Filed pursuant to Rule 424(b)(5)
Registration No. 333-57785
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 6, 1998)
[APACHE LOGO]
APACHE CORPORATION
$400,000,000
6 1/4% NOTES DUE 2012
Interest payable April 15 and October 15
ISSUE PRICE: 99.288%
The notes will mature on April 15, 2012. Interest will accrue from April 11,
2002. We may redeem some or all of the notes at any time prior to maturity at
the redemption price described in this prospectus supplement. The notes are not
subject to any sinking fund.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or determined that this
prospectus supplement or the accompanying prospectus is accurate or complete.
Any representation to the contrary is a criminal offense.
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PRICE TO UNDERWRITING PROCEEDS TO US
PUBLIC(1) DISCOUNTS BEFORE EXPENSES
---------------------------------------------------------------------------------------------
Per Note 99.288% 0.650% 98.638%
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Total $397,152,000 $2,600,000 $394,552,000
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(1) Plus accrued interest from April 11, 2002, if settlement occurs after that
date.
The notes will not be listed on any securities exchange. Currently, there is no
public market for the notes.
The underwriters expect to deliver the notes in book-entry form only through the
facilities of The Depository Trust Company against payment in New York, New York
on or about April 11, 2002.
BANC OF AMERICA SECURITIES LLC JPMORGAN
BNP PARIBAS
DEUTSCHE BANK SECURITIES
RBC CAPITAL MARKETS
SALOMON SMITH BARNEY
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL
SG COWEN
TD SECURITIES
WACHOVIA SECURITIES
April 8, 2002
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT
About this prospectus supplement and
the accompanying prospectus........ S-2
Cautionary statements regarding
forward-looking statements......... S-3
Apache Corporation.................... S-3
Recent developments................... S-4
Use of proceeds....................... S-4
Ratio of earnings to fixed charges.... S-5
Description of notes.................. S-5
Underwriting.......................... S-11
Legal Matters......................... S-13
PAGE
PROSPECTUS
Available Information................. 2
Information Incorporated by
Reference.......................... 2
Safe Harbor Statement under the
Private Securities Litigation
Reform Act of 1995................. 3
The Company........................... 3
Use of Proceeds....................... 4
Ratios of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends.......................... 4
Description of Debt Securities........ 4
Description of Capital Stock.......... 13
Plan of Distribution.................. 15
Legal Matters......................... 16
Experts............................... 16
ABOUT THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS
This document is in two parts. The first part is this prospectus supplement,
which describes the terms of the notes. The second part is the accompanying
prospectus, which gives more general information, some of which may not apply to
the notes. Generally, the term "prospectus" refers to both parts combined.
If the description of the notes varies between this prospectus supplement and
the accompanying prospectus, you should rely on the information in this
prospectus supplement.
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. No
person is authorized to provide you with different information or to offer the
notes in any state where the offer is not permitted. You should not assume that
the information provided by this prospectus supplement or the accompanying
prospectus is accurate as of any date other than the date on the front of this
prospectus supplement. In this prospectus supplement, "Apache," "we," "us," and
"our" mean Apache Corporation. Unless otherwise stated, the dollar amounts and
financial data contained in this prospectus supplement and the accompanying
prospectus are presented in U.S. dollars.
---------------------
S-2
CAUTIONARY STATEMENTS REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus, and the documents
incorporated herein and therein by reference contain statements that constitute
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All
statements other than statements of historical facts, including, without
limitation, those relating to our future financial position, business strategy,
budgets, reserve information, projected levels of production, projected costs
and plans and objectives of management for future operations, are
forward-looking statements.
Words such as "expect," "anticipate," "estimate," "intend," "plan," "believe"
and similar expressions are intended to identify forward-looking statements.
Although we believe our expectations reflected in forward-looking statements are
based on reasonable assumptions, no assurance can be given that these
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the expectations reflected in the
forward-looking statements include, among others:
- the market prices of oil and gas;
- economic and competitive conditions;
- inflation rates;
- legislative and regulatory changes;
- financial market conditions;
- political and economic uncertainties of foreign governments; and
- future business decisions.
In light of these risks, uncertainties and assumptions, the events anticipated
by our forward-looking statements might not occur. We undertake no obligation to
update or revise our forward-looking statements, whether as a result of new
information, future events or otherwise.
APACHE CORPORATION
Apache Corporation, a Delaware corporation formed in 1954, is an independent
energy company that explores for, develops and produces natural gas, crude oil
and natural gas liquids. In North America, our exploration and production
interests are focused in the Gulf of Mexico, the Gulf Coast, the Permian Basin,
the Anadarko Basin and the Western Sedimentary Basin of Canada. Outside of North
America we have exploration and production interests offshore Western Australia,
in Egypt and Argentina, and exploration interests in Poland and offshore The
People's Republic of China. Our common stock, par value $1.25 per share, has
been listed on the New York Stock Exchange since 1969, and on the Chicago Stock
Exchange since 1960. Our principal executive offices are located at One Post Oak
Central, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400. Our
telephone number is (713) 296-6000.
S-3
RECENT DEVELOPMENTS
GLOBAL CREDIT FACILITY
We have a $1 billion global credit facility that consists of three separate bank
facilities: a $700 million facility in the United States; a $175 million
facility in Australia; and a $125 million facility in Canada. The global credit
facility enables us to draw on the entire $1 billion facility without
restrictions tied to periodic revaluation of our oil and gas reserves. The
global credit facility is scheduled to mature on June 12, 2003. We also have a
$500 million 364-day revolving credit facility with a group of banks. The terms
of this facility, other than the maturity date, are substantially the same as
those of our global credit facility. This facility is used, along with the U.S.
portion of the global credit facility, to support our commercial paper program.
The 364-day revolving credit facility allows us to convert outstanding revolving
loans into one-year term loans on the revolving commitment termination date. The
364-day revolving credit facility is scheduled to mature on July 12, 2002.
As of April 5, 2002, nothing was outstanding under our global credit facility or
under our 364-day revolving credit facility and $676.6 million was outstanding
under our commercial paper program.
Affiliates of the underwriters, including the trustee for the notes, are agent
banks and/or lenders under our existing global credit facility and/or 364-day
revolving credit facility. See "Underwriting."
We are in the process of replacing our global credit facility and 364-day
revolving credit facility or, alternatively, extending either or both of these
facilities and do not anticipate any difficulty in replacing or extending them.
OTHER MATTERS
On March 29, 2002, our board of directors resolved (i) not to engage Arthur
Andersen LLP to continue serving as our independent accountants and (ii) to
engage Ernst & Young LLP, effective immediately, to serve as our independent
accountants. For further information, please refer to our Current Report on Form
8-K dated March 29, 2002, which we filed with the SEC and is incorporated by
reference in the accompanying prospectus. Relief that may be available to
investors under the federal securities laws against auditing firms may not be
available as a practical matter against Arthur Andersen should it cease to
operate or be financially impaired.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the notes, which is estimated
to be approximately $394.1 million (after deducting underwriting compensation
and other expenses of the offering), to repay a portion of our outstanding
commercial paper, with any remaining balance to be used for general corporate
purposes. We used the proceeds from the issuance of the commercial paper for
general corporate purposes. As of April 5, 2002, we had $676.6 million in
principal amount of commercial paper bearing interest at an average weighted
rate of 1.9699 percent per year. We will continue to incur short-term
indebtedness to finance current operations.
S-4
RATIO OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges were as follows for the respective
periods indicated:
--------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------
2001 2000 1999 1998 1997
--------------------------------
6.71 7.41 3.03 - 2.93
--------------------------------
Our ratios of earnings to fixed charges were computed based on:
- "earnings," which consist of consolidated income or loss from
continuing operations plus income taxes, preferred interests of
subsidiaries and fixed charges, except capitalized interest and preferred
dividend requirements of consolidated subsidiaries; and
- "fixed charges," which consist of interest on indebtedness, including
capitalized interest, amortization of debt discount and expense, and the
estimated portion of rental expense attributable to interest and
preferred dividend requirements of consolidated subsidiaries.
Our 1998 earnings were inadequate to cover fixed charges by $237.0 million due
to the $243.2 million non-cash write down of the carrying value of our U.S. oil
and gas properties for the year ended December 31, 1998.
DESCRIPTION OF NOTES
We will issue the notes under the indenture referred to in the accompanying
prospectus. The following description and the description in the accompanying
prospectus are summaries of the material provisions of the notes and the
indenture. These descriptions do not restate the indenture in its entirety. We
urge you to read the indenture because it, and not these descriptions, defines
your rights as holders of the notes. We have filed a copy of the indenture as an
exhibit to the registration statement, which includes the accompanying
prospectus.
This description of the notes, to the extent it is inconsistent, replaces the
description of the general provisions of the notes and the indenture in the
accompanying prospectus. The notes are "debt securities" as that term is used in
the accompanying prospectus.
With certain exceptions and pursuant to certain requirements set forth in the
indenture, we may discharge our obligations under the indenture with respect to
the notes as described under "Description of Debt Securities--Discharge,
Defeasance and Covenant Defeasance" in the accompanying prospectus.
