Stock Report | October 22, 2011 | NYS Symbol: APA | APA is in the S&P 500

Apache Corp
S&P Recommendation STRONG BUY

55555

Price $94.73 (as of Oct 21, 2011)

12-Mo. Target Price $145.00

Investment Style Large-Cap Blend

UPDATE: PLEASE SEE THE ANALYST'S LATEST RESEARCH NOTE IN THE COMPANY NEWS SECTION

GICS Sector Energy Sub-Industry Oil & Gas Exploration & Production

Summary Apache is one of the largest independent exploration and production companies in the U.S. The company explores for, develops, and produces natural gas, crude oil, and natural gas liquids.

Key Stock Statistics (Source S&P, Vickers, company reports) 52-Wk Range $134.13– 73.04 Trailing 12-Month EPS $9.95 Trailing 12-Month P/E 9.5 $10K Invested 5 Yrs Ago $14,853 Price Performance
30-Week Mov. Avg. 12-Mo. Target Price
160 120

S&P Oper. EPS 2011E S&P Oper. EPS 2012E P/E on S&P Oper. EPS 2011E Common Shares Outstg. (M)

12.45 13.25 7.6 383.9

Market Capitalization(B) Yield (%) Dividend Rate/Share Institutional Ownership (%)

$36.370 0.63 $0.60 86

Beta S&P 3-Yr. Proj. EPS CAGR(%) S&P Credit Rating

1.28 33 A-

Qualitative Risk Assessment
10-Week Mov. Avg. Relative Strength GAAP Earnings vs. Previous Year Up Down No Change Volume Above Avg. Below Avg. STARS

LOW

MEDIUM

HIGH

80 60

Our risk assessment for APA reflects its participation in a highly capital-intensive industry that derives value based on commodity prices that can be highly volatile. However, APA is a large exploration and production company and is diversified across major producing regions. Quantitative Evaluations

Vol. Mil. 30 20 10 0 5 1 J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J 4

S&P Quality Ranking
D
5

AB B+ AA A+

C

B-

Relative Strength Rank
50
LOWEST = 1

MODERATE
HIGHEST = 99

2008

2009

2010

2011
Options: ASE, CBOE, P, Ph

Revenue/Earnings Data Revenue (Million $) 1Q 2Q 2011 3,925 4,338 2010 2,673 2,972 2009 1,634 2,093 2008 3,188 3,900 2007 1,997 2,468 2006 1,999 2,062 Earnings Per Share ($) 2011 2.86 3.17 2010 2.08 2.53 2009 -5.25 1.31 2008 3.03 4.28 2007 1.47 1.89 2006 1.97 2.17

Analysis prepared by Equity Analyst Michael Kay on Aug 18, 2011, when the stock traded at $104.89. Highlights
®

Investment Rationale/Risk
®

We believe a broader portfolio of assets has enlarged APA's opportunity set, providing visible production growth and significant exploration upside. First half 2011 production was up 21%, on track to meet growth targets of 13%-17%, reflecting an 80 rig global program and ramped activity at the U.S. onshore liquidsrich Granite Wash (10 rigs) and Permian Basin (24 rigs) plays. APA is benefiting from widening Brent crude (60% of oil volumes) differentials versus the U.S. WTI benchmark. A resumption of Gulf of Mexico deepwater drilling should allow APA to begin exploiting a deep prospect inventory. No disruptions in Egypt were reported and the Van Gogh field in Australia is back online after cyclone activity earlier in the year. APA's drilling capex budget of $7.5 billion for 2011 is up from $5.3 billion, excluding $12 billion in acquisitions. Under this budget, we expect substantial free cash flow this year. We see EPS of $12.45 in 2011 and $13.25 in 2012, up from adjusted EPS of $8.92 in 2010, reflecting production and oil price gains. APA's debtto-capital ratio is 24%, and we view its balance sheet as one of the strongest among peers.

