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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 September 30, 2023
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) (Zip code)
Registrant’s telephone number, including area code: (713296-6000
Securities registered pursuant to Section 12(b) of the Act: None
 ________________________________________________________________
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 filerAccelerated filerEmerging growth company
Non-accelerated filerSmaller reporting 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 registrant's units outstanding as of September 30, 20231,019 



TABLE OF CONTENTS
ItemDescriptionPage
PART I - FINANCIAL INFORMATION
1.
2.
3.
4.
PART II - OTHER INFORMATION
1.
1A.
2.
3.
4.
5.
6.





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 the Partnership’s (as defined below in the Notes to Consolidated Financial Statements) 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 Partnership’s examination of historical operating trends, the information that was used to prepare the Partnership’s estimate of proved reserves as of December 31, 2022, and other data in its 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,” “prospect,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “goal,” “might,” “outlook,” “possibly,” “potential,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although the Partnership 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 Partnership’s expectations include, but are not limited to, the Partnership’s assumptions about:
changes in local, regional, national, and international economic conditions, including as a result of any epidemics or pandemics, such as the coronavirus disease (COVID-19) pandemic and any related variants;
the market prices of oil, natural gas, natural gas liquids (NGLs), and other products or services;
the supply and demand for oil, natural gas, NGLs, and other products or services;
pipeline and gathering system capacity and availability;
production and reserve levels;
drilling risks;
economic and competitive conditions, including market and macro-economic disruptions resulting from the Russian war in Ukraine, the armed conflict in Israel and Gaza, and actions taken by foreign oil and gas producing nations, including the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members that participate in OPEC initiatives (OPEC+);
the availability of capital resources;
capital expenditures and other contractual obligations;
weather conditions;
inflation rates;
the availability of goods and services;
the impact of political pressure and the influence of environmental groups and other stakeholders on decisions and policies related to the industries in which the Partnership operates;
legislative, regulatory, or policy changes, including environmental regulation and initiatives addressing the impact of global climate change;
terrorism or cyberattacks;
market related risks, such as general credit, liquidity, and interest-rate risks; and
other factors disclosed under Item 2 – “Properties — Estimated Proved Reserves and Future Net Cash Flows,” Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in the Partnership’s most recently filed Annual Report on Form 10-K and other filings that it makes with the Securities and Exchange Commission.



Other factors or events that could cause the Partnership’s actual results to differ materially from the Partnership’s expectations may emerge from time to time, and it is not possible for the Partnership to predict all such factors or events. 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 these 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 Partnership disclaims any obligation to update or revise these statements, whether based on changes in internal estimates or expectations, new information, future developments, or otherwise.




PART I — FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
For the Quarter Ended September 30,For the Nine Months Ended September 30,
 2023202220232022
REVENUES:
Oil and gas sales$331,014 $434,515 $759,581 $1,470,295 
Interest income62,452 15,403 163,364 16,368 
393,466 449,918 922,945 1,486,663 
EXPENSES:
Depreciation, depletion and amortization74,817 90,408 156,712 342,752 
Asset retirement obligation accretion16,071 20,589 47,376 60,879 
Lease operating expenses159,749 98,127 483,847 352,746 
Gathering and transportation costs4,763 8,036 12,080 19,493 
Administrative76,353 74,571 229,056 223,714 
331,753 291,731 929,071 999,584 
NET INCOME (LOSS)
$61,713 $158,187 $(6,126)$487,079 
NET INCOME (LOSS) ALLOCATED TO:
Managing Partner$17,601 $45,318 $7,234 $152,405 
Investing Partners44,112 112,869 (13,360)334,674 
$61,713 $158,187 $(6,126)$487,079 
NET INCOME (LOSS) PER INVESTING PARTNER UNIT
$43 $111 $(13)$329 
WEIGHTED AVERAGE INVESTING PARTNER UNITS OUTSTANDING1,018.5 1,018.5 1,018.5 1,018.5 
The accompanying notes to consolidated financial statements
are an integral part of this statement.
1


APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30,
 20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$(6,126)$487,079 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization156,712 342,752 
Asset retirement obligation accretion47,376 60,879 
Changes in operating assets and liabilities:
Accrued receivables49,725 (291,555)
Receivable from/payable to Apache Corporation(23,392)1,917 
Accrued operating expenses(821)(106,534)
Asset retirement obligations (26,895)
Net cash provided by operating activities223,474 467,643 
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties(1,656) 
Net cash used in investing activities(1,656) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Managing Partner(16,426)(93,503)
Net cash used in financing activities(16,426)(93,503)
NET INCREASE IN CASH AND CASH EQUIVALENTS205,392 374,140 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR4,669,084 4,161,783 
CASH AND CASH EQUIVALENTS, END OF PERIOD$4,874,476 $4,535,923 
The accompanying notes to consolidated financial statements
are an integral part of this statement.
2


APACHE OFFSHORE INVESTMENT PARTNERSHIP
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 2023December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$4,874,476 $4,669,084 
Accrued revenues receivable210,211 259,936 
5,084,687 4,929,020 
OIL AND GAS PROPERTIES, on the basis of full cost accounting:
Proved properties195,953,224 195,923,083 
Less – Accumulated depreciation, depletion and amortization(192,369,033)(192,212,321)
3,584,191 3,710,762 
$8,668,878 $8,639,782 
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
Payable to Apache Corporation$4,543 $27,935 
Asset retirement obligation408,339 408,339 
Accrued operating expenses63,963 64,784 
Accrued development costs11,484  
Accrued decommissioning and abandonment costs 9,919 
488,329 510,977 
ASSET RETIREMENT OBLIGATION1,111,470 1,037,174 
PARTNERS’ CAPITAL:
Managing Partner536,084 545,276 
Investing Partners (1,018.5 units outstanding)
6,532,995 6,546,355 
7,069,079 7,091,631 
$8,668,878 $8,639,782 
The accompanying notes to consolidated financial statements
are an integral part of this statement.
3


APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CONSOLIDATED CHANGES IN PARTNERS’ CAPITAL
(Unaudited) 
Managing
Partner
Investing
Partners
Total
For the Quarter Ended September 30, 2022
BALANCE, JUNE 30, 2022$562,752 $6,368,513 $6,931,265 
Distributions(67,353)— (67,353)
Net income45,318 112,869 158,187 
BALANCE, SEPTEMBER 30, 2022$540,717 $6,481,382 $7,022,099 
For the Quarter Ended September 30, 2023
BALANCE, JUNE 30, 2023$496,494 $6,488,883 $6,985,377 
Contributions
21,989 — 21,989 
Net income
17,601 44,112 61,713 
BALANCE, SEPTEMBER 30, 2023$536,084 $6,532,995 $7,069,079 
For the Nine Months Ended September 30, 2022
BALANCE, DECEMBER 31, 2021$481,815 $6,146,708 $6,628,523 
Distributions(93,503)— (93,503)
Net income152,405 334,674 487,079 
BALANCE, SEPTEMBER 30, 2022$540,717 $6,481,382 $7,022,099 
For the Nine Months Ended September 30, 2023
BALANCE, DECEMBER 31, 2022$545,276 $6,546,355 $7,091,631 
Distributions(16,426)— (16,426)
Net income (loss)
7,234 (13,360)(6,126)
BALANCE, SEPTEMBER 30, 2023$536,084 $6,532,995 $7,069,079 
The accompanying notes to consolidated financial statements
are an integral part of this statement.

