AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON JANUARY 26, 2004
REGISTRATION NO. 333-107934
333-107934-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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APACHE CORPORATION
APACHE FINANCE CANADA CORPORATION
(Exact name of each registrant as specified in its charter)
DELAWARE NO. 41-0747868 1311
NOVA SCOTIA NO. 98-0216251 1311
(State or other jurisdiction of (I.R.S. Employer (Primary Standard Industrial
incorporation or organization) Identification Numbers) Classification Code Number)
ONE POST OAK CENTRAL ERIC L. HARRY
2000 POST OAK BOULEVARD, SUITE 100 2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400 HOUSTON, TEXAS 77056-4400
(713) 296-6000 (713) 296-6000
(Address, including zip code, and telephone (Name, address, including zip code, and
number, including telephone number,
area code, of registrant's principal executive including area code, of agent for service)
offices)
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COPIES TO:
RALPH K. MILLER, JR. CRAIG E. CHAPMAN
CHAMBERLAIN, HRDLICKA, WHITE, WILLIAMS & SIDLEY AUSTIN BROWN & WOOD LLP
MARTIN
1200 SMITH STREET, SUITE 1400 787 SEVENTH AVENUE
HOUSTON, TEXAS 77002-4310 NEW YORK, NEW YORK 10019
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after this registration statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON THE DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE THE SEC, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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The information in this prospectus is not complete and may be changed. We may
not consummate the exchange offer until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell or exchange these securities and it is not soliciting an offer to
acquire or exchange these securities in any jurisdiction where the offer, sale
or exchange is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 26, 2004
PROSPECTUS
$350,000,000
APACHE FINANCE CANADA CORPORATION
EXCHANGE OFFER FOR $350,000,000
4.375% NOTES DUE 2015
FULLY AND UNCONDITIONALLY GUARANTEED BY
(APACHE CORPORATION LOGO)
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Apache Canada is offering to exchange its 4.375% senior notes due 2015, or
the "exchange notes," for its currently outstanding 4.375% senior notes due
2015, or the "outstanding notes." We have fully and unconditionally guaranteed
the outstanding notes and will fully and unconditionally guarantee the exchange
notes. The exchange notes are substantially identical to the outstanding notes,
except that the exchange notes have been registered under the federal securities
laws, and specified transfer restrictions, registration rights and special
interest relating to the outstanding notes will not apply to the exchange notes.
The exchange notes will represent the same debt as the outstanding notes, and we
and Apache Canada will issue the exchange notes under the same indenture.
The principal features of the exchange offer are as follows:
- Expires 5:00 p.m., New York City time, on , 2004 unless
extended.
- Subject to customary conditions, including the condition that the
exchange offer not violate applicable law or any applicable
interpretation of the staff of the U.S. Securities and Exchange
Commission, or the "SEC."
- All outstanding notes that are validly tendered and not withdrawn will be
exchanged.
- Tenders of outstanding notes may be withdrawn any time prior to the
expiration of this exchange offer.
- The exchange of the outstanding notes for exchange notes will not be a
taxable exchange for U.S. and Canadian federal income tax purposes.
- We will not receive any cash proceeds from the exchange offer.
- Any outstanding notes not validly tendered will continue to remain
outstanding and accrue interest but will remain subject to existing
transfer restrictions.
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Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. The letter of
transmittal states that, by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for outstanding notes where
such outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. We have agreed that, for a
period of 90 days after the expiration date, as defined herein, we will make
this prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
There has not previously been any public market for the exchange notes that
will be issued in the exchange offer. We do not intend to list the exchange
notes on any national stock exchange or on the Nasdaq National Market. There can
be no assurance that an active market for such exchange notes will develop.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus is January , 2004.
TABLE OF CONTENTS
PAGE
----
About This Prospectus....................................... i
Oil and Gas Terms........................................... i
Where You Can find More Information......................... i
Cautionary Statements Regarding Forward-Looking
Statements................................................ iii
Prospectus Summary.......................................... 1
Use of Proceeds............................................. 10
Capitalization.............................................. 11
Ratios of Earnings to Fixed Charges......................... 12
The Exchange Offer.......................................... 12
Description of Notes and Guarantees......................... 23
Federal Income Tax Considerations........................... 38
Plan of Distribution........................................ 39
Legal Matters............................................... 41
Experts..................................................... 41
ABOUT THIS PROSPECTUS
In this prospectus, "Apache," "we," "us," and "our" mean Apache
Corporation, and "Apache Canada" means Apache Finance Canada Corporation. Unless
otherwise stated, the dollar amounts contained in this prospectus are presented
in U.S. dollars.
You should not assume that the information contained in, as well as any
information we filed or will file with the SEC and that is incorporated by
reference into this prospectus is accurate as of any date other than its
respective date. Our business, financial condition, results of operations and
prospects may have changed since that date.
This exchange offer is not being made to, and we will not accept surrenders
for exchange from, holders of outstanding notes in any jurisdiction in which the
exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of that jurisdiction.
OIL AND GAS TERMS
When describing natural gas:.......... Mcf = thousand cubic feet
MMbtu = million British thermal units
MMcf = million cubic feet
Bcf = billion cubic feet
When describing oil:.................. Bbl = barrel
Mbbls = thousand barrels
MMbbls = million barrels
When comparing natural gas to oil:.... 6 Mcf of gas = 1 bbl of oil equivalent
Boe = barrel of oil equivalent
Mboe = thousand barrels of oil equivalent
MMboe = million barrels of oil equivalent
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms located at
i
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms and their
copy charges.
Our common stock has been listed and traded on the New York Stock Exchange
since 1969, Nasdaq National Market since 2004, and the Chicago Stock Exchange
since 1960. Accordingly, you may inspect the information we file with the SEC at
the New York Stock Exchange, 20 Broad Street, New York, New York 10005, National
Association of Securities Dealers, Inc., 1735 K Street N.W., Washington, D.C.
20006, and at the Chicago Stock Exchange, One Financial Place, 440 S. LaSalle
Street, Chicago, Illinois 60605-1070. For more information on obtaining copies
of our public filings at the New York Stock Exchange, you should call (212)
656-5060.
We incorporate by reference the documents filed by us listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, other than information in such documents
that is deemed not to be filed, after the date of this prospectus and until this
offering is completed, or after the date of this initial registration statement
to the date of effectiveness of this registration statement:
- Annual Report on Form 10-K, as amended by Form 10-K/A, for the fiscal
year ended December 31, 2002;
- Quarterly Reports on Form 10-Q, as amended by Form 10-Q/A, for the fiscal
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003;
- Current Report on Form 8-K, filed January 12, 2004;
- Current Report on Form 8-K, filed January 8, 2004;
- Current Report on Form 8-K, filed December 22, 2003;
- Current Report on Form 8-K, filed September 30, 2003;
- Current Report on Form 8-K, filed September 18, 2003;
- Current Report on Form 8-K, filed July 14, 2003;
- Current Report on Form 8-K, filed May 16, 2003;
- Current Report on Form 8-K, filed April 17, 2003, as amended by Forms
8-K/A, filed June 16, 2003 and January 26, 2004;
- Current Report on Form 8-K, filed January 16, 2003; and
- Current Report on Form 8-K, filed January 13, 2003.
The information incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede this information. Each of these documents is available from
the SEC's web site and public reference rooms described above. Through our
website, http://www.apachecorp.com, you can access electronic copies of
documents we file with the SEC, including our annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K and any
amendments to those reports. Information on our website is not incorporated by
reference in this prospectus. Access to those electronic filings is available as
soon as practical after filing with the SEC. You may also request a copy of
those filings, excluding exhibits, at no cost by writing or telephoning Cheri L.
Peper, Corporate Secretary, at our principal executive office, which is:
Apache Corporation
2000 Post Oak Boulevard, Suite 100
Houston, Texas 77056-4400
(713) 296-6000.
IF YOU WOULD LIKE TO REQUEST ANY DOCUMENTS, PLEASE DO SO BY ,
2004, IN ORDER TO RECEIVE THEM BEFORE THE EXCHANGE OFFER EXPIRES.
ii
There are no separate financial statements of Apache Canada included or
incorporated by reference in this prospectus. We do not believe these financial
statements would be helpful because:
- Apache Canada is a wholly-owned subsidiary of Apache, which files
consolidated financial information under the Securities Exchange Act of
1934;
- the notes to the financial statements in the periodic reports that Apache
files with the SEC include condensed consolidating financial statements
for Apache, Apache Canada and other subsidiaries of Apache;
- Apache Canada does not have any independent operations other than issuing
the notes, holding shares in subsidiaries, and other necessary or
incidental activities as described in this prospectus; and
- Apache guarantees the notes of Apache Canada.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. The information on our
web site is not incorporated by reference into this prospectus. Neither Apache
nor Apache Canada has authorized anyone to provide you with different
information.
Neither Apache nor Apache Canada is making an offer of the securities
covered by this prospectus in any state where the offer is not permitted. You
should not assume that the information in this prospectus or in any other
document incorporated by reference in this prospectus is accurate as of any date
other than the date of those documents.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain statements that constitute "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.
These statements relate to future events or our future financial
performance, which involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity, performance or
achievements to be materially different from those expressed or implied by any
forward looking statements. In some cases, you can identify forward looking
statements by terminology such as "expect," "anticipate," "estimate," "intend,"
"may," "will," "could," "would," "should," "predict," "potential," "plan,"
"believe" or the negative of these terms or similar terminology.
These statements are only predictions. Actual events or results may differ
materially because of market conditions in our markets or other factors.
Moreover, we do not, nor does any other person, assume responsibility for the
accuracy and completeness of those statements. Unless otherwise required by
applicable securities laws, we disclaim any intention or obligation to update
any of the forward-looking statements after the date of this prospectus. All of
the forward-looking statements are qualified in their entirety by reference to
the factors discussed under the captions "Risk Factors" and "Management's
Discussion and Analysis of Results of Operations and Financial Condition" in our
Form 10-K for the fiscal year ended December 31, 2002 (incorporated by reference
in this prospectus), and similar sections in our subsequent filings that we
incorporated by reference in this prospectus, which describe risks and factors
that could cause results to differ materially from those projected in those
forward-looking statements.
Those risk factors may not be exhaustive. We operate in a continually
changing business environment, and new risk factors emerge from time to time. We
cannot predict these new risk factors, nor can we assess the impact, if any, of
these new risk factors on our businesses or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
projected in any forward-looking statements. Accordingly, forward-looking
statements should not be relied upon as a prediction of actual results.
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 are not applicable to Apache Canada.
iii
PROSPECTUS SUMMARY
This summary highlights selected information about us, Apache Canada and
the exchange offer. This summary is not complete and does not contain all of the
information that is important to you. You should carefully read this prospectus
and the other documents we refer to and incorporate by reference for a more
complete understanding of us and the exchange offer. In particular, we
incorporate important business and financial information in this prospectus.
APACHE CORPORATION
Apache Corporation is a Delaware corporation founded in 1954 that, directly
and through subsidiaries, explores for, acquires and develops oil and gas
reserves and produces natural gas, crude oil, condensate and natural gas
liquids. In North America, our exploration and production interests are focused
on the Gulf of Mexico, the Anadarko Basin, the Permian Basin, the Gulf Coast and
the Western Sedimentary Basin of Canada. Outside North America, we currently
have exploration and production interests offshore Western Australia, in and
offshore Egypt, in Argentina, and offshore The People's Republic of China and
the UK North Sea, and exploration interests in Poland.
Through September 30, 2003, our average daily production was:
- 208.8 Mbbls of crude oil, condensate and natural gas liquids; and
- 1,203 MMcf of natural gas.
As of September 30, 2003, our worldwide proved reserves totaled 1,567
MMboe, including:
- 821 MMbbls of crude oil, condensate and natural gas liquids; and
- 4,477 Bcf of natural gas.
STRATEGY
Our strategy is to increase our oil and gas reserves, production, cash flow
and earnings through a balanced growth program that involves:
- exploiting our existing asset base;
- acquiring properties to which we can add value; and
- investing in high-potential exploration prospects.
Exploiting Our Existing Asset Base. We seek to maximize the value of our
existing asset base by increasing production and reserves while controlling per
unit operating costs. In order to achieve these objectives, we actively examine
our operations to reduce costs, identify production enhancement initiatives such
as workovers and recompletions employing new technology, and divest marginal and
non-strategic properties.
Acquiring Properties to Which We Can Add Value. Generally, we seek to
purchase reserves at appropriate prices by avoiding auction processes where we
are competing with other buyers. Our aim is to follow each acquisition with a
cycle of reserve enhancement, property consolidation and cash flow acceleration,
thereby facilitating asset growth and debt reduction. During the past decade, we
have consistently succeeded in adding value to acquired properties through this
strategy. We acquired 254 MMboe and 213 MMboe of proved reserves for $1.3
billion and $0.9 billion in 2000 and 2001, respectively. In addition, the
acquisitions included $94 million of production, processing and transportation
facilities in 2000, and $146 million of such facilities and $197 million of
goodwill in 2001. In 2002, we acquired an estimated 49 MMboe of proved reserves
for approximately $352 million. Our 2002 acquisitions added $3 million of
production, processing and transportation facilities. For the first nine months
in 2003, we have acquired an estimated 260 MMboe of proved reserves for
approximately $1.5 billion, and we have added $5 million of production,
processing and transportation facilities. We believe that the current
1
environment is favorable for possible additional acquisitions, and we continue
to evaluate attractive opportunities. Any future acquisitions would be subject
to a number of conditions, including conditions beyond our control, and there
can be no assurance that we will enter into or actually consummate any such
transactions.
Investing In High-Potential Exploration Prospects. Our international
investments and exploration activities are a significant component of our
long-term growth strategy. They complement our North American operations, which
are more development oriented. We seek to concentrate our exploratory
investments in a select number of international areas and to become a dominant
operator in those regions. We believe that these investments, although
higher-risk, offer the potential for significant reserve additions.
A critical component in implementing our three-pronged growth strategy is
maintenance of significant financial flexibility. We are committed to preserving
a strong balance sheet and credit position to give us the foundation required to
pursue our growth initiatives.
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Our executive offices are located at 2000 Post Oak Boulevard, Suite 100,
Houston, Texas 77056, and our telephone number is (713) 296-6000.
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APACHE CANADA
Apache Canada is an unlimited liability company organized in August 1999
under the laws of Nova Scotia, Canada. Apache Canada was established to
facilitate financing of and investment in our Canadian operations and entities.
We use Apache Canada to issue debt securities, such as the outstanding notes and
the exchange notes, guaranteed by us.
The principal place of business of Apache Canada is 700 -- 9th Ave. SW,
Suite 1000, Calgary, Alberta, Canada T2P 3V4; telephone 403-261-1200.
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SUMMARY OF THE EXCHANGE OFFER
For a more complete description of the terms of the exchange offer, see
"The Exchange Offer" below in this prospectus.
The Exchange Offer............ Apache Canada is offering to exchange up to
$350,000,000 aggregate principal amount of its
4.375% Notes due 2015, which have been
registered under the Securities Act (the
"exchange notes"), for up to $350,000,000
aggregate principal amount of its outstanding
4.375% Notes due 2015, which were issued in a
private offering on May 15, 2003 (the
"outstanding notes"). Apache Canada will issue
exchange notes promptly after the expiration of
the exchange offer. The outstanding notes may
be exchanged only in integral multiples of
$1,000 principal amount.
Registration Rights........... You are entitled to exchange your outstanding
notes for freely tradeable exchange notes with
substantially identical terms. The exchange
offer will satisfy your registration rights.
