REDEMABLE NONCONTROLLING INTEREST - ALTUS

12 Months Ended

Dec. 31, 2023

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. 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” and 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. Accordingly, prior to the deconsolidation of Altus on February 22, 2022, the Company recorded a net loss attributable to Altus Preferred Unit limited partners totaling $70 million and net income attributable to Altus Preferred Unit limited partners totaling $162 million during 2022 and 2021, respectively.

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 quarter ended March 31, 2021 as capital transactions, which are reflected in Apache’s Statement of Consolidated Changes in Equity (Deficit) and Noncontrolling Interest. 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.

Stock Compensation Plans

Prior to consummation of the Holding Company Reorganization, the Company maintained several stock-based compensation plans, which include stock options, restricted stock, and conditional restricted stock unit plans. In 2021, pursuant to the Holding Company Reorganization, Apache’s outstanding common shares were converted into equivalent corresponding shares of APA. APA assumed sponsorship of all stock compensation plans. All cash-settled awards previously indexed to Apache’s stock price were subsequently indexed to APA’s stock price, and all unvested stock-settled awards will be settled in APA stock upon vesting.

On May 12, 2016, the Company’s shareholders approved the 2016 Omnibus Compensation Plan (the 2016 Plan), which is used to provide eligible employees with equity-based incentives by granting incentive stock options, non-qualified stock options, performance awards, restricted stock awards, restricted stock units, stock appreciation rights, cash awards, or any combination of the foregoing. As of December 31, 2023, 9.4 million shares were authorized and available for grant under the 2016 Plan. Previously approved plans remain in effect solely for the purpose of governing grants still outstanding that were issued prior to approval of the 2016 Plan. All new grants are issued from the 2016 Plan. In 2018, the Company began issuing cash-settled awards (phantom units) under the restricted stock and conditional restricted stock unit plans. The phantom units represent a hypothetical interest in APA’s stock and, once vested, are settled in cash.

Costs related to the plans are capitalized or expensed to “Lease operating expenses,” “Exploration,” or “General and administrative” in the Company’s statement of consolidated operations based on the nature of each employee’s activities. The following table summarizes the Company’s stock-settled and cash-settled compensation costs for the years ended December 31, 2023, 2022, and 2021:

	For the Year Ended December 31,
	2023		2022		2021
	(In millions)
Stock-settled and cash-settled compensation expensed:
Lease operating expenses	$	27	$	82	$	39
Exploration	4		13		5
General and administrative	50		193		108
Total stock-settled and cash-settled compensation expensed	81		288		152
Stock-settled and cash-settled compensation capitalized	13		43		18
Total stock-settled and cash-settled compensation costs	$	94	$	331	$	170

Stock Options

As of December 31, 2023, APA had outstanding options to purchase shares of APA’s common stock under the 2016 Plan and the 2011 Omnibus Equity Compensation Plan (the 2011 Plan and, with the 2016 Plan, the Omnibus Plans). The Omnibus Plans were submitted to and approved by the Company’s shareholders. New shares of common stock will be issued for employee stock option exercises. Under the Omnibus Plans, the exercise price of each option equals the closing price of APA’s common stock on the date of grant. Options granted become exercisable ratably over a three-year period and expire 10 years after granted.

The following table summarizes stock option activity for the years ended December 31, 2023, 2022, and 2021:

	2023			2022			2021
	Shares Under Option	Weighted Average Exercise Price		Shares Under Option	Weighted Average Exercise Price		Shares Under Option	Weighted Average Exercise Price
	(In thousands, except exercise price amounts)
Outstanding, beginning of year	2,078	$	57.71	3,012	$	63.79	3,537	$	72.10
Exercised	(12)	42.38		(99)	42.09		—	—
Forfeited	—	—		(2)	49.10		—	—
Expired	(601)	80.53		(833)	81.56		(525)	119.83
Outstanding, end of year(1)	1,465	48.48		2,078	57.71		3,012	63.79
Expected to vest	—	—		—	—		—	—
Exercisable, end of year(1)	1,465	48.48		2,078	57.71		3,012	63.79

(1)As of December 31, 2023, options exercisable and outstanding had a weighted average remaining contractual life of 3.1 years and aggregate intrinsic value of $33,000.

