UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q 

(Mark One)  

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

For the quarterly period ended June 30, 2021

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: 1-40144

APA CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	86-1430562
(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) (Zip Code)

(713) 296-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.625 par value	APA	Nasdaq Global Select Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Number of shares of registrant’s common stock outstanding as of July 31, 2021 378,021,539 

TABLE OF CONTENTS

Item		Page
	PART I - FINANCIAL INFORMATION
1.	FINANCIAL STATEMENTS	1
	STATEMENT OF CONSOLIDATED OPERATIONS	1
	STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)	2
	STATEMENT OF CONSOLIDATED CASH FLOWS	3
	CONSOLIDATED BALANCE SHEET	4
	STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTEREST	5
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7
2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	30
3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	43
4.	CONTROLS AND PROCEDURES	44
	PART II - OTHER INFORMATION
1.	LEGAL PROCEEDINGS	45
1A.	RISK FACTORS	45
2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	45
6.	EXHIBITS	46

FORWARD-LOOKING STATEMENTS AND RISKS

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts included or incorporated by reference in this report, including, without limitation, statements regarding the Company’s 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 the Company’s examination of historical operating trends, the information that was used to prepare its estimate of proved reserves as of December 31, 2020, and other data in the Company’s 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,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable under the circumstances, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, its assumptions about:

•the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically, the coronavirus disease 2019 (COVID-19) pandemic and any related variant) and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors, and suppliers, in response to such epidemics or pandemics;

•the availability and effectiveness of vaccine programs and therapeutics related to the treatment of COVID-19;

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

•the Company’s commodity hedging arrangements;

•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 expenditures and other contractual obligations;

•currency exchange rates;

•weather conditions;

•inflation rates;

•the availability of goods and services;

•legislative, regulatory, or policy changes, including initiatives addressing the impact of global climate change or further regulating hydraulic fracturing, methane emissions, flaring, or water disposal;

•the Company’s performance on environmental, social, and governance measures;

•terrorism or cyberattacks;

•the occurrence of property acquisitions or divestitures;

•the integration of acquisitions;

•the Company’s ability to access the capital markets;

•market-related risks, such as general credit, liquidity, and interest-rate risks;

•the Company’s expectations with respect to the new operating structure implemented pursuant to the Holding Company Reorganization (as defined in the Notes to the Company’s Consolidated Financial Statements set forth in Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q) and the associated disclosure implications;

•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 the Annual Report on Form 10-K of Apache Corporation, the Company’s predecessor registrant, for the fiscal year ended December 31, 2020;

•other risks and uncertainties disclosed in the Company’s second-quarter 2021 earnings release;

•other factors disclosed under Part II, Item 1A—Risk Factors in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021;

•other factors disclosed under Part II, Item 1A—Risk Factors of this Quarterly Report on Form 10-Q; and

•other factors disclosed in the other filings that the Company makes with the Securities and Exchange Commission.

Other factors or events that could cause the Company’s actual results to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all such factors or events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, the Company disclaims any obligation to update or revise these statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.

DEFINITIONS

All defined terms under Rule 4-10(a) of Regulation S-X shall have their statutorily prescribed meanings when used in this Quarterly Report on Form 10-Q. As used herein:

“3-D” means three-dimensional.

“4-D” means four-dimensional.

“b/d” means barrels of oil or natural gas liquids per day.

“bbl” or “bbls” means barrel or barrels of oil or natural gas liquids.

“bcf” means billion cubic feet of natural gas.

“bcf/d” means one bcf per day.

“boe” means barrel of oil equivalent, determined by using the ratio of one barrel of oil or NGLs to six Mcf of gas.

“boe/d” means boe per day.

“Btu” means a British thermal unit, a measure of heating value.

“Liquids” means oil and natural gas liquids.

“LNG” means liquefied natural gas.

“Mb/d” means Mbbls per day.

“Mbbls” means thousand barrels of oil or natural gas liquids.

“Mboe” means thousand boe.

“Mboe/d” means Mboe per day.