After the exchange offer is complete, you will
no longer be entitled to any exchange or
registration rights with respect to your
untendered outstanding notes. Accordingly, if
you do not exchange your outstanding notes, you
will not be able to reoffer, resell or
otherwise dispose of your outstanding notes
unless you comply with the registration and
prospectus delivery requirements of the
2
Securities Act, or if an exemption from
registration under the Securities Act is
available.
Resales of the Exchange
Notes......................... Based on interpretations by the staff of the
SEC, as detailed in a series of "no-action
letters" issued to third parties, we believe
that the exchange notes issued in the exchange
offer may be offered for resale, resold or
otherwise transferred by you without compliance
with the registration and prospectus delivery
requirements of the Securities Act, provided
that:
- you are acquiring the exchange notes in the
ordinary course of your business;
- you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate
in a distribution of the exchange notes; and
- you are not an "affiliate" of ours.
If you do not meet the above criteria you will
have to comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any reoffer,
resale or other disposition of your exchange
notes. Brokers or dealers who acquired
outstanding notes directly from Apache Canada
may not rely on the staff's interpretations and
must comply with the registration and
prospectus delivery requirements of the
Securities Act, including being named as a
selling security holder, in order to resell the
outstanding notes or the exchange notes. Each
broker or dealer that receives exchange notes
for its own account in exchange for outstanding
notes that were acquired as a result of
market-making or other trading activities,
except for outstanding notes that were acquired
directly from us, must acknowledge that it will
deliver this prospectus in connection with any
sale of exchange notes.
Accrued Interest on the
Exchange Notes and Outstanding
Notes......................... The exchange notes will bear interest at the
annual rate of 4.375% from the most recent date
to which interest has been paid on the
outstanding notes or if no interest has been
paid, from the issue date of the outstanding
notes. If your outstanding notes are accepted
for exchange, then you will receive interest on
the exchange notes and not on the outstanding
notes.
Expiration Date............... 5:00 p.m., New York City time, on ,
2004, unless we extend the expiration date.
Conditions to the Exchange
Offer......................... The exchange offer is subject to customary
conditions, which may be waived by us. The
exchange offer is not conditioned upon any
minimum principal amount of outstanding notes
being tendered.
Procedures for Tendering
Outstanding Notes............. If you wish to tender outstanding notes for
exchange notes pursuant to the exchange offer,
you must transmit to JPMorgan
3
Chase Bank, who is the exchange agent, on or
prior to the expiration date:
- a properly completed and duly executed letter
of transmittal, which accompanies this
prospectus, together with your outstanding
notes and any other required documentation,
to the exchange agent at its address listed
in this prospectus and on the front cover of
the letter of transmittal; or
- a computer-generated agent's message
transmitted through The Depository Trust
Company's Automated Tender Program system and
received by the exchange agent and forming a
part of a confirmation of book-entry transfer
in which you acknowledge and agree to be
bound by the terms of the letter of
transmittal.
By executing the letter of transmittal, you
will represent to us that, among other things:
- you, or the person or entity receiving the
related exchange notes, are acquiring the
exchange notes in the ordinary course of
business;
- neither you nor any person or entity
receiving the related exchange notes is
engaging in or intends to engage in a
distribution of the exchange notes within the
meaning of the federal securities laws;
- you are not an "affiliate" of ours; and
- you are not acting on behalf of any person or
entity that could not truthfully make these
statements.
See "The Exchange Offer -- Procedures for
Tendering Outstanding Notes" and "Plan of
Distribution."
Special Procedures for
Beneficial Holders............ If you are the beneficial holder of outstanding
notes that are registered in the name of your
broker, dealer, commercial bank, trust company
or other nominee, and you wish to tender in the
exchange offer, you should contact the person
in whose name your outstanding notes are
registered promptly and instruct such person to
tender on your behalf. See "The Exchange
Offer -- Procedures for Tendering Outstanding
Notes."
Guaranteed Delivery
Procedures.................... If you wish to tender your outstanding notes
and you cannot deliver such notes, the letter
of transmittal or any other required documents
to the exchange agent before the expiration
date, you may tender your outstanding notes
according to the guaranteed delivery procedures
set forth in "The Exchange Offer -- Guaranteed
Delivery Procedures."
Withdrawal Rights............. Tenders may be withdrawn at any time before
5:00 p.m., New York City time, on the
expiration date.
Acceptance of Outstanding
Notes and Delivery of Exchange
Notes......................... Subject to specified conditions, we will accept
for exchange any and all outstanding notes
which are properly tendered in the exchange
offer before 5:00 p.m., New York City time, on
the
4
expiration date. The exchange notes will be
delivered promptly after the expiration date.
See "The Exchange Offer -- Terms of the
Exchange Offer."
Federal Income Tax
Considerations................ The exchange of outstanding notes for exchange
notes generally will not be a taxable event for
United States and Canadian federal income tax
purposes. See "Federal Income Tax
Considerations" for more information.
Use of Proceeds............... We will not receive any proceeds from the
issuance of the exchange notes.
Exchange Agent................ JPMorgan Chase Bank is serving as exchange
agent in connection with the exchange offer.
The address, telephone number and facsimile
number of the exchange agent are set forth in
"The Exchange Offer -- Exchange Agent."
Effect on Holders of
Outstanding Notes............. Any outstanding notes that remain outstanding
after this exchange offer will continue to be
subject to restrictions on their transfer.
After this exchange offer, holders of
outstanding notes will not, with limited
exceptions, have any further rights under the
exchange offer and the registration rights
agreement. Any market for outstanding notes
that are not exchanged could be adversely
affected by the conclusion of this exchange
offer.
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SUMMARY OF THE EXCHANGE NOTES
The following summary contains basic information about the exchange notes.
The following summary does not contain all the information that may be important
to you. For a more complete understanding of the exchange notes, please refer to
the section of this prospectus entitled "Description of Notes and Guarantees,"
particularly those subsections to which we have referred you.
Issuer........................ Apache Finance Canada Corporation
Exchange Notes................ $350,000,000 aggregate principal amount of
4.375% Notes due 2015, which have been
registered under the Securities Act. The terms
of the exchanges notes will be identical in all
material respects to the outstanding notes,
except that the exchange notes will not contain
language restricting their transfer, and
holders of the exchange notes generally will
not be entitled to further registration rights
under the exchange offer and the registration
rights agreement and will not be entitled to
special interest. The exchange notes issued in
the exchange offer will evidence the same debt
as the outstanding notes, which they will
replace, and both the outstanding notes and the
exchange notes are governed by the same
indenture.
Guarantee..................... The exchange notes will be irrevocably and
unconditionally guaranteed by Apache.
Maturity...................... May 15, 2015.
Interest Payment Dates........ Interest will accrue from the last date on
which interest was paid on the outstanding
notes, or if no interest has been paid on the
outstanding notes, from May 15, 2003 and will
be payable
5
semiannually on each May 15 and November 15,
beginning on the first interest payment date
after the issuance of the exchange notes. The
payment of interest on exchange notes will
constitute payment of any accrued but unpaid
interest on the outstanding notes tendered for
exchange.
Ranking....................... The exchange notes will be senior unsecured
obligations of Apache Canada and will rank
equally and ratably with all other existing and
future senior indebtedness of Apache Canada.
The exchange notes will be guaranteed on a
senior unsecured basis by Apache, which
guarantee will rank equally and ratably with
all existing and future senior indebtedness of
Apache. See "Description of Notes and
Guarantees -- Ranking of Notes and Guarantees."
Optional Make-Whole
Redemption.................... The exchange notes will be redeemable, at the
option of Apache Canada, at any time, in whole
or in part, at a redemption price equal to the
greater of (i) 100% of their principal amount
and (ii) the sum of the present values of the
remaining scheduled payments of principal and
interest thereon discounted, on a semi-annual
basis, at the treasury yield plus 15 basis
points, plus accrued interest to the date of
redemption.
Optional Tax Redemption....... If specified Canadian tax law changes require
the payment of additional amounts, Apache
Canada may redeem all, but not less than all,
of the exchange notes at the principal amount
of the notes to be redeemed, plus accrued
interest to the date of redemption.
Mandatory Offer to Repurchase
on a Change in Control........ If a change in control, as defined in the
indenture referred to below, occurs, each
holder of exchange notes may elect to require
Apache Canada to repurchase the holder's
exchange notes. If a holder makes this
election, Apache Canada must purchase the
holder's exchange notes for their principal
amount plus accrued interest to the purchase
date. See "Description of Notes and
Guarantees -- Apache Canada is Obligated to
Purchase Notes on a Change in Control."
Covenants..................... We and Apache Canada will issue the exchange
notes under the indenture dated as of November
23, 1999, among Apache, Apache Canada and
JPMorgan Chase Bank, as trustee. The indenture,
among other things, limits our ability and the
ability of Apache Canada and our other
subsidiaries, to:
- incur liens;
- engage in sale-leaseback transactions; and
- in the case of us and Apache Canada, merge or
consolidate or sell all or substantially all
of our or their assets.
These covenants are subject to important
exceptions and qualifications that are
described under "Description of Notes and
Guarantees."
6
Absence of a Public Market for
the Exchange Notes............ There is no public trading market for the
exchange notes and we do not intend to apply
for listing of the exchange notes on any
national securities exchange or for quotation
of the exchange notes on any automated dealer
quotation system. No assurances can be given as
to the liquidity of the trading market for the
exchange notes or that an active public market
for the exchange notes will develop. If an
active trading market does not develop, the
market price and liquidity of the exchange
notes may be adversely affected.
Form.......................... The exchange notes will be represented by one
or more permanent global exchange notes in
fully registered form without interest coupons,
deposited with the trustee as custodian for,
and registered in the name of, a nominee of The
Depository Trust Company, except in limited
circumstances specified in this prospectus.
7
SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA
We have provided in the tables below our selected financial and operating
data. The financial information for each of the years in the three-year period
ended December 31, 2002, and at December 31, 2000, 2001 and 2002, has been
derived from our audited financial statements. The summary consolidated
financial data for the nine months ended September 30, 2003 and 2002 was derived
from our unaudited financial statements that have been incorporated by reference
in this prospectus and, in the opinion of management, have been prepared in a
manner consistent with the audited financial statements for the three years
ended December 31, 2002. Operating resulting for the nine months ended September
30, 2003 are not necessarily indicative of results that may be expected for the
full year. All share and per-share results have been adjusted to reflect the
five percent and ten percent common stock dividends declared in 2002 and 2001,
respectively, and the two-for-one stock split declared in September 2003. You
should read the following financial information in conjunction with our
consolidated financial statements and related notes that we have incorporated by
reference in this prospectus.
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------ ---------------------------
2000(1) 2001(2) 2002 2002 2003(4)
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
INCOME STATEMENT DATA:
Total revenues(3)...... $ 2,301,978 $ 2,809,391 $ 2,559,873 $ 1,829,500 $ 3,125,506
Net income............. 713,056 723,399 554,329 373,510 860,271
Income attributable to
common stock......... 693,068 703,798 543,514 364,115 856,011
Net income per common
share:
Basic................ 2.54 2.44 1.83 1.23 2.66
Diluted.............. 2.46 2.37 1.80 1.21 2.64
Cash dividends declared
per common share..... .09 .17 .19 .15 .16
Net cash provided by
operating
activities........... 1,517,368 1,905,000 1,380,718 1,009,269 2,079,109
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital........ $ 76,673 $ 175,291 $ 234,546 $ 369,208 $ 40,035
Total assets........... 7,481,950 8,933,656 9,459,851 9,248,709 12,240,045
Long-term debt......... 2,193,258 2,244,357 2,158,815 2,163,182 2,514,118
Shareholders' equity... 3,754,640 4,418,483 4,924,280 4,761,160 6,297,085
Common shares
outstanding.......... 285,596,268 287,916,676 302,506,424 302,330,097 323,861,084
---------------
(1) Includes the results of the acquisitions of specified oil and gas properties
from Repsol, Collins & Ware, Occidental and Phillips after January 24, 2000,
June 30, 2000, August 17, 2000, and December 29, 2000, respectively.
(2) Includes the results of the acquisitions of specified oil and gas properties
from Repsol YPF and Fletcher Challenge Energy after March 22, 2001, and
March 27, 2001, respectively.
(3) As a result of the consensus on Emerging Issues Task Force Issue 00-10,
"Accounting for Shipping and Handling Fees and Costs," for the year ended
December 31, 2002, third party gathering and transportation costs have been
reported as an operating expense instead of a reduction to revenues as
previously reported. A reclassification has been made to reflect this change
for the years ended December 31, 2000 and 2001, resulting in an increase in
reported revenue and operating expense for those periods. The change has no
impact on income attributable to common stock. For 2000 and
8
2001, the reclassification resulted in an increase in reported revenue and
operating expense of $18.1 million and $32.3 million, respectively, with no
impact on income attributable to common stock.
(4) Includes the results of the acquisitions of specified oil and gas properties
from BP p.l.c. after March 13, 2003 for the Gulf of Mexico properties and
after April 2, 2003 for the U.K. North Sea properties.
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ ---------------------
2000 2001 2002 2002 2003
---------- ---------- ---------- --------- ---------
(UNAUDITED)
OPERATING DATA:
Proved reserves:
Oil (Mbbls)(1)............................. 522,473 599,388 636,765 605,122 821,368
Natural gas (Bcf).......................... 3,384 4,005 4,055 3,772 4,477
Total proved reserves (Mboe)(2).......... 1,086,418 1,266,943 1,312,538 1,233,731 1,567,477
Reserves outside North America (% of
total)................................... 20% 25% 22% 23% 28%
Reserve replacement ratio(3)............... 393% 244% 137% 65% 333%
Reserve life index (years)(4).............. 11.4 10.1 10.5 9.9 10.5
Finding and development costs per
Boe(2)(5)................................ $ 5.65 $ 5.64 $ 7.04 $ 10.85 $ 6.90
Average daily production:
Oil (Mbbls/day)(1)......................... 122 156 161 162 209
Natural gas (MMcf/day)..................... 831 1,127 1,080 1,082 1,203
Total production (Mboe/day)(2)........... 260 344 341 343 409
Average lease operating costs per Boe(2)..... $ 2.66 $ 3.22 $ 3.71 $ 3.63 $ 4.61
---------------
(1) Includes crude oil, condensate and natural gas liquids.
(2) 6 Mcf of natural gas = 1 Boe.
(3) Total reserve additions for the period, including revisions and net of
property sales, divided by annual production.
(4) Total proved reserves at period end divided by annual production.
(5) Total capitalized costs incurred for the period, excluding capitalized
interest and property sales, divided by total reserve additions for the
period, including revisions.
---------------------
9
USE OF PROCEEDS
Neither we nor Apache Canada will receive any proceeds from the exchange
offer. The exchange offer is intended to satisfy our obligations and those of
Apache Canada under the registration rights agreement entered into for the
benefit of the holders of outstanding notes in connection with the initial
private offering of the outstanding notes. The net proceeds that Apache Canada
received from the sale of the outstanding notes on May 15, 2003, were used to
repay $347,312,000 outstanding under our commercial paper program, which was
utilized in connection with the previously announced purchase of properties in
the North Sea and Gulf of Mexico from subsidiaries of BP p.l.c., and the balance
was applied against the outstanding indebtedness under the Canadian portion of
our $1.5 billion global credit facility.
10
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
consolidated capitalization on a historical basis as of September 30, 2003. The
table should be read in conjunction with our consolidated financial statements
and related notes incorporated by reference in this prospectus.