The notes will be our senior unsecured obligations and will rank equally with
all of our other senior unsecured indebtedness. At April 5, 2002, we had $2.32
billion of senior unsecured indebtedness outstanding. The notes will mature on
April 15, 2012. Interest on the notes will accrue at the rate of 6.25% per year
and will be payable semi-annually in arrears on April 15 and October 15 of each
year, commencing on October 15, 2002. Interest on the notes will accrue from
April 11, 2002, or from the most recent interest payment date to which interest
has been paid or duly provided for, and will be computed on the basis of a
360-day year comprised of twelve 30-day months.
S-5
We will make each interest payment to the person in whose name the notes are
registered at the close of business on the April 1 or October 1 preceding the
applicable interest date, whether or not that date is a business day, as the
case may be. Interest payments on the notes will include interest accrued to,
but excluding, the applicable interest payment date or maturity date. If any
interest payment date or maturity date falls on a day that is not a business
day, the payment will be made on the next business day and, unless we default on
the payment, no interest will accrue for the period from and after the interest
payment date or maturity date. "Business day" means any day other than a
Saturday, Sunday or other day on which banking institutions in The City of New
York are authorized or obligated by law, regulation or executive order to close.
We do not intend to apply to list the notes on any securities exchange or to
include them on any automated quotation system.
If a change in control, as defined in the accompanying prospectus, occurs, each
holder of notes may elect to require us to repurchase the holder's notes. If a
holder makes this election, we must purchase the holder's notes for their
principal amount plus accrued interest to the purchase date. See "Description of
Debt Securities--Company's Obligation to Purchase Debt Securities On Change in
Control" in the accompanying prospectus.
JP Morgan Chase Bank, the trustee for the notes and an affiliate of J.P. Morgan
Securities Inc. ("JPMorgan"), is an agent bank and a lender under our global
credit facility and our 364-day revolving credit facility.
OPTIONAL REDEMPTION
The notes are redeemable as a whole or in part, at our option at any time, at a
redemption price equal to the greater of (i) 100 percent of their principal
amount or (ii) the sum of the present values of the remaining scheduled payments
of principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Yield plus 20 basis points, plus, in each case, accrued interest to
the date of redemption. We will, however, pay the interest installment due on
any interest payment date that occurs on or before a redemption date to the
holders of the notes as of the close of business on the record date immediately
preceding that interest payment date.
"Treasury Yield" means, with respect to any redemption date, the rate per annum
equal to the semiannual equivalent yield to maturity of the Comparable Treasury
Issue, assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security selected
by the Referenced Treasury Dealers or Dealer as having a maturity comparable to
the remaining term of the notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (ii) if the trustee obtains fewer than four but more than one
such Reference Treasury Dealer Quotations, the average of
S-6
all such Quotations or (iii) or if the trustee obtains only one such Referenced
Treasury Dealer Quotation, such quotation.
"Reference Treasury Dealer Quotations" means with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, bid and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of the principal amount) quoted in writing to the
trustee by such Reference Treasury Dealer at 5:00 p.m. (New York City time) on
the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of (i) Banc of America Securities LLC and
J.P. Morgan Securities Inc. (or their respective affiliates that are Primary
Treasury Dealers), and their respective successors; provided, however, that if
either of the foregoing ceases being a U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), we may substitute another Primary
Treasury Dealer, and (ii) any other Primary Treasury Dealer(s) selected by the
trustee after consultation with us.
Holders of notes to be redeemed will be given notice of redemption, at their
addresses as set forth in the security register for the notes, at least 30 and
not more than 60 days prior to the date fixed for redemption.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the notes or portion thereof
called for redemption.
Except as noted above, the notes are not redeemable prior to maturity and will
not be subject to any sinking fund.
GLOBAL SECURITIES
The notes will be issued in the form of one or more global notes registered in
the name of The Depository Trust Company, also referred to as DTC, as
depositary, or its nominee. We have been informed by DTC that its nominee will
be Cede & Co. Accordingly, Cede is expected to be the initial registered holder
of all the notes.
DTC has also informed us that it is:
- a limited-purpose trust company organized under New York banking laws;
- a "banking organization" within the meaning of the New York banking laws;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform Commercial
Code; and
- a "clearing agency" registered under the Securities Exchange Act.
DTC has also informed us that it was created to:
- hold securities for "participants"; and
- facilitate the computerized settlement of securities transactions among
participants through computerized electronic book-entry changes in
participants' accounts, thereby eliminating the need for the physical movement
of securities certificates.
No person that acquires a beneficial interest in a global note will be entitled
to receive a certificate representing the notes, except as set forth in this
prospectus supplement. Unless and until individual notes are issued under the
limited circumstances described below, all references
S-7
to actions by holders or beneficial owners of notes issued in book-entry form
will refer to actions taken by DTC upon instructions from its participants, and
all references to payments and notices to holders or beneficial owners will
refer to payments and notices to DTC or Cede, as the registered holder of such
notes.
When we issue the global note or notes, DTC or its nominee will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the individual notes represented by the global note to the accounts of
participants designated by the underwriters that have accounts with the
depositary. Ownership of beneficial interests in a global note will be limited
to participants or persons that may hold interests through participants. For
interests of participants, ownership of beneficial interests in a global note
will be shown on records maintained by the depositary or its nominee. For
interests of persons other than participants, that ownership information will be
shown on the records of participants. Transfer of that ownership will be
effected only through those records. The laws of some states require that
certain purchasers of securities take physical delivery of securities in
definitive form. These limits and laws may impair our ability to transfer
beneficial interests in a global note.
As long as DTC, or its nominee, is the registered owner of a global note, DTC or
its nominee will be considered the sole owner or holder of the notes represented
by the global note for all purposes under the indenture. Except as provided
below, owners of beneficial interests in a global note:
- will not be entitled to have any of the underlying notes registered in their
names;
- will not receive or be entitled to receive physical delivery of any of the
underlying notes in definitive form; and
- will not be considered the owners or holders under the indenture relating to
the underlying notes.
Payments of principal of, and any premium and interest on, the notes represented
by a global note registered in the name of DTC or its nominee will be made to
DTC or its nominee as the registered owner of a global note representing the
notes. Neither we, the trustee, any paying agent nor the registrar for the notes
will be responsible for any aspect of the records relating to or payments made
by DTC or any participants on account of beneficial interests in the global
note.
We expect that DTC or its nominee, upon receipt of any payment of principal,
premium or interest relating to a global note, immediately will credit
participants' accounts with the payments. Those payments will be credited in
amounts proportional to the respective beneficial interests of the participants
in the principal amount of the global note as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in the global note held through those participants will be governed by
standing instructions and customary practices. This is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name." Those payments will be the sole responsibility of those
participants.
If DTC is at any time unwilling, unable or ineligible to continue as depositary
and we do not appoint a successor depositary within 90 days, or if an event of
default with respect to the notes has occurred and is continuing, we will issue
individual notes in exchange for a global note. Further, if we specify, an owner
of a beneficial interest in the global note may, on terms acceptable to us, the
trustee and DTC, receive individual notes in exchange for those beneficial
interests. In that instance, the owner of the beneficial interest will be
entitled to physical
S-8
delivery of individual notes equal in principal amount to its beneficial
interest and to have the notes registered in its name. Those individual notes
will be issued in denominations of $1,000 or integral multiples of $1,000. Any
global note that is exchangeable in accordance with this paragraph will be
exchangeable for notes registered in such names as DTC directs.
If one of the events described in the immediately preceding paragraph occurs,
DTC is generally required to notify all participants of the availability through
DTC of definitive notes. Upon surrender by DTC of the global note or notes
representing the notes and delivery of instructions for re-registration, the
registrar, transfer agent or trustee, as the case may be, will reissue the notes
as definitive notes. After reissuance of the notes, such persons will recognize
the beneficial owners of such definitive notes as registered holders of notes.
Participants have accounts with DTC and include securities brokers and dealers,
banks, trust companies and clearing corporations. Indirect access to the DTC
system also is available to indirect participants such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Persons that are not participants or indirect participants but desire to buy,
sell or otherwise transfer ownership of or interests in notes may do so only
through participants and indirect participants. Under the book-entry system,
beneficial owners may experience some delay in receiving payments, as payments
will be forwarded by our agent to Cede, as nominee for DTC. DTC will forward
these payments to its participants, which thereafter will forward them to
indirect participants or beneficial owners. Beneficial owners will not be
recognized by the applicable registrar, transfer agent or trustee as registered
holders of the notes entitled to the benefits of the certificate or the
indenture. Beneficial owners that are not participants will be permitted to
exercise their rights as an owner only indirectly through participants and, if
applicable, indirect participants.
Under the current rules and regulations affecting DTC, DTC will be required to
make book-entry transfers of notes among participants and to receive and
transmit payments to participants. Participants and indirect participants with
which beneficial owners of notes have accounts are also required by these rules
to make book-entry transfers and receive and transmit such payments on behalf of
their respective account holders.
