10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 0-13546

APACHE OFFSHORE INVESTMENT PARTNERSHIP

(Exact name of registrant as specified in its charter)

Delaware	41-1464066
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Post Oak Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400

(Address of principal executive offices)

Registrant’s telephone number, including area code: (713) 296-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Number of registrant’s units outstanding as of March 31, 2015 1,022

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

APACHE OFFSHORE INVESTMENT PARTNERSHIP

STATEMENT OF CONSOLIDATED INCOME

(Unaudited)

	For the Three Months Ended March 31,
	2015			2014
REVENUES:
Oil and gas sales	$	482,163		$	730,188
		482,163			730,188
EXPENSES:
Depreciation, depletion and amortization		105,338			144,651
Asset retirement obligation accretion		32,031			32,568
Lease operating expenses		254,334			306,758
Gathering and transportation costs		29,231			21,470
Administrative		92,500			95,510
		513,434			600,957
NET INCOME (LOSS)	$	(31,271	)	$	129,231
NET INCOME (LOSS) ALLOCATED TO:
Managing Partner	$	14,627		$	53,410
Investing Partners		(45,898	)		75,821
	$	(31,271	)	$	129,231
NET INCOME (LOSS) PER INVESTING PARTNER UNIT	$	(45	)	$	74
WEIGHTED AVERAGE INVESTING PARTNER UNITS OUTSTANDING		1,021.5			1,021.5

The accompanying notes to consolidated financial statements

are an integral part of this statement.

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APACHE OFFSHORE INVESTMENT PARTNERSHIP

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)

	For the Three Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(31,271	)	$	129,231
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		105,338			144,651
Asset retirement obligation accretion		32,031			32,568
Changes in operating assets and liabilities:
(Increase) decrease in accrued receivables		59,896			(431,713	)
Increase (decrease) in receivable from/payable to Apache Corporation		8,201			27,044
Increase (decrease) in accrued operating expenses		(17,424	)		148,233
Increase (decrease) in deferred credits and other		—			(84,817	)
Net cash provided by (used in) operating activities		156,771			(34,803	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties		(12,284	)		—
Net cash used in investing activities		(12,284	)		—
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Managing Partner		(29,585	)		—
Contribution from Managing Partner		—			9,147
Net cash (used in) provided by financing activities		(29,585	)		9,147
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		114,902			(25,656	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		5,275,503			4,320,218
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	5,390,405		$	4,294,562

The accompanying notes to consolidated financial statements

are an integral part of this statement.

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APACHE OFFSHORE INVESTMENT PARTNERSHIP

CONSOLIDATED BALANCE SHEET

(Unaudited)

	March 31, 2015			December 31, 2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,390,405		$	5,275,503
Accrued revenues receivable		249,518			309,414
Receivable from Apache Corporation		—			2,467
		5,639,923			5,587,384
OIL AND GAS PROPERTIES, on the basis of full cost accounting:
Proved properties		194,703,386			194,691,102
Less – Accumulated depreciation, depletion and amortization		(186,882,987	)		(186,777,649	)
		7,820,399			7,913,453
	$	13,460,322		$	13,500,837
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
Payable to Apache Corporation	$	5,734		$	—
Current portion of asset retirement obligation		278,954			274,921
Accrued operating expenses		325,679			343,103
Accrued development costs		1,374			1,374
		611,741			619,398
ASSET RETIREMENT OBLIGATION		1,936,260			1,908,262
PARTNERS’ CAPITAL:
Managing Partner		399,404			414,362
Investing Partners (1,021.5 units outstanding)		10,512,917			10,558,815
		10,912,321			10,973,177
	$	13,460,322		$	13,500,837

The accompanying notes to consolidated financial statements

are an integral part of this statement.

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APACHE OFFSHORE INVESTMENT PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Apache Offshore Investment Partnership, a Delaware general partnership (the Investment Partnership), was formed on October 31, 1983, consisting of Apache Corporation, a Delaware corporation (Apache or the Managing Partner), as Managing Partner and public investors (the Investing Partners). The Investment Partnership invested its entire capital in Apache Offshore Petroleum Limited Partnership, a Delaware limited partnership (the Operating Partnership). The primary business of the Investment Partnership is to serve as the sole limited partner of the Operating Partnership. The accompanying financial statements include the accounts of both the Investment Partnership and the Operating Partnership. The term “Partnership”, as used herein, refers to the Investment Partnership or the Operating Partnership, as the case may be.