During the years ended December 31, 2023, 2022, and 2021, there were no options issued and 12,183, 98,646, and no options, respectively, exercised.

Restricted Stock Units and Restricted Stock Phantom Units

Prior to consummation of the Holding Company Reorganization, the Company had restricted stock unit and restricted stock phantom unit plans for eligible employees, including officers. The value of the stock-settled restricted stock unit awards is established by the market price on the date of grant and is recorded as compensation expense ratably over the vesting terms. The restricted stock phantom unit awards represent a hypothetical interest in either APA’s common stock or, prior to the BCP Business Combination, in ALTM’s common stock, as applicable, and, once vested, are settled in cash. Compensation expense related to the cash-settled awards is recorded as a liability and remeasured at the end of each reporting period over the applicable vesting term.

For the years ended December 31, 2023, 2022, and 2021, compensation costs charged to expense for the restricted stock units and restricted stock phantom units was $70 million, $145 million, and $91 million, respectively. As of December 31, 2023, 2022, and 2021, capitalized compensation costs for the restricted stock units and restricted stock phantom units were $11 million, $22 million, and $15 million, respectively.

The following table summarizes stock-settled restricted stock unit activity for the years ended December 31, 2023, 2022, and 2021:

	2023			2022			2021
	Units	Weighted Average  Grant-Date  Fair Value		Units	Weighted Average  Grant-Date  Fair Value		Units	Weighted Average  Grant-Date  Fair Value
	(In thousands, except per share amounts)
Non-vested, beginning of year	1,885	$	23.08	2,073	$	19.98	1,552	$	28.43
Granted	661	41.60		847	29.90		1,506	16.46
Vested(3)	(975)	23.31		(978)	22.39		(857)	29.13
Forfeited	(69)	32.44		(57)	23.49		(128)	19.78
Expired	(22)	27.81		—	—		—	—
Non-vested, end of year(1)(2)	1,480	30.69		1,885	23.08		2,073	19.98

(1)As of December 31, 2023, there was $15 million of total unrecognized compensation cost related to 1,479,880 unvested stock-settled restricted stock units.

(2)As of December 31, 2023, the weighted-average remaining life of unvested stock-settled restricted stock units is approximately 0.6 years.

(3)The grant date fair values of the stock-settled awards vested during 2023, 2022, and 2021 were approximately $23 million, $22 million, and $25 million, respectively.

The following table summarizes cash-settled restricted stock phantom unit activity for the years ended December 31, 2023, 2022, and 2021:

	For the Year Ended December 31,
	2023	2022	2021
	(In thousands)
Non-vested, beginning of year	5,709	6,402	4,423
Adjustment from ALTM transaction(1)	—	143	—
Granted(2)	1,972	2,568	4,441
Vested	(2,851)	(2,970)	(2,049)
Forfeited	(340)	(434)	(413)
Expired	(12)	—	—
Non-vested, end of year(3)	4,478	5,709	6,402

(1)Following the BCP Business Combination, certain employees were granted restricted stock phantom units based on APA’s common stock price to replace the equivalent value in restricted stock phantom units based on ALTM’s common stock price.

(2)Restricted stock phantom units granted during 2023, 2022, and 2021 included 1,972,116, 2,512,602, and 4,375,546 awards, respectively, based on the per-share market price of APA common stock. Restricted stock phantom units granted during 2022 and 2021 included 55,546 and 65,327 awards, respectively, based on the per-share market price of ALTM common stock prior to the deconsolidation of Altus on February 22, 2022.

(3)The outstanding liability for the unvested cash-settled restricted stock phantom units that had not been recognized as of December 31, 2023 was approximately $54 million.

In January 2024, APA awarded 819,836 restricted stock units and 2,356,255 restricted stock phantom units based on APA’s weighted-average per-share market price of $33.73 under the 2016 Plan to eligible employees. Total compensation cost for the restricted stock units and the restricted stock phantom units, absent any forfeitures, is estimated to be $28 million and $80 million, respectively, and was calculated based on the per-share fair market value of a share of APA’s common stock as of the grant date. Compensation cost will be recognized over a three-year vesting period for both plans. The restricted stock phantom units will be classified as a liability and remeasured at the end of each reporting period based on the change in fair value of one share of the Company’s common stock, a Level 1 fair value measurement.

