Good afternoon. My name is Regina and I will be your conference operator today. At this time I would like to welcome everyone to the Apache Corporation First Quarter 2016 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. I would now like to turn the conference over to Mr. Gary Clark, Vice President of Investor Relations. Sir, you may begin.

Good afternoon, and thank you for joining us on Apache Corp.'s First Quarter 2016 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 have had the opportunity to review our quarterly earnings supplement, which summarizes key financial and operational data for the first quarter, along with details regarding our updated 2016 production outlook. Our earnings release and quarterly earnings supplement can be found on our website at www.apachecorp.com/financials-reporting.aspx. I would like to remind everyone that today's discussions will contain forward-looking estimates and assumptions based on our current views and reasonable expectations. However, a number of factors could cause actual results to differ materially from what we discuss today. A full disclaimer is located with the supplemental data on our website. I will now turn the call over to John. John J. Christmann - President, Chief Executive Officer & Director: Thank you, Gary. Good afternoon, and thank you for joining us. In the first quarter, Apache delivered solid operational results, strong financial performance, and notable drilling outcomes, all of which were supported by our relentless focus on continuous improvement and cost reductions. Today I would like to start with a brief recap of first quarter results, and an update to Apaches 2016 production guidance. I will then provide an operational overview with particular emphasis on some of the exceptional well-cost reductions we are achieving at our key North American onshore plays. I will conclude with thoughts on our current activity level and the potential for increasing capital investment in the near future. As noted in this morning's press release, companywide, pro forma production of…

Our first question comes from the line of Ed Westlake with Credit Suisse. Please go ahead. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): Congratulations on the cost reduction, really quite impressive. Quick question on cash. You've got $1 billion of cash on the balance sheet, so just wondering what's the optimal level? I mean, obviously, peers have done some of the things you said, like issue equity and sell assets to get to their cash balances high, and people expect oil prices may still be volatile. Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yes. Thanks, Ed. This is Steve. I think at this point in time, I don't know what the optimal amount of cash on the balance sheet is, but I kind of like at this point in time having $1 billion of cash on the balance sheet. It's good for liquidity; I think it's a good time to have liquidity. It's a good time to have the cash ready for deployment, either in terms of paying down debt if we decide we need to do that, or for deployment into the capital program if we see the price scenario in the future improving. Or, for that matter, I am happy just to hold cash. We do believe that the cash balance will go back up to $1.5 billion by the end of this year, based on our plan for the year. Edward George Westlake - Credit Suisse Securities (USA) LLC (Broker): I guess a different way of asking it is there are obviously across the broad North American portfolio a lot of assets which potentially may be of interest to others, and as commodity prices lift their head a little bit, are you looking to be more aggressive on perhaps disposals of Tier 2? Stephen J. Riney - Chief Financial Officer & Executive Vice President: The answer to that is we are always looking at the portfolio. We have done some small one-offs that are not really material to production. But at this point, we are always looking at our internal assets. We grade those against other things, we look at what could be added and what would add incremental value, but right now it's a pretty hard litmus test because of the types of projects we've deferred. So we sit on a pretty good set of assets, a really good deep inventory that we're very excited about, and we'll look how do we improve it going forward. But nothing major planned on either side.

Your next question will from the line of David Tameron with Wells Fargo. Please go ahead.

Yes. Good morning. Nice quarter. A couple of questions, first I guess just on the horizontal Yeso. John, can you talk about what your plans are there, after seeing the results in the first quarter? What should we look for from that asset over the next few months or next few quarters, I guess? John J. Christmann - President, Chief Executive Officer & Director: Well, thanks, David. That is one of the areas that we've got inventory that we could put back to work. I mean, right now we do not have a rig that's over there. We've drilled some fantastic wells with, where the cost structure is moving now and when price has gone. That would be one of the areas that we could do, add some future activity to. But right now we don't have anything immediately planned to do, but we've got a lot of nice inventory.