These financial statements have been prepared by the Partnership, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal, recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and which contains a summary of the Partnership’s significant accounting policies and other disclosures.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of March 31, 2015, the Partnership’s significant accounting policies are consistent with those discussed in Note 2 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserves and related present value estimates of future net cash flow therefrom and asset retirement obligations. Actual results could differ from those estimates.

New Pronouncements Issued But Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a joint revenue recognition standard, ASU 2014-09. The new standard removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The guidance requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Partnership is currently evaluating the level of effort needed to implement the standard, the impact of adopting this standard on its consolidated financial statements, and whether to use the full retrospective approach or the modified retrospective approach.

2. RECEIVABLE FROM / PAYABLE TO APACHE CORPORATION

The receivable from/payable to Apache represents the net result of the Investing Partners’ revenue received and expenditure paid on behalf of the Partnership in the current month. Generally, cash in this amount will be paid by Apache to the Partnership or transferred to Apache in the month after the Partnership’s transactions are processed and the net results of operations are determined.

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3. RIGHT OF PRESENTMENT

As provided in the Partnership Agreement, as amended (the Amended Partnership Agreement), a first right of presentment valuation was computed during the first quarter of 2015. The per-unit value was determined to be $9,765 based on the valuation date of December 31, 2014. The Partnership will not repurchase any Investing Partner Units (Units) during the first half of 2015 as a result of the Partnership’s limited amount of cash available for discretionary purposes. The Partnership is not in a position to predict how many Units will be presented for repurchase during the remainder of 2015 and cannot, at this time, determine if the Partnership will have sufficient funds available to repurchase any Units. Pursuant to the Amended Partnership Agreement, the Partnership has no obligation to purchase any Units presented to the extent it determines that it has insufficient funds for such purchases.

4. ASSET RETIREMENT OBLIGATIONS

The following table describes the changes to the Partnership’s asset retirement obligation liability for the first three months of 2015:

Asset retirement obligation at December 31, 2014	$	2,183,183
Accretion expense		32,031
Asset retirement obligation at March 31, 2015		2,215,214
Less current portion		(278,954	)
Asset retirement obligation, long-term	$	1,936,260

5. FAIR VALUE MEASUREMENTS

Certain assets and liabilities are reported at fair value on a recurring basis in the Partnership’s consolidated balance sheet. As of March 31, 2015, and December 31, 2014, the carrying amounts of the Partnership’s current assets and current liabilities approximated fair value because of the short-term nature or maturity of these instruments.

The Partnership did not use derivative financial instruments or otherwise engage in hedging activities during the three months ended March 31, 2015, and 2014.

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                   OPERATIONS

This discussion relates to Apache Offshore Investment Partnership (the Partnership) and should be read in conjunction with the Partnership’s consolidated financial statements as of March 31, 2015, and the period then ended, and accompanying notes included under Part I, Item 1, of this Quarterly Report on Form 10-Q, as well as its consolidated financial statements as of December 31, 2014, and the year then ended, the accompanying notes and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

The Partnership’s business is participation in oil and gas exploration, development and production activities on federal lease tracts in the Gulf of Mexico, offshore Louisiana and Texas.

Results of Operations

Net Income and Revenue

The Partnership reported a net loss of $31,271 for the first quarter of 2015, compared to net income of $129,231 in the first quarter of 2014. On a per Investing Partner Unit basis, the Partnership reported a net loss of $45 per Unit in the first quarter of 2015, compared to net income of $74 per Unit in the first quarter of 2014. Lower oil and gas prices in 2015 drove the decrease in earnings and net income per Investing Partner Unit from 2014. Production increases resulting from recompletions at South Timbalier 295 slightly offset the impact of lower oil and gas prices.

Total revenues decreased 34 percent from the first quarter of 2014 to the first quarter of 2015 on lower oil and gas prices in the first quarter of 2015. Oil and gas prices began to decline in the third quarter of 2014 and declined significantly in December 2014. Product prices are expected to remain low throughout 2015.

