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 March 31, 2008

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	(I.R.S. Employer
Incorporation or Organization)	Identification Number)
Suite 100, One Post Oak Central	77056-4400
2000 Post Oak Boulevard, Houston, TX	(Zip Code)
(Address of Principal Executive Offices)

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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

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	Smaller reporting company: o
		(Do not check if a smaller reporting company)

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 March 31, 2008 333,588,922

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
Form of Request for Approval of Extension of Maturity Date
Form of Request for Approval of Extension of Maturity Date
2008 Share Appreciation Program Specifics
Restricted Stock Unit Award Agreement
Statement of Computation of Ratio of Earnings to Fixed Charges
Certification by Chief Executive Officer
Certification by Chief Financial Officer
Section 1350 Certification by Chief Executive Officer and Chief Financial Officer

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

APACHE CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)

	For the Quarter Ended March 31,
	2008		2007
	(In thousands, except per common share data)
REVENUES AND OTHER:
Oil and gas production revenues	$	3,177,949	$	2,023,067
Other		9,792		(20,192	)
		3,187,741		2,002,875
OPERATING EXPENSES:
Depreciation, depletion and amortization		620,489		530,913
Asset retirement obligation accretion		26,497		24,064
Lease operating expenses		454,638		382,107
Gathering and transportation		40,976		31,263
Taxes other than income		242,578		109,970
General and administrative		82,423		67,862
Financing costs, net		44,253		42,063
		1,511,854		1,188,242
INCOME BEFORE INCOME TAXES		1,675,887		814,633
Current income tax provision		487,800		186,522
Deferred income tax provision		166,574		135,162
NET INCOME		1,021,513		492,949
Preferred stock dividends		1,420		1,420
INCOME ATTRIBUTABLE TO COMMON STOCK	$	1,020,093	$	491,529
NET INCOME PER COMMON SHARE:
Basic	$	3.06	$	1.48
Diluted	$	3.03	$	1.47

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 Quarter Ended
	March 31,
	2008			2007
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,021,513		$	492,949
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		620,489			530,913
Provision for deferred income taxes		166,574			135,162
Asset retirement obligation accretion		26,497			24,064
Other		9,611			9,372
Changes in operating assets and liabilities:
(Increase) decrease in receivables		(38,356	)		45,365
(Increase) decrease in inventories		76,311			(8,250	)
(Increase) decrease in drilling advances and other		(911	)		(4,502	)
(Increase) decrease in deferred charges and other		(8,914	)		3,304
Increase (decrease) in accounts payable		55,869			(3,296	)
Increase (decrease) in accrued expenses		(111,511	)		(156,217	)
Increase (decrease) in advances from gas purchasers		—			(9,449	)
Increase (decrease) in deferred credits and noncurrent liabilities		(8,768	)		4,144
NET CASH PROVIDED BY OPERATING ACTIVITIES		1,808,404			1,063,559
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(1,165,729	)		(1,109,095	)
Acquisition of U.S. Permian Basin properties		—			(1,000,000	)
Additions to gas gathering, transmission and processing facilities		(80,704	)		(96,427	)
Restricted cash		(228,134	)		—
Proceeds from sale of oil and gas properties		192,932			6,477
Other, net		(123,264	)		(30,149	)
NET CASH USED IN INVESTING ACTIVITIES		(1,404,899	)		(2,229,194	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Commercial paper and money market borrowings, net		(87,043	)		(298,128	)
Fixed-rate debt borrowings		—			1,494,045
Payments on fixed-rate debt		(353	)		(3,000	)
Dividends paid		(84,672	)		(51,032	)
Common stock activity		8,653			5,821
Treasury stock activity, net		(616	)		1,949
Cost of debt and equity transactions		(288	)		(13,389	)
Other		18,031			5,313
NET CASH PROVIDED BY FINANCING ACTIVITIES		(146,288	)		1,141,579
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		257,217			(24,056	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		125,823			140,524
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	383,040		$	116,468
SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	52,237		$	13,263
Income taxes paid, net of refunds		368,614			136,757

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

2

APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)

	March 31,			December 31,
	2008			2007
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	383,040		$	125,823
Receivables, net of allowance		1,972,318			1,936,977
Inventories		490,423			461,211
Drilling advances		112,873			112,840
Derivative instruments		448			20,889
Prepaid assets and other		94,001			94,511
		3,053,103			2,752,251
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full cost accounting:
Proved properties		35,778,792			34,645,710
Unproved properties and properties under development, not being amortized		1,473,476			1,439,726
Gas gathering, transmission and processing facilities		2,287,157			2,206,453
Other		421,685			416,149
		39,961,110			38,708,038
Less: Accumulated depreciation, depletion and amortization		(14,095,724	)		(13,476,445	)
		25,865,386			25,231,593
OTHER ASSETS:
Restricted cash		228,134			—
Goodwill, net		189,252			189,252
Deferred charges and other		480,200			461,555
	$	29,816,075		$	28,634,651

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

3

APACHE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)

	March 31,			December 31,
	2008			2007
	(In thousands)
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	683,581		$	617,937
Accrued operating expense		112,917			112,453
Accrued exploration and development		708,596			600,165
Accrued compensation and benefits		135,072			172,542
Accrued interest		73,153			78,187
Accrued income taxes		154,854			73,184
Current debt		227,588			215,074
Asset retirement obligation		271,476			309,777
Derivative instruments		435,561			286,226
Other		197,684			199,471
		3,000,482			2,665,016
LONG-TERM DEBT		3,911,924			4,011,605
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		3,953,792			3,924,983
Asset retirement obligation		1,553,814			1,556,909
Derivative instruments		563,287			381,791
Other		752,769			716,368
		6,823,662			6,580,051
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value, 5,000,000 shares authorized – Series B, 5.68% Cumulative, $100 million aggregate liquidation value, 100,000 shares issued and outstanding		98,387			98,387
Common stock, $0.625 par, 430,000,000 shares authorized, 341,906,506 and 341,322,088 shares issued, respectively		213,691			213,326
Paid-in capital		4,369,172			4,367,149
Retained earnings		12,394,428			11,457,592
Treasury stock, at cost, 8,317,584 and 8,394,945 shares, respectively		(236,066	)		(238,264	)
Accumulated other comprehensive loss		(759,605	)		(520,211	)
		16,080,007			15,377,979
	$	29,816,075		$	28,634,651

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, 2006				$	98,387	$	212,365	$	4,269,795		$	8,898,577		$	(256,739	)	$	(31,332	)	$	13,191,053
Comprehensive income (loss):
Net income	$	492,949			—		—		—			492,949			—			—			492,949
Commodity hedges, net of income tax benefit of $87,020		(161,815	)		—		—		—			—			—			(161,815	)		(161,815	)
Comprehensive income	$	331,134
Dividends:
Preferred					—		—		—			(1,420	)		—			—			(1,420	)
Common ($.15 per share)					—		—		—			(49,654	)		—			—			(49,654	)
Common shares issued					—		199		10,288			—			—			—			10,487
Treasury shares issued, net					—		—		1,170			—			2,928			—			4,098
Compensation expense					—		—		10,359			—			—			—			10,359
FIN 48 adoption					—		—		—			(48,502	)		—			—			(48,502	)
Other					—		—		48			252			—			—			300
BALANCE AT MARCH 31, 2007				$	98,387	$	212,564	$	4,291,660		$	9,292,202		$	(253,811	)	$	(193,147	)	$	13,447,855
BALANCE AT DECEMBER 31, 2007				$	98,387	$	213,326	$	4,367,149		$	11,457,592		$	(238,264	)	$	(520,211	)	$	15,377,979
Comprehensive income (loss):
Net income	$	1,021,513			—		—		—			1,021,513			—			—			1,021,513
Commodity hedges, net of income tax benefit of $123,133		(239,394	)		—		—		—			—			—			(239,394	)		(239,394	)
Comprehensive income	$	782,119
Dividends:
Preferred					—		—		—			(1,420	)		—			—			(1,420	)
Common ($.25 per share)					—		—		—			(83,271	)		—			—			(83,271	)
Common shares issued					—		365		5,957			—			—			—			6,322
Treasury shares issued, net					—		—		(545	)		—			2,198			—			1,653
Compensation expense					—		—		13,592			—			—			—			13,592
Other					—		—		(16,981	)		14			—			—			(16,967	)
BALANCE AT MARCH 31, 2008				$	98,387	$	213,691	$	4,369,172		$	12,394,428		$	(236,066	)	$	(759,605	)	$	16,080,007

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

2008 Activity

     Divestitures On January 29, 2008, the Company completed the sale of its interest in Ship Shoal blocks 349 and 359 on the outer continental shelf of the Gulf of Mexico to W&T Offshore, Inc. for $116 million, subject to normal post-closing adjustments.

     On January 31, 2008, the Company completed the sale of non-strategic oil and gas properties in the Permian Basin of West Texas to Vanguard Permian, LLC for $78 million, subject to normal post-closing adjustments.

     Subsequent Event On April 2, 2008, the Company completed the sale of non-strategic Canadian properties to Central Global Resources for $112 million, subject to normal post-closing adjustments.

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 March 31, 2008, the total outstanding positions of Apache’s natural gas and crude oil cash flow hedges were as follows:

Collars

					Weighted
Production					Average		Fair Value
Period	Instrument Type	Total Volumes			Floor/Ceiling		Asset/(Liability)
							(In thousands)
2008	US Gas Collars		70,125,000	MMBtu		$7.27 / 10.31	$	(50,872	)
	Canadian Gas Collars		24,750,000	GJ		6.41 / 10.04		(9,134	)
	Oil Collars		9,762,500	Bbl		64.12 / 78.96		(220,352	)
2009	US Gas Collars		18,250,000	MMBtu		7.35 / 10.19		(16,980	)
	Canadian Gas Collars		29,200,000	GJ		6.32 / 9.83		(12,878	)
	Oil Collars		8,591,000	Bbl		61.13 / 77.07		(190,399	)
2010	US Gas Collars		1,350,000	MMBtu		7.17 / 10.58		(1,402	)
	Oil Collars		6,016,000	Bbl		62.11 / 77.44		(118,165	)
2011	Oil Collars		4,377,000	Bbl		65.83 / 84.41		(63,679	)
2012	Oil Collars		1,456,000	Bbl		66.88 / 85.52		(19,397	)

6

Options

Production							Fair Value
Period	Instrument Type	Total Volumes			Strike Price		Asset/(Liability)
							(In thousands)
2008	Gas Put Option		5,500,000	MMBtu	$	8.75	$	1,419
2010	Oil Call Option		368,000	Bbl		129.50		1,656
2011	Oil Call Option		1,095,000	Bbl		134.17		5,144
2012	Oil Call Option		364,000	Bbl		138.00		1,973

Fixed-Price Swaps

					Weighted
Production					Average		Fair Value
Period	Instrument Type	Total Volumes			Fixed-Price		Asset/(Liability)
							(In thousands)
2008	Fixed-Price Oil Swap		3,300,000	Bbl	$	69.21	$	(99,090	)
2009	Fixed-Price Oil Swap		368,000	Bbl		67.95		(9,681	)
2010	Fixed-Price Oil Swap		2,018,000	Bbl		70.87		(45,304	)
2011	Fixed-Price Oil Swap		3,285,000	Bbl		71.16		(70,025	)
2012	Fixed-Price Oil Swap		2,926,000	Bbl		71.34		(59,140	)
2013	Fixed-Price Oil Swap		1,086,000	Bbl		71.34		(21,518	)

     U.S. natural gas prices in the table above 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 Henry Hub, Panhandle Eastern Pipe Line and Houston Ship Channel. The Canadian natural gas prices in the table above represent a weighted average of AECO Index prices. These gas collars are entered into on a per gigajoule (GJ) basis, are converted to U.S. dollars utilizing a March 31, 2008 exchange rate, and are settled against the AECO Index. Crude oil prices in the table above primarily represent a weighted average of NYMEX WTI Cushing Index prices on contracts entered into on a per barrel (Bbl) basis.

     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 loss on derivatives at December 31, 2007	$	(638,752	)	$	(411,678	)
Net losses realized into earnings		92,653			59,634
Net change in derivative fair value		(455,180	)		(299,028	)
Unrealized loss on derivatives at March 31, 2008	$	(1,001,279	)	$	(651,072	)

     Based on market prices as of March 31, 2008, the Company’s unrealized loss in other comprehensive income totaled $1 billion ($651 million after tax). Gains and losses on the commodity hedges will be realized in future earnings contemporaneously with the related sales of natural gas and crude oil production applicable to specific hedges. Of the $1 billion estimated unrealized loss on derivatives as of March 31, 2008, approximately $437 million ($284 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.

7

3. DEBT

     The Company’s March 31, 2008 debt-to-capitalization ratio was 20 percent, down from 22 percent at December 31, 2007.

     In February 2008 the Company requested amendments to its existing $1.5 billion U.S. five-year revolving credit facility to (a) extend the maturity date one year to May 28, 2013 and (b) remove certain restrictions on our Australian entities including their ability to incur liens and issue guarantees. The Company also requested amendments to its $450 million U.S. credit facility, $150 million Australian credit facility and $150 million Canadian credit facility to (a) extend the maturity date one year to May 12, 2013, (b) remove certain restrictions on our Australian entities including their ability to incur liens and issue guarantees, and (c) specific to the Australian credit facility, giving the Company the option of increasing the size of the facility up to a maximum amount of $400 million from the current limit of $300 million by adding commitments from new or existing lenders.