Okay. And then as a follow up, bigger picture, if I think about, last conference call you made the comment that you could have kept 2016 production flat at $45, obviously I think your service cost and efficiencies have improved since then. Can you talk about looking forward, either give us an apples-to-apples numbers for 2016 or kind of projecting the forward for 2017, what that range would look like? John J. Christmann - President, Chief Executive Officer & Director: Well, I will take you back to what I said on the last call was, in 2016 another $900 million, which would have put our capital budget midpoint around 2.5, would have kept his flat in 2016. As we look at 2017, clearly we continue to make progress on the efficiency side, which would lower that. Our decline on our base is flattening, it's a function of, we're now 18 months into a slowdown in terms of the numbers of wells we've been bringing on, so that helps. Plus the base rate is a little lower that you have got to keep flat. So we see clearly less capital in 2017 to keep it flat, but it's kind of a moving target at this point. And then obviously the other factor is we've got some projects that we are advancing, Kaliter (29:28) in the North Sea is on track, which would give us a big kick in the middle of 2017. So it's going to be less, but it's pretty dynamic and we're in the middle of working through a planning process at this point. So at this point I'll just say it's going to be less than it would have been this year and you're right, $900 million or $45 base plan versus our $35 would have kept us neutral in 2016. But it will be a lower number for 2017.

Your next question will come from the line of Pearce Hammond with Simmons/Piper Jaffray. Please go ahead. Pearce Hammond - Piper Jaffray & Co. (Broker): Hi, good afternoon, and thanks for taking my questions. My first question, John, what is driving the steep decline in LOE, and then how sustainable are those cost declines? John J. Christmann - President, Chief Executive Officer & Director: Well, and I'll let Steve chime in, in a minute, a lot of its timing of how things came up first quarter. We had a big drop in a couple of areas. It is not something that will be there for the rest of the year, which is kind of why we moved our number down from $9.50 guidance to about $9.25, but we're making progress, and I've got confidence the guys can keep working on those numbers. Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yeah, I'll just... Pearce Hammond - Piper Jaffray & Co. (Broker): Yeah, go ahead. Sorry. Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yes, just in echoing John's comments, we had good cost results in Egypt, in the Permian and the North Sea. All three have been very strong. I think there is a good mix of that that's just timing related, and you'll note that that kind of a reduction doesn't show up in the guidance reduction to $9.25 per BOE. Pearce Hammond - Piper Jaffray & Co. (Broker): Great. Thank you. And then my follow-up is given the improvement in commodity price, any updated thoughts on hedging? Stephen J. Riney - Chief Financial Officer & Executive Vice President: At this point, the environment's getting much better. I mean, we like the direction on the cost, we like the direction on the oil price, so I think we're at a point where things are starting to look pretty darn attractive. But right now, our best hedge is we haven't committed to a lot of rigs or a big program at this point. So it's one of those things we will be discussing as we start to look at plans, but at this point, we're not quite where I would feel good about locking in a scenario.

Your next question will come from the line of Evan Calio with Morgan Stanley. Please go ahead. Evan Calio - Morgan Stanley & Co. LLC: Hey. Good morning, guys. Good afternoon to you, sorry. I appreciate all the color. I just wanted to make sure I understand the activity re-acceleration, which sounds closer. You accelerated around current levels, or are you looking for market fundamentals to clean up and then that acceleration will be governed, or the pace of that acceleration will be governed to remain cash flow neutral? Is that right? John J. Christmann - President, Chief Executive Officer & Director: Well, I mean, I think the key is, Evan, we budgeted to be cash flow neutral this year at $35 and a $2.35 gas price. We're a little bit behind that in the first quarter on oil, we're behind it on gas. Clearly, in April we've seen a little bit of a rebound. So if the strip were to hold up, clearly we're going to be in a position to have some cash to deploy in the back half of the year, and those are the types of things we would look at. But there's lots of things out there. I mean, we've got debt we could address or the program. But the plan would be to – cash flow is going to be the governor, we plan to stay cash neutral, and we'll have some options to choose from if the current conditions hold. Evan Calio - Morgan Stanley & Co. LLC: Great. You also discussed your North American capital allocation in the recovery, but you didn't mention the Eagle Ford, which I had thought was a higher hurdle from your previous comments. Yet in Q1, you completed four Eagle Ford wells with competitive results. Can you discuss what the driver there was? Is that some science or lease-related activity? John J. Christmann - President, Chief Executive Officer & Director: Well, we mentioned we'd been doing a lot of strategic testing. I mean, most of our North American capital is designed to that. We had some wells that were down that we wanted to complete and, you know, to be able to evaluate those. The Eagle Ford will require a little higher hurdle than some of the other plays. So as we start to think about in the future potentially putting capital back to work, right now it would not be the first place it would go. But we're seeing great progress in the Eagle Ford as well and have made a lot of progress over the last 18 months. So it's something I think can be an option in the future.