The Partnership’s oil, gas and natural gas liquids (NGL) production volume and price information is summarized in the following table (gas volumes are presented in thousand cubic feet (Mcf) per day):

	For the Three Months Ended March 31,
	2015		2014		Increase (Decrease)
Gas volume – Mcf per day		337		331		2	%
Average gas price – per Mcf	$	3.05	$	4.61		(34	)%
Oil volume – barrels per day		74		61		21	%
Average oil price – per barrel	$	56.62	$	101.45		(44	)%
NGL volume – barrels per day		8		11		(27	)%
Average NGL price – per barrel	$	19.71	$	33.39		(41	)%

Oil and Gas Sales

The Partnership’s crude oil sales for the first quarter of 2015 totaled $374,993 compared to $560,678 of crude oil sales in the first quarter of 2014. The Partnership’s average realized price in the first quarter of 2015 decreased $44.83 per barrel from the first quarter of 2014, reducing sales by $247,757. Reflecting two recompletions at South Timbalier 295, crude oil volumes on a per day basis increased from 61 barrels per day in 2014 to 74 barrels per day in 2015, increasing sales by $62,072.

Natural gas sales totaled $92,546 in the first quarter of 2015, decreasing $44,628 or 33 percent from the same period in 2014. The Partnership’s average realized natural gas price for the quarter decreased $1.56 per Mcf, or 34 percent, from the first quarter of 2014, reducing sales by $46,469 from a year ago. Natural gas volumes on a per day basis increased 2 percent from the first quarter of 2014, increasing sales by $1,841. North Padre Island 969/976 remained shut-in awaiting repair plans by the operator.

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During the first quarter of 2015, the Partnership sold 8 barrels per day of natural gas liquids, down from 11 barrels per day during the first quarter of 2014. The decrease reflected a reduction in processed volumes at Ship Shoal 258/259 and South Timbalier 295 from 2014.

Since the Partnership does not anticipate acquiring additional acreage or conducting exploratory drilling on leases in which it currently holds an interest, declines in oil and gas production can be expected in future periods as a result of natural depletion. Also, given the small number of producing wells owned by the Partnership and exposure to inclement weather in the Gulf of Mexico, the Partnership’s production during the remainder of 2015 and beyond may be subject to more volatility than those companies with a larger or more diversified property portfolio.

Operating Expenses

The Partnership’s depreciation, depletion and amortization (DD&A) rate, expressed as a percentage of oil and gas sales, was approximately 22 percent during the first quarter of 2015 and 20 percent during first quarter of 2014. The dollar amount of DD&A expense for the first quarter of 2015 decreased from the comparable periods a year ago as a result of lower oil and gas sales in 2015. The Partnership recognized $32,031 in asset retirement obligation accretion for the first quarter of 2015 compared to $32,568 for the first quarter of 2014.

Lease operating expenses (LOE) for the first quarter of 2015 totaled $254,334, down 17 percent from the first quarter of 2014 on lower workover and repair costs in 2015 and lower cost from shutting-in Matagorda Island 681/682 for abandonment.

In the first quarter of 2015, gathering and transportation costs for the delivery of oil and gas increased 36 percent from the same period in 2014 on higher oil and gas volumes. Administrative expense for 2015 decreased three percent for the three-month period ended March 31 compared to the same period in 2014.

Capital Resources and Liquidity

The Partnership’s primary capital resource is net cash provided by operating activities, which was a net source of funds of $156,771 for the first three months of 2015 compared to a net use of $34,803 during the first three months of 2014. The $34,803 net use of cash by operating activities for the first three months of 2014 reflected the payment of $84,817 of abandonment cost during the period while the receipt of revenues were delayed during the transition of operations from Apache to Fieldwood Energy LLC in early 2014.

At March 31, 2015, the Partnership had approximately $5.4 million in cash and cash equivalents, up from $5.3 million at December 31, 2014. The Partnership’s goal is to maintain cash and cash equivalents at least sufficient to cover the undiscounted value of its future asset retirement obligation (ARO) liability. The Partnership also plans to reserve funds for recompletion work planned for the second half of 2015 and anticipated repairs which may disrupt the Partnership’s production.

The Partnership’s future financial condition, results of operations and cash from operating activities will largely depend upon prices received for its oil and natural gas production. A substantial portion of the Partnership’s production is sold under market-sensitive contracts. Prices for oil and natural gas are subject to fluctuations in response to changes in supply, market uncertainty and a variety of factors beyond the Partnership’s control. These factors include worldwide political instability (especially in the Middle East), the foreign supply of oil and natural gas, the price of foreign imports, the level of consumer demand, and the price and availability of alternative fuels.