4


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. 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, 2022, which contains a summary of the Partnership’s significant accounting policies and other disclosures.
1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As of September 30, 2023, 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, 2022.
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 reserve quantities and the related present value of estimated future net cash flows therefrom and the assessment of asset retirement obligations. Actual results could differ from those estimates.
Oil and Gas Property
The Partnership follows the full-cost method of accounting for its oil and gas property. Under this method of accounting, all costs incurred for both successful and unsuccessful exploration and development activities, and oil and gas property acquisitions are capitalized. The net book value of oil and gas properties may not exceed a calculated “ceiling.” The ceiling limitation is the estimated future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements. For a discussion of the calculation of estimated future net cash flows, please refer to Note 10—Supplemental Oil and Gas Disclosures (Unaudited) to the consolidated financial statements contained in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Any excess of the net book value of proved oil and gas properties over the ceiling is charged to expense and reflected as “Additional depreciation, depletion and amortization” in the accompanying statement of consolidated operations, when applicable. Such limitations are tested quarterly. The Partnership had no write-downs of the carrying value of its proved oil and gas properties during the third quarters and first nine months of 2023 and 2022.
5


Revenue Recognition
There have been no significant changes to the Partnership’s contracts with customers during the nine months ended September 30, 2023. The Partnership generates revenue from its contracts with customers from the sale of its crude oil, natural gas, and NGL production volumes. Under these short-term commodity sales contracts, the physical delivery of each unit of quantity represents a single, distinct performance obligation on behalf of the Partnership. Contract prices are determined based on market-indexed prices, adjusted for quality, transportation, and other market-reflective differentials. Revenue is measured by allocating an entirely variable market price to each performance obligation and recognized at a point in time when control is transferred to the customer. The Partnership considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, and the Partnership’s right to payment. Control typically transfers to customers upon the physical delivery at specified locations within each contract and the transfer of title.
The table below presents revenues from contracts with customers disaggregated by product type for the quarters and nine months ended September 30, 2023 and 2022:
 For the Quarter Ended September 30,For the Nine Months Ended September 30,
 2023202220232022
Oil$304,772 $348,200 $685,690 $1,245,017 
Gas19,166 68,159 57,801 183,679 
NGLs7,076 18,156 16,090 41,599 
Total Oil and Gas Revenue$331,014 $434,515 $759,581 $1,470,295 
The Partnership records trade accounts receivable for its unconditional rights to consideration arising under sales contracts with customers, which is measured at amortized cost net of any allowance for credit losses. The Partnership routinely assesses the collectability of all material trade and other receivables. The Partnership would accrue an allowance for expected credit losses when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of any expected credit losses may be reasonably estimated. As of September 30, 2023, the carrying amounts of trade accounts receivables approximate fair value because of the short-term nature of these instruments. Receivables from contracts with customers totaled $210,211 and $259,936 as of September 30, 2023 and December 31, 2022, respectively. The Partnership had no allowance for expected credit losses recorded for any comparative periods presented.
2.    RECEIVABLE FROM / PAYABLE TO APACHE CORPORATION
The receivable from/payable to Apache represents the net result of the Investing Partners’ revenue received and expenditures paid 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.
6


