INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Income Before Income Taxes

Income before income taxes is composed of the following:

	For the Year Ended December 31,
	2012		2011		2010
	(In millions)
U.S.	$	1,605	$	2,373	$	1,328
Foreign		3,272		5,720		3,878
Total	$	4,877	$	8,093	$	5,206

Total Provision for Income Taxes

The total provision for income taxes consists of the following:

	For the Year Ended December 31,
	2012			2011		2010
	(In millions)
Current taxes:
Federal	$	(150	)	$	64	$	25
State		—			2		4
Foreign		2,349			2,197		1,193
		2,199			2,263		1,222
Deferred taxes:
Federal		596			656		431
State		10			17		7
Foreign		71			573		514
		677			1,246		952
Total	$	2,876		$	3,509	$	2,174

Reconciliation of Tax of Income Before Income Taxes and Total Tax Expense

A reconciliation of the tax on the Company’s income before income taxes and total tax expense is shown below:

	For the Year Ended December 31,
	2012			2011			2010
	(In millions)
Income tax expense at U.S. statutory rate	$	1,707		$	2,833		$	1,822
State income tax, less federal benefit		6			12			6
Taxes related to foreign operations		773			568			245
Tax credits		(4	)		(15	)		(8	)
Non-deductible merger costs		—			—			6
Current and deferred taxes related to currency fluctuations		16			(66	)		111
Increase in U.K. tax rate		118			218			—
Net change in tax contingencies		(115	)		(6	)		(2	)
Increase in valuation allowance		355			8			12
All other, net		20			(43	)		(18	)
	$	2,876		$	3,509		$	2,174

Net Deferred Tax Liability

The net deferred tax liability consists of the following:

	December 31,
	2012			2011
	(In millions)
Deferred tax assets:
Deferred income	$	(33	)	$	(89	)
Federal and state net operating loss carryforwards		(932	)		(236	)
Foreign net operating loss carryforwards		(61	)		(55	)
Tax credits		(78	)		(66	)
Accrued expenses and liabilities		(2	)		(90	)
Total deferred tax assets		(1,106	)		(536	)
Valuation allowance		419			60
Net deferred tax assets		(687	)		(476	)
Deferred tax liabilities:
Other		23			21
Depreciation, depletion and amortization		8,536			7,443
Total deferred tax liabilities		8,559			7,464
Net deferred income tax liability	$	7,872		$	6,988

Net Operating Losses

On December 31, 2012, the Company had net operating losses as follows:

	December 31, 2012
	Amount		Expiration
	(In millions)
Net operating losses:
U.S. — Federal	$	2,393	2027
U.S. — State		1,648	Various
Canada		6	2014
Australia		94	Indefinite
Argentina		55	2013

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2012			2011			2010
	(In millions)
Balance at beginning of year	$	97		$	110		$	123
Additions based on tax positions related to the current year		—			13			(1	)
Reductions for tax positions of prior years		(29	)		(4	)		(12	)
Settlements		(65	)		(22	)		—
Balance at end of year	$	3		$	97		$	110

Key Jurisdictions of Company's Earliest Open Tax Years

Apache’s earliest open tax years in its key jurisdictions are as follows:

Jurisdiction
U.S.	2004
Canada	2008
Egypt	1998
Australia	2008
U.K.	2011
Argentina	2005