DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2012

Open Crude Oil and Natural Gas Derivative Instruments

As of December 31, 2012, Apache had the following open crude oil derivative positions:

	Fixed-Price Swaps				Collars
Production Period	Mbbls(2)		Weighted Average Fixed Price(1)		Mbbls(2)		Weighted Average Floor Price(1)		Weighted Average Ceiling Price(1)
2013		40,292	$	97.31		5,701	$	82.84	$	111.63
2014		76		74.50		—		—		—

(1) Crude oil prices represent a weighted average of several contracts entered into on a per-barrel basis. Crude oil contracts are primarily settled against NYMEX WTI Cushing Index and Platts Dated Brent. Approximately 50 percent of 2013 contracts are settled against Dated Brent.

(2) For 2013, fixed-price swaps of 38,320 Mbbls have not been designated as cash flow hedges, and changes in fair value are reflected directly in earnings. All other derivative positions have been designated as cash flow hedges.

As of December 31, 2012, Apache had the following open natural gas derivative positions which have all been designated as cash flow hedges:

	Fixed-Price Swaps				Collars
Production Period	MMBtu (in 000’s)		Weighted Average Fixed Price(1)		MMBtu (in 000’s)		Weighted Average Floor Price(1)		Weighted Average Ceiling Price(1)
2013		10,095	$	6.74		6,825	$	5.35	$	6.67
2014		1,295	$	6.72		—	$	—	$	—

(1) U.S. natural gas prices represent a weighted average of several contracts entered into on a per-million British thermal units (MMBtu) basis and are settled against NYMEX Henry Hub.

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the Company’s derivative assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurements Using
	Quoted Price in Active Markets (Level 1)		Significant Other Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Netting(1)			Carrying Amount
	(In millions)
December 31, 2012
Assets:
Commodity Derivative Instruments		$—	$	48		$—	$	48	$	(15	)	$	33
Liabilities:
Commodity Derivative Instruments		—		131		—		131		(15	)		116
December 31, 2011
Assets:
Commodity Derivative Instruments		$—	$	428		$—	$	428	$	(96	)	$	332
Liabilities:
Commodity Derivative Instruments		—		250		—		250		(96	)		154

(1) The derivative fair values are based on analysis of each contract on a gross basis, even where the legal right of offset exists.

Fair Values of Derivative Instruments Recorded in Consolidated Balance Sheet

The fair market value of the Company’s derivative assets and liabilities and their locations on the consolidated balance sheet are as follows:

	December 31, 2012		December 31, 2011
	(In millions)
Current Assets: Derivative instruments	$	31	$	304
Other Assets: Deferred charges and other		2		28
Total Assets	$	33	$	332
Current Liabilities: Derivative instruments	$	116	$	113
Noncurrent Liabilities: Other		—		41
Total Liabilities	$	116	$	154

Commodity Derivative Activity Recorded in Statement of Consolidated Operations

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

	Gain (Loss) on Derivatives Recognized in Income	For the Year Ended December 31,
		2012			2011			2010
		(In millions)
Gain (loss) on cash flow hedges reclassified from accumulated other comprehensive loss	Oil and Gas Production Revenues	$	268		$	(13	)	$	165
Gain (loss) for ineffectiveness on cash flow hedges	Revenues and Other: Other	$	—		$	2		$	(2	)
Loss on derivatives not designated as cash flow hedges	Revenues and Other: Other	$	(79	)	$	—		$	—

Commodity Derivative Activity in Accumulated Other Comprehensive Income (Loss)

A reconciliation of the components of accumulated other comprehensive income (loss) in the statement of consolidated shareholders’ equity related to Apache’s cash flow hedges is presented in the table below:

	For the Year Ended December 31,
	2012						2011						2010
	Before tax			After tax			Before tax			After tax			Before tax			After tax
	(In millions)
Unrealized gain (loss) on derivatives at beginning of year	$	145		$	114		$	(54	)	$	(19	)	$	(267	)	$	(170	)
Realized amounts reclassified into earnings		(268	)		(199	)		13			19			(165	)		(106	)
Net change in derivative fair value		113			79			188			115			376			256
Ineffectiveness reclassified into earnings		—			—			(2	)		(1	)		2			1
Unrealized gain (loss) on derivatives at end of period	$	(10	)	$	(6	)	$	145		$	114		$	(54	)	$	(19	)