 

     Lenders approved the amendments removing certain restrictions on our Australian entities, including their ability to incur liens and issue guarantees as well as the amendment allowing the Company to increase the size of Australian credit facility to a maximum of $400 million. At March 31, 2008, lenders had extended the maturity date on all of the credit facilities except for $50 million of the $1.5 billion U.S. credit facility and $40 million of the $450 million U.S. credit facility. In April 2008, both U.S. amounts were extended and the Company increased the Australian credit facility by $50 million to $200 million, leaving $200 million, half the maximum amount.

Financing Costs, Net

     Financing costs incurred during the periods noted are composed of the following:

	For the Quarter Ended March 31,
	2008			2007
	(In thousands)
Interest expense	$	69,307		$	65,732
Amortization of deferred loan costs		851			694
Capitalized interest		(21,577	)		(21,776	)
Interest income		(4,328	)		(2,587	)
Financing costs, net	$	44,253		$	42,063

4. INCOME TAXES

     The Company estimates its 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 recognized as discrete items in the quarter in which they occur.

     Apache and its subsidiaries are subject to U.S. federal income tax as well as income tax in various state and foreign jurisdictions. The Company’s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority.

     The Company is in Administrative Appeals with the United States Internal Revenue Service (IRS) regarding the 2002 and 2003 tax years and under IRS audit for the 2004 and 2005 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.

8

5. CAPITAL STOCK

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 March 31,
	2008						2007
	Income		Shares		Per Share		Income		Shares		Per Share
	(In thousands, except per share amounts)
Basic:
Income attributable to common stock	$	1,020,093		333,393	$	3.06	$	491,529		331,213	$	1.48
Effect of Dilutive Securities:
Stock options and other		—		3,156				—		2,089
Diluted:
Income attributable to common stock, including assumed conversions	$	1,020,093		336,549	$	3.03	$	491,529		333,302	$	1.47

     The diluted earnings per share calculation excluded 30,500 and 1.6 million average shares of common stock that were anti-dilutive for the quarters ending March 31, 2008 and 2007, respectively.

Common and Preferred Stock Dividends

     During the first quarter of 2008 and 2007, Apache paid $83 million and $50 million, respectively, in dividends on its common stock. The increase in the first-quarter 2008 common stock dividends compared to the amount paid in the same period last year, including a special cash dividend of 10 cents per common share paid March 18, 2008. In addition, in each period, Apache paid a total of $1.4 million in dividends on its Series B Preferred Stock issued in August 1998.

Stock-Based Compensation

     2005 Share Appreciation Plan On May 5, 2005, the Company’s stockholders approved the 2005 Share Appreciation Plan that provided 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 had to close at or above the stated threshold for 10 days out of any 30 consecutive trading days by the end of the stated period.

     On June 14, 2007, Apache’s share price exceeded the interim threshold for the required 10-days. 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.

     On February 29, 2008, Apache’s share price exceeded the second threshold for the required 10-days. As such, Apache will issue approximately two million shares of its common stock, after minimum tax withholding requirements, in four equal installments. The first installment was issued in March 2008. Subsequent installments will be issued in 2009, 2010 and 2011 to employees remaining with the Company during that period.

     2008 Share Appreciation Program On May 7, 2008, the Stock Option Plan Committee of the Company’s board of directors, pursuant to the Apache Corporation 2007 Omnibus Equity Compensation Plan, approved the 2008 Share Appreciation Program (the “Program”) that provides incentives for employees to increase Apache’s share price to $216 by the end of 2012, with an initial goal of $162 to be achieved by the end of 2010. To achieve the trigger price, the Company’s stock price must close at or above the stated threshold for 10 trading days out of any 30 consecutive trading days by the end of the stated period. Under the Program, if the first threshold is achieved, approximately 1.1 million shares would be awarded for an intrinsic cost of $180 million. Achieving the second threshold would result in awards of approximately 1.7 million shares for an intrinsic cost of $359 million. Shares ultimately issued to employees would be reduced by the required minimum tax withholding. Awards under the Program are payable in five equal installments, beginning on a date not more than 30 days after a threshold is attained for the required measurement period and on the four succeeding anniversaries of the attainment date.

     Current accounting practices dictate that, regardless of whether these thresholds are ultimately achieved, the Company will recognize, over time, the fair value cost determined at the grant date based on numerous assumptions, including an estimate of the likelihood that Apache’s stock price will achieve these thresholds and the expected forfeiture rate. As a result, the Company will recognize expense and capitalized costs of approximately $191 million over the expected service life of the plan.

     The weighted average fair value, based on a Monte Carlo Simulation Model, was $82.14 per share, determined by using expected volatility of 26.97 percent, an expected dividend yield of 0.50 percent, and a risk free interest rate of 2.46 percent.

9

     On May 7, 2008, the Stock Option Plan Committee of Apache's board of directors awarded its chief executive officer up to 250,000 restricted stock units, 50,000 of which will vest on July 1, 2009. The remaining 200,000 shares will vest ratably on the first business day of each of 2010, 2011, 2012 and 2013. Upon vesting, the Company will issue one share of the Company's common stock as settlement for each restricted stock unit. Thirty thousand of the shares vesting each year will not be eligible for sale by the executive until such time as he retires or otherwise terminates employment with the Company. The restricted stock unit agreement, dated May 8, 2008, is included as Exhibit 10.4 to this quarterly report on Form 10-Q and incorporated herein by reference.

6. BUSINESS SEGMENT INFORMATION

     Apache has production in six countries: the United States (Gulf Coast and Central regions), Canada, Egypt, Australia, offshore the United Kingdom (U.K.) in the North Sea, and Argentina. Early in the second quarter of 2008, we finalized contracts for two exploration blocks in Chile. Financial information by country is presented below:

	United								U.K.				Other
	States		Canada		Egypt		Australia		North Sea		Argentina		International		Total
	(In thousands)
For the Quarter Ended March 31, 2008
Oil and Gas Production Revenues	$	1,369,468	$	406,262	$	671,898	$	124,099	$	516,376	$	89,846	$	—	$	3,177,949
Operating Income (1)	$	783,119	$	180,724	$	532,628	$	44,919	$	231,829	$	19,552	$	—	$	1,792,771
Other Income (Expense):
Other																9,792
General and administrative																(82,423	)
Financing costs, net																(44,253	)
Income Before Income Taxes															$	1,675,887
Total Assets	$	12,515,032	$	7,459,446	$	3,708,017	$	2,076,730	$	2,330,861	$	1,715,456	$	10,532	$	29,816,075
For the Quarter Ended March 31, 2007
Oil and Gas Production Revenues	$	861,317	$	320,170	$	396,607	$	104,184	$	273,608	$	67,181	$	—	$	2,023,067
Operating Income (1)	$	373,556	$	128,306	$	273,909	$	42,724	$	115,748	$	10,507	$	—	$	944,750
Other Income (Expense):
Other																(20,192	)
General and administrative																(67,862	)
Financing costs, net																(42,063	)
Income Before Income Taxes															$	814,633
Total Assets	$	12,663,370	$	5,978,178	$	2,603,969	$	1,442,133	$	1,894,525	$	1,459,814	$	11,818	$	26,053,807

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 taxes other than income.

10

7. ASSET RETIREMENT OBLIGATION

     The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the quarter ended March 31, 2008:

	2008
	(In thousands)
Asset retirement obligation at December 31, 2007	$	1,866,686
Liabilities incurred		85,072
Liabilities settled		(152,965	)
Accretion expense		26,497
Asset retirement obligation at March 31, 2008		1,825,290
Less current portion		271,476
Asset retirement obligation, long-term	$	1,553,814

     The asset retirement obligation reflects the estimated present value of the amount of dismantlement, removal, site reclamation and similar activities associated with our oil and gas properties. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. To determine the current present value of this obligation, some key assumptions the Company must estimate include the ultimate productive life of the properties, a risk adjusted discount rate, and an inflation factor. To the extent future revisions to these assumptions impact the present value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance.

     Liabilities settled primarily relate to individual properties plugged and abandoned during the period. Most of the activity was in the Gulf of Mexico, a portion of which relates to the continued abandonment activity on platforms lost in 2005 during Hurricanes Katrina and Rita.

8. COMMITMENTS AND CONTINGENCIES

Legal Matters

     Grynberg As more fully described in Note 9 of the financial statements in our annual report on Form 10-K for our 2007 fiscal year, in 1997, Jack J. Grynberg began filing lawsuits against other natural gas producers, gatherers, and pipelines 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 the Pioneer acquisition in 2006, 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 9 of the financial statements in our annual report on Form 10-K for our 2007 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 9 of the financial statements in our annual report on Form 10-K for our 2007 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 9 of the financial statements in our annual report on Form 10-K for our 2007 fiscal year, 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

11

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 this matter has occurred since the filing of our most recent annual report on Form 10-K.

     Other Matters The Company is involved in other litigation and is subject to government and regulatory controls in the normal course of business. The Company has an accrued liability of approximately $11 million for other legal contingencies that are 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.

Environmental Matters

     As of March 31, 2008, the Company had an undiscounted reserve for environmental remediation of approximately $26 million. The Company is not aware of any environmental claims existing as of March 31, 2008, 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.

Decommission of Downed Platforms

     In January 2008, Apache, BP plc and Chevron Corporation entered into a contract with Well Control, Inc, to decommission certain downed platforms and related well facilities located offshore Louisiana in the Gulf of Mexico for a fixed fee of $750 million. Apache’s portion is 37.5 percent, or $281 million, which is included as part of the Company’s accrued asset retirement obligation.

9. FAIR VALUE MEASUREMENTS

     The Company adopted SFAS No. 157, “Fair Value Measurements,” as of the beginning of 2008. SFAS No. 157 defines fair value, and establishes disclosure requirements for assets and liabilities presented at fair value on the consolidated balance sheet. The statement also provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value. Level 1 inputs consist of unadjusted quoted prices for identical instruments in active markets, and have the highest priority. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs which are significant and unobservable, and have the lowest priority.

     The following table presents the Company’s material assets and liabilities measured at fair value for each hierarchy level as of March 31, 2008.

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total Fair
	Inputs		Inputs		Inputs		Value
			(In thousands)
Assets:
Derivative instruments	$	—		448		—	$	448
Liabilities:
Derivative instruments	$	—		998,848		—	$	998,848

12

     Derivative instruments are valued using forward commodity price curves provided by reputable third-party brokers. Some of our derivative instruments are not actively quoted in the market, and are valued using Level 2 inputs.

10. RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED

     In March 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities.” The statement amends SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. We are currently evaluating the provisions of SFAS No. 161 and assessing the impact, if any, it may have on the Company.

     In December 2007, the FASB issued a revision to SFAS No. 141 “Business Combinations” (SFAS No. 141(R)). The revision broadens the definition of a business combination to include all transactions or other events in which control of one or more businesses is obtained. Further, the statement establishes principles and requirements for how an acquirer recognizes assets acquired, liabilities assumed and any non-controlling interests acquired. SFAS No. 141(R) is effective for business combination transactions for which the acquisition date is on or after the beginning of the first reporting period beginning on or after December 15, 2008. Early adoption is prohibited. Apache is currently evaluating the provisions of SFAS No. 141(R) and assessing the impact, if any, it may have on the Company.  

     Also in December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements.” This statement amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements.” SFAS No. 160 establishes accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, sometimes called a minority interest, is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, the amounts of consolidated net income attributable to both the parent and the noncontrolling interest must be reported separately on the face of the income statement. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. We are currently evaluating the provisions of SFAS No. 160 and assessing the impact, if any, it may have on the Company.

11. 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 the following condensed consolidating financial statements are 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, these 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 March 31, 2008

											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	$	1,353,405		$	—	$	—		$	—	$	1,842,319		$	(17,775	)	$	3,177,949
Equity in net income (loss) of affiliates		643,089			8,050		10,926			89,593		(2,491	)		(749,167	)		—
Other		(34	)		—		—			14,657		(3,909	)		(922	)		9,792
		1,996,460			8,050		10,926			104,250		1,835,919			(767,864	)		3,187,741
OPERATING EXPENSES:
Depreciation, depletion and amortization.		288,516			—		—			—		331,973			—			620,489
Asset retirement obligation accretion		17,777			—		—			—		8,720			—			26,497
Lease operating expenses		213,325			—		—			—		241,313			—			454,638
Gathering and transportation		10,127			—		—			—		48,624			(17,775	)		40,976
Taxes other than income		54,209			—		—			—		188,369			—			242,578
General and administrative		66,883			—		—			—		16,462			(922	)		82,423
Financing costs, net		37,473			—		4,497			14,113		(11,830	)		—			44,253
		688,310			—		4,497			14,113		823,631			(18,697	)		1,511,854
INCOME (LOSS) BEFORE INCOME TAXES		1,308,150			8,050		6,429			90,137		1,012,288			(749,167	)		1,675,887
Provision (benefit) for income taxes		286,637			—		(1,621	)		159		369,199			—			654,374
NET INCOME		1,021,513			8,050		8,050			89,978		643,089			(749,167	)		1,021,513
Preferred stock dividends		1,420			—		—			—		—			—			1,420
INCOME ATTRIBUTABLE TO COMMON STOCK	$	1,020,093		$	8,050	$	8,050		$	89,978	$	643,089		$	(749,167	)	$	1,020,093