We believe APA's $11.5 billion of acquisitions in 2010 will add significant future opportunity in core regions. In our view, APA has a proven track record of unlocking value from acquired assets, and it plans to focus much of 2011 on integration and exploiting mature reserves and focusing capital on international development projects. Its portfolio of reserves is balanced between liquids and natural gas (44/56) and is geographically diverse. In 2011, we see Canada and Egypt driving international production, while APA's Granite Wash and Permian Basin program should drive onshore domestic volumes. We expect APA to enhance its top-tier balance sheet with free cash flow in 2011, and we expect about $1 billion in divestments. Risks to our opinion and target price include unfavorable changes to economic, industry, and operating conditions, including increased costs, and difficulty replacing reserves. We think APA's large international oil projects provide solid growth visibility. We blend several valuation methods, including NAV ($151), DCF ($149; WACC 11%; terminal growth 3%), and relative metrics to derive our $145 target price.

3Q -3,013 2,332 3,365 2,499 2,261

4Q -3,434 2,570 1,937 3,014 1,967

Year -12,092 8,615 12,390 9,978 8,289

E2.94 2.12 1.30 3.52 1.83 1.94

E3.39 1.77 1.72 -8.80 3.19 1.56

E12.45 8.46 -0.87 2.10 8.39 7.64

Fiscal year ended Dec. 31. Next earnings report expected: NA. EPS Estimates based on S&P Operating Earnings; historical GAAP earnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)
Amount ($) Date Decl. Ex-Div. Date Stk. of Record Payment Date

®

®

®

®

0.150 0.150 0.150 0.150

11/22 02/22 05/18 09/20

01/19 04/19 07/20 10/19

01/21 04/22 07/22 10/21

02/22/11 05/23/11 08/22/11 11/22/11

Dividends have been paid since 1965. Source: Company reports.

Please read the Required Disclosures and Analyst Certification on the last page of this report.
Redistribution or reproduction is prohibited without written permission. Copyright ©2011 The McGraw-Hill Companies, Inc.