The Partnership’s oil and gas reserves and production will also significantly impact future results of operations and cash from operating activities. The Partnership’s production is subject to fluctuations in response to remaining quantities of oil and gas reserves, weather, pipeline capacity, consumer demand, mechanical performance and workover, recompletion and drilling activities. Declines in oil and gas production can be expected in future years as a result of normal depletion and the non-participation in acquisition or exploration activities by the Partnership. Based on production estimates from independent engineers and current market conditions, the Partnership forecasts it will be able to meet its liquidity needs for routine operations in the foreseeable future. The Partnership will reduce capital expenditures and distributions to partners as cash from operating activities declines.

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In the event that future short-term operating cash requirements are greater than the Partnership’s financial resources, the Partnership may seek short-term, interest-bearing advances from the Managing Partner as needed. The Managing Partner, however, is not obligated to make loans to the Partnership.

On an ongoing basis, the Partnership reviews the possible sale of lower value properties prior to incurring associated dismantlement and abandonment costs.

Capital Commitments

The Partnership’s primary needs for cash are for operating expenses, drilling and recompletion expenditures, future dismantlement and abandonment costs, distributions to Investing Partners, and the purchase of Units offered by Investing Partners under the right of presentment. To the extent there is discretion, the Partnership allocates available capital to investment in the Partnership’s properties so as to maximize production and resultant cash flow. The Partnership had no outstanding debt or lease commitments at March 31, 2015. The Partnership did not have any contractual obligations as of March 31, 2015, other than the liability for dismantlement and abandonment costs of its oil and gas properties. The Partnership has recorded a separate liability for the present value of this asset retirement obligation as discussed in the notes to the financial statements included in the Partnership’s latest annual report on Form 10-K.

During the first three months of 2015 the Partnership had cash outlays for capital expenditures of $12,284 for its share of recompletion projects at South Timbalier 295. The Partnership spent approximately $84,817 on abandonment cost at North Padre Island 969/976 during the first quarter of 2014. Based on information supplied by the operators of the properties, the Partnership anticipates capital expenditures of less than $0.1 million for the remainder of 2015 as no new drilling projects are currently planned for 2015. Capital estimates may change based on realized prices, changes by the operator to the development plan, pipeline construction or modifications, or changes in government regulations.

Because of significantly lower oil and gas prices in 2015 and the need to maintain cash reserves for future asset retirement obligations, no distributions were made to Investing Partners during the first three months of 2015. The Partnership also made no distribution to Investing Partners during the first three months of 2014 as a result of the large amount of plugging costs funded in 2014.

The amount of future distributions will be dependent on actual and expected production levels, realized and anticipated oil and gas prices, expected drilling and recompletion expenditures, and prudent cash reserves for future dismantlement and abandonment costs that will be incurred after the Partnership’s reserves are depleted. The Partnership’s goal is to maintain cash and cash equivalents in the Partnership at least sufficient to cover the undiscounted value of its future asset retirement obligations. During the second half of 2015, the Partnership will review available cash balances and the factors noted above to determine whether there are sufficient funds to make a distribution to Investing Partners during the remainder of the year

As provided in the Amended Partnership Agreement, a first right of presentment valuation was computed during the first quarter of 2015. The per-unit value was determined to be $9,765 based on the valuation date of December 31, 2014. The Partnership will not repurchase any Investing Partner Units (Units) during the first half of 2015 as a result of the Partnership’s limited amount of cash available for discretionary purposes. The Partnership is not in a position to predict how many Units will be presented for repurchase during the remainder of 2015 and cannot, at this time, determine if the Partnership will have sufficient funds available to repurchase any units. Pursuant to the Amended Partnership Agreement, the Partnership has no obligation to repurchase any Units presented to the extent it determines that it has insufficient funds for such purchases.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

The Partnership’s major market risk exposure is in the pricing applicable to its oil and gas production. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot prices applicable to its natural gas production. Prices received for oil and gas production continue to be volatile and unpredictable. The Partnership has not used derivative financial instruments or otherwise engaged in hedging activities during 2014 or the first three months of 2015.

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The information set forth under “Commodity Risk” in Item 7A of the Partnership’s Form 10-K for the year ended December 31, 2014, is incorporated by reference. Information about market risks for the current quarter is not materially different.