14

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Quarter Ended March 31, 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	$	837,548	$	—	$	—		$	—		$	1,231,734		$	(46,215	)	$	2,023,067
Equity in net income (loss) of affiliates		296,573		4,480		7,830			38,010			(12,911	)		(333,982	)		—
Other		306		—		—			—			(20,498	)		—			(20,192	)
		1,134,427		4,480		7,830			38,010			1,198,325			(380,197	)		2,002,875
OPERATING EXPENSES:
Depreciation, depletion and amortization.		226,892		—		—			—			304,021			—			530,913
Asset retirement obligation accretion		17,638		—		—			—			6,426			—			24,064
Lease operating expenses		196,313		—		—			—			232,009			(46,215	)		382,107
Gathering and transportation		8,989		—		—			—			22,274			—			31,263
Taxes other than income		32,135		—		—			—			77,835			—			109,970
General and administrative		52,329		—		—			—			15,533			—			67,862
Financing costs, net		34,372		—		4,513			14,112			(10,934	)		—			42,063
		568,668		—		4,513			14,112			647,164			(46,215	)		1,188,242
INCOME (LOSS) BEFORE INCOME TAXES		565,759		4,480		3,317			23,898			551,161			(333,982	)		814,633
Provision (benefit) for income taxes		72,810		—		(1,163	)		(4,551	)		254,588			—			321,684
NET INCOME		492,949		4,480		4,480			28,449			296,573			(333,982	)		492,949
Preferred stock dividends		1,420		—		—			—			—			—			1,420
INCOME ATTRIBUTABLE TO COMMON STOCK	$	491,529	$	4,480	$	4,480		$	28,449		$	296,573		$	(333,982	)	$	491,529

15

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Quarter Ended March 31, 2008

													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	$	234,070		$	—		$	(5,381	)	$	(2,119	)	$	1,581,834		$	—		$	1,808,404
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		39,109			—			—			—			(1,240,040	)		—			(1,200,931	)
Additions to gas gathering, transmission and processing facilities		—			—			—			—			(80,704	)		—			(80,704	)
Investment in subsidiaries, net		(131,108	)		(3,500	)		—			—			(5,662	)		140,270			—
Other, net		(4,548	)		—			—			—			(118,716	)		—			(123,264	)
NET CASH USED IN INVESTING ACTIVITIES		(96,547	)		(3,500	)		—			—			(1,445,122	)		140,270			(1,404,899	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings		92,691			—			1,880			369			126,235			(101,561	)		119,614
Payments on debt		(165,300	)		—			—			—			(41,372	)		—			(206,672	)
Dividends paid		(84,672	)		—			—			—			—			—			(84,672	)
Common stock activity		8,653			3,500			3,500			—			31,709			(38,709	)		8,653
Treasury stock activity, net		(616	)		—			—			—			—			—			(616	)
Cost of debt and equity transactions		(288	)		—			—			—			—			—			(288	)
Other		17,693			—			—			—			—			—			17,693
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(131,839	)		3,500			5,380			369			116,572			(140,270	)		(146,288	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		5,684			—			(1	)		(1,750	)		253,284			—			257,217
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		3,626			—			1			1,751			120,445			—			125,823
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	9,310		$	—		$	—		$	1		$	373,729		$	—		$	383,040

16

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Quarter Ended March 31, 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	$	352,318		$	—		$	(3,562	)	$	(641	)	$	715,444		$	—		$	1,063,559
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas property		(479,825	)		—			—			—			(629,270	)		—			(1,109,095	)
Acquisition of U.S. Permian Basin properties		(1,000,000	)		—			—			—			—			—			(1,000,000	)
Additions to gas gathering, transmission and processing facilities		—			—			—			—			(96,427	)		—			(96,427	)
Non-cash portion of net oil and gas property additions		12,478			—			—			—			(12,478	)		—			—
Investment in subsidiaries, net		(28,669	)		(3,500	)		—			—			(4,555	)		36,724			—
Other, net		(3,008	)		—			—			—			(20,664	)		—			(23,672	)
NET CASH USED IN INVESTING ACTIVITIES		(1,499,024	)		(3,500	)		—			—			(763,394	)		36,724			(2,229,194	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt borrowings		2,730,165			—			64			641			38,220			(22,289	)		2,746,801
Payments on debt		(1,530,500	)		—			—			—			(23,384	)		—			(1,553,884	)
Dividends paid		(51,032	)		—			—			—			—			—			(51,032	)
Common stock activity		5,821			3,500			3,500			—			7,435			(14,435	)		5,821
Treasury stock activity, net		1,949			—			—			—			—			—			1,949
Cost of debt and equity transactions		(13,389	)		—			—			—			—			—			(13,389	)
Other		5,313			—			—			—			—			—			5,313
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,148,327			3,500			3,564			641			22,271			(36,724	)		1,141,579
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,621			—			2			—			(25,679	)		—			(24,056	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		4,148			—			—			1			136,375			—			140,524
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	5,769		$	—		$	2		$	1		$	110,696		$	—		$	116,468

17

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
As of March 31, 2008

											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	$	9,310	$	—	$	—		$	1		$	373,629		$	—		$	382,940
Receivables, net of allowance		923,127		—		—			845			1,048,346			—			1,972,318
Inventories		23,777		—		—			—			466,647			—			490,424
Drilling advances and others		135,162		—		—			—			72,159			—			207,321
Short-term investment		—		—		—			—			100			—			100
		1,091,376		—		—			846			1,960,881			—			3,053,103
PROPERTY AND EQUIPMENT, NET		11,884,797		—		—			—			13,980,589			—			25,865,386
OTHER ASSETS:
Intercompany receivable, net		1,180,244		—		(171,859	)		(253,619	)		(754,766	)		—			—
Restricted cash		228,134		—		—			—			—			—			228,134
Goodwill, net		—		—		—			—			189,252			—			189,252
Equity in affiliates		10,656,425		494,186		713,330			2,228,928			(180,912	)		(13,911,957	)		—
Deferred charges and other		235,862		—		—			1,003,589			240,749			(1,000,000	)		480,200
	$	25,276,838	$	494,186	$	541,471		$	2,979,744		$	15,435,793		$	(14,911,957	)	$	29,816,075
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term debt	$	66,300	$	—	$	99,911		$	—		$	61,377		$	—		$	227,588
Accounts payable		471,603		—		—			—			211,978			—			683,581
Other accrued expenses		495,009		—		(14,713	)		51,898			1,557,119			—			2,089,313
		1,032,912		—		85,198			51,898			1,830,474			—			3,000,482
LONG-TERM DEBT		3,264,011		—		—			647,014			899			—			3,911,924
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		1,591,625		—		(37,913	)		4,602			2,395,478			—			3,953,792
Advances from gas purchasers		6,449		—		—			—			—			—			6,449
Asset retirement obligation		957,689		—		—			—			596,125			—			1,553,814
Derivative instruments		1,333,636		—		—			—			(770,349	)		—			563,287
Other		1,487,641		—		—			9,070			249,609			(1,000,000	)		746,320
		5,377,040		—		(37,913	)		13,672			2,470,863			(1,000,000	)		6,823,662
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY		15,602,875		494,186		494,186			2,267,160			11,133,557			(13,911,957	)		16,080,007
	$	25,276,838	$	494,186	$	541,471		$	2,979,744		$	15,435,793		$	(14,911,957	)	$	29,816,075

18

APACHE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2007

											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	$	3,626	$	—	$	1		$	1,751		$	120,445		$	—		$	125,823
Receivables, net of allowance		883,022		—		—			—			1,053,955			—			1,936,977
Inventories		25,445		—		—			—			435,766			—			461,211
Drilling advances and other		140,335		—		—			—			87,905			—			228,240
		1,052,428		—		1			1,751			1,698,071			—			2,752,251
PROPERTY AND EQUIPMENT, NET		11,858,362		—		—			—			13,373,231			—			25,231,593
OTHER ASSETS:
Intercompany receivable, net		1,080,893		—		(170,000	)		(253,268	)		(657,625	)		—			—
Goodwill, net		—		—		—			—			189,252			—			189,252
Equity in affiliates		8,924,250		451,161		670,908			2,137,603			(168,977	)		(12,014,945	)		—
Deferred charges and other		211,399		—		—			1,003,668			246,488			(1,000,000	)		461,555
	$	23,127,332	$	451,161	$	500,909		$	2,889,754		$	14,680,440		$	(13,014,945	)	$	28,634,651
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	414,733	$	—	$	—		$	—		$	203,204		$	—		$	617,937
Other accrued expenses		1,170,670		—		(12,994	)		39,438			634,891			—			1,832,005
Current debt		139,100		—		—			—			75,974			—			215,074
		1,724,503		—		(12,994	)		39,438			914,069			—			2,665,016
LONG-TERM DEBT		3,263,820		—		99,890			646,996			899			—			4,011,605
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes		1,582,346		—		(37,148	)		5,630			2,374,155			—			3,924,983
Advances from gas purchasers		12,004		—		—			—						—			12,004
Asset retirement obligation		962,287		—		—			—			594,622			—			1,556,909
Derivative instruments		346,408		—		—			—			35,383			—			381,791
Other		1,446,414		—		—			9,317			248,633			(1,000,000	)		704,364
		4,349,459		—		(37,148	)		14,947			3,252,793			(1,000,000	)		6,580,051
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY		13,789,550		451,161		451,161			2,188,373			10,512,679			(12,014,945	)		15,377,979
	$	23,127,332	$	451,161	$	500,909		$	2,889,754		$	14,680,440		$	(13,014,945	)	$	28,634,651

19

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.

     Apache Corporation (Apache) is an independent energy company whose principle business includes exploration, development and production of crude oil, natural gas and natural gas liquids. We operate in six countries: the United States, Canada, Egypt, Australia, offshore the United Kingdom in the North Sea, and Argentina. Early in the second quarter of 2008, we finalized contracts for two exploration blocks in Chile. Quarterly earnings were our second best on record, trailing only fourth-quarter 2007 earnings. In the first quarter, we invested $1.2 billion in exploration and development, with several encouraging discoveries in our core growth areas of Australia, Canada and Egypt. We also divested over $300 million of non-strategic oil and gas properties during the quarter and early in the second quarter of 2008.

First Quarter 2008 vs. First Quarter 2007

     Apache earned just over $1.0 billion, $3.03 per diluted common share, in the first quarter of 2008, more than double the $492 million ($1.47 per share) earned in the same quarter last year. Cash flow from operating activities totaled $1.8 billion, compared to $1.1 billion last year, an increase of 70 percent.

     Quarter-over-quarter increases in equivalent production and prices increased oil and gas revenues 57 percent over last year’s first quarter, to $3.2 billion. Crude oil realizations averaged $89.25 a barrel, 60 percent above 2007 first-quarter prices, while natural gas realizations averaged $6.42 per thousand cubic feet (Mcf), up 23 percent. Even though historically high commodity prices continue to increase industry demand and competition for services, thereby pressuring costs, this quarter’s pre-tax margin was the best in our history, 96 percent higher than the 2007 quarter. For a more detailed discussion of our revenue and cost components, please refer to Results of Operations in this Item 2.

Pre-tax Margins
	For the Quarter Ended March 31,
	2008		2007
	(In thousands, except margin)
Income before Income Taxes	$	1,675,887	$	814,633
Barrels of oil equivalent produced		50,744		48,267
Margin per boe produced	$	33.03	$	16.88

Operating Highlights

Egypt

¨ On January 24, 2008, the Company announced that the Hydra-1X exploration well in the Shushan “C” Concession in Egypt’s Western Desert test-flowed 41.6 million cubic feet (MMcf) of natural gas and 1,313 barrels of condensate per day from the Deep Jurassic formation and encountered 64 feet of pay in the overlying AEB-6 formation on the way down that test-flowed 35 MMcf and 1,500 barrels of condensate per day. We are currently drilling an appraisal well to ascertain reserve potential. The Company has a 100 percent interest in this concession. The Hydra-1X will be produced through future expansion of Apache’s Western Desert gas facilities.

¨ Expansion of our Salam gas plant is on schedule and we continue to expect first gas through the plant by the end of the year. This expansion is projected to add an estimated 90 to 100 MMcf/d and 4,500 barrels of oil per day (b/d) of net capacity to Apache.

¨ Development of our three water-flood projects continues with 21 producers and 23 injection wells drilled during the quarter.

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Australia

¨ Appraisal of the Julimar-Brunello area on Australia’s Northwest Shelf progressed with three successful appraisal wells drilled since year-end. On January 24, the Company announced the Brulimar-1 discovery which encountered 113 feet of net pay in the Upper Triassic Mungaroo sandstone. On April 8, we announced the Julimar Southeast-1 discovery which logged 195 feet of net pay across five intervals of the Triassic Mungaroo sandstone. On May 1, we announced the Julimar Northwest-1 discovery which logged 43 feet of net pay in the J-17 Triassic Mungaroo sandstone. We have now drilled six discoveries in the complex. We plan to complete our appraisal program this summer and pursue a development strategy in the second half of the year. Apache owns a 65 percent interest in and operates the Julimar-Brunello complex.

¨ During the first quarter, we completed a three-dimensional (3-D) seismic program in Gippsland Basin of Australia, identifying a multiple prospect drilling program.  The acreage, which we believe is an under-explored area, is located near producing fields.  We drilled three shallow commitment wells in the quarter, all of which were unsuccessful.  However, the remaining prospects, which are in deeper water, are the primary objective of the program.  During the second half of the year, we will begin drilling the 12 deeper water prospects.    

¨ On April 8, 2008, we announced the Halyard-1 discovery on Australia’s WA-13-L block, which test-flowed 68 MMcf/d. We are considering running a subsea gathering line from Halyard to an existing pipeline at our East Spar field, 20 miles to the southeast, to transport the gas to Varanus Island for processing. Using our existing infrastructure would accelerate development of the field and first sales. The pipeline has capacity of 200 MMcf/d. Apache has a 55 percent interest in and operates the block.

