Apache Corp. (NYSE:APA)

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Apache Corp., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Deferred income	20)	—)	153)	33)	89)
U.S. and state net operating loss carryforwards	329)	1,333)	900)	932)	236)
Foreign net operating loss carryforwards	1,507)	366)	156)	61)	55)
Tax credits and other tax incentives	82)	42)	66)	78)	66)
Foreign tax credit carryforwards	2,090)	—)	—)	—)	—)
Accrued expenses and liabilities	136)	68)	162)	2)	90)
Asset retirement obligation	1,037)	1,202)	1,231)	1,677)	—)
Property and equipment	3,880)	—)	—)	—)	—)
Deferred tax assets	9,081)	3,011)	2,668)	2,783)	536)
Valuation allowance	(6,530)	(1,069)	(651)	(419)	(60)
Net deferred tax assets	2,551)	1,942)	2,017)	2,364)	476)
Other	(1)	(19)	(29)	(23)	(21)
Deferred income	(140)	(24)	—)	—)	—)
Investment in foreign subsidiaries	(1,903)	(1,654)	—)	—)	—)
Property and equipment	(1,574)	(8,986)	(10,224)	(10,213)	(7,443)
Deferred tax liabilities	(3,618)	(10,683)	(10,253)	(10,236)	(7,464)
Net deferred income tax asset (liability)	(1,067)	(8,741)	(8,236)	(7,872)	(6,988)

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

The net deferred income tax position transitioned from a substantial liability of 6,988 million US$ in 2011 to a significantly reduced liability of 1,067 million US$ by 2015. This evolution was characterized by a period of increasing liabilities through 2014, followed by a sharp correction and restructuring of both deferred tax assets and liabilities in 2015.

Deferred Tax Asset Growth and Valuation: Gross deferred tax assets experienced an exponential increase, rising from 536 million US$ in 2011 to 9,081 million US$ in 2015. This surge was primarily driven by the emergence of foreign tax credit carryforwards of 2,090 million US$ and property and equipment assets of 3,880 million US$ in the final year. Simultaneously, the valuation allowance expanded aggressively from 60 million US$ in 2011 to 6,530 million US$ in 2015, indicating a significant increase in the company's assessment of the risk that these assets may not be fully realized.
Net Operating Loss (NOL) Trends: A divergence is observed between domestic and foreign net operating loss carryforwards. U.S. and state NOLs grew steadily to a peak of 1,333 million US$ in 2014 before dropping sharply to 329 million US$ in 2015. Conversely, foreign NOL carryforwards exhibited consistent growth, increasing from 55 million US$ in 2011 to 1,507 million US$ in 2015, shifting the weight of tax losses toward international operations.
Deferred Tax Liability Dynamics: Deferred tax liabilities reached a peak of 10,683 million US$ in 2014, largely dominated by property and equipment liabilities which stood at 8,986 million US$ that year. However, 2015 marked a drastic reversal, with total deferred tax liabilities falling to 3,618 million US$. This reduction was primarily due to a collapse in property and equipment liabilities, which fell to 1,574 million US$, partially offset by the growth of liabilities related to investments in foreign subsidiaries, which reached 1,903 million US$.
Net Position Analysis: The net deferred tax liability trended downward from 2011 to 2014, reaching its maximum deficit of 8,741 million US$. The subsequent shift in 2015 suggests a major revaluation or structural change in the balance sheet, as the net liability was reduced by approximately 87% in a single year, moving the company closer to a neutral tax position.

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Apache Corp., deferred tax assets and liabilities, classification

US$ in millions

	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Current deferred tax asset	—)	769)	134)	—)	—)
Noncurrent deferred tax asset (included in Deferred charges and other)	5)	17)	33)	—)	—)
Current deferred tax liability (included in Other current liabilities)	—)	28)	39)	—)	—)
Noncurrent deferred tax liability	1,072)	9,499)	8,364)	8,024)	7,197)

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

The financial data indicates a significant shift in the deferred tax position between 2011 and 2015, characterized by a prolonged increase in long-term obligations followed by a substantial reduction in the final year of the period.