“Mcf” means thousand cubic feet of natural gas.

“Mcf/d” means Mcf per day.

“MMbbls” means million barrels of oil or natural gas liquids.

“MMboe” means million boe.

“MMBtu” means million Btu.

“MMBtu/d” means MMBtu per day.

“MMcf” means million cubic feet of natural gas.

“MMcf/d” means MMcf per day.

“NGL” or “NGLs” means natural gas liquids, which are expressed in barrels.

“NYMEX” means New York Mercantile Exchange.

“oil” includes crude oil and condensate.

“PUD” means proved undeveloped.

“SEC” means United States Securities and Exchange Commission.

“Tcf” means trillion cubic feet of natural gas.

“U.K.” means United Kingdom.

“U.S.” means United States.

With respect to information relating to our working interest in wells or acreage, “net” oil and gas wells or acreage is determined by multiplying gross wells or acreage by our working interest therein. Unless otherwise specified, all references to wells and acres are gross.

References to “APA,” the “Company,” “we,” “us,” and “our” refer to APA Corporation and its consolidated subsidiaries, including Apache Corporation, unless otherwise specifically stated. References to “Apache” refer to Apache Corporation, the Company’s wholly-owned subsidiary, and its consolidated subsidiaries, unless otherwise specifically stated.

PART I – FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(In millions, except share data)
REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues	$	1,514	$	697	$	2,945	$	1,933
Purchased oil and gas sales	242		55		682		163
Total revenues	1,756		752		3,627		2,096
Derivative instrument gains (losses), net	(113)		(175)		45		(278)
Gain on divestitures, net	65		—		67		25
Other, net	74		19		135		32
	1,782		596		3,874		1,875
OPERATING EXPENSES:
Lease operating expenses	311		264		575		599
Gathering, processing, and transmission	61		72		119		143
Purchased oil and gas costs	262		46		756		132
Taxes other than income	51		23		95		56
Exploration	26		72		75		129
General and administrative	86		94		169		162
Transaction, reorganization, and separation	4		10		4		37
Depreciation, depletion, and amortization	351		418		693		984
Asset retirement obligation accretion	28		27		56		54
Impairments	—		20		—		4,492
Financing costs, net	107		(34)		217		69
	1,287		1,012		2,759		6,857
NET INCOME (LOSS) BEFORE INCOME TAXES	495		(416)		1,115		(4,982)
Current income tax provision (benefit)	131		(27)		280		62
Deferred income tax benefit	(44)		(11)		(23)		(44)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS	408		(378)		858		(5,000)
Net income (loss) attributable to noncontrolling interest - Egypt	41		(11)		83		(162)
Net income (loss) attributable to noncontrolling interest - Altus	27		—		28		(9)
Net income attributable to Altus Preferred Unit limited partners	24		19		43		37
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	316	$	(386)	$	704	$	(4,866)
NET INCOME (LOSS) PER COMMON SHARE:
Basic	$	0.83	$	(1.02)	$	1.86	$	(12.88)
Diluted	$	0.82	$	(1.02)	$	1.86	$	(12.88)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	378		378		378		378
Diluted	379		378		379		378

The accompanying notes to consolidated financial statements are an integral part of this statement.

1

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021		2020
	(In millions)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS	$	408	$	(378)	$	858	$	(5,000)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Share of equity method interests other comprehensive income (loss)	—		—		1		(1)
COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS	408		(378)		859		(5,001)
Comprehensive income (loss) attributable to noncontrolling interest - Egypt	41		(11)		83		(162)
Comprehensive income (loss) attributable to noncontrolling interest - Altus	27		—		28		(9)
Comprehensive income attributable to Altus Preferred Unit limited partners	24		19		43		37
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK	$	316	$	(386)	$	705	$	(4,867)

The accompanying notes to consolidated financial statements are an integral part of this statement.