¨ We have several large development projects underway in Australia. The Van Gogh and Pyrenees developments remain on schedule to deliver first production in 2009 and 2010, respectively, with projected net rates of 20,000 b/d each. Our Reindeer development program is also on track to deliver approximately 60 MMcf/d net to Apache beginning in 2010 and we are in negotiations to contract the gas to a purchaser onshore. Efforts at Reindeer during the remainder of 2008 will consist of finalizing the gas sales contract, drilling three development wells and beginning the detailed engineering phase of the project.

United States

¨ On January 29, 2008, the Company completed the sale of its interest in Ship Shoal blocks 349 and 359 on the outer continental shelf of the Gulf of Mexico to W&T Offshore, Inc. for $116 million, subject to normal post-closing adjustments.

¨ On January 31, 2008, the Company completed the sale of non-strategic oil and gas properties in the Permian Basin of West Texas to Vanguard Permian, LLC for $78 million, subject to normal post-closing adjustments.

¨ The U.S. increased oil production to 100,679 b/d, a 35 percent increase over the comparable prior year quarter with the addition of Permian Basin properties acquired at the end of the first quarter of 2007, new drilling and recompletion activity, and production restored from hurricane damaged properties.

Canada

¨ On April 2, 2008, the Company announced that it had completed the sale of non-strategic Canadian properties to Central Global Resources for $112 million, subject to normal post-closing adjustments.

¨ On April 8, 2008, Apache announced that three successful horizontal wells drilled in the Ootla shale-gas play in northeast British Columbia test-flowed at rates of 8.8 MMcf, 6.1 MMcf, and 5.3 MMcf of gas per day. Apache has a 50 percent interest in approximately 400,000 gross acres in this play. Apache operates approximately one-half of this position.

21

Financial Highlights

     First-Quarter 2008 compared to First-Quarter 2007.

¨ Earnings of $1.0 billion, double last year’s $492 million.

¨ Cash provided by operating activities of $1.8 billion, up 70 percent.

¨ Oil and gas revenues of $3.2 billion, up 57 percent. Oil revenue alone increased nearly $1 billion.

¨ Oil price realizations averaged a record $89.25 per barrel, up $33.38 per barrel; gas price realizations averaged $6.42 per Mcf, up $1.20 per Mcf.

¨ Exploration and development capital expenditures totaled $1.2 billion, up 14 percent.

Results of Operations

Revenues

	For the Quarter Ended March 31,
	2008		Contribution			2007		Contribution
Revenues (in thousands):
Oil	$	2,119,720		67	%	$	1,159,929		57	%
Natural gas		997,654		31	%		826,761		41	%
Natural gas liquids		60,575		2	%		36,377		2	%
Total	$	3,177,949		100	%	$	2,023,067		100	%

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Production and Pricing

	For the Quarter Ended March 31,
					Increase
	2008		2007		(Decrease)
Oil Volume – Barrels per day:
United States		100,679		74,652		34.86	%
Canada		17,347		19,032		(8.85	)%
Egypt		62,551		60,371		3.61	%
Australia		9,420		12,141		(22.41	)%
North Sea		58,771		53,671		9.50	%
Argentina		12,225		10,797		13.23	%
Total (1)		260,993		230,664		13.15	%
Average Oil Price – Per barrel:
United States	$	83.58	$	55.89		49.54	%
Canada		93.21		53.62		73.83	%
Egypt		97.85		56.64		72.76	%
Australia		101.67		66.96		51.84	%
North Sea		95.83		56.35		70.06	%
Argentina		45.13		40.61		11.13	%
Total (2)		89.25		55.87		59.75	%
Natural Gas Volume – Mcf per day:
United States		744,014		739,828		.57	%
Canada		360,750		383,020		(5.81	)%
Egypt		242,977		243,485		(.21	)%
Australia		191,180		194,961		(1.94	)%
North Sea		2,605		1,889		37.90	%
Argentina		165,133		198,239		(16.70	)%
Total (3)		1,706,659		1,761,422		(3.11	)%
Average Natural Gas Price – Per Mcf:
United States	$	8.36	$	6.96		20.11	%
Canada		7.56		6.44		17.39	%
Egypt		5.20		4.06		28.08	%
Australia		2.12		1.77		19.77	%
North Sea		16.31		8.30		96.51	%
Argentina		1.84		1.14		61.40	%
Total (4)		6.42		5.22		22.99	%
Natural Gas Liquids (NGL) – Barrels per day:
United States		7,240		7,195		.63	%
Canada		2,235		2,232		.13	%
Argentina		2,720		2,635		3.23	%
Total		12,195		12,062		1.10	%
Average NGL Price – Per barrel:
United States	$	57.37	$	35.02		63.82	%
Canada		53.35		31.47		69.53	%
Argentina		48.18		31.10		54.92	%
Total		54.58		33.51		62.88	%

(1)	Approximately 17 percent of first-quarter 2008 production was subject to financial derivative hedges, 14 percent in 2007.
(2)	Reflects per barrel reduction of $4.09 in first-quarter 2008 and a $.76 increase in 2007 from financial derivative hedging activities.
(3)	Approximately 18 percent of first-quarter 2008 production was subject to financial derivative hedges, 14 percent in 2007.
(4)	Reflects per Mcf increase of $.03 in first-quarter 2008 and $.07 in 2007 from financial derivative hedging activities.

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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
	For the Quarter Ended						For the Quarter Ended
	March 31,						March 31,
	2008			2007			2008			2007
United States		36	%		32	%		57	%		56	%
Canada		7	%		8	%		25	%		27	%
North America		43	%		40	%		82	%		83	%
Egypt		26	%		27	%		11	%		11	%
Australia		4	%		6	%		4	%		4	%
North Sea		24	%		24	%		–			–
Argentina		3	%		3	%		3	%		2	%
Total		100	%		100	%		100	%		100	%

First Quarter 2008 Compared to First Quarter 2007

     Crude Oil Revenues First-quarter crude oil revenues increased $960 million on a 60 percent increase in average realized price and a 13 percent increase in daily production.

     U.S. oil revenues were $390 million higher, driven by a 50 percent increase in realized crude oil prices and a 35 percent increase in daily production. Higher prices generated $272 million more of revenues when compared to the 2007 period. Hedging activity reduced 2008 revenues by $97 million compared to a $16 million gain in the comparable 2007 period. Production increases generated an additional $231 million in revenues, reflecting a 37 percent increase in Gulf Coast region production and a 31 percent increase in Central region production. Gulf Coast region production gains were associated with drilling and recompletion activity and production restored from hurricane damaged properties. Central region production was up on an active drilling program and additional volumes from Permian Basin properties acquired at the end of first-quarter 2007.

     Egypt’s crude oil revenues increased $249 million on a 73 percent increase in realized price and a four percent increase in daily crude oil production. Egypt’s 2008 price realizations, which were up $41.21 to $97.85 per barrel, added $224 million to revenues while production gains added the balance. Development drilling drove the production growth.

     North Sea oil revenues increased $241 million with a 70 percent higher realized price generating an additional $191 million of revenues. Oil price realizations averaged $95.83, up $39.48 per barrel. A combination of new wells and increased production efficiency resulting from topside facilities work increased production 10 percent, to 58,771 b/d, increasing revenues by $50 million.

     Canada’s revenues increased $55 million. Realized prices were up 74 percent, adding $68 million in revenue and daily production declined nine percent reducing revenue by $13 million. Canada’s oil prices averaged $93.21 per barrel, up from $53.62. The lower production resulted from natural decline in a number of fields.

     Australia’s oil revenues increased $14 million. Additional revenues of $38 million generated from a 52 percent increase in realized prices were partially offset by a 22 percent decline in daily production. Australia’s realized prices averaged $101.67 per barrel, the highest in the Company. Natural decline at Harriet, Stag, Legendre, Doric, Lee, West Cycad and Bambra fields reduced production. An additional interest acquired in the Legendre field in March of 2007, and liquids associated with Wonnich Deep gas well, lessened the impact of natural decline.

     Argentina’s crude oil revenues increased $11 million on a 13 percent increase in production and an 11 percent increase in realized price. The higher production was related to successful drilling, workover and recompletion activities.

     Natural Gas Revenues First-quarter natural gas revenues increased $171 million, with $192 million of additional revenues generated from a 23 percent increase in realized natural gas prices slightly reduced by a three percent decline in production. All core gas producing regions saw higher natural gas revenues.

24

     U.S. natural gas revenues increased $103 million. Higher realized prices added $101 million to 2008 revenues and production growth contributed another $9 million. Hedging gains were $3 million, $7 million less than first- quarter 2007. Natural gas prices averaged $8.36 per Mcf, up $1.40 from the comparable year-ago quarter. Central region daily production was up 10 percent on drilling and recompletion activities and incremental volumes from the Permian Basin properties acquired at the end of March 2007. Gulf Coast daily production was five percent lower on natural decline which more than offset gains from drilling and recompletion activities and production restored from hurricane damaged properties.

     Egypt contributed an additional $26 million to consolidated natural gas revenues primarily from a 28 percent increase in realized prices. Egypt’s price realizations were up $1.14 to $5.20 per Mcf.

     Canada’s natural gas revenues increased $26 million with a 17 percent increase in realized natural gas price contributing $39 million of additional revenues. Gas price realizations climbed $1.12 to $7.56 per Mcf. Natural gas production declined six percent, reducing revenues by $13 million. Lower production resulted from natural decline in numerous areas.

     Argentina’s natural gas revenues increased $7 million on a 61 percent increase in realized price, which generated an additional $12 million in revenues. Argentina’s price increased $.70 to $1.84 per Mcf. A 17 percent decline in production reduced revenues $5 million. The production decline was primarily caused by re-injection of gas in Tierra Del Fuego related to gas export and pipeline restrictions and by declines in new Neuquén Basin wells.

     Australia’s natural gas revenues were $6 million higher on a 20 percent price increase, offset slightly by a two percent decline in production. Australia’s price averaged $2.12, up $.35 per Mcf. Production was down on reduced customer demand.

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 March 31,				For the Quarter Ended March 31,
	2008		2007		2008		2007
	(In millions)				(Per Boe)
Depreciation, depletion and amortization:
Oil and gas property and equipment	$	583	$	497	$	11.50	$	10.29
Other assets		37		34		.73		.71
Asset retirement obligation accretion		27		24		.52		.50
Lease operating expenses		455		382		8.96		7.92
Gathering and transportation		41		31		.81		.65
Taxes other than income		243		110		4.78		2.28
General and administrative expenses		82		68		1.62		1.40
Financing costs, net		44		42		.87		.87
Total	$	1,512	$	1,188	$	29.79	$	24.62

First Quarter 2008 Compared to First Quarter 2007

     Depreciation, Depletion and Amortization (DD&A) The following table details the changes in DD&A of oil and gas properties for the first quarter of 2008.

	For the Quarter
	Ended
	March 31, 2008
	(In millions)
2007 DD&A	$	497
Volume change		29
Rate change		57
2008 DD&A	$	583

     Full-cost DD&A expense of $583 million increased $86 million on an absolute dollar basis; $57 million on rate and $29 million from higher volumes. The Company’s full-cost DD&A rate increased $1.21 to $11.50 per boe. The increase in rate reflects drilling and finding costs that continue to exceed our historical cost basis. The higher industry-wide costs, which also impact estimates of future development costs, are driven by increased demand for drilling services, a consequence of both higher oil and gas prices.

25

     Lease Operating Expenses (LOE) Our 2008 first-quarter LOE increased 19 percent on an absolute dollar basis, however, only 13 percent on a per unit basis as four percent production growth mitigated the impact of higher costs.

     Our  LOE rate increased $1.04 per boe as follows:

§	Higher workover activity, primarily on Permian Basin oil properties acquired at the end of the first quarter of 2007, added $.45
§	A weaker U.S. dollar added $.30 per boe.  Over the past 12 months, the U.S. dollar weakened 16 percent against the Canadian and Australian dollars, and one percent against the British Pound.
§	A non-cash charge to increase our OIL insurance early withdrawal penalty (incurred if the Company terminates its membership in OIL; an insurance mutual) added $.11 per boe.
§	Stock-based compensation increased $.05 per boe on a 12 percent increase in stock price during the first quarter of 2008 compared to six percent increase in the comparative quarter of 2007.
§	Last year included $.66 per boe of hurricane repair costs.
§	The balance of the increase is related to higher operating costs in all regions, driven by rising commodity prices, the acquisition of higher cost oil properties in the U.S. Permian Basin and an additional interest in the higher cost Legendre oil field in Australia.

     Gathering and Transportation Gathering and transportation costs totaled $41 million in the first-quarter 2008, up $10 million. 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
	March 31,
	2008		2007
	(In millions)
U.S	$	10	$	9
Canada		18		11
North Sea		8		6
Egypt		4		4
Argentina		1		1
Total Gathering and Transportation	$	41	$	31

     The increase in Canada resulted primarily from the impact of higher transportation tariffs and foreign exchange rates. North Sea costs were up on increased volumes and higher transportation tariffs.

     Taxes other than Income Taxes other than income totaled $243 million, an increase of $133 million. A detail of these taxes follows:

	For the Quarter Ended
	March 31,
	2008		2007
	(In millions)
U.K. PRT	$	165	$	61
Severance taxes		47		29
Ad valorem taxes		22		13
Canadian taxes		4		5
Other		5		2
Total Taxes other than Income	$	243	$	110

     North Sea Petroleum Revenue Tax (PRT) is assessed on net profits from subject fields in the United Kingdom (U.K.) North Sea. U.K. PRT was $104 million more than the 2007 period on a 166 percent increase in net profits driven by higher production and prices. Severance taxes are incurred primarily on onshore properties in the U.S. and certain properties in Australia and Argentina. The increase in severance taxes resulted from higher taxable revenues in the U.S. and Australia, consistent with the higher realized oil and natural gas prices. Ad valorem taxes

26

are assessed on U.S. and Canadian properties. The $9 million increase resulted from higher taxable valuations associated with increases in oil and natural gas prices and the acquisition of Permian Basin properties late in the first quarter of 2007.

