	70.56	$	(1,475	)
2008	US Fixed-Price Oil Swap		4,392,000	Bbl	$	69.21	$	(13,046	)

     U.S. natural gas prices represent a weighted average of several contracts entered into on a per million British thermal units (MMBtu) basis and are settled against a combination of indices, including NYMEX, Panhandle Eastern Pipe Line and Houston Ship Channel. Crude oil contracts are entered into on a per barrel (Bbl) basis, and settled against the NYMEX index. The Canadian gas collars above are entered into on a per gigajoule (GJ) basis, are converted to U.S. dollars utilizing June 30, 2007 exchange rates, and are settled against the AECO Index.

     A reconciliation of the components of accumulated other comprehensive income (loss) in the Statement of Consolidated Shareholders’ Equity related to Apache’s commodity derivative activity is presented in the table below:

	Before tax			After tax
	(In thousands)
Unrealized gain (loss) on derivatives at December 31, 2006	$	129,325		$	83,534
Net gains realized into earnings		(17,536	)		(11,224	)
Net change in derivative fair value		(179,972	)		(115,624	)
Unrealized gain (loss) on derivatives at June 30, 2007	$	(68,183	)	$	(43,314	)

     Differences between the fair values and the unrealized loss on derivatives before income taxes recognized in accumulated other comprehensive income (loss) are related to premiums, recognition of unrealized gains and losses on certain derivatives that did not qualify for hedge accounting and hedge ineffectiveness. Based on market prices as of June 30, 2007, the company recorded an unrealized loss in other comprehensive income of $68 million ($43 million after tax). Unrealized gains and losses on these commodity hedges will fluctuate significantly and will ultimately be realized in future earnings contemporaneously with the related sales of natural gas and crude oil production applicable to specific hedges. Of the $68 million estimated unrealized loss on derivatives on June 30, 2007, approximately $7 million ($4 million after tax) applies to the next 12 months; however, estimated and actual amounts are likely to vary materially as a result of changes in market conditions. These contracts, designated as hedges, qualified and continue to qualify for hedge accounting in accordance with Statement of Financial Accounting Standards (SFAS) No. 133, as amended.

3. DEBT

     On January 26, 2007, the company issued $500 million principal amount, $499.5 million net of discount, of senior unsecured 5.625-percent notes maturing January 15, 2017 and $1.0 billion principal amount, $993 million net of discount, of senior unsecured 6.0-percent notes maturing January 15, 2037. The notes are redeemable, as a whole or in part, at Apache’s option, subject to a make-whole premium. The proceeds were used to repay a portion of the company’s outstanding commercial paper in anticipation of funding our $1.0 billion acquisition of Permian Basin properties from Anadarko which closed March 29, 2007, and for general corporate purposes.

     On April 16, 2007, the company issued $500 million principal amount, $498.8 million net of discount, of senior unsecured 5.25-percent notes maturing April 15, 2013. The notes are redeemable, as a whole or in part, at Apache’s option, subject to a make-whole premium. The proceeds were used to repay a portion of the company’s outstanding commercial paper and for general corporate purposes.

     On April 30, 2007, the company amended its existing $1.5 billion U.S. five-year revolving credit facility to extend the maturity date to May 28, 2012 from the current maturity date of May 28, 2011. The amendment also allows the company to increase the size of the facility by up to $750 million by adding commitments from new or existing lenders.

     The company also amended its $450 million U.S. credit facility, $150 million Australian credit facility and $150 million Canadian credit facility to extend the maturity dates of all the commitments to May 12, 2012. The amendment also allows the company to increase the size of the U.S. facility by up to $250 million, the Australian

7

facility by up to $150 million and the Canadian facility by up to $150 million by adding commitments from new or existing lenders.

4. INCOME TAXES

     The company uses an estimated annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the company operates. Statutory tax rate changes and other significant or unusual items are discretely recognized in the quarter in which they occur.

     Apache adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes” as of January 1, 2007. FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position must meet before being recognized in the financial statements. As a result of the implementation of FIN 48, the company recorded a $49 million increase in its tax reserves and an offsetting decrease to retained earnings for uncertain tax positions. As of the adoption date, the company had total tax reserves of $563 million, including $521 million of unrecognized tax benefits which, if recognized, would impact the company’s effective income tax rate in future periods. This reserve includes an estimate of potential interest and penalties, which are recorded as components of income tax expense, in the amount of $91 million as of January 1, 2007. Subsequent to adoption, no significant changes were made to the company’s tax reserve balances during the first six months of 2007; however, an additional $17 million of potential interest expense was recorded. Liabilities related to uncertain tax positions are reflected in Deferred Credits and Other Noncurrent Liabilities under the “Other” caption.

     The company is under audit by the U.S. Internal Revenue Service for the 2002 through 2005 income tax years. The company is also under audit in various states and in most of the company’s foreign jurisdictions as part of its normal course of business. There were no significant changes to the status of these examinations during the first six months of 2007.

5. CAPITAL STOCK

     During the second quarter of 2007 and 2006, Apache declared $50 million and $33 million, respectively, in dividends on its common stock and for the six months ended June 30, 2007 and 2006, the company declared $99 million and $66 million, respectively. The increase from the amount declared for the same period last year, primarily reflects a 50 percent higher common stock dividend rate and a slight increase in common shares outstanding. On September 13, 2006, the company announced that its board of directors voted to increase the quarterly cash dividend on its common stock to 15 cents per share from 10 cents per share, effective with the November 2006 payment. In addition, for the three months and six months ended June 30, 2007 and 2006, Apache declared a total of $1.4 million and $2.8 million, respectively, in dividends on its Series B Preferred Stock issued in August 1998.

6. STOCK-BASED COMPENSATION

2005 Share Appreciation Plan

     On May 5, 2005, the company’s stockholders approved the 2005 Share Appreciation Plan that provides incentives for employees to double Apache’s share price to $108 by the end of 2008, with an interim goal of $81 to be achieved by the end of 2007. To achieve the trigger price, the company’s stock price must close at or above the stated threshold for 10 days out of any 30 consecutive trading days by the end of the stated period. Under the plan, achieving the first threshold results in approximately 1.4 million shares being awarded for an intrinsic cost of $113 million. Achieving the second threshold would result in approximately 2.1 million shares awarded for an intrinsic cost of $230 million. Shares ultimately issued would be reduced for any minimum tax withholding requirements. Under the terms of this targeted stock plan, awards are payable in four equal installments, beginning with the date the trigger stock price is met and on each succeeding anniversary date.

     As of June 14, 2007, Apache’s share price exceeded the interim threshold for the 10-day requirement. As such, Apache will issue approximately one million shares of its common stock, after minimum tax withholding requirements, in four equal installments. The first installment was issued in July 2007. Subsequent installments will be issued in 2008, 2009 and 2010 to employees remaining with the company during that period.

8

7. NET INCOME PER COMMON SHARE

     A reconciliation of the components of basic and diluted net income per common share is presented in the table below:

	For the Quarter Ended June 30,
	2007						2006
	Income		Shares		Per Share		Income		Shares		Per Share
	(In thousands, except per share amounts)
Basic:
Income attributable to common stock	$	632,118		331,812	$	1.91	$	722,205		329,862	$	2.19
Effect of Dilutive Securities:
Stock options and other		—		2,094				—		3,058
Diluted:
Income attributable to common stock, including assumed conversions	$	632,118		333,906	$	1.89	$	722,205		332,920	$	2.17

	For the Six Months Ended June 30,
	2007						2006
	Income		Shares		Per Share		Income		Shares		Per Share
	(In thousands, except per share amounts)
Basic:
Income attributable to common stock	$	1,123,647		331,514	$	3.39	$	1,381,706		330,137	$	4.19
Effect of Dilutive Securities:
Stock options and other		—		2,081				—		3,534
Diluted:
Income attributable to common stock, including assumed conversions	$	1,123,647		333,595	$	3.37	$	1,381,706		333,671	$	4.14

9

8. BUSINESS SEGMENT INFORMATION

     Apache has interests in the United States, Canada, Egypt, Australia, offshore the United Kingdom (U.K.) in the North Sea, and Argentina. The company evaluates segment performance based on profit and loss from oil and gas operations before income and expense items incidental to oil and gas operations and income taxes. Apache’s reportable segments are managed separately because of their geographic locations. Financial information by reportable segment is presented below:

	United								U.K.				Other
	States		Canada		Egypt		Australia		North Sea		Argentina		International		Total
	(in thousands)
For the Quarter Ended June 30, 2007
Oil and Gas Production Revenues	$	1,060,972	$	358,543	$	469,635	$	141,620	$	336,899	$	76,362	$	—	$	2,444,031
Operating Income (1)	$	521,001	$	157,184	$	349,040	$	59,859	$	151,014	$	10,676	$	—	$	1,248,774
Other Income (Expense):
Other																23,636
General and administrative																(70,798	)
Financing costs, net																(63,358	)
Income Before Income Taxes															$	1,138,254
For the Six Months Ended June 30, 2007
Oil and Gas Production Revenues	$	1,922,289	$	678,713	$	866,242	$	245,804	$	610,507	$	143,543	$	—	$	4,467,098
Operating Income (1)	$	894,557	$	291,024	$	622,949	$	102,583	$	266,762	$	21,183	$	—	$	2,199,058
Other Income (Expense):
Other																(2,090	)
General and administrative																(138,660	)
Financing costs, net																(105,421	)
Income Before Income Taxes															$	1,952,887
Total Assets	$	11,942,642	$	7,026,501	$	2,879,714	$	1,522,149	$	2,038,736	$	1,511,457	$	10,732	$	26,931,931
For the Quarter Ended June 30, 2006
Oil and Gas Production Revenues	$	736,057	$	352,257	$	438,172	$	109,868	$	376,201	$	39,701	$	32,871	$	2,085,127
Operating Income (1)	$	376,140	$	167,174	$	342,496	$	50,520	$	153,328	$	7,437	$	19,120	$	1,116,215
Other Income (Expense):
Other																(23,609	)
General and administrative																(52,191	)
Financing costs, net																(31,508	)
Income Before Income Taxes															$	1,008,907
For the Six Months Ended June 30, 2006
Oil and Gas Production Revenues	$	1,429,742	$	733,566	$	836,642	$	204,179	$	730,042	$	44,536	$	56,718	$	4,035,425
Operating Income (1)	$	733,579	$	383,922	$	646,827	$	99,067	$	304,657	$	8,035	$	33,072	$	2,209,159
Other Income (Expense):
Other																25,195
General and administrative																(97,863	)
Financing costs, net																(54,322	)
Income Before Income Taxes															$	2,082,169
Total Assets	$	10,281,299	$	5,425,594	$	2,281,204	$	1,270,139	$	1,705,711	$	862,277	$	85,131	$	21,911,355

1) Operating Income consists of oil and gas production revenues less depreciation, depletion and amortization, asset retirement obligation accretion, lease operating expenses, gathering and transportation costs, and severance and other taxes.

10

9. SUPPLEMENTAL CASH FLOW INFORMATION

     The following table provides supplemental disclosure of cash flow information:

	For the Six Months Ended
	June 30,
	2007		2006
	(In thousands)
Cash paid during the period for:
Interest (net of amounts capitalized)	$	63,015	$	59,810
Income taxes (net of refunds)		380,156		613,242

10. ASSET RETIREMENT OBLIGATIONS

     The following table describes changes to the company’s asset retirement obligation (ARO) liability for the six months ended June 30, 2007 (in thousands):

Asset retirement obligation as of December 31, 2006	$	1,747,566
Liabilities incurred		126,828
Liabilities settled		(208,976	)
Accretion expense		48,198
Asset retirement obligation as of June 30, 2007	$	1,713,616

     Liabilities incurred primarily relate to abandonment obligations assumed in connection with current drilling activity and acquisitions closed during the period. Liabilities settled during the period relate to properties plugged and abandoned, primarily in the U.S. Gulf of Mexico.

11. COMMITMENTS AND CONTINGENCIES

Litigation

Texaco China B.V.

     In March, 2007 Apache paid $81.5 million to settle Texaco China B.V.’s international arbitration award. The settlement was fully reserved. The history of this matter is discussed in Note 10 of the financial statements in our most recent annual report on Form 10-K.

Grynberg

     As more fully described in Note 10 of the financial statements in our most recently filed annual report on Form 10-K, Jack J. Grynberg began filing lawsuits against natural gas producers, gatherers, and pipelines in 1997, claiming that the defendants have under paid royalty to the federal government and Indian tribes by mis-measurement of the volume and heating content of natural gas and are responsible for acts of others who mis-measured natural gas. The claims against Apache were dismissed, though Mr. Grynberg has appealed the dismissal. No material changes in this matter have occurred since the filing of our most recent annual report on Form 10-K.

Argentine Environmental Claims

     In connection with a 2006 acquisition from Pioneer Natural Resources (Pioneer), the company acquired a subsidiary of Pioneer in Argentina (“PNRA”) that is involved in various administrative proceedings with environmental authorities in the Neuquén Province relating to permits for and discharges from operations in that province. In addition, PNRA was named in a suit initiated against oil companies operating in the Neuquén basin entitled Asociación de Superficiarios de la Patagonia v. YPF S.A., et. al., originally filed on August 21, 2003, in the Argentine National Supreme Court of Justice relating to various environmental and remediation claims. All of these matters are more fully described in Note 10 of the financial statements in our annual report on Form 10-K for our

11

2006 fiscal year. No material change in the status of these matters has occurred since the filing of our most recent annual report on Form 10-K.

Louisiana Restoration

     As more fully described in Note 10 of the financial statements in our annual report on Form 10-K for our 2006 fiscal year, numerous surface owners have filed claims or sent demand letters to various oil and gas companies, including Apache, claiming that, under either expressed or implied lease terms or Louisiana law, they are liable for damage measured by the cost of restoration of leased premises to their original condition as well as damages for contamination and cleanup. No material change in the status of these matters has occurred since the filing of our most recent annual report on Form 10-K.

Hurricane Related Litigation

     As more fully described in Note 10 of the financial statements in our annual report on Form 10-K for our 2006 fiscal year, two cases were filed against oil and gas companies and others relating to damages caused by Hurricanes Katrina and Rita in 2005. In the class action lawsuit styled Barasich, et al., individually and as representatives of all those similarly situated vs. Columbia Gulf Transmission Co., et al, No. 05-4161, United States District Court, Eastern District of Louisiana, the District Court entered an order of dismissal. The judgment of the District Court is now final and the case has been dismissed.

     In a case styled Ned Comer, et al vs. Murphy Oil USA, Inc., et al, Case No: 1:05-cv-00436; U.S.D.C., United States District Court, Southern District of Mississippi., Mississippi property owners allege that hurricanes’ meteorological effects increased in frequency and intensity due to global warming, and there will be continued future damage from increasing intensity of storms and sea level rises. They claim this was caused by the various defendants (oil and gas companies, electric and coal companies, and chemical manufacturers). No material change in the status of these matters has occurred since the filing of our most recent annual report on Form 10-K.

Insurance Claims

     As described in Note 10 of the financial statements in our 2006 annual report on Form 10-K, Apache filed claims for damage related to two 2005 hurricanes with OIL Insurance Ltd. (“OIL” and “OIL Coverage”) and with its principal commercial insurance underwriters who provided “Excess Coverage” for property damage in excess of OIL Coverage, business interruption insurance, and liability coverage.

     Through June 30, 2007, Apache collected $53 million from OIL for property damage and $119 million from underwriters for property damage in excess of OIL Coverage. Apache also collected $150 million from its underwriters for business interruption claims.

     Apache’s Excess Coverage policy includes an endorsement providing $165 million per occurrence for wreck removal costs and expenses. Similarly, Apache has another policy which includes the same endorsement for wreck removal costs and expenses that provides an additional $100 million of coverage per occurrence (the “Second Excess Coverage”). Apache informed the lead underwriters of its intention to file claims under the wreck removal provisions of the policies. The lead underwriter requested that Apache not make such claims in return for payment of claims still outstanding and a waiver of the underwriters’ alleged right to seek repayment of the amounts already paid to Apache. In response to the underwriter’s demand, Apache filed an action styled “Apache Corporation v. Houston Casualty Company, and Certain Underwriters at Interest” in the District Court of Harris County in Houston, Texas seeking a declaratory judgment that the underwriters providing Excess Coverage are obligated to pay any outstanding claims and have no right to seek repayment of any previously paid amounts, regardless of any final resolution of Apache’s right to recovery under the wreck removal endorsement. Subsequent to our filing the lawsuit, the underwriters agreed to pay all remaining claims for physical damage and not to seek repayment of that amount or amounts previously paid for physical damage and business interruption. Payment was received, and Apache dismissed the lawsuit. However, the underwriters continue to dispute Apache’s right to recovery under the wreck removal endorsement and the parties are attempting to resolve the remaining claims through negotiation, mediation, or arbitration.

12

General

     The company is involved in other litigation and is subject to governmental and regulatory controls arising in the ordinary course of business. The company has an accrued liability of approximately $7 million for other legal contingencies that are deemed probable of occurring and can be reasonably estimated. It is management’s opinion that the loss for any such other litigation matters and claims that are reasonably possible to occur will not have a material adverse affect on the company’s financial position or results of operations.

Other Commitments and Contingencies

Environmental

     As of June 30, 2007, the company had an undiscounted reserve for environmental remediation of approximately $22 million. Apache is not aware of any environmental claims existing as of June 30, 2007, which have not been provided for or would otherwise have a material impact on its financial position or results of operations. There can be no assurance, however, that current regulatory requirements will not change, or past non-compliance with environmental laws will not be discovered on the company’s properties.

Other

     On May 7, 2007, Apache, on behalf of its joint venture, announced that it signed a contract for a floating production, storage and offloading vessel that will be used in the company’s Van Gogh development in Western Australia’s Exmouth Basin. Beginning with first production anticipated in 2009, Apache and its partner will pay $40 million per year plus operating expenses for a seven-year term with options for an eight-year extension or to acquire the vessel. Apache owns 52.5 percent of the development.

12. SUPPLEMENTAL GUARANTOR INFORMATION

     Apache Finance Pty Ltd. (Apache Finance Australia) and Apache Finance Canada Corporation (Apache Finance Canada) are subsidiaries of Apache that have issued publicly traded securities and require the following condensed consolidating financial statements be provided as an alternative to filing separate financial statements.