The transaction was completed on November 11. Fiedorek A. Leon (713-296-6692) Office 2000 Post Oak Blvd Ste 100. U. In 2010. and substantially all of BP's upstream natural gas business in western Alberta and British Columbia. 2011 | NYS Symbol: APA Apache Corp Business Summary August 18. Egypt holds APA's largest acreage position.95 billion barrels of oil equivalent (boe. including acquisitions totaling more than $11 billion. D. At year-end 2010. including approximately 1. APA is currently planning to divest $1. with a 92% success rate. Pittman Domicile Delaware Founded 1954 Employees 4. crude oil and natural gas liquids (NGLs). Central region. Acquisitions in 2010 substantially added to its asset base in the U. Lannie Board Members F. up from $5. Canada 26%.K. Egypt. On July 20. Merelli W. D. . develops and produces natural gas. F.S. In April 2010.S.3 billion in 2010.2 million gross acres. 5%. up from 610 in 2009.Stock Report | October 22. Exmouth and Browse Basins. D.J. and doubled oil drilling activity in the Permian Basin. APA's North American asset base comprises the U. FINANCIAL TRENDS. Farris R. We expect free cash flow to surpass $1. U. Outside of North America. On June 10.S.. Montgomery R. Jr. excluding acquisitions. Gulf Coast region. and onshore Argentina and Chile. C.80 in cash for each outstanding share of ME common stock. APA's interests are focused on the Gulf of Mexico. Telephone 713-296-6000. Josey C. Australia 11%. exploration activity is focused in the offshore Carnarvon. Proved oil and gas reserves grew 25%. S. We believe APA's project development inventory and strong balance sheet should provide built-in production growth and acquisition opportunities going forward.000 Redistribution or reproduction is prohibited without written permission. Apache Corp. offshore the U. In addition to being the largest acreage holder in Egypt's Western Desert. Australia. with more than 11 million gross acres that provide considerable exploration and development opportunities.S. where APA holds 12. 2011 CORPORATE OVERVIEW.K. in aggregate.3 million net in Western Alberta and British Columbia acquired from BP in 2010.2 billion in debt for a total value of approximately $3. Egypt contributed 24% of total production and 10% of total estimated proved reserves. versus peer averages of over 30%. the U. A.K. reflecting close to $12 billion in acquisitions. held 44% of estimated proved reserves. C.S. despite capital investments of $17 billion. Frazier. APA and EnCana Corporation (ECA) are 50% partners and control more than 400. 2010. likely legacy conventional properties in Canada. Ferlic E. 2010. Inc.A.apachecorp. Increases reflect the start-up of the Van Gogh field in 2010. A. and Egypt. Copyright ©2011 The McGraw-Hill Companies. the Permian region and Canada region.7 billion. J. Oil and gas production grew 13%. 2010. the U.5 billion in 2011. subject to an election feature and proration. APA has interests in Egypt. 0. 67% developed. Corporate Information Investor Contact A. the U. APA participated in drilling 904 gross wells.. In 2010 North America assets contributed 48% of production and 70% of estimated proved reserves at year end. the Gulf Coast. H.17043 of a share of APA common stock and $7. APA believes it is also the largest producer of liquid hydrocarbons and natural gas in the Western Desert and the third largest in all of Egypt. and Argentina 4%. acreage and infrastructure in the Permian Basin and Egypt's Western Desert. It ended 2010 with a debt-to-capitalization ratio of 25%. APA has E&P operations in seven countries. 44% liquids) in 2010. Eichler EVP & CFO T. Graham S. increased drilling in the Granite Wash formation.S. One of the largest independent exploration and production (E&P) companies in the U.. Permian and Central regions of the U. Bahorich EVP & General Counsel P. APA has ramped up activity as it moved into development stages at Horn River.000 acres in the Horn River Basin shale-gas play in northeast British Columbia. D. APA also will assume $1. APA completed the acquisition of Devon Energy Corporation's assets in the shallow waters of the Gulf of Mexico Shelf for $1. the region increased production 40% and accounted for approximately 12% of total production and 11% of year-end estimated proved reserves. (APA) explores for.P. Website http://www.0 billion of properties. APA entered 2010 with nearly $2 billion of cash and a long-term debt to total capitalization ratio of 24%.4 billion for the assets. Lawrence. In 2010. With capital expenditures budgeted at $7. Joung J. APA paid about $6. IMPACT OF MAJOR DEVELOPMENTS. and Canada.3 million net acres across Canada. to 657 thousand boe per day (52% liquids). Bohen G. Egypt 10%. Jr. TX 77056-4400.5 billion for 2011. Canada.com Officers Chrmn & CEO G. Argentina and Chile. Canada.449 Stockholders 440.S. Since early 2010. offshore Western Australia. M. M. The acquisitions were closed in 2010. In Australia..S. Farris COO & Co-Pres R. In 2010. to 2. in the North Sea. APA agreed to acquire BP's operations. P. APA and Mariner Energy (ME) entered into a merger agreement under which ME shareholders would receive. allowing APA to reduce debt and integrate acquired assets.05 billion. In North America. which include estimated proved reserves of 385 MMBOE and production of 83 MBOE/day. Kocur G.S. Patton C. Houston. Chambers EVP & CTO M. APA has 6. APA estimates net proved and probable reserves of 83 MMBOE at year-end 2009. we estimate a 14% boost in 2011 production and believe APA can sustain double-digit production growth through 2015.