2

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)

	For the Six Months Ended June 30,
	2021		2020
	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) including noncontrolling interests	$	858	$	(5,000)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Unrealized derivative instrument losses, net	55		241
Gain on divestitures, net	(67)		(25)
Exploratory dry hole expense and unproved leasehold impairments	46		97
Depreciation, depletion, and amortization	693		984
Asset retirement obligation accretion	56		54
Impairments	—		4,492
Deferred income tax benefit	(23)		(44)
Gain on extinguishment of debt	(1)		(140)
Other, net	(14)		14
Changes in operating assets and liabilities:
Receivables	(165)		183
Inventories	20		25
Drilling advances and other current assets	43		(26)
Deferred charges and other long-term assets	(18)		(16)
Accounts payable	157		(147)
Accrued expenses	17		(148)
Deferred credits and noncurrent liabilities	(17)		42
NET CASH PROVIDED BY OPERATING ACTIVITIES	1,640		586
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to upstream oil and gas property	(558)		(838)
Additions to Altus gathering, processing, and transmission (GPT) facilities	(1)		(25)
Leasehold and property acquisitions	(3)		(3)
Contributions to Altus equity method interests	(24)		(154)
Proceeds from sale of oil and gas properties	181		126
Other, net	12		(23)
NET CASH USED IN INVESTING ACTIVITIES	(393)		(917)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) Apache credit facility, net	(150)		565
Proceeds from Altus credit facility, net	33		97
Payments on Apache fixed-rate debt	(20)		(264)
Distributions to noncontrolling interest - Egypt	(60)		(40)
Distributions to Altus Preferred Unit limited partners	(23)		—
Dividends paid to APA common stockholders	(19)		(104)
Other, net	(21)		(35)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(260)		219
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	987		(112)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	262		247
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,249	$	135
SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	233	$	212
Income taxes paid, net of refunds	231		80

The accompanying notes to consolidated financial statements are an integral part of this statement.

3

APA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)

	June 30, 2021		December 31, 2020
	(In millions, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ($75 and $24 related to Altus VIE)	$	1,249	$	262
Receivables, net of allowance of $99 and $95	1,068		908
Other current assets (Note 5) ($9 and $5 related to Altus VIE)	628		676
	2,945		1,846
PROPERTY AND EQUIPMENT:
Oil and gas properties	40,437		41,819
Gathering, processing, and transmission facilities ($206 and $206 related to Altus VIE)	668		670
Other ($4 and $3 related to Altus VIE)	1,140		1,140
Less: Accumulated depreciation, depletion, and amortization ($19 and $13 related to Altus VIE)	(33,744)		(34,810)
	8,501		8,819
OTHER ASSETS:
Equity method interests (Note 6) ($1,554 and $1,555 related to Altus VIE)	1,554		1,555
Deferred charges and other ($9 and $5 related to Altus VIE)	512		526
	$	13,512	$	12,746
LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	603	$	444
Current debt	215		2
Other current liabilities (Note 7) ($11 and $4 related to Altus VIE)	955		862
	1,773		1,308
LONG-TERM DEBT (Note 9) ($657 and $624 related to Altus VIE)	8,420		8,770
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Income taxes	194		215
Asset retirement obligation (Note 8) ($66 and $64 related to Altus VIE)	1,893		1,888
Other ($131 and $144 related to Altus VIE)	539		602
	2,626		2,705
REDEEMABLE NONCONTROLLING INTEREST - ALTUS PREFERRED UNIT LIMITED PARTNERS (Note 12)	617		608
EQUITY (DEFICIT):
Common stock, $0.625 par, 860,000,000 shares authorized, 418,960,548 and 418,429,375 shares issued, respectively	262		262
Paid-in capital	11,704		11,735
Accumulated deficit	(9,757)		(10,461)
Treasury stock, at cost, 40,943,612 and 40,946,745 shares, respectively	(3,188)		(3,189)
Accumulated other comprehensive income	15		14
APA SHAREHOLDERS’ DEFICIT	(964)		(1,639)
Noncontrolling interest - Egypt	948		925
Noncontrolling interest - Altus	92		69
TOTAL EQUITY (DEFICIT)	76		(645)
	$	13,512	$	12,746

The accompanying notes to consolidated financial statements are an integral part of this statement.