     Each of the companies presented in the condensed consolidating financial statements has been fully consolidated in Apache’s consolidated financial statements. As such, the condensed consolidating financial statements should be read in conjunction with the financial statements of Apache Corporation and Subsidiaries and notes.

13

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended June 30, 2007

											All Other
					Apache			Apache			Subsidiaries
	Apache		Apache		Finance			Finance			of Apache			Reclassifications
	Corporation		North America		Australia			Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
REVENUES AND OTHER:
Oil and gas production revenues	$	1,052,514	$	—	$	—		$	—		$	1,420,049		$	(28,532	)	$	2,444,031
Equity in net income (loss) of affiliates		290,281		2,263		5,184			(2,738	)		(13,328	)		(281,662	)		—
Other		3,286		—		(66	)		—			20,416			—			23,636
		1,346,081		2,263		5,118			(2,738	)		1,427,137			(310,194	)		2,467,667
OPERATING EXPENSES:
Depreciation, depletion and amortization		270,860		—		—			—			320,247			—			591,107
Asset retirement obligation accretion		17,542		—		—			—			6,592			—			24,134
Lease operating expenses		210,509		—		—			—			236,839			(28,532	)		418,816
Gathering and transportation costs		10,023		—		—			—			20,162			—			30,185
Severance and other taxes		32,496		—		—			—			98,519			—			131,015
General and administrative		61,059		—		—			—			9,739			—			70,798
Financing costs, net		53,203		—		4,513			14,112			(8,470	)		—			63,358
		655,692		—		4,513			14,112			683,628			(28,532	)		1,329,413
INCOME (LOSS) BEFORE INCOME TAXES		690,389		2,263		605			(16,850	)		743,509			(281,662	)		1,138,254
Provision (benefit) for income taxes		56,851		—		(1,658	)		(3,705	)		453,228			—			504,716
NET INCOME		633,538		2,263		2,263			(13,145	)		290,281			(281,662	)		633,538
Preferred stock dividends		1,420		—		—			—			—			—			1,420
INCOME ATTRIBUTABLE TO COMMON STOCK	$	632,118	$	2,263	$	2,263		$	(13,145	)	$	290,281		$	(281,662	)	$	632,118

14

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended June 30, 2006

												All Other
						Apache			Apache			Subsidiaries
	Apache			Apache		Finance			Finance			of Apache			Reclassifications
	Corporation			North America		Australia			Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
REVENUES AND OTHER:
Oil and gas production revenues	$	705,019		$	—	$	—		$	—		$	1,439,469		$	(59,361	)	$	2,085,127
Equity in net income (loss) of affiliates		496,865			7,787		9,029			85,067			(10,613	)		(588,135	)		—
Other		(1,928	)		—		(38	)		—			(21,643	)		—			(23,609	)
		1,199,956			7,787		8,991			85,067			1,407,213			(647,496	)		2,061,518
OPERATING EXPENSES:
Depreciation, depletion and amortization		179,790			—		—			—			261,648			—			441,438
Asset retirement obligation accretion		15,000			—		—			—			5,861			—			20,861
Lease operating expenses		123,688			—		—			—			248,075			(59,361	)		312,402
Gathering and transportation costs		7,901			—		—			—			17,908			—			25,809
Severance and other taxes		27,914			—		—			—			140,488			—			168,402
General and administrative		41,623			—		—			—			10,568			—			52,191
Financing costs, net		22,889			—		4,465			14,111			(9,957	)		—			31,508
		418,805			—		4,465			14,111			674,591			(59,361	)		1,052,611
INCOME (LOSS) BEFORE INCOME TAXES		781,151			7,787		4,526			70,956			732,622			(588,135	)		1,008,907
Provision (benefit) for income taxes		57,526			—		(3,261	)		(4,740	)		235,757			—			285,282
NET INCOME		723,625			7,787		7,787			75,696			496,865			(588,135	)		723,625
Preferred stock dividends		1,420			—		—			—			—			—			1,420
INCOME ATTRIBUTABLE TO COMMON STOCK	$	722,205		$	7,787	$	7,787		$	75,696		$	496,865		$	(588,135	)	$	722,205

15

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2007

											All Other
					Apache			Apache			Subsidiaries
	Apache		Apache		Finance			Finance			of Apache			Reclassifications
	Corporation		North America		Australia			Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
REVENUES AND OTHER:
Oil and gas production revenues	$	1,890,062	$	—	$	—		$	—		$	2,651,783		$	(74,747	)	$	4,467,098
Equity in net income (loss) of affiliates		586,854		6,743		13,014			35,272			(26,239	)		(615,644	)		—
Other		3,592		—		(66	)		—			(5,616	)		—			(2,090	)
		2,480,508		6,743		12,948			35,272			2,619,928			(690,391	)		4,465,008
OPERATING EXPENSES:
Depreciation, depletion and amortization		497,752		—		—			—			624,268			—			1,122,020
Asset retirement obligation accretion		35,180		—		—			—			13,018			—			48,198
Lease operating expenses		414,742		—		—			—			471,330			(74,747	)		811,325
Gathering and transportation costs		19,012		—		—			—			39,198			—			58,210
Severance and other taxes		56,711		—		—			—			171,576			—			228,287
General and administrative		113,388		—		—			—			25,272			—			138,660
Financing costs, net		87,575		—		9,026			28,224			(19,404	)		—			105,421
		1,224,360		—		9,026			28,224			1,325,258			(74,747	)		2,512,121
INCOME (LOSS) BEFORE INCOME TAXES		1,256,148		6,743		3,922			7,048			1,294,670			(615,644	)		1,952,887
Provision (benefit) for income taxes		129,661		—		(2,821	)		(8,256	)		707,816			—			826,400
NET INCOME		1,126,487		6,743		6,743			15,304			586,854			(615,644	)		1,126,487
Preferred stock dividends		2,840		—		—			—			—			—			2,840
INCOME ATTRIBUTABLE TO COMMON STOCK	$	1,123,647	$	6,743	$	6,743		$	15,304		$	586,854		$	(615,644	)	$	1,123,647

16

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2006

											All Other
					Apache			Apache			Subsidiaries
	Apache		Apache		Finance			Finance			of Apache			Reclassifications
	Corporation		North America		Australia			Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
REVENUES AND OTHER:
Oil and gas production revenues	$	1,371,318	$	—	$	—		$	—		$	2,788,653		$	(124,546	)	$	4,035,425
Equity in net income (loss) of affiliates		938,676		14,547		18,584			156,845			(22,779	)		(1,105,873	)		—
Other		67,947		—		(38	)		—			(42,714	)		—			25,195
		2,377,941		14,547		18,546			156,845			2,723,160			(1,230,419	)		4,060,620
OPERATING EXPENSES:
Depreciation, depletion and amortization		330,482		—		—			—			483,533			—			814,015
Asset retirement obligation accretion		30,083		—		—			—			11,423			—			41,506
Lease operating expenses		255,424		—		—			—			473,138			(124,546	)		604,016
Gathering and transportation costs		15,611		—		—			—			36,302			—			51,913
Severance and other taxes		55,523		—		—			—			259,293			—			314,816
General and administrative		78,933		—		—			—			18,930			—			97,863
Financing costs, net		42,813		—		9,048			28,222			(25,761	)		—			54,322
		808,869		—		9,048			28,222			1,256,858			(124,546	)		1,978,451
INCOME (LOSS) BEFORE INCOME TAXES		1,569,072		14,547		9,498			128,623			1,466,302			(1,105,873	)		2,082,169
Provision (benefit) for income taxes		184,526		—		(5,049	)		(9,480	)		527,626			—			697,623
NET INCOME		1,384,546		14,547		14,547			138,103			938,676			(1,105,873	)		1,384,546
Preferred stock dividends		2,840		—		—			—			—			—			2,840
INCOME ATTRIBUTABLE TO COMMON STOCK	$	1,381,706	$	14,547	$	14,547		$	138,103		$	938,676		$	(1,105,873	)	$	1,381,706

17

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2007

													All Other
							Apache			Apache			Subsidiaries
	Apache			Apache			Finance			Finance			of Apache			Reclassifications
	Corporation			North America			Australia			Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	1,994,465		$	—		$	(8,353	)	$	(1,020,725	)	$	1,484,618		$	—		$	2,450,005
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(1,025,001	)		—			—			—			(1,180,670	)		—			(2,205,671	)
Acquisition of Anadarko properties		(1,000,000	)		—			—			—			—			—			(1,000,000	)
Additions to gas gathering, transmission and processing facilities		—			—			—			—			(202,824	)		—			(202,824	)
Proceeds from sale of oil & gas properties		4,641			—			—			—			6,508			—			11,149
Investment in subsidiaries, net		(1,037,929	)		(9,025	)		—			—			(1,029,349	)		2,076,303			—
Other, net		(17,329	)		—			—			—			(79,063	)		—			(96,392	)
NET CASH USED IN INVESTING ACTIVITIES		(3,075,618	)		(9,025	)		—			—			(2,485,398	)		2,076,303			(3,493,738	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings		3,333,795			—			(671	)		(2,785	)		53,358			(16,816	)		3,366,881
Payments on debt		(2,175,900	)		—			—			—			(24,757	)		—			(2,200,657	)
Dividends paid		(102,152	)		—			—			—			—			—			(102,152	)
Common stock activity		18,919			9,025			9,025			1,023,510			1,017,927			(2,059,487	)		18,919
Treasury stock activity, net		10,476			—			—			—			—			—			10,476
Cost of debt and equity transactions		(16,145	)		—			—			—			—			—			(16,145	)
Other		14,529			—			—			—			—			—			14,529
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,083,522			9,025			8,354			1,020,725			1,046,528			(2,076,303	)		1,091,851
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,369			—			1			—			45,748			—			48,118
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		4,148			—			—			1			136,375			—			140,524
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	6,517		$	—		$	1		$	1		$	182,123		$	—		$	188,642

18

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2006

													All Other
							Apache			Apache			Subsidiaries
	Apache			Apache			Finance			Finance			of Apache			Reclassifications
	Corporation			North America			Australia			Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	849,640		$	—		$	(10,349	)	$	(19,798	)	$	1,405,815		$	—		$	2,225,308
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(854,648	)		—			—			—			(1,018,590	)		—			(1,873,238	)
Acquisition of Amerada Hess properties		(229,095	)		—			—			—			—			—			(229,095	)
Acquisition of Pioneer’s Argentine operations		—			—			—			—			(702,629	)		—			(702,629	)
Acquisition of BP plc properties		(821,282	)		—			—			—			—			—			(821,282	)
Additions to gas gathering, transmission and processing facilities		—			—			—			—			(144,489	)		—			(144,489	)
Proceeds from sale of Egyptian properties		—			—			—			—			409,197			—			409,197
Investment in subsidiaries, net		(63,018	)		(9,025	)		—			—			(30,107	)		102,150			—
Other, net		29,605			—			—			—			(167,873	)		—			(138,268	)
NET CASH USED IN INVESTING ACTIVITIES		(1,938,438	)		(9,025	)		—			—			(1,654,491	)		102,150			(3,499,804	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings		1,356,500			—			1,324			77			53,115			(54,368	)		1,356,648
Payments on debt		(72,300	)		—			—			—			(274	)		—			(72,574	)
Dividends paid		(68,888	)		—			—			—			—			—			(68,888	)
Common stock activity		16,460			9,025			9,025			19,721			10,011			(47,782	)		16,460
Treasury stock activity, net		(155,552	)		—			—			—			—			—			(155,552	)
Cost of debt and equity transactions		(1,158	)		—			—			—			—			—			(1,158	)
Other		12,626			—			—			—			—			—			12,626
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,087,688			9,025			10,349			19,798			62,852			(102,150	)		1,087,562
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,110	)		—			—			(1	)		(185,824	)		—			(186,934	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		3,785			—			2			1			225,072			—			228,860
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,675		$	—		$	2		$	—		$	39,248		$	—		$	41,926

19

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
As of June 30, 2007

											All Other
					Apache			Apache			Subsidiaries
	Apache		Apache		Finance			Finance			of Apache			Reclassifications
	Corporation		North America		Australia			Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,517	$	—	$	1		$	1		$	182,123		$	—		$	188,642
Receivables, net of allowance		839,181		—		1,557			—			846,241			—			1,686,979
Inventories		27,196		—		—			—			378,828			—			406,024
Drilling advances and others		161,891		—		—			—			97,123			—			259,014
		1,034,785		—		1,558			1			1,504,315			—			2,540,659
PROPERTY AND EQUIPMENT, NET		11,628,478		—		—			—			12,161,050			—			23,789,528
OTHER ASSETS:
Intercompany receivable, net		1,027,021		—		(5,560	)		(250,896	)		(770,565	)		—			—
Goodwill, net		—		—		—			—			189,252			—			189,252
Equity in affiliates		9,365,457		296,836		526,883			1,967,941			(185,342	)		(11,971,775	)		—
Deferred charges and other		206,370		—		—			1,003,826			202,296			(1,000,000	)		412,492
	$	23,262,111	$	296,836	$	522,881		$	2,720,872		$	13,101,006		$	(12,971,775	)	$	26,931,931
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term debt	$	736,800	$	—	$	169,921		$	—		$	69,040		$	—		$	975,761
Accounts payable		430,009		—		—			—			177,653			—			607,662
Other accrued expenses		926,640		—		2,599			47,815			576,029			—			1,553,083
		2,093,449		—		172,520			47,815			822,722			—			3,136,506
LONG-TERM DEBT		3,263,440		—		99,849			646,960			898			—			4,011,147
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		1,389,861		—		(46,324	)		4,984			2,238,408			—			3,586,929
Advances from gas purchasers		24,680		—		—			—			—			—			24,680
Asset retirement obligation		881,498		—		—			—			454,092			—			1,335,590
Derivative instruments		63,659		—		—			—			—			—			63,659
Other		1,440,336		—		—			8,467			219,429			(1,000,000	)		668,232
		3,800,034		—		(46,324	)		13,451			2,911,929			(1,000,000	)		5,679,090
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY		14,105,188		296,836		296,836			2,012,646			9,365,457			(11,971,775	)		14,105,188
	$	23,262,111	$	296,836	$	522,881		$	2,720,872		$	13,101,006		$	(12,971,775	)	$	26,931,931

20

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2006

											All Other
					Apache						Subsidiaries
	Apache		Apache		Finance			Apache			of Apache			Reclassifications
	Corporation		North America		Australia			Finance Canada			Corporation			& Eliminations			Consolidated
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,148	$	—	$	—		$	1		$	136,375		$	—		$	140,524
Receivables, net of allowance		824,404		—		861			—			826,399			—			1,651,664
Inventories		30,580		—		—			—			289,806			—			320,386
Drilling advances and other		374,067		—		—			—			3,630			—			377,697
		1,233,199		—		861			1			1,256,210			—			2,490,271
PROPERTY AND EQUIPMENT, NET		9,960,531		—		—			—			11,385,721			—			21,346,252
OTHER ASSETS:
Intercompany receivable, net		1,013,099		—		(6,355	)		(253,715	)		(753,029	)		—			—
Goodwill, net		—		—		—			—			189,252			—			189,252
Equity in affiliates		7,761,686		279,129		511,806			1,908,263			(1,171,863	)		(9,289,021	)		—
Deferred charges and other		122,893		—		—			3,985			155,522			—			282,400
	$	20,091,408	$	279,129	$	506,312		$	1,658,534		$	11,061,813		$	(9,289,021	)	$	24,308,175
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	381,780	$	—	$	—		$	57		$	263,052		$	—		$	644,889
Other accrued expenses		958,294		—		2,599			38,201			365,535			—			1,364,629
Current debt		1,570,500		—		169,837			—			61,757			—			1,802,094
		2,910,574		—		172,436			38,258			690,344			—			3,811,612
LONG-TERM DEBT		1,271,845		—		99,809			646,926			1,251			—			2,019,831
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		1,631,847		—		(45,062	)		4,273			2,027,931			—			3,618,989
Advances from gas purchasers		43,167		—		—			—			—			—			43,167
Asset retirement obligation		932,844		—		—			—			438,009			—			1,370,853
Other		110,078		—		—			—			142,592			—			252,670
		2,717,936		—		(45,062	)		4,273			2,608,532			—			5,285,679
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY		13,191,053		279,129		279,129			969,077			7,761,686			(9,289,021	)		13,191,053
	$	20,091,408	$	279,129	$	506,312		$	1,658,534		$	11,061,813		$	(9,289,021	)	$	24,308,175

21

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     These financial statements should be read in conjunction with the financial statements and the summary of significant accounting policies and notes included in the company’s most recent annual report on Form 10-K.

Overview

     Apache Corporation (Apache or the company) reported second-quarter 2007 earnings of $632 million, compared to $722 million in the second quarter of 2006. The lower earnings resulted from a higher effective tax rate in the 2007 period when compared to the 2006 quarter. The 2006 effective tax rate was lower because of a Canadian rate reduction enacted in the second quarter of 2006, while the 2007 rate included additional deferred taxes related to foreign exchange rates, and the effect of a 10 percent oil and gas tax rate enacted in the U.K. subsequent to the second quarter of 2006. Second-quarter 2007 pre-tax earnings were $129 million more than the second quarter of 2006, with a $406 million increase in revenues more than offsetting a $277 million increase in expenses. Revenues rose on an 11 percent increase in natural gas prices and record daily gas, oil and natural gas liquids production which increased 18 percent, 11 percent, and five percent, respectively. For a more detailed discussion of the revenue and costs components please refer to Results of Operations in this Item 2.

     For the six months ending June 30, 2007, the company reported earnings of $1.1 billion compared to $1.4 billion in the comparable 2006 period, with approximately half of the decline in earnings associated with a higher effective tax rate in 2007, when compared to 2006. The balance of the decline related to the 2007 first quarter which saw flat revenues and a nine percent increase in per unit costs. For comparative purposes, the 2006 period benefited from $71 million of business interruption claims for production shut-in from two 2005 hurricanes. Cash provided by operating activities totaled $2.5 billion for 2007 period, $225 million ahead of 2006.

