Apache Oil Corporation was founded in 1954 in Minneapolis, Minnesota, by Truman Anderson, Raymond Plank and Charles Arnao working alongside six employees and backed by 41 shareholders who invested $250,000 in initial capital. The company’s name was the sum of the founders’ initials – a, p and a – with “che.” An early employee, Helen Johnson, was awarded a $25 U.S. Savings Bond for the idea. In 1955, its first wells were drilled in the Cushing Field in Cushing, Oklahoma, between Tulsa and Oklahoma City.
In 1956, Apache was one of the first firms to register a drilling program with the U.S. Securities and Exchange Commission, providing investors with the protections of SEC reporting requirements and distinguishing the young company from many of the oil patch promoters who peddled their opaque investments to less knowledgeable investors in the Twin Cities and elsewhere.
On its 30th, 40th and 50th anniversaries, Apache published corporate history books that provide a public record of the company’s evolution. In the first book, “Journey into Risk Country,” published in 1984, Raymond Plank said three concepts formed Apache’s foundation:
“First, rather than have a visiting promoter as his only contact, the investor would have the operator of the wells working directly for him, sharing an identity of earnings interest with him and providing visible, regularly recurring, accurately reported results. Second, sufficient money would be raised by us to fund such a professional approach. Finally, the risk would be spread over a number of drilling opportunities, rather than all-or-nothing deals that were being offered by promoters coming into town with only one or two drilling prospects to offer.”
Although the oil and gas business grew rapidly, state regulatory restrictions on production – prorationing – that limited profitability from operations during the late 1950s drove Apache toward diversification. The conglomerate era began with the organization of Apache Realty Corporation in 1959 and the acquisition of office buildings – including an interest in the Foshay Tower – and development of Apache Plaza, one of the nation’s first enclosed malls, and other shopping centers. Foshay Tower, a 32-story knock-off of the Washington Monument, became the location of Apache’s headquarters from early 1960s until 1984.
The company’s name was changed to Apache Corporation in 1960, signaling that more diversification was ahead: Over the next two decades, Apache also diversified into agriculture, steel, plastics, telephones, utilities, cattle and dude ranching, aerosol cans, lumber, auto supplies and other businesses – a total of 58 acquired firms.
In 1963, after building tensions over management philosophy and strategy – and executive office intrigue – Anderson left the company. Plank, who had been president, was named Apache’s chief executive officer, a post he held until 2002. The third founder, Charles Arnao, had left the firm in 1956 to pursue other interests.
Apache established its reputation as an oil explorer in Wyoming’s Powder River Basin with its first major oil discovery, the Fagerness No. 1, drilled in 1967 near the town of Recluse. The discovery flowed 1,200 barrels of oil per day from the Muddy formation, and was followed by 23 oil additional producers, two gas producers and just two dry holes.
Apache Corporation shares were listed on the New York Stock Exchange (NYSE: APA) in 1969.
Apache formed Apache Exploration Company (subsequently “Apexco”) as its oil and gas operating company in 1971. The new company provided drilling program investors with an opportunity to gain liquidity and focused management attention back to oil and gas.
With Apexco’s value exceeding the stock market value of the parent company, Apache sold Apexco in 1977 and reinvested the proceeds through a farm-in of independent producer GHK’s North Block, a valuable tract with multiple natural gas-producing formations in the Anadarko Basin of western Oklahoma and the Texas Panhandle. The value of the acreage soared when GHK founder Bobby Hefner successfully lobbied Congress to deregulate prices for natural gas produced from formations below 15,000 feet.
In 1977, with signs pointing to continued strength in oil prices, Apache began the process of selling its real estate, industrial and agricultural businesses in order to streamline the company and free up capital for investment in energy assets. The dramatic commodity price run-ups after the 1973 Arab oil embargo affirmed the decision.