AS OF SEPTEMBER 30, 2003
ACTUAL
------------------------
(UNAUDITED)
(IN THOUSANDS)
Cash and Cash Equivalents................................... $ 42,637
==========
Total Debt:
Apache:
7.95% notes due 2026...................................... $ 178,630
7.625% debentures due 2096................................ 149,175
7.625% notes due 2019..................................... 149,154
7.375% debentures due 2047................................ 148,014
7.7% notes due 2026....................................... 99,664
7.0% notes due 2018....................................... 148,491
6.25% notes due 2012...................................... 397,470
Money market lines of credit and commercial paper......... 322,500
Subsidiary and other obligations:
Apache Finance Australia 6.5% notes due 2007.............. 169,357
Apache Finance Australia 7.0% notes due 2009.............. 99,581
Apache Finance Canada 4.375% notes due 2015............... 349,682
Apache Finance Canada 7.75% notes due 2029................ 297,044
Fletcher Notes............................................ 5,356
Apache Clearwater, Inc. .................................. --
----------
Total debt................................................ 2,514,118
----------
Preferred Interests of Subsidiaries......................... --
----------
Shareholders' Equity:
Series B preferred stock.................................. 98,387
Common stock.............................................. 207,487
Paid-in capital........................................... 4,023,754
Retained earnings......................................... 2,204,487
Treasury stock............................................ (106,564)
Accumulated other comprehensive loss...................... (130,466)
----------
Total shareholders' equity............................. 6,297,085
----------
Total capitalization................................... $8,811,203
==========
11
RATIOS OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges were as follows for the periods
indicated in the table below.
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- --------------------------------
2003 2002 2002 2001 2000 1999 1998
------ ----- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges............ 10.27 4.97 5.52 6.71 7.41 3.03 --
Our ratios of earnings to fixed charges were computed based on:
"earnings," which is the amount resulting from adding:
- pretax income from continuing operations before adjustment for minority
interests in consolidated subsidiaries or income or loss from equity
investees,
- fixed charges,
- amortization of capitalized interest,
- distributed income of equity investees, and
- our share of pre-tax losses of equity investees for which charges arising
from guarantees are included in fixed charges,
and subtracting:
- interest capitalized,
- preference security dividend requirements of consolidated subsidiaries,
and
- the minority interest in pre-tax income of subsidiaries that have not
incurred fixed charges;
"fixed charges," which means the sum of the following:
- interest expensed and capitalized,
- amortized premiums, discounts and capitalized expenses related to
indebtedness,
- an estimate of the interest within rental expense, and
- preference security dividend requirements of consolidated subsidiaries.
Due to the $243.2 million non-cash write-down of the carrying value of our
U.S. proved oil and gas properties for the year ended December 31, 1998, our
1998 earnings were inadequate to cover fixed charges by $236.8 million.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The following is a summary of the exchange offer relating to the
outstanding notes. As a summary, it does not contain all of the information you
might find useful. For further information you should read the registration
rights agreement and the form of letter of transmittal, copies of which has been
filed as exhibits to the registration statement of which this prospectus is a
part. The exchange offer is intended to satisfy our obligations under the
registration rights agreement.
Exchange Offer Registration Statement. Apache Canada issued the
outstanding notes, and Apache issued its guarantee of the outstanding notes, on
May 15, 2003. The initial purchasers of the outstanding notes have advised us
that they subsequently resold the outstanding notes to "qualified institutional
buyers" in reliance on Rule 144A under the Securities Act. As a condition to the
offering of the outstanding notes, we entered into a registration rights
agreement dated May 15, 2003, among us, Apache Canada and the
12
initial purchasers, pursuant to which we agreed, subject to specified
circumstances, for the benefit of all holders of the outstanding notes, at our
own expense, unless the exchange offer would not be permitted by applicable law
or SEC policy, to:
- file the registration statement of which this prospectus is a part with
the SEC on or prior to 90 days after the issue date of the outstanding
notes,
- use our reasonable best efforts to cause the registration statement to be
declared effective by the SEC on or prior to 150 days after the issue
date of the outstanding notes,
- use our reasonable best efforts to keep the registration statement
effective until the closing of the exchange offer, and
- use our reasonable best efforts to issue, on or prior to 270 days after
the issue date of the outstanding notes, exchange notes in exchange for
all outstanding notes tendered prior thereto.
Further, we agreed to keep the exchange offer open for acceptance for not
less than a period of 20 business days after the date notice of the exchange
offer is mailed to holders of outstanding notes or, if longer, the minimum
period required under applicable law. For each outstanding note validly tendered
pursuant to the exchange offer and not withdrawn, the holder of the outstanding
note will receive an exchange note having a principal amount equal to that of
the tendered outstanding note. Interest on each exchange note will accrue from
the last date on which interest was paid on the tendered outstanding note in
exchange therefor or, if no interest was paid on such outstanding note, from the
issue date of the outstanding notes.
In specific circumstances, we are obligated to use our reasonable best
efforts to file a shelf registration statement for resales of outstanding notes
and to use our reasonable best efforts to cause such shelf registration
statement to be declared effective by the SEC.
Transferability. Apache Canada issued the outstanding notes in a
transaction exempt from the registration requirements of the Securities Act.
Accordingly, the outstanding notes may not be offered or sold in the United
States unless registered, or pursuant to an applicable exemption, under the
Securities Act and applicable state securities laws. Based on no-action letters
issued by the staff of the SEC with respect to similar transactions with third
parties, we believe that the exchange notes issued pursuant to the exchange
offer in exchange for outstanding notes may be offered for resale, resold and
otherwise transferred by holders of notes who are not our affiliates without
further compliance with the registration and prospectus delivery requirements of
the Securities Act, provided that:
- any exchange notes to be received by the holder were acquired in the
ordinary course of the holder's business;
- at the time of the commencement of the exchange offer the holder is not
engaged in, does not intend to engage in, and has no arrangement or
understanding with any person to participate in the distribution (within
the meaning of the Securities Act) of the exchange notes;
- the holder is not an "affiliate" of ours, as defined in Rule 405 under
the Securities Act, or, if it is an affiliate, that it will comply with
the registration and prospectus delivery requirements of the Securities
Act to the extent applicable; and
- the holder did not purchase the outstanding notes directly from Apache
Canada to resell pursuant to 144A or another available exemption.
We have not sought, however, a no-action letter with respect to the
exchange offer and we cannot assure you that the staff of the SEC would make a
similar determination with respect to the exchange offer. Any holder who tenders
his outstanding notes in the exchange offer with any intention of participating
in a distribution of exchange notes or who is an affiliate of ours
- cannot rely on the interpretation by the staff of the SEC;
- will not be able to validly tender outstanding notes in the exchange
offer; and
13
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any secondary resale transactions.
In addition, each broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it acquired the
outstanding notes for its own account as the result of market-making activities
or other trading activities and that it will deliver a prospectus in connection
with any resale of such exchange notes. The letter of transmittal accompanying
this prospectus states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is acting in the capacity of
an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of exchange notes received in
exchange for outstanding notes where the outstanding notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. Pursuant to the registration rights agreement, we agreed to make
this prospectus available to any such broker-dealer for use in connection with
any such resale. See "Plan of Distribution."
Shelf Registration Statement. If any of the following occurs:
- if, because of any changes in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC, the we are not permitted
to effect the exchange offer;
- if for any other reason the exchange offer registration statement is not
declared effective within 150 calendar days following the issue date of
the outstanding notes, provided that we are not then actively pursuing
such effectiveness;
- if for any other reason the exchange offer is not consummated within 270
calendar days after the issue date of the outstanding notes, provided
that we are not then actively pursuing such consummation;
- upon the written request of the initial purchasers with respect to any
outstanding notes that such initial purchaser acquired directly from us;
or
- upon the written request of any holder of outstanding notes that either
- is not permitted pursuant to applicable law, SEC rules and regulations
or applicable interpretations thereof by the staff of the SEC to
participate in the exchange offer, or
- participates in the exchange offer and does not receive fully tradable
notes pursuant to the exchange offer;
then in each such case we will, at our cost:
- promptly, file with the SEC, and thereafter will use our reasonable best
efforts to cause to be declared effective promptly but no later than 270
calendar days after the issue date of the outstanding notes, a shelf
registration statement relating to the offer and sale of the outstanding
notes by the holders thereof from time to time in accordance with the
methods of distribution elected by the majority of such holders
participating in the shelf registration and set forth in such shelf
registration statement; and
- use our reasonable best efforts to keep the shelf registration statement
continuously effective in order to permit the prospectus that is a part
of the shelf registration statement to be usable by holders of
outstanding notes for a period ending on the earliest of
- two years from the date we originally issued the outstanding notes,
- the date on which the outstanding notes become eligible for resale
without volume limitations pursuant to Rule 144 under the Securities
Act, or
- for such shorter period that will terminate when all outstanding notes
covered by the shelf registration statement have been sold under the
shelf registration statement or cease to be outstanding or otherwise
cease to have rights to be included in the shelf registration
statement.
14
We will, in the event of the filing of the shelf registration statement,
provide to each holder of the outstanding notes copies of the prospectus that is
a part of the shelf registration statement, notify each such holder when the
shelf registration statement for the outstanding notes has become effective and
take other specified action as is required to permit unrestricted resales of the
outstanding notes. A holder of outstanding notes who sells such outstanding
notes pursuant to the shelf registration statement generally will be:
- required to be named as a selling security holder in the related
prospectus;
- required to deliver the prospectus to purchasers;
- subject to the civil liability provisions under the Securities Act in
connection with those sales; and
- bound by the provisions of the registration rights agreement which are
applicable to the holder (including specified indemnification
obligations).
In addition, each holder of the outstanding notes may be required to
deliver information to be used in connection with the shelf registration
statement as set forth in the registration rights agreement in order to have
their outstanding notes included in the shelf registration statement and to
benefit from the provisions regarding special interest.
Special Interest. Apache Canada will pay special interest in respect of
the outstanding notes (for each outstanding note which has not been exchanged in
the exchange offer) if the exchange offer is not consummated and the shelf
registration statement is not declared effective on or prior to the date that is
270 days after the issue date of the notes.
The preceding event is a registration default. Apache Canada will pay
special interest to each holder of outstanding notes while a registration
default is continuing immediately following the occurrence of such registration
default in an amount equal to 0.25% per annum of the principal amount of the
outstanding notes. Following the cure of a particular registration default, the
accrual of special interest with respect to such registration default will
cease.
TERMS OF THE EXCHANGE OFFER
Upon satisfaction or waiver of all the conditions of the exchange offer,
Apache Canada will accept any and all outstanding notes properly tendered and
not properly withdrawn prior to the expiration date and will issue the exchange
notes promptly after acceptance of the outstanding notes. See "-- Conditions to
the Exchange Offer" and "-- Procedures for Tendering Outstanding Notes." Apache
Canada will issue $1,000 principal amount of exchange notes in exchange for each
$1,000 principal amount of outstanding notes accepted in the exchange offer. As
of the date of this prospectus, $350,000,000 aggregate principal amount of the
4.375% notes due 2015 are outstanding. Holders may tender some or all of their
outstanding notes pursuant to the exchange offer. Outstanding notes, however,
may be tendered only in integral multiples of $1,000.
The exchange notes are substantially identical to the outstanding notes
except that the exchange notes will not contain specified transfer restrictions,
registration rights and special interest provisions. The issuance of exchange
notes in exchange for outstanding notes pursuant to the exchange offer will not
result in a repayment of the indebtedness of Apache Canada that is presently
evidenced by the outstanding notes. The exchange notes will evidence the same
debt as the outstanding notes and will be issued pursuant to, and entitled to
the benefits of, the indenture pursuant to which the outstanding notes were
issued and will be deemed one issue of notes, together with any outstanding
notes not tendered in the exchange offer.
This prospectus, together with the letter of transmittal, is being sent to
all registered holders and to others believed to have beneficial interests in
the outstanding notes. Holders of outstanding notes do not have any appraisal or
dissenters' rights under the indenture in connection with the exchange offer. We
and Apache Canada intend to conduct the exchange offer in accordance with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of the SEC promulgated thereunder.
15
For purposes of the exchange offer, Apache Canada will be deemed to have
accepted validly tendered outstanding notes when, and as if, Apache Canada has
given oral or written notice thereof to the exchange agent. The exchange agent
will act as our agent for the purpose of distributing the exchange notes from us
to the tendering holders. If Apache Canada does not accept any tendered
outstanding notes because of an invalid tender, the occurrence of other events
set forth in this prospectus or otherwise, Apache Canada will return the
unaccepted outstanding notes, without expense, to the tendering holder thereof
promptly after the expiration date.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commission's or fees or, except as set forth below
under "-- Transfer Taxes," transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. We or Apache Canada will pay
all charges and expenses, other than applicable taxes, if any, in connection
with the exchange offer. See "-- Fees and Expenses."
Neither we nor Apache Canada makes any recommendation to holders of
outstanding notes as to whether to tender or refrain from tendering all or any
portion of their outstanding notes in the exchange offer. In addition, no one
has been authorized to make any recommendation as to whether holders should
tender outstanding notes in the exchange offer. Holders of outstanding notes
must make their own decisions whether to tender outstanding notes in the
exchange offer and, if so, the aggregate amount of outstanding notes to tender
based on the holders' own financial positions and requirements.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time, on ,
, 2004, unless we and Apache Canada, in our sole discretion, extend
the exchange offer, in which case the term "expiration date" shall mean the
latest date and time to which the exchange offer is extended. In order to extend
the exchange offer, we and Apache Canada will notify the exchange agent by oral
or written notice and each registered holder by means of press release or other
public announcement of any extension, in each case, prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date.
We and Apache Canada reserve the right, in our sole discretion, to:
- delay accepting any outstanding notes,
- extend the exchange offer,
- terminate the exchange offer if the conditions set forth below under
" -- Conditions to the Exchange Offer" shall not have been satisfied, or
- amend the terms of the exchange offer in any manner.
We and Apache Canada will notify the exchange agent of any delay,
extension, termination or amendment by oral or written notice. We and Apache
Canada will additionally notify each registered holder of any amendment by means
of press release or other public announcement. We and Apache Canada will give to
the exchange agent written confirmation of any oral notice.
EXCHANGE DATE
As soon as practicable after the close of the exchange offer Apache Canada
will accept for exchange all outstanding notes properly tendered and not validly
withdrawn prior to 5:00 p.m., New York City time, on the expiration date in
accordance with the terms of this prospectus and the letters of transmittal.
CONDITIONS TO THE EXCHANGE OFFER
Completion of the exchange offer is subject to the conditions that:
- the exchange offer or the making of any exchange by a holder, does not
violate applicable law or any applicable interpretation of the staff of
the SEC,
16
- the due tendering of outstanding notes is in accordance with the exchange
offer,
- each holder of outstanding notes exchanged in the exchange offer shall
have represented that all exchange notes to be received by it were
acquired in the ordinary course of its business and that at the time of
the consummation of the exchange offer it shall have no arrangement or
understanding with any person to participate in the distribution (within
the meaning of the Securities Act) of the exchange notes and shall have
made such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to render the use of
Form S-4 or other appropriate form under the Securities Act available,
and
- no action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency with respect to the
exchange offer which, in our or Apache Canada's judgment, would
reasonably be expected to impair the ability of us or Apache Canada to
proceed with the exchange offer.