     General and Administrative Expenses General and administrative expenses (G&A) were $14 million higher. On a boe basis, G&A averaged $1.62, up $.22 per boe. Higher stock based compensation, driven by Apache’s stock price appreciation, and increases in employee incentive-based bonuses added $.17 to our 2008 rate. The balance of the increase in rate was related to additional fringe benefit costs, much of which came about because of the incentive plans, as well as higher insurance costs. Apache’s stock price increased 12 percent during the first quarter of 2008 compared to six percent in the comparative 2007 quarter.

     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. There were no significant changes in statutory tax rates in the major jurisdictions in which the Company operates during the first quarter of 2008 or 2007.

     The provision for income taxes increased $333 million to $654 million, more than twice the prior-year taxes, as income before taxes doubled on significantly higher oil and gas production revenues. The effective income tax rate in the first quarter of 2008 was 39.0 percent compared to 39.5 percent in the first quarter of 2007. Apache recorded a $13 million reduction to tax expense related to foreign currency fluctuations during the first quarter of 2008 compared to $2 million of additional tax expense for the same 2007 period.

Capital Resources and Liquidity
 
Sources and Uses of Cash

     The following table presents the sources and uses of our cash and cash equivalents for the periods presented. The table presents capital expenditures on a cash basis; therefore, the amounts differ from the amounts of capital expenditures, including accruals that are referred to elsewhere in this document.

	For the Quarter Ended
	March 31,
	2008		2007
	(In millions)
Sources of Cash and Cash Equivalents:
Net Cash Provided by Operating Activities	$	1,808	$	1,064
Sales of property and equipment		193		6
Fixed-rate debt borrowings		–		1,494
Common stock issuances		9		6
Other		18		6
		2,028		2,576
Uses of Cash and Cash Equivalents:
Capital expenditures		1,247		1,205
Restricted cash		228		–
Acquisition U.S. Permian Basin properties		–		1,000
Net commercial paper and money market repayments		87		298
Payments of fixed-rate debt		–		3
Dividends		85		51
Cost of debt and equity transactions		–		13
Other		124		30
		1,771		2,600
Increase (decrease) in cash and cash equivalents	$	257	$	(24	)

     Net Cash Provided by Operating Activities Apache’s net cash provided by operating activities for the first quarter of 2008 totaled $1.8 billion, up $745 million from the same period in 2007. 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.

27

     Capital Expenditures Capital expenditures totaled $1.4 billion for the first three months of 2008, compared to $2.3 billion for the comparable period last year. Acquisition capital in the first-quarter 2007 exceeded $1 billion marking the difference between the two comparable periods. The following table presents a summary of the Company’s capital expenditures by country for the three months ended March 31, 2008 and 2007.

	For the Quarter Ended
	March 31,
	2008		2007
	(In thousands)
Exploration and Development:
United States	$	427,361	$	467,349
Canada		223,896		201,501
Egypt		187,185		145,062
Australia		229,516		75,496
North Sea		118,363		146,626
Argentina		63,248		56,210
		1,249,569		1,092,244
Acquisitions – Oil and Gas Properties		7,947		1,005,199
Asset Retirement Costs		85,072		74,821
Capitalized Interest		21,577		21,776
Gathering Transmission and Processing Facilities		76,304		96,428
Total Capital Expenditures	$	1,440,469	$	2,290,468

     Exploration and development (E&D) expenditures were up $157 million, or 14 percent, from the 2007 comparable quarter to $1.2 million. The U.S. accounted for 34 percent of total E&D activity in first-quarter 2008, down from 43 percent in the prior year’s comparable quarter. Expenditures in the U.S. were down $40 million on lower drilling activity and less investment in platforms and production facilities located in the Gulf of Mexico. Canada accounted for 18 percent of worldwide E&D expenditures for both periods presented. Canada’s E&D expenditures were up $22 million on increased drilling activity. Australia’s portion of 2008 activity jumped to 18 percent from seven percent because of an increase in drilling, relative to the 2007 period, and costs associated with several platform and production facility development projects we initiated in early 2008. Australia’s E&D expenditures totaled nearly $230 million, three-times 2007 spending. Egypt spent $42 million more in the 2008 quarter on higher levels of drilling activity. North Sea E&D expenditures were down $28 million on lower drilling activity.

     Dividends Common stock dividends paid during the first quarter of 2008 rose to $83 million, including a special cash dividend of 10 cents per common share paid on March 18, 2008. During the first quarter of 2008 and 2007, Apache paid $1.4 million in dividends on its Series B Preferred Stock issued in August 1998.

Liquidity

 

	March 31,			December 31,
	2008			2007
Millions of dollars except as indicated
Cash	$	383		$	126
Restricted cash	$	228		$	—
Total debt	$	4,140		$	4,227
Shareholders’ equity	$	16,080		$	15,378
Available committed borrowing capacity	$	2,186		$	2,115
Floating-rate debt/total debt		3	%		5	%
Percent of total debt to capitalization		20	%		22	%

     Restricted Cash The Company classifies cash balances as restricted cash when cash is restricted as to withdrawal or usage. As of March 31, 2008, the Company had approximately $228 million of property divestiture proceeds classified as restricted cash, and held in escrow to use in a like-kind exchange under Section 1031 of the U.S. federal tax code. The Company intends to use these funds to acquire noncurrent assets. Accordingly, the restricted cash is classified as long term on the balance sheet.

28

     Debt and Credit Facilities The Company’s March 31, 2008 debt-to-capitalization ratio was 20 percent, down from 22 percent at December 31, 2007.

     In February 2008 the Company requested amendments to its existing $1.5 billion U.S. five-year revolving credit facility to (a) extend the maturity date one year to May 28, 2013 and (b) remove certain restrictions on our Australian entities including their ability to incur liens and issue guarantees. The Company also requested amendments to its $450 million U.S. credit facility, $150 million Australian credit facility and $150 million Canadian credit facility to (a) extend the maturity date one year to May 12, 2013, (b) remove certain restrictions on our Australian entities including their ability to incur liens and issue guarantees, and (c) specific to the Australian credit facility, giving the Company the option of increasing the size of the facility up to a maximum amount of $400 million from the current limit of $300 million by adding commitments from new or existing lenders.

     Lenders approved the amendments removing certain restrictions on our Australian entities, including their ability to incur liens and issue guarantees as well as the amendment allowing the Company to increase the size of Australian credit facility to a maximum of $400 million. The lenders also extended the maturity date on all of the credit facilities except for $50 million of the $1.5 billion U.S. credit facility and $40 million of the $450 million U.S. credit facility. In April 2008, both U.S. amounts were extended and the Company increased the Australian credit facility by $50 million to $200 million, half the maximum amount.

     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 March 31, 2008, Apache had $64 million of commercial paper outstanding. Our weighted-average interest rate for commercial paper was 3.91 percent and 5.36 percent for the first quarter of 2008 and 2007, 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 $2.2 billion at March 31, 2008.

     The Company was in compliance with the terms of all credit facilities as of March 31, 2008.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

     We periodically enter into hedging activities on a portion of our projected oil and natural gas production through a variety of financial and physical arrangements intended to support oil and natural gas prices at targeted levels and to manage our overall exposure to oil and gas price fluctuations. Apache may use futures contracts, swaps, options and fixed-price physical contracts to hedge its commodity prices. Realized gains or losses from the Company’s price risk management activities are recognized in oil and gas production revenues when the associated production occurs. Apache does not generally hold or issue derivative instruments for trading purposes.

     Apache historically only hedged long-term oil and gas prices related to a portion of its expected production associated with acquisitions; however, in 2006 and 2007, the Company’s Board of Directors authorized management to hedge a portion of production generated from the Company’s drilling program. Approximately 18 percent of our first-quarter 2008 natural gas and 17 percent of our crude oil production was subjected to financial derivative hedges. Hedges in place for the remainder of 2008 are expected to cover similar percentages of production.

     On March 31, 2008, the Company had open natural gas derivative hedges in a liability position with a fair value of $87 million. A 10 percent increase in natural gas prices would reduce the fair value by approximately $68 million, while a 10 percent decrease in prices would increase the fair value by approximately $60 million. The Company also had open oil derivatives in a liability position with a fair value of $911 million. A 10 percent increase in oil prices would increase the liability by approximately $392 million, while a 10 percent decrease in prices would decrease the liability by approximately $379 million. These fair value changes assume volatility based on prevailing market parameters at March 31, 2008. 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 and terms 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 97 percent of the Company’s debt. At March 31, 2008, total debt included $128 million of floating-rate debt. As a result, Apache’s annual interest costs in 2008 will fluctuate based on short-term interest rates on what is presently approximately 3 percent of our total debt outstanding at March 31, 2008. The impact on cash flow of a 10 percent change in the floating interest rate would be approximately $0.2 million per quarter on March 31, 2008.

29

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. Approximately half of 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. Argentine revenues and expenditures are largely denominated in U.S. dollars, but converted into Argentine pesos at the time of payment. Revenue and disbursement transactions denominated in Australian dollars, Canadian dollars, British pounds, Egyptian pounds and Argentine pesos are converted to U.S. dollar equivalents based on the average exchange rates during the period.

     Foreign currency gains and losses also arise when monetary assets and monetary liabilities denominated in foreign currencies are translated at the end of each month. Currency gains and losses 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 are dependent upon certain events, risks and uncertainties that may be outside the Company’s control, and 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.

     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 March 31, 2008, 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 within the time periods specified in the Commission’s rules and forms and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

     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 controls 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 controls over financial reporting.

30

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Please refer to Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (filed with the SEC on February 29, 2008) for a description of material legal proceedings.

ITEM 1A. RISK FACTORS

During the quarter ending March 31, 2008, 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, 2007.

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

None

ITEM 5. OTHER INFORMATION

Material Compensatory Arrangements

On May 7, 2008, the stock option plan committee of the board of directors (the “Committee”) approved two new compensatory arrangements pursuant to the Apache Corporation 2007 Omnibus Equity Compensation Plan (the “Omnibus Plan”).

2008 Share Appreciation Program

Pursuant to the Omnibus Plan, the Committee authorized and approved the 2008 Share Appreciation Program and estimated conditional grants of 2,773,000 shares of Company common stock to eligible participants under the 2008 Share Appreciation Program.

The primary purpose of the 2008 Share Appreciation Program, like the Company’s prior share appreciation plans, is to provide incentives to our employees to work toward significant increases in stockholder value. The conditional grants will vest upon attainment of an initial price threshold of $162 per share of Company common stock prior to year end 2010 and a final price threshold of $216 per share of Company common stock prior to year end 2012. The achievement of the $216 price threshold would represent approximately $36 billion of growth in market value for the currently outstanding shares of the Company’s common stock, since attainment of the prior stock appreciation plan price threshold in February 2008. If achieved, the conditional grants to our employees would have an estimated total value of approximately two percent of such projected growth in market capitalization. Consistent with prior share appreciation plans, more than 90 percent of the incentives under the 2008 Share Appreciation Program would be paid to non-executive employees.

There are three categories of employees eligible to receive grants under the 2008 Share Appreciation Program. The first category is comprised of all executive officers, key technical professionals and senior managers. The second category is comprised of mid-level managers, supervisors and key administrative professionals. The third category is comprised of entry level professionals, office administrative staff and field operators. For the $162 price threshold, the number of shares granted to an employee was determined by multiplying the recipient’s annual base salary by one times the recipient’s base salary for the first category, one-half times the recipient’s base salary for the second category, and one-fourth times the recipient’s base salary for the third category, and dividing the product by $162. For the $216 price threshold, the number of shares granted to an employee was determined by multiplying a recipient’s annual base salary by two times the recipient’s base salary for the first category, one times the recipient’s base salary for the second category, and one-half times the recipient’s base salary for the third category, and dividing the product by $216. The Committee, in its discretion, is authorized to reduce future conditional grants (to new employees, for example) to prorate benefits as it de ems appropriate.

If a price threshold is reached for any ten trading days during any period of 30 consecutive trading days before the applicable threshold deadline, the shares (adjusted for required tax withholdings) will be paid out to recipients in five equal installments, with the first installment payable no later than 30 days after the expiration of such 10-day period. The remaining installments will be paid on the first, second, third, and fourth anniversaries of the attainment date.

A detailed description of the 2008 Share Appreciation Program is included as Exhibit 10.3 to this quarterly report on Form 10-Q and incorporated herein by reference.

Award of Restricted Stock Units to Chief Executive Officer

Pursuant to the Omnibus Plan, the Committee awarded G. Steven Farris, Apache’s president and chief executive officer, 250,000 restricted stock units on May 7, 2008. 50,000 of such restricted stock units will vest on July 1, 2009, and 50,000 will vest on the first business day of each of 2010, 2011, 2012 and 2013. Upon vesting, the Company will issue Mr. Farris one share of the Company’s common stock as settlement for each restricted stock unit. 30,000 of the shares vesting each year will be subject to the restriction that none of such 30,000 shares will be eligible for sale by Mr. Farris until such time as he retires as chief executive officer or otherwise terminates employment with the Company. The restricted stock unit agreement, dated May 8, 2008, is included as Exhibit 10.4 to this quarterly report on Form 10-Q and incorporated herein by reference.