752 28.49 15. for stk.502 1.6 Data as orig reptd.46 0.586 28.615 NA 2.37 2.010 36. Fair Value Calculation Investability Quotient Percentile Volatility Technical Evaluation Insider Activity $90.46 51.663 37.186 2.87 -0.63 25.658 1.0 22.460 532 2.87 0.978 7.3% 2.0% 1.94 14 10 2009 46. Inc.55 1.3 11.8% 2.434 8.206 NA 3.25 8.092 NA 3.5 899 12.348 312 4.60 7% 120.6 229 2.56 13 7 12.950 15.826 7.45 10 6 2004 24.119 1.67 3. NR-Not Ranked.15 47.73 or 5.79 11 7 2003 19.244 4.1 26.80 1.472 Capital Expenditures 4. NM-Not Meaningful. Depletion and Amortization Interest Expense Pretax Income Effective Tax Rate Net Income S&P Core Earnings 2010 57.224 2.30 13.973 8.5 4.095 1.41 8.5 126 2.3% 1.06 12.988 7.0 12.154 1. based on S&P's proprietary quantitative model suggests that APA is slightly overvalued by $4.46 8. .595 2.777 2.9 767 9.393 4. EPS diluted.03 2.70 12.839 3.416 122 4.552 2.162 19.34 4% 78.6 19.33 4.163 1.22 14.793 2.500 242 326 187.020 13.665 4.3 10.456 2.525 1.07 24.19 0.08 0.1 28.22 7.68 2.892 4.8 18.25 6.194 229 5.6 2.8 141 2.809 16.30 19.390 8.807 5.713 4.55 16.85 22.443 12.91 -97.490 24.80 26.716 4.095 Common Equity 24.4 30.830 3.6% 712 701 9.241 1. divs.0 17.68 26.01 13 8 2006 39. UR-Under Review.812 2.70 33% 149.73 0.03 NM NM 2008 48.39 8.84 17.9 NM NM 1.1 2.44 11.952 166 932 23.805 8. 2011 | NYS Symbol: APA Apache Corp Quantitative Evaluations S&P Fair Value Rank 31 LOWEST Expanded Ratio Analysis 2 3 4 5 HIGHEST Based on S&P's proprietary quantitative model.3 29. results of disc opers/spec.77 UNFAVORABLE NEUTRAL FAVORABLE Company Financials Fiscal Year Ended Dec.80 81.377 Total Capital 32. items.083 1.81 5.32 63.146 821 132 1.673 39.60 0.073 127 1. the technical indicators for APA have been BEARISH.5 % Return on Equity 15.000 8.272 2.2 35.02 NA NM NM 335.61 4.206 37.289 5. Copyright ©2011 The McGraw-Hill Companies.24 21.280 23.034 1.9 2008 2.509 24. NA-Not Available. E-Estimated.283 2.10 2.34 6.588 8.048 4. 25. stocks are ranked from most overvalued (1) to most undervalued (5).560 1.4 51.26 12 8 2002 15.25 56.30 337.159 4.60 7% 109.98 7.16 36.0 12.12 359.29 0.5 6.0 2009 4.79 334.0%.308 3.88 21. Diluted Shares Outstg (M) Figures based on calendar year-end price 2010 3.480 Total Assets 43.733 3.670 1.0 % Long Term Debt of Capitalization 24.7 19.6 98 LOWEST = 1 HIGHEST = 100 Key Growth Rates and Averages Past Growth Rate (%) Sales Net Income Ratio Analysis (Annual Avg.615 4.32 6% 55.779 20.94 17.3% 554 524 2.192 10.973 4.7% 723 681 Balance Sheet & Other Financial Data (Million $) Cash 134 Current Assets 3.327 6.631 2. 31 Per Share Data ($) Tangible Book Value Cash Flow Earnings S&P Core Earnings Dividends Payout Ratio Prices:High Prices:Low P/E Ratio:High P/E Ratio:Low Income Statement Analysis (Million $) Revenue Operating Income Depreciation..78 5.922 43.95 35.21 6% 41.222 120 2.0 19.753 1.2 111 1.50 10 7 2005 31.524 Long Term Debt 8.792 1.106 10.35 3.315 5.12 5% 31.363 0.7 21.7 10.416 820 2.434 7.18 8.635 2.349 15.57 -0.12 16 12 2001 14.7 13.812 2.23 57.194 Current Ratio 1.816 158 4.199 39.11 19.30 -79.387 1.2 15.3 8.187 2.860 1.484 5.15 NM 7.9 23.92 LOW BEARISH AVERAGE HIGH Since August. Per share data adj.04 5.584 5.1 24.30 2.6 698 8.19 11% 28.539 5.2 2007 3.0 20.655 1.6% 2.934 522 2.) Net Margin (%) % LT Debt to Capitalization Return on Equity (%) 1 Year 3 Years 5 Years 9 Years APA scored higher than 98% of all companies for which an S&P Report is available.54 NA 8.032 3.. bef.9 33.19 7.11 71 27 2007 46.10 9.17 22.922 Cash Flow 6.208 1.93 15.64 7.190 3.624 2.30 0.84 7.048 844 133 899 38.1% -284 -292 12.Stock Report | October 22.9 % Return on Assets 8.28 0.333 4. Redistribution or reproduction is prohibited without written permission.60 NM 106.425 Current Liabilities 3.68 15.451 29. 40.00 Analysis of the stock's current worth.093 18.186 2. Price/Sales Price/EBITDA Price/Pretax Income P/E Ratio Avg.112 7.887 1. 2011.36 NM 2.60 8% 76.037 1.38 0.227 15.525 1.69 5.069 2.

