Good afternoon. My name is Kendra, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2011 Q4 and Year-End Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to your host, Mr. Patrick Cassidy. Sir, you may begin your conference.

Thank you, Kendra. Good afternoon, everyone, and thank you for joining us for Apache Corp.'s Full Year and Fourth Quarter 2011 Earnings Conference Call. This morning, we reported earnings of $4.5 billion or $11.47 per diluted share. Adjusted earnings, which excluded certain items that impacted comparability of results, totaled $4.7 billion or $11.83 per diluted share. Cash flow from operations totaled $10 billion. On today's call, we will have 4 speakers making prepared remarks prior to taking questions. First we will hear from Steve Farris, our Chairman and Chief Executive Officer; followed by Rod Eichler, President and Chief Operating Officer; and Tom Chambers, Executive Vice President and Chief Financial Officer; and finally Roger Plank, our President and Chief Corporate Officer. We prepared our usual detailed supplemental data package for your use, which also includes a reconciliation of any non-GAAP numbers that we discuss such as adjusted earnings, cash flow from operations or pretax margin. The data package can be found on our website at www.apachecorp.com/financial data. Today's discussion may contain forward-looking estimates and assumptions, and no assurances can be given that those expectations will be realized. A full disclaimer is located with the supplemental data package on our website. With that, I'll turn the call over to Steve.

Thank you, Patrick, and good afternoon, everyone, and thank you for joining us today. Apache had an outstanding year in 2011. We had strong production growth, earnings and cash flow, all delivered with the financial and balance sheet discipline that has characterized our company for 57 years. Apache's global oil and gas production in 2011 was 748,000 barrels of oil equivalent a day, which is 14% growth over 2010 and a new record for us. The strong growth delivery is consistent with our performance over time compared with other companies. Whether it's over the last 5 years or 10 years, Apache gross production posted more than most of its peers, and we do this in a balanced and diversified manner, living within our means. Crude oil represented 45% of our 2011 production and if you add NGL, liquids represented 50% of our production. We already have the portfolio balance that most of our peers aspire to obtain at some point in the future. As we grow competitively, we do not sacrifice our balance. 2011 earnings, as Pat mentioned, was $4.5 billion, which was 50% up year-on-year or 36% per share. Our cash flow from operations before working capital items in 2011 stood at $10.2 billion, which was up 39% year-on-year. The driver of this financial performance is, truthfully saying, we focus on rate of return, and it shows. This financial performance will continue to fuel our growth as it continues to increase our investment capacity. Needless to say, 2011 was an excellent year for Apache. I'd like now to move to 2012 and talk a little bit about our capital program and our production growth forecast. Our initial exploration and development capital budget for 2012 is $9.5 billion, which is a 25% increase year-on-year on a cash basis, and we'll…

Thanks, Steve. I'll focus my remarks on our 2012 plans based on the initial allocation of capital and what this means in terms of production for each of our regions. The biggest drivers for our growth in exploration in the year ahead include the following: the Permian and Anadarko basins, where we are going to step up our activity by close to $1 billion; the deepwater Gulf of Mexico, where we are broadening our participation in high-impact prospects such as appraisal drilling at Heidelberg and moving into the development of megaprojects such as at Lucius, where our first test well last year flowed at 15,000 barrels of oil per day, a rate that was constrained by a surface test equipment. In Australia, we've entered full development at Wheatstone LNG, Apache's first LNG project. In our global exploration, our efforts over recent years are now translating to big steps forward across a number of new portfolio positions. During the year ahead, we expect to run between 90 and 95 operated rigs worldwide on a daily basis. This is up from the 80 rigs we averaged during 2011. We are planning up to a 30% increase in new wells drilled, which represents approximately 300 additional wells compared to the 1,100 wells drilled last year. More than half of all planned wells will be drilled in the Permian and Anadarko basins as we exploit their liquid-rich stacked pay opportunities. Across our portfolio, a shift is underway to Apache to direct our drilling to more profitable oil and NGL opportunities. This will be most evident in North America. Our supplemental disclosure document posted on our website outlines Apache's 2012 capital by region. It can be found on Page 10. I'll move on now to discussing our recent highlights. We continue to ramp up activity…