The notes will settle in DTC's Same-Day Funds Settlement System and trade in
that system in book-entry form until maturity. Therefore, secondary market
trading activity for the notes will settle in immediately available funds. We
will pay principal, premium, if any, and interest in respect of the global notes
to DTC in immediately available funds. There can be no assurance as to the
effect, if any, that settlement in immediately available funds will have on
trading activity in the notes.
Because DTC can act only on behalf of participants, who in turn act only on
behalf of other participants or indirect participants, and on behalf of certain
banks, trust companies and other persons approved by it, the ability of a
beneficial owner of notes issued in book-entry form to pledge those notes to
persons or entities that do not participate in the DTC system may be limited due
to the unavailability of physical certificates for the notes.
DTC has advised us that it will take any action permitted to be taken by a
registered holder of any notes under the certificate or the indenture only at
the direction of one or more participants to whose accounts with DTC the notes
are credited.
We understand that under existing industry practices, in the event that we
request any action of holders or that an owner of a beneficial interest in a
global note desires to give or take any
S-9
action which a holder is entitled to give or take under the indenture, DTC would
authorize the participants holding the relevant beneficial interests to give or
take the desired action, and the participants would authorize owners of
beneficial interests in the global notes owning through the participants to give
or take the action or would otherwise act upon the instructions of beneficial
owners.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants, and by participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the principal
amount of the notes is to be redeemed, we believe that DTC's current practice is
to determine by lot the interests of the participants to be redeemed.
According to DTC, the information with respect to DTC has been provided to its
participants and other members of the financial community for informational
purposes only and is not intended to serve as a representation, warranty, or
contract modification of any kind.
Except as described above:
- a global note may not be transferred except as a whole global note by or among
DTC, a nominee of DTC and/or a successor depository appointed by us; and
- DTC may not sell, assign or otherwise transfer any beneficial interest in a
global note unless the beneficial interest is in an amount equal to an
authorized denomination for the notes evidenced by the global note.
None of Apache, the trustee, any registrar or transfer agent, or any agent of
any of them, will have any responsibility or liability for any aspect of DTC's
or any participant's records relating to, or for payments made on account of,
beneficial interests in a global note.
S-10
UNDERWRITING
Apache and the underwriters for the offering named below have entered into an
underwriting agreement and a terms agreement with respect to the notes. Subject
to certain conditions set forth in the underwriting agreement, each underwriter
has severally agreed to purchase, and we have agreed to sell to each
underwriter, the principal amount of notes indicated in the following table.
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PRINCIPAL AMOUNT
UNDERWRITERS OF NOTES
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Banc of America Securities LLC.............................. $ 121,000,000
J.P. Morgan Securities Inc. ................................ $ 121,000,000
BNP Paribas Securities Corp. ............................... $ 22,000,000
Deutsche Bank Securities Inc. .............................. $ 22,000,000
RBC Dominion Securities Corporation......................... $ 22,000,000
Salomon Smith Barney Inc. .................................. $ 22,000,000
Banc One Capital Markets, Inc. ............................. $ 14,000,000
First Union Securities, Inc. ............................... $ 14,000,000
Scotia Capital (USA) Inc. .................................. $ 14,000,000
SG Cowen Securities Corporation............................. $ 14,000,000
TD Securities (USA) Inc. ................................... $ 14,000,000
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Total....................................................... $ 400,000,000
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The underwriting agreement provides that the obligations of the several
underwriters to purchase the notes are subject to approval of certain legal
matters by counsel and to certain other conditions. The underwriters are
obligated to purchase all of the notes if they purchase any of the notes.
Notes sold by the underwriters to the public will initially be offered at the
price to public set forth on the cover of this prospectus supplement. Any notes
sold by the underwriters to securities dealers may be sold at a discount from
the price to public of up to 0.40% of the principal amount of notes. Any such
securities dealers may resell any notes purchased from the underwriters to
certain other brokers or dealers at a discount from the price to public of up to
0.25% of the principal amount of notes. If all the notes are not sold at the
price to public, the underwriters may change the offering price and the other
selling terms.
The notes are a new issue of securities with no established trading market. We
have been advised by the underwriters that the underwriters intend to make a
market in the notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the notes.
In connection with the offering, the underwriters may purchase and sell notes in
the open market. These transactions may include over-allotment, covering
transactions and stabilizing transactions. Over-allotment involves sales of
notes in excess of the principal amount of notes to be purchased by the
underwriter in the offering, which creates a short position. Covering
transactions involve purchases of the notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of notes made for
the purpose of preventing or retarding a decline in the market price of the
notes while the offering is in progress.
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Any of these activities may cause the price of the notes to be higher than the
price that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected in the over-the-counter market
or otherwise and, if commenced, may be discontinued at any time.
We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $503,200. The
underwriters have agreed to reimburse us for some of these expenses.
The following table shows the underwriting commissions to be paid to the
underwriters by Apache in connection with this offering (expressed as a
percentage of the principal amount of the notes):
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PAID BY APACHE
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Per note.................................................... 0.65%
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We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
Each of Banc of America Securities LLC and JPMorgan will make the notes
available for distribution on the Internet through a proprietary Web site and/or
third-party system operated by Market Axess Inc., an Internet-based
communications technology provider. Market Axess Inc. is providing the system as
a conduit for communications between Banc of America Securities LLC and JPMorgan
and their customers and is not a party to any transactions. Market Axess Inc., a
registered broker-dealer, will receive compensation from Banc of America
Securities LLC and JPMorgan based on transactions Banc of America Securities LLC
and JPMorgan conduct through the system. Banc of America Securities LLC and
JPMorgan will make the notes available to their customers through Internet
distributions, whether made through a proprietary or third-party system, on the
same terms as distributions made through other channels.
First Union Securities, Inc., a subsidiary of Wachovia Corporation, conducts its
investment banking, institutional and capital markets businesses under the trade
name of Wachovia Securities. Any references to "Wachovia Securities" in this
prospectus supplement, however, do not include Wachovia Securities, Inc., member
NASD/SIPC, a separate broker-dealer subsidiary of Wachovia Corporation and
sister affiliate of First Union Securities, Inc., which may or may not be
participating as a selling dealer in the distribution of the notes.
JP Morgan Chase Bank, the trustee for the notes, is an affiliate of JPMorgan,
one of the underwriters. The underwriters and or certain of their affiliates
have performed or may in the future perform other investment banking, commercial
banking and/or other financial services to us or our affiliates.
J.P. Morgan Ventures Corporation, an affiliate of JPMorgan, holds preferred
stock with a liquidation preference of $52 million and a debt security in the
principal amount of $37 million issued on August 9, 2001 by Apache Clearwater,
Inc., an affiliate of Apache. Dividends on the preferred stock, which are
payable quarterly, accrue at a rate equal to such liquidation preference
multiplied by LIBOR plus 1.15%. The debt security bears interest at a floating
rate equal to LIBOR plus 1.05% and matures on August 9, 2003.
S-12
LEGAL MATTERS
Certain legal matters regarding the offering of the notes, other than United
States federal or state securities laws, have been passed upon for us by our
Attorney and Assistant Secretary, Jeffrey B. King. As of the date of this
prospectus supplement, Mr. King owns 90.5 shares of Apache Common Stock through
Apache 's 401(k) savings plan; holds employee stock options to purchase 7,108
shares of Apache Common Stock, of which 2,116 options are currently exercisable;
and holds a conditional grant under Apache Corporation's 2000 Share Price
Appreciation Plan relating to 6,379 shares of Apache Common Stock, none of which
is vested.
Certain legal matters will also be passed upon for us by Chamberlain, Hrdlicka,
White, Williams & Martin, Houston, Texas, and certain legal matters will be
passed upon for the underwriters by Sidley Austin Brown & Wood LLP, New York,
New York.
S-13
PROSPECTUS
$500,000,000
[APACHE CORP. LOGO]
DEBT SECURITIES
PREFERRED STOCK
Apache Corporation (the "Company" or "Apache") may from time to time offer
unsecured senior debt securities in one or more series ("Debt Securities"),
and/or preferred stock, no par value per share, in one or more series
("Preferred Stock" and together with the Debt Securities, the "Securities"), at
an aggregate initial offering price not to exceed $500,000,000, in amounts, at
prices and on terms to be determined at the time of sale and, to the extent not
set forth herein, set forth in an accompanying Prospectus Supplement. The terms
of the Debt Securities, including, where applicable, the specific designation,
aggregate principal amount, currency, denominations, maturity, interest rate
(which may be fixed or variable), method of distribution, and any prepayment
and, original issue discount or other variable terms with regard to time of
payment of interest, if any, terms for redemption at the option of the Company
or the holder, the initial public offering price, and the other specific terms
of the series of the Debt Securities in respect of which this Prospectus is
being delivered, to the extent not set forth herein, will be set forth in the
applicable Prospectus Supplement. The specific designation, rights, preferences,
privileges and restrictions, including, where applicable, the dividend rate (or
manner of calculation thereof), time of payment of dividends, liquidation value,
listing (if any) on a securities exchange, terms for mandatory or optional
redemption and any other specific terms of the series of the Preferred Stock in
respect of which this Prospectus is being delivered, to the extent not set forth
herein, will be set forth in the applicable Prospectus Supplement. If so
specified in the applicable Prospectus Supplement, the Preferred Stock may be
represented by Depositary Shares entitling the holders proportionally to all
rights and preferences of the Preferred Stock.