642 26. up from $79 in 2010. prices have retreated on tempered global economic data. reflecting the disruption of exports from Libya and unrest elsewhere in the Middle East/North Africa.0% decline in the S&P 1500.73 79.76 million b/d in 2010.5 3. Cap.69 1.37 1.S.S. $) 36.22/17. Energy Information Administration (EIA) estimated that global oil demand grew 2.5 6. natural gas. to 88. Due to new OPEC capacity.94/141.S. leading to a price discount for WTI compared to similar quality global crudes such as Brent crude oil. and we look for low natural gas prices to depress U.7 3.0 LTD to Cap (%) 24. heavily weighted toward gas.827 24.S.15 per million Btu in 2011 and $4. U.4 24.41 90. West Texas Intermediate (WTI) spot oil prices were projected to average about $90.44 MMb/d in 2012.69 93.6 2.08 million b/d. S&P expected Henry Hub spot prices to average $4.00 65.09 1.62 20.9 21.915 36.57 MMb/d in 2012. Source: S&P. Copyright ©2011 The McGraw-Hill Companies.6 25.7 15.10 S&P Return on Quality IQ Revenue Ranking %ile (%) AB+ NR AB B+ B+ B+ 98 37 89 30 94 44 38 50 25. high inventory levels and increased production from onshore shale plays have pressured spot prices.50 per barrel in 2011 and $88.40 in 2010.46 Yield (%) 0.Inc.40 64.21/10.4 1.6 MMb/d in 2010.369 39. the EIA estimates global oil supply grew 2. versus a 3. drilling activity in 2011. Since early May. (Mil. Like the shale gas frenzy several years ago. Growing volumes of Canadian imports and greater takeaway capacity from the Rockies and Mid-continent shale plays have led to record high storage levels at Cushing. For U.9 million b/d. and sees growth of 1.28 1.8 1.396 14.27 52.56/50. and sees supply growth of 0.4 MMb/d. *For Peer Groups with more than 15 companies or stocks.60 in 2012.88 52 Week High/Low($) 134.04/25.70 NA 58.9 MMb/d in 2011 and 1.92 1.11 271.2 NA-Not Available NM-Not Meaningful NR-Not Rated.75 Beta 1.0 22. Year to date through October 14. 2. to 86. Redistribution or reproduction is prohibited without written permission. As of October 20.9 5. Heavy M&A activity has persisted domestically in 2011.222 Recent Stock Price($) 94. the S&P Oil & Gas Exploration & Production Index fell 10.80 13.Large Peer Group Apache Corp Anadarko Petroleum CNOOC Ltd ADS Canadian Natural Resources Devon Energy EOG Resources EnCana Corp Talisman Energy Stock Symbol APA APC CEO CNQ DVN EOG ECA TLM Stk. as integrated and national oil companies seek growth avenues.95 33.347 75.Stock Report | October 22. Earlier in 2011.50/57.1 1. using S&P estimates based on data from IHS Global Insight. and 1.32 MMb/d in 2011.37 MMb/d.3 32. OPEC spare production capacity is believed to have fallen to 2.43 MMb/d (ex Iraq and Libya) in the third quarter. much of the activity remains focused onshore. versus $4.44/66.13/73. oil prices reached highs not seen since 2008. in our view.($) 90.00 0.04 169. OPEC production (ex Iraq and Libya) is 27.1 0.6 0.84 MMb/d. to 87. using forecasts from the EIA.8 16. to 89.9 36.80 65. .64 25. We see EPS growth of about 17% in both 2011 and 2012.50 189. selection of issues is based on market capitalization.9 P/E Ratio 10 47 7 26 5 57 21 NM Fair Value Calc.04 85. where early drilling results have been successful at several untapped basins with high liquids content.81 35.42 1.4 MMb/d above quota.7%. 2011 | NYS Symbol: APA Apache Corp Sub-Industry Outlook Our fundamental outlook for the oil & gas exploration & production (E&P) sub-industry for the next 12 months is positive. As of October. --Michael Kay 40 20 0 Stock Performance GICS Sector: Energy Sub-Industry: Oil & Gas Exploration & Production Based on S&P 1500 Indexes Month-end Price Performance as of 09/30/11 200 180 160 140 120 100 80 60 2007 Sub-Industry 2008 2009 2010 S&P 1500 2011 Sector NOTE: All Sector & Sub-Industry information is based on the Global Industry Classification Standard (GICS) Sub-Industry : Oil & Gas Exploration & Production Peer Group*: Exploration & Production . E&Ps.Mkt. the U. On disruptions in Libya.7 15.91 13.74 121. As of October 20. according to the EIA.30 in 2012. OK.0 29.343 15.20 18. as we expect strong oil prices and production growth to generate earnings and cash flow growth. have begun to focus on unconventional oil and natural gas liquids (NGLs).1 7.