Forward-Looking Statements and Risk

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. Such forward-looking statements are based on our examination of historical operating trends, the information that was used to prepare our estimate of proved reserves as of December 31, 2014, and other data in our possession or available from third parties. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “believe,” or “continue” or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, our assumptions about:

• the market prices of oil, natural gas, NGLs and other products or services;

• the supply and demand for oil, natural gas, NGLs and other products or services;

• production and reserve levels;

• drilling risks;

• economic and competitive conditions;

• the availability of capital resources;

• capital expenditure and other contractual obligations;

• weather conditions;

• inflation rates;

• the availability of goods and services;

• legislative or regulatory changes;

• terrorism or cyber-attacks;

• occurrence of property acquisitions or divestitures;

• the securities or capital markets and related risks such as general credit, liquidity, market and interest-rate risks; and

• other factors disclosed under Items 1 and 2 – “Business and Properties — Estimated Proved Reserves and Future Net Cash Flows,” Item 1A – “Risk Factors,” Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Item 7A – “Quantitative and Qualitative Disclosures About Market Risk,” and elsewhere in our most recently filed Form 10-K.

All subsequent written and oral forward-looking statements attributable to the Partnership, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. We assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise.

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ITEM 4 – CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

John J. Christmann, the Managing Partner’s Chief Executive Officer and President (in his capacity as principal executive officer), and Stephen J. Riney, the Managing Partner’s Executive Vice President and Chief Financial Officer (in his capacity as principal financial officer), evaluated the effectiveness of the Partnership’s disclosure controls and procedures as of March 31, 2015, the end of the period covered by this report. Based on that evaluation and as of the date of that evaluation, these officers concluded that the Partnership’s disclosure controls and procedures were effective, providing effective means to ensure that the information it is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified under the Commission’s rules and forms and communicated to our management, including the Managing Partner’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal controls over financial reporting during the period covered by this quarterly report on Form 10-Q that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

During the quarter ended March 31, 2015, there were no material changes from the risk factors as previously disclosed in the Partnership’s Form 10-K for the year ended December 31, 2014.

ITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

a. Exhibits

*3.1 Partnership Agreement of Apache Offshore Investment Partnership (incorporated by reference to Exhibit (3)(i) to Form 10 filed by Partnership with the Commission on April 30, 1985, Commission File No. 0-13546).

*3.2 Amendment No. 1, dated February 11, 1994, to the Partnership Agreement of Apache Offshore Investment Partnership (incorporated by reference to Exhibit 3.3 to Partnership’s Annual Report on Form 10-K for the year ended December 31, 1993, Commission File No. 0-13546).

*3.3 Limited Partnership Agreement of Apache Offshore Petroleum Limited Partnership (incorporated by reference to Exhibit (3)(ii) to Form 10 filed by Partnership with the Commission on April 30, 1985, Commission File No. 0-13546).

**31.1 Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer

**31.2 Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Financial Officer

**32.1 Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer

**101.INS XBRL Instance Document.

**101.SCH XBRL Taxonomy Schema Document.

**101.CAL XBRL Calculation Linkbase Document.

**101.LAB XBRL Label Linkbase Document.

**101.PRE XBRL Presentation Linkbase Document.

  * Incorporated by reference herein.

** Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	APACHE OFFSHORE INVESTMENT PARTNERSHIP
	By:	Apache Corporation, Managing Partner
Dated: May 7, 2015	/s/ Stephen J. Riney
	Stephen J. Riney Executive Vice President and Chief Financial Officer (principal financial officer) of Apache Corporation, Managing Partner
Dated: May 7, 2015	/s/ Rebecca A. Hoyt
	Rebecca A. Hoyt Senior Vice President, Chief Accounting Officer and Controller (principal accounting officer) of Apache Corporation, Managing Partner

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, John J. Christmann, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Apache Offshore Investment Partnership;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John J. Christmann

John J. Christmann

Chief Executive Officer and President (principal executive officer)

of Apache Corporation, Managing Partner

Date: May 7, 2015

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Stephen J. Riney, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Apache Offshore Investment Partnership;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Stephen J. Riney

Stephen J. Riney

Executive Vice President and Chief Financial Officer

(principal financial officer) of Apache Corporation,

Managing Partner

Date: May 7, 2015

EX-32.1

Exhibit 32.1

APACHE OFFSHORE INVESTMENT PARTNERSHIP

by Apache Corporation, Managing Partner

Certification of Principal Executive Officer

and Principal Financial Officer

I, John J. Christmann, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Offshore Investment Partnership for the quarterly period ending March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Offshore Investment Partnership.