3.    ASSET RETIREMENT OBLIGATIONS
The following table describes the changes to the Partnership’s asset retirement obligation liability for the first nine months of 2023:
Asset retirement obligation at December 31, 2022$1,445,513 
Accretion expense47,376 
Revisions in estimated liabilities26,920 
Asset retirement obligation at September 30, 20231,519,809 
Less current portion(408,339)
Asset retirement obligation, long-term$1,111,470 
4.    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 September 30, 2023 and December 31, 2022, 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 nine months ended September 30, 2023 and 2022.
5.    NOTICE OF WITHDRAWAL AND RIGHT OF PRESENTMENT
On March 22, 2019, Apache, as the Managing Partner of the Investment Partnership, gave notice of its intention to withdraw as Managing Partner of the Investment Partnership. The notice described the withdrawal process and certain notice periods required by that process. No party assumed the role of Managing Partner within the 120-day notice period specified by the notice of intention to withdraw. Consequently, Apache will oversee the process of winding up and liquidating the business and affairs of the Investment Partnership. Apache has not made a decision as to when it will complete the process to withdraw as Managing Partner.
On April 26, 2019, the Managing Partner determined that, during the withdrawal and dissolution process, it would be inconsistent with the Managing Partner’s fiduciary duties to purchase (or to cause the Investment Partnership to purchase) outstanding units of partnership interests (Units) from the holders thereof pursuant to the right of presentment provided for in Sections 6.9 through 6.14 of the Partnership Agreement of the Investment Partnership (the Partnership Agreement). As a result of this determination by the Managing Partner, pursuant to Section 6.12 of the Partnership Agreement, the right of presentment was terminated for 2019 and future periods. Sections 6.9 through 6.14 have “become null and void and of no further force or effect” as provided in Section 6.12 of the Partnership Agreement.
Prior to terminating the right of presentment, the Investment Partnership had not made a repurchase under the right of presentment since 2008.
6.    FINANCIAL CONDITION OF THE OPERATOR OF THE PARTNERSHIP’S PRODUCING LEASE
On August 3, 2020, Fieldwood Energy LLC, the operator of the Partnership’s producing lease, and certain of its affiliated debtors (collectively, Fieldwood) filed for protection under Chapter 11 of the United States Bankruptcy Code. On June 25, 2021, the United States Bankruptcy Court for the Southern District of Texas (Houston Division) entered an order confirming Fieldwood’s bankruptcy plan. On August 27, 2021, Fieldwood’s bankruptcy plan became effective. Pursuant to the plan, Fieldwood separated its ownership in and operatorship of the Partnership’s producing lease, together with several of Fieldwood’s other leases, into a standalone company (GOM Shelf, LLC), which will continue to perform Fieldwood’s obligations with respect to the Partnership’s properties. The reorganization of Fieldwood under the plan has not had and is not expected to have any material adverse effect on the Partnership’s operations.
7


ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion relates to Apache Offshore Investment Partnership (the Partnership) and should be read in conjunction with the Partnership’s consolidated financial statements and accompanying notes included under Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q, as well as the Partnership’s consolidated financial statements, accompanying notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
The Partnership’s business is participation in oil and gas development and production activities on federal lease tracts in the Gulf of Mexico, offshore Louisiana.
Results of Operations
Net Income and Revenue
For the third quarter of 2023, the Partnership reported net income of $61,713 ($43 per Investing Partner Unit) compared to net income of $158,187 ($111 per Investing Partner Unit) for the third quarter of 2022. For the first nine months of 2023, the Partnership reported a net loss of $6,126 ($13 per Investing Partner Unit) compared to net income of $487,079 ($329 per Investing Partner Unit) in the first nine months of 2022. The decrease in net income for the third quarter and first nine months of 2023 was primarily related to lower realized prices for oil and gas compared to the same prior year periods. The Partnership also experienced lower oil and gas production during the first nine months of 2023 as a result of wells being shut-in for pipeline repairs during the second quarter of 2023.
The Partnership recorded total revenues of $393,466 for the third quarter of 2023 compared to total revenues of $449,918 in the third quarter of 2022. Total revenues in the first nine months of 2023 were $922,945, a decrease of 38 percent, from $1,486,663 of total revenues in the first nine months of 2022. The reductions in revenues for the third quarter and first nine months of 2023 are primarily the result of lower realized oil and gas prices compared to the prior year periods. Production interruptions for pipeline repairs during the second quarter of 2023 further reduced revenues during the first nine months of 2023 compared to the first nine months of 2022. The Partnership’s crude oil, natural gas, and NGLs production volume and price information is summarized in the following table (gas volumes are presented in thousand cubic feet (Mcf) per day):
 