     On March 29, 2007, the company closed its acquisition of controlling interest in 28 oil and gas fields in the Permian Basin of West Texas from Anadarko Petroleum Corporation (Anadarko) for $1 billion. Apache estimates that these fields had proved reserves of 57 million barrels (MMbbls) of liquid hydrocarbons and 78 billion cubic feet (Bcf) of natural gas as of year end 2006. The company funded the acquisition with debt. Apache and Anadarko entered into a joint-venture arrangement to effect the transaction. The company entered into cash flow hedges for a portion of the crude oil and the natural gas production.

     Other second-quarter 2007 operational highlights include:

t	On April 3, 2007, Apache announced that the Jade 1-X discovery on the company’s Matruh Concession in Egypt’s Western Desert tested 25.6 million cubic feet (MMcf) per day. The company believes this discovery extends the Jurassic gas fairway 12 miles to the Southwest, opening additional drilling opportunities. Apache operates the Matruh Concession with a 100 percent contractor interest.
t	On April 17, 2007, the company announced that its Julimar-1 gas discovery on Australia’s Northwest Shelf tested a combined 85 MMcf per day from two zones. Apache owns a 65 percent interest in the field.
t	On May 7, 2007, Apache announced that it has signed a contract for a floating production, storage and offloading (FPSO) vessel that will be used in the $500 million Van Gogh development in Western Australia’s Exmouth Basin in which the company owns a 52.5 percent interest.
t	On June 21, 2007, the company announced that its Theo 3-H well tested at 9,694 barrels per day (b/d) in a test of the first horizontal well at the Van Gogh development.
t	On July 3, 2007, Apache announced that it will proceed with development of the Pyrenees fields in the Exmouth Sub-basin offshore Western Australia. Apache has a 28.57 percent interest in the estimated $1.7 billion BHP Billiton-operated development.

22

Results of Operations

Revenues

     The table below presents oil and gas production revenues, production and average prices received from sales of natural gas, oil and natural gas liquids.

	For the Quarter Ended June 30,							For the Six Months Ended June 30,
					Increase							Increase
	2007		2006		(Decrease)			2007		2006		(Decrease)
Revenues (in thousands):
Oil	$	1,473,621	$	1,333,594		10.50	%	$	2,633,550	$	2,472,592		6.51	%
Natural gas		922,736		707,426		30.44	%		1,749,497		1,486,824		17.67	%
Natural gas liquids		47,674		44,107		8.09	%		84,051		76,009		10.58	%
Total	$	2,444,031	$	2,085,127		17.21	%	$	4,467,098	$	4,035,425		10.70	%
Oil Volume — Barrels per day:
United States		91,060		65,451		39.13	%		82,901		62,388		32.88	%
Canada		19,036		21,181		(10.13	%)		19,034		21,434		(11.20	%)
Egypt		59,890		55,370		8.16	%		60,129		56,326		6.75	%
Australia		16,071		12,273		30.95	%		14,117		12,093		16.74	%
North Sea		55,209		61,455		(10.16	%)		54,445		62,942		(13.50	%)
Argentina		11,282		6,581		71.43	%		11,041		3,941		180.16	%
China		—		5,419	NM				—		4,991	NM
Total		252,548		227,730		10.90	%		241,667		224,115		7.83	%
Average Oil price — Per barrel:
United States	$	60.08	$	56.84		5.70	%	$	58.21	$	53.71		8.38	%
Canada		63.75		66.81		(4.58	%)		58.71		60.45		(2.88	%)
Egypt		68.65		69.33		(.98	%)		62.65		65.06		(3.70	%)
Australia		74.96		74.58		.51	%		71.54		70.57		1.37	%
North Sea		66.59		66.93		(.51	%)		61.57		63.73		(3.39	%)
Argentina		45.78		44.22		3.53	%		43.26		43.43		(.39	%)
China		—		66.66	NM				—		62.78	NM
Total		64.12		64.35		(.36	%)		60.21		60.95		(1.21	%)
Natural Gas Volume — Mcf per day:
United States		801,778		638,469		25.58	%		770,974		619,860		24.38	%
Canada		389,218		417,494		(6.77	%)		386,136		401,826		(3.90	%)
Egypt		234,466		218,788		7.17	%		238,951		215,847		10.70	%
Australia		196,249		184,746		6.23	%		195,608		169,288		15.55	%
North Sea		1,944		2,163		(10.12	%)		1,917		2,216		(13.49	%)
Argentina		216,187		102,935		110.02	%		207,263		53,315		288.75	%
China		—		—		—			—		—		—
Total		1,839,842		1,564,595		17.59	%		1,800,849		1,462,352		23.15	%
Average Natural Gas price — Per Mcf:
United States	$	7.29	$	6.29		15.90	%	$	7.13	$	6.83		4.39	%
Canada		6.79		5.69		19.33	%		6.62		6.66		(.60	%)
Egypt		4.48		4.46		.45	%		4.26		4.44		(4.05	%)
Australia		1.79		1.58		13.29	%		1.78		1.62		9.88	%
North Sea		13.39		9.68		38.33	%		10.90		9.83		10.89	%
Argentina		1.02		.92		10.87	%		1.08		.93		16.13	%
China		—		—		—			—		—		—
Total		5.51		4.97		10.87	%		5.37		5.62		(4.45	%)
Natural Gas Liquids (NGL)
Volume — Barrels per day:
United States		8,060		8,811		(8.52	%)		7,631		8,185		(6.77	%)
Canada		2,113		2,226		(5.08	%)		2,172		2,202		(1.36	%)
Argentina		2,816		1,355		107.82	%		2,726		682		299.71	%
Total		12,989		12,392		4.82	%		12,529		11,069		13.19	%
Average NGL Price — Per barrel:
United States	$	42.10	$	40.21		4.70	%	$	38.78	$	38.52		.67	%
Canada		39.28		35.77		9.81	%		35.29		35.94		(1.81	%)
Argentina		36.06		37.44		(3.69	%)		33.68		37.44		(10.04	%)
Total		40.33		39.11		3.12	%		37.06		37.94		(2.32	%)

NM = not meaningful

23

     Contributions to Oil and Natural Gas Revenues

     The following table presents each segment’s oil revenues and gas revenues as a percentage of total oil revenues and gas revenues, respectively.

	Oil Revenues						Gas Revenues						Oil Revenues						Gas Revenues
	For the Quarter Ended						For the Quarter Ended						For the Six Months						For the Six Months
	June 30,						June 30,						Ended June 30,						Ended June 30,
	2007			2006			2007			2006			2007			2006			2007			2006
United States		34	%		25	%		58	%		52	%		33	%		25	%		57	%		51	%
Canada		7	%		10	%		26	%		30	%		8	%		9	%		26	%		33	%
North America		41	%		35	%		84	%		82	%		41	%		34	%		83	%		84	%
Egypt		25	%		26	%		10	%		13	%		26	%		27	%		11	%		12	%
Australia		8	%		6	%		4	%		4	%		7	%		6	%		4	%		3	%
North Sea		23	%		28	%		—			—			23	%		29	%		—			—
Argentina		3	%		2	%		2	%		1	%		3	%		1	%		2	%		1	%
China		—			3	%		—			—			—			3	%		—			—
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

     Crude Oil Revenues

     Second-quarter 2007 crude oil revenues increased $140 million from the comparable 2006 quarter, driven by an 11 percent increase in production with comparable overall pricing. Production growth in the U.S., Egypt, Australia and Argentina were the predominate drivers. For the six-month period, crude oil revenues increased $161 million from the comparable 2006 period with slightly lower price realizations offsetting the benefits from production gains in the areas mentioned above. China’s operations were sold in August 2006.

     U.S. second-quarter 2007 crude oil revenues increased $159 million compared to the same quarter of 2006, reflecting a 39 percent increase in production and a six percent increase in realized crude oil prices. The Gulf Coast Region’s production increased 48 percent on less hurricane downtime, the addition of producing properties on the Outer Continental Shelf of the Gulf of Mexico in June 2006, and drilling and recompletion activity. The Central Region saw a 28 percent rise in production reflecting the acquisition of the Permian Basin properties from Anadarko in March 2007 and drilling and recompletion activity. The six-month period reflects a $267 million increase in revenues on a 33 percent increase in production and an eight percent increase in realized price over 2006.

     Australia’s second-quarter 2007 crude oil revenues increased $26 million compared to the second quarter of 2006 on a 31 percent increase in production. Realized prices were comparable period over period. Production gains were driven by completion of West Cycad, additional working interest acquired in the Legendre field, increased production at Bambra, and increased liquids associated with John Brookes, Doric and Lee gas wells. Australia’s revenues for the 2007 six-month period were up $28 million on a 17 percent increase in production and a one percent increase in realized price when compared to the same period in 2006.

     Egypt’s crude oil revenues increased $25 million in the second quarter of 2007 compared to the same quarter in 2006. An eight percent increase in crude oil production added $28 million in revenues, offset by a one percent decrease in realized prices. While numerous concessions saw production growth, gains from new well completions in Umbarka and East Bahariya concessions were noteworthy. Also, Khalda condensate production was higher from additional throughput at the Obaiyed gas plant. Egypt’s 2007 six-month period revenues increased $19 million from 2006 with a seven percent increase in production more than offsetting a four percent decrease in price. Similar to the quarter, production growth was most prevalent in Umbarka, East Bahariya and the Khalda concessions.

     Argentina’s crude oil revenues increased $21 million in the second quarter of 2007 compared to the second quarter in 2006, reflecting a 71 percent increase in production from two acquisitions which closed during the second and third quarters of 2006. A four percent increase in oil price realizations also benefited revenues. Revenues for the 2007 six-month period increased $55 million over the prior year for the same reasons.

     Canada’s second-quarter 2007 revenues decreased $18 million from second-quarter of 2006 on a 10 percent decline in oil production and a five percent decrease in realized prices. Production from the Zama and Virginia Hills areas fell on natural decline, while downtime impacted production at House Mountain and Weyburn. Canada’s 2007 six-month period oil revenues were $32 million less than the comparable 2006 period on an 11 percent drop in production and a three percent drop in pricing.

24

     The North Sea’s second-quarter 2007 crude oil revenues were $40 million less than the comparable 2006 period, reflecting a 10 percent decrease in oil production and a one percent decrease in realized price. Production was negatively impacted by downtime and natural decline. Year-to-date revenues fell by $119 million compared to prior year as production declined 14 percent for the same reasons described above.

     Approximately 18 percent and 16 percent of our worldwide crude oil production was subject to financial derivative hedges for the second quarter and first six months of 2007, respectively, compared to eight percent for the two comparable periods in 2006. (See Note 2, Hedging and Derivative Instruments, of the Notes to Consolidated Financial Statements in this Form 10-Q for a summary of the current derivative positions and terms.) These financial derivative instruments reduced our second-quarter 2007 and 2006 worldwide realized prices $.26 and $1.71 per barrel, respectively. For the six-month period ending June 30, 2007 these hedges increased our average realized prices $.22 per barrel. For the six-month period ending June 30, 2006 these hedges reduced our average realized prices $1.52 per barrel.

Natural Gas Revenues

     Apache’s second-quarter 2007 natural gas revenues increased $215 million from the prior-year quarter on production growth and higher realized prices. All core gas producing regions reported higher natural gas revenues with the largest gains experienced in Canada and the U.S. For the six-month period, gas revenues increased $263 million from the comparable 2006 period, reflecting a 23 percent increase in gas production partially offset by a four percent decrease in realized prices.

     U.S. second-quarter 2007 natural gas revenues were $167 million higher than the comparable quarter of last year. In the U.S., second-quarter natural gas production increased 26 percent adding $108 million to U.S. natural gas revenues on acquisitions, drilling and recompletion activities and restoration of production shut-in because of hurricane damage. Higher realized prices added another $59 million to U.S. natural gas revenues over the prior year quarter. The year-to-date period reflects a $229 million increase in revenue on a 24 percent increase in production, for the reasons noted above, and a four percent increase in realized prices over the same period in 2006.

     Canada’s second-quarter 2007 natural gas revenues increased $24 million over the prior year comparable quarter. Canada’s realized natural gas price increased 19 percent, offsetting a seven percent decline in gas production. Gas production fell in our Zama and Hatton areas on natural decline and plant downtime. Production gains from new wells in the Exxon Mobil lands area limited the decline. On a year-to-date basis, gas revenues were down $22 million from 2006 on a decline in production while prices have remained flat.

     Argentina’s second-quarter 2007 natural gas revenues increased $12 million compared to the second-quarter of 2006 on increased production from previously noted acquisitions and drilling activity as well as higher prices. The current year six-month period reflects a $32 million increase in revenues for the same reasons.

     Egypt contributed an additional $7 million to second-quarter 2007 consolidated natural gas revenues compared to the same quarter of 2006 on a seven percent increase in natural gas production and a slight increase in realized prices. Virtually all of the increase in production was related to a full quarter of production from Qasr field in the Khalda concession. Egypt’s 2007 six-month revenues increased $11 million over the same period of 2006 on an 11 percent increase in production, which was partially offset by the impact of a four percent decrease in price. Like the quarter, production gains came from the Qasr field.

     Australia’s 2007 second-quarter natural gas revenues were $5 million higher than the respective prior-year period on six percent higher production, which contributed $2 million, and a 13 percent increase in realized prices, which added $3 million. The increase in gas production over the 2006 quarter was associated with additional customer demand, including full-contract sales to Burrup Fertilizer. Australia’s six-month revenues were up $13 million from 2006 on a 16 percent increase in production and a 10 percent increase in realized price. The six-month period productions gains were also related to increased customer demand.

     Although a majority of our worldwide gas sales contracts are indexed to prevailing market prices, approximately five percent and eight percent of our second-quarter 2007 and 2006 U.S. natural gas production, respectively, was subject to long-term, fixed-price physical contracts and for the first six months of 2007 approximately six percent of our U.S. natural gas production was subject to long-term, fixed price physical contracts down from eight percent in the prior year. These fixed-price contracts reduced second-quarter 2007 and 2006 worldwide realized prices $.09 and $.08 per Mcf, respectively and 2007 and 2006 six-month worldwide realized prices $.08 and $.14 per Mcf, respectively.

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     Approximately 19 percent and 17 percent of our worldwide natural gas production was subject to financial derivative hedges for the second-quarter and six-month periods of 2007, respectively, compared to seven percent for the two comparable periods in 2006. These derivative financial instruments reduced our second-quarter 2007 and 2006 consolidated realized prices $.02 and $.03 per Mcf, respectively. For the first half of 2007, these instruments increased our realized price $.02 per mcf but reduced them $.09 per mcf in the first half of 2006. (See Note 2, Hedging and Derivative Instruments, of the Notes to Consolidated Financial Statements in this Form 10-Q for a summary of our current derivative positions and terms.)

Costs

     The table below presents a comparison of our expenses on an absolute dollar basis and an equivalent unit of production (boe) basis. Our discussion may reference expenses either on a boe basis or on an absolute dollar basis, or both, depending on their relevance.

	For the Quarter Ended June 30,								For the Six Months Ended June 30,
	2007		2006		2007		2006		2007		2006		2007		2006
	(In millions)				(Per boe)				(In millions)				(Per boe)
Depreciation, depletion and amortization (DD&A):
Oil and gas property	$	558	$	413	$	10.72	$	9.06	$	1,055	$	759	$	10.51	$	8.75
Other assets		33		28		.64		.63		67		55		.67		.64
Total DD&A		591		441						1,122		814
Asset retirement obligation accretion		24		21		.46		.46		48		41		.48		.48
Lease operating costs		419		313		8.04		6.85		811		604		8.09		6.97
Gathering and transportation costs		30		26		.58		.57		58		52		.58		.60
Severance and other taxes		131		168		2.52		3.69		228		315		2.28		3.63
General and administrative expense		71		52		1.36		1.15		139		98		1.38		1.13
Financing costs, net		63		32		1.22		.68		106		54		1.05		.62
Total	$	1,329	$	1,053	$	25.54	$	23.09	$	2,512	$	1,978	$	25.04	$	22.82

     Oil and Gas Property DD&A

     The following table details the changes in DD&A of oil and gas properties between 2006 and 2007 for the three-month and six-month periods.

	For the Quarter Ended		For the Six Months Ended
	(In millions)
2006 DD&A	$	413	$	759
Volume change		62		128
Rate change		83		168
2007 DD&A	$	558	$	1,055

     Second-quarter 2007 full-cost DD&A expense increased $145 million from the second quarter of 2006, $83 million of which was related to an increase in the DD&A rate. The DD&A rate increased $1.66 to $10.72 per boe as the costs to acquire, find and develop reserves continue to exceed our historical cost basis. Increasing costs also impact our estimates for future development of known reserves and estimates to abandon properties, both of which impact our full-cost depletion rate.

     DD&A expense for the first half of 2007 totaled $1.1 billion, $296 million more than 2006. The year-to-date full-cost DD&A rate averaged $10.51 per boe, $1.76 higher than the rate for the first six months 2006 for the same reasons discussed above.

     Lease Operating Expenses (LOE)

     LOE increased $106 million from the second quarter of last year to $419 million in the second quarter of 2007. LOE for the six months ended June 30, 2007, totaled $811 million, $207 million more than 2006. The increase for both comparative periods reflect two significant acquisitions in Argentina, one in the Gulf of Mexico, one in the U.S. Permian Basin, hurricane repairs, new wells from our active drilling program, generally rising costs and the impact of a weakening U.S. dollar. Acquisitions and new wells increase absolute LOE, but they also add production, thereby limiting increases to our worldwide per unit rate. While Apache’s 2007 second-quarter and six-month total costs were 34 percent higher than their respective 2006 period, the rate per boe produced increased only half as much. As such, the following discussion will focus on per unit operating costs as management believes this is the most informative method of analyzing LOE trends.

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     Our 2007 second-quarter worldwide LOE rate averaged $8.04 per boe, an increase of $1.19 when compared to the 2006 quarter, $.36 of which came from hurricane damage repairs. Late in 2006, the company exhausted its base insurance coverage for these repairs.