/s/ John J. Christmann
By:	John J. Christmann
Title:	Chief Executive Officer and President (principal executive officer) of Apache Corporation, Managing Partner
Date:	May 7, 2015

I, Stephen J. Riney, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the quarterly report on Form 10-Q of Apache Offshore Investment Partnership for the quarterly period ending March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly represents, in all material respects, the financial condition and results of operations of Apache Offshore Investment Partnership.

/s/ Stephen J. Riney
By:	Stephen J. Riney
Title:	Executive Vice President and Chief Financial Officer (principal financial officer) of Apache Corporation, Managing Partner
Date:	May 7, 2015

XML

Asset Retirement Obligations

3 Months Ended

Mar. 31, 2015

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

4. ASSET RETIREMENT OBLIGATIONS

The following table describes the changes to the Partnership’s asset retirement obligation liability for the first three months of 2015:

Asset retirement obligation at December 31, 2014	$	2,183,183
Accretion expense		32,031
Asset retirement obligation at March 31, 2015		2,215,214
Less current portion		(278,954	)
Asset retirement obligation, long-term	$	1,936,260

XML

Right of Presentment

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Right of Presentment

3. RIGHT OF PRESENTMENT

As provided in the Partnership Agreement, as amended (the Amended Partnership Agreement), a first right of presentment valuation was computed during the first quarter of 2015. The per-unit value was determined to be $9,765 based on the valuation date of December 31, 2014. The Partnership will not repurchase any Investing Partner Units (Units) during the first half of 2015 as a result of the Partnership’s limited amount of cash available for discretionary purposes. The Partnership is not in a position to predict how many Units will be presented for repurchase during the remainder of 2015 and cannot, at this time, determine if the Partnership will have sufficient funds available to repurchase any Units. Pursuant to the Amended Partnership Agreement, the Partnership has no obligation to purchase any Units presented to the extent it determines that it has insufficient funds for such purchases.

XML

Statement of Consolidated Income (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
REVENUES:
Oil and gas sales	$ 482,163	$ 730,188
Total Revenues	482,163	730,188
EXPENSES:
Depreciation, depletion and amortization	105,338	144,651
Asset retirement obligation accretion	32,031	32,568
Lease operating expenses	254,334	306,758
Gathering and transportation costs	29,231	21,470
Administrative	92,500	95,510
Total Expenses	513,434	600,957
NET INCOME (LOSS)	(31,271)	129,231
NET INCOME (LOSS) ALLOCATED TO:
Managing Partner	14,627	53,410
Investing Partners	(45,898)	75,821
NET INCOME (LOSS)	$ (31,271)	$ 129,231
NET INCOME (LOSS) PER INVESTING PARTNER UNIT	$ (45)	$ 74
WEIGHTED AVERAGE INVESTING PARTNER UNITS OUTSTANDING	1,021.5	1,021.5

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of March 31, 2015, the Partnership’s significant accounting policies are consistent with those discussed in Note 2 of its consolidated financial statements contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserves and related present value estimates of future net cash flow therefrom and asset retirement obligations. Actual results could differ from those estimates.

New Pronouncements Issued But Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a joint revenue recognition standard, ASU 2014-09. The new standard removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The guidance requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Partnership is currently evaluating the level of effort needed to implement the standard, the impact of adopting this standard on its consolidated financial statements, and whether to use the full retrospective approach or the modified retrospective approach.

XML

Receivable from / Payable to Apache Corporation

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Receivable from / Payable to Apache Corporation

2. RECEIVABLE FROM / PAYABLE TO APACHE CORPORATION

The receivable from/payable to Apache represents the net result of the Investing Partners’ revenue received and expenditure paid on behalf of the Partnership in the current month. Generally, cash in this amount will be paid by Apache to the Partnership or transferred to Apache in the month after the Partnership’s transactions are processed and the net results of operations are determined.