Thanks, Rod, and good afternoon, everyone. I'd like to reiterate what Steve mentioned earlier in that we had record results for the year across the board. Underpinning our 2011 financial results was record production, which averaged 748,000 barrels of oil a day, up 14% from the prior year. More importantly, we achieved record oil production of 340,000 barrels per day, allowing us to benefit from higher oil price realizations. For the year, we reported record earnings of $4.5 billion or $11.47 per diluted share, our first time to break the $10 threshold. When we remove items for comparability purposes, adjusted earnings were $11.83 per share, up 32% from the prior-year period. Record production and oil prices drove cash from operations before working capital items, up 39% to $10.2 billion, our best year ever. In a nutshell, it was a phenomenal year in all respects. Record cash flow enabled us to fund our largest E&D capital budget, acquired assets for another $2 billion in cash, which provide a future platform for continued long-term profitable growth, while we also paid down $925 million in debt. So we were able to end the year and reduce our debt-to-cap 20%. I want to highlight the importance of our portfolio's ability to consistently generate cash flow. For 2011, our $10 billion of operating cash flow enabled us to achieve many targeted goals and set the stage for continued growth into 2012. Without the constraint of having to pay down debt in 2012, the 2012 capital budget spending rises, as Steve indicated. However, I would emphasize that our disciplined approach reduced capital on a quarterly basis to ensure we do not outspend our cash flow or, if prices rise significantly, to potentially allocate any excess to the best projects available. These results speak volumes for our…

Thanks, Tom, and good afternoon, everyone. 2011 was, indeed, another year of growth and change for Apache, and I wanted to just take a moment to reflect on how the company's evolved over the last few years. In a deteriorating price environment for North American natural gas, in the last 2 years Apache turned $7.5 billion in cash flow to $17.5 billion. Through drilling and acquisitions, we've invested $25 million, expanding our production and rebalancing our portfolio in areas with considerable future growth prospects. To manage this change and maintain focus on executing and delivering consistent profitable growth, we've added hundreds of professionals and, importantly, 3 new growth regions: deepwater, Gulf Coast onshore and the Permian Basin. In addition, recent changes in our central region, including the Cordillera transaction, will transform its legacy Apache region into one of our most active drilling regions focused on drilling oil and liquids production. The changes have the affect of beefing up our portfolio in North America and today, onshore North America represents 38% of our worldwide production compared to 28% just 2 years ago. On a pro forma basis, including Cordillera, no single region accounts for more than 1/5 of our total production. Although our geographic mix has shifted, our production mix has not. Half our production remains liquids, in which 90% is oil. Another aspect of Apache's portfolio evolution is the inclusion of a growing number of long lead times, impactful development and infrastructure projects. More than half of our 2012 capital goes to projects that contribute no production this year, but will contribute meaningful volumes in 2013 and beyond. In fact, following additional investment, we expect these projects will add hundreds of thousands of equivalent barrels to our daily production spread out over the next 5 years. Fortunately, we have the…

That concludes our prepared remarks. Operator, we're ready to take questions.

[Operator Instructions] And your first question is from Brian Singer of Goldman Sachs.

Two questions. First on the Cline shale, how does the Cline compete with other horizontal and vertical opportunities that you're pursuing in the Permian Basin? And can you talk to what your well cost expectations are there relative to the EURs that you mentioned earlier?

Well honestly, Brian, I think it's a little early to tell how they can be. But with our portfolio, we are going to test most of the plays and the horizontal plays out there, whether it be the Wolfcamp shale or the Cline. And frankly, we're looking for the highest rate of return. I think Rod mentioned 300,000 barrels of oil equivalent per day with a cost of what, Rod?

Completed well cost around $6.5 million.

Yes, completed well cost $6.5 million, so it will compete with most shale plays.

And your next question is from Pearce Hammond of Simmons & Company. Pearce W. Hammond - Simmons & Company International, Research Division: You outlined your production growth for this year at 7% to 13%, and you made some smart acquisitions in the course of the last year, the North Sea acquisition and here recently, Cordillera. If we try to look at just the organic production growth rate without the acquisitions, what do you think it might break out to be?

Well honestly, we don't break that out. I will tell you probably in the high single digits.

Your next question is from John Herrlin of Societe Generale.

Two quick ones. In terms of your CapEx budget, how much is actually exploration and how much is development, because you just depict it as E&D.

Well, whether it's in the regions or new ventures group, it's about $1 billion.

Okay, that's fine. Next one for me is on Egypt, Steve. Your reserves went down out a little bit year-over-year. Were there performance issues because you had negative revisions? Normally, you have positive revisions there. And that's it for me.

Actually, what we had is we had a negative revision, but it all has to do with price. John, you're aware of that concession agreement. What happens is you get more barrels for cost recovery, but you also have an adjustment on the reserve side. So that's counterintuitive. I mean, when you have more production, you have less reserves. And if you have less production, you have more reserves. I mean, it really is the way the concession agreement works.