The applicable Prospectus Supplement will contain information, where
applicable, concerning certain United States federal income tax considerations
relating to the Securities covered by such Prospectus Supplement, any listing or
proposed listing of such Securities on a securities exchange and, if the
Securities are issued in fully registered book-entry form, a description of the
depository arrangements.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The Securities may be sold (i) through underwriters or dealers, (ii)
directly by the Company to a limited number of institutional purchasers or to a
single purchaser, (iii) through agents designated from time to time, or (iv)
through any combination of the above. If any agents of the Company or any
underwriters are involved in the sale of the Securities, the names of such
agents or underwriters and any applicable commissions or discounts will be set
forth in the applicable Prospectus Supplement. See "Plan of Distribution" for
indemnification arrangements which the Company may make available to
underwriters and agents for the sale of the Securities.
The date of this Prospectus is July 6, 1998.
AVAILABLE INFORMATION
Apache is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information filed by
Apache can be inspected and copied at the public reference facilities maintained
by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices at Seven World Trade Center, 13th Floor, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained by mail from
the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Also, the SEC maintains a web site that
contains reports, proxy statements and other information regarding the Company
at http://www.sec.gov. In addition, reports, proxy statements and other
information concerning Apache may be inspected at the offices of The New York
Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005, and
also at the offices of the Chicago Stock Exchange ("CSE"), One Financial Place,
440 S. LaSalle Street, Chicago, Illinois 60605-1070. The address of the
Company's principal executive offices and its telephone number are 2000 Post Oak
Boulevard, Suite 100, Houston, Texas 77056-4400 and (713) 296-6000.
The Company has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities. This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
SEC. For further information, reference is hereby made to the Registration
Statement. Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or otherwise filed
with the SEC are not necessarily complete, and in each instance reference is
made to the copy of such document so filed, each such statement being qualified
in its entirety by such reference.
---------------------
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company (SEC File No.
1-4300) with the SEC pursuant to the Exchange Act are incorporated in and made a
part of this Prospectus:
a. Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
b. Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998.
c. Current Report on Form 8-K dated January 29, 1998.
d. Current Report on Form 8-K dated June 18, 1998.
All documents which the Company files pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering described herein shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement contained in a document
incorporated by reference, or deemed to be incorporated by reference, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document or in any accompanying Prospectus Supplement modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company undertakes to provide without charge, upon the written or oral
request of any person to whom a copy of this Prospectus has been delivered, a
copy of any or all of the documents referred to above which are incorporated in
this Prospectus by reference, other than exhibits to such documents. Requests
should be directed to Cheri L. Peper, Corporate Secretary, Apache Corporation,
2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400; (713) 296-6000.
2
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
Certain forward-looking information contained in this Prospectus and
certain material incorporated by reference herein is being provided, and certain
forward-looking information in each Prospectus Supplement will be provided, in
reliance upon the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 as set forth in Section 27A of the Securities Act and Section
21E of the Exchange Act. Such information includes, without limitation,
discussions as to estimates, expectations, beliefs, plans, strategies and
objectives concerning the Company's future financial and operating performance.
Such forward-looking information is subject to assumptions and beliefs based on
current information known to the Company and factors that could yield actual
results differing materially from those anticipated. Such factors include,
without limitation, the prices received for the Company's oil and natural gas
production, the costs of acquiring, finding, developing and producing reserves,
the rates of production of the Company's hydrocarbon reserves, the Company's
success in acquiring or finding additional reserves, unforeseen operational
hazards, significant changes in tax or regulatory environments, and the
political, economic and financial uncertainties of foreign operations.
---------------------
All defined terms under Rule 4-10(a) of Regulation S-X promulgated under
the Securities Act shall have their statutorily-prescribed meanings when used in
this Prospectus. Quantities of natural gas are expressed in this Prospectus and
will be expressed in each Prospectus Supplement in terms of thousand cubic feet
("Mcf"), million cubic feet ("MMcf") or billion cubic feet ("Bcf"). Oil (which
includes condensate) is quantified in terms of barrels ("bbls"), thousands of
barrels ("Mbbls") and millions of barrels ("MMbbls"). One barrel of oil is
treated as the energy equivalent of six Mcf of natural gas, expressed as a
barrel of oil equivalent. Natural gas is compared to oil in terms of thousand
barrels of oil equivalent ("Mboe") and in million barrels of oil equivalents
("MMboe"). Oil and natural gas liquids are compared with natural gas in terms of
million cubic feet equivalent ("MMcfe") and billion cubic feet equivalent
("Bcfe"). Daily oil and gas production is expressed in terms of barrels of oil
per day ("bopd") and thousands of cubic feet of gas per day ("Mcfd"),
respectively. The Company's "net" working interest in wells or acreage is
determined by multiplying gross wells or acreage by the Company's working
interest therein. Unless otherwise specified, all references to wells and acres
are gross. Unless otherwise specifically provided herein or in any accompanying
Prospectus Supplement, references to "$" or dollars in this Prospectus or any
such Prospectus Supplement shall mean United States dollars.
THE COMPANY
Apache, a Delaware corporation formed in 1954, is an independent energy
company that explores for, develops and produces crude oil and natural gas. In
North America, the Company's exploration and production interests are focused on
the Gulf of Mexico, the Anadarko Basin, the Permian Basin, the Gulf Coast and
the Western Sedimentary Basin of Canada. Outside of North America, the Company
has exploration and production interests offshore Western Australia and in
Egypt, and exploration interests in Poland, offshore the People's Republic of
China, offshore the Ivory Coast and in Indonesia. The Company's common stock,
par value $1.25 per share ("Apache Common Stock"), has been listed on the NYSE
since 1969, and on the CSE since 1960.
The Company holds interests in many of its North American and international
properties through operating subsidiaries, such as Apache Canada Ltd., MW
Petroleum Corporation, Apache Energy Limited, Apache International, Inc., Apache
Overseas, Inc., and Apache PHN Company, Inc. The Company treats all operations
as one segment of business.
3
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used to refinance outstanding
indebtedness and for other general corporate purposes. To the extent proceeds
are used to refinance outstanding indebtedness, certain terms of the
indebtedness being refinanced will be set forth in the applicable Prospectus
Supplement.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The Company's ratios of earnings to combined fixed charges and preferred
stock dividends were as follows for the respective periods indicated:
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- --------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- ---- ---- ---- ---- ----
1.60 4.07 2.93 2.72 1.15 2.34 2.37
The Company's ratios of earnings to combined fixed charges and preferred
stock dividends were computed based on: (A) consolidated income or losses from
continuing operations before income taxes, fixed charges (excluding interest
capitalized) and preferred stock dividends; and (B) consolidated fixed charges,
which consist of interest on indebtedness (including amounts capitalized),
amortization of debt discount and expense, the estimated portion of rental
expense attributable to interest and preferred stock dividends. On May 17, 1995,
Apache acquired DEKALB Energy Company ("DEKALB", now known as DEK Energy
Company) through a merger which resulted in DEKALB becoming a wholly-owned
subsidiary of Apache. The merger was accounted for as a "pooling of interests."
As a result, Apache's financial information for all preceding periods was
restated.
No shares of Preferred Stock were outstanding during any of the periods
presented. Accordingly, the ratios of earnings to combined fixed charges and
preferred stock dividends for each of the periods presented above is the same as
the ratios of earnings to fixed charges for such periods.
DESCRIPTION OF DEBT SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities will be issued under an indenture (as supplemented from time to
time, the "Indenture") entered into between the Company and The Chase Manhattan
Bank, as trustee (the "Trustee"). References herein to "Sections" are references
to Sections of the Indenture unless otherwise indicated. The Debt Securities to
be offered by this Prospectus are limited to an aggregate initial offering price
not to exceed $500,000,000. However, the Indenture does not limit the amount of
Debt Securities which can be issued thereunder and provides that additional Debt
Securities of any series may be issued thereunder up to the aggregate principal
amount which may be authorized from time to time by the Company. The payment of
principal of, and premium, if any, and interest on the Debt Securities will rank
pari passu with all other unsecured unsubordinated indebtedness of the Company.
Unless otherwise indicated herein or in the applicable Prospectus Supplement,
the Debt Securities will be issued in denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
The Indenture is listed as an exhibit to the Registration Statement of
which this Prospectus is a part. The information herein includes a summary of
certain provisions of the Indenture and does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all provisions of
the Indenture, including the definition therein of certain terms. The following
summaries set forth certain general terms and provisions of the Debt Securities
to which any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Debt Securities so offered will be
described, to the extent not described herein, in the Prospectus Supplement
relating to such Debt Securities.