Your next question comes from the line of John Herrlin with Societe Generale. Please go ahead.

Yeah, I had a question for you on the shales. Obviously, you've had a lot of improvement. How much capital have you really dedicated from the science side of things to better optimize, like density studies, things like that? John J. Christmann - President, Chief Executive Officer & Director: John, I'd say if you look at our strategic testing, it really falls into several buckets, and I don't have an exact split on how much of it is in that portion of it, but we're doing three things, really. We're testing new acreage, we're testing new zones and then we're optimizing within zones. And if you look at our completions in the – a lot of the Permian as well as the Woodford or even the Eagle Ford, I mean, we're taking and integrating seismic data, core data, petrophysics, landing zones, everything. And so we're doing a lot of time on that, and I think that's where you're seeing some of the productivity things that are showing up from that time that we're taking to do things properly, and we've learned an awful lot.

Okay. Next one for me, with the services companies, do you find that your conversations about future activity levels and costs are different? Is it more collegial, less adversarial, or...? John J. Christmann - President, Chief Executive Officer & Director: Yes, I would say that really, since the fall of last year, it's become a lot more collaborative. I mean, we've had some really good sit-down discussions with some of the small service companies as well as some of the very big ones and have had some really, really constructive conversations on how do we lower the cost structure in North America, and a lot of progress on that front. And I think a willingness to recognize that that's what is going to take going forward. And you're seeing some of the fruits show up, not just in terms of cost reductions from the service side, but in terms of execution, efficiencies, structural things, a lot of these things that are going to be permanent. And that's what's important.

Your next question comes from the line of Arun Jayaram with JPMorgan. Please go ahead.

Yes, good afternoon. John, I was wondering if you could perhaps comment on some of the steps you're taking kind of to manage your base decline in the Permian? You had a pretty skinny sequential decline, right? So in addition to new drilling activity, what are you doing to manage that base? John J. Christmann - President, Chief Executive Officer & Director: Well, I mean, I think one of the big things is we've stepped back. We've gone from trying to bring on a lot of wells and completing a lot of wells to really getting back to managing your base, and looking at fluid levels, looking at optimizing how we're producing these wells, changing some of the lift, it's amazing what you can do when you take the time. Compression, optimizing water shut offs, little things. And there's not a lot of money, but boy, it sure makes a big, big difference. I mean, we've got back in, cleaned out some injectors in some of our water floods, some of the old bread and butter, classic Apache things that we've done for decades.

John, I remember you commenting, maybe in a previous call, that you thought that your overall base decline rate was in the low 20% range? Any thoughts on that number, is it a coming down? John J. Christmann - President, Chief Executive Officer & Director: Well, I mean, clearly, as we started the year, we said it was in the 25%, 26% range. As we bring on fewer wells, which is what we've done, it has flattened and is flattening. That's a good topic of discussion with me and our reservoir engineers, because we are always working on that. But clearly it is coming off and clearly in terms of flattening, and then also all these projects help too. So I think you'll see us continue to focus on that. It gets back to the quality of having some conventional, and a big chunk of our Permian is water floods and CO2 floods and things that just don't decline as rapidly. There's a lot of things you can do, scale cleanouts, all kinds of things, moving more water, there's just a lot – you have a lot more options to pull on your conventional asset base and you're seeing us pull those. So I think you will see it flatten.

