ACQUISITIONS AND DIVESTITURES

2018 Activity

Altus Transaction

In November 2018, Apache completed a previously announced transaction with Kayne Anderson Acquisition Corp. (KAAC) to create a publicly traded, pure-play, Permian Basin to Gulf Coast midstream C-corporation anchored by Apache’s gathering, processing, and transmission assets at Alpine High. Pursuant to the agreement, Apache contributed certain Alpine High midstream assets and options to acquire equity interests in five separate third-party pipeline projects to a then wholly-owned subsidiary of KAAC, Altus Midstream LP and/or its subsidiaries. KAAC contributed approximately $628 million of cash, net of transaction expenses, into Altus Midstream LP. The transaction was accounted for as a reverse recapitalization by KAAC. Under this method of accounting, KAAC was treated as the “acquired” company and Apache’s contributed assets of approximately $1.1 billion remained at historical cost, with no goodwill or other intangible assets recorded.

The partnership is jointly owned by Apache and KAAC, which was renamed to Altus Midstream Company upon closing. Apache owns an approximate 79 percent ownership interest in Altus.

Apache fully consolidates the assets and liabilities of Altus in its consolidated financial statements, with a corresponding noncontrolling interest reflected separately. Apache recorded a noncontrolling interest of $406 million upon closing, which is reflected as a separate component of equity in the Company’s consolidated balance sheet. This represents approximately 21 percent third party ownership of the net assets in Altus at the time of the transaction. The cash contributions in excess of the noncontrolling interest were recognized as additional paid-in capital.

Other Activity

During 2018, Apache completed the sale of certain non-core assets and leasehold, primarily in the North Sea and Permian regions, in multiple transactions for total cash proceeds of $138 million. The Company recognized gains of approximately $23 million during 2018 upon the closing of these transactions.

Apache completed $133 million of leasehold and property acquisitions during 2018, primarily in its U.S. onshore regions.

In December 2018, Altus Midstream LP’s subsidiary exercised its option to acquire a 15 percent equity interest in Gulf Coast Express Pipeline LLC (GCX), a Delaware limited liability company, for total cash consideration of $91 million. GCX is a long-haul natural gas pipeline that, upon completion, is expected to have capacity of approximately 2.0 Bcf/d and will transport natural gas from the Waha area in northern Pecos County, Texas to the Agua Dulce Hub near the Texas Gulf Coast. GCX will be operated by Kinder Morgan Texas Pipeline LLC and is expected to be operational and in-service in the fourth quarter of 2019. Upon exercising the GCX option, Altus Midstream LP has estimated it will incur an additional $175 million of capital contributions for its equity interest in 2019. The joint venture equity interest in GCX is included in “Deferred charges and other” on Apache’s consolidated balance sheet.

Subsequent to the balance sheet date, Altus Midstream LP’s subsidiary exercised the option with EPIC Pipeline LP in February 2019, to acquire a 15 percent equity interest in the EPIC Crude pipeline. The transaction is anticipated to close in the first quarter of 2019, with an anticipated exercise price of approximately $52 million. The pipeline is a long-haul crude oil pipeline that, upon completion, is expected to have an initial throughput capacity of approximately 590 MBbl/d from the Permian Basin to Corpus Christi, Texas. The EPIC Crude pipeline will be operated by EPIC Consolidated Operations, LLC and is expected to be operational and in service in the first quarter of 2020.

2017 Activity

Canada Divestitures

During 2017, Apache announced the sale of its subsidiary Apache Canada Ltd. (ACL) and complete exit of its Canadian operations. On June 30, 2017, Apache completed the sale of its Canadian assets at Midale and House Mountain, located in Saskatchewan and Alberta, for aggregate cash proceeds of approximately $228 million. The Company recognized a $52 million loss during the second quarter of 2017 in association with this sale.

In August of 2017, Apache completed the sale of its remaining Canadian operations for aggregate cash proceeds of approximately $478 million. The Company recognized a $74 million gain upon closing of these transactions in the third quarter of 2017. A summary of the Company’s Canadian assets and liabilities at the time of close is detailed below:



	(In millions)
ASSETS
Cash	$	46
Other current assets	64
Property, plant & equipment	1,132
Total Assets	$	1,242
LIABILITIES
Current liabilities, excluding asset retirement obligation	$	120
Asset retirement obligation	780
Other long-term liabilities	46
Total Liabilities	$	946

The net carrying value of the assets disposed included a currency translation loss of $109 million, which was recorded in “Accumulated other comprehensive income (loss)” on the Company’s consolidated balance sheet at December 31, 2016. The currency translation loss was recognized as a reduction of the net gain on sale during the third quarter of 2017 upon closing of the transactions.

Apache’s Canadian operations recorded pretax losses of $141 million and $684 million for the years ended 2017 and 2016, respectively.

U.S. Divestitures

During 2017, Apache completed the sale of certain non-core assets, primarily leasehold acreage in the Permian and Midcontinent/Gulf Coast regions, in multiple transactions for cash proceeds of $798 million, subject to customary closing adjustments. Refundable deposits totaling $40 million were received in the fourth quarter of 2016 in connection with certain of these transactions and were recorded in “Other current liabilities” on the consolidated balance sheet as of December 31, 2016. In the first quarter of 2017, Apache completed these transactions, and the liabilities related to the refundable deposits were released. The Company recognized gains of approximately $599 million during 2017 in connection with these transactions.

North Sea GTP Divestiture

During the fourth quarter of 2016, Apache entered into an agreement to sell its 30.28 percent interest in the SAGE gas plant and its 60.56 percent interest in the Beryl pipeline in the North Sea to Ancala Midstream Acquisitions Limited. A refundable deposit of $134 million was received in the fourth quarter of 2016 in connection with this transaction and was recorded in “Other current liabilities” on the consolidated balance sheet as of December 31, 2016. In November 2017, Apache completed the sale, and the liability related to the refundable deposit was released. No additional proceeds were received, and the Company recognized a $6 million gain upon closing of this transaction.

Leasehold and Property Acquisitions

Apache completed $188 million of leasehold and property acquisitions during 2017, primarily in its North America onshore regions.

2016 Activity

Leasehold and Property Acquisitions

Apache completed $181 million of leasehold and property acquisitions during 2016, primarily in its North America onshore regions.

Divestiture of Other Oil and Gas Properties

Apache recorded $134 million of proceeds from the divestiture of other oil and gas properties during 2016. An associated $21 million of gain was recorded in 2016.

Discontinued Operations

Apache sold its operations in Argentina and Australia in 2014 and 2015, respectively. The results of operations related to the Argentina and Australia dispositions and the losses on disposals were classified as discontinued operations in the Company’s financial statements. During 2016, the Company incurred additional losses on these dispositions. The components of the Company’s loss from discontinued operations were as follows:



	For the Year Ended December 31,
	2018		2017		2016
	(In millions)
Loss on Woodside sale	$	—	$	—	$	(23	)
Loss from Argentina divestiture	—		—		(10		)
Income (loss) from discontinued operations, net of tax	$	—	$	—	$	(33	)

Transaction, Reorganization, and Separation

Apache recorded $28 million, $16 million, and $39 million of expenses during 2018, 2017, and 2016, respectively, primarily related to company reorganization, including separation costs, investment banking fees and other associated costs. The charges for 2018 include $22 million for consulting and legal fees related to divestitures and the Altus transaction, and $6 million related to employee separation and other reorganization efforts.