Letter from the CEO

Apache continually strives to achieve responsible and sustainable operations across its worldwide asset base spanning five continents. We empower our employees to seek innovative solutions that create value to our operations while also incorporating sustainability initiatives, including reducing greenhouse gas (GHG) emissions, protecting biodiversity in environmentally sensitive areas, providing a safe operating environment and giving back to the communities where we operate.

Among the past year’s sustainability highlights:

• Apache and partner Encana received the 2011 Environmental Performance Award from the Canadian Association of Petroleum Producers for developing infrastructure designed to reduce the environmental impact of natural gas development in British Columbia’s Horn River Basin.
• Apache employees worked safer. In an analysis of the company’s safety performance including joint venture operations over a three-year period ending in 2010, employee recordable injuries declined by 88 percent and work-restricting injuries by 90 percent.
• Apache kicked off its “Give Where We Live” program, presenting $100,000 in grants to non-profit organizations in the Lafayette / Acadiana, La. area. The popular Facebook campaign is a grassroots effort to unite Apache employees and their local communities.

At Apache, we believe increased use of natural gas should play an important role in any practical carbon policy because it emits significantly less GHG than other fossil fuels. In the United States, ample domestic supplies make natural gas the only fossil fuel than can simultaneously reduce the country’s trade imbalance and improve the environment with lower emissions.

For a growth company like Apache, reducing our absolute GHG emissions can be a challenge, but we have been successful at identifying and implementing many initiatives that both improve operations and reduce emissions across the company’s operational regions. In the North Sea and in Egypt, we replaced fuel oil with natural gas to generate power to substantially reduce costs and emissions. In Canada, Apache sequesters carbon dioxide from a coal-fired electric plant to increase oil recovery at our Midale field. In the United States, we built seven compressed natural gas (CNG) fueling stations and converted more than 246 field vehicles to operate on CNG with the goal of converting the majority of our field vehicles within five years. These and other efforts have led to a reduction in greenhouse gas emissions in 2010.

Apache is a leader in protecting biodiversity in several environmentally sensitive areas around the world, including nearly 270,000 acres of wetlands in south Louisiana that are subjected to continual coastal erosion. Apache spends considerable resources to maintain freshwater marsh habitats and ecosystems that support substantial plant, wildlife and fish populations.

Safety is not negotiable at Apache, and we demand high standards from our regular and contract employees. All workers are empowered to ensure a safe and environmentally responsible operation.

Apache gives back to the communities where we operate by providing monetary and volunteer support to hundreds of civic and philanthropic organizations. Apache supports education through the Fund for Teachers and Springboard: Educating the Future and the arts through support of the Ucross Foundation. We have donated more than two million trees to local communities across the United States.

Apache’s operations are underpinned with identifiable programs that balance exploration and production activities with environmental stewardship, safety and corporate outreach. Our employees are empowered, encouraged and committed to deliver a sustainable future.

G. Steven Farris
Chairman and CEO