31

ITEM 6. EXHIBITS

*10.1	–	Form of Request for Approval of Extension of Maturity Date and Amendment, dated as of February 18, 2008, among Registrant, the Lenders named therein, JPMorgan Chase Bank, as Administrative Agent, Citibank, N.A. and Bank of America, N.A., as Co-Syndication Agents, and BNP Paribas and UBS Loan Finance LLC, as Co-Documentation Agents.
*10.2	–	Form of Request for Approval of Extension of Maturity Date and Amendment, dated February 18, 2008, among Registrant, Apache Canada Ltd., Apache Energy Limited, the Lenders named therein, JPMorgan Chase Bank, N.A., as Global Administrative Agent, and the other agents party thereto.
†*10.3	—	2008 Share Appreciation Program Specifications
†*10.4	—	Restricted Stock Unit Award Agreement, dated May 8, 2008, between Apache Corporation and G. Steven Farris.
*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 the Exchange Act) by Chief Executive Officer.
*31.2	–	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the 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
†	Management contracts or compensatory plans or arrangements

32

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: May 9, 2008	/s/ ROGER B. PLANK
	Roger B. Plank
	Executive Vice President and Chief Financial Officer
Dated: May 9, 2008	/s/ REBECCA A. HOYT
	Rebecca A. Hoyt
	Vice President and Controller (Chief Accounting Officer)

EXHIBIT INDEX

*10.1	-	Form of Request for Approval of Extension of Maturity Date and Amendment, dated as of February 18, 2008, among Registrant, the Lenders named therein, JPMorgan Chase Bank, as Administrative Agent, Citibank, N.A. and Bank of America, N.A., as Co-Syndication Agents, and BNP Paribas and UBS Loan Finance LLC, as Co-Documentation Agents.
*10.2	-	Form of Request for Approval of Extension of Maturity Date and Amendment, dated February 18, 2008, among Registrant, Apache Canada Ltd., Apache Energy Limited, the Lenders named therein, JPMorgan Chase Bank, N.A., as Global Administrative Agent, and the other agents party thereto.
†*10.3	—	2008 Share Appreciation Program Specifications
†*10.4	—	Restricted Stock Unit Award Agreement, dated May 8, 2008, between Apache Corporation and G. Steven Farris.
*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 the Exchange Act) by Chief Executive Officer.
*31.2	-	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the 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
†	Management contracts or compensatory plans or arrangements

EX-10.1

Exhibit 10.1

Form of
Request for Approval of Extension of Maturity Date and Amendment

February 18, 2008

VIA INTRALINKS

THE LENDERS UNDER THE APACHE
CORPORATION 2006 U.S. CREDIT FACILITY

Re: Apache Corporation 2006 U.S. $1,500,000,000 Five-Year Senior Revolving Credit Facility

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated as of May 9, 2006 (together with all amendments, if any, from time to time made thereto, the “Five-Year Credit Agreement”), among Apache Corporation (the “Borrower”), the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), and the other agents party thereto. Terms defined in the Credit Agreement are used herein with the same meanings.

I. Extension of the Credit Facility

In the February 18, 2008 Annual Certificate of Extension delivered to the Administrative Agent which is attached hereto as Exhibit A, Borrower requested pursuant to Section 2.6 of the Credit Agreement the extension of the Maturity Date, and concomitantly the total Commitments under the Credit Agreement from May 28, 2012 to May 28, 2013. The Borrower hereby certifies that no Event of Default has occurred and is continuing under the Credit Agreement.

This letter is to confirm that the Lenders hereby agree to the extension of the Maturity Date under the Credit Agreements and the related Commitments of the Lenders from May 28, 2012 to May 28, 2013.

II. Amendment of the Credit Facility

The Borrower, the Administrative Agent and the Required Lenders hereby agree as follows:

A. The definition of “Restricted Subsidiary” contained in Section 1.1 of the Credit Agreement is amended in its entirety to read as follows:

“ “Restricted Subsidiary” means any Subsidiary of Borrower that owns any asset representing or consisting of an entitlement to production from, or other interest in, reserves of oil, gas or other minerals in place located in the United

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 2

States or Canada, including, without limitation, Apache Canada Ltd., a corporation organized under the laws of the Province of Alberta, Canada.”

Please indicate your consent to (i) the extension of the Maturity Date under the Credit Agreements and the related Commitments of the Lenders from May 28, 2012 to May 28, 2013 and (ii) to the amendment outlined above by having an authorized signatory of your financial institution execute this letter in the space provided below and returning the executed page by the end of business on Tuesday, March 4, 2008, (i) via telecopy to Frank Bradley at (713) 754-6630, and (ii) via courier to: Greenberg Traurig LLP, 1000 Louisiana, Suite 1700, Houston, Texas 77002, Attention: Frank Bradley.

This letter may be executed in any number of counterparts and all such counterparts shall together constitute but one and the same letter.

By execution hereof, the Administrative Agent acknowledges its agreement and consent to the request for extension and to the amendment outlined above in its capacity as a Lender and as Administrative Agent, respectively.

If you have any questions, please do not hesitate to contact either Lisa Kopff of the Administrative Agent at (212) 270-6091, Pete Czerniakowski of Apache Corporation at (713) 296-6642 or Frank Bradley at Greenberg Traurig LLP at (713) 374-3630.

JPMORGAN CHASE BANK, N.A., as Administrative Agent and as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 3

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

CITIBANK, N.A., as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

BANK OF AMERICA, N.A., as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS       DAY OF ___, 2008.

BNP PARIBAS, as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 4

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

UBS LOAN FINANCE LLC, as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

BMO CAPITAL MARKETS FINANCING, INC. (f/k/a HARRIS NESBITT FINANCING, INC.), as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 5

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

ROYAL BANK OF CANADA, as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 6

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

UNION BANK OF CALIFORNIA, N.A., as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 7

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

ABN AMRO BANK N.V., as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

BAYERISCHE LANDESBANK — CAYMAN ISLANDS BRANCH, as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 8

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

CALYON NEW YORK BRANCH, as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

WILLIAM STREET COMMITMENT CORPORATION, as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 9

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

MORGAN STANLEY BANK, as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

THE ROYAL BANK OF SCOTLAND PLC , as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

SOCIÉTÉ GÉNÉRALE, as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 10

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

SUMITOMO MITSUI BANKING CORPORATION, as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

MIZUHO CORPORATE BANK, LTD., as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

WELLS FARGO BANK, NA, as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 11

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

BARCLAYS BANK PLC, as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

TORONTO DOMINION (TEXAS) LLC, as a Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

AMEGY BANK NATIONAL ASSOCIATION, as a Lender
By:
	Name:
	Title:

THE LENDERS UNDER THE APACHE
CORPORATION 2006 FIVE-YEAR CREDIT FACILITY
February 18, 2008
Page 12

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE CREDIT AGREEMENT AND (ii) TO THE AMENDMENT OUTLINED ABOVE, EACH AS OF THIS            DAY OF ___, 2008.

BANCO BILBAO VIZCAYA ARGENTARIA S.A., as a Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

ACKNOWLEDGED AND AGREED:

APACHE CORPORATION, as Borrower

By:
	Name:	Matthew W. Dundrea
	Title:	Vice President and Treasurer

EXHIBIT A
2008 Annual Certificate of Extension

[see attached]

Exhibit A — Page 1

EX-10.2

Exhibit 10.2

Form of
Request for Approval of Extension of Maturity Date and Amendment

February 18, 2008

VIA INTRALINKS

THE COMBINED LENDERS UNDER
THE APACHE CORPORATION GLOBAL
CREDIT FACILITY

     Re: Apache Corporation 2005 Global Credit Facility

Ladies and Gentlemen:

     Reference is made to (i) that certain Credit Agreement [U.S. Credit Agreement], dated as of May 12, 2005 (together with all amendments, if any, from time to time made thereto, the “U.S. Credit Agreement”), among Apache Corporation (the “U.S. Borrower”), the lenders party thereto (the “U.S. Lenders”), JPMorgan Chase Bank, N.A., as Global Administrative Agent (the “Global Administrative Agent”), and the other agents party thereto; (ii) that certain Credit Agreement [Australian Credit Agreement], dated as of May 12, 2005 (together with all amendments, if any, from time to time made thereto, the “Australian Credit Agreement”), among Apache Energy Limited (the “Australian Borrower”), the Australian Lenders party thereto, the Global Administrative Agent, Citisecurities Limited, as Australian Administrative Agent (the “Australian Administrative Agent”), and the other agents party thereto; and (iii) that certain Credit Agreement [Canadian Credit Agreement], dated as of May 12, 2005 (together with all amendments, if any, from time to time made thereto, the “Canadian Credit Agreement” and, together with the U.S. Credit Agreement and the Australian Credit Agreement, the “Combined Credit Agreements”), among Apache Canada Ltd. (the “Canadian Borrower”), the Canadian Lenders party thereto, the Global Administrative Agent, Royal Bank of Canada, as Canadian Administrative Agent (the “Canadian Administrative Agent”), and the other agents party thereto. Terms defined in the U.S. Credit Agreement are used herein with the same meanings.

I. Extension of the Global Credit Facility

     In the February 18, 2008 Annual Certificate of Extension delivered to the Global Administrative Agent, the Australian Administrative Agent and the Canadian Administrative Agent which is attached hereto as Exhibit A, Borrower requested pursuant to Section 2.6 of each of the U.S. Credit Agreement, the Australian Credit Agreement and the Canadian Credit Agreement, respectively, the extension of the Maturity Date, and concomitantly the total “Commitments” (as defined under each of the Combined Credit Agreements), under each of the U.S. Credit Agreement, the Australian Credit Agreement and the Canadian Credit Agreement, respectively, from May 12, 2012 to May 12, 2013. Each of the U.S. Borrower, the Australian Borrower and the Canadian Borrower hereby certify that no Event of Default has occurred and is continuing under the Combined Credit Agreements.

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 2

     This letter is to confirm that the Combined Lenders hereby agree to the extension of the Maturity Date under each of the Combined Credit Agreements and the related “Commitments” of the Combined Lenders from May 12, 2012 to May 12, 2013.

II. Amendment of the Global Credit Facility

     The U.S. Borrower, the Australian Borrower, the Canadian Borrower, the Global Administrative Agent, the Australian Administrative Agent, the Canadian Administrative Agent and the Combined Required Lenders hereby agree as follows:

     A. Amendment to U.S. Credit Agreement. The definition of “Restricted Subsidiary” contained in Section 1.1 of the U.S. Credit Agreement is amended in its entirety to read as follows:

““Restricted Subsidiary” means any Subsidiary of Borrower that owns any asset representing or consisting of an entitlement to production from, or other interest in, reserves of oil, gas or other minerals in place located in the United States or Canada, including, without limitation, Apache Canada.”

     B. Amendments to Australian Credit Agreement.

     (i) The definition of “Restricted Subsidiary” contained in Section 1.1 of the Australian Credit Agreement is amended in its entirety to read as follows:

““Restricted Subsidiary” means any Subsidiary of Parent that owns any asset representing or consisting of an entitlement to production from, or other interest in, reserves of oil, gas or other minerals in place located in the United States or Canada, including, without limitation, with respect to the Parent, the Canadian Borrower.”

     (ii) Section 2.21(a) of Australian Credit Agreement is amended by replacing the phrase “U.S.$300,000,000” with “U.S.$400,000,000”.

     (iii) Section 5.3 of the Australian Credit Agreement is amended in its entirety to read as follows:

     “SECTION 5.3 [Intentionally omitted].”

     (iv) Section 7.1 of the Australian Credit Agreement is amended in its entirety to read as follows:

     “SECTION 7.1 [Intentionally omitted].”

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 3

     (v) Section 7.2 of the Australian Credit Agreement is amended in its entirety to read as follows:

“SECTION 7.2 Mergers. Borrower will not liquidate or dissolve, amalgamate with, consolidate with, or merge into or with, any other Person, or sell, lease or otherwise transfer all or substantially all of its assets unless (a) Borrower is the survivor of such amalgamation, merger or consolidation, and (b) no Default or Event of Default has occurred and is continuing or would occur after giving effect thereto. Notwithstanding the foregoing, nothing herein shall prohibit any transfer of any assets from any Borrower to any Subsidiary of such Borrower, from any Subsidiary of a Borrower to such Borrower or from a Subsidiary of a Borrower to another Subsidiary of such Borrower.”

     (vi) Section 7.3 of the Australian Credit Agreement is amended in its entirety to read as follows:

     “SECTION 7.3 [Intentionally omitted].”

     (vii) Section 7.5 of the Australian Credit Agreement is amended by deleting the second sentence thereof in its entirety.

     (viii) Section 7.6 of Australian Credit Agreement is amended by deleting the phrase “and Borrower” from the first line thereof.

     (ix) The Australian Credit Agreement hereby is amended by replacing Exhibit 2.21 to Australian Credit Agreement with the Exhibit 2.21 attached to this letter agreement.

     C. Amendment to Canadian Credit Agreement. The definition of “Restricted Subsidiary” contained in Section 1.1 of the Canadian Credit Agreement is amended in its entirety to read as follows:

““Restricted Subsidiary” means any Subsidiary of Borrower or Parent that owns any asset representing or consisting of an entitlement to production from, or other interest in, reserves of oil, gas or other minerals in place located in the United States or Canada, including, without limitation, with respect to the Parent, the Borrower.”

     This letter agreement shall be deemed to be an amendment to the Combined Credit Agreements, and the Combined Credit Agreements, as amended hereby, are hereby ratified, approved and confirmed in each and every respect. All references to the Combined Credit Agreements herein and in any other document, instrument, agreement or writing shall hereafter be deemed to refer to the Combined Credit Agreements as amended hereby.

