DEBT AND FINANCING COSTS

9 Months Ended

Sep. 30, 2019

The following table presents the carrying value of the Company’s debt as of September 30, 2019 and December 31, 2018:



	September 30, 2019			December 31, 2018
	(In millions)
Notes and debentures before unamortized discount and debt issuance costs⁽¹⁾	$	8,217		$	8,299
Altus credit facility⁽²⁾	235			—
Finance lease obligations	57			40
Unamortized discount	(43		)	(44		)
Debt issuance costs	(54		)	(51		)
Total debt	8,412			8,244
Current maturities	(19		)	(151		)
Long-term debt	$	8,393		$	8,093


(1)	The fair value of the Company’s notes and debentures was $8.2 billion and $7.8 billion as of September 30, 2019 and December 31, 2018, respectively. Apache uses a market approach to determine the fair value of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).


(2)	The carrying amount of borrowings by Altus Midstream LP on its credit facility approximate fair value because the interest rates are variable and reflective of market rates.

As of September 30, 2019, current debt included $19 million of finance lease obligations. As of December 31, 2018, current debt included $150 million of 7.625% senior notes due July 1, 2019 and $1 million of finance lease obligations. On July 1, 2019, Apache’s 7.625% senior notes in original principal amount of $150 million matured and were repaid.

On June 19, 2019, Apache closed offerings of $1.0 billion in aggregate principal amount of senior unsecured notes, comprised of $600 million in aggregate principal amount of 4.250% notes due January 15, 2030 and $400 million in aggregate principal amount of 5.350% notes due July 1, 2049. The notes are redeemable at any time, in whole or in part, at Apache’s option, subject to a make-whole premium. The net proceeds from the sale of the notes were used to purchase certain outstanding notes in cash tender offers and for general corporate purposes.

On June 21, 2019, the Company closed cash tender offers for certain outstanding notes. Apache accepted for purchase $932 million aggregate principal amount of certain notes covered by the tender offers. Apache paid holders an aggregate of approximately $1.0 billion reflecting principal, the net premium to par, early tender premium, and accrued and unpaid interest. The Company recorded a net loss of $75 million on extinguishment of debt, including $7 million of unamortized debt issuance costs and discount, in connection with the note purchases.

In March 2018, the Company entered into a revolving credit facility with commitments totaling $4.0 billion. In March 2019, the term of this facility was extended by one year to March 2024 (subject to Apache’s remaining one-year extension option) pursuant to Apache’s exercise of an extension option. The Company can increase commitments up to $5.0 billion by adding new lenders or obtaining the consent of any increasing existing lenders. The facility includes a letter of credit subfacility of up to $3.0

billion, of which $2.08 billion was committed as of September 30, 2019. The facility is for general corporate purposes, and committed borrowing capacity fully supports Apache’s commercial paper program. As of September 30, 2019, a letter of credit for approximately £3.1 million and no borrowings were outstanding under this facility.

The Company’s $3.5 billion commercial paper program, which is subject to market availability, facilitates Apache borrowing funds for up to 270 days at competitive interest rates. As of September 30, 2019, the Company had no commercial paper outstanding.

In November 2018, Altus Midstream LP entered into a revolving credit facility for general corporate purposes that matures in November 2023 (subject to Altus Midstream LP’s two, one-year extension options). The agreement for this facility, as amended, provides aggregate commitments from a syndicate of banks of $650 million until the consolidated net income of Altus Midstream LP and its restricted subsidiaries, as adjusted pursuant to the agreement, for the immediately preceding fiscal quarter equals or exceeds $175 million on an annualized basis (such period, the Initial Period). Following the Initial Period, the aggregate commitments equal $800 million. All aggregate commitments include a letter of credit subfacility of up to $100 million and a swingline loan subfacility of up to $100 million. After the Initial Period, Altus Midstream LP may increase commitments up to an aggregate $1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders. As of September 30, 2019, there were $235 million of borrowings and no letters of credit outstanding under this facility. As of December 31, 2018, no borrowings or letters of credit were outstanding under this facility. The Altus Midstream LP credit facility is unsecured and is not guaranteed by Apache or any of Apache’s other subsidiaries.

Financing Costs, Net

The following table presents the components of Apache’s financing costs, net:



	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
	(In millions)
Interest expense	$	107		$	113		$	323		$	335
Amortization of deferred loan costs	2			2			5			8
Capitalized interest	(9		)	(11		)	(26		)	(36		)
Loss on extinguishment of debt	—			94			75			94
Interest income	(5		)	(6		)	(12		)	(16		)
Financing costs, net	$	95		$	192		$	365		$	385