4
GENERAL
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for the following terms and other information with respect to the
Debt Securities being offered thereby, to the extent not described herein: (i)
the designation, aggregate principal amount and authorized denominations of such
Debt Securities; (ii) the percentage of the principal amount at which such Debt
Securities will be issued; (iii) the date (or the manner of determining or
extending the date or dates) on which the principal of such Debt Securities will
be payable; (iv) whether such Debt Securities will be issued in fully registered
form or in bearer form or any combination thereof; (v) whether such Debt
Securities will be issued in the form of one or more global securities and
whether such global securities are to be issuable in a temporary global form or
permanent global form; (vi) if other than U.S. dollars, the currency or
currencies or currency unit or units in which Debt Securities may be denominated
and purchased and the currency or currencies or currency units in which
principal, premium (if any) and any interest may be payable; (vii) if the
currency or currencies or currency unit or units for which Debt Securities may
be purchased or in which principal, premium (if any) and any interest may be
payable is at the election of the Company or the purchaser, the manner in which
such an election may be made and the terms of such election; (viii) the rate or
rates per annum at which such Debt Securities will bear interest, if any, or the
method or methods of determination of such rate or rates and the basis upon
which interest will be calculated if other than that of a 360-day year
consisting of twelve 30-day months; (ix) the date or dates from which such
interest, if any, on such Debt Securities will accrue or the method or methods,
if any, by which such date or dates are to be determined, the date or dates on
which such interest, if any, will be payable, the date on which payment of such
interest, if any, will commence and the regular record dates for such interest
payment dates, if any; (x) the date or dates, if any, on or after which, or the
period or periods, if any, within which, and the price or prices at which such
Debt Securities may, pursuant to any optional redemption provisions, be redeemed
at the option of the Company or of the holder thereof and the other terms and
provisions of such optional redemption; (xi) information with respect to
book-entry procedures relating to global Debt Securities; (xii) whether and
under what circumstances the Company will pay Additional Amounts (as defined in
the Indenture) as contemplated by Section 1004 of the Indenture (the term
"interest," as used in this Prospectus, shall include such Additional Amounts)
on such Debt Securities to any holder who is a United States Alien (as defined
in the Indenture) (including any modification to the definition of such terms
contained in the Indenture as originally executed) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have the
option to redeem such Debt Securities rather than pay such Additional Amounts
(and the terms of any such option); (xiii) any deletions from, modifications of
or additions to the Events of Default or covenants of the Company with respect
to any of such Debt Securities; (xiv) if either or both of Section 402(2)
relating to defeasance or Section 402(3) relating to covenant defeasance shall
not be applicable to such Debt Securities or any covenants in addition to those
specified in Section 402(3) relating to such Debt Securities shall be subject to
covenant defeasance, and any deletions from, or modifications or additions to,
the provisions of Article Four of the Indenture relating to satisfaction and
discharge in respect of such Debt Securities; (xv) any index or other method
used to determine the amount of payments of principal, premium (if any) and any
interest on such Debt Securities; (xvi) if a trustee other than The Chase
Manhattan Bank is named for such Debt Securities, the name of such trustee; and
(xvii) any other specific terms of the such Debt Securities. All Debt Securities
of any one series need not be issued at the same time and all the Debt
Securities of any one series need not bear interest at the same rate or mature
on the same date. (Section 301.)
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of, or premium, if any, or interest, if any,
on any series of Debt Securities is payable in foreign currencies or foreign
currency units, the restrictions, elections, tax consequences, specific terms
and other information with respect to such Debt Securities and such foreign
currencies or foreign currency units will be set forth in the applicable
Prospectus Supplement. (Section 302.)
Other than as described below under "Limitation on Liens," "Limitation on
Sale/Leaseback Transactions" and "Company's Obligation to Purchase Debt
Securities on Change in Control," the Indenture does not contain any provision
that would limit the ability of the Company to incur indebtedness or that would
afford holders of Debt Securities protection in the event of a decline in the
credit quality of the Company or a
5
takeover, recapitalization or highly leveraged or similar transaction involving
the Company. Reference is made to the Prospectus Supplement relating to the
particular series of Debt Securities offered thereby, to the extent not
otherwise described herein, for any information with respect to any deletions
from, modifications of or additions to the Events of Default described below and
contained in the Indenture, including any addition of a covenant or other
provision providing event risk or similar protection.
INTEREST RATES
The Debt Securities will earn interest at a fixed or floating rate or rates
for the period or periods of time specified in the applicable Prospectus
Supplement. Unless otherwise specified in the applicable Prospectus Supplement,
the Debt Securities shall bear interest on the basis of a 360-day year
consisting of twelve 30-day months.
DISCOUNT, SERIES, MATURITIES, REGISTRATION AND PAYMENT
The Debt Securities may be sold at a substantial discount below their
stated principal amount, bearing no interest or interest at a rate that at the
time of issuance is below market rates. Federal income tax consequences and
special considerations applicable to any such series will be described in the
Prospectus Supplement relating thereto.
The Debt Securities may be issued in one or more series with the same or
various maturities. (Section 301.) Debt Securities may be issued solely in fully
registered form without coupons ("Registered Securities"), solely in bearer form
with or without coupons ("Bearer Securities"), or as both Registered Securities
and Bearer Securities. (Section 301.) Registered Securities may be exchangeable
for other Debt Securities of the same series, registered in the same name, for a
like aggregate principal amount in authorized denominations and will be
transferable at any time or from time to time at the office mentioned below. No
service charge will be made to the holder for any such exchange or transfer,
except for any tax or governmental charge incidental thereto. If Debt Securities
of any series are issued as Bearer Securities, the applicable Prospectus
Supplement will contain any restrictions applicable to the offer, sale or
delivery of Bearer Securities and the terms upon which Bearer Securities of the
series may be exchanged for Registered Securities of the series and, if
permitted by applicable laws and regulations, the terms upon which Registered
Securities of the series may be exchanged for Bearer Securities of the series,
whether such Debt Securities are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests in any such
permanent global security may exchange such interests for Debt Securities of
such series and the circumstances under which any such exchanges may occur.
Unless otherwise specified in the applicable Prospectus Supplement,
principal and interest, if any, on the Debt Securities offered thereby are to be
payable at the office or agency of the Company maintained for such purposes in
the city where the principal corporate trust office of the Trustee is located,
and will initially be the principal corporate trust office of the Trustee,
provided that payment of interest, if any, may be made (subject to collection)
at the option of the Company by check mailed to the persons in whose names the
Debt Securities are registered at the close of business on the day specified in
the applicable Prospectus Supplement.
FORM, EXCHANGE AND REGISTRATION OF TRANSFER
Debt Securities will be exchangeable for other Debt Securities of the same
series and of like tenor, in any authorized denominations and of a like
aggregate principal amount and Stated Maturity (as defined in the Indenture).
Registered Securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed) at the office of the Trustee or
at the office of any transfer agent designated by the Company for such purpose,
without service charge and upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the books of the Trustee or such transfer agent contingent upon
such Trustee or transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. (Section 305.)
In the event of any redemption of Debt Securities, the Company shall not be
required to: (i) issue, register the transfer of or exchange such Debt
Securities during a period beginning at the opening of business
6
15 days before any selection of such Debt Securities to be redeemed and ending
at the close of business on the day of mailing of the relevant notice of
redemption; or (ii) register the transfer of or exchange any such Debt Security,
or portion thereof, called for redemption, except the unredeemed portion of any
such Debt Security being redeemed in part. (Section 305.)
LIMITATION ON LIENS
Nothing in the Indenture or the Debt Securities will in any way limit the
amount of indebtedness or securities which may be incurred or issued by the
Company or any of its Subsidiaries (as defined in the Indenture). The Indenture
provides that neither the Company nor any Subsidiary will issue, assume or
guarantee any notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed secured by a mortgage, lien, pledge, security
interest or other encumbrance (defined in the Indenture as "Liens") upon any of
its property, subject to certain exceptions set forth in the Indenture, without
making effective provisions whereby any and all Debt Securities then outstanding
shall be secured by a Lien equally and ratably with any and all other
obligations thereby secured. Such restrictions will not, however, apply to (a)
Liens existing on the date of the Indenture or provided for under the terms of
agreements existing on the date thereof; (b) Liens securing (i) all or part of
the cost of exploring, producing, gathering, processing, marketing, drilling or
developing any properties of the Company or any of its Subsidiaries, or securing
indebtedness incurred to provide funds therefor or (ii) indebtedness incurred to
finance all or part of the cost of acquiring, constructing, altering, improving
or repairing any such property or assets, or securing indebtedness incurred to
provide funds therefor; (c) Liens which secure only indebtedness owing by a
Subsidiary to the Company, or to one or more Subsidiaries, or the Company and
one or more Subsidiaries; (d) Liens on the property of any corporation or other
entity existing at the time such corporation or entity becomes a Subsidiary; (e)
Liens on any property to secure indebtedness incurred in connection with the
construction, installation or financing of pollution control or abatement
facilities or other forms of industrial revenue bond financing or indebtedness
issued or guaranteed by the United States, any state or any department, agency
or instrumentality of either or indebtedness issued to or guaranteed for the
benefit of a foreign government, any state or any department, agency or
instrumentality of either or an international finance agency or any division or
department thereof, including the World Bank, the International Finance Corp.
and the Multilateral Investment Guarantee Agency; (f) any extension, renewal or
replacement (or successive extensions, renewals or replacements) of any Lien
referred to in the foregoing clauses (a) through (e) existing on the date of the
Indenture; (g) certain Liens incurred in the ordinary course of business or (h)
Liens which secure Limited Recourse Indebtedness (as defined in the Indenture).