 For the Quarter Ended September 30,For the Nine Months Ended September 30,
20232022Increase
(Decrease)
20232022Increase
(Decrease)
Gas volume – Mcf per day81 98 (17)%75 98 (23)%
Average gas price – per Mcf$2.56 $7.58 (66)%$2.84 $6.85 (59)%
Oil volume – barrels per day43 42 %34 47 (28)%
Average oil price – per barrel$77.22 $90.63 (15)%$74.66 $96.35 (23)%
NGL volume – barrels per day(40)%(25)%
Average NGL price – per barrel$22.36 $37.50 (40)%$21.50 $36.74 (41)%
Oil and Gas Sales
The Partnership’s crude oil sales for the third quarter of 2023 totaled $304,772, or 12 percent lower, when compared to $348,200 of crude oil sales in the third quarter of 2022. The Partnership’s average realized oil price in the third quarter of 2023 decreased $13.41 per barrel from the third quarter of 2022, reducing sales by $51,521. Crude oil volumes totaled 43 barrels per day in the third quarter of 2023, staying essentially flat compared to 42 barrels per day in the same prior year period. The slight increase in production increased total oil sales by $8,093 when compared to the third quarter of 2022.
Crude oil sales for the first nine months of 2023 totaled $685,690, or 45 percent lower, when compared to $1,245,017 of crude oil sales in the first nine months of 2022. The Partnership’s average realized oil price for the first nine months of 2023 decreased 23 percent from the first nine months of 2022 to $74.66 per barrel, reducing sales by $280,278. The Partnership’s crude oil volumes decreased to 34 barrels per day in the first nine months of 2023, compared to 47 barrels per day in the same prior year period. The lower production was primarily the result of wells shut-in during the second quarter of 2023 for repairs performed on pipelines and natural decline. The lower production decreased oil sales by $279,049 when compared to the first nine months of 2022.
8