     The U.S. added $.97 of the $1.19 per boe increase. The $.36 mentioned above, and an additional $.61 per boe related to non-hurricane repairs in the Gulf of Mexico, inflationary pressure on service costs from the continued effects of high commodity prices, higher expenses for stock-based compensation and significant acquisitions in the Gulf of Mexico late in the second quarter of 2006 and in the Permian Basin in 2007. The properties we acquired carried a higher LOE rate than our existing U.S. properties. Additionally, we incurred higher than normal levels of repair and workover activity to improve operating efficiencies and production. The weakening U.S. dollar also impacted our worldwide rate, adding $.10 per boe. The balance of the increase was related to increased workover rig costs and activity levels and higher ad valorem taxes in Canada.

     For the 2007 six-month period our worldwide LOE rate averaged $8.09 per boe, an increase of $1.12. The U.S. accounted for $1.03 of the increase, with $.54 per boe related to hurricane damage repairs and the remainder of the increase driven by the items impacting the quarter-to-quarter increase, discussed above. The impact of the weakening U.S. dollar on the foreign exchange rate increased the rate $.06 per boe for the six-month period.

     Gathering and Transportation Costs

     Gathering and transportation costs totaled $30 million in the second quarter of 2007, up $4 million from the 2006 comparative quarter. The following table presents gathering and transportation costs paid by Apache to third-party carriers for each of the periods presented.

	For the Quarter Ended				For the Six Months
	June 30,				Ended June 30,
	2007		2006		2007		2006
	(In millions)
U.S.	$	10	$	8	$	19	$	16
Canada		8		9		16		17
North Sea		7		7		13		14
Egypt		4		2		8		5
Argentina		1		—		2		—
Total Gathering and Transportation	$	30	$	26	$	58	$	52

     The increases for both periods presented are primarily related to new production from Gulf of Mexico properties acquired in mid-2006 and additional Egyptian crude oil exports.

     Severance and Other Taxes

     Severance and other taxes for the second quarter and the first six months of 2007 declined $37 million and $87 million, respectively, from the corresponding prior-year periods. A detail of these taxes follows:

	For the Quarter Ended				For the Six Months
	June 30,				Ended June 30,
	2007		2006		2007		2006
	(In millions)
Severance taxes	$	38	$	34	$	67	$	63
U.K. PRT		81		123		142		231
Canadian taxes		6		4		11		9
Other		6		7		8		12
Total Severance and Other Taxes	$	131	$	168	$	228	$	315

     U.K. Petroleum Revenue Tax (PRT) is assessed on net profits from subject fields in the United Kingdom (U.K.) North Sea, including Apache’s Forties field. U.K. PRT was 34 percent below the second quarter of 2006 and 39 percent below the first half of 2006 largely driven by lower comparable revenues on declining production and slightly higher deductible costs, which include capital expenditures, LOE, G&A, and transportation tariffs. Severance taxes are

27

incurred primarily on onshore properties in the U.S., Argentina and certain properties in Australia. The second quarter and six-month increases in severance taxes resulted from higher taxable revenues.

     General and Administrative Expenses (G&A)

     Second-quarter 2007 G&A expenses were $19 million higher, or $.21 per boe, driven by a one-time charge related to changes to our board of directors’ compensation and retirement plans ($.13 per boe), the effect of appreciation of our stock price on stock-based compensation ($.12 per boe) and higher insurance rates ($.07 per boe). These increases were partially offset by higher production.

     Year-to-date G&A expenses were $41 million higher, or $.25 per boe, higher than the 2006 period. As with the quarter, higher insurance rates ($.11 per boe), higher stock-based compensation ($.10 per boe) and changes to our board of directors’ compensation and retirement plans ($.07 per boe) drove the rate increase from 2006.

     Financing Costs, Net

     Net financing costs for the second-quarter and six months of 2007 increased $32 million and $51 million, respectively, from the comparative prior-year periods on higher average outstanding debt balances.

     Provision for Income Taxes

     During interim periods, income tax expense is based on the estimated effective income tax rate that is expected for the entire fiscal year. The second-quarter and first six-month 2007 provision for income taxes were $219 million and $129 million more than their comparative 2006 periods, a reflection of higher pre-tax income and higher effective tax rates in the 2007 periods.

     The second-quarter and first six-month 2007 effective tax rates were 44.3 percent and 42.3 percent compared to second-quarter and first six-month 2006 rates of 28.3 percent and 33.5 percent. The 2007 effective rates were higher primarily because of the effect of the weakening U.S. dollar on re-measurement of our foreign deferred tax liabilities ($66 million for the quarter and $68 million for the six-month period) and a 10 percent increase in the oil and gas tax rate in the U.K. enacted subsequent to the second quarter of 2006 ($17 million for the quarter and $27 million for the six-month period). The 2006 effective rates were lowered by the benefit of a Canadian tax rate reduction enacted in the second quarter of 2006 ($132 million for both periods), somewhat offset by the impact of the weakening U.S. dollar on the re-measurement of our foreign deferred tax liabilities ($25 million for both periods).

Capital Resources and Liquidity

Financial Indicators

	June 30,			December 31,
	2007			2006
Millions of dollars except as indicated
Current ratio		.81			.65
Total debt	$	4,987		$	3,822
Shareholders’ equity	$	14,105		$	13,191
Percent of total debt to capitalization		26	%		22	%
Floating-rate debt/total debt		16	%		43	%

Net Cash Provided by Operating Activities

     Apache’s net cash provided by operating activities for the first six months of 2007 totaled $2.5 billion, up $225 million from the same period in 2006. For a detailed discussion of commodity prices, production, costs and expenses, refer to the “Results of Operations” of this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     Historically, fluctuations in commodity prices have been the primary reason for the company’s short-term changes in cash flow from operating activities. Sales volume changes have also impacted cash flow in the short-term, but have not been as volatile as commodity prices. Apache’s long-term cash flow from operating activities is dependent on commodity prices, reserve replacement and the level of costs and expenses required for continued operations.

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Debt

     During the first six months of 2007, the company’s debt-to-capitalization ratio increased to 26 percent from 22 percent at December 31, 2006, primarily on increased debt.

     On January 26, 2007, the company issued $500 million principal amount, $499.5 million net of discount, of senior unsecured 5.625-percent notes maturing January 15, 2017 and $1.0 billion principal amount, $993 million net of discount, of senior unsecured 6.0-percent notes maturing January 15, 2037. The notes are redeemable, as a whole or in part, at Apache’s option, subject to a make-whole premium. The proceeds were used to repay a portion of the company’s outstanding commerical paper and for general corporate purposes. The company’s outstanding debt includes notes and debentures maturing in the years 2007 through 2096.

     On April 16, 2007, the company issued $500 million principal amount, $498.8 million net of discount, of senior unsecured 5.25-percent notes maturing April 15, 2013. The notes are redeemable, as a whole or part, at Apache’s option, subject to a make-whole premium. The proceeds were used to repay a portion of the company’s outstanding commercial paper and for general corporate purposes.

     On April 30, 2007, the company amended its existing $1.5 billion U.S. five-year revolving credit facility to extend the maturity date to May 28, 2012 from the current maturity date of May 28, 2011. The amendment also allows the company to increase the size of the facility by up to $750 million by adding commitments from new or existing lenders.

     The company also amended its $450 million U.S. credit facility, $150 million Australian credit facility and $150 million Canadian credit facility to extend the maturity dates of all the commitments to May 12, 2012. The amendment also allows the company to increase the size of the U.S. facility by up to $250 million, the Australian facility by up to $150 million and the Canadian facility by up to $150 million by adding commitments from new or existing lenders.

     The company has available a $1.95 billion commercial paper program which enables Apache to borrow funds for up to 270 days at competitive interest rates. As of June 30, 2007, Apache had $728 million of commercial paper outstanding. Our weighted-average interest rate for commercial paper was 5.37 percent and 4.88 percent for the first six months of 2007 and 2006, respectively. If the company is unable to issue commercial paper following a significant credit downgrade or dislocation in the market, the company’s U.S. credit facilities are available as a 100 percent backstop. The company had available borrowing capacity under our total credit facilities of approximately $1.5 billion at June 30, 2007.

     The company was in compliance with the terms of all credit facilities as of June 30, 2007.

Contingencies

     Apache Corporation adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No 48 (FIN 48), “Accounting for Uncertainty in Income Taxes” as of January 1, 2007. FIN 48 requires, among other things, that uncertain income tax contingencies be disclosed separately from the company’s deferred tax liability. As of the adoption date, the company had total tax reserves of $563 million, which represents potential future cash obligations.

     On May 7, 2007, Apache, on behalf of its joint venture, announced that it signed a contract for a floating production, storage and offloading vessel that will be used in the company’s Van Gogh development in Western Australia’s Exmouth Basin. Apache and its partner will pay $40 million per year plus operating expenses for a seven-year term with options for an eight-year extension or to acquire the vessel. Apache owns 52.5 percent of the development.

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Oil and Gas Capital Expenditures

     The following table presents a summary of the company’s capital expenditures for each of our reportable segments for the six months ended June 30, 2007 and 2006.

	For the Six Months Ended
	June 30,
	2007		2006
	(In thousands)
Exploration and development (E&D):
United States	$	959,702	$	689,536
Canada		296,978		559,763
Egypt		302,645		211,049
Australia		212,362		69,711
North Sea		286,611		157,817
Argentina		115,176		20,890
China		—		9,963
		2,173,474		1,718,729
Acquisitions — Oil and gas properties		1,011,297		1,840,186
Asset Retirement Costs (ARC)		126,828		144,686
Capitalized Interest		37,674		30,075
Gathering Transmission and Processing Facilities		202,824		144,514
Total capital expenditures	$	3,552,097	$	3,878,190

     All of our reportable segments, except for Canada, reported an increase in E&D expenditures. The U.S. accounted for 44 percent of the E&D expenditures in first six months of 2007, up from 40 percent in the prior year’s comparable quarter. Canada’s 2007 E&D expenditures totaled 14 percent of the company’s total, down from 33 percent in 2006, on reduced activity. All other segments reported increases in their expenditures reflecting higher levels of activity compared to the first six months of 2006.

Cash Dividends

     Common dividends declared during the first six months of 2007 rose to $99 million, reflecting a slight increase in common shares outstanding and the higher common stock dividend rate. The company increased its quarterly cash dividend 50 percent, to 15 cents per share from 10 cents per share, effective with the November 2006 dividend payment. During the three months and six months ended June 30, 2007 and 2006, Apache declared $1.4 million and $2.8 million, respectively, in dividends on its Series B Preferred Stock issued in August 1998.

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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

     The company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production. These fluctuations can influence future operating results and capital investment decisions. The company utilizes commodity hedgers to mitigate a portion of this exposure.

     In the first six months of 2007, financial derivative hedges covered approximately 17 percent of the average worldwide natural gas production and 16 percent of the total worldwide crude oil production. Hedges in place at the end of the quarter represent approximately 20 percent of worldwide production for natural gas and crude oil.

     On June 30, 2007, the company had open natural gas derivative hedges in an asset position with a fair value of $50 million. A 10 percent increase in natural gas prices would decrease the asset fair value by $61 million. A 10 percent decrease in prices would increase the asset fair value by $64 million. The company also had open oil derivatives in a liability position with a fair value of $118 million on June 30, 2007. A 10 percent increase in crude oil prices would decrease the liability fair value by $182 million. A 10 percent decrease in prices would increase the liability fair value by $171 million. See Note 2, Hedging and Derivative Instruments of the Notes to Consolidated Financial Statements in this quarterly report on Form 10-Q, for notional volumes associated with the company’s derivative contracts.

Interest Rate Risk

     The company considers its interest rate risk exposure to be minimal as a result of fixing interest rates on approximately 84 percent of the company’s debt. At June 30, 2007, total debt included $805 million of floating-rate debt. As a result, Apache’s annual interest costs in 2007 will fluctuate based on short-term interest rates on what is presently approximately 16 percent of our total debt outstanding at June 30, 2007. The impact on cash flow of a 10 percent change in the floating interest rate would be approximately $1.2 million per quarter on June 30, 2007.

Foreign Currency Risk

     The company’s cash flow stream relating to certain international operations is based on the U.S. dollar equivalent of cash flows measured in foreign currencies. In Australia, oil production is sold under U.S. dollar contracts and the majority of the gas production is sold under fixed-price Australian dollar contracts. Over half the costs incurred for Australian operations are paid in U.S. dollars. In Canada, the majority of oil and gas production is sold under Canadian dollar contracts. The majority of the costs incurred are paid in Canadian dollars. The North Sea production is sold under U.S. dollar contracts and the majority of costs incurred are paid in U.K. pounds. In Egypt, all oil and gas production is sold under U.S. dollar contracts and the majority of the costs incurred are denominated in U.S. dollars. Argentina revenues and expenditures are largely denominated in U.S. dollars but translated into pesos at the then current exchange rate. Revenue and disbursement transactions denominated in Australian dollars, Canadian dollars, U.K. pounds, Egyptian pounds and Argentine pesos are converted to U.S. dollars equivalents based on the exchange rate as of the transaction date.

     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. Currency gains and loses are included as either a component of “Other” under “Revenues and Other,” or, as is the case when we re-measure our foreign tax liabilities, as a component of the company’s provision for income tax expense on the Statement of Consolidated Operations.

Forward-Looking Statements And Risk

     Certain statements in this quarterly report on Form 10-Q, including statements of the future plans, objectives, and expected performance of the company, are forward-looking statements that involve estimates, assumptions, risks and uncertainties, including without limitation, risks, uncertainties and other factors discussed in Apache’s 2006 annual report on Form 10-K and on its website, which could cause actual results to differ materially from those anticipated. Some of these include, but are not limited to, the market prices of oil and gas, economic and competitive conditions, inflation rates, legislative and regulatory changes, financial market conditions, political and economic uncertainties of foreign governments, future business decisions, and other uncertainties, all of which are difficult to predict. Apache assumes no duty to update forward-looking statements as of any future date.

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     There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and in projecting future rates of production and the timing of development expenditures. The total amount or timing of actual future production may vary significantly from reserves and production estimates. The drilling of exploratory wells can involve significant risks, including those related to timing, success rates and cost overruns. Lease and rig availability, complex geology and other factors can affect these risks. Although Apache may make use of futures contracts, swaps, options and fixed-price physical contracts to mitigate risk, fluctuations in oil and natural gas prices or a prolonged continuation of low prices, may adversely affect the company’s financial position, results of operations and cash flows.

ITEM 4 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     G. Steven Farris, the company’s President, Chief Executive Officer and Chief Operating Officer, and Roger B. Plank, the company’s Executive Vice President and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2007, 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 information we are required to disclose under applicable laws and regulations is recorded, processed, summarized and reported in a timely manner.

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

Changes in Internal Control over Financial Reporting

     There was no change in our internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 10 to the Consolidated Financial Statements contained in the company’s annual report on Form 10-K for the year ended December 31, 2006 (filed with the SEC on March 1, 2007) and the updating of those matters in Note 11 to the Consolidated Financial Statements contained in this quarterly report on Form 10-Q, is incorporated herein by reference.

ITEM 1A. RISK FACTORS

During the quarter ending June 30, 2007, there were no material changes from the risk factors as previously disclosed in the company’s annual report on Form 10-K for the year ended December 31, 2006.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The company’s annual meeting of stockholders was held in Houston, Texas at 10:00 a.m. local time, on Wednesday, May 2, 2007. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934.

Out of a total of 331,068,988 shares of the company’s common stock outstanding and entitled to vote, 289,156,662 shares were present at the meeting in person or by proxy, representing 87.3 percent of the shares entitled to vote. Matters voted upon at the meeting were as follows:

(a) We received stockholder votes for the election of four directors of Apache, each to serve until Apache’s annual meeting in 2010, or until their successors are duly elected. We counted and tabulated all votes and determined the results of the votes as follows:

Nominee	For		Against		Abstain
Eugene C. Fiedorek		235,460,872		41,772,917		11,922,873
Patricia Albjerg Graham		212,435,146		73,965,312		2,756,204
F. H. Merelli		276,303,030		10,171,358		2,682,274
Raymond Plank		276,216,306		10,183,922		2,756,434

The name of each director whose term of office as a director continued after the meeting is listed below:

Frederick M. Bohen	G. Steven Farris
Randolph M. Ferlic	A.D. Frazier, Jr.
John A. Kocur	George D. Lawrence
Rodman D. Patton	Charles J. Pitman
Jay A. Precourt*

* Effective July 2, 2007, Mr. Precourt retired as a director of the company.

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(b) The company’s stockholders approved the 2007 Omnibus Equity Compensation Plan. The voting results were as follows:

For	213,710,585
Against	29,803,777
Abstain	2,378,917
Broker Non-Vote	43,263,383

(c) The company’s stockholders defeated the stockholder proposal concerning reimbursement of proxy expenses. The voting results were as follows:

For	32,571,000
Against	201,722,588
Abstain	11,599,691
Broker Non-Vote	43,263,383

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

*10.1  –	Apache Corporation Executive Restricted Stock Plan, as amended and restated May 2, 2007.
*10.2  –	Apache Corporation 2003 Stock Appreciation Rights Plan, as amended and restated May 2, 2007.
*10.3  –	Apache Corporation 2005 Stock Option Plan, as amended and restated May 2, 2007.
*12.1  –	Statement of computation of ratio of earnings to fixed charges and combined fixed charges and preferred stock dividends.
*31.1  –	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of this Exchange Act) by Chief Executive Officer.
*31.2  –	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of this Exchange Act) by Chief Financial Officer.
*32.1  –	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief Executive Officer and Chief Financial Officer.

* Filed herewith

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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.

	APACHE CORPORATION
Dated: August 8, 2007	/s/ ROGER B. PLANK
	Roger B. Plank
	Executive Vice President and Chief Financial Officer
Dated: August 8, 2007	/s/ REBECCA A. HOYT
	Rebecca A. Hoyt
	Vice President and Controller
	(Chief Accounting Officer)

EXHIBIT INDEX

*10.1  –	Apache Corporation Executive Restricted Stock Plan, as amended and restated May 2, 2007.
*10.2  –	Apache Corporation 2003 Stock Appreciation Rights Plan, as amended and restated May 2, 2007.
*10.3  –	Apache Corporation 2005 Stock Option Plan, as amended and restated May 2, 2007.
*12.1  –	Statement of computation of ratio of earnings to fixed charges and combined fixed charges and preferred stock dividends.
*31.1  –	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of this Exchange Act) by Chief Executive Officer.
*31.2  –	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of this Exchange Act) by Chief Financial Officer.
*32.1  –	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief Executive Officer and Chief Financial Officer.