Your next question will come from the line of Scott Hanold with RBC Capital Markets. Please go ahead.

Thanks. Good afternoon. Just specifically on some North Sea activity, did the Storr and Kinord wells, did those move into this year? And if you could comment if changes in the PRT tax over there have changed your view on how active you get? John J. Christmann - President, Chief Executive Officer & Director: Yes, I would say that the changes in the PRT are very helpful. It does not change where we are in terms of the game plan. I mean, we've got such a low cost structure there relative to the rest of the industry, and we're going to generate cash flow out of the North Sea, much like Egypt, on our international portfolio. So it does not change big picture the steps we're taking, but it does make things more attractive, and provides us incremental cash flow, it lets us do a few more things. We do plan to bring Storr and Kinord into the back half of this year at this point. So that would be – the plan would be to at least get the wells drilled at this back half of the year or could spill into next year.

Okay. Thanks. And as my follow-up, turning to the Permian and really good results on that Seagull well. Could you give a little color on what you all might have done differently there and maybe a little bit of color, too, on that new zone within the Third Bone Spring that you're looking at? John J. Christmann - President, Chief Executive Officer & Director: Well, I mean, the Seagull is a pretty – it's only a 4,600 foot lateral. It's really target testing and modification. As we continue to understand the hydrocarbon system, we're figuring out exactly where to land those wells and how to modify our fracs. And, Tim, do you have any color you want to add? Timothy J. Sullivan - Executive Vice President – Operations Support: Yes, really, the results of the Seagull well incorporate the integration of the team, and that really takes into consideration the 3-D and targeting fracture intensity there. And it's had tremendous results and I think it's repeatable as we've just recently put a well online, or Bluejay 103, that's flowing over 2000 barrels of oil per day, very similar geologic environment.

Your next question will come from the line of Doug Leggate with Bank of America. Please go ahead.

Thank you. Guys, I don't know if you could give this or not, but Egypt and the North Sea are your big cash cows in the portfolio. I wonder if you could give us an idea of what the operating cash and free cash flows out of those assets this quarter? Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yeah, Doug. We typically don't give that type of information down to the asset level. You obviously can figure that out at the end of each year. We are thinking about some – potentially expanding our – both our guidance and our detailed reporting around things like that for the future. But we're not ready to start doing that at this point in time. I can tell you that both of those asset areas this year will be cash flow generators for us.

Were they free cash flow positive in Q1? Stephen J. Riney - Chief Financial Officer & Executive Vice President: Not going to say whether they were or not. I can say that they will be for the year, that's for sure.

Your next question comes from the line of John Freeman with Raymond James. Please go ahead. John A. Freeman - Raymond James & Associates, Inc.: Good afternoon. On the Bluejay 103H that you just mentioned came on at over 2,000-barrels a day and also set a record and completed at $3.5 million, what were the specs on that well, like the lateral length? John J. Christmann - President, Chief Executive Officer & Director: That's just a single mile lateral. John A. Freeman - Raymond James & Associates, Inc.: And then where specifically is it located in your position? John J. Christmann - President, Chief Executive Officer & Director: It's our target one in the Third Bone Springs interval.

Your next question comes from the line of Paul Sankey with Wolfe Research. Please go ahead.

