DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Objectives and Strategies

The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production, as well as fluctuations in exchange rates in connection with transactions denominated in foreign currencies. The Company manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production and foreign currency transactions. The Company may utilize various types of derivative financial instruments, including forward contracts, futures contracts, swaps, and options, to manage fluctuations in cash flows resulting from changes in commodity prices or foreign currency values.

In December 2022, counterparty agreements for Apache’s commodity derivative instruments were transferred from Apache to APA Corporation. Apache had no outstanding derivative positions as of June 30, 2023 or December 31, 2022.

Derivative Activity Recorded in the Statement of Consolidated Operations

The following table summarizes the effect of derivative instruments on the Company’s statement of consolidated operations:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022

	(In millions)
Realized:
Commodity derivative instruments	$	—	$	(4)	$	—	$	(9)
Foreign currency derivative instruments	—		(2)		—		(2)
Realized losses, net	—		(6)		—		(11)
Unrealized:
Commodity derivative instruments	—		(20)		—		(44)

Foreign currency derivative instruments	—		(6)		—		(8)
Preferred Units embedded derivative	—		—		—		(31)
Unrealized losses, net	—		(26)		—		(83)
Derivative instrument losses, net	$	—	$	(32)	$	—	$	(94)

Derivative instrument gains and losses were recorded in “Derivative instrument losses, net” under “Revenues and Other” in the Company’s statement of consolidated operations. Unrealized losses for derivative activity recorded in the statement of consolidated operations are reflected in the statement of consolidated cash flows separately as “Unrealized derivative instrument losses, net” under “Adjustments to reconcile net income to net cash provided by operating activities.”