The following types of transactions, among others, shall not be deemed to create
indebtedness secured by Liens: (i) the sale or other transfer of crude oil,
natural gas or other petroleum hydrocarbons in place for a period of time until,
or in an amount such that, the transferee will realize therefrom a specified
amount (however determined) of money or such crude oil, natural gas or other
petroleum hydrocarbons, or the sale or other transfer of any other interest in
property of the character commonly referred to as a production payment,
overriding royalty, forward sale or similar interest and (ii) Liens required by
any contract or statute in order to permit the Company or a Subsidiary to
perform any contract or subcontract made by it with or at the request of the
United States government or any foreign government or international finance
agency, any state or any department thereof, or any agency or instrumentality of
either, or to secure partial, progress, advance or other payments to the Company
or any Subsidiary by any such entity pursuant to the provisions of any contract
or statute. (Section 1005.)
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Indenture provides that neither the Company nor any Subsidiary will
enter into any arrangement with any person (other than the Company or a
Subsidiary) providing for the leasing to the Company or a Subsidiary for a
period of more than three years of any property which has been, or is to be,
sold or transferred by the Company or such Subsidiary to such person or to any
person (other than the Company or a Subsidiary) to which funds have been or are
to be advanced by such person on the security of the leased property unless
either (a) the Company or such Subsidiary would be entitled, pursuant to the
provisions described under "Limitation on Liens" above, to incur indebtedness in
a principal amount equal to or exceeding the value of such sale/leaseback
transaction, secured by a Lien on the property to be leased; (b) since the date
of the
7
Indenture and within a period commencing six months prior to the consummation of
such arrangement and ending six months after the consummation thereof, the
Company or such Subsidiary has expended or will expend for any property
(including amounts expended for the acquisition, exploration, drilling or
development thereof, and for additions, alterations, improvements and repairs
thereto) an amount equal to all or a portion of the net proceeds of such
arrangement and the Company elects to designate such amount as a credit against
such arrangement (with any such amount not being so designated to be applied as
set forth in (c) below); or (c) the Company, during or immediately after the
expiration of the 12 months after the effective date of such transaction,
applies to the voluntary defeasance or retirement of the Debt Securities and its
other Senior Indebtedness (as defined in the Indenture) an amount equal to the
greater of the net proceeds of the sale or transfer of the property leased in
such transaction or the fair value, in the opinion of the board of directors of
the Company of such property at the time of entering into such transaction (in
either case adjusted to reflect the remaining term of the lease and any amount
utilized by the Company as set forth in (b) above), less an amount equal to the
principal amount of Senior Indebtedness voluntarily retired by the Company
within such 12-month period. (Section 1006.)
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, any one
of the following events will constitute an "Event of Default" under the
Indenture with respect to the Debt Securities of any series: (a) failure to pay
any interest on any Debt Security of such series when due, continued for 30
days; (b) failure to pay principal of (or premium, if any) on the Debt
Securities of such series when due and payable, either at Maturity or, if
applicable, at 12:00 noon on the Business Day following a Change in Control
Purchase Date, as defined below; (c) failure to perform, or breach of, any other
covenant or warranty of the Company in the Indenture or the Debt Securities
(other than a covenant or warranty included in the Indenture solely for the
benefit of a series of securities other than the Debt Securities), continued for
60 days after written notice as provided in the Indenture; (d) the acceleration
of any Indebtedness (as defined in the Indenture) of the Company or any
Subsidiary in excess of an aggregate of $25,000,000 in principal amount under
any event of default as defined in any mortgage, indenture or instrument and
such acceleration has not been rescinded or annulled within 30 days after
written notice as provided in the Indenture specifying such Event of Default and
requiring the Company to cause such acceleration to be rescinded or annulled;
(e) failure to pay, bond or otherwise discharge within 60 days of entry, a
judgment, court order or uninsured monetary damage award against the Company or
any Subsidiary exceeding an aggregate of $25,000,000 in principal amount which
is not stayed on appeal or otherwise being appropriately contested in good
faith; (f) certain events of bankruptcy, insolvency or reorganization involving
the Company or any Subsidiary; and (g) any other Event of Default provided with
respect to the Debt Securities of that series. (Section 501.)
If an Event of Default with respect to the Debt Securities of any series
(other than an Event of Default described in (e) or (f) of the preceding
paragraph) occurs and is continuing, either the Trustee or the holders of at
least 25% in aggregate principal amount of the outstanding Debt Securities of
such series by notice as provided in the Indenture may declare the principal
amount of such Debt Securities to be due and payable immediately. At any time
after a declaration of acceleration has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, and subject to
applicable law and certain other provisions of the Indenture, the holders of a
majority in aggregate principal amount of the Debt Securities of such series
may, under certain circumstances, rescind and annul such acceleration. An Event
of Default described in (e) or (f) of the preceding paragraph shall cause the
principal amount and accrued interest (or such lesser amount as provided for in
the Debt Securities of such series) to become immediately due and payable
without any declaration or other act by the Trustee or any holder. (Section
502.)
The Indenture provides that, within 90 days after the occurrence of any
Event of Default thereunder with respect to the Debt Securities of any series,
the Trustee shall transmit, in the manner set forth in the Indenture, notice of
such Event of Default to the holders of the Debt Securities of such series
unless such Event of Default has been cured or waived; provided, however, that
except in the case of a default in the payment of principal of, or premium, if
any, or interest, if any, or additional amounts, if any, on any Debt Security of
such series, the Trustee may withhold such notice if and so long as the board of
directors, the
8
executive committee or a trust committee of directors or Responsible Officers
(as defined in the Indenture) of the Trustee has in good faith determined that
the withholding of such notice is in the interest of the holders of Debt
Securities of such series. (Section 602.)
If an Event of Default occurs and is continuing with respect to the Debt
Securities of any series, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the holders of Debt Securities of such
series by all appropriate judicial proceedings. (Section 504.)
The Indenture provides that, subject to the duty of the Trustee during any
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders of Debt Securities, unless such
holders shall have offered to the Trustee reasonable indemnity. (Section 601.)
Subject to such provisions for the indemnification of the Trustee, and subject
to applicable law and certain other provisions of the Indenture, the holders of
a majority in aggregate principal amount of the outstanding Debt Securities of a
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, with respect to the Debt Securities of such
series. (Section 512.)
COMPANY'S OBLIGATION TO PURCHASE DEBT SECURITIES ON CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" as defined in the Indenture,
the Company shall mail within 15 days of the occurrence of such Change in
Control written notice regarding such Change in Control to the Trustee of the
Debt Securities of each series and to every holder thereof, after which the
Company shall be obligated, at the election of each holder thereof, to purchase
such Debt Securities. Under the Indenture, a "Change in Control" is deemed to
occur upon (a) the occurrence of any event requiring the filing of any report
under or in response to Schedule 13D or 14D-1 pursuant to the Exchange Act
disclosing beneficial ownership of either (i) 50% or more of the Apache Common
Stock then outstanding or (ii) 50% or more of the voting power of the voting
stock of the Company then outstanding; (b) the consummation of sale, transfer,
lease, or conveyance of the Company's properties and assets substantially as an
entirety to any Person or Persons who are not Subsidiaries (as such terms are
defined in the Indenture) of the Company; and (c) the consummation of any
consolidation of the Company with or merger of the Company into any other Person
in a transaction in which either (i) the Company is not the sole surviving
corporation or (ii) Apache Common Stock existing prior to such transaction is
converted into cash, securities or other property and those exchanging Apache
Common Stock do not receive either (x) 75% or more of the survivor's common
stock or (y) 75% or more of the voting power of the survivor's voting stock,
following the consummation of such transaction. The notice to be sent to the
Trustee and every holder upon a Change in Control shall, in addition, be
published at least once in an Authorized Newspaper (as defined in the Indenture)
and shall state (a) the event causing the Change in Control and the date
thereof, (b) the date by which notice of such Change in Control is required by
the Indenture to be given, (c) the date (which date shall be 35 business days
after the occurrence of the Change in Control) by which the Company shall
purchase Debt Securities to be purchased pursuant to the selling holder's
exercise of rights on Change in Control (the "Change in Control Purchase Date"),
(d) the price specified in such Debt Securities for their purchase by the
Company (the "Change in Control Purchase Price"), (e) the name and address of
the Trustee, (f) the procedure for surrendering Debt Securities to the Trustee
or other designated office or agent for payment, (g) a statement of the
Company's obligation to make prompt payment on proper surrender of such Debt
Securities, (h) the procedure for holders' exercise of rights of sale of such
Debt Securities by delivery of a "Change in Control Purchase Notice," and (i)
the procedures for withdrawing a Change in Control Purchase Notice. No purchase
of any Debt Securities shall be made if there has occurred and is continuing an
Event of Default under the Indenture (other than default in payment of the
Change in Control Purchase Price). In connection with any purchase of Debt
Securities under this paragraph, the Company will comply with all Federal and
state securities laws, including, specifically, Rule 13E-4, if applicable, of
the Exchange Act, and any related Schedule 13E-4 required to be submitted under
such Rule. (Section 1601.)