2011 Apache Corp. Rising competition among integrated oils (upstream spending seen up 2%-5%) should drive active M&A markets.52*****): APA plans to acquire ExxonMobil's (XOM 71. which will be divided along geographic lines.84*****): Q1 adjusted EPS of $2. he was vice president of commercial and governmental affairs in Argentina. and lower costs per unit.80 to $13. On Q2 and updated prices. $2. April 28.96 is $0. vs. and keep '12's at $13. on rising liquids prices. we cut our '11 EPS view $1. March 7.22.. while Australia saw only minor weather-related issues. we up our '11 EPS view $0.. Kay July 28. Deepwater and Gulf Coast Onshore regions. Van Gogh in Australia is back online.D. /M. WTI. Redistribution or reproduction is prohibited without written permission. On below peer metrics. contributing significantly to process improvement. Production in Egypt. Volumes are split nearly 50/50 between liquids and gas and 40/60 U. September 21. Q4. . 2011 Apache Corporation announced the appointments of Rod Eichler to president and chief operating officer. and director of international technical services based in Houston. and APA sees limited downside risk in Egypt. John Crum. and this mix in assets is allowing APA to benefit from wider global crude oil differentials vs. /M. 2011 10:16 am ET . director of risk management since 2009. midstream. Most '11 E&P capex. Jon Jeppesen has been promoted to the new role of executive vice president overseeing the operations of the Gulf of Mexico Shelf. is leaving the company to become chief executive officer of Midstates Petroleum. H1 '11 production rose 21%. /M. cash of $1. 2011 Apache Corp... a concern earlier in '11.83. our target price is $160. and set '12's at $11. rose vs. $2. we see production up 14% in '11. lifting North Sea production and reserves 54% and 44%. Pittman as members of the Stock Plan Committee. /M.19 above our forecast on production and pricing. On our proved NAV. 2011 The Board of Apache Corp. on track to meet targets of 13%-17%. S&P MAINTAINS STRONG BUY RECOMMENDATION ON SHARES OF APACHE CORP (APA 129.62 to $12. health and safety organization.. we expect APA's focus to turn to asset integration. 2011 12:47 pm ET . North Sea will represent 11% of production (7% prior). /M. a diverse asset base and attractive valuation. S&P RAISES FUNDAMENTAL OUTLOOK ON EXPLORATION & PROD'N SUB-INDUSTRY TO POSITIVE (APA 122. Montgomery is a member of Quantum's executive and investment committees. and rising E&P metrics.Inc. after cyclones. and Roger Plank to president and chief corporate officer. announced the promotions and appointments to its management team. strong production growth (14% in '11). He held positions of increasing responsibility within the finance organization. its lowest-cost asset.10... On DCF and relative metrics. we think the independent E&P space lends exposure to tight oil markets. respectively (65% liquids).Kay April 7. a managing director of Quantum Energy Partners. We find APA's balance sheet superior with debt-to-capital of 23%.27*****): Q4 EPS of $2. of Apache Energy Ltd.Stock Report | October 22. Montgomery. appointed Frederick M. Africa geopolitical tensions.10 and '12's by $0. vs. Earlier. We keep our $140 target price. We see '11 production growth of 15% and expect higher activity at the liquids-rich Permian Basin. streamlining. we raise our target price by $20 $160. Updating our model. (APA 109.75 to $12. involved in setting of the firm's strategy and responsible for originating and overseeing investments in the oil and gas upstream. is $0. joined Apache in 1988. we lift our '11 EPS estimate $0. in our view. Many E&P's began shifting away from weak natural gas. S&P MAINTAINS STRONG BUY RECOMMENDATION ON SHARES OF APACHE CORP. Permian. 