Good afternoon. My name is Kim and I will be your conference operator today. At this time, I would like to welcome everyone to the Apache Corporation Fourth Quarter and Full Year 2015 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. Thank you. Gary Clark, Vice President, Investor Relations, you may begin your conference, sir.

Good afternoon and thank you for joining us on Apache Corporation fourth quarter 2015 earnings conference call. Speakers making prepared remarks on today's call will be Apache's CEO and President, John Christmann, and CFO, Steve Riney. Also joining us in the room is Tim Sullivan, Executive Vice President of Operations. In conjunction with this morning's press release, I hope you've had the opportunity to review our quarterly earnings supplement, which summarizes key financial and operational data for the fourth quarter and full year 2015, along with details regarding our 2016 production and capital spending outlook. We have revised and streamlined the structure and content of our earnings supplement and believe you will find it more useful. Also, please note that we've changed our capital expenditure guidance convention to reflect a more comprehensive picture of our spending. Specifically, the 2016 capital spending range we provided in this morning's press release includes all exploration, development, gathering, transportation and processing expenditures. It also includes budgeted leasehold acquisition costs and capitalized interest and capitalized G&A. The only element of our 2016 program that our guidance will continue to exclude is capital attributable to our minority interest partner in Egypt. As a result of this guidance change, references made on today's call to 2015 and 2016 capital spending may not be directly comparable. Our earnings release, the accompanying financial tables, and non-GAAP reconciliations, along with our quarterly earnings supplement can all be found on our website at www.apachecorp.com/financial data. We also plan to post on our website a section which contains responses to any questions that arise on today's call for which we do not have readily available information to answer. I'd like to remind everyone that today's discussions will contain forward-looking estimates and assumptions based on our current views and reasonable explanations. However, a…

And your first question comes from the line of Pearce Hammond with Simmons & Company. Your line is open. Pearce Wheless Hammond - Simmons & Company International: Good afternoon. John, does the Egyptian government help drive your thinking regarding capital allocation among your different regions? I assume the Egyptian government wants you to produce as much oil and gas as possible to bolster both domestic energy security as well as the Egyptian treasury. And so just curious if it limits your capital allocation flexibility in any ways. John J. Christmann - President, Chief Executive Officer & Director: Yeah, Pearce, clearly they would like us to invest more money, but like everything else, we decide where we put the investments in place, so it has not had an impact. We are going to generate cash flow in both Egypt and the North Sea, and they understand that. And it obviously will flow with our budget as we're flexible. Pearce Wheless Hammond - Simmons & Company International: Great. And then my follow-up around the offshore Suriname blocks, if this is a legacy position from when Apache had a more defined exploration program like in New Zealand, Cook Inlet and places like that, is this a bit more of a one-off or is this a type of business that you want to build over the next few years? John J. Christmann - President, Chief Executive Officer & Director: Yeah, I think it is something – it fits with our international portfolio. Actually, we've got a lot of questions about that position, Pearce. We felt like it was important to go ahead and get a map out there. We drilled the well this year, our Popokai well, and we actually had picked up the other block prior to either Exxon drilling there Liza well or our well going down. So, we've got those two blocks there, not a huge capital commitment. We're going to be shooting seismic over block 58 this year, and we'll go from there.

And your next question comes from the line of Brian Singer with Goldman Sachs. Your line is open. Brian Singer - Goldman Sachs & Co.: Good afternoon. John J. Christmann - President, Chief Executive Officer & Director: Hello, Brian. Brian Singer - Goldman Sachs & Co.: With regards to the CapEx and activity reductions, when we think about your cost base and your lowered cost, including on the SG&A side, when it's time to ramp back up, what is your operational and scale flexibility to do this? And what flexibility, if any, may be reduced, at least, temporarily? I mean, in other words, if you wanted to take the Permian and bring it back to a 10 or 15 or 20 rig count again, would this require re-staffing and the passage of time to make that happen? John J. Christmann - President, Chief Executive Officer & Director: Brian, with the way we've done our staffing, we strategically designed this organization for a $50 plus world. So, we do not envision needing to add a lot of staff to be able to flex back up. Clearly, I think if you get into a significantly lower time period where you've got lower prices, 24 months, 36 months out at that point you'd probably reduce further. But, we've maintained the flexibility so we can ramp up our capital programs when appropriate. Brian Singer - Goldman Sachs & Co.: Great. Thanks so much. My follow-up is actually a follow-up to Pearce's question on exploration. You made a couple of references to adding exploration opportunities. Was that specifically the Suriname reference that you've already kind of spoken to here or are there other opportunities including the onshore that you're pursuing from a more exploratory perspective? And can you give us more color beyond Suriname if the answer is yes to that? John J. Christmann - President, Chief Executive Officer & Director: Well, I mean, it obviously includes Suriname. We did a good job of highlighting our North Sea exploration program last November, so we've got some exploration wells to drill in the North Sea. We brought on two discoveries late-2014 in Egypt in Ptah and Berenice, so we have active exploration programs both North Sea, both Egypt, Suriname and then obviously in North America. We have acknowledged that we acquired some acreage last year at some low prices that we think can be prospective. And while we've shut down for the most part our development drilling in North America, we will be doing some strategic testing in and around our existing asset base, and on some acreage that we've picked up.