XML

Statement of Consolidated Cash Flows (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (31,271)	$ 129,231
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	105,338	144,651
Asset retirement obligation accretion	32,031	32,568
Changes in operating assets and liabilities:
(Increase) decrease in accrued receivables	59,896	(431,713)
Increase (decrease) in receivable from/payable to Apache Corporation	8,201	27,044
Increase (decrease) in accrued operating expenses	(17,424)	148,233
Increase (decrease) in deferred credits and other		(84,817)
Net cash provided by (used in) operating activities	156,771	(34,803)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties	(12,284)
Net cash used in investing activities	(12,284)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Managing Partner	(29,585)
Contribution from Managing Partner		9,147
Net cash (used in) provided by financing activities	(29,585)	9,147
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	114,902	(25,656)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	5,275,503	4,320,218
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 5,390,405	$ 4,294,562

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	AOIP
Entity Registrant Name	APACHE OFFSHORE INVESTMENT PARTNERSHIP
Entity Central Index Key	0000727538
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	1,022

XML

Consolidated Balance Sheet (USD $)	Mar. 31, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 5,390,405	$ 5,275,503
Accrued revenues receivable	249,518	309,414
Receivable from Apache Corporation		2,467
Total Current Assets	5,639,923	5,587,384
OIL AND GAS PROPERTIES, on the basis of full cost accounting:
Proved properties	194,703,386	194,691,102
Less - Accumulated depreciation, depletion and amortization	(186,882,987)	(186,777,649)
Total oil and gas properties, on the basis of full cost accounting	7,820,399	7,913,453
Total Assets	13,460,322	13,500,837
CURRENT LIABILITIES:
Payable to Apache Corporation	5,734
Current portion of asset retirement obligation	278,954	274,921
Accrued operating expenses	325,679	343,103
Accrued development costs	1,374	1,374
Total Current Liabilities	611,741	619,398
ASSET RETIREMENT OBLIGATION	1,936,260	1,908,262
PARTNERS' CAPITAL:
Managing Partner	399,404	414,362
Investing Partners (1,021.5 units outstanding)	10,512,917	10,558,815
Total Partners' Capital	10,912,321	10,973,177
Total liabilities and partners' capital	$ 13,460,322	$ 13,500,837

XML

Asset Retirement Obligations (Tables)

3 Months Ended

Mar. 31, 2015

Asset Retirement Obligation Disclosure [Abstract]

Changes to Partnership's Asset Retirement Obligation Liability

The following table describes the changes to the Partnership’s asset retirement obligation liability for the first three months of 2015:

Asset retirement obligation at December 31, 2014	$	2,183,183
Accretion expense		32,031
Asset retirement obligation at March 31, 2015		2,215,214
Less current portion		(278,954	)
Asset retirement obligation, long-term	$	1,936,260

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserves and related present value estimates of future net cash flow therefrom and asset retirement obligations. Actual results could differ from those estimates.

New Pronouncements Issued But Not Yet Adopted

New Pronouncements Issued But Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a joint revenue recognition standard, ASU 2014-09. The new standard removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The guidance requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Partnership is currently evaluating the level of effort needed to implement the standard, the impact of adopting this standard on its consolidated financial statements, and whether to use the full retrospective approach or the modified retrospective approach.

XML

Right of Presentment - Additional Information (Detail)	Dec. 31, 2014
Equity [Abstract]
Investing partner units value per unit	9,765

XML

Asset Retirement Obligations - Changes to Partnership's Asset Retirement Obligation Liability (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Asset Retirement Obligation Disclosure [Abstract]
Asset retirement obligation, Beginning Balance	$ 2,183,183
Accretion expense	32,031	32,568
Asset retirement obligation, Ending Balance	2,215,214
Less current portion	(278,954)		(274,921)
Asset retirement obligation, long-term	$ 1,936,260		$ 1,908,262

XML

Consolidated Balance Sheet (Parenthetical)	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Investing Partners, units outstanding	1,021.5	1,021.5

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. FAIR VALUE MEASUREMENTS

Certain assets and liabilities are reported at fair value on a recurring basis in the Partnership’s consolidated balance sheet. As of March 31, 2015, and December 31, 2014, the carrying amounts of the Partnership’s current assets and current liabilities approximated fair value because of the short-term nature or maturity of these instruments.

The Partnership did not use derivative financial instruments or otherwise engage in hedging activities during the three months ended March 31, 2015, and 2014.