Noncurrent Deferred Tax Liabilities: A consistent upward trend is observed from 2011 to 2014, with liabilities increasing from 7,197 million US$ to a peak of 9,499 million US$. However, this trend reversed sharply in 2015, where the balance decreased to 1,072 million US$, representing a reduction of approximately 88.7% in a single year.
Deferred Tax Assets: Current deferred tax assets emerged in 2013 at 134 million US$ and experienced a significant surge to 769 million US$ by 2014. In contrast, noncurrent deferred tax assets exhibited a steady decline during the latter part of the period, decreasing from 33 million US$ in 2013 to 5 million US$ by 2015.
Current Deferred Tax Liabilities: Current deferred tax liabilities remained relatively immaterial compared to noncurrent obligations. A modest decrease was noted between 2013 and 2014, moving from 39 million US$ to 28 million US$, before the balance was no longer reported in 2015.
Overall Tax Position Trend: The net deferred tax position was heavily weighted toward noncurrent liabilities throughout the majority of the analyzed period. The dramatic collapse of the noncurrent deferred tax liability in 2015 suggests a major accounting reclassification, a valuation allowance adjustment, or a significant realization of tax benefits that fundamentally altered the balance sheet's tax profile.

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Apache Corp., Financial Data: Reported vs. Adjusted

Apache Corp., adjustments to financial statements

US$ in millions

	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Adjustment to Current Assets
Current assets (as reported)	3,752)	6,415)	6,366)	4,962)	4,803)
Less: Current deferred tax assets, net	—)	769)	134)	—)	—)
Current assets (adjusted)	3,752)	5,646)	6,232)	4,962)	4,803)
Adjustment to Total Assets
Total assets (as reported)	18,842)	55,952)	61,637)	60,737)	52,051)
Less: Current deferred tax assets, net	—)	769)	134)	—)	—)
Less: Noncurrent deferred tax assets, net	5)	17)	33)	—)	—)
Total assets (adjusted)	18,837)	55,166)	61,470)	60,737)	52,051)
Adjustment to Current Liabilities
Current liabilities (as reported)	1,841)	3,664)	4,700)	5,536)	4,963)
Less: Current deferred tax liabilities, net	—)	28)	39)	—)	—)
Current liabilities (adjusted)	1,841)	3,636)	4,661)	5,536)	4,963)
Adjustment to Total Liabilities
Total liabilities (as reported)	14,614)	27,815)	26,244)	29,406)	23,058)
Less: Current deferred tax liabilities, net	—)	28)	39)	—)	—)
Less: Noncurrent deferred tax liabilities, net	1,072)	9,499)	8,364)	8,024)	7,197)
Total liabilities (adjusted)	13,542)	18,288)	17,841)	21,382)	15,861)
Adjustment to Total Apache Shareholders’ Equity
Total Apache shareholders’ equity (as reported)	2,566)	25,937)	33,396)	31,331)	28,993)
Less: Net deferred tax assets (liabilities)	(1,067)	(8,741)	(8,236)	(7,872)	(6,988)
Total Apache shareholders’ equity (adjusted)	3,633)	34,678)	41,632)	39,203)	35,981)
Adjustment to Net Income (loss) Attributable To Apache Shareholders
Net income (loss) attributable to Apache shareholders (as reported)	(23,119)	(5,403)	2,232)	2,001)	4,584)
Add: Deferred income tax expense (benefit)	(5,778)	495)	263)	677)	1,246)
Net income (loss) attributable to Apache shareholders (adjusted)	(28,897)	(4,908)	2,495)	2,678)	5,830)

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

The financial data indicates a significant divergence between reported and adjusted figures, primarily driven by the removal of deferred tax accounts. This adjustment consistently results in a reduction of total liabilities and a corresponding increase in shareholders' equity across the observed period from 2011 to 2015.

Asset Trends and Valuation: Reported and adjusted current assets remained identical from 2011 to 2012, with a divergence appearing in 2013 and 2014 where adjusted values were lower. Total assets exhibited growth from 2011 to 2013, peaking at approximately 61.6 billion USD, followed by a precipitous decline in 2015, where total assets fell to approximately 18.8 billion USD.
Liability Adjustments: A substantial gap exists between reported and adjusted total liabilities throughout the entire period. In 2011, adjusted total liabilities were approximately 7.2 billion USD lower than reported liabilities. This trend of significant reduction continued through 2014, suggesting that a large portion of the reported liabilities consisted of deferred tax obligations. By 2015, while the gap narrowed in absolute terms, adjusted liabilities remained lower than reported figures.
Shareholders' Equity Impact: The removal of deferred taxes resulted in an upward adjustment of shareholders' equity. In 2011, adjusted equity was approximately 7 billion USD higher than reported equity. This premium persisted through 2014. However, a severe erosion of equity is observed by 2015, with reported equity falling to 2.566 billion USD and adjusted equity to 3.633 billion USD, representing a massive decline from the 2013 peak.
Net Income Volatility: Profitability trends show a sharp reversal. From 2011 to 2013, the company maintained positive net income, with adjusted figures generally exceeding reported figures. A transition to net losses occurred in 2014, which accelerated drastically in 2015. In the final year, the adjusted net loss of 28.897 billion USD was significantly more severe than the reported net loss of 23.119 billion USD, indicating that the tax adjustments exacerbated the reported losses during the period of financial decline.