The foregoing conditions are for our and Apache Canada's sole benefit and
may be asserted by us or Apache Canada regardless of the circumstances giving
rise to any such condition or may be waived by us or Apache Canada in whole or
in part at any time and from time to time in our sole discretion. Our or Apache
Canada's failure at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right and such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. In addition, we
and Apache Canada will not accept for exchange any outstanding notes tendered,
and no exchange notes will be issued in exchange for any such outstanding notes,
if, at such time, any stop order shall be threatened by the SEC or be in effect
with respect to the registration statement of which this prospectus is a part or
the qualification of the indenture under the Trust Indenture Act of 1939, as
amended.
The exchange offer is not conditioned on any minimum aggregate principal
amount of outstanding notes being tendered for exchange.
CONSEQUENCES OF FAILURE TO EXCHANGE
Any outstanding notes not tendered pursuant to the exchange offer will
remain outstanding and continue to accrue interest at the rate of 4.375% (that
is, without special interest), and holders of outstanding notes not tendered
will not be entitled to any further registration rights under the registration
rights agreement, except under limited circumstances. The outstanding notes will
remain "restricted securities" within the meaning of the Securities Act.
Accordingly, prior to the date that is two years after the later of the issue
date of the outstanding notes and the last date on which we or any of our
affiliates was the owner of the outstanding notes, the outstanding notes may be
resold only
- to us;
- to a person who the seller reasonably believes is a "qualified
institutional buyer" purchasing for its own account or for the account of
another "qualified institutional buyer" in compliance with the resale
limitations of Rule 144A;
- to an "institutional accredited investor" that, prior to the transfer,
furnishes to the trustee a written certification containing
representations and agreements relating to the restrictions on transfer
of the notes (the form of this letter can be obtained from the trustee);
- pursuant to the limitations on resale provided by Rule 144 under the
Securities Act;
- pursuant to the resale provisions of Rule 904 of Regulation S under the
Securities Act;
- pursuant to an effective registration statement under the Securities Act;
or
- pursuant to any other available exemption from the registration
requirements of the Securities Act,
subject in each of the foregoing cases to compliance with applicable state
securities laws.
17
As a result, the liquidity of the market for non-tendered outstanding notes
could be adversely affected upon completion of the exchange offer. The foregoing
restrictions on resale will no longer apply after the later of the second
anniversary of the issue date of the outstanding notes or the purchase of the
outstanding notes from us or our affiliate.
FEES AND EXPENSES
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone by
our officers and employees.
Expenses incurred in connection with the exchange offer will be paid by us.
Such expenses include, among others, the fees and expenses of the trustee and
the exchange agent, accounting and legal fees, printing costs and other
miscellaneous fees and expenses.
ACCOUNTING TREATMENT
We will not recognize any gain or loss for accounting purposes upon the
consummation of the exchange offer. We will amortize the expenses of the
exchange offer as additional interest expense over the term of the exchange
notes.
PROCEDURES FOR TENDERING OUTSTANDING NOTES
The tender of outstanding notes pursuant to any of the procedures set forth
in this prospectus and in the letter of transmittal will constitute a binding
agreement between the tendering holder and us in accordance with the terms and
subject to the conditions set forth in this prospectus and in the letter of
transmittal. The tender of outstanding notes will constitute an agreement to
deliver good and marketable title to all tendered outstanding notes prior to the
expiration date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
Except as provided in "-- Guaranteed Delivery Procedures," unless the
outstanding notes being tendered are deposited by you with the exchange agent
prior to the expiration date and are accompanied by a properly completed and
duly executed letter of transmittal, we may, at our option, reject the tender.
Issuance of exchange notes will be made only against deposit of tendered
outstanding notes and delivery of all other required documents. Notwithstanding
the foregoing, DTC participants tendering through its Automated Tender Offer
Program ("ATOP") will be deemed to have made valid delivery where the exchange
agent receives an agent's message prior to the expiration date.
Accordingly, to properly tender outstanding notes, the following procedures
must be followed:
Notes held through a Custodian. Each beneficial owner holding outstanding
notes through a DTC participant must instruct the DTC participant to cause its
outstanding notes to be tendered in accordance with the procedures set forth in
this prospectus.
Notes held through DTC. Pursuant to an authorization given by DTC to the
DTC participants, each DTC participant holding outstanding notes through DTC
must
- electronically transmit its acceptance through ATOP, and DTC will then
edit and verify the acceptance, execute a book-entry delivery to the
exchange agent's account at DTC and send an agent's message to the
exchange agent for its acceptance, or
- comply with the guaranteed delivery procedures set forth below and in a
notice of guaranteed delivery. See "-- Guaranteed Delivery
Procedures -- Notes held through DTC."
Promptly after the date of this prospectus, the exchange agent will
establish an account at DTC for purposes of the exchange offer with respect to
outstanding notes held through DTC. Any financial institution that is a DTC
participant may make book-entry delivery of interests in outstanding notes into
the exchange agent's account through ATOP. However, although delivery of
interests in the outstanding
18
notes may be effected through book-entry transfer into the exchange agent's
account through ATOP, an agent's message in connection with such book-entry
transfer, and any other required documents, must be, in any case, transmitted to
and received by the exchange agent at its address set forth under "-- Exchange
Agent," or the guaranteed delivery procedures set forth below must be complied
with, in each case, prior to the expiration date. DELIVERY OF DOCUMENTS TO DTC
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. The confirmation of a
book-entry transfer into the exchange agent's account at DTC as described above
is referred to herein as a "Book-Entry Confirmation."
The term "agent's message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of the book-entry
confirmation, which states that DTC has received an express acknowledgment from
each DTC participant tendering through ATOP that such DTC participants have
received a letter of transmittal and agree to be bound by the terms of the
letter of transmittal and that we may enforce such agreement against such DTC
participants.
Cede & Co., as the holder of the global note, will tender a portion of each
global note equal to the aggregate principal amount of outstanding notes for
which instructions to tender are given by DTC participants.
By tendering, each holder and each DTC participant will represent to us
that, among other things, it is:
- not our affiliate;
- not a broker-dealer tendering outstanding notes acquired directly from us
for its own account;
- acquiring the exchange notes in its ordinary course of business; and
- not engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of the
exchange notes.
In addition, each broker-dealer that is to receive exchange notes for its
own account in exchange for outstanding notes must represent that such
outstanding notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, and must acknowledge that
it will deliver a prospectus that meets the requirements of the Securities Act
in connection with any resale of the exchange notes. The letter of transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
Section 2(a)(11) of the Securities Act. See "Plan of Distribution."
Unless waived by us, we will not accept any alternative, conditional,
irregular or contingent tenders. By executing a letter of transmittal or
transmitting an acceptance through ATOP, as the case may be, each tendering
holder waives any right to receive any notice of the acceptance for purchase of
its outstanding notes.
We will resolve all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tendered outstanding notes, and
such determination will be final and binding. We reserve the absolute right to
reject any or all tenders that are not in proper form or the acceptance of which
may, in the opinion of our counsel, be unlawful. We also reserve the absolute
right to waive any condition to the exchange offer and any irregularities or
conditions of tender as to particular outstanding notes. Our interpretation of
the terms and conditions of the exchange offer (including the instructions in
the letter of transmittal) will be final and binding. Unless waived, any
irregularities in connection with tenders must be cured within such time as we
shall determine. We, along with the exchange agent, shall be under no duty to
give notification of defects in such tenders and shall not incur liabilities for
failure to give such notification. Tenders of outstanding notes will not be
deemed to have been made until such irregularities have been cured or waived.
Any outstanding notes received by the exchange agent that are not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the exchange agent to the tendering holder, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
19
If any letter of transmittal, endorsement, bond power, power of attorney or
any other document required by the letter of transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, that person
should so indicate when signing, and, unless waived by us, proper evidence
satisfactory to us, in our sole discretion, of that person's authority must be
submitted. A beneficial owner of outstanding notes that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact that entity promptly if that
beneficial holder wishes to participate in the exchange offer.
LETTERS OF TRANSMITTAL AND OUTSTANDING NOTES MUST BE SENT ONLY TO THE
EXCHANGE AGENT. DO NOT SEND LETTERS OF TRANSMITTAL OR OUTSTANDING NOTES TO US,
APACHE CANADA OR DTC.
The method of delivery of outstanding notes, letters of transmittal, any
required signature guaranties and all other required documents, including
delivery through DTC and any acceptance through ATOP, is at the election and
risk of the persons tendering and delivering acceptances or letters of
transmittal and, except as otherwise provided in the applicable letter of
transmittal, delivery will be deemed made only when actually received by the
exchange agent. If delivery is by mail, it is suggested that the holder use
properly insured, registered mail with return receipt requested, and that the
mailing be made sufficiently in advance of the expiration date to permit
delivery to the exchange agent prior to the expiration date.
GUARANTEED DELIVERY PROCEDURES
Notes held through DTC. DTC participants holding outstanding notes through
DTC who wish to cause their outstanding notes to be tendered, but who cannot
transmit their acceptances through ATOP prior to the expiration date, may cause
a tender to be effected if:
- guaranteed delivery is made by or through a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act, including the
following, which we call "eligible institutions":
- a bank;
- a broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government securities broker;
- a credit union;
- a national securities exchange, registered securities association or
clearing agency; or
- a savings institution that is a participant in a Securities Transfer
Association recognized program;
- prior to the expiration date, the exchange agent receives from any of the
above institutions a properly completed and duly executed notice of
guaranteed delivery, by mail, hand delivery, facsimile transmission or
overnight courier, substantially in the form provided with this
prospectus; and
- book-entry confirmation and an agent's message in connection therewith
are received by the exchange agent within three New York Stock Exchange
trading days after the expiration date.
Notes held by Holders. Holders who wish to tender their outstanding notes
but
- whose outstanding notes are not immediately available and will not be
available for tendering prior to the expiration date; or
- who cannot deliver their outstanding notes, the letter of transmittal, or
any other required documents to the exchange agent prior to the
expiration date,
20
may effect a tender if:
- the tender is made by or through any of the above-listed eligible
institutions;
- prior to the expiration date, the exchange agent receives from any
above-listed eligible institutions a properly completed and duly executed
notice of guaranteed delivery, whether by mail, hand delivery, facsimile
transmission or overnight courier, substantially in the form provided
with this prospectus; and
- a properly completed and executed letter of transmittal, as well as the
certificate(s) representing all tendered outstanding notes in proper form
for transfer, and all other documents required by the letter of
transmittal, are received by the exchange agent within three New York
Stock Exchange trading days after the expiration date.
WITHDRAWAL RIGHTS
You may withdraw tenders of outstanding notes, or any portion of your
outstanding notes, in integral multiples of $1,000 principal amount due at the
stated maturity, at any time prior to 5:00 p.m., New York City time, on the
expiration date. Any outstanding notes properly withdrawn will be deemed to be
not validly tendered for purposes of the exchange offer.
Notes held through DTC. DTC participants holding outstanding notes who
have transmitted their acceptances through ATOP may, prior to 5:00 p.m., New
York City time, on the expiration date, withdraw the instruction given thereby
by delivering to the exchange agent, at its address set forth under "-- Exchange
Agent," a written, telegraphic or facsimile notice of withdrawal of such
instruction. Such notice of withdrawal must contain the name and number of the
DTC participant, the principal amount due at the stated maturity of outstanding
notes to which such withdrawal relates and the signature of the DTC participant.
Receipt of such written notice of withdrawal by the exchange agent effectuates a
withdrawal.
Notes held by Holders. Holders may withdraw their tender of outstanding
notes, prior to 5:00 p.m., New York City time, on the expiration date, by
delivering to the exchange agent, at its address set forth under "-- Exchange
Agent," a written, telegraphic or facsimile notice of withdrawal. Any such
notice of withdrawal must:
- specify the name of the person who tendered the outstanding notes to be
withdrawn;
- contain a description of the outstanding notes to be withdrawn and
identify the certificate number or numbers shown on the particular
certificates evidencing such outstanding notes and the aggregate
principal amount due at the stated maturity represented by such
outstanding notes; and
- be signed by the holder of such outstanding notes in the same manner as
the original signature on the letter of transmittal by which such
outstanding notes were tendered (including any required signature
guaranties), or be accompanied by
- documents of transfer in a form acceptable to us, in our sole
discretion; and
- a properly completed irrevocable proxy that authorized such person to
effect such revocation on behalf of such holder.
If the outstanding notes to be withdrawn have been delivered or otherwise
identified to the exchange agent, a signed notice of withdrawal is effective
immediately upon written, telegraphic or facsimile notice of withdrawal even if
physical release is not yet effected.
All signatures on a notice of withdrawal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program; provided, however, that signatures on the notice of withdrawal need not
be guaranteed if the outstanding notes being withdrawn are held for the account
of any of the institutions listed above under "-- Guaranteed Delivery
Procedures."
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A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC participant or a holder of outstanding notes, as the case may be, in
the same manner as the person's name appears on its transmission through ATOP or
letter of transmittal, as the case may be, to which such withdrawal relates. If
a notice of withdrawal is signed by a trustee, partner, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, such person must so indicate
when signing and must submit with the revocation appropriate evidence of
authority to execute the notice of withdrawal. A DTC participant or a holder may
withdraw an instruction or a tender, as the case may be, only if such withdrawal
complies with the provisions of this prospectus.
All questions as to the validity, form and eligibility, including time of
receipt, or withdrawal notices will be determined by us, in our sole discretion,
which determination shall be final and binding on all parties. Neither we,
Apache Canada, the exchange agent nor any other person is under any duty to give
any notification of any irregularities in any notice of withdrawal nor will
those parties incur any liability for failure to give that notice.
A withdrawal of a tender of outstanding notes by a DTC participant or a
holder, as the case may be, may be rescinded only by a new transmission of an
acceptance through ATOP or execution and delivery of a new letter of
transmittal, as the case may be, in accordance with the procedures described
herein.
EXCHANGE AGENT
JPMorgan Chase Bank has been appointed as exchange agent for the exchange
offer. Questions, requests for assistance and requests for additional copies of
this prospectus or of the letter of transmittal should be directed to the
exchange agent addressed as follows:
By Mail:
(Registered or Certified Mail is recommended)
JPMorgan Chase Bank,
as Exchange Agent
ITS Bond Events
P.O. Box 2320
Dallas, TX 75221
Attention: Frank Ivins
By hand or by overnight courier:
JPMorgan Chase Bank,
as Exchange Agent
ITS Bond Events
2001 Bryan Street
9th Floor
Dallas, TX 75201
Attention: Frank Ivins
By Facsimile Transmission:
(For Eligible Institutions only)
(214) 468-6494
Attention: Frank Ivins
To confirm facsimile:
(214) 468-6464
Telephone Inquiries: (800) 275-2048
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
The exchange agent also acts as trustee under the indenture.
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TRANSFER TAXES
Holders of outstanding notes who tender their outstanding notes for
exchange notes will not be obligated to pay any transfer taxes in connection
therewith, except that holders who instruct us to register exchange notes in the
name of, or request that outstanding notes not tendered or not accepted in the
exchange offer be returned to, a person other than the registered tendering
holder will be responsible for the payment of any applicable transfer tax
thereon.
OTHER
Participation in the exchange offer is voluntary. You should carefully
consider whether to accept the exchange offer. You should consult your financial
and tax advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered outstanding notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. We have no present plans to acquire any outstanding notes that are
not tendered in the exchange offer or to file a registration statement to permit
resales of any untendered outstanding notes.
DESCRIPTION OF NOTES AND GUARANTEES
GENERAL
Apache Canada issued the outstanding notes and will issue the exchange
notes as one separate series under the indenture dated as of November 23, 1999,
among Apache Canada, Apache and JPMorgan Chase Bank, as trustee. The exchange
notes will be issued in the form of one or more global notes registered in the
name of The Depository Trust Company ("DTC") or its nominee, as described under
"-- Book-Entry, Delivery and Form." The following description is a summary of
the material provisions of the exchange notes, the guarantees and the indenture.
