REDEMABLE NONCONTROLLING INTEREST - ALTUS

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

REDEMABLE NONCONTROLLING INTEREST - ALTUS

REDEEMABLE NONCONTROLLING INTEREST — ALTUS

Preferred Units Issuance

On June 12, 2019, Altus Midstream LP issued and sold Preferred Units for an aggregate issue price of $625 million in a private offering exempt from the registration requirements of the Securities Act (the Closing). Altus Midstream LP received approximately $611 million in cash proceeds from the sale after deducting transaction costs and discounts to certain purchasers.

Classification

Prior to the deconsolidation of Altus on February 22, 2022, at December 31, 2021, the carrying amount of the Preferred Units was recorded as “Redeemable Noncontrolling Interest — Altus Preferred Unit Limited Partners” classified as temporary equity on the Company’s consolidated balance sheet based on the terms of the Preferred Units, including the redemption rights with respect thereto.

Measurement

Altus applied a two-step approach to subsequent measurement of the redeemable noncontrolling interest related to the Preferred Units by first allocating a portion of the net income of Altus Midstream LP in accordance with the terms of the partnership agreement. An additional adjustment to the carrying value of the Preferred Unit redeemable noncontrolling interest at each period end was recorded, if applicable. The amount of such adjustment was determined based upon the accreted value method to reflect the passage of time until the Preferred Units were exchangeable at the option of the holder. Pursuant to this method, the net transaction price was accreted using the effective interest method to the Redemption Price calculated at the seventh anniversary of the Closing. The total adjustment was limited to an amount such that the carrying amount of the Preferred Unit redeemable noncontrolling interest at each period end was equal to the greater of (a) the sum of (i) the carrying amount of the Preferred Units, plus (ii) the fair value of the embedded derivative liability and (b) the accreted value of the net transaction price.

Activity related to the Preferred Units is as follows:

	Units Outstanding	Financial Position
	(In millions, except unit data)
Redeemable noncontrolling interest — Preferred Units at: December 31, 2020	660,694	$	608
Cash distributions to Altus Preferred Unit limited partners	—	(46)
Distributions payable to Altus Preferred Unit limited partners	—	(12)
Allocation of Altus Midstream LP net income	N/A	80
Accreted value adjustment	N/A	82
Redeemable noncontrolling interest — Preferred Units at: December 31, 2021	660,694	712
Allocation of Altus Midstream LP net income	N/A	12
Accreted value adjustment(1)	N/A	(82)
Redeemable noncontrolling interest — Preferred Units at: February 22, 2022	660,694	642
Preferred Units embedded derivative		89
Deconsolidation of Altus		(731)
		$	—

(1)    Includes the reversal of previously recorded accreted value adjustments of $53 million due to the deconsolidation of Altus.

N/A - not applicable.

CAPITAL STOCK AND EQUITY

Upon consummation of the Holding Company Reorganization, each outstanding share of Apache common stock automatically converted into a share of APA common stock on a one-for-one basis. As a result, each stockholder of Apache now owns the same number of shares of APA common stock that such stockholder owned of Apache common stock immediately prior to the Holding Company Reorganization. As a result of the Holding Company Reorganization and subsequent activity, Apache recorded various intercompany activities during the first quarter ended March 31, 2021 as capital transactions, which are reflected in Apache’s Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling Interests. Refer to Note 2—Transactions with Parent Affiliate for more detail.

Additionally, in connection with the Holding Company Reorganization, Apache transferred to APA, and APA assumed, sponsorship of all of Apache’s stock plans along with all of Apache’s rights and obligations under each plan. Subsequent to the Holding Company Reorganization, stock-based compensation associated with APA equity awards granted and outstanding to Apache employees are reflected as capital contributions from APA to Apache.

Net Income (Loss) per Common Share

Net income (loss) per share for Apache is no longer required, as its shares are not publicly traded, and Apache is now a direct, wholly owned subsidiary of APA.

Distributions to APA Corporation and Common Stock Dividends

During the quarter ended March 31, 2022, the Company paid $305 million in capital distributions to its parent, APA, which is included as “Distributions to APA Corporation” on the Company’s statement of consolidated cash flows. During the quarter ended March 31, 2021, prior to completion of the Holding Company Reorganization, the Company paid $9 million in dividends on its common stock.