And your next question comes from the line of Evan Calio with Morgan Stanley. Your line is open. Evan Calio - Morgan Stanley & Co. LLC: Good afternoon, guys. I appreciate the color and added disclosure. My first question, you guys cut CapEx, I think, deeper than expectations to get within cash flow post-dividend and avoided, at least, so far, some moves made by peers. And maybe you alluded to this in your opening comments. Yet to be clear, on the strip, do think that these moves mitigate the risk of needing to issue equity or losing your IG rating at Moody's? John J. Christmann - President, Chief Executive Officer & Director: Clearly, at this point, we took actions and we're very aggressive last year. So you look back to 2015 and 2016, we've had a track record of reducing activity and really trying to gear our business and mirror our activities to the price environment we're in. We've done that, we worked hard last year to improve our financial position, which we demonstrated we did. If you look back over second quarter, third quarter of last year we had an outspend of approximately 14% which was significantly lower than most of our peer group. So it put us in a position where we have been working to gear our spending levels to a lower price environment. So, clearly, we worked on that, and we do have cash on hand this year. Obviously, we're making a conscious decision again in 2016 to live within the current price environment and within cash flow here such that we end the year with flat net debt. So it puts us in a position where we would anticipate not having to do some of those things at this point. And obviously protecting our investment…

And your next question comes from the line of John Herrlin with Société Générale. Your line is open.

Two quick ones. For Suriname, when will you get the bird stack in on the seismic? John J. Christmann - President, Chief Executive Officer & Director: John, we will be shooting that later this year. So, it will be a summer program.

Okay. Thanks, John. With respect to your unconventional activity that you have planned, is this all going to be internal science done by Apache or are you going to be interfacing with the industry or what? John J. Christmann - President, Chief Executive Officer & Director: Clearly, it'd be internal programs that we'd be doing on our own. So, I mean, we participate in some wells in some areas and we learn from what we can and we've got partners in some places, but clearly, the work we are doing is all internally generated, and for the most part, it's done on our behalf for 100%.

Okay. Last one for me. Historically, you've made a lot of acquisitions; not of late, but a lot of people are experiencing some pain. Will you be more opportunistic in terms of property front in terms of buying things beyond what you have done? John J. Christmann - President, Chief Executive Officer & Director: I mean, John, we always are aware of what's out there and look at things carefully. The thing I would say, we find ourselves today in a very enviable position and we're opportunity-rich. With where we've scaled our capital back, there are a lot of excellent opportunities that we are choosing not to fund and that we think we would pursue at a higher price environment. So, as we think about things, they would have to be something that would be incrementally additive to our current inventory and portfolio. And so, I mean, it'd be a pretty high bar to be able to – something that we would want to bring into the door.

And your next question comes from the line of Michael Hall with Heikkinen Energy. Your line is open.

Thanks. Was just curious going back to Egypt a little bit, is there anything – any feature within the PSC that kind of limits your downside flexibility around spending? I'm just trying to think through if there's any sort of reduced cost-recovery barrels or anything along those lines if you cut too much. John J. Christmann - President, Chief Executive Officer & Director: No, Michael, there really isn't. The nice thing about what you're seeing on the international portfolio is a lot of these PSCs and so forth were designed for lower price environments. And quite frankly, the way they work, the government takes a greater percentage in higher prices. And so, as we look at the international portfolio and we look at North America, there's greater leverage in North America to higher prices, and there's less leverage on the international side. So it makes sense to allocate more capital into those projects right now because the returns are superior. And there's no requirements or commitments on the spend level that would cause us to have to spend more or anything along those lines.