The terms of the exchange notes and guarantees are substantially identical in
all material respects to the outstanding notes and guarantees, except that the
exchange notes and guarantees will have been registered under the Securities Act
and, therefore, will not bear legends restricting their transfer and will not
contain specified provisions providing for additional interest under specified
circumstances described in the registration rights agreement, the provisions of
which will terminate upon the consummation of the exchange offer. This
description does not restate the indenture in its entirety. We and Apache Canada
urge you to read the indenture because it, and not this description, defines
your rights as holders of the exchange notes. Unless otherwise stated, all
references to "issuer" mean Apache Canada and all references to "guarantor" mean
Apache, the term "notes" refers to both the outstanding notes and the exchange
notes and the term "guarantee" refers to our guarantee of the outstanding notes
and the exchange notes.
The notes are senior unsecured obligations of Apache Canada. We will
irrevocably and unconditionally guarantee the notes as to principal, premium, if
any, interest and additional amounts, if any.
The notes are redeemable as described below under "-- Optional Redemption"
and "-- Redemption for Taxation Reasons." The notes are not entitled to the
benefit of any sinking fund. If a change in control, as defined in the
indenture, occurs, each holder of notes may elect to require Apache Canada to
repurchase the holder's notes. If a holder makes this election, Apache Canada
must purchase the holder's notes for their principal amount plus accrued
interest to the purchase date. See "-- Apache Canada is Obligated to Purchase
Notes on a Change in Control."
With the exceptions and pursuant to the requirements set forth in the
indenture, we and Apache Canada may discharge our and its obligations under the
indenture with respect to the notes as described in "-- Discharge, Defeasance
and Covenant Defeasance."
Other than as described below under "-- The Indenture Limits Our and Apache
Canada's Ability to Incur Liens," "-- The Indenture Limits Our and Apache
Canada's Ability to Engage in Sale/Leaseback
23
Transactions" and "-- Apache Canada is Obligated to Purchase Notes on a Change
in Control," the indenture does not limit our or Apache Canada's ability to
incur indebtedness or afford holders of securities protection if our credit
quality declines or if we are involved in a takeover, recapitalization or highly
leveraged or similar transaction.
Apache Canada will issue the notes in denominations of $1,000 or integral
multiples of $1,000.
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on May 15, 2015. Apache Canada may issue and sell
additional principal amounts of the notes or other debt securities in the future
without the consent of the holders of the notes. Any additional notes, together
with these notes, will constitute a single series of notes under the indenture.
Interest on the notes will accrue at the rate of 4.375% per year and will
be payable semi-annually in arrears on May 15 and November 15 of each year,
commencing on November 15, 2003. Apache Canada will make each interest payment
to the person in whose name the notes are registered at the close of business on
the immediately preceding May 1 or November 1, as the case may be, whether or
not that date is a business day.
Interest on the notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from May 15, 2003, and
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
If any interest payment date, maturity date or redemption date falls on a
day that is not a business day, the payment will be made on the next business
day and, unless we and Apache Canada default on the payment, no interest will
accrue for the period from and after the interest payment date, maturity date or
redemption date. As used in this prospectus, the term "business day" means any
day, other than a Saturday or Sunday, that is neither a legal holiday nor a day
on which commercial banks are authorized or required by law, regulation or
executive order to close in The City of New York.
RANKING
The notes will be unsecured obligations of Apache Canada and will rank
equally with all other unsecured senior indebtedness of Apache Canada, and the
guarantees will be unsecured obligations of Apache and will rank equally with
all other unsecured senior indebtedness of Apache. At November 30, 2003, Apache
had approximately $2.35 billion of unsecured senior indebtedness outstanding on
a consolidated basis.
Dividend and other distributions to us from our various subsidiaries may be
subject to statutory, contractual and other restrictions (including, without
limitation, exchange controls that may be applicable to foreign subsidiaries).
The rights of our creditors to participate in the assets of any subsidiary upon
that subsidiary's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors, except to the extent that we may ourselves
be a creditor with recognized claims against the subsidiary. The claims of
holders under the guarantees will be effectively subordinated to the claims of
creditors of our subsidiaries other than, in the case of the notes, Apache
Canada. The indenture does not restrict the amount of indebtedness that we,
Apache Canada or our other subsidiaries may incur.
GUARANTEES
We will irrevocably and unconditionally guarantee to each holder of the
notes issued by Apache Canada and authenticated and delivered by the trustee the
due and punctual payment of the principal of, any premium and interest on, and
any additional amounts payable with respect to, the notes, when and as it
becomes due and payable, whether at maturity, upon acceleration, by call for
redemption, repayment or otherwise in accordance with the terms of the notes and
of the indenture. We will (a) agree that, if an event of default occurs under
the notes, our obligations under the guarantees will be as if we had issued the
notes, and will be enforceable irrespective of any invalidity, irregularity or
unenforceability of the notes or the indenture or any supplement thereto and (b)
waive our right to require the trustee or the holders to
24
pursue or exhaust their legal or equitable remedies against Apache Canada before
exercising their rights under the guarantees.
OPTIONAL REDEMPTION
The notes are redeemable as a whole or in part, at the option of Apache
Canada at any time, at a redemption price equal to the greater of (i) 100
percent of their principal amount or (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted to the
date of redemption on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Yield plus 15 basis points, plus, in each
case, accrued interest to the date of redemption. Apache Canada will, however,
pay the interest installment due on any interest payment date that occurs on or
before a redemption date to the holders of the notes as of the close of business
on the record date immediately preceding that interest payment date.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Reference Treasury Dealers or Dealer as having a maturity
comparable to the remaining term of the notes that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (ii) if the trustee obtains fewer than four but more than one
such Reference Treasury Dealer Quotations, the average of all such Quotations or
(iii) or if the trustee obtains only one such Referenced Treasury Dealer
Quotation, such quotation.
"Reference Treasury Dealer Quotations" means with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, bid and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of the principal amount) quoted in writing to the
trustee by such Reference Treasury Dealer at 5:00 p.m. (New York City time) on
the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of (i) Banc of America Securities
LLC and Deutsche Bank Securities Inc. (or their respective affiliates that are
Primary Treasury Dealers), and their respective successors; provided, however,
that if either of the foregoing ceases being a U.S. Government securities dealer
in New York City (a "Primary Treasury Dealer"), we may substitute another
Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer(s) selected
by the trustee after consultation with us.
Holders of notes to be redeemed will be given notice of redemption, at
their addresses as set forth in the security register for the notes, at least 30
and not more than 60 days prior to the date fixed for redemption. If fewer than
all of the notes are to be redeemed, the trustee will select the particular
notes or portions thereof for redemption from the outstanding notes not
previously called, pro rata or by lot or in such other manner as the trustee
deems fair and appropriate.
Unless Apache Canada defaults in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the notes or portion
thereof called for redemption.
Except as noted above and in "-- Redemption for Taxation Reasons," the
notes are not redeemable prior to maturity and will not be subject to any
sinking fund.
PAYMENT AND PAYING AGENTS; EXCHANGE AND TRANSFERS
The notes will be exchangeable, transfers of the notes will be registrable,
and principal of and premium, if any, and interest on the notes will be payable,
at the corporate trust office of the trustee at
25
4 New York Plaza, 15th Floor, New York, New York 10004; provided that payment of
interest on an interest payment date may, at Apache Canada's option, be made by
check mailed to the address of the person entitled thereto as it appears in the
security register or by transfer to an account maintained by the payee with a
bank located in the United States. Payments of principal, premium, if any, and
interest (and additional amounts, if any) in respect of the global notes (as
defined below) will be made to DTC in immediately available funds, while
disbursement of such payments to owners of beneficial interests in the global
notes will be made in accordance with the procedures of DTC and its participants
in effect from time to time.
If a redemption occurs, neither we nor Apache Canada will be required to:
- issue, register the transfer of or exchange notes during a period
beginning at the opening of business 15 days before any selection of
notes to be redeemed and ending at the close of business on the day of
mailing of the relevant notice of redemption; or
- register the transfer of or exchange any note, or portion thereof, called
for redemption, except the unredeemed portion of any note being redeemed
in part.
Neither we, Apache Canada nor the trustee will impose any service charge
for any transfer or exchange of a note; however, we or Apache Canada may ask you
to pay any taxes or other governmental charges in connection with a transfer or
exchange of notes.
THE INDENTURE LIMITS OUR AND APACHE CANADA'S ABILITY TO INCUR LIENS
Nothing in the indenture or the notes will in any way limit the amount of
indebtedness or securities which we, Apache Canada or our other subsidiaries, as
defined in the indenture, may incur or issue. The indenture provides that none
of us, Apache Canada or any of our other subsidiaries may issue, assume or
guarantee any notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed secured by a mortgage, lien, pledge, security
interest or other encumbrance -- defined in the indenture as "liens" -- upon any
of our or its property unless we provide that any and all notes then outstanding
shall be secured by a lien equally and ratably with any and all other
obligations secured by the lien. The restrictions on liens will not, however,
apply to:
- liens existing on the date of the indenture or provided for under the
terms of agreements existing on the date of the indenture;
- liens securing all or part of the cost of exploring, producing,
gathering, processing, marketing, drilling or developing any of our or
our subsidiaries' properties, or securing indebtedness incurred to
provide funds therefor or indebtedness incurred to finance all or part of
the cost of acquiring, constructing, altering, improving or repairing any
property or assets, or improvements used in connection with such
property, or securing indebtedness incurred to provide funds therefor;
- liens securing only indebtedness owed by one of our subsidiaries to us,
Apache Canada or to one or more of our other subsidiaries;
- liens on the property of any corporation or other entity existing at the
time it becomes our subsidiary;
- liens on any property to secure indebtedness incurred in connection with
the construction, installation or financing of pollution control or
abatement facilities or other forms of industrial revenue bond financing
or indebtedness issued or guaranteed by the United States or any state or
any department, agency or instrumentality of either or indebtedness
issued to or guaranteed for the benefit of a foreign government or any
state or any department, agency or instrumentality of either or an
international finance agency or any division or department thereof,
including the World Bank, the International Finance Corp. and the
Multilateral Investment Guarantee Agency;
- any extension, renewal or replacement or successive extensions, renewals
or replacements of any lien referred to in the foregoing clauses that
existed on the date of the indenture;
26
- other "ordinary course liens," as defined in the indenture, incurred in
the ordinary course of business; or
- liens which secure "limited recourse indebtedness," as defined in the
indenture.
In addition, the following types of transactions, among others, shall not be
deemed to create indebtedness secured by liens:
- the sale, granting of liens with respect to or other transfer of crude
oil, natural gas or other petroleum hydrocarbons in place for a period of
time until, or in an amount that, the transferee will receive as a result
of the transfer a specified amount of money or of crude oil, natural gas
or other petroleum hydrocarbons;
- the sale or other transfer of any other interest in property of the
character commonly referred to as a production payment, overriding
royalty, forward sale or similar interest; and
- the granting of liens required by any contract or statute in order to
permit us or one of our subsidiaries to perform any contract or
subcontract made by it with or at the request of the U.S. government or
any foreign government or international finance agency, any state or any
department thereof, or any agency or instrumentality of either, or to
secure partial, progress, advance or other payments to us or one of our
subsidiaries by any of these entities pursuant to the provisions of any
contract or statute.
Notwithstanding the limitations on liens described above, we, Apache Canada
and any one or more of our other subsidiaries may issue, assume or guarantee the
following indebtedness secured by liens on assets without regard to the
limitations described above: indebtedness in any aggregate principal amount
that, together with the aggregate outstanding principal amount of all our other
indebtedness and indebtedness of any of our subsidiaries so secured (excluding
indebtedness secured by the permitted liens described above), and the aggregate
amount of sale/leaseback transaction obligations that would otherwise be subject
to the limitations on sale/leaseback transactions described below, does not at
the time such indebtedness is incurred exceed 10% of our consolidated net worth
as shown on our most recent audited consolidated balance sheet.
THE INDENTURE LIMITS OUR AND APACHE CANADA'S ABILITY TO ENGAGE IN SALE/LEASEBACK
TRANSACTIONS
Neither we, Apache Canada nor any of our other subsidiaries will enter into
any arrangement with any person, other than us or one of our subsidiaries, to
lease any property to us, Apache Canada or a subsidiary of ours for more than
three years. For the restriction to apply, we or one of our subsidiaries must
sell or plan to sell the property to the person leasing it to us or our
subsidiary or to another person to which funds have been or are to be advanced
on the security of the leased property. The limitation does not apply where:
- either we, Apache Canada or our other subsidiaries would be entitled to
create debt secured by a lien on the property to be leased in a principal
amount equal to or exceeding the value of that sale/leaseback
transaction;
- since the date of the indenture and within a period commencing six months
before the consummation of that arrangement and ending six months after
the consummation of the arrangement, we, Apache Canada or our other
subsidiaries have expended or will expend for any property -- including
amounts expended for the acquisition, exploration, drilling or
development of the property, and for additions, alterations, improvements
and repairs to the property -- an amount equal to all or a portion of the
net proceeds of that arrangement and we, Apache Canada or our other
subsidiaries designate that amount as a credit against that arrangement,
with any amount not being so designated to be applied as set forth in the
next item; or
- during or immediately after the expiration of the 12 months after the
effective date of that transaction, we or Apache Canada apply to the
voluntary defeasance, redemption or retirement of the notes and its other
senior indebtedness, as defined in the indenture, an amount equal to the
27
greater of the net proceeds of the sale or transfer of the property
leased in that transaction and the fair value of the property at the time
of entering into the transaction, in either case adjusted to reflect the
remaining term of the lease and any amount we utilize as set forth in the
prior item. The amount will be reduced by the principal amount of other
senior indebtedness we voluntarily retired within that 12-month period.
THE INDENTURE INCLUDES EVENTS OF DEFAULT
Any one of the following events will constitute an "event of default" under
the indenture with respect to the notes:
- if we or Apache Canada fail to pay any interest on the notes (or
additional amounts, if any, in respect thereof) when due, and the failure
continues for 30 days;
- if we or Apache Canada fail to pay principal of or any premium on the
notes (or additional amounts, if any, in respect thereof) when due and
payable, either at maturity or otherwise;
- if we or Apache Canada fail to perform or breach any of the other
covenants or warranties in the indenture or the notes -- other than a
covenant or warranty included in the indenture solely for the benefit of
a series of securities other than the notes -- and that breach or failure
continues for 60 days after written notice as provided in the indenture;
- if any of our, Apache Canada's or any of our other subsidiaries'
indebtedness, as defined in the indenture, in excess of an aggregate of
$25,000,000 in principal amount is accelerated under any event of default
as defined in any mortgage, indenture or instrument and the acceleration
has not been rescinded or annulled within 30 days after written notice as
provided in the indenture specifying the event of default and requiring
us or Apache Canada to cause that acceleration to be rescinded or
annulled;
- if we, Apache Canada or any of our other subsidiaries fail to pay, bond
or otherwise discharge within 60 days of entry, a judgment, court order
or uninsured monetary damage award against us or them in excess of an
aggregate of $25,000,000 which is not stayed on appeal or otherwise being
appropriately contested in good faith; and
- specified events of voluntary or involuntary bankruptcy, insolvency or
reorganization involving us, Apache Canada or any of our other
subsidiaries.