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Apache Corp., Financial Ratios: Reported vs. Adjusted

Apache Corp., adjusted financial ratios

	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Current Ratio
Reported current ratio	2.04	1.75	1.35	0.90	0.97
Adjusted current ratio	2.04	1.55	1.34	0.90	0.97
Net Profit Margin
Reported net profit margin	-362.20%	-39.30%	13.61%	11.81%	27.27%
Adjusted net profit margin	-452.72%	-35.70%	15.21%	15.80%	34.68%
Total Asset Turnover
Reported total asset turnover	0.34	0.25	0.27	0.28	0.32
Adjusted total asset turnover	0.34	0.25	0.27	0.28	0.32
Financial Leverage
Reported financial leverage	7.34	2.16	1.85	1.94	1.80
Adjusted financial leverage	5.18	1.59	1.48	1.55	1.45
Return on Equity (ROE)
Reported ROE	-900.97%	-20.83%	6.68%	6.39%	15.81%
Adjusted ROE	-795.40%	-14.15%	5.99%	6.83%	16.20%
Return on Assets (ROA)
Reported ROA	-122.70%	-9.66%	3.62%	3.29%	8.81%
Adjusted ROA	-153.41%	-8.90%	4.06%	4.41%	11.20%

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

The financial performance from 2011 to 2015 is characterized by a transition from steady profitability to severe losses, with a notable divergence appearing between reported and adjusted metrics following the removal of deferred taxes. While liquidity and asset efficiency remained largely unaffected by these adjustments, profitability and solvency ratios exhibited significant sensitivity to deferred tax accounting.

Liquidity and Operational Efficiency: The current ratio showed a consistent upward trend, improving from 0.97 in 2011 to 2.04 in 2015. The minimal variance between reported and adjusted current ratios suggests that deferred tax items have a negligible impact on the assessment of short-term liquidity. Similarly, total asset turnover remained relatively stable, fluctuating between 0.25 and 0.34 without any difference between reported and adjusted figures, indicating that tax adjustments do not influence the measurement of asset productivity.
Profitability and Returns: Net profit margins underwent a drastic collapse, falling from a reported 27.27% in 2011 to -362.20% in 2015. The adjusted net profit margin was higher than the reported margin during profitable years (2011–2013) but became significantly more negative by 2015 (-452.72%), suggesting that the removal of deferred taxes amplifies the volatility of net earnings. This pattern is reflected in the Return on Equity (ROE) and Return on Assets (ROA), both of which shifted from positive territory in 2011 to extreme negative values by 2015, with adjusted ROA showing higher initial returns but deeper eventual declines.
Financial Leverage and Solvency: A marked discrepancy is observed in financial leverage, particularly in the latter years of the period. Reported financial leverage increased from 1.80 in 2011 to a peak of 7.34 in 2015. However, the adjusted financial leverage remained considerably lower throughout the period, ending at 5.18 in 2015. This divergence indicates that deferred tax liabilities contribute substantially to the reported leverage, and their exclusion results in a significant reduction of the perceived debt-to-equity risk.

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	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Current assets	3,752)	6,415)	6,366)	4,962)	4,803)
Current liabilities	1,841)	3,664)	4,700)	5,536)	4,963)
Liquidity Ratio
Current ratio¹	2.04	1.75	1.35	0.90	0.97
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets	3,752)	5,646)	6,232)	4,962)	4,803)
Adjusted current liabilities	1,841)	3,636)	4,661)	5,536)	4,963)
Liquidity Ratio
Adjusted current ratio²	2.04	1.55	1.34	0.90	0.97

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 3,752 ÷ 1,841 = 2.04

² Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= 3,752 ÷ 1,841 = 2.04

The liquidity position of the entity exhibited a significant strengthening trend between 2011 and 2015. After an initial period of liquidity pressure where current liabilities exceeded current assets, the organization achieved a substantial improvement in its short-term solvency, moving from a current ratio below 1.0 to over 2.0.