Okay. That's helpful. Appreciate the color. And North America, if I just think about the 2015 fourth quarter rate and then take a linear decline through 2016, I'm showing about 20% plus decline year-on-year 4Q 2016 versus 4Q 2015, is that directionally reasonable or is that anything I ought to revise in that thinking? John J. Christmann - President, Chief Executive Officer & Director: Yeah, I would say you'd probably end up a little bit steeper on the backside, but it's all going to hinge on how flexible we are with the capital and prices.

And your next question comes from the line of David Tameron with Wells Fargo. Your line is open.

Hi. Good morning or I guess afternoon. John, I'm just trying to think about 2017. If you think about it, if you get a modest uptick, obviously, cash flow, you guys have a lot of leverage to that. Your cash flow goes up. How are you thinking about the next two years? Is it spend within cash flow? Is it – it obviously would take a little bit of time to ramp to get there, but how would you thinking about that in, say, a $45 world? John J. Christmann - President, Chief Executive Officer & Director: Well, I think the important thing is if you look at 2016, we're guiding to relatively flat international. We said earlier on the call in the prepared notes that an additional $900 million incremental capital in North America would keep North America flat to slightly growing, which translates to about a $45 world. So 2016, we could live within cash flow and be flat to relatively slight growth. So, as we look ahead into 2017, there's a couple of things going on first and foremost. We're in the second year now of a significantly reduced CapEx budget. We reduced aggressively last year, again this year. So we've got fewer wells that were brought on than historical. So our rates will be flattening slightly as we go into 2017. Secondly, it will not take as much capital in 2017 to keep it flat, especially with North America. We're already investing at levels right now on the international side. Additionally, we've got some catalysts that will be coming on in 2017. If you look at the North Sea, our Callater well, potentially more than one well there that could be coming on. So, we've got some catalysts. And quite frankly, with the capital efficiency we're seeing, the other thing I'll say is, as we look at the 2016 budget, we've already seen well costs coming in significantly under what we planned this year. So the capital efficiency is the other big thing. So, I think as we get out into 2017, it's going to take a lower oil price for us to be able to stay flat and potentially grow.

Okay. And then one follow-up, just to clarify. So you said that you're going to have four rigs in the Permian or that's where you get to. Where – maybe one or two of those doing some R&D, can you talk about where the activity is going to be? John J. Christmann - President, Chief Executive Officer & Director: We've got four long-term contracts, so we will ramp down to those four rigs. There'll be a couple of them working in the Delaware, two to three. And there will be at least one up in the Midland Basin, Central Basin Platform as we continue to test all of our plays.

And your next question comes from the line of Edward Westlake with Credit Suisse. Your line is open. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Good afternoon and thank you very much for talking about returns and fully-loaded returns at that. So as we go out on the other side of this trough, however long it lasts, what is the hurdle rate for investment fully-loaded that you're looking to develop? I appreciate oil price is going to move, the cost structure is going to change, but I'm trying to think about what hurdle rate gets you to invest. John J. Christmann - President, Chief Executive Officer & Director: I think the key is we want to get to fully burdened corporate returns that are in the low-double digits. And I think that's where we need to be striving and that's where we plan to get to. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Yes. Good that you have a returns target because historically the returns have not been as good for the industry even at $100 oil. Just a question then on the Permian and Delaware. You've got acreage, but it's not all contiguous. I'm just wondering if there's any update on people being willing to block up to get some efficiency gains? John J. Christmann - President, Chief Executive Officer & Director: The nice thing is we've got 3.3 million gross acres, so we've got lots of acreage. We have done a lot of small trades and we are doing a lot of things. We are trying to block some things up and have had some success. So they're not things that hit the press in terms of radar screen, but we're continually looking to block and swap. We're interbedded with a lot of the operators and there's lots of things we're doing to try to core up those positions and put together drilling units where you've got more control.

And your next question comes from the line of Bob Morris with Citi. Your line is open.

Thank you. John, on the four rigs at mid-year in the Permian, will you have a rig running in the Woodford/SCOOP or anywhere else, or will it be just those four? John J. Christmann - President, Chief Executive Officer & Director: At this point we've got flexibility there, Bob, but I would anticipate those being in the Permian.