If an event of default with respect to the notes, other than an event of
default described above pertaining to events of bankruptcy, insolvency or
reorganization, occurs and is continuing, either the trustee or the holders of
at least 25% in aggregate principal amount of the outstanding notes may declare
the principal amount of the notes to be due and payable immediately. At any time
after a declaration of acceleration has been made, but before a judgment or
decree for payment of money has been obtained by the trustee, and subject to
applicable law and other provisions of the indenture, the holders of a majority
in aggregate principal amount of the notes may, under some circumstances,
rescind and annul the acceleration. If an event of default described above
pertaining to events of bankruptcy, insolvency or reorganization occurs, the
principal amount and accrued interest will become immediately due and payable
without any declaration or other act by the trustee or any holder.
Within 90 days after the occurrence of any default with respect to the
notes, the trustee must transmit notice of the default to the holders of the
notes unless the event of default has been cured or waived. However, except in
the case of a payment default, the trustee may withhold the notice if and so
long as the board of directors, the executive committee or a trust committee of
directors or responsible officers of the trustee has in good faith determined
that the withholding of the notice is in the interest of the holders of the
notes.
If an event of default occurs and is continuing with respect to the notes,
the trustee may in its discretion proceed to protect and enforce its rights and
the rights of the holders of the notes by all appropriate judicial proceedings.
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Subject to the duty of the trustee during any default to act with the
required standard of care, the trustee is under no obligation to exercise any of
its rights or powers under the indenture at the request or direction of any of
the holders of the notes, unless the holders offer the trustee reasonable
indemnity. Subject to indemnifying the trustee, and subject to applicable law
and other provisions of the indenture, the holders of a majority in aggregate
principal amount of the outstanding notes may direct the time, method and place
of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, with respect to the
notes.
APACHE CANADA IS OBLIGATED TO PURCHASE NOTES ON A CHANGE IN CONTROL
If a change in control, as defined in the indenture, occurs, Apache Canada
must mail within 15 days a written notice regarding the change in control to the
trustee and to every holder of the notes. The notice must also be published at
least once in an authorized newspaper, as defined in the indenture, and must
state:
- the events causing the change in control and the date of the change in
control;
- the date by which notice of the change in control is required by the
indenture to be given;
- the date, 35 business days after the occurrence of the change in control,
by which Apache Canada must purchase the notes it is obligated to
purchase pursuant to the selling holder's exercise of rights on change in
control;
- the price Apache Canada must pay for the notes it is obligated to
purchase;
- the name and address of the trustee;
- the procedure for surrendering notes to the trustee or other designated
office or agency for payment;
- a statement of Apache Canada's obligation to make prompt payment on
proper surrender of the notes;
- the procedure for holders' exercise of rights of sale of the notes; and
- the procedures by which a holder may withdraw the notice after it is
given.
After Apache Canada gives this notice it will be obligated, at the election
of each holder, to purchase those notes. Under the indenture, a change in
control is deemed to have occurred when:
- any event requiring the filing of any report under or in response to
Schedule 13D or 14D-1 pursuant to the Securities Exchange Act of 1934
disclosing beneficial ownership of either 50% or more of our common stock
then outstanding or 50% or more of the voting power of our voting stock
then outstanding;
- the completion of any sale, transfer, lease, or conveyance of our
properties and assets substantially as an entirety to any person or
persons that is not our subsidiary, as those terms are defined in the
indenture; or
- the completion of a consolidation or merger of us with or into any other
person or entity in a transaction in which either we are not the sole
surviving corporation or our common stock existing before the transaction
is converted into cash, securities or other property and those exchanging
our common stock do not, as a result of the transaction, receive either
75% or more of the survivor's common stock or 75% or more of the voting
power of the survivor's voting stock.
Apache Canada will not purchase any notes if there has occurred and is
continuing an event of default under the indenture, other than default in
payment of the purchase price payable for the notes upon change in control. In
connection with any purchase of the notes after a change in control, we and
Apache Canada will comply with all federal and state securities laws, including,
specifically, Rule 13e-4, if applicable, under the Securities Exchange Act of
1934, and any related Schedule 13E-4 required to be submitted under that rule.
29
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We or Apache Canada may discharge our or its obligations to holders of the
notes that have not already been delivered to the trustee for cancellation and
that:
- have become due and payable;
- will become due and payable within one year; or
- are scheduled for redemption within one year.
To discharge the obligations with respect to the notes, we or Apache Canada
must deposit with the trustee, in trust, an amount of funds in U.S. dollars
sufficient to pay the entire amount of principal of, and any premium or interest
on, those notes to the date of the deposit if those notes have become due and
payable or to the maturity of the notes, as the case may be.
The indenture provides that we or Apache Canada may elect either
- to defease and be discharged from any and all obligations with respect to
the notes, which is referred to as "legal defeasance"; or
- to be released from the obligations with respect to the notes under the
covenants described in "-- The Indenture Limits Our and Apache Canada's
Ability to Incur Liens" and "-- The Indenture Limits Our and Apache
Canada's Ability to Engage in Sale/Leaseback Transactions" above, which
is referred to as "covenant defeasance."
In the case of discharge or legal defeasance, we and Apache Canada will
still retain some obligations in respect of the notes, including the
obligations:
- to pay additional amounts, if any, upon the occurrence of specified
events of taxation, assessment or governmental charge with respect to
payments on the notes;
- to register the transfer or exchange of the notes;
- to replace temporary or mutilated, destroyed, lost or stolen notes; and
- to maintain an office or agency with respect to the notes and to hold
moneys for payment in trust.
After a covenant defeasance, any omission to comply with the obligations or
covenants that have been defeased shall not constitute a default or an event of
default with respect to the notes.
To elect either legal defeasance or covenant defeasance we or Apache Canada
must deposit with the trustee, in trust, an amount, in U.S. dollars or in
government obligations, as defined below, or both, applicable to the notes which
through the scheduled payment of principal and interest in accordance with their
terms will provide money in an amount sufficient to pay the principal of and any
premium and interest (and additional amounts, if any) on the notes on their
scheduled due dates.
In addition, we or Apache Canada can only elect legal defeasance or
covenant defeasance if, among other things:
- the applicable defeasance does not result in a breach or violation of, or
constitute a default under, the indenture or any other material agreement
or instrument to which we or Apache Canada are a party or by which we or
Apache Canada are bound;
- no default or event of default with respect to the notes shall have
occurred and be continuing on the date of the establishment of the trust;
and
- we or Apache Canada have delivered to the trustee an opinion of counsel
to the effect that the holders of the notes will not recognize income,
gain or loss for U.S. federal income tax purposes as a result of the
defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if the defeasance had not occurred, and the opinion of counsel, in
the case of legal defeasance, must refer to and be based
30
upon a letter ruling of the Internal Revenue Service received by us, a
Revenue Ruling published by the Internal Revenue Service or a change in
applicable U.S. federal income tax law occurring after the date of the
indenture.
The indenture defines government obligations as securities which are not
callable or redeemable at the option of the issuer or issuers and are:
- direct obligations of the United States; or
- obligations of a person or entity controlled or supervised by and acting
as an agency or instrumentality of the United States, the timely payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States or that other government or governments.
Government obligations also include a depository receipt issued by a bank or
trust company as custodian with respect to any government obligation described
above or a specific payment of interest on or principal of or any other amount
with respect to any government obligation held by that custodian for the account
of the holder of the depository receipt, as long as, except as required by law,
that custodian is not authorized to make any deduction from the amount payable
to the holder of the depository receipt from any amount received by the
custodian with respect to the government obligation or the specific payment of
interest on or principal of or any other amount with respect to the government
obligation evidenced by the depository receipt.
If we or Apache Canada effect a covenant defeasance with respect to the
notes and the notes are declared due and payable because of the occurrence of
any event of default other than an event of default with respect to which there
has been covenant defeasance, the government obligations on deposit with the
trustee will be sufficient to pay amounts due on the notes at the time of the
stated maturity but may not be sufficient to pay amounts due on the notes at the
time of the acceleration resulting from the event of default. We and Apache
Canada, however, would remain liable for payment of the amounts due at the time
of acceleration.
Under the indenture, we and Apache Canada are required to furnish to the
trustee annually a statement as to our and Apache Canada's performance of our
and Apache Canada's obligations under the indenture and as to any default in
performance. We and Apache Canada are also required to deliver to the trustee,
within five days after occurrence thereof, written notice of any event which
after notice or lapse of time or both would constitute an event of default.
MODIFICATION AND WAIVER
We, Apache Canada and the trustee may, without the consent of holders,
modify provisions of the indenture for specified purposes that do not materially
adversely affect the interests of the holders of outstanding notes. We, Apache
Canada and the trustee may modify the indenture or waive other provisions of the
indenture with respect to the notes only with the consent of the holders of not
less than two-thirds in aggregate principal amount of the notes. The provisions
of the indenture, however, may not be waived or modified without the consent of
the holder of each note affected thereby if the modification or waiver would:
- change the stated maturity of the principal of, or premium, if any, on,
or any installment of principal, if any, of or interest on, or any
additional amounts payable with respect to, the notes;
- reduce the principal amount of, or premium or interest on, or any
additional amounts payable with respect to, the notes;
- change the coin or currency in which any note or any premium or any
interest on the notes or any additional amounts payable with respect to
the notes is payable;
- impair the right to institute suit for the enforcement of any payment on
or after the stated maturity of the notes or, in the case of redemption,
on or after the redemption date or, in the case of a change in control,
after the change in control purchase date;
31
- reduce the percentage and principal amount of the outstanding notes, the
consent of whose holders is required in order to take specified actions;
- change any of our or Apache Canada's obligations to maintain an office or
agency in the places and for the purposes required by the indenture;
- modify or affect in any manner adverse to the holders of the notes the
terms and conditions of our or Apache Canada's obligations regarding the
due and punctual payment of principal or, any premium on or all interest
on, or additional amounts in respect of, the notes; or
- modify any of the above provisions.
The holders of at least a majority in aggregate principal amount of notes
may, on behalf of the holders of all notes, waive our or Apache Canada's
compliance with specified restrictive provisions of the indenture with respect
to the notes. The holders of not less than a majority in aggregate principal
amount of the notes may, on behalf of all holders of the notes, waive any past
default and its consequences under the indenture with respect to the notes,
except:
- a payment default with respect to the notes; or
- a default of a covenant or provision of the indenture that cannot be
modified or amended without the consent of the holder of the notes.
ASSUMPTION OF THE OBLIGATIONS UNDER THE NOTES BY APACHE
Under the indenture, we may, at our option, assume Apache Canada's
obligations under the notes if:
- we expressly assume the obligations in an assumption agreement or
supplemental indenture that is executed and delivered to the trustee in a
form that is acceptable to the trustee;
- no event of default and no event that, after a notice or the lapse of
time or both, would become an event of default occurs and is continuing
after giving effect to our assuming the obligations; and
- we expressly agree in an assumption agreement or supplemental indenture
to indemnify the holders of the notes against any tax, assessment or
government charge imposed on a holder or required to be withheld or
deducted from any payment made to a holder, including any charge or
withholding required on account of this indemnification, and any costs or
expenses incurred by a holder on account of our assuming the obligations.
If we deliver to the trustee an opinion of an independent tax counsel or
consultant of recognized standing stating that the holders will not
recognize income, gain or loss, for U.S. federal income tax purposes, as
a result of assuming these obligations, then a holder will have the above
indemnification rights only if and when gain for U.S. federal income tax
purposes is actually recognized by a holder.
If we assume Apache Canada's obligations, as described above, we will be
substituted for Apache Canada for all purposes regarding the notes so assumed as
if we had been the original issuer of the notes.
ASSIGNMENT TO ANOTHER SUBSIDIARY
Under the indenture, Apache Canada may assign its obligations under the
notes to any of our other subsidiaries and the new subsidiary will be treated,
for all purposes, as Apache Canada's successor with respect to the notes
assigned, provided that the conditions described under "-- Consolidation, Merger
and Sale of Assets" below are satisfied.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may, without the consent of the holders of the notes, consolidate or
merge with or into, or convey, transfer or lease our properties and assets
substantially as an entirety to, any person that is a corporation, limited
liability company, partnership, joint venture or joint stock company organized
and validly existing under the laws of any domestic jurisdiction. We may also
permit any of those persons to
32
consolidate with or merge into us or convey, transfer or lease its properties
and assets substantially as an entirety to us, as long as any successor person
assumes our obligations on the securities and after giving effect to the
transaction no event of default under the indenture, and no event which, after
notice or lapse of time or both, would become an event of default, will have
occurred and be continuing, and as long as some other conditions are met.
Apache Canada may, without the consent of the holders of the notes,
consolidate or merge into, or convey, transfer or lease its properties and
assets substantially as an entirety to any person that is a corporation, limited
liability company, partnership, joint venture or joint stock company and is
organized and validly existing under the laws of any jurisdiction or permit any
such person to consolidate with or merge into or convey, transfer or lease its
properties and assets substantially as an entirety to us or Apache Canada, as
long as the person assumes Apache Canada's obligations on the notes and under
the indenture, and immediately after the transaction, no event of default, and
no event that, after notice or lapse of time or both, would become an event of
default, under the indenture has occurred.
Also, the successor person to us or Apache Canada must expressly agree in a
supplemental indenture:
- that all payments on the notes in respect of the principal of and any
premium and interest shall be made without withholding or deduction for
any present or future taxes, duties, assessments or governmental charges
of any nature imposed or levied by or on behalf of the person's
jurisdiction of organization or political subdivision or taxing
authority, unless the taxes are required by the jurisdiction, subdivision
or authority to be withheld or deducted, in which case the person will
pay additional amounts so that after deducting the taxes the holder of a
note receives the same amount that the holder would have received if no
withholding or deduction was required; and
- to indemnify immediately the holder of each note against
- any tax, assessment or governmental charge imposed on the holder or
required to be withheld or deducted from any payment to the holder as a
consequence of the transaction; and
- any other tax costs or other tax expenses of the transaction.
If we, Apache Canada or the successor person deliver an opinion of an
independent counsel or a tax consultant of recognized standing that the holder
will not recognize income, gain or loss for U.S. federal income tax purposes as
a result of the transaction, a holder will have this right to indemnification
only if and when gain for U.S. federal income tax purposes is actually
recognized by the holder.
PAYMENT OF ADDITIONAL AMOUNTS
Apache Canada must make all payments of, or in respect of, principal of and
any premium and interest on the notes without withholding or deduction for any
taxes imposed or levied by or on behalf of any Canadian taxing authorities. If
those taxing authorities nonetheless require Apache Canada to withhold taxes,
Apache Canada must pay as additional interest an amount that will result, after
deducting the taxes, in the payment to the holder of the notes of the amount
that would have been paid if no withholding was required. Apache Canada is not
required to pay this additional interest for or on account of:
- any tax that would not have been imposed but for the fact that the holder
- was a resident, domiciled or national of, or engaged in business or
maintained a permanent establishment or was physically present in
Canada or otherwise had some connection with Canada other than merely
owning the note;
- presented, if presentation is required, the note for payment in Canada,
unless the note could not have been presented for payment elsewhere;
- presented, if presentation is required, the note more than 30 days
after the date on which the payment relating to the note first became
due and payable or provided for, whichever is later, except to the
extent that the holder would have been entitled to the additional
interest if it had presented the note for payment on any day within
this 30 day period; 33
- is not dealing with Apache Canada, directly or indirectly, on an
arm's-length basis; or
- entered into or participated in a scheme to avoid Canadian withholding
tax that Apache Canada was neither a party to nor participated in;
- any estate, inheritance, gift, sale, transfer, personal property or
similar tax, assessment or other governmental charge;
- any tax that is payable other than by withholding or deduction from
payments of, or in respect of, principal of or any premium or interest on
the notes;
- any tax that is imposed or withheld because the holder or the beneficial
owner of a note failed, upon request of Apache Canada, to provide
information concerning the nationality, residence or identity of the
holder or the beneficial owner, or to make any declaration or other
similar claim or satisfy any information or reporting requirement that is
required or imposed by Canadian federal income tax laws as a precondition
to exemption from all or part of the tax, assessment or other
governmental charge; or
- any combination of the four items listed above.