Current Asset Trends: Reported current assets grew steadily from 4,803 million USD in 2011 to a peak of 6,415 million USD in 2014. However, a sharp contraction occurred in 2015, with assets declining to 3,752 million USD. Adjusted current assets followed a similar trajectory but showed lower values in 2013 and 2014 compared to reported figures, indicating specific exclusions during those periods.
Current Liability Trends: Current liabilities peaked in 2012 at 5,536 million USD and subsequently entered a period of consistent and aggressive decline. By December 31, 2015, liabilities had been reduced to 1,841 million USD. This sustained reduction in short-term obligations served as the primary driver for the improvement in liquidity ratios, offsetting the decline in assets observed in the final year.
Analysis of the Adjusted Current Ratio: The adjusted current ratio demonstrates a consistent upward trend from 0.90 in 2012 to 2.04 in 2015. While the reported and adjusted ratios were identical in 2011, 2012, and 2015, a divergence appeared in 2013 and 2014. In 2014, the adjusted current ratio of 1.55 was notably lower than the reported ratio of 1.75, suggesting that adjustments to current assets and liabilities during that period resulted in a more conservative assessment of liquidity.

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	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Apache shareholders	(23,119)	(5,403)	2,232)	2,001)	4,584)
Oil and gas production revenues	6,383)	13,749)	16,402)	16,947)	16,810)
Profitability Ratio
Net profit margin¹	-362.20%	-39.30%	13.61%	11.81%	27.27%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Apache shareholders	(28,897)	(4,908)	2,495)	2,678)	5,830)
Oil and gas production revenues	6,383)	13,749)	16,402)	16,947)	16,810)
Profitability Ratio
Adjusted net profit margin²	-452.72%	-35.70%	15.21%	15.80%	34.68%

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Net profit margin = 100 × Net income (loss) attributable to Apache shareholders ÷ Oil and gas production revenues
= 100 × -23,119 ÷ 6,383 = -362.20%

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to Apache shareholders ÷ Oil and gas production revenues
= 100 × -28,897 ÷ 6,383 = -452.72%

The financial trajectory of Apache Corp. between 2011 and 2015 is characterized by a transition from strong profitability to extreme net losses. A systematic decline in both reported and adjusted metrics is evident, with a critical inflection point occurring after 2013.

Net Income Performance: Reported net income experienced a significant contraction from a peak of US$ 4,584 million in 2011 to US$ 2,001 million in 2012, with a slight recovery to US$ 2,232 million in 2013. The company then entered a period of severe deficit, reporting a loss of US$ 5,403 million in 2014 and a substantial loss of US$ 23,119 million in 2015.
Adjusted Net Income Trends: Adjusted net income figures were higher than reported figures during the period of profitability, starting at US$ 5,830 million in 2011. However, during the period of decline, the adjusted figures exacerbated the perceived losses. By 2015, the adjusted net loss reached US$ 28,897 million, which is significantly deeper than the reported loss for the same period.
Reported Net Profit Margin Analysis: The reported net profit margin showed a downward trend from 27.27% in 2011 to 13.61% in 2013. This shifted to a negative margin of -39.30% in 2014 and collapsed further to -362.20% in 2015, indicating that the net losses in the final year were several times the magnitude of the company's revenue.
Adjusted Net Profit Margin Evaluation: The adjusted net profit margin followed a similar pattern of deterioration, starting at 34.68% in 2011 and falling to 15.21% in 2013. In the final two years, the adjusted margin was consistently more negative than the reported margin, reaching -452.72% in 2015. The increasing divergence between reported and adjusted margins suggests that the items excluded from reported net income had a profoundly negative impact on the company's adjusted profitability ratios during the downturn.

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	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Oil and gas production revenues	6,383)	13,749)	16,402)	16,947)	16,810)
Total assets	18,842)	55,952)	61,637)	60,737)	52,051)
Activity Ratio
Total asset turnover¹	0.34	0.25	0.27	0.28	0.32
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Oil and gas production revenues	6,383)	13,749)	16,402)	16,947)	16,810)
Adjusted total assets	18,837)	55,166)	61,470)	60,737)	52,051)
Activity Ratio
Adjusted total asset turnover²	0.34	0.25	0.27	0.28	0.32

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Total asset turnover = Oil and gas production revenues ÷ Total assets
= 6,383 ÷ 18,842 = 0.34

² Adjusted total asset turnover = Oil and gas production revenues ÷ Adjusted total assets
= 6,383 ÷ 18,837 = 0.34

The analysis of asset utilization and turnover trends reveals a period of expansion and gradual efficiency decline followed by a sharp contraction in the balance sheet. Between 2011 and 2014, the asset base increased and then stabilized, while the asset turnover ratio consistently decreased, indicating a diminishing return on assets employed.