2011 10:55 am ET . administration and business development. positioning those exposed to liquids for upcoming margin expansion in '11-'12. APA boosts exposure to higher-priced Brent crude and UK natural gas.1B. Apache's controller of North America accounting since 2006. announced the appointment of William C. despite downtime in Australia.66*****): After a highly active '10 in M&A markets. Copyright ©2011 The McGraw-Hill Companies. (APA 121. forecasted up 10%-15%.46. Gilbronson has been appointed to vice president of international marketing and Bright to vice president of North America marketing.45. we lift our '11 EPS view $1. Graham Lawton was named vice president . who served as co-chief operating officer and president -. June 1.. 2011 03:54 pm ET . Bohen as Chair and A. worldwide drilling. managing director of Apache Poland. February 17. Jon Graham has been named vice president of the global environmental.. 2011 | NYS Symbol: APA Apache Corp S&P Analyst Research Notes and other Company News September 22.19 vs.86 to $9. announced that Dave Gilbronson and Mark Bright will lead Apache's oil and gas marketing organization. peers. towards oil and NGL projects in '09/'10. and on new realized price forecasts. leading the Kitimat project team for the LNG facility and Pacific Trail Pipelines.75B (expected Q4 close). in addition to his management role in finance. is $0.70 and '12's $0.. S&P MAINTAINS STRONG BUY RECOMMENDATION ON SHARES OF APACHE CORP. (APA 128. is aimed at oily prospects (Bakken.S. These factors should help improve cash flow. We see growth in most operating regions. where oil production is up 35%. and view positively exposure to oil.. and capital flexibility vs. and a solid exploration portfolio. and oilfield service sectors.78*****): With oil prices rising above $105/bbl on supply disruption fears stemming from Middle East/N. S&P MAINTAINS STRONG BUY RECOMMENDATION ON SHARES OF APACHE CORP. Eagle Ford. North Sea success at Forties (doubled reserves since '03) should aid to maximize Beryl opportunities. $1. On higher oil prices and rising production forecasts.07 below our forecast as production beat. S&P MAINTAINS STRONG BUY RECOMMENDATION ON SHARES OF APACHE CORP (APA 94. on updated NAV. and abroad.45.25. and Granite Wash in Texas. etc). a production beat. Kenny Paterson has been named vice president. We see the valuation discount narrowing this year. 2011 Apache Corp. 2011 03:56 pm ET . 28% for our E&P universe). Kay Source: S&P. and see valuation as compelling.liquefied natural gas projects. Bright.North America. Kay March 15. reflecting the recent pullback in E&P stocks.40 above our estimate.25. we cut our target price $15 to $145. /M. Frazier and Charles J. Strong Buy) Beryl and other North Sea fields for $1. In his new role as president and sole chief operating officer. LNG marketing and shipping. Acquisitions have set the stage for multi-year growth..49. 2011 02:59 pm ET . Kay August 4. Gilbronson. Kay February 28. but costs were higher on acquired assets. Roger Plank is assuming responsibilities for marketing and corporate purchasing. margins. Mark Bauer has been promoted to region vice president for the Gulf of Mexico Shelf.60 to $11. to its board of directors.61 to $11. and the development of future leaders. Michael Bose moved up to region vice president and country manager for Argentina.19*****): Q2 adjusted EPS of $3.90. debt reduction and efficiencies. We see exposure to oil (52% of production vs. gas monetization and worldwide projects. operations general manager for Apache Egypt Companies. Eichler will be responsible for Apache's 10 operating regions. joined Apache in 1999.