Apache Canada also does not have to pay additional interest with respect to
any payment of the principal of or any premium or interest on the note to any
holder that is a fiduciary or partnership or other than the sole beneficial
owner of the payment to the extent the payment would be required by the laws of
Canada to be included in the income for tax purposes of a beneficiary or settlor
with respect to a fiduciary or a member of the partnership or a beneficial owner
who would not have been entitled to the additional interest if it held the note.
Any amounts paid by us, as guarantor, under the indenture must be paid
without withholding or deduction for any taxes imposed or levied by or on behalf
of any U.S. taxing authority. If a U.S. taxing authority nonetheless requires us
to withhold taxes, we must pay an additional amount so that the net amount paid
to the holder, after deducting the taxes, is not less than the amount then due
and payable on the notes. We are not required to pay this additional amount to
any holder of a note who is:
- subject to U.S. tax by reason of the holder being connected with the U.S.
otherwise than by holding or owning the notes; or
- not dealing at arm's length with us.
Where this prospectus mentions, in any context, the payment of principal
of, or any premium or interest on, or in respect of, the notes or the net
proceeds received on the sale or exchange of the notes, this amount shall be
deemed to include the payment of additional amounts provided for in the
indenture to the extent that the additional amounts are, were or would be
payable under the indenture.
REDEMPTION FOR TAXATION REASONS
If Canadian taxing authorities change or amend their laws, regulations or
published tax rulings or the official administration, application or
interpretation of their laws, regulations or published tax rulings either
generally or in relation to the notes, and Apache Canada determines that:
- it will be required to pay any additional amounts under the indenture or
the terms of any note in respect of interest on the next succeeding
interest payment date; and
- Apache Canada cannot avoid paying the additional amount by taking
reasonable measures available to it,
it may, at its option, redeem all, but not less than all, of the notes of any
series in respect of which any additional amounts would be so payable at any
time, upon not less than 30 nor more than 60 days' written
34
notice as provided in the indenture. The redemption price will be equal to 100
percent of the principal amount of the notes plus accrued interest to the date
of redemption. Notwithstanding the foregoing:
- no notice of redemption may be given earlier than 60 days before the
earliest date on which Apache Canada would be obligated to pay any
additional amounts if a payment was due in respect of the notes; and
- at the time any redemption notice is given, the obligation to pay any
additional amounts must remain in effect.
If
- Apache Canada has consolidated with or merged into, or conveyed or
transferred or leased its properties and assets as an entirety or
substantially as an entirety to, any person that is organized under the
laws of any jurisdiction other than the United States or Canada;
- as the result of any change in or any amendment to the laws, regulations
or published tax rulings of the jurisdiction under which Apache Canada's
successor is organized or of its political subdivisions or taxing
authorities affecting taxation, or any change in the official
administration, application or interpretation of its laws, regulations or
published tax rulings either generally or in relation to any particular
notes, Apache Canada's successor must pay any additional amounts under
the indenture or the terms of the notes in respect of interest on the
notes on the next succeeding interest payment date; and
- Apache Canada or its successor taking reasonable measures cannot avoid
this obligation,
then Apache Canada or its successor may redeem all, but not less than all, of
the notes in respect of which any additional amounts would be so payable at any
time, upon not less than 30 nor more than 60 days' written notice as provided in
the indenture, at a redemption price equal to 100 percent of the principal
amount of the notes plus accrued interest to the date fixed for redemption. No
notice of redemption may be given earlier than 60 days before the earliest date
on which a successor must pay any additional amounts if a payment was due in
respect of the notes. Also, at the time any redemption notice is given, the
successor's obligation to pay any additional amounts must remain in effect.
CONCERNING THE TRUSTEE
JPMorgan Chase Bank, New York, New York is the trustee under the indenture.
JPMorgan Chase Bank is an agent bank and a lender under our global credit
facility.
SERVICE OF PROCESS
Under the indenture, Apache Canada has irrevocably appointed CT Corporation
System, 111 8th Avenue, New York, New York 10011, as its agent for service of
process in any suit, action or proceeding with respect to the indenture, the
notes or the guarantees issued thereunder and for actions brought under the
federal or state securities laws brought in any federal or state court located
in New York City, and submitted to jurisdiction in New York.
GOVERNING LAW
The indenture, the notes and the guarantees are governed by and construed
under the laws of the State of New York, without regard to the principles of
conflicts of laws, except as may otherwise be required by mandatory provisions
of law. All matters governing the authorization and execution of the indenture
and the notes by Apache Canada will be governed by and construed in accordance
with the laws of Nova Scotia, Canada.
35
ENFORCEABILITY OF JUDGMENTS
Since a substantial portion of Apache Canada's assets are outside the
United States, any judgment obtained in the United States against Apache Canada,
including judgments with respect to the payment of principal or interest on the
notes, may not be collectible in the United States.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
the registration rights agreement without charge by writing to Apache
Corporation, 2000 Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400,
Attention: Corporate Secretary.
BOOK-ENTRY, DELIVERY AND FORM
THE GLOBAL NOTES
The exchange notes will be issued in the form of one or more registered
notes in global form, without interest coupons (the "global notes").
Upon issuance, each of the global notes will be deposited with the trustee
as custodian for DTC and registered in the name of Cede & Co., as nominee of
DTC.
Ownership of beneficial interests in each global note will be limited to
persons who have accounts with DTC ("DTC participants") or persons who hold
interests through DTC participants. Apache Canada expects that under procedures
established by DTC:
- upon deposit of each global note with DTC's custodian, DTC will credit
portions of the principal amount of the global note to the accounts of
the DTC participants designated by the initial purchasers; and
- ownership of beneficial interests in each global note will be shown on,
and transfer of ownership of those interests will be effected only
through, records maintained by DTC (with respect to interests of DTC
participants) and the records of DTC participants (with respect to other
owners of beneficial interests in the global note).
DEPOSITARY PROCEDURES
All interests in the global notes will be subject to the operations and
procedures of DTC. The following description of the operations and procedures of
DTC is provided solely as a matter of convenience. These operations and
procedures are solely within the control of DTC and is subject to changes by
DTC. Neither we nor Apache Canada take responsibility for these operations and
procedures, and urge investors to contact DTC or its participants directly to
discuss these matters.
DTC has advised us and Apache Canada that DTC is a limited-purpose trust
company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and Indirect Participants.
Under the terms of the indenture, we, Apache Canada and the trustee will
treat the persons in whose names the notes, including the global notes, are
registered as the owners thereof for the purpose of receiving payments and for
any and all other purposes whatsoever. Consequently, neither Apache, Apache
36
Canada, the trustee nor any agent of Apache, Apache Canada or the trustee has or
will have any responsibility or liability for:
- any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interests in the global notes, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or
Indirect Participant's records relating to the beneficial ownership
interests in the global notes; or
- any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants.
DTC has advised us and Apache Canada that its current practices, upon
receipt of any payment in respect of securities such as the notes (including
principal and interest (including special interest), if any), is to credit the
accounts of the relevant Participants with the payment on the payment date, in
amounts proportionate to their respective holdings in principal amount of
beneficial interests in the relevant security such as the global notes as shown
on the records of DTC. Payments by Participants and the Indirect Participants to
the beneficial owners of notes will be governed by standing instructions and
customary practices and will not be the responsibility of DTC, the trustee,
Apache or Apache Canada. Neither Apache, Apache Canada nor the trustee will be
liable for any delay by DTC or its Participants in identifying the beneficial
owners of the notes, and Apache, Apache Canada and the trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its nominee
as the registered owner of the notes for all purposes.
Interests in the global notes will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will, therefore,
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its Participants. Transfers between Participants in DTC
will be effective in accordance with DTC's procedures, and will be settled in
same-day funds.
DTC has advised us and Apache Canada that it will take any action permitted
to be taken by a holder of notes only at the direction of one or more
Participants to whose account DTC interests in the global notes are credited and
only in respect of such portion of the aggregate principal amount of the notes
as to which such Participant or Participants has or have given direction. If,
however, there is an event of default under the notes, DTC reserves the right to
exchange global notes for legended notes in certificated form and to distribute
such notes to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that we and Apache Canada believe to be reliable,
but we and Apache Canada take no responsibility for the accuracy of that
information.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the global notes among Participants in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of Apache, Apache Canada or the
trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants of their respective obligations under the
rules and procedures governing their operations.
CERTIFICATED NOTES
Notes in physical, certificated form will be issued and delivered to each
person that DTC identifies as a beneficial owner of the related notes only if:
- DTC notifies Apache Canada at any time that it is unwilling or unable to
continue as depositary for the global notes and a successor depositary is
not appointed within 90 days;
- DTC ceases to be registered as a clearing agency under the Securities
Exchange Act of 1934 and a successor depositary is not appointed within
90 days;
37
- Apache Canada, at its option, notifies the trustee that it elects to
cause the issuance of certificated notes; or
- an event of default as provided in the indenture with respect to the
notes should occur and be continuing.
SAME DAY SETTLEMENT AND PAYMENT
The indenture will require that payments in respect of the notes
represented by the global note (including principal, premium, if any, and
interest (including special interest), if any) be made by wire transfer of
immediately available funds to the accounts specified by the global note holder.
With respect to certificated notes, Apache Canada will make all payments of
principal, premium, if any, interest (including special interest), if any, by
wire transfer of immediately available funds to the accounts specified by the
holders thereof or, if no such account is specified, by mailing a check to each
such holder's registered address. Apache and Apache Canada expect that secondary
trading in the certificated notes will also be settled in immediately available
funds.
FEDERAL INCOME TAX CONSIDERATIONS
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following section describes the anticipated U.S. federal income tax
consequences relating to the exchange of outstanding notes for exchange notes
pursuant to the exchange offer. This description is based upon the Internal
Revenue Code of 1986, as amended; existing administrative pronouncements and
judicial decisions; and existing and proposed Treasury regulations, each as
available and in effect as of the date hereof. All of the foregoing are subject
to change, and any such change could be retroactive and could affect the
continuing validity of this description.
This description deals only with exchange notes held as capital assets by
initial holders that acquire the exchange notes pursuant to the exchange offer.
This description does not discuss all of the tax consequences that may be
relevant to holders subject to special rules, such as:
- financial institutions;
- real estate investment trusts;
- regulated investment companies;
- grantor trusts;
- insurance companies;
- dealers or traders in securities or currencies;
- persons holding notes in connection with a hedging transaction, straddle,
conversion transaction or other integrated transaction; or
- persons who have ceased to be United States citizens or to be taxed as
resident aliens.
This description also does not address the U.S. federal estate and gift tax
consequences or any applicable foreign, state or local tax laws.
Holders should consult their tax advisors with regard to the application of
U.S. federal income and estate tax laws to their particular situation, as well
as any tax consequences arising under the laws of any state, local or foreign
taxing jurisdiction.
EXCHANGE OFFER
The exchange of outstanding notes by a holder for exchange notes pursuant
to the exchange offer will not constitute a taxable exchange for U.S. federal
income tax purposes. A holder will not recognize gain or
38
loss upon the receipt of exchange notes pursuant to the exchange offer and will
be required to treat the exchange notes and any payments thereon for U.S.
federal income tax purposes as if the exchange offer had not occurred. A
holder's holding period for exchange notes will include the holding period for
the outstanding notes exchanged pursuant to the exchange offer and a holder's
adjusted basis in exchange notes will be the same as such holder's adjusted
basis in such outstanding notes.
The above description is not intended to constitute a complete analysis of
all tax consequences relating to the exchange of outstanding notes for exchange
notes pursuant to the exchange offer or the acquisition, ownership, and
disposition of the exchange notes. You should consult with your own tax advisor
regarding the application of the U.S. federal income tax laws to your particular
situation, as well as any tax consequences that may arise under the laws of any
state, local, or other taxing jurisdiction.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the anticipated Canadian federal income tax
considerations relating to the exchange of outstanding notes for exchange notes
pursuant to the exchange offer to persons who acquired their outstanding notes
pursuant to the original private offering of such notes on May 15, 2003, and
who, for the purpose of the Income Tax Act (Canada) (the "ITA"), are
non-residents of Canada and hold their outstanding notes as capital property.
This summary is based on the current provisions of the ITA and the regulations
thereunder, the current assessing and administrative practices of the Canada
Customs and Revenue Agency (the "CCRA"), all specific proposals to amend the ITA
and the regulations thereunder publicly announced by the Minister of Finance
(Canada) before the date of this prospectus and the assumption that the exchange
of outstanding notes for exchange notes, pursuant to the exchange offer, does
not constitute a repayment, under the commercial laws of the jurisdiction which
governs the outstanding notes, of the indebtedness evidenced by the outstanding
notes. This summary does not otherwise take into account or anticipate changes
in the law or in the assessing and administrative practices of the CCRA, whether
by judicial, governmental or legislative decision or action, nor does it take
into account tax legislation or considerations of any province or territory of
Canada or any jurisdiction other than Canada.
This summary is of a general nature only and is not intended to be, and
should not be interpreted as, legal or tax advice to any holder of outstanding
notes. Holders of outstanding notes should consult their own tax advisors with
regard to the application of Canadian federal income tax laws to their
particular situation.
The exchange of outstanding notes by a holder for exchange notes pursuant
to the exchange offer will not constitute a taxable event under the ITA.
Accordingly, no tax on income (including capital gains) will be payable under
the ITA in respect of the exchange of outstanding notes for exchange notes
pursuant to the exchange offer.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account under
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of exchange notes.
This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of exchange notes
received in exchange for outstanding notes if the outstanding notes were
acquired as a result of market-making activities or other trading activities. We
have agreed to make this prospectus, as amended or supplemented, available to
any broker-dealer to use in connection with any such resale for a period of at
least 90 days after the expiration date.
39
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own accounts
under the exchange offer may be sold from time to time in one or more
transactions:
- in the over-the-counter market;
- in negotiated transactions;
- through the writing of options on the exchange notes or a combination of
such methods of resale;
- at market prices prevailing at the time of resale;
- at prices related to such prevailing market prices; or
- at negotiated prices.
Any resale may be made directly to purchasers or to or through brokers or
dealers. Brokers or dealers may receive compensation in the form of commissions
or concessions from any broker-dealer or the purchasers of any such exchange
notes. An "underwriter" within the meaning of the Securities Act includes:
- any broker-dealer that resells exchange notes that were received by it
for its own account pursuant to the exchange offer; or
- any broker or dealer that participates in a distribution of such exchange
notes.
Any profit on any resale of exchange notes and any commissions or
concessions received by any persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Based on interpretations by the staff of the SEC in no-action letters
issued to third parties, we believe that a holder or other person who receives
exchange notes will be allowed to resell the exchange notes to the public
without further registration under the Securities Act and without delivering to
the purchasers of the exchange notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. The holder (other than a
person that is an "affiliate" of Apache within the meaning of Rule 405 under the
Securities Act) who receives exchange notes in exchange for outstanding notes in
the ordinary course of business and who is not participating, need not intend to
participate or have an arrangement or understanding with person to participate
in the distribution of the exchange notes.