Asset Base Evolution: Reported total assets grew from US$ 52,051 million in 2011 to a peak of US$ 61,637 million in 2013. This was followed by a moderate reduction to US$ 55,952 million in 2014 and a drastic contraction to US$ 18,842 million by December 31, 2015. Adjusted total assets mirrored this trend closely, with minimal variance from reported figures, suggesting that adjustments for non-core or non-recurring items had a negligible impact on the overall asset trajectory.
Adjusted Total Asset Turnover Trend: The adjusted total asset turnover ratio exhibited a steady decline from 0.32 in 2011 to 0.25 in 2014. This downward trend suggests that for every dollar of assets, the company generated progressively less revenue over this four-year period, reflecting a decrease in operational efficiency regarding asset deployment.
Analysis of 2015 Performance: A significant reversal occurred in 2015, with the adjusted total asset turnover increasing to 0.34. This spike in the turnover ratio is primarily attributable to the substantial reduction in the asset base rather than an increase in revenue generation. The sharp drop in total assets effectively reduced the denominator of the ratio, resulting in a mathematical increase in perceived asset efficiency despite the overall contraction of the company's scale.

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	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Total assets	18,842)	55,952)	61,637)	60,737)	52,051)
Total Apache shareholders’ equity	2,566)	25,937)	33,396)	31,331)	28,993)
Solvency Ratio
Financial leverage¹	7.34	2.16	1.85	1.94	1.80
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	18,837)	55,166)	61,470)	60,737)	52,051)
Adjusted total Apache shareholders’ equity	3,633)	34,678)	41,632)	39,203)	35,981)
Solvency Ratio
Adjusted financial leverage²	5.18	1.59	1.48	1.55	1.45

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ Financial leverage = Total assets ÷ Total Apache shareholders’ equity
= 18,842 ÷ 2,566 = 7.34

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Apache shareholders’ equity
= 18,837 ÷ 3,633 = 5.18

Between 2011 and 2015, the financial structure shifted from a period of relative stability and growth to a severe contraction. From 2011 to 2013, there was a consistent increase in the asset base and shareholders' equity, which kept leverage ratios within a narrow, manageable range. However, starting in 2014, a downward trend emerged, culminating in a dramatic collapse of equity and assets in 2015, which significantly elevated the company's financial risk profile.

Asset Trends: Reported total assets increased from US$ 52,051 million in 2011 to a peak of US$ 61,637 million in 2013. Following a slight decline in 2014 to US$ 55,952 million, a precipitous drop occurred in 2015, with assets falling to US$ 18,842 million. Adjusted total assets followed a nearly identical trajectory, confirming a massive reduction in the overall scale of the balance sheet by the end of the period.
Equity Performance: Reported shareholders' equity grew steadily from US$ 28,993 million in 2011 to US$ 33,396 million in 2013. A substantial decline began in 2014, accelerating sharply in 2015 to a low of US$ 2,566 million. Adjusted equity figures were consistently higher than reported figures throughout the five-year period, peaking at US$ 41,632 million in 2013 before dropping to US$ 3,633 million in 2015, indicating that while adjustments provided a buffer, they could not offset the overall erosion of equity.
Financial Leverage Analysis: Financial leverage remained stable between 2011 and 2013, with adjusted leverage fluctuating slightly between 1.45 and 1.55. In 2014, a moderate increase to 1.59 was observed. By 2015, leverage experienced an exponential spike; reported financial leverage surged to 7.34, while adjusted financial leverage rose to 5.18. This shift reflects a critical increase in financial gearing and a significantly higher reliance on debt relative to equity.