Performance Program

To provide long-term incentives for the Company’s employees to deliver competitive shareholder returns, APA makes annual grants of cash-settled conditional restricted stock phantom units to eligible employees. APA has a performance program for certain eligible employees with payout for a portion of the shares based upon measurement of total shareholder return (TSR) of APA common stock as compared to a designated peer group during a three-year performance period. Payout for the remaining portion of the shares is based on performance and financial objectives as defined in the plan. The overall results of the objectives are calculated at the end of the award’s stated performance period and, if a payout is warranted, applied to the target number of restricted stock units awarded. The performance shares will immediately vest 50 percent at the end of the three-year performance period, with the remaining 50 percent vesting at the end of the following year. Grants from the performance programs outstanding at December 31, 2023, are as described below:

•In January 2020, APA’s Board of Directors approved the 2020 Performance Program, pursuant to the 2016 Plan. Eligible employees received initial cash-settled conditional phantom units totaling 1,687,307 units. A total of 999,896 phantom units were outstanding as of December 31, 2023. The results for the performance period yielded a payout of 155 percent of target.

•In January 2021, APA’s Board of Directors approved the 2021 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling 1,959,856 units. A total of 1,803,083 phantom units were outstanding as of December 31, 2023. The results for the performance period yielded a payout of 118 percent of target.

•In January 2022, APA’s Board of Directors approved the 2022 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling 1,093,034 units. The actual number of phantom units awarded will be between zero and 200 percent of target. A total of 1,040,100 phantom units were outstanding as of December 31, 2023, from which a minimum of zero to a maximum of 2,080,200 units could be awarded.

•In January 2023, APA’s Board of Directors approved the 2023 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling 822,200 units. The actual number of phantom units awarded will be between zero and 200 percent of target. A total of 784,977 phantom units were outstanding as of December 31, 2023, from which a minimum of zero to a maximum of 1,569,954 units could be awarded.

Compensation expense related to the conditional cash-settled awards is recorded as a liability and remeasured at the end of each reporting period over the applicable vesting term. Compensation costs charged to expense under the cash-settled performance programs were expenses of $2 million, $136 million, and $56 million during 2023, 2022, and 2021, respectively. Capitalized compensation costs under the cash-settled performance programs were expenses of approximately $100 thousand, $21 million, and $3 million during 2023, 2022, and 2021, respectively.

The following table summarizes cash-settled conditional restricted stock phantom unit activity for the years ended December 31, 2023, 2022, and 2021:

	For the Year Ended December 31,
	2023	2022	2021
	(In thousands)
Non-vested, beginning of year	4,835	4,531	3,417
Granted	1,536	1,676	1,782
Vested	(1,593)	(656)	(76)
Forfeited	(99)	(106)	(240)
Expired	(50)	(610)	(352)
Non-vested, end of year(1)	4,629	4,835	4,531

(1)As of December 31, 2023, the outstanding liability for the unvested cash-settled conditional restricted stock phantom units that had not been recognized was approximately $24 million.

In January 2024, APA’s Board of Directors approved the 2024 Performance Program, pursuant to the 2016 Plan. A portion of the award is based upon measurement of TSR similar to prior year awards, and the remaining portion of the award is based on performance and financial objectives as defined in the 2024 Performance Program. Eligible employees received conditional phantom units and cash incentives. The conditional phantom units totaled 644,399 units, with the ultimate units to be awarded ranging from zero to a maximum of 1,288,798 units. These phantom units represent a hypothetical interest in APA’s common stock and once vested, are settled in cash. These phantom units will be classified as a liability and remeasured at the end of each reporting period based on the change in fair value of one share of APA’s common stock, a Level 1 fair value measurement. The cash incentives totaled $14 million, with the ultimate payout ranging from zero to $28 million. Final payout of the awards will be determined at the end of a three-year performance period.