* Filed herewith

EX-10.1

Exhibit 10.1

APACHE CORPORATION

EXECUTIVE RESTRICTED STOCK PLAN

Amended and Restated May 2, 2007, Effective as of May 2, 2007

Section 1 Introduction

1.1	Establishment.
	Apache Corporation, a Delaware corporation (hereinafter referred to, together with its Affiliated Corporations (as defined below) as the “Company” except where the context otherwise requires), established the Apache Corporation Executive Restricted Stock Plan (formerly known as the Pilot Executive Restricted Plan), effective as of May 2, 2002 (the “Plan”).
1.2	Purposes.
	The primary purpose of the Plan is to focus the energies of the Company’s executive and regional officers on significantly increasing shareholder wealth by increasing such officers’ ownership of the Company’s equity. Additional purposes of the Plan include the retention of existing key employees and as an additional inducement in the recruitment of talented personnel in a competitive environment.

Section 2 Definitions

2.1 Definitions.

(a)	“Affiliated Corporation” means any corporation or other entity (including but not limited to a partnership) that is affiliated with Apache Corporation through stock ownership or otherwise and is treated as a common employer under the provisions of Sections 414(b) and (c) or any successor section(s) of the Internal Revenue Code.
(b)	“Board” means the Board of Directors of the Company.
(c)	“Committee” means the Stock Option Plan Committee of the Board or such other committee of the Board that is empowered hereunder to administer the Plan. The Committee shall be constituted at all times so as to permit the Plan to be administered by “non-employee directors” (as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended).
(d)	“Deferred Delivery Plan” means the Company’s Deferred Delivery Plan, as it has been or may be amended from time to time, or any successor plan.
(e)	“Deferred Restricted Units” means investment units under the Deferred Delivery Plan.
(f)	“Eligible Employees” means executive and regional officers of the Company.
(g)	“Fair Market Value” means the closing price of the Stock as reported on The New York Stock Exchange, Inc. Composite Transactions Reporting System (“Composite Tape”) for a particular date. If there are no Stock transactions on such date, the Fair Market Value shall be determined as of the immediately preceding date on which there were Stock transactions.

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(h)	“Grant” has the meaning set forth in Section 6 hereof.
(i)	“Grant Agreement” has the meaning set forth in Section 6 hereof.
(j)	“Grant Date” means for any Grant the date specified in the applicable resolutions of the Committee.
(k)	“Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.
(l)	“Participant” means an Eligible Employee designated by the Committee from time to time during the term of the Plan to receive one or more Grants of Plan Units under the Plan.
(m)	“Plan Units” means investment units, each of which is equivalent in value to one share of Stock.
(n)	“Stock” means the $0.625 par value common stock of the Company.

2.2	Headings; Gender and Number.
	The headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. Except when otherwise indicated by the context, the masculine gender shall also include the feminine gender, and the definition of any term herein in the singular shall also include the plural.

Section 3 Plan Administration

The Plan shall be administered by the Committee. In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, adopt rules and regulations for carrying out the purposes of the Plan, including, without limitation, selecting the Participants from among the Eligible Employees, appointing designees or agents (who need not be members of the Committee or employees of the Company) to assist the Committee with the administration of the Plan, and establishing such other terms and requirements as the Committee may deem necessary or desirable and consistent with the terms of the Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan or in any Grant Agreement entered into hereunder, in the manner and to the extent it shall deem expedient and the Committee shall be the sole and final judge of such expediency. No member of the Committee shall be liable for any action or determination made in good faith. The determinations, interpretations, and other actions of the Committee pursuant to the provisions of the Plan shall be binding and conclusive for all purposes and on all persons.

Section 4 Stock Subject to the Plan

4.1

Number of Shares.

Subject to Sections 4.3 and 6.1 hereof, up to 450,000 shares of Stock (adjusted to 945,000 shares for (i) the Company’s five-percent stock dividend, record date March 12, 2003, paid April 2, 2003, and (ii) the Company’s two-for-one stock split, record date December 31, 2003, distributed January 14, 2004) are authorized for issuance under the Plan upon conversion of any Plan Units in accordance with the Plan’s terms and subject to such restrictions or other provisions as the Committee may from time to time deem necessary.

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	Shares of Stock issued pursuant to the conversion of any Plan Units or related Deferred Restricted Units awarded hereunder shall be applied to reduce the maximum number of shares of Stock remaining available for use under the Plan. The Company shall at all times during the term of the Plan and while any Plan Units or related Deferred Restricted Units are outstanding retain as authorized and unissued Stock and/or Stock in the Company’s treasury, at least the number of shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder.
4.2	Other Shares of Stock.
	Any shares of Stock that are subject to issuance upon conversion of a Plan Unit or related Deferred Restricted Unit that expires, is forfeited, is cancelled, or for any reason is terminated, and any shares of Stock that for any other reason are not issued to a Participant or are forfeited shall automatically become available for use under the Plan.
4.3	Certain Adjustments.
	If the Company shall at any time increase or decrease the number of its outstanding shares of Stock (other than by way of issuing Stock in a public or private offering for cash or property) or change in any way the rights and privileges of such shares by means of a dividend or any other distribution upon such shares payable in Stock, or through a split, subdivision, consolidation, combination, reclassification, or recapitalization involving the Stock or a subscription for shares of Stock that has the effect of diluting the Company’s capital (hereinafter a “capital restructuring”), then for purposes of determining the entitlement to payments under Section 6, the number of shares of Stock authorized for issuance under this Section 4 shall be equitably and proportionally adjusted to take into account any capital restructuring. Any adjustment under this Section shall be made by the Committee, whose determination with regard thereto, including whether any adjustment is needed, shall be final and binding upon all parties.

Section 5 Reorganization or Liquidation

In the event that the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or if all or substantially all of the assets or more than 20 percent of the outstanding voting stock of the Company is acquired by any other corporation, business entity or person, or in case of a reorganization (other than a reorganization under the United States Bankruptcy Code) or liquidation of the Company, and if the provisions of Section 7 hereof do not apply, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall, as to the Plan and outstanding Plan Units either (i) make appropriate provision for the adoption and continuation of the Plan by the acquiring or successor corporation and for the protection of any holders of such outstanding Plan Units by the substitution on an equitable basis of appropriate stock of the Company or of the merged, consolidated, or otherwise reorganized corporation that will be issuable with respect to the Stock, provided that no additional benefits shall be conferred upon the Participants holding such Plan Units as a result of such substitution, or (ii) provide that all Plan Units shall become immediately vested and convertible into shares of Stock.

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Section 6 Grant of Plan Units

6.1	Grants.
	From time to time each Participant may be awarded one or more grants (each, a “Grant”) of Plan Units under this Plan by the Committee. Each Grant shall be composed of a number of Plan Units as may be determined by the Committee in its sole discretion. Each Grant awarded by the Committee shall be evidenced by a written agreement entered into by the Company and the Participant to whom the Grant is awarded (the “Grant Agreement”), which shall contain the terms and conditions set out in this Section 6 (which may be modified in any manner as the Committee shall determine in its sole discretion), as well as such other terms and conditions as the Committee may consider appropriate.
6.2	Grant Agreements.
	Each Grant Agreement entered into by the Company and each Participant shall contain at least the following terms and conditions. In the event of any inconsistency between the provisions of the Plan and any Grant Agreement, the provisions of the Plan shall govern.

6.2.1 Grant Terms, 2005. Each Grant Agreement made during 2005 – even those made before December 14, 2005 (the date this Plan was retroactively amended) — shall evidence the Grant of Plan Units and conditionally entitle the Participant to receive the indicated Plan Units which shall vest, subject to Section 6.2.3 below, based on the following schedule:

June 1, 2006	25	%
May 4, 2007	25	%
May 4, 2008	25	%
May 4, 2009	25	%

6.2.2 Grant Terms, 2006 and After. Each Grant Agreement made after December 31, 2005 shall evidence the Grant of Plan Units and conditionally entitle the Participant to receive the indicated Plan Units which shall vest, subject to Section 6.2.3 below, based on the following schedule:

The first day of the month immediately following the first anniversary of the Grant Date	25	%
The second anniversary of the Grant Date	25	%
The third anniversary of the Grant Date	25	%
The fourth anniversary of the Grant Date	25	%

6.2.3 Deferral of Vested Units. A Participant may make an election during the month in which the Grant is made to defer all or a portion of the Grant to the Deferred Delivery Plan, subject to the rules and procedures described in the Deferred Delivery Plan. If a Participant elects such a deferral, on the date the deferred Plan Units vest, the Participant’s Account in the Deferred Delivery Plan shall be credited with Deferred

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Restricted Units that equal the value of the deferred Plan Units that vested less any taxes imposed and withheld when vesting occurred. At the time the Participant makes the deferral election, he or she shall also make a payout election with respect to the deferred Plan Units, from among the choices provided in the Deferred Delivery Plan. Plan Units that are not deferred into the Deferred Delivery Plan shall be converted into Stock, and the Participant shall be issued the requisite number of shares, as soon as administratively convenient after vesting occurs.

6.3	Termination of Employment, Death, Disability, etc.
	Except as set forth below, each Grant Agreement shall state that each Grant, the Plan Units received thereunder and the right to receive any shares of Stock or Deferred Restricted Units, thereunder upon vesting of the Plan Units shall be subject to the condition that the Participant has remained an Eligible Employee from the initial award of a Grant until the applicable vesting date as follows:

(a)	If the employment of the Participant is terminated by the Company for cause, all Plan Units, vested and unvested, and any Deferred Restricted Units into which vested Plan Units have been converted shall thereafter be void and forfeited for all purposes.
(b)	If the Participant voluntarily leaves the employment of the Company, or if the employment of the Participant is terminated by the Company other than for cause, the Participant shall be entitled to receive the shares of Stock issueable in accordance with Section 5 or 6.2.3. Such Participant shall not be entitled to any shares of Stock issueable on account of Plan Units that were not vested prior to the effective date of such Participant’s leaving the employment of the Company. If the Participant dies before receiving all of the Stock to which he or she is entitled under this Section 6.3(b), such Stock shall be issued to those entitled under the Participant’s will or by the laws of descent and distribution.
(c)	If the Participant becomes disabled (as determined pursuant to the Company’s Long-Term Disability Plan or any successor plan), while still employed by the Company, the Participant shall be entitled to receive the shares of Stock issueable on account of vested Plan Units in accordance with Section 5 or 6.2.3. Such Participant shall not be entitled to any shares of Stock issueable on account of Plan Units that were not vested prior to the date such Participant’s became disabled. If the Participant dies before receiving all of the Stock to which he or she is entitled under this Section 6.3(c), such Stock shall be issued to those entitled under the Participant’s will or by the laws of descent and distribution.
(d)	If a Participant dies while still employed by the Company, all unvested Plan Units shall automatically vest and convert into the right to receive Stock, without conversion into Deferred Restricted Units and deferral into the Deferred Delivery Plan, and the shares of Stock issueable for vested Plan Units (including those vested pursuant to this Section 6.3(d)) will be issued in accordance with Section 5 or 6.2.3 and shall be made to those entitled under the Participant’s will or by the laws of descent and distribution.

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6.4	Tax Withholding.
	Each Grant Agreement shall provide that, when the benefits under this Plan become subject to tax, the Participant shall make appropriate arrangements with the Company to provide for the tax withholding required under the Internal Revenue Code and applicable state and local income and other tax laws.
6.5	Stockholder Privileges.
	No Participant shall have any rights as a stockholder with respect to any shares of Stock into which a Plan Unit is convertible until the Participant becomes the holder of record of such Stock.

Section 7 Change of Control

7.1	In General.
	In the event of a change of control of the Company, as defined in Section 7.3 hereof, all unvested Plan Units shall automatically vest. The newly vested Plan Units shall be converted to Stock and the Participant shall be issued the requisite number of shares, after any withholding under Section 6.4, as soon as administratively practicable after the change of control occurs, unless the Participant had elected to defer such Plan Units to the Deferred Delivery Plan pursuant to Section 6.2.3, in which case the Participant’s account in the Deferred Delivery Plan shall be credited with Deferred Restricted Units as of the date of the change of control.
7.2	Limitation on Payments.
	If the provisions of this Section 7 would result in the receipt by any Participant of a payment within the meaning of Section 280G or any successor section(s) of the Internal Revenue Code, and the regulations promulgated thereunder, and if the receipt of such payment by any Participant would, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Sections 280G and 4999 or any successor section(s) of the Internal Revenue Code, then the amount of such payment shall be reduced to the extent required, in the opinion of independent tax counsel, to prevent the imposition of such excise tax; provided, however, that the Committee, in its sole discretion, may authorize the payment of all or any portion of the amount of such reduction to the Participant.
7.3	Definition.
	For purposes of the Plan, a “change of control” shall mean any event specified in the Company’s Income Continuance Plan or any successor plan that constitutes a change of control within the meaning of such plan.

Section 8 Rights of Employees, Participants

8.1	Employment.
	Neither anything contained in the Plan or any Grant Agreement nor the granting of any Plan Units under the Plan shall confer upon any Participant any right with respect to the continuation of his or her employment by the Company or any Affiliated Corporation, or

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	interfere in any way with the right of the Company or any Affiliated Corporation, at any time to terminate such employment or to increase or decrease the level of the Participant’s compensation from the level in existence at the time of the award of Plan Units.
8.2	Non-Transferability.
	No right or interest of any Participant in a Plan Unit granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of a Participant’s death, a Participant’s rights and interests in any Plan Unit shall, to the extent provided in Section 6.3 hereof, be transferable by testamentary will or the laws of descent and distribution, and payment of any entitlements due under the Plan shall be made to the Participant’s legal representatives, heirs or legatees. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his or her affairs because of mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator or other legal personal representative upon furnishing the Committee with evidence satisfactory to the Committee of such status.

Section 9 Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of the payment upon conversion of a Plan Unit shall not constitute “earnings” or “compensation” with respect to which any other employee benefits of such Participant are determined, including without limitation benefits under any pension, profit sharing, life insurance or salary continuation plan.

Section 10 Plan Amendment, Modification and Termination

The Committee or the Board may at any time terminate and, from time to time, may amend or modify the Plan. No amendment, modification or termination of the Plan shall in any manner adversely affect any Plan Unit theretofore awarded under the Plan, without the consent of the Participant holding such Plan Unit.

The Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with the provisions of the laws (including, but not limited to, tax laws and regulations) of countries other than the United States in which the Company may operate, so as to assure the viability of the benefits of the Plan to Participants employed in such countries.

Section 11 Requirements of Law

11.1

Requirements of Law.

The issuance of shares of Stock pursuant to the Plan shall be subject to all applicable laws, rules and regulations, including applicable federal and state securities laws. The Company may require a Participant, as a condition of receiving payment upon conversion of a Plan Unit, to give written assurances in substance and form satisfactory to the Company and its counsel to such effect as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws.

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11.2	Section 16 Requirements.
	If a Participant is an officer or director of the Company within the meaning of Section 16, Grants awarded hereunder shall be subject to all conditions required under Rule 16b-3, or any successor rule(s) promulgated under the Securities Exchange Act of 1934, as amended, to qualify the Plan Units for any exemption from the provisions of Section 16 available under such Rule. Such conditions are hereby incorporated herein by reference and shall be set forth in the agreement with the Participant that describes the Grant.
11.3	Governing Law.
	The Plan and all Grant Agreements hereunder shall be construed in accordance with and governed by the laws of the State of Texas.

Section 12 Duration of the Plan

The Plan shall terminate effective as of May 2, 2007, and no Plan Units shall be awarded on or after such termination date. Plan Units that remain outstanding at the time of the Plan termination shall continue in accordance with the Grant Agreement pertaining to such Plan Units.

Dated: May 2, 2007
		APACHE CORPORATION
ATTEST:
/s/ Cheri L. Peper	By:	/s/ Jeffrey M. Bender
Cheri L. Peper		Jeffrey M. Bender
Corporate Secretary		Vice President

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EX-10.2

Exhibit 10.2

APACHE CORPORATION

2003 Stock Appreciation Rights Plan

Amended and Restated May 2, 2007; Effective as of May 2, 2007

Section 1

Introduction

1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter referred to, together with its Affiliated Corporations (as defined in Section 2.1 hereof) as the “Company” except where the context otherwise requires), hereby establishes the Apache Corporation 2003 Stock Appreciation Rights Plan (the “Plan”) for Eligible Employees (as defined in Section 2.1 hereof). The Plan permits the grant of stock appreciation rights to Eligible Employees selected by the Committee (as defined in Section 2.1 hereof).

1.2 Purposes. The purposes of the Plan are to provide the Eligible Employees designated by the Committee for participation in the Plan with added incentives to continue in the long-term service of the Company and to create in such employees a more direct interest in the future success of the operations of the Company by relating incentive compensation to increases in stockholder value, so that the income of those employees is more closely aligned with the interests of the Company’s stockholders. The Plan is also designed to retain and motivate Eligible Employees and attract talented personnel in a competitive environment.

1.3 Effective Date. The effective date of the Plan (the “Effective Date”) is May 1, 2003.

Section 2

Definitions

2.1 Definitions. The following terms shall have the meanings set forth below:

     (a) “Administrative Agent” means any designee or agent that may be appointed by the Committee pursuant to Section 3.1(b) hereof.

     (b) “Affiliated Corporation” means any corporation or other entity (including but not limited to a partnership) which is affiliated with Apache Corporation through stock ownership or otherwise and is treated as a common employer under the provisions of Sections 414(b) and (c) or any successor section(s) of the Internal Revenue Code.

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     (c) “Board” means the Board of Directors of the Company.

     (d) “Committee” means the Stock Option Plan Committee of the Board, which is empowered hereunder to take actions in the administration of the Plan. The Committee shall be constituted at all times as to permit the Plan to comply with Rule 16b-3 or any successor rule(s) promulgated under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

     (e) “Eligible Employees” means full-time employees (including, without limitation, officers and directors who are also employees), and certain part-time employees, of the Company or any division thereof.

     (f) “Exercise Date” means the date of exercise determined in accordance with subsection 7.2(g) hereof.