Natural gas sales for the third quarter of 2023 totaled $19,166, or 72 percent lower when compared to $68,159 of natural gas sales during the third quarter of 2022. The Partnership’s average realized natural gas price in the third quarter of 2023 decreased $5.02 per Mcf, or 66 percent, from the second quarter of 2022. Lower natural gas prices reduced sales by $45,146 when compared to the third quarter of 2022. A 17 percent decrease in natural gas volumes during the third quarter of 2023 compared to the third quarter of 2022 decreased gas sales by $3,847. Natural gas volumes decreased to 81 Mcf per day in the third quarter of 2023, compared to 98 Mcf per day in the same prior year period. The lower production was primarily the result of natural decline at South Timbalier 295.
Natural gas sales for the first nine months of 2023 totaled $57,801, or 69 percent lower, when compared to $183,679 of natural gas sales in the first nine months of 2022. The Partnership’s average realized gas price for the first nine months of 2023 decreased $4.01 per Mcf, or 59 percent, from the first nine months of 2022. Lower natural gas prices reduced sales by $107,516 when compared to the first nine months of 2022. A 23 percent decrease in natural gas volumes during the first nine months of 2023 compared to the first nine months of 2022 decreased natural gas sales by $18,362. The lower production was primarily the result of wells shut-in during the second quarter of 2023 and natural decline at South Timbalier 295.
The Partnership sold an average of 3 barrels per day of NGL in each of the third quarter and first nine months of 2023, compared to an average of 5 and 4 barrels per day in the third quarter and first nine months of 2022, respectively. NGL revenues reflect a 40 percent and 41 percent decrease in realized NGL prices for the third quarter and first nine months of 2023, respectively, when compared to the prior year periods.
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 and pipeline interruptions in the Gulf of Mexico, the Partnership’s production is 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) expense expressed as a percentage of oil and gas sales was approximately 23 percent and 21 percent for the third quarter and first nine months of 2023, respectively, compared to 21 percent and 23 percent, respectively, in the same prior year periods. Total DD&A for the third quarter and first nine months of 2023 totaled $74,817 and $156,712, respectively, compared to $90,408 and $342,752, respectively, in the same prior year periods. The decrease in DD&A expense was driven by lower sales revenue during the third quarter and first nine months of 2023.
Lease operating expenses (LOE) for the third quarter and first nine months of 2023 totaled $159,749 and $483,847, respectively, up 63 percent and 37 percent, respectively, from the same prior year periods, primarily the result of increased workover activity, higher repair and maintenance expense, and operating costs generally trending with inflation at South Timbalier 295 during the third quarter and first nine months of 2023. Gathering and transportation cost totaled $4,763 and $12,080 during the third quarter and first nine months of 2023, respectively, compared to $8,036 and $19,493, respectively, in the same prior year periods. The lower gathering and transportation costs in the 2023 periods are a result of lower production volumes when compared to the prior year periods. Administrative expenses for the third quarter and first nine months of 2023 were both two percent higher compared to the same periods of 2022.
Capital Resources and Liquidity
The Partnership’s primary capital resource is net cash provided by operating activities. During the first nine months of 2023, the Partnership recorded $223,474 of net cash flow provided by operating activities, compared to $467,643 during the first nine months of 2022. The decrease in operating cash flow was primarily the result of lower oil and gas revenues, and other changes to operating assets and liabilities.
At September 30, 2023, the Partnership had approximately $4.9 million in cash and cash equivalents, up approximately 4 percent from December 31, 2022. 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 liability. The Partnership also plans to reserve funds for unexpected repairs, which may disrupt the Partnership’s production, and for future recompletion operations.
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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 and economic conditions, the foreign and domestic supply of oil and natural gas, the price of foreign imports, the level of consumer demand, weather, 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 and availability, consumer demand, mechanical well performance and workovers, and recompletion activities. Declines in oil and gas production can be expected in future years as a result of natural depletion and the non-participation in acquisition or exploration activities by the Partnership.
Based on production estimates from independent engineers and existing cash balances reserved for platform dismantlement and abandonment activities, current market conditions resulting from the recent rise in inflation and interest rates and geopolitical events, including the Russian war in Ukraine, the armed conflict in Israel and Gaza, and actions taken by foreign oil and gas producing nations, including OPEC+, are not expected to materially impact the Partnership’s liquidity. The Partnership forecasts it will be able to meet its liquidity needs for routine operations for 2023 and in the long-term, although volatile oil and gas prices and slowing consumer demand resulting from the current market conditions could decrease revenue and could require the Partnership to further reduce its cash and cash equivalents.
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. The Partnership does not intend to incur debt from banks or other outside sources nor solicit capital from existing Unit holders or in the open market.
Critical Accounting Policies and Estimates
The Partnership prepares its financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States (U.S. GAAP), which requires management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and accompanying notes. Management identifies certain accounting policies as critical based on, among other things, their impact on the Partnership’s financial condition, results of operations or liquidity and the degree of difficulty, subjectivity, and complexity in their development. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. For a discussion of the Partnership’s significant accounting policies, please see the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Some of the more significant estimates include reserve estimates and asset retirement obligations.
New Accounting Pronouncements
There have been no material changes in recently issued or adopted accounting standards from those disclosed in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Material Cash Requirements, Capital Commitments and Contingencies
The Partnership’s material cash requirements are for operating expenses, recompletion expenditures, and future dismantlement and abandonment costs. 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 September 30, 2023. The Partnership did not have any contractual obligations as of September 30, 2023, other than the liability for dismantlement and abandonment costs of its oil and gas properties. The Partnership has recorded a separate liability for this asset retirement obligation as discussed in the Notes to the Financial Statements included under Part I, Item I of this Quarterly Report on Form 10-Q.
The Partnership anticipates $408,339 of costs will be spent during the next twelve months, primarily to dismantle platforms at North Padre Island 969/976. Based on information currently available to the Partnership, it anticipates minimal capital expenditures during the remainder of 2023 for recompletions and other capital projects at South Timbalier 295. Such estimates may change based on realized oil and gas prices, recompletion results, weather disruptions, rates charged by contractors or changes by the operator to their development or abandonment plans.
The Partnership believes its balances of cash and cash equivalents and cash provided by operating activities will be sufficient to satisfy cash requirements over the next twelve months and beyond.
10