Yes, apologies, I'm going to keep going on the Bluejay and the Seagull, if I could. But if we put it in the wider context, you talked about design and efficiency gaining you in costs considerably since 2014. Has there been a step change there or is that a linear progression? And further to that, you mentioned the results at Bluejay were very strong. I was going to ask you if they were less than the Seagull, where you had such strong volume performance. Can we go – I guess what I'm driving at with the linear and the step is can we actually go a whole lot lower than that $3.5 million? Does it have a similar split between drilling and completion that we typically see? How much more do you think we can get out for less money? Is it a question of more volume, or can you actually even go less money? Thanks. John J. Christmann - President, Chief Executive Officer & Director: Yes. I mean, when you look at – we put in the supplement a good bar chart that shows the steps in terms of how the costs have come down really over the last five or six quarters. So I continue to be amazed at what we can do. Obviously, there are certain things that, as you get lower and lower, it gets harder to keep having those sorts of reductions. I mean, I think $3.5 million for a mile-long lateral in the Delaware is pretty strong, especially with the type of productivity the well's come on. It tells you we're not cutting corners on the completion or anything like that. So, yeah, we'll clearly keep driving. The guys will tell you they can keep taking off small chunks, but how far – how much further can we go, I think that will be a function – we'll just have to wait and see what we can do. In terms of performance, it's going to end up being pretty similar to the Seagull. The 2,800 BOEs a day included gas, the 2,000. As Tim referenced, it's very early on the Bluejay, and that's just on the oil side. So I think it's going to be a pretty similar well before it's all said and done. But we'll have to wait and see.

Your next question comes from the line of Charles Meade with Johnson Rice. Please go ahead. Charles A. Meade - Johnson Rice & Co. LLC: Good afternoon, John, and to the rest of your team there. I'd like to go back to the question of the possible acceleration in the back half of 2016. I know you spent a lot of your prepared comments on this and you've already had a couple questions in Q&A here, but number of other companies have spoken about this decision, this kind of a – maybe being in two pieces. The first question is do you have the capacity to accelerate? And then the second would be do you have the appetite to or do you have the returns to? And I wonder if you could speak more to that second piece. I understand that you want to keep staying cash flow neutral on the year, but in this current environment, is $45 enough for – you would have the cash flow – but is it enough on the returns front on these plays to really entice you to up your rig count? John J. Christmann - President, Chief Executive Officer & Director: Charles, a couple of things. Number one, we've seen tremendous progress and now we've got a lot of wells with returns actually full cycle, fully burdened, look pretty darn good. So I think we've got plenty of inventory. If you go back a year ago, everybody started ramping up and adding rigs quickly and expecting prices to hold. And unfortunately, those that outspent significantly in anticipation of what I'll call visibility into more flat, longer sustainable price environment, ended up having to go back to the debt markets or the equity markets, that sort of thing. So I mean we're going…

Your next question will come from the line of Michael Hall with Heikkinen Energy Advisors. Please go ahead.

Yes. Thanks. If I could, just a couple accounting-related questions for me. First, on Egypt, am I understanding it right, you basically had, on a recurring net income basis, about a $17 million loss, if I just back off the $54 million write down from the $71 million non-controlling interest? I'm just talking about the non-controlling interest side, that $17 million. And if that's right, I'm just trying to think through, what price level is that business net income breakeven? Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yes. Sorry, Michael. You're looking at what number for Egypt?

So, on the non-controlling interest side, the $71 million loss that was backed out, if you just adjust that for the $54 million write down in the adjustment, you get $17 million loss on that third of the business. Is that the right way to think about it? And if so, what price level brings net income to breakeven? Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yes. If you corrected that for the Egypt's non-controlling portion of the impairment in Egypt, you said.

Right. Exactly, yes. Is that the right way to think about it? Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yes, so – and the question is what would it take to do what?

My question is, number one, is that right way to think about if that's the net income on that third of the business? And then number two, what price level would be required to drive a net income breakeven for that business? Stephen J. Riney - Chief Financial Officer & Executive Vice President: Yeah, okay. So I think that for the quarter, yes, that's a reasonable way to think about that. I think when you reduce operating results down to a single quarter, you're going to get lots of noise in that quarter. But for example I think we had a significant piece of noise on the revenue side in Egypt for the quarter to the tune of about $8 million on gas revenue side that we're in some dispute on, and we're looking at. I think that obviously the issue with the price that would breakeven, so how much lower can the price go to breakeven from an accounting perspective. I think that's obviously very difficult to do because of the cost sharing arrangement in the PSC. So I'm not really prepared to say how far down prices would have to go in order for that number to become zero. But suffice it to say, it would have to go down a bit more from where it is in the first quarter in order for that to happen.