     (g) “Expiration Date” means the date on which the Stock Appreciation Right Period (as defined in subsection 7.2(c) hereof) ends.

     (h) “Fair Market Value” means the per share closing price of the Stock as reported on The New York Stock Exchange, Inc. Composite Transactions Reporting System for a particular date. If there are no Stock transactions on such date, the Fair Market Value shall be determined as of the immediately preceding date on which there were Stock transactions.

     (i) “Grant Date” means the date of grant determined in accordance with subsection 7.2(h) hereof.

     (j) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.

     (k) “Participant” means an Eligible Employee designated by the Committee from time to time during the term of the Plan to receive one or more Stock Appreciation Rights under the Plan.

     (l) “Stock Appreciation Right” means to receive an amount equal to the excess of the Fair Market Value as of the Exercise Date of one share of Stock over the SAR Price times the number of shares of Stock to which the Stock Appreciation Right relates.

     (m) “SAR Price” means the price at which the Stock Appreciation Right was granted determined in accordance with subsection 7.2(b) hereof.

     (n) “Stock” means the U.S. $1.25 par value Common Stock of the Company.

2.2 Headings; Gender and Number. The headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. Except when otherwise indicated by the context, the masculine gender shall

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also include the feminine gender, and the definition of any term herein in the singular shall also include the plural.

Section 3

Plan Administration

3.1 Administration by the Committee.

     (a) The Plan shall be administered by the Committee. In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, select the Participants from among the Eligible Employees, determine the Stock Appreciation Rights to be granted pursuant to the Plan, the number of shares of Stock to which each Stock Appreciation Right relates, the time at which such Stock Appreciation Rights are to be granted, fix the SAR Price, and establish such other terms and requirements as the Committee may deem necessary or desirable and consistent with the terms of the Plan. The Committee shall determine the form or forms of the agreements with Participants which shall evidence the particular provisions, terms, conditions, rights and duties of the Company and the Participants with respect to Stock Appreciation Rights granted pursuant to the Plan, which provisions need not be identical except as may be provided herein.

     (b) The Committee may from time to time adopt such rules and regulations for carrying out the purposes of the Plan as it may deem proper and in the best interests of the Company. The Committee may appoint an Administrative Agent, who need not be a member of the Committee or an employee of the Company, to assist the Committee in administration of the Plan and to whom it may delegate such powers as the Committee deems appropriate, except that the Committee shall determine any dispute. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan, or in any agreement entered into hereunder, in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. No member of the Committee shall be liable for any action or determination made in good faith. The determination, interpretations and other actions of the Committee pursuant to the provisions of the Plan shall be binding and conclusive for all purposes and on all persons.

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Section 4

Adjustments to or Other Changes in Stock

4.1 Adjustments for Stock Split, Stock Dividend, etc. If the Company shall at any time increase or decrease the number of its outstanding shares of Stock or change in any way the rights and privileges of such shares by means of the payment of a Stock dividend or any other distribution upon such shares payable in Stock, or through a Stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock then in relation to the Stock that is affected by one or more of the above events, the numbers, rights and privileges of the following shall be, in each case, equitably and proportionally adjusted to take into account the occurrence of any of the above events, (i) the shares of Stock to which each outstanding Stock Appreciation Right relates; and (ii) the SAR Price for each outstanding Stock Appreciation Right granted hereunder.

4.2 Other Changes in Stock. In the event there shall be any change, other than as specified in Section 4.1 hereof, in the number or kind of outstanding shares of Stock or of any stock or other securities into which the Stock shall be changed or for which it shall have been exchanged, and if the Committee shall in its discretion determine that such change equitably requires an adjustment in the number or kind of shares to which outstanding Stock Appreciation Rights relate, then such adjustments shall be made by the Committee and shall be effective for all purposes of the Plan and for each outstanding Stock Appreciation Right that involves the particular type of stock for which a change was effected.

4.3 Determination by the Committee, Etc. Adjustments under this Section 4 shall be made by the Committee, whose determinations with regard thereto shall be final and binding upon all parties.

Section 5

Reorganization or Liquidation

In the event that the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or if all or substantially all of the assets or more than 20 percent of the outstanding voting stock of the Company is acquired by any other corporation, business entity or person, or in case of a reorganization (other than a reorganization under the United States Bankruptcy Code) or liquidation of the Company, and if the provisions of Section 8 hereof do not apply, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall, as to the Plan and outstanding Stock Appreciation Rights either (i) make appropriate provision for the adoption and continuation of the Plan by the acquiring or successor corporation and for the protection of any such outstanding Stock Appreciation Rights by the substitution on an equitable basis of appropriate stock of the Company or of the merged,

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consolidated or otherwise reorganized corporation which will be issuable with respect to the Stock, provided that no additional benefits shall be conferred upon the Participants holding such Stock Appreciation Rights as a result of such substitution, and the excess of the aggregate Fair Market Value of the shares of Stock to which the Stock Appreciation Rights relate immediately after such substitution over the aggregate SAR Price thereof is not more than the excess of the aggregate Fair Market Value of the shares of Stock to which such Stock Appreciation Rights relate immediately before such substitution over the aggregate Unit Price thereof, or (ii) upon written notice to the Participants, provide that all unexercised Stock Appreciation Rights shall be exercised within a specified number of days of the date of such notice or such Stock Appreciation Rights will be terminated. In the latter event, the Committee shall accelerate the vesting dates of outstanding Stock Appreciation Rights so that all Stock Appreciation Rights become fully vested and exercisable prior to any such event.

Section 6

Participation

Participants in the Plan shall be those Eligible Employees who, in the judgment of the Committee, are performing, or during the term of their incentive arrangement will perform, vital services in the management, operation and development of the Company or an Affiliated Corporation, and significantly contribute, or are expected to significantly contribute, to the achievement of the Company’s long-term corporate economic objectives. Participants may be granted from time to time one or more Stock Appreciation Rights; provided, however, that the grant of each such Stock Appreciation Right shall be separately approved by the Committee, and receipt of one such Stock Appreciation Right shall not result in automatic receipt of any other Stock Appreciation Right. Upon determination by the Committee that a Stock Appreciation Right is to be granted to a Participant, written notice shall be given to such person, specifying the terms, conditions, rights and duties related thereto. Each Participant shall, if required by the Committee, enter into an agreement with the Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan, specifying such terms, conditions, rights and duties. Stock Appreciation Rights shall be deemed to be granted as of the date specified in the grant resolution of the Committee, which date shall be the date of any related agreement with the Participant. In the event of any inconsistency between the provisions of the Plan and any such agreement entered into hereunder, the provisions of the Plan shall govern.

Section 7

Stock Appreciation Rights

7.1 Grant of Stock Appreciation Rights. Coincident with or following designation for participation in the Plan, an Eligible Employee may be granted one or more Stock Appreciation Rights. Grants of Stock Appreciation Rights under the Plan shall be made

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by the Committee. In no event shall the exercise of one Stock Appreciation Right affect the right to exercise any other Stock Appreciation Right or affect the number of shares of Stock to which any other Share Appreciation Right relates, except as provided in subsection 7.2(j) hereof.

7.2 Stock Appreciation Right Agreements. Each Stock Appreciation Right granted under the Plan shall be evidenced by a written agreement which shall be entered into by the Company and the Participant to whom the Stock Appreciation Right is granted (the “Stock Appreciation Right Agreement”), and which shall contain the following terms and conditions, as well as such other terms and conditions, not inconsistent therewith, as the Committee may consider appropriate in each case:

     (a) Number of Shares. Each Stock Appreciation Right Agreement shall state that it relates to a specified number of shares of Stock, as determined by the Committee.

     (b) SAR Price. The price shall be determined in each case by the Committee at the time of grant and set forth in the Stock Appreciation Right Agreement, but in no event shall the SAR Price be less than the Fair Market Value of the Stock on the Grant Date.

     (c) Duration of Stock Appreciation Rights; Employment Required For Exercise. Each Stock Appreciation Right Agreement shall state the period of time, determined by the Committee, within which the Stock Appreciation Right may be exercised by the Participant (the “Stock Appreciation Right Period”). The Stock Appreciation Right Period must end, in all cases, not more than ten years from the Grant Date. Except as otherwise provided in Sections 5 and 8 and subsection 7.2(d)(iv) hereof, each Stock Appreciation Right granted under the Plan shall become exercisable in increments such that 25 percent of the Share Appreciation Right becomes exercisable on each of the four subsequent one-year anniversaries of the date the Stock Appreciation Right is granted, provided that each such additional 25-percent increment shall become exercisable only if the Participant has been continuously employed by the Company from the date the Stock Appreciation Right is granted through the date on which each such additional 25-percent increment becomes exercisable.

     (d) Termination of Employment, Death, Disability, Etc. Each Stock Appreciation Right Agreement shall provide as follows with respect to the exercise of the Stock Appreciation Right upon termination of the employment or the death of the Participant:

          (i) If the employment of the Participant by the Company is terminated within the Stock Appreciation Right Period for cause, as determined by the Company, the Stock Appreciation Right shall thereafter be void for all purposes. As used in this subsection 7.2(d), “cause” shall mean a gross violation, as determined by the Company, of the Company’s established policies and procedures, provided that the effect of this subsection 7.2(d) shall be limited to determining the consequences of a termination and that nothing in this subsection 7.2(d) shall restrict or otherwise interfere with the Company’s discretion with respect to the termination of any employee.

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          (ii) If the Participant retires from employment by the Company on or after attaining age 60, the Stock Appreciation Right may be exercised by the Participant within 36 months following his or her retirement (provided that such exercise must occur within the Stock Appreciation Right Period), but not thereafter. In the event of the Participant’s death during such 36-month period, each Stock Appreciation Right may be exercised by those entitled to do so in the manner referred to in (iv) below. In any such case, the Stock Appreciation Right may be exercised only as to the increment(s) of the Stock Appreciation Right that have become exercisable on or before the date of the Participant’s retirement.

          (iii) If the Participant becomes disabled (as determined pursuant to the Company’s Long-Term Disability Plan or any successor plan), during the Stock Appreciation Right Period while still employed, or within the three-month period referred to in subsection 7.2(d)(v) below, or within the 36-month period referred to in subsection 7.2(d)(ii) above, the Stock Appreciation Right may be exercised by the Participant or by his or her guardian or legal representative, within twelve months following the Participant’s disability, or within the 36-month period referred to in subsection 7.2(d)(ii) above if applicable and if longer (provided that such exercise must occur within the Stock Appreciation Right Period), but not thereafter. In the event of the Participant’s death during such twelve-month period, each Stock Appreciation Right may be exercised by those entitled to do so in the manner referred to in subsection 7.2(d)(iv) below. In any such case, the Stock Appreciation Right may be exercised only as to the increment(s) of the Stock Appreciation Right that have become exercisable on or before the date of the Participant’s disability.

          (iv) In the event of the Participant’s death while still employed by the Company, each Stock Appreciation Right of the deceased Participant may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution within twelve months following the Participant’s death (provided that in any event such exercise must occur within the Stock Appreciation Right Period), but not thereafter, as to all increments of each Stock Appreciation Right, including each 25-percent increment of the Stock Appreciation Right, if any, which has not yet become exercisable at the time of the Participant’s death. In the event of the Participant’s death within the 36-month period referred to in subsection 7.2(d)(ii) above, the increment(s) of or within the twelve-month period referred to in subsection 7.2(d)(iii) above, the increment(s) of each Stock Appreciation Right of the deceased Participant that are exercisable at the time of death may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution within twelve months following the Participant’s death or within the 36-month period referred to in subsection 7.2(d)(ii) above, if applicable and if longer (provided that in any event such exercise must occur within the Stock Appreciation Right Period).

          (v) If the employment of the Participant by the Company is terminated (which for this purpose means that the Participant is no longer employed by the Company or by an Affiliated Corporation) within the Stock Appreciation Right Period for any reason other than cause, the Participant’s retirement on or after attaining age 60, or the Participant’s disability or death, the Stock Appreciation Right may be exercised by

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the Participant within three months following the date of such termination (provided that such exercise must occur within the Stock Appreciation Right Period), but not thereafter. In any such case, the Stock Appreciation Right may be exercised only as to the increment(s) of the Stock Appreciation Right that have become exercisable on or before the date of termination of the Participant’s employment.

     (e) Transferability. Each Stock Appreciation Right Agreement shall provide that the Stock Appreciation Right granted therein is not transferable by the Participant except by will or pursuant to the laws of descent and distribution, and that such Stock Appreciation Right is exercisable during the Participant’s lifetime only by him or her, or in the event of the Participant’s disability or incapacity, by his or her guardian or legal representative.

     (f) Agreement to Continue in Employment. Each Stock Appreciation Right Agreement shall contain the Participant’s agreement to remain in the employment of the Company, at the pleasure of the Company, for a continuous period of at least one year after the date of such Stock Appreciation Right Agreement, at the salary rate in effect on the date of such agreement or at such changed rate as may be fixed, from time to time, by the Company.

     (g) Exercise, Payments, Etc.

          (i) Each Stock Appreciation Right Agreement shall provide that the method for exercising the Stock Appreciation Right granted therein shall be by delivery to the Administrative Agent or to the Office of the Secretary of the Company of written notice specifying the number of shares of Stock that relate to the Stock Appreciation Right being exercised. Such notice shall be in a form satisfactory to the Committee and shall specify the particular Stock Appreciation Rights (or portions thereof) which are being exercised and the number of shares of Stock that relate to the Stock Appreciation Rights being exercised. The exercise of the Stock Appreciation Right shall be deemed effective on the date such notice is received by the Administrative Agent or by the Office of the Secretary (the “Exercise Date”).

          (ii) Subject to subsection 7.2(i) and Section 12.1 hereof, the amount to which the Participant is entitled as a result of the exercise of the Stock Appreciation Right shall be paid through the Company’s payroll system, as part of the payroll cycle next following the Exercise Date.

          (iii) For purposes of the Plan, the income resulting from a Stock Appreciation Right exercise shall be based on the Fair Market Value of the Stock for the Exercise Date.

     (h) Grant Date. A Stock Appreciation Right shall be considered as having been granted on the date specified in the grant resolution of the Committee.

     (i) Tax Withholding. Each Stock Appreciation Right Agreement shall provide that, upon exercise of a Stock Appreciation Right, minimum tax withholding required by Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code and

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applicable state and local income and other tax laws shall be deducted from the amount payable to the Participant.

     (j) Adjustment of Stock Appreciation Rights. Subject to the provisions of Sections 4, 5, 7, 8 and 11 hereof, the Committee may make any adjustment in the number of shares of Stock to which an outstanding Stock Appreciation Right relates, or the terms of an outstanding Stock Appreciation Right and a subsequent granting of a Stock Appreciation Right, by amendment or by substitution for an outstanding Stock Appreciation Right; however, except as provided in Sections 4, 5, 8 and 11 hereof, the Committee may not adjust the SAR Price of any outstanding Stock Appreciation Right. Such amendment or substitution may result in terms and conditions (including the number of shares of Stock to which the Stock Appreciation Right relates, vesting schedule or Stock Appreciation Right Period) that differ from the terms and conditions of the original Stock Appreciation Right. The Committee may not, however, adversely affect the rights of any Participant to previously granted Stock Appreciation Rights without the consent of such Participant. If such action is effected by amendment, the effective date of such amendment will be the date of grant of the original Stock Appreciation Right.

7.3 Stockholder Privileges. No Participant shall have any rights as a stockholder with respect to any shares of Stock to which a Stock Appreciation Right relates.

Section 8

Change of Control

8.1 In General. In the event of the occurrence of a change of control of the Company, as defined in Section 8.3 hereof, all outstanding Stock Appreciation Rights shall become automatically vested, without further action by the Committee or the Board, so as to make all such Stock Appreciation Rights fully vested and exercisable as of the date of such change of control.

8.2 Limitation on Payments. If the provisions of this Section 8 would result in the receipt by any Participant of a payment within the meaning of Section 280G or any successor section(s) of the Internal Revenue Code, and the regulations promulgated thereunder, and if the receipt of such payment by any Participant would, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Sections 280G and 4999 or any successor section(s) of the Internal Revenue Code, then the amount of such payment shall be reduced to the extent required, in the opinion of independent tax counsel, to prevent the imposition of such excise tax; provided, however, that the Committee, in its sole discretion, may authorize the payment of all or any portion of the amount of such reduction to the Participant.

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8.3 Definition. For purposes of the Plan, a “change of control” shall mean any of the events specified in the Company’s Income Continuance Plan or any successor plan which constitute a change of control within the meaning of such plan.

Section 9

Rights of Employees, Participants

9.1 Employment. Nothing contained in the Plan or in any Stock Appreciation Right granted under the Plan shall confer upon any Participant any right with respect to the continuation of his or her employment by the Company or any Affiliated Corporation, or interfere in any way with the right of the Company or any Affiliated Corporation, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the level of the Participant’s compensation from the level in existence at the time of the grant of an Stock Appreciation Right. Whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of employment shall be determined by the Committee at the time.

9.2 Nontransferability. No right or interest of any Participant in an Stock Appreciation Right granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of a Participant’s death, a Participant’s rights and interests in any Stock Appreciation Right shall, to the extent provided in Section 7 hereof, be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Stock Appreciation Right may be made by, the Participant’s legal representatives, heirs or legatees. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his or her affairs because of mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator or other legal personal representative upon furnishing the Committee with evidence of such status satisfactory to the Committee.

Section 10

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of a Stock Appreciation Right exercise shall not constitute “earnings” or “compensation” with respect to which any other employee benefits of such Participant are determined including, without limitation, benefits under any pension, profit sharing, life insurance or salary continuation plan.

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Section 11

Plan Amendment, Modification and Termination

The Committee or the Board may at any time terminate, and from time to time may amend or modify the Plan provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the Company’s stockholders if stockholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements unless the Company, on the advice of counsel, determines that stockholder approval is otherwise necessary or desirable.

No amendment, modification or termination of the Plan shall in any manner adversely affect any Stock Appreciation Right theretofore granted under the Plan, without the consent of the Participant holding such Stock Appreciation Right.

The Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with the provisions of the laws (including, but not limited to, tax laws and regulations) of countries other than the United States in which the Company may operate, so as to assure the viability of the benefits of the Plan to Participants employed in such countries.