On August 3, 2020, Fieldwood Energy LLC, the operator of the Partnership’s producing lease, and certain of its affiliated debtors (collectively, Fieldwood) filed for protection under Chapter 11 of the United States Bankruptcy Code. On June 25, 2021, the United States Bankruptcy Court for the Southern District of Texas (Houston Division) entered an order confirming Fieldwood’s bankruptcy plan. On August 27, 2021, Fieldwood’s bankruptcy plan became effective. Pursuant to the plan, Fieldwood separated its ownership in and operatorship of the Partnership’s producing lease, together with several of Fieldwood’s other leases, into a standalone company (GOM Shelf, LLC), which will continue to perform Fieldwood’s obligations with respect to the Partnership’s properties. The reorganization of Fieldwood under the plan has not had and is not expected to have any material adverse effect on the Partnership’s operations.
Notice of Withdrawal and Right of Presentment
On March 22, 2019, Apache, as the Managing Partner of the Investment Partnership, gave notice of its intention to withdraw as Managing Partner of the Investment Partnership. The notice described the withdrawal process and certain notice periods required by that process. No party assumed the role of Managing Partner within the 120-day notice period specified by the notice of intention to withdraw. Consequently, Apache will oversee the process of winding up and liquidating the business and affairs of the Investment Partnership. Apache has not made a decision as to when it will complete the process to withdraw as Managing Partner.
On April 26, 2019, the Managing Partner determined that, during the withdrawal and dissolution process, it would be inconsistent with the Managing Partner’s fiduciary duties to purchase (or to cause the Investment Partnership to purchase) outstanding units of partnership interests (Units) from the holders thereof pursuant to the right of presentment provided for in Sections 6.9 through 6.14 of the Partnership Agreement of the Investment Partnership (the Partnership Agreement). As a result of this determination by the Managing Partner, pursuant to Section 6.12 of the Partnership Agreement, the right of presentment was terminated for 2019 and future periods. Sections 6.9 through 6.14 have “become null and void and of no further force or effect” as provided in Section 6.12 of the Partnership Agreement.
Prior to terminating the right of presentment, the Investment Partnership had not made a repurchase under the right of presentment since 2008.

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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” the Partnership is not required to provide the information required by this Item. The Partnership has chosen to disclose, however, that it has not engaged in any transactions, issued or bought any financial instruments, or entered into any contracts that are required to be disclosed in response to this Item.
ITEM 4.    CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
John J. Christmann IV, 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 September 30, 2023, 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 SEC’s rules and forms and communicated to the Partnership’s 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 the Partnership’s 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, the Partnership’s internal controls over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS
None.
ITEM 1A.    RISK FACTORS
As a “smaller reporting company,” the Partnership is not required to provide the information required by this Item.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.    MINE SAFETY DISCLOSURES
None.
ITEM 5.    OTHER INFORMATION
None.
ITEM 6.    EXHIBITS
p3.1
 Partnership Agreement of Apache Offshore Investment Partnership (incorporated by reference to Exhibit (3)(i) to Form 10 filed by Partnership with the SEC on April 30, 1985, SEC File No. 0-13546).
p3.2
 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 fiscal year ended December 31, 1993, SEC File No. 0-13546).
p3.3
 Limited Partnership Agreement of Apache Offshore Petroleum Limited Partnership (incorporated by reference to Exhibit (3)(ii) to Form 10 filed by Partnership with the SEC on April 30, 1985, SEC File No. 0-13546).
*31.1 
*31.2 
*32.1 
*101
The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Statement of Consolidated Operations, (ii) Statement of Consolidated Cash Flows, (iii) Consolidated Balance Sheet, (iv) Statement of Consolidated Changes in Partners’ Capital and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
*101.SCH Inline XBRL Taxonomy Schema Document.
*101.CAL Inline XBRL Calculation Linkbase Document.
*101.DEFInline XBRL Definition Linkbase Document.
*101.LAB Inline XBRL Label Linkbase Document.
*101.PRE Inline XBRL Presentation Linkbase Document.
*104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*    Filed herewith.
P    Filed previously in paper format.
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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:November 2, 2023/s/ Stephen J. Riney
Stephen J. Riney
Executive Vice President and Chief Financial Officer
(principal financial officer) of Apache Corporation,
Managing Partner
Dated:November 2, 2023/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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