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 4

     Please indicate your consent to (i) the extension of the Maturity Date under each of the Combined Credit Agreements and the related Commitments of the Combined Lenders from May 12, 2012 to May 12, 2013 and (ii) to the amendments outlined above by having an authorized signatory of your financial institution execute this letter in the space provided below and returning the executed page by the end of business on Tuesday, March 4, 2008, (i) via telecopy to Frank Bradley at (713) 754-6630, and (ii) via courier to: Greenberg Traurig LLP, 1000 Louisiana, Suite 1700, Houston, Texas 77002, Attention: Frank Bradley.

     This letter may be executed in any number of counterparts and all such counterparts shall together constitute but one and the same letter.

     By execution hereof, the Global Administrative Agent acknowledges its agreement and consent to the request for extension and to the amendments outlined above in its capacity as a U.S. Lender and as Global Administrative Agent, respectively.

     If you have any questions, please do not hesitate to contact either Lisa Kopff of the Global Administrative Agent at (212) 270-6091, Pete Czerniakowski of Apache Corporation at (713) 296-6642 or Frank Bradley at Greenberg Traurig LLP at (713) 374-3630.

JPMORGAN CHASE BANK, N.A., as Global Administrative Agent and as a U.S. Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 5

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BANK OF AMERICA, N.A., as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

CITIBANK, N.A., as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

CALYON NEW YORK BRANCH, as a U.S. Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 6

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

SOCIÉTÉ GÉNÉRALE, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

MORGAN STANLEY BANK, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BANCO BILBAO VIZCAYA ARGENTARIA S.A., as a U.S. Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 7

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

WACHOVIA BANK, NATIONAL ASSOCIATION, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

SUMITOMO MITSUI BANKING CORPORATION, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

THE ROYAL BANK OF SCOTLAND PLC, as a U.S. Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 8

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BAYERISCHE LANDESBANK — CAYMAN ISLANDS BRANCH, as a U.S. Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

ABN AMRO BANK N.V., as a U.S. Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 9

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

FIFTH THIRD BANK, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

WILLIAM STREET COMMITMENT CORPORATION, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

WELLS FARGO BANK, NA, as a U.S. Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 10

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

THE BANK OF NEW YORK, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

AMEGY BANK NATIONAL ASSOCIATION, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

MIZUHO CORPORATE BANK, LTD., as a U.S. Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 11

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

ROYAL BANK OF CANADA, as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

DEUTSCHE BANK AG NEW YORK BRANCH, as a U.S. Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 12

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BMO CAPITAL MARKETS FINANCING, INC. (f/k/a HARRIS NESBITT FINANCING, INC.), as a U.S. Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

UNION BANK OF CALIFORNIA, N.A., as a U.S. Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 13

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BNP PARIBAS, as a U.S. Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

CITISECURITIES LIMITED (ABN 51 008 489 610), as Australian Administrative Agent
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 14

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

DEUTSCHE BANK AG, SYDNEY BRANCH (ABN 13 064 165 162), as an Australian Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

JPMORGAN CHASE BANK (ARBN 074 112 011), as an Australian Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 15

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BANK OF AMERICA, N.A., SYDNEY BRANCH (ARBN 064 874 531), as an Australian Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

UBS AG, AUSTRALIA BRANCH (ABN 47 088 129 613), as an Australian Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 16

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

CITIBANK, N.A. (ARBN 072 814 058), as an Australian Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BARCLAYS BANK PLC, AUSTRALIAN BRANCH (ABN 86062 449 585), as an Australian Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 17

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

ROYAL BANK OF CANADA, as Canadian Administrative Agent
By:
	Name:
	Title:
ROYAL BANK OF CANADA, as a Canadian Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BANK OF MONTREAL, as a Canadian Lender
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 18

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

UNION BANK OF CALIFORNIA, N.A., CANADA BRANCH, as a Canadian Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

THE TORONTO-DOMINION BANK, as a Canadian Lender
By:
	Name:
	Title:

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

BNP PARIBAS (CANADA), as a Canadian Lender
By:
	Name:
	Title:
By:
	Name:
	Title:

THE COMBINED LENDERS UNDER THE APACHE
CORPORATION GLOBAL CREDIT FACILITY
February 18, 2008
Page 19

THE UNDERSIGNED AGREES AND CONSENTS TO (i) THE REQUESTED EXTENSION OF THE MATURITY DATE AND COMMITMENTS UNDER THE COMBINED CREDIT AGREEMENTS AND (ii) TO THE AMENDMENTS OUTLINED ABOVE, EACH AS OF THIS                      DAY OF                                          , 2008.

JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as a Canadian Lender
By:
	Name:
	Title:

ACKNOWLEDGED AND AGREED: APACHE CORPORATION, as U.S. Borrower
By:
	Name:	Matthew W. Dundrea
	Title:	Vice President and Treasurer
APACHE ENERGY LIMITED (ACN 009 301 964), as Australian Borrower
By:
	Name:	Matthew W. Dundrea
	Title:	Vice President and Treasurer
APACHE CANADA LTD., as Canadian Borrower
By:
	Name:	Matthew W. Dundrea
	Title:	Vice President and Treasurer

EXHIBIT A

Annual Certificate of Extension — 2008

[see attached]

Exhibit A - Page 1

EXHIBIT 2.21
NOTICE OF COMMITMENT INCREASE

Citisecurities Limited (ABN 51 008 489 610),
as Australian Administrative Agent
Level 23, 2 Park Street
Sydney N.S.W. 2000

Australia
Attention: Agency/Maria Mills/Trevor Dutton
Fax No: 61 2 8225 5244

Citicorp International Limited
13/F., Two Harbourfront
22 Tak Fung Street
Hunghom, Kowloon
Hong Kong
Attention: Dixon Koon/Maggie Tai
Facsimile: +852 2621 3183/4

JPMorgan Chase Bank, N.A.,
as Global Administrative Agent
for the Lenders referred to below
c/o Loan & Agency Services Group
1111 Fannin Street, 10th Floor
Houston, Texas 77002-8069
Attention: Rose Salvacion
Telephone: (713) 750-2501
Facsimile: (713) 427-6307

APACHE ENERGY LIMITED (ACN 009 301 964)

Dear Sirs:

     This Notice of Commitment Increase is delivered to you pursuant to Section 2.21 of that certain Credit Agreement, dated as of May 12, 2005 (together with all amendments, if any, from time to time made thereto, the “Credit Agreement”), among Apache Energy Limited (ACN 009 301 964), the Lenders party thereto, JPMorgan Chase Bank, N.A., as Global Administrative Agent, Citisecurities Limited (ABN 51 008 489 610), as Australian Administrative Agent, and the other agents and lenders party thereto. Terms defined in the Credit Agreement are used herein with the same meanings.

Exhibit 2.21 - Page 1

     Please be advised that Borrower hereby requests an increase effective                     , 20                    ¹ in the aggregate Commitments under the Credit Agreement from $                                         to $                    .²

     [CI Lender] has agreed [Language for existing Lender] [(a) to increase effective                     , 20___its Commitment under the Credit Agreement from $                                         to $                     and (b) that it shall continue to be a party in all respects to the Credit Agreement and the other Loan Documents] [Language if CI Lender is a new Lender] [effective                     , 20___(a) to become a Lender under the Credit Agreement with a Commitment of $                     and (b) that it shall be deemed to be a party in all respects to the Credit Agreement and the other Loan Documents.]

     The parties hereto have caused this Notice of Commitment Increase to be executed and delivered, and the certification and warranties contained herein to be made, by its Authorized Officer this ___day of                     , 200_.

APACHE ENERGY LIMITED (ACN 009 301 964)
By:
	Name:
	Title:
[Any other Additional Borrowers (ACN                     )
By:
	Name:
	Title:	]
APACHE CORPORATION, as Parent and party to Deed of Guaranty
By:
	Name:
	Title:

1	Such date shall be no earlier than five (5) Business Days after receipt by the Global Administrative Agent and the Australian Administrative Agent of such Notice of Commitment Increase (unless an earlier date is otherwise agreed to by the Borrower, any applicable Lender or CI Lender, the Global Administrative Agent, and the Australian Administrative Agent).
2	After giving effect to the requested Commitment Increase, the total amount of the Commitments shall not exceed $400,000,000.

Exhibit 2.21 - Page 2

ACKNOWLEDGED AND AGREED: [Name of CI Lender]
By:
	Name:
	Title:
JPMORGAN CHASE BANK, N.A., as Global Administrative Agent
By:
	Name:
	Title:
CITISECURITIES LIMITED (ABN 51 008 489 610), as Australian Administrative Agent
By:
	Name:
	Title:

Exhibit 2.21 - Page 3

EX-10.3

Exhibit 10.3

Apache Corporation
2008 Share Appreciation Program Specifications

Share Plan:	2007 Omnibus Equity Compensation Plan, the terms of which are incorporated herein by reference.
Administration:	The 2008 Share Appreciation Program will be administered by the Stock Option Plan Committee of the Company’s Board of Directors.
Eligible Participants:	Substantially all full-time and designated part-time employees of Apache Corporation and certain subsidiaries.
Objective:	Focus the energies of the Company’s employees to significantly increasing shareholder value through stock price appreciation to share prices of $162 and $216.
	Share price goals seek to increase shareholder value by approximately $18.0 to $36.0 billion with the Company’s employees sharing in approximately two percent of the additional shareholder value created at the $216 threshold.
	Continued retention of existing key employees and as an additional enhancement in the recruitment of talent to Apache in a competitive recruiting environment.
Conditional Award:	Restricted shares of Apache Corporation common stock based on a percentage or multiple of annual base salary.
Share Price Thresholds:	Initial: $162 for the Measurement Period by year end 2010 Final: $216 for the Measurement Period by year end 2012
Measurement Period:	Any ten trading days during a period of 30 consecutive trading days.
Plan Term:	Expires close of business December 31, 2012, except for payment of any remaining installments for price threshold(s) achieved prior to such date.
Vesting:	Grant vests at time that share price threshold is met.
Payment Schedule:	When share price thresholds are met, awards will be paid out in five installments:

• 20% at attainment (within 30 days of event)

• 20% 12 months after attainment

• 20% 24 months after attainment

• 20% 36 months after attainment

• 20% 48 months after attainment

Notes: A portion of the shares will be withheld to cover required taxes and the net number of shares will be paid to the participant. Cash bonus plans will be implemented for employees of Apache subsidiaries that are not eligible to participate in the 2008 Share Appreciation Program.

1

Apache Corporation
2008 Share Appreciation Program Specifications

Participation Levels:	Tier I: Officers, key technical professionals and senior managers
	Tier II: Mid-level managers, supervisors and key administrative professionals
	Tier III: Entry level professionals, office administrative staff and field operators

Pay Out Multiples as a Percentage of Base Salary¹:

Share Price Threshold	Tier I		Tier II		Tier III
Initial $162		1.00		.50		.25
Final $216		2.00		1.00		.50
Total		3.00		1.50		.75

¹ Conditional Grant based on Base Salary as of the date of grant

	Participation Proration: The Committee, in its discretion, is authorized to reduce future conditional awards (to new employees, for example) to prorate grants as it deems appropriate. Any eligibility to participate in the Program will end for employees hired after September 30, 2011.
Number of Shares	Estimate of 2.77 million shares (before shares withheld to cover required taxes) of Apache common stock are required for issuance under the Program if both the Initial and Final thresholds are achieved.
Conditional Grants:	Grants are made based on Base Salary as of the date of grant, times the applicable multiple, divided by $162 for Initial award and $216 for Final award.
Payout requirement:	Must be an active employee on the date the price threshold is achieved and on each award payout date. First installment to be paid within 30 days of achievement of each price threshold.
Accelerated Payments:	If price threshold is attained prior to death, disability, or retirement, then payment is accelerated for:

• Disability

• Death

• Retirement (age 65 or more)

2

EX-10.4

Exhibit 10.4

Restricted Stock Unit Award Agreement

Schedule A

Notice of Restricted Stock Unit Award

Company:	Apache Corporation
Participant:	G. Steven Farris
Notice:	You have been granted an Award of Restricted Stock Units in accordance with the terms of the Plan and the attached Restricted Stock Unit Award Agreement.
Type of Award:	Restricted Stock Units
Number of Units:	250,000
Restriction:	Except as set forth in Section 3 of the attached Restricted Stock Award Agreement, the Shares received in settlement of Restricted Stock Units pursuant to this Award are not eligible for sale by the Participant until such time as the Participant retires from his duties as CEO.
Vesting:	50,000 Units July 1, 2009
	50,000 Units the first business day of 2010
	50,000 Units the first business day of 2011
	50,000 Units the first business day of 2012
	50,000 Units the first business day of 2013
Plan:	Apache Corporation 2007 Omnibus Equity Compensation Plan
Award Date:	May 8, 2008
Acceptance:	Please execute the attached Restricted Stock Unit Award Agreement. By accepting your Restricted Stock Unit Award, you will have agreed to the terms and conditions set forth in this Agreement and the Plan. If you do not accept your Award by executing this Agreement, you will be unable to receive your shares.

Restricted Stock Unit Award Agreement

          This Restricted Stock Unit Award Agreement (this “Agreement”), dated as of the Award Date set forth in the Notice of Restricted Stock Unit Award attached as Schedule A hereto (the “Award Notice”) is made between Apache Corporation (the “Company”) and the Participant named in the Award Notice. The Award Notice is included in and made part of this Agreement.