Section 12

Withholding

12.1 Withholding Requirement. The Company’s obligations to deliver the amounts payable to the Participant for the exercise of a Stock Appreciation Right, shall be subject to the Participant’s satisfaction of all applicable federal, state and local income and other tax withholding requirements.

12.2 Excess Withholding. At the time the Committee grants a Stock Appreciation Right, it may, in its sole discretion, grant the Participant an election to pay additional or excess amounts of tax withholding, beyond the required amounts and up to the Participant’s marginal tax rate. Such election must be specified in the written notice of exercise given in accordance with subsection 7.2(g) hereof.

Section 13

Requirements of Law

13.1 Requirements of Law. The payment of amounts pursuant to the Plan shall be subject to all applicable laws, rules and regulations.

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13.2 Federal Securities Laws Requirements. If a Participant is an officer or director of the Company within the meaning of Section 16 of the 1934 Act, Stock Appreciation Rights granted hereunder shall be subject to all conditions required under Rule 16b-3, or any successor rule(s) promulgated under the 1934 Act, to qualify the Stock Appreciation Right for any exception from the provisions of Section 16 available under such rule. Such conditions are hereby incorporated herein by reference and shall be set forth in the Stock Appreciation Right Agreement with the Participant which describes the Stock Appreciation Right.

13.3 Governing Law. The Plan and all Stock Appreciation Right Agreements hereunder shall be construed in accordance with and governed by the laws of the State of Texas.

Section 14

Duration of the Plan

The Plan shall terminate effective as of May 2, 2007, and no Stock Appreciation Right shall be granted on or after such termination date. Any Stock Appreciation Rights outstanding at the time of the Plan termination shall continue to be exercisable in accordance with the Stock Appreciation Right Agreement pertaining to each such Stock Appreciation Right.

Dated: May 2, 2007

	APACHE CORPORATION
ATTEST:
/s/ Cheri L. Peper	By:	/s/ Jeffrey M. Bender
Cheri L. Peper		Jeffrey M. Bender
Corporate Secretary		Vice President, Human Resources

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EX-10.3

Exhibit 10.3

APACHE CORPORATION

2005 STOCK OPTION PLAN

Amended and Restated May 2, 2007; Effective as of May 2, 2007

Section 1

Introduction

1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter referred to, together with its Affiliated Corporations (as defined in Section 2.1 hereof) as the “Company” except where the context otherwise requires), hereby establishes the Apache Corporation 2005 Stock Option Plan (the “Plan”) for Eligible Employees (as defined in Section 2.1 hereof). The Plan permits the grant of stock options to Eligible Employees selected by the Committee (as defined in Section 2.1 hereof).

1.2 Purposes. The purposes of the Plan are to provide the Eligible Employees designated by the Committee for participation in the Plan with added incentives to continue in the long-term service of the Company and to create in such employees a more direct interest in the future success of the operations of the Company by relating incentive compensation to increases in stockholder value, so that the income of those employees is more closely aligned with the interests of the Company’s stockholders. The Plan is also designed to attract outstanding individuals and to retain and motivate Eligible Employees by providing an opportunity for investment in the Company.

1.3 Effective Date. The Effective Date of the Plan (the “Effective Date”) is February 3, 2005. This Plan and each Option (as defined in Section 2.1 hereof) granted hereunder is conditioned on and shall be of no force or effect until the Plan is approved by the stockholders of the Company. The Committee may grant Options, the exercise of which shall be expressly subject to the condition that the Plan shall have been approved by the stockholders of the Company.

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Section 2
Definitions

2.1 Definitions. The following terms shall have the meanings set forth below:

     (a) “Administrative Agent” means any designee or agent that may be appointed by the Committee pursuant to Section 3.1(b) hereof.

     (b) “Affiliated Corporation” means any corporation or other entity (including but not limited to a partnership) which is affiliated with Apache Corporation through stock ownership or otherwise and is treated as a common employer under the provisions of Sections 414(b) and (c) or any successor section(s) of the Internal Revenue Code.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Committee” means the Stock Option Plan Committee of the Board, which is empowered hereunder to take actions in the administration of the Plan. The Committee shall be constituted at all times as to permit the Plan to comply with Rule 16b-3 or any successor rule(s) promulgated under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

     (e) “Eligible Employees” means full-time employees (including, without limitation, officers and directors who are also employees), and certain part-time employees, of the Company or any division thereof.

     (f) “Expiration Date” means the date on which the Option Period (as defined in subsection 7.2(c) hereof) ends.

     (g) “Fair Market Value” means the per share closing price of the Stock as reported on The New York Stock Exchange, Inc. Composite Transactions Reporting System for a particular date or, if the Stock is not so listed at any time, as reported on NASDAQ or on such other exchange or electronic trading system as, on the date in question, reports the largest number of traded shares of Stock. If on such date there are no transactions in the Stock, the Fair Market Value shall be determined as of the immediately preceding date on which there were transactions in the Stock.

     (h) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be amended from time to time, and any successor thereto.

     (i) “Option” means a right to purchase shares of Stock at a stated price for a specified period of time. All Options granted under the Plan shall be Options which are not “incentive stock options” as described in Section 422 or any successor section(s) of the Internal Revenue Code.

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     (j) “Option Price” means the price at which shares of Stock subject to an Option may be purchased, determined in accordance with subsection 7.2(b) hereof.

     (k) “Participant” means an Eligible Employee designated by the Committee from time to time during the term of the Plan to receive one or more Options under the Plan.

     (l) “Stock” means the U.S. $0.625 par value Common Stock of the Company or any security into which such Common Stock is converted or exchanged upon merger, consolidation, or any capital restructuring (within the meaning of Section 4.3) of the Company.

     2.2 Headings; Gender and Number. The headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. Except when otherwise indicated by the context, the masculine gender shall also include the feminine gender, and the definition of any term herein in the singular shall also include the plural.

Section 3

Plan Administration

3.1 Administration by the Committee.

     (a) The Plan shall be administered by the Committee. In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, select the Participants from among the Eligible Employees, determine the Options to be granted pursuant to the Plan, the number of shares of Stock to be issued thereunder, the time at which such Options are to be granted, fix the Option Price, and establish such other terms and requirements as the Committee may deem necessary or desirable and consistent with the terms of the Plan. The Committee shall determine the form or forms of the agreements with Participants which shall evidence the particular provisions, terms, conditions, rights and duties of the Company and the Participants with respect to Options granted pursuant to the Plan, which provisions need not be identical except as may be provided herein.

     (b) The Committee may from time to time adopt such rules and regulations for carrying out the purposes of the Plan as it may deem proper and in the best interests of the Company. The Committee may appoint an Administrative Agent, who need not be a member of the Committee or an employee of the Company, to assist the Committee in administration of the Plan and to whom it may delegate such powers as the Committee deems appropriate,

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except that the Committee shall determine any dispute. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan, or in any agreement entered into hereunder, in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. No member of the Committee shall be liable for any action or determination made in good faith. The determination, interpretations and other actions of the Committee pursuant to the provisions of the Plan shall be binding and conclusive for all purposes and on all persons.

3.2 Compliance with Section 162(m). The Plan is intended to comply with the requirements of Section 162(m) or any successor section(s) of the Internal Revenue Code (“Section 162(m)”) as to any “covered employee” as defined in Section 162(m), and shall be administered, interpreted and construed consistently therewith. In accordance with this intent, the amount of income a Participant may receive from Options granted under the Plan shall be based solely on an increase in the value of the Stock after the date of the grant of the Option, or such other bases as may be permitted by applicable law. The Committee is authorized to take such additional action, if any, that may be required to ensure that the Plan and any Option granted under the Plan satisfy the requirements of Section 162(m), taking into account any regulations or other guidance issued by the Internal Revenue Service.

Section 4

Stock Subject to the Plan

4.1 Number of Shares. Subject to Section 7.1 hereof and to adjustment pursuant to Section 4.3 hereof, five million (5,000,000) shares of Stock are authorized for issuance under the Plan in accordance with the provisions of the Plan and subject to such restrictions or other provisions as the Committee may from time to time deem necessary. This authorization may be increased from time to time by approval of the Board and the stockholders of the Company if, on the advice of counsel for the Company, such stockholder approval is required. Shares of Stock which may be issued upon exercise of Options shall be applied to reduce the maximum number of shares of Stock remaining available for use under the Plan. The Company shall at all times during the term of the Plan and while any Options are outstanding retain as authorized and unissued Stock, or as Stock in the Company’s treasury, at least the number of shares from time to time required under the provisions of the Plan, or otherwise assure itself of its ability to perform its obligations hereunder.

4.2 Other Shares of Stock. Any shares of Stock that are subject to an Option which expires, is forfeited, is cancelled, or for any reason is terminated unexercised, and any shares of Stock that for any other reason are not issued to

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a Participant or are forfeited shall automatically become available for use under the Plan.

4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall at any time increase or decrease the number of its outstanding shares of Stock or change in any way the rights and privileges of such shares by means of the payment of a Stock dividend or any other distribution upon such shares payable in Stock, or through a Stock split, subdivision, consolidation, combination, reclassification or recapitalization involving the Stock (any of the foregoing being herein called a “capital restructuring”), then in relation to the Stock that is affected by one or more of the above events, the numbers, rights and privileges of the following shall be, in each case, equitably and proportionally adjusted to take into account the occurrence of any of the above events, (i) the shares of Stock as to which Options may be granted under the Plan; (ii) the shares of Stock then included in each outstanding Option granted hereunder; and (iii) the Option Price for each outstanding Option granted hereunder.

4.4 Dividend Payable in Stock of Another Corporation, Etc. If the Company shall at any time pay or make any dividend or other distribution upon the Stock payable in securities or other property (except money or Stock), a proportionate part of such securities or other property shall be set aside and delivered to any Participant then holding an Option for the particular type of Stock for which the dividend or other distribution was made, upon exercise thereof. Prior to the time that any such securities or other property are delivered to a Participant in accordance with the foregoing, the Company shall be the owner of such securities or other property and shall have the right to vote the securities, receive any dividends payable on such securities, and in all other respects shall be treated as the owner. If securities or other property which have been set aside by the Company in accordance with this Section are not delivered to a Participant because an Option is not exercised, then such securities or other property shall remain the property of the Company and shall be dealt with by the Company as it shall determine in its sole discretion.

4.5 Other Changes in Stock. In the event there shall be any change, other than as specified in Sections 4.3 and 4.4 hereof, in the number or kind of outstanding shares of Stock or of any stock or other securities into which the Stock shall be changed or for which it shall have been exchanged, and if the Committee shall in its discretion determine that such change equitably requires an adjustment in the number or kind of shares subject to outstanding Options or which have been reserved for issuance pursuant to the Plan but are not then subject to an Option, then such adjustments shall be made by the Committee and shall be effective for all purposes of the Plan and on each outstanding Option that involves the particular type of stock for which a change was effected.

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4.6 Rights to Subscribe. If the Company shall at any time grant to the holders of its Stock rights to subscribe pro rata for additional shares thereof or for any other securities of the Company or of any other corporation, there shall be reserved with respect to the shares then under Option to any Participant of the particular class of Stock involved the Stock or other securities which the Participant would have been entitled to subscribe for if immediately prior to such grant the Participant had exercised his entire Option. If, upon exercise of any such Option, the Participant subscribes for the additional shares or other securities, the aggregate Option Price shall be increased by the amount of the price that is payable by the Participant for such additional shares or other securities.

4.7 General Adjustment Rules. No adjustment or substitution provided for in this Section 4 shall require the Company to sell a fractional share of Stock under any Option, or otherwise issue a fractional share of Stock, and the total substitution or adjustment with respect to each Option shall be limited by deleting any fractional share. In the case of any such substitution or adjustment, the aggregate Option Price for the shares of Stock then subject to the Option shall remain unchanged but the Option Price per share under each such Option shall be equitably adjusted by the Committee to reflect the greater or lesser number of shares of Stock or other securities into which the Stock subject to the Option may have been changed.

4.8 Determination by the Committee, Etc. Adjustments under this Section 4 shall be made by the Committee, whose determinations with regard thereto shall be final and binding upon all parties.

Section 5

Reorganization or Liquidation

In the event that the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or if all or substantially all of the assets or more than 20 percent of the outstanding voting stock of the Company is acquired by any other corporation, business entity or person, or in case of a reorganization (other than a reorganization under the United States Bankruptcy Code) or liquidation of the Company, and if the provisions of Section 8 hereof do not apply, the Committee, or the board of directors of any corporation assuming the obligations of the Company, shall, as to the Plan and outstanding Options make appropriate provision for the adoption and continuation of the Plan by the acquiring or successor corporation and for the protection of any such outstanding Options by the substitution on an equitable basis of appropriate stock of the Company or of the merged,

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consolidated or otherwise reorganized corporation which will be issuable with respect to the Stock, provided that no additional benefits shall be conferred upon the Participants holding such Options as a result of such substitution, and the excess of the aggregate Fair Market Value of the shares subject to the Options immediately after such substitution over the aggregate Option Price thereof is not more than the excess of the aggregate Fair Market Value of the shares subject to such Options immediately before such substitution over the aggregate Option Price thereof. Additionally, upon the occurrence of such an event and upon written notice to the Participants, the Committee may provide that all unexercised Options shall be exercised within a specified number of days of the date of such notice or such Options will be terminated. In the latter event, the Committee shall accelerate the vesting dates of outstanding Options so that all Options become fully vested and exercisable prior to any such event.

Section 6

Participation

Participants in the Plan shall be those Eligible Employees who, in the judgment of the Committee, are performing, or during the term of their incentive arrangement will perform, vital services in the management, operation and development of the Company or an Affiliated Corporation, and significantly contribute, or are expected to significantly contribute, to the achievement of the Company’s long-term corporate economic objectives. Participants may be granted from time to time one or more Options; provided, however, that the grant of each such Option shall be separately approved by the Committee, and receipt of one such Option shall not result in automatic receipt of any other Option. Upon determination by the Committee that an Option is to be granted to a Participant, written notice shall be given to such person, specifying the terms, conditions, rights and duties related thereto. Each Participant shall, if required by the Committee, enter into an agreement with the Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan, specifying such terms, conditions, rights and duties. Options shall be deemed to be granted as of the date specified in the grant resolution of the Committee, which date shall be the date of any related agreement with the Participant. In the event of any inconsistency between the provisions of the Plan and any such agreement entered into hereunder, the provisions of the Plan shall govern.

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Section 7

Stock Options

7.1 Grant of Stock Options. Coincident with or following designation for participation in the Plan, an Eligible Employee may be granted one or more Options. Grants of Options under the Plan shall be made by the Committee. In no event shall the exercise of one Option affect the right to exercise any other Option or affect the number of shares of Stock for which any other Option may be exercised, except as provided in subsection 7.2(j) hereof. During the duration of the Plan, no Eligible Employee may be granted Options which in the aggregate cover in excess of 25 percent of the total shares of Stock authorized under the Plan.

7.2 Stock Option Agreements. Each Option granted under the Plan shall be evidenced by a written stock option agreement which shall be entered into by the Company and the Participant to whom the Option is granted (the “Stock Option Agreement”), and which shall contain the following terms and conditions set out in this Section 7.2, as well as such other terms and conditions, not inconsistent therewith, as the Committee may consider appropriate. This requirement for delivery of a written Stock Option Agreement is satisfied by electronic delivery of such agreement provided that evidence of the Participant’s receipt of such electronic delivery is available to the Company and all applicable laws and regulations permit such delivery.

     (a) Number of Shares. Each Stock Option Agreement shall state that it covers a specified number of shares of Stock, as determined by the Committee.

     (b) Price. The price at which each share of Stock covered by an Option may be purchased shall be determined in each case by the Committee and set forth in the Stock Option Agreement, but in no event shall the price be less than the Fair Market Value of the Stock on the date the Option is granted.

     (c) Duration of Options; Employment Required For Exercise. Each Stock Option Agreement shall state the period of time, determined by the Committee, within which the Option may be exercised by the Participant (the “Option Period”). The Option Period must end, in all cases, not more than ten years from the date an Option is granted. Except as otherwise provided in Sections 5 and 8 and subsection 7.2(d)(iv) hereof, each Option granted under the Plan shall become exercisable in increments such that 25 percent of the Option becomes exercisable on each of the four subsequent one-year anniversaries of the date the Option is granted, provided that each such additional 25-percent increment shall become exercisable only if the Participant has been continuously employed by the Company from the date the Option is

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granted through the date on which each such additional 25-percent increment becomes exercisable.

     (d) Termination of Employment, Death, Disability, Etc. Each Stock Option Agreement shall provide as follows with respect to the exercise of the Option upon termination of the employment or the death or disability of the Participant:

          (i) If the employment of the Participant by the Company is terminated within the Option Period for cause, as determined by the Company, the Option shall thereafter be void for all purposes. As used in this subsection 7.2(d), “cause” shall mean a gross violation, as determined by the Company, of the Company’s established policies and procedures, provided that the effect of this subsection 7.2(d) shall be limited to determining the consequences of a termination and that nothing in this subsection 7.2(d) shall restrict or otherwise interfere with the Company’s discretion with respect to the termination of any employee.

          (ii) If the Participant retires from employment by the Company on or after attaining age 60, the Option may be exercised by the Participant within 36 months following his or her retirement (provided that such exercise must occur within the Option Period), but not thereafter. In the event of the Participant’s death during such 36-month period, each Option may be exercised by those entitled to do so in the manner referred to in (iv) below. In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of the Participant’s retirement.

          (iii) If the Participant becomes disabled (as determined pursuant to the Company’s Long-Term Disability Plan or any successor plan), during the Option Period while still employed, or within the three-month period referred to in subsection 7.2(d)(v) below, or within the 36-month period referred to in subsection 7.2(d)(ii) above, the Option may be exercised by the Participant or by his or her guardian or legal representative, within twelve months following the Participant’s disability, or within the 36-month period referred to in subsection 7.2(d)(ii) above if applicable and if longer (provided that such exercise must occur within the Option Period), but not thereafter. In the event of the Participant’s death during such twelve-month period, each Option may be exercised by those entitled to do so in the manner referred to in subsection 7.2(d)(iv) below. In any such case, the Option may be exercised only as to the shares of Stock as to which the Option had become exercisable on or before the date of the Participant’s disability.