Okay. And then on the drilled but uncompleted inventory, how will that trend through the year? Do you have an inventory starting out the year, will that be drawn down or how will that contribute to the production during the year? John J. Christmann - President, Chief Executive Officer & Director: If you look at last year, we consumed about 70 horizontal drilled but uncompleted wells and about 50 vertical. As I was pretty vocal early last year the wells we drill we intended to complete, and we drew down a lot of our DUCs. I would envision us doing the same thing this year. You could see that number come down a little bit, but it's at a level now where we don't have a lot that we haven't already completed. And the thing I'll add, too, is we have the luxury of not having a lot of rig contracts and a lot of leases that require drilling of wells right now. So we're not in a position where we're having to build DUCs because we don't think that's a prudent use of capital.

And your next question comes from the line of Doug Leggate with Bank of America. Your line is open.

Thanks. John, I wondered if I could try two, please. I don't know if I missed this, but could you give us some idea of exit rate to exit rate in North America Q4 to Q4 2016 just to give us an idea where you're going be running at going into next year? John J. Christmann - President, Chief Executive Officer & Director: Doug, we did not give any guidance around that specific. I would say probably the best thing to do is take – we gave first quarter guidance, we gave the average ranges for the year and I would just probably extrapolate from that. I will say going into 2017, we expect to see capital efficiencies and things come into play where we have a much better picture for 2017 than we do currently for 2016 at these capital levels.

Okay. I can join the dots. If I may, I want to go back to Suriname from the earlier question. And I'm just trying to understand a little bit about what's going on there with your longer-term thinking. Are you getting carried, John, on the activities there? And I'm just wondering are you retaining this really more as an option in case (1:01:04) spills over into your block? Or is that a little bit more strategic that this is really something that would be a core part of your portfolio going forward? And I'll leave it there. Thanks. John J. Christmann - President, Chief Executive Officer & Director: Well, what I'll say is when we originally took the block several years ago, the first block, 53, we viewed it as being in a very potential prospective area. I think what you now see is you've got a proven oil hydrocarbon province. We've got two blocks that are centrally located. There is a system there. We did drill one well last year. Prior to drilling that well, we did bring in partners and were promoted on the one well in Block 53. We picked up Block 58 on our own just as protection. It was not a huge commitment. And I think we now have the luxury to see what we do with it. It is a bid option. We own it 100%. And clearly it's an area that's very prospective and is getting a lot of attention.

And your next question comes from the line of Bob Brackett with Bernstein Research. Your line is open. Bob Alan Brackett - Sanford C. Bernstein & Co. LLC: The strategic allocation of capital, could you contrast what you call a development CapEx versus a base maintenance CapEx, say, in the Permian? And what does strategic capital mean in that exploration bucket? John J. Christmann - President, Chief Executive Officer & Director: I think first and foremost in terms of maintenance, there are just certain things you have to do on your existing fields. So basically, Bob, we're not drilling development wells in the Permian which would be to generate further growth. So that's going to be the difference. The other thing is going to be just your bread-and-butter maintenance things that you do with your base. And that's repairing subs, doing those types of things. In terms of strategic capital, we would put that as things that potentially sets up new drilling programs, test new zones, test new concepts, helps us better define what are going to be the inventory of growth opportunities in the future. Bob Alan Brackett - Sanford C. Bernstein & Co. LLC: So testing stacked pay on an existing development you'd throw-in on the strategic side? John J. Christmann - President, Chief Executive Officer & Director: If it had running room and could open up something significant, then yes. If it's something small on the Central Basin Platform or some areas where we've got just a few locations identified, then it wouldn't be in that category. Bob Alan Brackett - Sanford C. Bernstein & Co. LLC: Okay. I think that's clear. John J. Christmann - President, Chief Executive Officer & Director: It'd have to have potential scope to it for it to be strategic. Bob Alan Brackett - Sanford C. Bernstein & Co. LLC: Okay.

And your next question comes from the line of Mike Kelly with Seaport Global. Your line is open.

Hey, guys. My question was asked. I'll hand it back. Thanks.