4

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTEREST

(Unaudited)

	Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners		Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		APA SHAREHOLDERS’ EQUITY (DEFICIT)		Noncontrolling Interests		TOTAL EQUITY (DEFICIT)
	(In millions)
For the Quarter Ended June 30, 2020
Balance at March 31, 2020	$	573	$	262	$	11,747	$	(10,081)	$	(3,189)	$	15	$	(1,246)	$	1,018	$	(228)
Net loss attributable to common stock	—		—		—		(386)		—		—		(386)		—		(386)
Net loss attributable to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(11)		(11)
Net income attributable to Altus Preferred Unit holders	19		—		—		—		—		—		—		—		—
Distributions to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(8)		(8)
Common dividends declared ($0.025 per share)	—		—		(9)		—		—		—		(9)		—		(9)
Other	—		—		6		—		—		—		6		—		6
Balance at June 30, 2020	$	592	$	262	$	11,744	$	(10,467)	$	(3,189)	$	15	$	(1,635)	$	999	$	(636)
For the Quarter Ended June 30, 2021
Balance at March 31, 2021	$	605	$	262	$	11,727	$	(10,073)	$	(3,189)	$	15	$	(1,258)	$	997	$	(261)
Net income attributable to common stock	—		—		—		316		—		—		316		—		316
Net income attributable to noncontrolling interest - Egypt	—		—		—		—		—		—		—		41		41
Net income attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		27		27
Net income attributable to Altus Preferred Unit limited partners	24		—		—		—		—		—		—		—		—
Distributions payable to Altus Preferred Unit limited partners	(12)		—		—		—		—		—		—		—		—
Distributions to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(20)		(20)
Common dividends declared ($0.025 per share)	—		—		(10)		—		—		—		(10)		—		(10)
Other	—		—		(13)		—		1		—		(12)		(5)		(17)
Balance at June 30, 2021	$	617	$	262	$	11,704	$	(9,757)	$	(3,188)	$	15	$	(964)	$	1,040	$	76

The accompanying notes to consolidated financial statements are an integral part of this statement.

5

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY (DEFICIT) AND NONCONTROLLING INTEREST - Continued

(Unaudited)

	Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners		Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		APA SHAREHOLDERS’ EQUITY (DEFICIT)		Noncontrolling Interests		TOTAL EQUITY (DEFICIT)
	(In millions)
For the Six Months Ended June 30, 2020
Balance at December 31, 2019	$	555	$	261	$	11,769	$	(5,601)	$	(3,190)	$	16	$	3,255	$	1,210	$	4,465
Net loss attributable to common stock	—		—		—		(4,866)		—		—		(4,866)		—		(4,866)
Net loss attributable to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(162)		(162)
Net loss attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		(9)		(9)
Net income attributable to Altus Preferred Unit holders	37		—		—		—		—		—		—		—		—
Distributions to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(40)		(40)
Common dividends declared ($0.025 per share)	—		—		(19)		—		—		—		(19)		—		(19)
Other	—		1		(6)		—		1		(1)		(5)		—		(5)
Balance at June 30, 2020	$	592	$	262	$	11,744	$	(10,467)	$	(3,189)	$	15	$	(1,635)	$	999	$	(636)
For the Six Months Ended June 30, 2021
Balance at December 31, 2020	$	608	$	262	$	11,735	$	(10,461)	$	(3,189)	$	14	$	(1,639)	$	994	$	(645)
Net income attributable to common stock	—		—		—		704		—		—		704		—		704
Net income attributable to noncontrolling interest - Egypt	—		—		—		—		—		—		—		83		83
Net income attributable to noncontrolling interest - Altus	—		—		—		—		—		—		—		28		28
Net income attributable to Altus Preferred Unit limited partners	43		—		—		—		—		—		—		—		—
Distributions payable to Altus Preferred Unit limited partners	(11)		—		—		—		—		—		—		—		—
Distributions paid to Altus Preferred Unit limited partners	(23)		—		—		—		—		—		—		—		—
Distributions to noncontrolling interest - Egypt	—		—		—		—		—		—		—		(60)		(60)
Common dividends declared ($0.025 per share)	—		—		(19)		—		—		—		(19)		—		(19)
Other	—		—		(12)		—		1		1		(10)		(5)		(15)
Balance at June 30, 2021	$	617	$	262	$	11,704	$	(9,757)	$	(3,188)	$	15	$	(964)	$	1,040	$	76