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	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Apache shareholders	(23,119)	(5,403)	2,232)	2,001)	4,584)
Total Apache shareholders’ equity	2,566)	25,937)	33,396)	31,331)	28,993)
Profitability Ratio
ROE¹	-900.97%	-20.83%	6.68%	6.39%	15.81%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Apache shareholders	(28,897)	(4,908)	2,495)	2,678)	5,830)
Adjusted total Apache shareholders’ equity	3,633)	34,678)	41,632)	39,203)	35,981)
Profitability Ratio
Adjusted ROE²	-795.40%	-14.15%	5.99%	6.83%	16.20%

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ ROE = 100 × Net income (loss) attributable to Apache shareholders ÷ Total Apache shareholders’ equity
= 100 × -23,119 ÷ 2,566 = -900.97%

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to Apache shareholders ÷ Adjusted total Apache shareholders’ equity
= 100 × -28,897 ÷ 3,633 = -795.40%

A comprehensive analysis of the financial period from 2011 to 2015 reveals a severe deterioration in both profitability and capital stability. The company transitioned from a period of positive earnings and growing equity to a state of extreme losses and a critical reduction in shareholders' equity.

Net Income Trajectory: Adjusted net income exhibited a consistent downward trend, starting at US$ 5,830 million in 2011 and decreasing to US$ 2,495 million by 2013. This decline transitioned into significant deficits in 2014, with an adjusted loss of US$ 4,908 million, which then escalated sharply to an adjusted loss of US$ 28,897 million in 2015. Reported net income followed a nearly identical trajectory, ending the period with a loss of US$ 23,119 million.
Shareholders' Equity Erosion: Adjusted total shareholders' equity initially increased, rising from US$ 35,981 million in 2011 to a peak of US$ 41,632 million in 2013. However, this growth was reversed in 2014, with equity falling to US$ 34,678 million. By 2015, there was a catastrophic collapse in equity, with adjusted shareholders' equity plummeting to US$ 3,633 million, representing a near-total erosion of the capital base.
Return on Equity (ROE) Performance: The Adjusted ROE reflects the compounding impact of falling income and evaporating equity. The ratio began at a strong 16.20% in 2011, before dropping to 6.83% in 2012 and 5.99% in 2013. In 2014, the ROE entered negative territory at -14.15%. By 2015, the ratio reached an extreme negative value of -795.40%, driven by the combination of massive net losses and a drastically reduced equity denominator.
Comparison of Reported and Adjusted Metrics: A consistent variance is observed between reported and adjusted figures. Throughout the period, adjusted equity remained higher than reported equity. While adjusted net income was higher than reported income during the profitable years (2011-2013), the adjusted loss in 2015 was significantly more severe (US$ -28,897 million) than the reported loss (US$ -23,119 million), contributing to the divergence in the final ROE figures.

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	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Apache shareholders	(23,119)	(5,403)	2,232)	2,001)	4,584)
Total assets	18,842)	55,952)	61,637)	60,737)	52,051)
Profitability Ratio
ROA¹	-122.70%	-9.66%	3.62%	3.29%	8.81%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Apache shareholders	(28,897)	(4,908)	2,495)	2,678)	5,830)
Adjusted total assets	18,837)	55,166)	61,470)	60,737)	52,051)
Profitability Ratio
Adjusted ROA²	-153.41%	-8.90%	4.06%	4.41%	11.20%

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

2015 Calculations

¹ ROA = 100 × Net income (loss) attributable to Apache shareholders ÷ Total assets
= 100 × -23,119 ÷ 18,842 = -122.70%

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to Apache shareholders ÷ Adjusted total assets
= 100 × -28,897 ÷ 18,837 = -153.41%

A severe deterioration in financial performance is evident between 2011 and 2015, characterized by a transition from consistent profitability to substantial net losses and a precipitous contraction of the total asset base.

Net Income Trends: Positive net income was maintained from 2011 through 2013, although a downward trend was established after 2011. A sharp reversal occurred in 2014, with reported net losses reaching 5.4 billion USD. This decline accelerated dramatically in 2015, resulting in reported net losses of 23.1 billion USD and adjusted net losses of 28.9 billion USD.
Total Asset Trajectory: The asset base expanded from 52.1 billion USD in 2011 to a peak of approximately 61.6 billion USD in 2013. Following this peak, a contraction began in 2014, culminating in a drastic reduction to approximately 18.8 billion USD by December 31, 2015, indicating a significant reduction in the company's scale of operations or substantial asset write-downs.
Adjusted Return on Assets (ROA): The adjusted ROA demonstrates a consistent decline from a high of 11.20% in 2011 to 4.06% in 2013. The metric shifted to a negative return of -8.90% in 2014 and experienced a collapse to -153.41% in 2015. This extreme negative value in the final period is the result of massive adjusted net losses occurring simultaneously with a severely diminished asset base.

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