9
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or are scheduled for redemption within one year) by
depositing with the Trustee, in trust, funds in U.S. dollars or in the Foreign
Currency (as defined below) in which such Debt Securities are payable in an
amount sufficient to pay the entire indebtedness on such Debt Securities with
respect to principal (and premium, if any) and interest to the date of such
deposit (if such Debt Securities have become due and payable) or to the Maturity
thereof, as the case may be. (Section 401.)
The Indenture provides that, unless the provisions of Section 402 thereof
are made inapplicable to the Debt Securities of or within any series pursuant to
Section 301 thereof, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for, among other things, the obligation to pay Additional Amounts, if
any, upon the occurrence of certain events of taxation, assessment or
governmental charge with respect to payments on such Debt Securities and other
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency with respect to such Debt Securities and to hold
moneys for payment in trust) ("defeasance") or (b) to be released from its
obligations with respect to such Debt Securities under the covenants described
in "Limitation on Liens" and "Limitation on Sale/Leaseback Transactions" above
or, if provided pursuant to Section 301 of the Indenture, its obligations with
respect to any other covenant, and any omission to comply with such obligations
shall not constitute a default or an Event of Default with respect to such Debt
Securities ("covenant defeasance"). Defeasance or covenant defeasance, as the
case may be, shall be conditioned upon the irrevocable deposit by the Company
with the Trustee, in trust of an amount, in U.S. dollars or in the Foreign
Currency in which such Debt Securities are payable at Stated Maturity, or
Government Obligations (as defined below), or both, applicable to such Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on such Debt Securities on
the scheduled due dates therefor. (Section 401.)
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the Indenture or any other material
agreement or instrument to which the Company is a party or by which it is bound,
(ii) no default or Event of Default with respect to the Debt Securities to be
defeased shall have occurred and be continuing on the date of the establishment
of such a trust and (iii) the Company has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of the Internal
Revenue Service received by the Company, a Revenue Ruling published by the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture. (Section 402.)
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the ECU, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments. (Section 101.)
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government or the governments in the
confederation which issued the Foreign Currency in which the Debt Securities of
a particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government or governments which issued the Foreign Currency in which the
Debt Securities of such series are payable, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government or governments, which, in the case of
clauses (i) and (ii), are not callable or redeemable at the option of the issuer
or issuers thereof, and shall also include a depository receipt issued by a bank
or trust company as
10
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of or any other amount with respect to any such
Government Obligation held by such custodian for the account of the holder of
such depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian with
respect to the Government Obligation or the specific payment of interest on or
principal of or any other amount with respect to the Government Obligation
evidenced by such depository receipt. (Section 101.)
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the holder of a Debt Security of such series is entitled to, and does, elect
pursuant to Section 301 of the Indenture or the terms of such Debt Security to
receive payment in a currency other than that in which such deposit has been
made in respect of such Debt Security, or (b) a Conversion Event (as defined
below) occurs in respect of the Foreign Currency in which such deposit has been
made, the indebtedness represented by such Debt Security shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest, if any, on such Debt Security
as such Debt Security becomes due out of the proceeds yielded by converting the
amount or other properties so deposited in respect of such Debt Security into
the currency in which such Debt Security becomes payable as a result of such
election or such Conversion Event based on (x) in the case of payments made
pursuant to clause (a) above, the applicable market exchange rate for such
currency in effect on the second business day prior to such payment date, or (y)
with respect to a Conversion Event, the applicable market exchange rate for such
Foreign Currency in effect (as nearly as feasible) at the time of the Conversion
Event. (Section 402.)
"Conversion Event" means the cessation of use of (i) a Foreign Currency
other than the ECU both by the government of the country or the confederation
which issued such Foreign Currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Community or (iii) any currency unit or composite currency other than the ECU
for the purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that are payable in a Foreign Currency
that ceases to be used by the government or confederation of issuance shall be
made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than an Event of Default with
respect to Sections 1005 and 1006 of the Indenture (which Sections would no
longer be applicable to such Debt Securities after such covenant defeasance) or
with respect to any other covenant as to which there has been covenant
defeasance, the amount in such Foreign Currency in which such Debt Securities
are payable, and Government Obligations on deposit with the Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of the Stated
Maturity but may not be sufficient to pay amounts due on such Debt Securities at
the time of the acceleration resulting from such Event of Default. However, the
Company would remain liable to make payment of such amounts due at the time of
acceleration.
The applicable Prospectus Supplement may further describe the provisions,
if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
Under the Indenture, the Company is required to furnish to the Trustee
annually a statement as to performance by the Company of certain of its
obligations under the Indenture and as to any default in such performance. The
Company is also required to deliver to the Trustee, within five days after
occurrence thereof, written notice of any event which after notice or lapse of
time or both would constitute an Event of Default. (Section 1009.)
11
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series affected
thereby; provided, however, that no such modification or amendment may, without
the consent of the holder of each Debt Security affected thereby, (a) change the
Stated Maturity of the principal of, or premium, if any, on, or any installment
of principal, if any, of or interest on, or any Additional Amounts with respect
to, any Debt Security, (b) reduce the principal amount of, or premium or
interest on, or any Additional Amounts with respect to, any Debt Security, (c)
change the coin or currency in which any Debt Security or any premium or any
interest thereon or any Additional Amounts with respect thereto is payable, (d)
impair the right to institute suit for the enforcement of any payment on or
after the Stated Maturity of any Debt Securities (or, in the case of redemption,
on or after the Redemption Date or, in the case of repayment at the option of
any holder, on or after the date for repayment or in the case of a change in
control, after the change in control purchase date), (e) reduce the percentage
and principal amount of the outstanding Debt Securities, the consent of whose
holders is required in order to take certain actions, (f) change any obligation
of the Company to maintain an office or agency in the places and for the
purposes required by the Indenture, or (g) modify any of the above provisions.
(Section 902.)
The holders of at least a majority in aggregate principal amount of Debt
Securities of any series may, on behalf of the holders of all Debt Securities of
such series, waive compliance by the Company with certain restrictive provisions
of the Indenture. (Section 1008.) The holders of not less than a majority in
aggregate principal amount of Debt Securities of any series may, on behalf of
all holders of Debt Securities of such series, waive any past default and its
consequences under the Indenture with respect to the Debt Securities of such
series, except a default (a) in the payment of principal of (or premium, if any)
or any interest on or any Additional Amounts with respect to Debt Securities of
such series or (b) in respect of a covenant or provision of the Indenture that
cannot be modified or amended without the consent of the holder of each Debt
Security of any series. (Section 513.)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may, without the consent of the holders of the Debt Securities,
consolidate or merge with or into, or convey, transfer or lease its properties
and assets substantially as an entirety to, any Person that is a corporation,
limited liability company, partnership or trust organized and validly existing
under the laws of any domestic jurisdiction, or may permit any such Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, provided that
any successor Person assumes the Company's obligations on the Debt Securities
and under the Indenture, that after giving effect to the transaction no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing, and that certain
other conditions are met. (Section 801.)
CONCERNING THE TRUSTEE
Unless otherwise specified in the applicable Prospectus Supplement, The
Chase Manhattan Bank, New York, New York, successor to Chemical Bank, will be
the Trustee under the Indenture.
12
DESCRIPTION OF CAPITAL STOCK
The following summaries of the Apache Common Stock, Preferred Stock and
Rights (defined below) do not purport to be complete and are qualified in their
entirety by reference to the Restated Certificate of Incorporation of the
Company and the Rights Agreement dated January 31, 1996, between the Company and
Norwest Bank Minnesota, N.A. (the "Rights Agreement"). The Restated Certificate
of Incorporation and the Rights Agreement are listed as exhibits to the
Registration Statement of which this Prospectus is a part. The summaries use
terms which are defined in such exhibits. The following summaries set forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of the Preferred Stock
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Preferred Stock so offered will, to the
extent not described herein, be described in the Prospectus Supplement relating
to such Preferred Stock.
GENERAL
Under the Company's Restated Certificate of Incorporation, the Company is
authorized to issue (i) 215,000,000 shares of Apache Common Stock, of which
97,581,000 shares were outstanding as of March 31, 1997, and (ii) 5,000,000
shares of preferred stock, no par value, none of which are issued and
outstanding as of the date of this Prospectus, although 25,000 shares have been
designated as Series A Junior Participating Preferred Stock and are reserved for
issuance upon exercise of the Rights.
COMMON STOCK
Holders of Apache Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and are entitled, subject to any
preferential rights of holders of preferred stock, to receive such dividends, if
any, as may be declared from time to time by the Board of Directors, in its
discretion, out of funds legally available therefor. Upon any liquidation or
dissolution of the Company, the holders of Apache Common Stock are entitled,
subject to any preferential rights of holders of preferred stock, to receive
pro-rata all assets remaining available for distribution to stockholders after
payment of all liabilities. Apache Common Stock has no preemptive or other
subscriptive rights, and there are no conversion rights or redemption or sinking
fund provisions with respect to the Apache Common Stock.