The accompanying notes to consolidated financial statements are an integral part of this statement.

6

APA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These consolidated financial statements have been prepared by APA Corporation (APA or the Company) 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 presentation of the results for the interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements. 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 (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with the Annual Report on Form 10-K of Apache Corporation, the Company’s predecessor registrant, for the fiscal year ended December 31, 2020, which contains a summary of the Company’s significant accounting policies and other disclosures.

On January 4, 2021, Apache Corporation announced plans to implement a holding company reorganization (the Holding Company Reorganization), which was thereafter completed on March 1, 2021. In connection with the Holding Company Reorganization, Apache Corporation became a direct, wholly-owned subsidiary of APA Corporation, and all of Apache Corporation’s outstanding shares were automatically converted into equivalent corresponding shares of APA. Pursuant to the Holding Company Reorganization, APA became the successor issuer to Apache Corporation pursuant to Rule 12g-3(a) under the Exchange Act and replaced Apache Corporation as the public company trading on the Nasdaq Global Select Market under the ticker symbol “APA.” The Holding Company Reorganization modernized the Company’s operating and legal structure to more closely align with its growing international presence, making it more consistent with other companies that have subsidiaries operating around the globe.

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of June 30, 2021, the Company's significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in Apache Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The Company’s financial statements for prior periods include reclassifications that were made to conform to the current-year presentation.

Principles of Consolidation

The implementation of the Holding Company Reorganization was accounted for as a merger under common control. APA recognized the assets and liabilities of Apache at carryover basis. The consolidated financial statements of APA present comparative information for prior years on a combined basis, as if both APA and Apache were under common control for all periods presented.

The accompanying consolidated financial statements include the accounts of APA and its subsidiaries after elimination of intercompany balances and transactions.

The Company’s undivided interests in oil and gas exploration and production ventures and partnerships are proportionately consolidated. The Company consolidates all other investments in which, either through direct or indirect ownership, it has more than a 50 percent voting interest or controls the financial and operating decisions. Noncontrolling interests represent third-party ownership in the net assets of a consolidated subsidiary of APA and are reflected separately in the Company’s financial statements.

Sinopec International Petroleum Exploration and Production Corporation (Sinopec) owns a one-third minority participation in the Company’s Egypt oil and gas business as a noncontrolling interest, which is reflected as a separate noncontrolling interest component of equity in the Company’s consolidated balance sheet. Additionally, third-party investors own a minority interest of approximately 21 percent of Altus Midstream Company (ALTM), which is reflected as a separate noncontrolling interest component of equity in the Company’s consolidated balance sheet. ALTM qualifies as a variable interest entity under GAAP, for which APA consolidates because a wholly-owned subsidiary of APA has a controlling financial interest and was determined to be the primary beneficiary.

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Investments in which the Company has significant influence, but not control, are accounted for under the equity method of accounting. These investments are recorded separately as “Equity method interests” in the Company’s consolidated balance sheet. The Company’s proportionate share of the results of operations generated by the equity method interests are recorded as a component of “Other, net” under “Revenues and Other” in the Company’s statement of consolidated operations. Refer to Note 6—Equity Method Interests for further detail.

Use of Estimates

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities require management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of the Company’s financial statements and changes in these estimates are recorded when known.

Significant estimates with regard to these financial statements include the estimates of fair value for long-lived assets (refer to “Fair Value Measurements” and “Property and Equipment” sections in this Note 1 below), the fair value determination of acquired assets a