Definitions

          All capitalized terms contained in this Agreement shall have the meanings assigned to those terms by the Plan, unless otherwise indicated herein.

Terms

          1. Award of Restricted Stock Units. Subject to the provisions of this Agreement and the provisions of the Apache Corporation 2007 Omnibus Equity Compensation Plan (the “Plan”), the Company hereby awards to the Participant, pursuant to the Plan, a right to receive the number of shares of $0.625 par value Common Stock of the Company (“Shares”) set forth in the Award Notice.

          2. Evidence of Units. The Participant’s right to receive the Restricted Stock Units shall be evidenced by book entry registration (or by such other manner as the Committee may determine).

          3. Restrictions. 30,000 of the Shares vesting each year pursuant to this Agreement and the Plan shall be subject to the restriction that none of such 30,000 shares shall be eligible to be sold by the Participant until such time as the Participant retires or otherwise terminates employment with the Company. The remaining 20,000 Shares vesting each year shall vest free of restrictions, except those, if any, required by applicable securities laws, and may be sold at any time to pay taxes or for other reasons. Certificates representing the 30,000 restricted Shares issued each year will bear all legends required by law or by the Company or its counsel as necessary or advisable to effectuate the provisions of the Plan and this Award including the following restrictive legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS CONTAINED IN A RESTRICTED STOCK UNIT AWARD AGREEMENT DATED AS OF MAY 8, 2008, BY AND BETWEEN APACHE CORPORATION AND G. STEVEN FARRIS, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF THE COMPANY.

          4. Certificates. The Company may place a “stop transfer” order against shares of the Common Stock issued pursuant to this Award until all restrictions and conditions set forth in the Plan or this Agreement and in the legends referred to in Section 3 have been complied with. The stock transfer records of the Company will reflect stock transfer instructions with respect to such shares.

Page 1

          5. Custody. Any stock certificates issued pursuant to this Agreement shall be held by the Corporate Secretary of the Company until all restrictions thereon have lapsed or until the Committee authorizes the release.

          6. Vesting and Settlement. Subject to earlier settlement or forfeiture as provided in Section 9 and any deferral election under Section 8, Restricted Stock Units awarded hereunder shall vest in accordance with the following table.

Tranche	Number of Units	Vesting Date
I	50,000 Units	July 1, 2009
II	50,000 Units	first business day of 2010
III	50,000 Units	first business day of 2011
IV	50,000 Units	first business day of 2012
V	50,000 Units	first business day of 2013

The Restricted Stock Units shall be settled in an equivalent number of shares of Common Stock on the date on which such Restricted Stock Units vest. The Company shall not be obligated to deliver any shares of Common Stock if counsel to the Company determines that such sale or delivery would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which the Common Stock is listed or quoted. The Company shall in no event be obligated to take any affirmative action in order to cause the delivery of shares of Common Stock to comply with any such law, rule, regulation or agreement.

          7. Dividend Equivalent Payments. The Company will pay to the Participant an amount equivalent to any cash dividends declared on the Common Stock as soon as administratively practicable after the payment date for such dividend, in proportion to the number of unvested Restricted Stock Units as of the record date for such dividend, with the following exception. Any such payments that would be made before June 8, 2009 shall instead be accumulated and paid as soon as administratively practicable after on the earliest of the following dates, but only if the Participant is still employed by the Company on such date: June 8, 2009; the date of the Participant’s death; the date the Committee determines the Participant is Disabled; or the date of a Change of Control that is described in Section 409A(a)(2)(A)(v) of the Internal Revenue Code. If the Participant is not employed by the Company on such date, the accumulated payments shall be forfeited.

          8. Deferral Election. The Participant may, within 30 days of the Award Date and in accordance with the terms and conditions of the Deferred Plan, elect to defer receipt of Shares that would otherwise be issued on a Vesting Date in settlement of all or any part of a Tranche of Restricted Stock Units. If the Participant makes such an election, effective as of the applicable Vesting Date, each Restricted Stock Unit so deferred shall thereafter be a Stock Unit

Page 2

(as defined in the Deferred Plan) and settlement of the Stock Units shall be in accordance with the Deferred Plan except that the restrictions in Section 3 shall continue to apply to any shares of Common Stock issued in settlement of the Stock Units until such restrictions would have expired had such shares been issued in settlement of the Restricted Stock Units. Any such deferral of less than 100 percent of the Shares shall apply on a pro rata basis to both Shares subject to the restriction against sales and those Shares not subject to restriction.

          9. Termination of Employment, Death, Disability, etc. Except as set forth below, this Agreement and each Award shall be subject to the condition that the Participant has remained an Eligible Employee from the initial award of an Award until the applicable Vesting Date as follows:

          (a) If the Participant voluntarily leaves the employment of the Company (but not for Good Reason) or is terminated by the Company for Cause before an applicable Vesting Date, all Restricted Stock Units not already vested shall be immediately cancelled.

          (b) If the Participant dies or becomes Disabled before an applicable Vesting Date, the Restricted Stock Units that would have vested at the next Vesting Date shall thereupon vest, the restrictions in Section 3 shall lapse and the then vested Restricted Stock Units shall be settled as soon as administratively practicable following the date the Participant dies or becomes Disabled. Any Restricted Stock Units not already vested or vested by reason of death or Disability shall be immediately cancelled. If the Participant dies before settlement, settlement shall be made to the beneficiary designated for this purpose in the manner prescribed by the Committee, or, if there is no such beneficiary, to the estate of the Participant.

          (c) If, before June 8, 2009, the Participant is terminated by the Company without Cause and not by reason of becoming Disabled or if the Participant terminates his employment for Good Reason, then all unvested Restricted Stock Units shall be cancelled. If, after June 7, 2009 the Participant is terminated by the Company without Cause and not by reason of becoming Disabled or if the Participant terminates his employment for Good Reason, then all Restricted Stock Units shall thereupon vest, the restrictions in Section 3 shall lapse, and, subject to the terms of the Deferred Plan, if applicable, the Restricted Stock Units shall be settled as soon as administratively practicable following the date the Participant’s employment is terminated.

          (d) Notwithstanding Section 12 of the Plan or subsections 9(a), 9(b), or 9(c), if the Participant is employed by the Company when a Change of Control that is described in Section 409A(a)(2)(A)(v) of the Internal Revenue Code occurs, any unvested Restricted Stock Units shall vest, the restrictions in Section 3 shall lapse, and settlement of the newly vested Restricted Stock Units shall occur on the date of such Change of Control or as soon thereafter as is administratively practicable.

For purposes of this Agreement,

          “Cause” means the Participant’s willful failure to perform his duties after a demand for performance is delivered to him by the Company’s board of directors that specifically states the manner in which the board believes the Participant has not performed his

Page 3

duties; the Participant’s willful gross misconduct materially injurious to the Company; or the Participant’s violation of a direct order of the board of directors or the executive committee of the board. An act or omission is “willful” if it is done in bad faith or without reasonable belief that the act or omission was in the Company’s interests.

          “Disabled” means the Participant is expected by the Committee to both (i) become entitled to long-term disability payments under the Company’s long-term disability plan then in effect and (ii) be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that is expected to result in death or is expected to last for a continuous period of at least one year.

          “Good Reason” means a material diminution in the Participant’s responsibilities or duties or a material diminution in the Participant’s base compensation unless the base compensation of other senior officers of the Company is also reduced proportionately.

          10. Payment and Tax Withholding. The Committee may make such provisions as it may deem appropriate for the withholding of any taxes that it determines is required in connection with this Award. The Participant may pay all or any portion of the taxes required to be withheld by the Company or paid by the Participant in connection with all or any portion of this Award by delivering cash or by electing to have the Company withhold shares of Common Stock that would have otherwise been delivered to Participant having a Fair Market Value determined by the Committee in accordance with the Plan, equal to the amount required to be withheld or paid.

          11. No Ownership Rights Prior to Issuance of Shares. Neither the Participant nor any other person shall become the beneficial owner of the Shares underlying the Restricted Stock Units, nor have any rights of a shareholder (including, without limitation, dividend and voting rights) with respect to any such Shares, unless and until and after such Shares have vested.

          12. Non-Transferability of Restricted Stock Units. Subject to the conditions and exceptions set forth in Deferred Plan, if elected, and Section 14.2 of the Plan, the Restricted Stock Units (and, while subject to the restrictions in Section 3, the Shares) shall not be transferable otherwise than by will or the laws of descent and distribution or to a trust for estate planning purposes or a family partnership.

          13. No Right to Continued Employment. Neither the Restricted Stock Units nor any terms contained in this Agreement shall confer upon the Participant any express or implied right to be retained in the employment or service of the Company or any Affiliate for any period, nor restrict in any way the right of the Company or any Affiliate, which right is hereby expressly reserved, to terminate the Participant’s employment or service at any time for any reason. The Participant acknowledges and agrees that any right to have restrictions on the Restricted Stock Units lapse is earned only by continuing as an employee of the Company or an Affiliate at the will of the Company or such Affiliate, or satisfaction of any other applicable terms and conditions contained in the Plan and this Agreement, and not through the act of being hired, being Awarded the Restricted Stock Units or acquiring Shares hereunder.

          14. The Plan. In consideration for this award of Restricted Stock Units, the Participant agrees to comply with the terms of the Plan and this Agreement. This Agreement is

Page 4

subject to all the terms, provisions and conditions of the Plan, a copy of which is attached hereto and incorporated herein by reference, and to such regulations and administrative interpretations thereunder as may from time to time be adopted by the Committee. Unless defined herein, capitalized terms are used herein as defined in the Plan. In the event of any conflict between the provisions of the Plan and this Agreement, the provisions of the Plan shall control, and this Agreement shall be deemed to be modified accordingly.

          15. Notices. All notices by the Participant or the Participant’s assignees may be made only in the following manner, using such forms as the Company may from time to time provide:

          (a) by first class registered or certified United States mail, postage prepaid, to Apache Corporation, Attn: Corporate Secretary, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056;

          (b) by hand delivery to or Apache Corporation, Attn: Corporate Secretary, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056; or

          (c) by such other means, including by electronic means or by facsimile, as provided by the Committee.

          All notices to the Participant shall be addressed to the Participant at the Participant’s address in the Company’s records.

          Any notices provided for in this Agreement or in the Plan shall be deemed effectively delivered or given upon receipt of such notice.

          16. Other Plans. The Participant acknowledges that any income derived from the Restricted Stock Units shall not affect the Participant’s participation in, or benefits under, any other benefit plan or other contract or arrangement maintained by the Company or any Affiliate.

          17. Terms of Employment. The Plan is a discretionary plan. The Participant hereby acknowledges that neither the Plan nor this Agreement forms part of his terms of employment and nothing in the Plan may be construed as imposing on the Company or any Affiliate a contractual obligation to offer participation in the Plan to any employee of the Company or any Affiliate. The Company or any Affiliate is under no obligation to award further Shares to any Participant under the Plan.

Page 5

          18. Section 409A of the Internal Revenue Code. Notwithstanding any provision of this Agreement to the contrary, this Agreement is intended to provide for a grant of deferred compensation that is exempt from or compliant with Section 409A of the Internal Revenue Code and related regulations and United States Department of the Treasury pronouncements (“Section 409A”). Any ambiguous provisions will be construed in a manner so that this Award is either compliant with or exempt from the application of Section 409A. If a provision of this Agreement would result in the imposition of an applicable tax under Section 409A, such provision may be reformed to avoid imposition of the applicable tax.

          IN WITNESS WHEREOF, the Company and Participant have executed this Agreement on May 8, 2008. The Agreement is effective as of May 8, 2008.

Attest:	APACHE CORPORATION
/s/ Cheri L. Peper	By	/s/ Margery M. Harris
Cheri L. Peper		Margery M. Harris
Corporate Secretary		Vice President, Human Resources
	PARTICIPANT:
	/s/ G. Steven Farris
	G. Steven Farris

Page 6

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)

	Quarter Ended
	March 31,
	2008		2007		2007		2006		2005		2004		2003
EARNINGS
Pretax income from continuing operations before preferred interests of subsidiaries	$	1,675,887	$	814,633	$	4,672,612	$	4,009,595	$	4,206,254	$	2,663,083	$	1,930,925
Add: Fixed charges excluding capitalized interest and preferred interest requirements of consolidated subsidiaries		53,960		50,018		258,221		178,399		138,399		134,797		132,820
Adjusted Earnings	$	1,729,847	$	864,651	$	4,930,833	$	4,187,994	$	4,344,653	$	2,797,880	$	2,063,745
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Interest expense including capitalized interest (1,5)	$	69,307	$	65,732	$	308,235	$	217,454	$	175,419	$	168,090	$	173,045
Amortization of debt expense		851		694		3,310		2,048		3,748		2,471		2,163
Interest component of lease rental expenditures (2)		5,379		5,368		22,424		20,198		16,220		14,984		14,458
Preferred interest requirements of consolidated subsidiaries (3)		—		—		—		—		—		—		11,805
Fixed charges		75,537		71,794		333,969		239,700		195,387		185,545		201,471
Preferred stock dividend requirements (4)		2,330		2,347		9,437		8,922		9,105		9,058		9,968
Combined Fixed Charges and Preferred Stock Dividends	$	77,867	$	74,141	$	343,406	$	248,622	$	204,492	$	194,603	$	211,439
Ratio of Earnings to Fixed Charges		22.90		12.04		14.76		17.47		22.24		15.08		10.24
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends		22.22		11.66		14.36		16.84		21.25		14.38		9.76

(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: May 9, 2008

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: May 9, 2008

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 March 31, 2008, 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:	May 9, 2008

     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 March 31, 2008, 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:	May 9, 2008