If, however, any holder acquires exchange notes in the exchange offer for
the purpose of distributing or participating in a distribution of the exchange
notes, the holder cannot rely on the position of the staff of the SEC enunciated
in such no-action letters or any similar interpretive letters. The holder must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. A secondary resale
transaction should be covered by an effective registration statement containing
the selling security holder information required by Item 507 or 508, as
applicable, of Regulation S-K under the Securities Act, unless an exemption from
registration is otherwise available.
Further, each broker-dealer that receives exchange notes for its own
account in exchange for outstanding notes, where the outstanding notes were
acquired by such participating broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of any exchange notes. We have agreed,
for a period of not less than 90 days from the consummation of the exchange
offer, to make this prospectus available to any broker-dealer for use in
connection with any such resale. For a period of not less than 90 days after the
expiration date we will promptly upon request send additional copies of this
prospectus and any amendment or supplement to this prospectus to any
broker-dealer that requests those documents in the letter of transmittal. We
have agreed to pay all expenses incident to the exchange offer, including the
expenses of one counsel for the holders of the outstanding notes, other than
commissions or concessions of
40
any brokers or dealers. We will indemnify the holders of the outstanding notes
against liabilities under the Securities Act, including any broker-dealers.
LEGAL MATTERS
The validity of the exchange notes and guarantees will be passed upon for
us and Apache Canada by Chamberlain, Hrdlicka, White, Williams & Martin,
Houston, Texas. In addition, particular matters concerning the laws of Canada
and Nova Scotia will be passed upon for Apache Canada by Bennett Jones LLP,
Calgary, Alberta, Canada and McInnes Cooper, Nova Scotia, Canada, respectively.
EXPERTS
The consolidated financial statements of Apache Corporation appearing in
Apache Corporation's Annual Report (Form 10-K/A) for the year ended December 31,
2002 and the statement of combined revenues and direct operating expenses of the
oil and gas properties purchased by Apache Corporation from BP p.l.c. for the
year ended December 31, 2002, included as Exhibit 99.4 to the Amendment No. 1
and Amendment No. 2 to Current Report on Form 8-K/A dated March 18, 2003 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
Our consolidated financial statements as of December 31, 2001 and for the
years ended December 31, 2001 and 2000 included in our Annual Report on Form
10-K for the year ended December 31, 2002 (the "2002 Annual Report") have been
incorporated by reference in this prospectus in reliance upon the report of
Arthur Andersen LLP, independent public accountants, and upon the authority of
said firm as experts in accounting and auditing. The Arthur Andersen LLP report
on the December 31, 2001 and 2000 consolidated financial statements, dated March
12, 2002, included in the 2002 Annual Report is a copy of the previously issued
Arthur Andersen LLP report, which has not been reissued because Arthur Andersen
LLP has ceased operations.
Because we will not be able to obtain, after reasonable efforts, the
written consent of Arthur Andersen LLP to our naming it in this prospectus as
having certified our financial statements for the two years ended December 31,
2001, as required by Section 7 of the Securities Act, we will dispense with the
filing of their consent in reliance on Rule 437a promulgated under the
Securities Act.
In light of the circumstances described above and the publicly reported
proceedings against Arthur Andersen, relief that may be available to investors
under the federal securities laws against accounting firms will not be available
against Arthur Andersen.
On April 2, 2002, we filed a Current Report on Form 8-K announcing that our
board of directors engaged Ernst & Young LLP as independent public accountants
for the fiscal year 2002, replacing Arthur Andersen LLP. The decision to change
independent public accountants was not the result of any disagreement with
Arthur Andersen LLP on matters of accounting principles or practices, financial
statement disclosure or auditing scope and procedure.
The information incorporated by reference into this prospectus regarding
our total proved reserves was prepared by us and reviewed by Ryder Scott Company
Petroleum Engineers, as stated in their letter reports, and is incorporated by
reference in reliance upon the authority of said firm as experts in such
matters.
41
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$350,000,000
APACHE FINANCE CANADA CORPORATION
EXCHANGE OFFER FOR $350,000,000
4.375% NOTES DUE 2015
FULLY AND UNCONDITIONALLY GUARANTEED BY
(APACHE CORPORATION LOGO)
----------
PROSPECTUS
----------
January , 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on unauthorized information. This prospectus is not an offer to sell or buy
any securities in any jurisdiction where it is unlawful. The information in this
prospectus is current as of the date hereof.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
APACHE CORPORATION
Apache's Certificate of Incorporation and bylaws provide that, to the full
extent permitted under the Delaware General Corporation Law, Apache's directors
shall not be personally liable for monetary damages. Apache's bylaws provide
that Apache shall indemnify its officers, directors, employees and agents.
Section 145 of the Delaware General Corporation Law, inter alia, authorizes
a corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, other than an action by or in the right of the corporation, because
such person is or was a director, officer, employee or agent of the corporation
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reason to believe his conduct was
unlawful. Similar indemnity is authorized for such persons against expenses,
including attorneys' fees, actually and reasonably incurred in defense or
settlement of any such pending, completed or threatened action or suit by or in
the right of the corporation if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and provided further that, unless a court of competent jurisdiction
otherwise provides, such person shall not have been adjudged liable to the
corporation. Any such indemnification may be made only as authorized in each
specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him. Apache maintains policies
insuring its and its subsidiaries' officers and directors against specified
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933.
Article VII of Apache's bylaws provides, in substance, that directors,
officers, employees and agents of Apache shall be indemnified to the extent
permitted by Section 145 of the Delaware General Corporation Law. Additionally,
Article Seventeen of Apache's restated certificate of incorporation eliminates
in specified circumstances the monetary liability of directors of Apache for a
breach of their fiduciary duty as directors. These provisions do not eliminate
the liability of a director:
- for a breach of the director's duty of loyalty to Apache or its
stockholders;
- for acts or omissions by the director not in good faith;
- for acts or omissions by a director involving intentional misconduct or a
knowing violation of the law;
- under Section 174 of the Delaware General Corporation Law, which relates
to the declaration of dividends and purchase or redemption of shares in
violation of the Delaware General Corporation Law; and
- for transactions from which the director derived an improper personal
benefit.
II-1
Reference is made to the form of underwriting agreements to be incorporated
by reference in this registration statement for a description of the
indemnification arrangements Apache and Apache Canada agree to in connection
with offerings of the securities registered by this registration statement.
APACHE FINANCE CANADA CORPORATION
The Articles of Association of Apache Finance Canada Corporation provide,
in substance, that every director and officer of Apache Canada shall be
indemnified by Apache Finance Canada Corporation against all costs, losses and
expenses which such person may incur by reason of any contract entered into, or
any act or thing done, by him in such capacity or in anyway in the discharge of
his duties, including acts or omissions not in good faith or other breaches of
fiduciary duty, unless such costs, losses and expenses result from the
dishonesty of the director or the officer.
Nova Scotia law does not make any statutory provision for, nor impose any
statutory restriction upon, the ability of a company to indemnify directors and
officers.
Although the matter has not been judicially considered, the obligation to
indemnify may not extend to losses occasioned by a breach by a director of his
common law fiduciary duty to Apache Finance Canada Corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
**4.1 Indenture dated as of November 23, 1999 among Apache
Corporation, Apache Finance Canada Corporation and JPMorgan
Chase Bank, formerly known as The Chase Manhattan Bank, as
trustee
**4.2 Registration Rights Agreement dated May 15, 2003 among
Apache, Apache Canada and the representatives of the Initial
Purchasers.
**4.3 Form of Exchange Note.
*5.1.1 Opinion of Chamberlain Hrdlicka White Williams & Martin
regarding legality of securities being registered by Apache.
*5.1.2 Opinion of Sidley Austin Brown & Wood LLP regarding legality
of securities being registered by Apache.
*5.2 Opinion of McInnes Cooper regarding legality under the laws
of Nova Scotia of securities being registered by Apache
Canada.
12.1 Statements of computation of ratios of earnings to fixed
charges (incorporated by reference to Exhibit 12.1 to
Apache's Quarterly Report on Form 10-Q, as amended by Form
10-Q/A, for the quarter ended September 30, 2003, SEC File
No. 1-4300).
*23.1 Consent of Ernst & Young LLP, Houston, Texas.
23.2 Consent of Arthur Andersen LLP, Houston, Texas (omitted
pursuant to Rule 437a of the Securities Act of 1933, as
amended).
*23.3 Consent of Chamberlain, Hrdlicka, White, Williams & Martin
(included in Exhibit 5.1.1).
*23.4 Consent of Bennett Jones LLP.
*23.5 Consent of McInnes Cooper (included in Exhibit 5.2).
**23.6 Consent of Ryder Scott Company Petroleum Engineers.
**24.1 Power of Attorney (included in Part II as a part of the
signature pages of the Registration Statement).
**25.1 Form T-1 Statement of Eligibility and Qualification under
Trust Indenture Act of 1939 of JPMorgan Chase Bank as
trustee under the Indenture among Apache, Apache Finance
Canada Corporation and JPMorgan Chase Bank, as trustee.
II-2
EXHIBIT
NUMBER DESCRIPTION
------- -----------
**25.2 Form T-1 Statement of Eligibility and Qualification under
Trust Indenture Act of 1939 of JPMorgan Chase Bank as
guarantee trustee under the guarantee of Apache Corporation
with respect to the Indenture among Apache, Apache Finance
Canada Corporation and JPMorgan Chase Bank, as trustee.
*99.1 Form of Letter of Transmittal.
*99.2 Form of Notice of Guaranteed Delivery.
*99.3 Form of Exchange Agent Agreement.
---------------
* Filed herewith
**Previously filed
(b) Financial Schedules:
None.
ITEM 22. UNDERTAKINGS
1. The undersigned Registrants hereby undertake:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculations of
Registration Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, that are
incorporated by reference in the Registration Statement;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Apache's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by
II-3
reference in the Registration Statement) shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the provisions described under Item 20 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
any Registrant of expenses incurred or paid by a director, officer or
controlling person of that Registrant in the successful defense of any action,
suit or proceeding) is asserted against any Registrant by such director, officer
or controlling person in connection with the securities being registered, that
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
4. The undersigned Registrants hereby undertake that:
(a) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act, as amended, shall be
deemed to be part of this Registration Statement as of the time it was
declared effective; and
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
5. The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by into this prospectus pursuant to Items 4,
10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This undertaking includes information contained in
documents filed subsequent to the effective date of this registration statement
through the date of responding to this request.
6. The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction that was not
the subject of and included in this registration statement when it became
effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act, Apache Corporation has
duly caused this Amendment No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 23rd day of January, 2004.
APACHE CORPORATION
By: /s/ ROGER B. PLANK
------------------------------------
Roger B. Plank
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons, in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Director, President, Chief January 23, 2004
-------------------------------------- Executive Officer and Chief
G. Steven Farris Operating Officer
(Principal Executive Officer)
/s/ ROGER B. PLANK Executive Vice President and January 23, 2004
-------------------------------------- Chief Financial Officer
Roger B. Plank (Principal Financial Officer)
* Vice President and Controller January 23, 2004
-------------------------------------- (Principal Accounting Officer)
Thomas L. Mitchell
* Director January 23, 2004
--------------------------------------
Raymond Plank
* Director January 23, 2004
--------------------------------------
Frederick M. Bohen
* Director January 23, 2004
--------------------------------------
Randolph M. Ferlic
* Director January 23, 2004
--------------------------------------
Eugene C. Fiedorek
* Director January 23, 2004
--------------------------------------
A.D. Frazier, Jr.
* Director January 23, 2004
--------------------------------------
Patricia A. Graham
* Director January 23, 2004
--------------------------------------
John A. Kocur
SIGNATURE TITLE DATE
--------- ----- ----
* Director January 23, 2004
--------------------------------------
George D. Lawrence
* Director January 23, 2004
--------------------------------------
F. H. Merelli
* Director January 23, 2004
--------------------------------------
Rodman D. Patton
* Director January 23, 2004
--------------------------------------
Charles J. Pitman
* Director January 23, 2004
--------------------------------------
Jay A. Precourt
*By: /s/ ROGER B. PLANK
------------------------------
Roger B. Plank
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act, Apache Finance Canada
Corporation has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Houston, State of Texas, on the 23rd day of January, 2004.
APACHE FINANCE CANADA CORPORATION
By: /s/ ROGER B. PLANK
------------------------------------
Roger B. Plank
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Director, Chief Executive Officer January 23, 2004
-------------------------------- (Principal Executive Officer)
G. Steven Farris
/s/ ROGER B. PLANK Director, Executive Vice January 23, 2004
-------------------------------- President and Chief Financial
Roger B. Plank Officer
(Principal Financial Officer)
* Vice President and Controller January 23, 2004
-------------------------------- (Principal Accounting Officer)
Thomas L. Mitchell
* Director January 23, 2004
--------------------------------
Floyd R. Price
* Director January 23, 2004
--------------------------------
Eric L. Harry
* Director January 23, 2004
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John F. Curran
* Director January 23, 2004
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James G. Smeltzer
/s/ ROGER B. PLANK
*By: ------------------------------
Roger B. Plank
Attorney-in-Fact
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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**4.1 Indenture dated as of November 23, 1999 among Apache
Corporation, Apache Finance Canada Corporation and JPMorgan
Chase Bank, formerly known as The Chase Manhattan Bank, as
trustee
**4.2 Registration Rights Agreement dated May 15, 2003 among
Apache, Apache Canada and the representatives of the Initial
Purchasers.
**4.3 Form of Exchange Note.
*5.1.1 Opinion of Chamberlain Hrdlicka White Williams & Martin
regarding legality of securities being registered by Apache.
*5.1.2 Opinion of Sidley Austin Brown & Wood LLP regarding legality
of securities being registered by Apache.
*5.2 Opinion of McInnes Cooper regarding legality under the laws
of Nova Scotia of securities being registered by Apache
Canada.
12.1 Statements of computation of ratios of earnings to fixed
charges (incorporated by reference to Exhibit 12.1 to
Apache's Quarterly Report on Form 10-Q, amended by Form
10-Q/A, for the quarter ended September 30, 2003, SEC File
No. 1-4300).
*23.1 Consent of Ernst & Young LLP, Houston, Texas.
23.2 Consent of Arthur Andersen LLP, Houston, Texas (omitted
pursuant to Rule 437a of the Securities Act of 1933, as
amended).
*23.3 Consent of Chamberlain, Hrdlicka, White, Williams & Martin
(included in Exhibit 5.1.1).
*23.4 Consent of Bennett Jones LLP.
*23.5 Consent of McInnes Cooper (included in Exhibit 5.2).
**23.6 Consent of Ryder Scott Company Petroleum Engineers.
**24.1 Power of Attorney (included in Part II as a part of the
signature pages of the Registration Statement).
**25.1 Form T-1 Statement of Eligibility and Qualification under
Trust Indenture Act of 1939 of JPMorgan Chase Bank as
trustee under the Indenture among Apache, Apache Finance
Canada Corporation and JPMorgan Chase Bank, as trustee.
**25.2 Form T-1 Statement of Eligibility and Qualification under
Trust Indenture Act of 1939 of JPMorgan Chase Bank as
guarantee trustee under the guarantee of Apache Corporation
with respect to the Indenture among Apache, Apache Finance
Canada Corporation and JPMorgan Chase Bank, as trustee.
*99.1 Form of Letter of Transmittal.
*99.2 Form of Notice of Guaranteed Delivery.
*99.3 Form of Exchange Agent Agreement.
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* Filed herewith
** Previously filed