And your next question comes from the line of Charles Meade with Johnson Rice. Your line is open. Charles A. Meade - Johnson Rice & Co. LLC: Good afternoon, John, and to the rest of your team there. I appreciate you guys sticking around to answer all these questions. If I could ask what one about your dividend and your thinking there. You guys made a lot of moves and you've reviewed a lot of them on this call to adapt to a reduced commodity price early, but leaving the dividend intact stands out as an anomaly there. So I'm wondering if you can tell us a little bit about your thinking. And I know the board's thinking is really what comes to bear on this, but if you could give us some thoughts on your posture there. Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yeah, this is Steve again. So you make very good points. We cut early, we took a lot of actions in 2015 that a lot of our peers didn't. And I think for that reason, we feel like we're very well positioned not to have to cut the dividend now. We've done all the things to strengthen the financial position, the liquidity position, our refinance risk on the debt portfolio. We've chosen to live 2015 and 2016 as close to cash flow neutral as possible. We've done that because we believe that, especially in North America, the opportunities for investment are going to be better in the future than they are now. There are some good ones now, but we believe they're going to be even better. So we've chosen to be cash flow neutral. So we've added $1.5 billion of cash on the balance sheet, chosen to be cash flow…

Yes. This is Tim Sullivan. We did drill – this was at a Wildfire lease. We did drill five well pads in the June Tippett lease. Three of them actually came online in the fourth quarter and two of them online in early 2016. And what we have done here, these are mile laterals. We had acquired some additional core data out here and tweaked our landing zone, targeting a higher TOC and lower clay content area. And the 30-day IPs for the average of those five wells was 980 barrels of oil equivalent per day, and 75% of that is oil. And if you compare that to a well or a pad that we had drilled early in the air which was a mile-and-a-half pad, this mile pad is outperforming those. So we are pretty excited about that and we do have quite a bit of running room.

And your next question comes from the line of Michael Rowe with TPH. Your line is open Michael J. Rowe - Tudor, Pickering, Holt & Co. Securities, Inc.: Thanks. Just a question on the North Sea. I appreciate that there are a number of discoveries coming online in 2017 and 2018 to arrest decline. That said, can you talk about the base decline of this asset and what these productions or what these discoveries, excuse me, will do to aggregate production growth in those years? John J. Christmann - President, Chief Executive Officer & Director: At this point, we see the North Sea being able to hang in there pretty strongly with the capital levels we're at. We have not looked at what price decks we'd use, and a lot of that will hinge on how many platform rigs we have, do we add those back in, in 2017 and 2018. We mentioned they would not be there the back half of this year, so a lot of that's going to hinge on capital as we lay out those future years. But we've got good running room now and a lot of nice things coming on. Stephen J. Riney - Chief Financial Officer & Executive Vice President: Michael, this is Steve. I'd also just point you to the presentation we made, the webcast that we made back in November. It's got some information that I think you'd find helpful. Michael J. Rowe - Tudor, Pickering, Holt & Co. Securities, Inc.: Understood. Thanks. I was just trying to see if there's been any change in thought process there. But maybe just my last question would be just a question on the goal of spending within cash flow and the comment you made on cash flow movements with each change – dollar per barrel change in the oil price. Of your 2016 operating cash flow, do you have a sense for how much of that is attributable to North American Onshore versus your International business at $35 oil? Thanks. John J. Christmann - President, Chief Executive Officer & Director: I don't have that number off the top my head. You're going to have more cash flow coming out of the International in terms of on a per barrel basis just because our cash margins are higher. But I'll let – we can follow-up with exactly that split. I'll have Gary follow up with a better idea on the ratio.

And our final question comes from the line of Jeffrey Campbell with Tuohy Brothers. Your line is open.

Thank you for taking my questions. Steve mentioned that cash flow neutrality remains the approach whether oil prices rise up or down. I was wondering if hedging might also be part of the method, particularly if oil prices rise somewhat, to protect the timing of any increased spending exposure. John J. Christmann - President, Chief Executive Officer & Director: Jeff, at some point, obviously, if we were going to commit a lot of capital, we would start to look at using hedging. I think you're in a period today where we don't have a cost structure that's not synchronized with price environment. But it is something in the future. If we were to put a lot of capital back to work that we would consider as a tool to offset or mitigate some of the risk to ensure that we can deliver the return objectives that we're focused on.

Thanks, John. My follow-up is, can you review the very low Permian well cost guidance that you gave, again, with average lateral links that correlate to those costs? And also do those estimates include more intensive completions? John J. Christmann - President, Chief Executive Officer & Director: In terms of our Permian well cost, we see things coming down and even further this year. As a rule, we're looking at mile-and-a-half laterals. We have seen the intensity of the frac concentrations going up. So those are the types of parameters we're going to use or using in those estimates.

And I would now like to turn the call back over to the presenters for closing remarks.

That's going to wrap up the call, Kim. There's no more questions. We look forward to speaking to you all next quarter, and please give myself or Chris Cortez a call if you have any follow-up questions. Thank you.

Ladies and gentlemen, this concludes today's conference call, and you may now disconnect.