Item 1.01
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Entry into a Material Definitive Agreement.
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On March 14, 2018, Apache Corporation,
a Delaware corporation (Apache), entered into a Credit Agreement among Apache, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent,
Citibank, N.A., Royal Bank of Canada, HSBC Bank USA, National Association, The Bank of Tokyo-Mitsubishi UFJ, Ltd, Wells Fargo Bank, National Association, Goldman Sachs Bank USA, The Toronto-Dominion Bank, New York Branch, and Mizuho Bank, Ltd., as
Co-Documentation
Agents (the Credit Agreement). In connection with entry into the Credit Agreement, Apache elected to terminate US$3.5 billion and £900.0 million in commitments under two
syndicated credit facilities described below (the Former Facilities).
The Credit Agreement provides for a five-year revolving
credit facility and aggregate commitments of US$4.0 billion (including a letter of credit subfacility of up to US$3.0 billion, of which US$2.08 billion currently is committed), with rights to increase commitments up to an aggregate
US$5.0 billion. Apache may increase commitments by adding additional lenders or by allowing one or more existing lenders to increase their commitments by up to an aggregate US$1.0 billion.
Borrowings under the Credit Agreement may be made only in US dollars. Letters of credit may be denominated in US dollars, pounds sterling,
Canadian dollars, and any other foreign currency consented to by an issuing bank. The aggregate amount of borrowings and the US dollar equivalent of undrawn letters of credit and unreimbursed drawings under issued letters of credit may not exceed
total commitments at any given time.
The Credit Agreement is for general corporate purposes. Committed borrowing capacity fully supports
Apaches $3.5 billion commercial paper program. Letters of credit are available for security needs, including in respect of abandonment obligations assumed in various North Sea acquisitions. As of March 14, 2018, letters of credit
aggregating approximately £129.1 million originally issued under one of the Former Facilities are deemed issued and outstanding under the Credit Agreement.
All amounts outstanding under the Credit Agreement are due March 14, 2023, provided that Apache may twice request that the maturity date
be extended for successive
one-year
periods expiring one year from the then scheduled maturity date. No lender is obligated to consent to any extension. Apache can replace a
non-consenting
lender and its commitment or repay a
non-consenting
lender and let its commitment expire upon scheduled maturity. Apache can proceed with the extension as
to remaining commitments if lenders having at least 51% of total commitments have agreed to it.
All borrowings under the Credit Agreement bear interest at one of the following rate options, as
selected by the borrower:
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A base rate plus a margin, with the (i) base rate being a rate per annum equal to the greatest of (a) the applicable prime rate, (b) the greater of the applicable federal funds rate and overnight bank
funding rate, plus 0.50%, and (c) an adjusted London Interbank Offered Rate (LIBOR) for a
one-month
interest period plus 1.0%, and (ii) margin (Base Rate Margin) being a rate
per annum that varies from 0.0% to 0.50% based on the rating for Apaches senior, unsecured,
non-credit
enhanced, long-term indebtedness for borrowed money (Long-Term Debt Rating); or
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LIBOR plus a margin (LIBOR Margin) at a rate per annum varying from 0.90% to 1.50% based on the Long-Term Debt Rating. For LIBOR-based interest rates, Apache may select an interest period with respect to any
currency of one, two, three or six months, or one week.
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The Credit Agreement also requires the borrower to pay quarterly a
facility fee equal to a per annum rate that varies from 0.10% to 0.25% of the full amount of the commitments based on the Long-Term Debt Rating.
Currently, the Base Rate Margin is 0.075%, the LIBOR Margin is 1.075%, and the facility fee is 0.175%.
A commission is payable quarterly to lenders on the face amount of each outstanding letter of credit at a per annum rate equal to the LIBOR
Margin then in effect. Customary letter of credit fronting fees and other charges are payable to issuing banks.
Borrowers under the
Credit Agreement may include Apache and certain subsidiaries organized under the laws of, resident of, or domiciled in, the United States, Canada, England and Wales, the United Kingdom, or the Cayman Islands.
Each borrower may borrow, prepay, and reborrow loans and obtain letters of credit, and Apache may obtain letters of credit for the account its
subsidiaries, in each case subject to representations and warranties, covenants, and events of default substantially similar to those in the Former Facilities. The Credit Agreements negative covenants continue to restrict the ability of Apache
and its subsidiaries to create liens securing debt on hydrocarbon-related assets, subject to certain exceptions, which now include exceptions for (i) liens securing debt incurred to finance the acquisition, construction, improvement, or capital
lease of assets, provided that such debt, when incurred, does not exceed the subject purchase price and costs, as applicable, and related expenses, and (ii) liens on assets if debt secured thereby does not exceed 15% of Apaches
consolidated net tangible assets, or approximately $2.97 billion as of December 31, 2017.
In connection with entry into the Credit Agreement, Apache elected to terminate effective
March 14, 2018 100% of the commitments under the Former Facilities as follows:
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US$3.5 billion of commitments under the Credit Agreement, dated as of June 4, 2015, among Apache and the lenders and agents party thereto, as amended; and
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£900.0 million of commitments under the Credit Agreement, dated as of February 22, 2016, among Apache and the lenders, issuing banks, and agents party thereto. Letters of credit aggregating approximately
£129.1 million which had been issued under this facility and remained outstanding as of March 14, 2018 are deemed issued and outstanding under the new Credit Agreement.
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The foregoing summary of the Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full
text of the Credit Agreement, a copy of which is filed as Exhibit 10.1 to this report and incorporated herein by reference.
The Credit
Agreement has been filed with this report to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about Apache. Representations, warranties, and covenants in the
Credit Agreement were made only for purposes of the Credit Agreement, were solely for the benefit of the parties to the Credit Agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by
confidential disclosures exchanged between the parties in connection with the execution of the Credit Agreement. Representations and warranties in the Credit Agreement may have been made as of specific dates and for purposes of allocating
contractual risk between the parties instead of establishing matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party
beneficiaries under the Credit Agreement and should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Apache or any of its subsidiaries or
affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of a Credit Agreement, which subsequent information may or may not be fully reflected in Apaches public
disclosures.