Yes, that's what I was getting at, that's helpful. Maybe I'll follow up more offline. And then the other piece was just on the North Sea, again accounting-related, but the $27 million PRT refund, was that adjusted out of net income in that $55 million tax adjustment, or is that still in the net income line? Is that expected to recur, or any more of those coming this year? Stephen J. Riney - Chief Financial Officer & Executive Vice President: No, it's not adjusted out of net income. It is a PRT refund because of, there are some costs related to prior year items. That's not an unusual type of thing to happen in the North Sea. We have that happen on a regular basis, we never adjust that out, whether it's a benefit to us or a detriment to us. We don't adjust it out for calculating adjusted earnings or adjusted EBITDA. It is – it's a large item this quarter relative to typical PRT simply because PRT is now approaching zero with the price environment that we have. But it's not – if you go back two or three years, you'll find PRT expense of nearly $300 million in some years.

Your next question will come from the line of Michael Rowe with Tudor Pickering Holt. Please go ahead. Michael J. Rowe - Tudor, Pickering, Holt & Co. Securities, Inc.: Thanks. Good afternoon. First question I have is on cash flow. You highlighted in your prepared remarks there was a big swing in working capital during the first quarter, as well as an excess of cash CapEx over accrual CapEx. So just to confirm, we should expect those items to reverse throughout the year so that you don't have any net debt additions, all else equal, according to the budget? Stephen J. Riney - Chief Financial Officer & Executive Vice President: That's right. So if we assume we don't pay down any debt this year, we expect to end closer to the $1.5 billion of cash where we started. We had about, a little over $450 million of cash consumption in the first quarter. Roughly two thirds of that, if you just take, if you look at first quarter actual versus the plan that it would take for the year to get to cash flow neutrality, of that $450 million, and about two thirds of that is because we built working capital in the first quarter and we had practically zero sale proceeds in the first quarter. We expect both of those items to be cash flow generators for us by the time we get to the end of the year. So, about two thirds of the $450 million is simply because of that. We had a pretty significant build in working capital during the quarter. The other one-third of the $450 million would be split roughly 50-50 between the overspend on capital in the year, versus kind of an average quarterly run rate for the year and the shortfall on…

Your next question will come from the line of Richard Tullis with Capital One Securities. Please go ahead.

Hi. Thanks, John, and thanks for taking a call at this late hour. I'll be quick. Obviously, you've had some nice well results over the past several quarters in that Pecos Bend area. Roughly how much surface acres do you have there and how many estimated drilling locations, given the various targets, at this point? John J. Christmann - President, Chief Executive Officer & Director: The Pecos Bend area is a very small area that we've got, and we've been pretty active there. I think it shows you, it's a block of acreage that's less than 10,000 acres. And quite frankly, the other nice thing there is we have a high mineral interest. So we don't have many royalty owners we have to share anything with. But it just shows you the depth and the number of wells and so forth that we can continue to drill. We've got a good, I would say, probably 40 to 50 wells there easily that even the one zone would add.

Okay. And just staying that same theme, looking at some of your best areas in the Permian, I guess that would be Pecos Bend, Barnhart, Deadwood, Wild Flower, how much acreage in total is made up from all of those different areas? John J. Christmann - President, Chief Executive Officer & Director: Well, I mean, the best thing I can do is point you back to our November 2014 Analyst Day where we broke the areas down. I mean, we've got 3.3 million gross acres in the Permian. We've got about 1.6 million to 1.7 million net. The four-county area we showed in the southern Midland Basin, we've got over 200,000 acres. That did not really include even the Audrian County stuff. So the best place to go look at those acreage counts would be going back to our analysts update from late 2014.

At this time I will turn the conference back over to management for any closing remarks.

Thank you, Regina. Well, that's going to conclude the call the day. We've reached the top of the hour. We look forward to speaking with everybody on next quarter's call. If you have any follow ups, please call Christopher Cortez or myself. Thanks.

Ladies and gentlemen, this concludes today's conference. Thank you all for joining, and you may now disconnect.