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          (iv) In the event of the Participant’s death while still employed by the Company, each Option of the deceased Participant may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution within twelve months following the Participant’s death (provided that in any event such exercise must occur within the Option Period), but not thereafter, as to all shares of Stock which are subject to such Option, including each 25-percent increment of the Option, if any, which has not yet become exercisable at the time of the Participant’s death. In the event of the Participant’s death within the 36-month period referred to in subsection 7.2(d)(ii) above or within the twelve-month period referred to in subsection 7.2(d)(iii) above, each Option of the deceased Participant that is exercisable at the time of death may be exercised by those entitled to do so under the Participant’s will or under the laws of descent and distribution within twelve months following the Participant’s death or within the 36-month period referred to in subsection 7.2(d)(ii) above, if applicable and if longer (provided that in any event such exercise must occur within the Option Period). The provisions of this paragraph (iv) of subsection 7.2(d) shall be applicable to each Stock Option Agreement as if set forth therein word for word. Each Stock Option Agreement executed by the Company prior to the adoption of this provision shall be deemed amended to include the provisions of this paragraph and all Options granted pursuant to such Stock Option Agreements shall be exercisable as provided herein.

          (v) If the employment of the Participant by the Company is terminated (which for this purpose means that the Participant is no longer employed by the Company or by an Affiliated Corporation) within the Option Period for any reason other than cause, the Participant’s retirement on or after attaining age 60, or the Participant’s disability or death, the Option may be exercised by the Participant within three months following the date of such termination (provided that such exercise must occur within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of termination of the Participant’s employment.

     (e) Transferability. Each Stock Option Agreement shall provide that the Option granted therein is not transferable by the Participant except by will or pursuant to the laws of descent and distribution, and that such Option is exercisable during the Participant’s lifetime only by him or her, or in the event of the Participant’s disability or incapacity, by his or her guardian or legal representative.

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     (f) Agreement to Continue in Employment. Each Stock Option Agreement shall contain the Participant’s agreement to remain in the employment of the Company, at the pleasure of the Company, for a continuous period of at least one year after the date of such Stock Option Agreement, at the salary rate in effect on the date of such agreement or at such changed rate as may be fixed, from time to time, by the Company. Termination of the Stock Option Agreement and all unvested Options granted under such Stock Option Agreement shall be the Company’s sole and exclusive remedy for an employee’s breach of this Section 7.2(f).

     (g) Exercise, Payments, Etc.

          (i) Each Stock Option Agreement shall provide that the method for exercising the Option granted therein shall be by delivery to the Office of the Secretary of the Company or to the Administrative Agent of written notice specifying the number of shares of Stock with respect to which such Option is exercised and payment to the Company of the aggregate Option Price. Such notice shall be in a form satisfactory to the Committee and shall specify the particular Options (or portions thereof) which are being exercised and the number of shares of Stock with respect to which the Options are being exercised. The Participant’s obligation to deliver written notice of exercise is satisfied by electronic delivery of such notice through means satisfactory to the Committee and prescribed by the Company. The exercise of the Option shall be deemed effective on the date such notice is received by the Office of the Secretary or by the Administrative Agent and payment is made to the Company of the aggregate Option Price (the “Exercise Date”); however, if payment of the aggregate Option Price is made pursuant to a sale of shares of Stock as contemplated by subsection 7.2(g)(iii)(E) below, the Exercise Date shall be deemed to be the date of such sale. If requested by the Company, such notice shall contain the Participant’s representation that he or she is purchasing the Stock for investment purposes only and his or her agreement not to sell any Stock so purchased in any manner that is in violation of the Securities Act of 1933, as amended, or any applicable state law, and such restriction, or notice thereof, shall be placed on the certificates representing the Stock so purchased. The purchase of such Stock shall take place upon delivery of such notice to the Office of the Secretary of the Company or to the Administrative Agent, at which time the aggregate Option Price shall be paid in full to the Company by any of the methods or any combination of the methods set forth in subsection 7.2(g)(iii) below.

          (ii) The shares of Stock to which the Participant is entitled as a result of the exercise of the Option shall be issued by the Company and (A) delivered by electronic means to an account designated by the Participant, or (B) delivered to the Participant in the form of a properly executed certificate or certificates representing such shares of Stock. If shares of Stock are used to pay

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all or part of the aggregate Option Price, the Company shall issue and deliver to the Participant the additional shares of Stock, in excess of the aggregate Option Price or portion thereof paid using shares of Stock, to which the Participant is entitled as a result of the Option exercise. The Company’s obligation to deliver the shares of Stock to which the Participant is entitled as a result of the exercise of the Option shall be subject to the payment in full to the Company of the aggregate Option Price and the required tax withholding.

          (iii) The aggregate Option Price shall be paid by any of the following methods or any combination of the following methods:

               (A) in cash, including the wire transfer of funds in U.S. dollars to one of the Company’s bank accounts located in the United States, with such bank account to be designated from time to time by the Company;

               (B) by personal, certified or cashier’s check payable in U.S. dollars to the order of the Company;

               (C) by delivery to the Company or the Administrative Agent of certificates representing a number of shares of Stock then owned by the Participant, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the aggregate Option Price of the Option being exercised, properly endorsed for transfer to the Company, provided that the shares of Stock used for this purpose must have been owned by the Participant for a period of at least six months;

               (D) by certification or attestation to the Company or the Administrative Agent of the Participant’s ownership (as of the Exercise Date) of a number of shares of Stock, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the aggregate Option Price of the Option being exercised, provided that the shares of Stock used for this purpose have been owned by the Participant for a period of at least six months; or

               (E) by delivery to the Company or the Administrative Agent of a properly executed notice of exercise together with irrevocable instructions to a broker to promptly deliver to the Company, by wire transfer or check as noted in subsection 7.2(g)(iii)(A) and (B) above, the amount of the proceeds of the sale of all or a portion of the Stock or of a loan from the broker to the Participant necessary to pay the aggregate Option Price.

          (iv) For purposes of the Plan, the income resulting from an Option exercise shall be based on the Fair Market Value of the Stock for the Exercise Date; however, if payment of the aggregate Option Price is made pursuant to a sale of shares of Stock as contemplated by subsection 7.2(g)(iii)(E) hereof, the Fair Market Value shall be deemed to be the per share sale price and the Exercise Date shall be deemed to be the date of such sale.

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     (h) Date of Grant. An Option shall be considered as having been granted on the date specified in the grant resolution of the Committee.

     (i) Tax Withholding. Each Stock Option Agreement shall provide that, upon exercise of the Option, the Participant shall make appropriate arrangements with the Company to provide for the minimum amount of tax withholding required by law, including without limitation Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code and applicable state and local income and other tax laws, by payment of such taxes in cash (including wire transfer), by check, or as provided in Section 13.2 hereof.

     (j) Adjustment of Options. Subject to the provisions of Sections 4, 5, 7, 8 and 12 hereof, the Committee may make any adjustment in the number of shares of Stock covered by, or the terms of an outstanding Option and a subsequent granting of an Option, by amendment or by substitution for an outstanding Option; however, except as provided in Sections 4, 5, 8 and 12 hereof, the Committee may not adjust the Option Price of any outstanding Option. Such amendment or substitution may result in terms and conditions (including the number of shares of Stock covered, vesting schedule or Option Period) that differ from the terms and conditions of the original Option. The Committee may not, however, adversely affect the rights of any Participant to previously granted Options without the consent of such Participant. If such action is effected by amendment, the effective date of such amendment will be the date of grant of the original Option.

7.3 Stockholder Privileges. No Participant shall have any rights as a stockholder with respect to any shares of Stock covered by an Option until the Participant becomes the holder of record of such Stock. Except as provided in Section 4 hereof, no adjustments shall be made for dividends or other distributions or other rights as to which there is a record date preceding the date on which such Participant becomes the holder of record of such Stock.

Section 8

Change of Control

8.1 In General. In the event of the occurrence of a change of control of the Company, as defined in Section 8.3 hereof, all outstanding Options shall become automatically vested, without further action by the Committee or the Board, so as to make all such Options fully vested and exercisable as of the date of such change of control.

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8.2 Limitation on Payments. If the provisions of this Section 8 would result in the receipt by any Participant of a payment within the meaning of Section 280G or any successor section(s) of the Internal Revenue Code, and the regulations promulgated thereunder, and if the receipt of such accelerated vesting or payment by any Participant would, in the opinion of independent tax counsel of recognized standing selected by the Company, result in the payment by such Participant of any excise tax provided for in Sections 280G and 4999 or any successor section(s) of the Internal Revenue Code, then the amount of such accelerated vesting or payment shall be reduced to the extent required, in the opinion of independent tax counsel, to prevent the imposition of such excise tax; provided, however, that any payment or vesting of any Options shall occur as otherwise provided herein to the fullest extent possible without triggering such excise tax.

8.3 Definition. For purposes of the Plan, a “change of control” shall mean any of the events specified in the Company’s Income Continuance Plan or any successor plan which constitute a change of control within the meaning of such plan.

Section 9

Rights of Employees, Participants

9.1 Employment. Nothing contained in the Plan or in any Option granted under the Plan shall confer upon any Participant any right with respect to the continuation of his or her employment by the Company or any Affiliated Corporation, or interfere in any way with the right of the Company or any Affiliated Corporation, subject to the terms of any separate employment agreement to the contrary, at any time, to terminate such employment or to increase or decrease the level of the Participant’s compensation from the level in existence at the time of the grant of an Option. Whether an authorized leave of absence, or absence in military or government service, shall constitute a termination of employment shall be determined by the Committee at the time.

9.2 Nontransferability. No right or interest of any Participant in an Option granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant, either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In the event of a Participant’s death, a Participant’s rights and interests in Options shall, to the extent provided in Section 7 hereof, be transferable by testamentary will or the laws of descent and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of any Options may be made by, the

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Participant’s legal representatives, heirs or legatees. If, in the opinion of the Committee, a person entitled to payments or to exercise rights with respect to the Plan is disabled from caring for his or her affairs because of mental condition, physical condition or age, payment due such person may be made to, and such rights shall be exercised by, such person’s guardian, conservator or other legal personal representative upon furnishing the Committee with evidence of such status satisfactory to the Committee.

Section 10

General Restrictions

10.1 Investment Representations. The Company may require a Participant, as a condition of exercising an Option, to give written assurances in substance and form satisfactory to the Company and its counsel to the effect that such person is acquiring the Stock subject to the Option for his own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws.

10.2 Compliance with Securities Laws. Each Option shall be subject to the requirement that, if at any time counsel to the Company shall determine that the listing, registration or qualification of the shares of Stock subject to such Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance or purchase of shares of Stock thereunder, such Option may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration, qualification, consent or approval.

Section 11

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of an Option exercise shall not constitute “earnings” or “compensation” with respect to which any other employee benefits of such Participant are determined including, without limitation, benefits under any pension, profit sharing, life insurance or salary continuation plan.

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Section 12

Plan Amendment, Modification and Termination

The Board may at any time terminate, and from time to time may amend or modify the Plan provided, however, that no amendment or modification may become effective without approval of the amendment or modification by the Company’s stockholders if stockholder approval is required to enable the Plan to satisfy any applicable statutory or regulatory requirements unless the Company, on the advice of counsel, determines that stockholder approval is otherwise necessary or desirable.

No amendment, modification or termination of the Plan shall in any manner adversely affect any Option theretofore granted under the Plan, without the consent of the Participant holding such Option.

The Committee shall have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with the provisions of the laws (including, but not limited to, tax laws and regulations) of countries other than the United States in which the Company may operate, so as to assure the viability of the benefits of the Plan to Participants employed in such countries.

Section 13

Withholding

13.1 Withholding Requirement. The Company’s obligations to deliver shares of Stock upon the exercise of an Option shall be subject to the Participant’s satisfaction of all applicable federal, state and local income and other tax withholding requirements.

13.2 Satisfaction of Required Withholding. At the time the Committee grants an Option, it may, in its sole discretion, grant the Participant an election to pay all such amounts of required tax withholding, or any part thereof:

     (a) by the delivery to the Company or the Administrative Agent of a number of shares of Stock then owned by the Participant, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the amount required to be withheld, provided that such shares have been held by the Participant for a period of at least six months;

16

     (b) by certification or attestation to the Company or the Administrative Agent of the Participant’s ownership (as of the Exercise Date) of a number of shares of Stock, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the amount required to be withheld, provided that such shares of Stock have been owned by the Participant for a period of at least six months; or

     (c) by the Company or the Administrative Agent withholding from the shares of Stock otherwise issuable to the Participant upon exercise of the Option, a number of shares of Stock, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the amount required to be withheld. Any such elections by Participants to have shares of Stock withheld for this purpose will be subject to the following restrictions:

          (i) all elections shall be made on or prior to the Exercise Date; and

          (ii) all elections shall be irrevocable.

13.3 Section 16 Requirements. If the Participant is an officer or director of the Company within the meaning of Section 16 or any successor section(s) of the 1934 Act (“Section 16”), the Participant must satisfy the requirements of such Section 16 and any applicable rules and regulations thereunder with respect to the use of shares of Stock to satisfy such tax withholding obligation.

Section 14

Requirements of Law

14.1 Requirements of Law. The issuance of Stock and the payment of cash pursuant to the Plan shall be subject to all applicable laws, rules and regulations.

14.2 Federal Securities Laws Requirements. If a Participant is an officer or director of the Company within the meaning of Section 16, Options granted hereunder shall be subject to all conditions required under Rule 16b-3, or any successor rule(s) promulgated under the 1934 Act, to qualify the Option for any exception from the provisions of Section 16 available under such Rule. Such conditions are hereby incorporated herein by reference and shall be set forth in the Stock Option Agreement with the Participant which describes the Option.

14.3 Governing Law. The Plan and all Stock Option Agreements hereunder shall be construed in accordance with and governed by the laws of the State of Texas.

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Section 15

Duration of the Plan

The Plan shall terminate effective as of May 2, 2007, and no Option shall be granted on or after termination date. Any Options outstanding at the time of the Plan termination shall continue to be exercisable in accordance with the Stock Option Agreement pertaining to each such Option.

Dated: May 2, 2007

	APACHE CORPORATION
ATTEST:
/s/ Cheri L. Peper	By:	/s/ Jeffrey M. Bender
Cheri L. Peper		Jeffrey M. Bender
Corporate Secretary		Vice President, Human Resources

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EX-12.1

EXHIBIT 12.1

APACHE CORPORATION
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(In Thousands)

	Six Months Ended
	June 30,
	2007		2006		2006		2005		2004		2003		2002
EARNINGS
Pretax income from continuing operations before preferred interests of subsidiaries	$	1,952,887	$	2,082,169	$	4,009,595	$	4,206,254	$	2,663,083	$	1,930,925	$	915,194
Add: Fixed charges excluding capitalized interest and preferred interest requirements of consolidated subsidiaries		122,234		73,468		178,399		138,399		134,797		132,820		128,730
Adjusted Earnings	$	2,075,121	$	2,155,637	$	4,187,994	$	4,344,653	$	2,797,880	$	2,063,745	$	1,043,924
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Interest expense including capitalized interest (1,5)	$	147,548	$	92,999	$	217,454	$	175,419	$	168,090	$	173,045	$	155,667
Amortization of debt expense		1,546		1,029		2,048		3,748		2,471		2,163		1,859
Interest component of lease rental expenditures (2)		10,814		9,515		20,198		16,220		14,984		14,458		11,895
Preferred interest requirements of consolidated subsidiaries (3)		—		—		—		—		—		11,805		19,581
Fixed charges		159,908		103,543		239,700		195,387		185,545		201,471		189,002
Preferred stock dividend requirements (4)		4,924		4,271		8,922		9,105		9,058		9,968		17,540
Combined Fixed Charges and Preferred Stock Dividends	$	164,832	$	107,814	$	248,622	$	204,492	$	194,603	$	211,439	$	206,542
Ratio of Earnings to Fixed Charges		12.98		20.82		17.47		22.24		15.08		10.24		5.52
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends		12.59		19.99		16.84		21.25		14.38		9.76		5.05

(1)	The company did not receive a tax benefit for $5 million of transaction costs written off to interest expense when the company retired its preferred interests of subsidiaries in September 2003. Given the non-deductibility of the charge, $9 million of pre-tax income was required to cover the $5 million write-off. Accordingly, interest expense has been grossed up by $4 million.
(2)	Represents the portion of rental expense assumed to be attributable to interest factors of related rental obligations determined at interest rates appropriate for the period during which the rental obligations were incurred. Approximately 32 to 34 percent applies to rental payments for all periods presented.
(3)	The company did not receive a tax benefit for a portion of its preferred interests of consolidated subsidiaries. This amount represents the pre-tax earnings that would be required to cover preferred interests requirements of consolidated subsidiaries. In September 2003, the company retired its preferred interests of subsidiaries.
(4)	The company does not receive a tax benefit for its preferred stock dividends. This amount represents the pre-tax earnings that would be required to cover its preferred stock dividends.
(5)	Interest expense related to the provisions of Financial Accounting Standards Board Interpretation No. 48 (FIN 48) “Accounting for Uncertainty in Income Taxes” is not included in the computation of ratios of earnings to fixed charges and combined fixed charges and preferred stock dividends.

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, G. Steven Farris, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Apache Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ G. Steven Farris

G. Steven Farris

President, Chief Executive Officer and

Chief Operating Officer

Date: August 8, 2007

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Roger B. Plank, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Apache Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Roger B. Plank

Roger B. Plank

Executive Vice President and Chief Financial Officer

Date: August 8, 2007

EX-32.1

EXHIBIT 32.1

APACHE CORPORATION

Certification of Chief Executive Officer
and Chief Financial Officer

     I, G. Steven Farris, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Corporation for the quarterly period ending June 30, 2007, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Corporation.

/s/ G. Steven Farris
By:	G. Steven Farris
Title:	President, Chief Executive Officer and Chief Operating Officer
Date:	August 8, 2007

     I, Roger B. Plank, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Corporation for the quarterly period ending June 30, 2007, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Corporation.

/s/ Roger B. Plank
By:	Roger B. Plank
Title:	Executive Vice President
	and Chief Financial Officer
Date:	August 8, 2007