All outstanding shares of Apache Common Stock are fully paid and
nonassessable. All holders of Apache Common Stock have full voting rights and
are entitled to one vote for each share held of record on all matters submitted
to a vote of the stockholders. The Board of Directors of the Company is
classified into three groups of approximately equal size, one-third elected each
year. The stockholders do not have the right to cumulate votes in the election
of directors.
The Company typically mails its annual reports to stockholders within 120
days after the end of its fiscal year. Notices of stockholder meetings are
mailed to record holders of Apache Common Stock at their addresses shown on the
books of the transfer agent and registrar. Norwest Bank Minnesota, N.A. is the
transfer agent and registrar for the Apache Common Stock.
PREFERRED STOCK
Under the Company's Restated Certificate of Incorporation, the Company is
authorized to issue 5,000,000 shares of preferred stock, 25,000 shares of which
have been designated as the Company's Series A Junior Preferred Stock, none of
which are outstanding as of the date of this Prospectus, however such shares of
preferred stock are reserved for issuance upon the exercise of the Rights. The
Board, without further action by the stockholders, is authorized to issue shares
of Preferred Stock with such designations, preferences and relative,
participating, optional or other special rights, qualifications, limitations or
restrictions, as may be stated and expressed in the resolution or resolutions
providing for the issuance of such Preferred Stock. The Preferred Stock will not
be convertible into shares of Apache Common Stock. The particular rights,
preferences and privileges of any series of Preferred Stock will be set forth in
the applicable Prospectus Supplement. Such preferences and rights as may be
established could have the effect of impeding the
13
acquisition of control of the Company. If so specified in the applicable
Prospectus Supplement, the Preferred Stock may be represented by Depositary
Shares entitling the holder proportionally to all rights and preferences of the
Preferred Stock.
RIGHTS
In December 1995, the Company adopted the Rights Agreement and declared a
dividend of one right (a "Right") for each share of Apache Common Stock
outstanding on January 31, 1996. Each Right entitles the registered holder to
purchase from the Company one ten-thousandth (1/10,000) of a share of Series A
Junior Participating Preferred Stock at a price of $100 per one ten-thousandth
of a share, subject to adjustment. The Rights are exercisable (and transferable
apart from the Apache Common Stock) 10 calendar days following a public
announcement that certain persons or groups have acquired 20 percent or more of
the outstanding shares of Apache Common Stock or 10 business days following
commencement of an offer for 30 percent or more of the outstanding shares of
Apache Common Stock. In addition, if the Company engages in certain business
combinations or a 20 percent shareholder engages in certain transactions with
the Company, the Rights become exercisable for Apache Common Stock or common
stock of the corporation acquiring the Company (as the case may be) at 50
percent of the then-market price. Any Rights that are or were beneficially owned
by a person who has acquired 20 percent or more of the outstanding shares of
Apache Common Stock and who engages in certain transactions or realizes the
benefits of certain transactions with the Company will become void. The Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right at
any time until 10 business days after public announcement that a person has
acquired 20 percent or more of the outstanding shares of Apache Common Stock.
The Rights will expire on January 31, 2006, unless earlier redeemed by the
Company. Unless the Rights have been previously redeemed, all shares of Apache
Common Stock issued by the Company after January 31, 1996 will include Rights.
Unless and until the Rights become exercisable, they will be transferred with
and only with the shares of Apache Common Stock.
CHANGE OF CONTROL
The Company's Restated Certificate of Incorporation includes provisions
designed to prevent the use of certain tactics in connection with a potential
takeover of the Company. Article Twelve of the Restated Certificate of
Incorporation generally stipulates that the affirmative vote of 80 percent of
the Company's voting shares is required to adopt any agreement for the merger or
consolidation of the Company with or into any other corporation which is the
beneficial owner of more than 5 percent of the Company's voting shares. Article
Twelve further provides that such 80 percent approval is necessary to authorize
any sale or lease of assets between the Company and any beneficial holder of 5
percent or more of the Company's voting shares. Article Fourteen of the Restated
Certificate of Incorporation contains a "fair price" provision which requires
that any tender offer made by a beneficial owner of more than 5 percent of the
outstanding voting stock of the Company in connection with any plan of merger,
consolidation or reorganization, any sale or lease of substantially all of the
Company's assets, or any issuance of equity securities of the Company to the 5
percent stockholder must provide at least as favorable terms to each holder of
Common Stock other than the stockholder making the tender offer. Article Fifteen
of the Restated Certificate of Incorporation contains an "anti-greenmail"
mechanism which prohibits the Company from acquiring any voting stock from the
beneficial owner of more than 5 percent of the outstanding voting stock of the
Company, except for acquisitions pursuant to a tender offer to all holders of
voting stock on the same price, terms and conditions, acquisitions in compliance
with Rule 10b-18 of the Exchange Act and acquisitions at a price not exceeding
the market value per share. Article Sixteen of the Restated Certificate of
Incorporation prohibits the stockholders of the Company from acting by written
consent in lieu of a meeting.
Section 203 of the Delaware General Corporation Law prevents an "interested
stockholder" (defined in Section 203, generally, as a person owning 15 percent
or more of a corporation's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with a publicly-held Delaware
corporation for three years following the time such person became an interested
stockholder unless (i) before such person became an interested stockholder, the
board of directors of the corporation approved the
14
transaction in which the interested stockholder became an interested stockholder
or approved the business combination; (ii) upon consummation of the transaction
that resulted in the interested stockholder's becoming an interested
stockholder, the interested stockholder owned at least 85 percent of the voting
stock of the corporation outstanding at the time the transaction commenced
(excluding stock held by directors who are also officers of the corporation and
by employee stock plans that do not provide participants with the rights to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer); or (iii) following the transaction in
which such person became an interested stockholder, the business combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. The provisions of Section 203 may have the effect of delaying,
deferring or preventing a change of control of the Company.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through underwriters or dealers,
(ii) directly to a limited number of institutional purchasers or to a single
purchaser, (iii) through agents designated from time to time, or (iv) through
any combination of the above. An accompanying Prospectus Supplement will set
forth the terms of the offering of the Securities offered thereby, including the
name or names of any underwriters, the purchase price of the Securities and the
net proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in the sale of Securities, such Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the several obligations
of the underwriters to purchase any Securities offered thereby will be subject
to certain conditions precedent and the underwriters will be obligated to take
and pay for all of such Securities, if any are taken.
Any agent involved in the offer or sale of the Securities will be named,
and any commissions payable by the Company to such agents will be set forth, in
an accompanying Prospectus Supplement. Unless otherwise indicated in such
Prospectus Supplement, any such agent will be acting on a reasonable efforts
basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under such contract will be
subject to the condition that the purchase of the offered Securities shall not
at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect to the validity of performance of such
contracts.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act.
The place and time of delivery for Securities in respect of which this
Prospectus is delivered will be set forth in the accompanying Prospectus
Supplement.
15
LEGAL MATTERS
Certain legal matters regarding the Securities offered hereby have been
passed upon for the Company by its Vice President and General Counsel, Z. S.
Kobiashvili. As of the date of this Prospectus, Mr. Kobiashvili owns 1,586
shares of Apache Common Stock through the Company's 401(k) savings plan; holds
employee stock options to purchase 41,100 shares of Apache Common Stock, of
which options to purchase 17,475 shares are currently exercisable, and holds a
conditional grant under the Company's 1996 Share Price Appreciation Plan
relating to 18,900 shares of Apache Common Stock, none of which is vested.
Certain legal matters will also be passed upon for the Company by Woodard, Hall
& Primm, P.C., Houston, Texas, and for any of the underwriters or agents by
Brown & Wood LLP, New York, New York.
EXPERTS
The audited consolidated financial statements of the Company, incorporated
by reference into this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said report.
The information incorporated by reference herein regarding the total proved
reserves of the Company was prepared by the Company and reviewed by Ryder Scott
Company Petroleum Engineers ("Ryder Scott"), as stated in their letter reports
with respect thereto, and is so incorporated by reference in reliance upon the
authority of said firm as experts in such matters. The information incorporated
by reference herein regarding the total estimated proved reserves acquired from
Texaco Exploration and Production Inc. was prepared by the Company and reviewed
by Ryder Scott, as stated in their letter reports with respect thereto, and is
so incorporated by reference in reliance upon the authority of said firm as
experts in such matters. The information incorporated by reference herein
regarding the total proved reserves of DEKALB was prepared by DEKALB and for the
four years ended December 31, 1994 was reviewed by Ryder Scott, as stated in
their letter reports with respect thereto, and is so incorporated by reference
in reliance upon the authority of said firm as experts in such matters.
A portion of the information incorporated by reference herein regarding the
total proved reserves of Aquila Energy Resources Corporation ("Aquila") acquired
by the Company was prepared by Netherland, Sewell & Associates, Inc.
("Netherland, Sewell") as of December 31, 1994, as stated in their letter report
with respect thereto, and is so incorporated by reference in reliance upon the
authority of said firm as experts in such matters. Netherland, Sewell did not
review any of the reserves of Aquila acquired during 1995.
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