So because we got to recover our costs, the higher the price per barrel, the lower the reserves you get to report. But the actual reserves performance has been just fine.

And your next question is from Bob Brackett of Bernstein Research. Bob Brackett - Sanford C. Bernstein & Co., LLC., Research Division: One of your competitors has talked about a JV or a sale of kind of 1 million acres scale asset in the Permian Basin. What's your appetite for that sort of scale transaction?

Well, we don't really comment on that, number one. And the other one is I think we have a pretty good acreage position as it is. Actually we are never looking, but opportunities come in a lot of different ways.

Your next question is from Leo Mariani from RBC.

Just kind of 2 quick questions here for you. I guess first off, could you maybe elaborate a little bit on your progress there on Kitimat? You guys kind of advanced negotiations with potential buyers. And a quick question here on the Permian. Obviously, you're stepping up the capital pretty dramatically here in 2012. And if I heard you guys right, you talked about mid-single-digit production growth in the Permian in '12. It just seemed like a low number to me. Is there some infrastructure issues there? Or maybe I misheard you guys.

Yes, I'd answer the first one at Kitimat. Frankly, we're somewhat past the polite introductions and that kind of stuff with respect to buyers. We are now in throes of actual negotiations. And in terms of the Permian Basin, you understand we're the second or third largest producer out there, so you've got 93,000, 94,000 barrels of oil equivalent a day starting off with. So a higher single-digit growth is a pretty good number, especially with the kind of capital that we're putting in there.

There's also a lot of timing involved. We have a lot of wells that are being drilled throughout the year. All those wells probably won't make it out to production until the early parts of 2013.

Your next question is from John Malone of Global Hunter Securities.

Just on Argentina, can you guys give us any color on the [indiscernible] well? The indication so far is gas. Have you seen any liquids in that? And really just overall, can you give us some thoughts on trends, what you're seeing in Argentina in terms of export and patriation, the politics down there?

Well, the exploration test we drilled at [indiscernible] in 2011 was specifically targeting the shales in the gas window. So it was a gas -- designed to be a gas test. That's what we have been evaluating. The subsequent wells we'll be drilling in 2012, as I mentioned, will be oil tests that are in the shale oil window as we currently mapped them adjacent to the recent discoveries announced by their operators.

With respect to your question about the politics down there, I think it's well to take a look at the circumstances that YPF, Repsol and the government of Argentina are in. I don't think there's any question that the Argentine government would like more money spent by YPF or Repsol in country. Personally, I think what you're seeing is a lot of discussion that really revolves around a specific issue. So we're truthfully not concerned about the wholesale expropriation of the oil industry down there.

In fact, Apache has been held up by the government in their recent press releases as one of several companies and an example of increasing the production and meeting or exceeding their production targets outlined in their concession agreements.

And your next question is from Mario from Tuohy Brothers.

It's actually Craig Shere. Mario had to jump off, but we have a quick question as a follow-up on Argentine also. Can you remind us how large the acreage positions are and the gas fee and then the oil shale windows and if you're still looking to expand acreage in either of those? And remind us the details regarding the 2012 drilling effort in the oil shale.

Okay. So the first part of your question, we have about 1.7 million gross acres, about 900,000 net acres in the shale fairway. We do not break that out; I don't have a breakout of that by oil province or gas province in that fashion. So it's a simple part of the Neuquén Basin. The second part of your question was what was...

Capital.

Capital in 2011?

2012.

2012. All right, 2012. We're looking at about $250 million as a preliminary capital allocation for our Argentina projects.

Just so you know, that's not an opportunity number. That is more of a prudency with respect to staying within our cash flow down there. And we're really testing ideas. If you look at any of our areas, when we talk -- Brian asked a question about the Permian Basin. We have built meaningful acreage positions in some of the best hydrocarbon basins in the world. And what we are trying to do is build long-term value for our shareholders. So in the Permian, we're going to test a number of different shales in a number of different ways, horizontal, and the same we're doing in the Neuquén. And we are a legacy owner in the Anadarko Basin. So it's not surprising that new technology catches up with a lot of hydrocarbons.

And there are no further questions at this time.

Okay, thank you, Kendra, for those remarks, and thank you for participating in Apache's conference call this afternoon. A webcast replay will be available on our website after 4:00 this afternoon.

This concludes today's conference call. You may now disconnect.