15 -0.. 11. and provides their consensus of earnings over the next two years. P/E 7. Source: S&P.Stock Report | October 22. Bernstein & Co. Prior 0 11 0 11 0 5 0 0 0 0 0 0 0 27 Buy Buy/Hold Hold Weak Hold Sell No Opinion Total Wall Street Consensus Estimates Estimates 14 12 10 8 J J A S O N D Wall Street Consensus vs.63.300 Wall Street analysts. Prior 3 Mos.69 -19% 2.1 -2% 31. Inc.46 2010 For fiscal year 2011. 2011 | NYS Symbol: APA Apache Corp Analysts' Recommendations Monthly Average Trend Buy B Wall Steet Consensus Opinion Buy/Hold BH Hold H Weak Hold WH Sell S No Opinion APA Trend BUY/HOLD Companies Offering Coverage Over 30 firms follow this stock. For the 2nd quarter of fiscal year 2011. For fiscal year 2012. 8.72 3. No. of Ratings 12 11 5 0 0 0 28 % of Total 43 39 18 0 0 0 100 1 Mo. representing 27% of the total annual estimate. Oppenheimer & Co. This graph shows the trend in analyst estimates over the past 15 months.08 21% Low Est. 28 24 17% 12 23 -48% Est. Agee & Leach Ticonderoga Securities Tudor Pickering & Co.5% # of Est.63 3% 2. Inc.93 11.78 8% High Est.41 12. 15. not all firms are displayed. Goldman Sachs & Co.62 10. 28 analysts currently publish recommendations. Howard Weil Inc.45 24% 3. LLC Scotia Capital Simmons & Company International Societe Generale Standard & Poors Sterne. LLC RBC Capital Markets Raymond James Sanford C.1 -7% A company's earnings outlook plays a major part in any investment decision.9 8. Argus Research Company Barclays Capital Bofa Merrill Lynch Buckingham Research Citi Credit Agricole Securities Deutsche Bank North America FBR Capital Markets & Co.Inc.99 2. Redistribution or reproduction is prohibited without written permission. analysts estimate that APA's earnings per share will grow by 3% to $11. Peters & Co. APA announced earnings per share of $3.17. J F M A M J J A S O 2010 2011 Fiscal Years 2012 2011 2012 vs. . analysts estimate that APA will earn $11. Q3'11 Avg Est. Performance 2011 2012 2010 Actual $8. ISI Group Johnson Rice & Company Jpmorgan Macquarie Research Morningstar. SEC UBS (us) Wells Fargo Securities.7 34. LLC Wall Street Average B BH H WH S Number of Analysts Following Stock 30 20 10 Stock Price ($) 140 120 100 80 N D J F M A M J J A S O N D J F M A M J J A S O 2009 2010 2011 Of the total 31 companies following APA. Standard & Poor's organizes the earnings estimates of over 2.I/B/E/S International.14 2. Copyright ©2011 The McGraw-Hill Companies. 2011 Q3'12 Q3'11 Q3'12 vs. Limited Pritchard Capital Partners.93.

3-Stock is fairly valued. indicating a mixture of growth and value characteristics and cannot be classified as purely growth or value. A stock with a (-) has a somewhat lesser chance to outperform other stocks with the same Fair Value Rank. or other forms of credit enhancement on the obligation. based on a combination of intrinsic. Exchange Type ASE . Quantitative Evaluations In contrast to our qualitative STARS recommendations. or the legality and enforceability of the obligation. One primary reason for this is that different measures are used to determine each. S&P Fair Value Rank Using S&P's exclusive proprietary quantitative model. Among the items typically excluded from EPS estimates are asset sale gains. listing the most undervalued stocks. the most overvalued issues. or the risk of a firm’s ability to continue as an ongoing concern. Excluded from the definition are pension gains. liquidity. or extraordinary. The Qualitative Risk Assessment is a relative ranking to the S&P U. management changes. S&P Quality Ranking Growth and stability of earnings and dividends are deemed key elements in establishing S&P’s Quality Rankings for common stocks. S&P Issuer Credit Rating A Standard & Poor’s Issuer Credit Rating is a current opinion of an obligor’s overall financial capacity (its creditworthiness) to pay its financial obligations. S&P EPS Estimates Standard & Poor's earnings per share (EPS) estimates reflect analyst projections of future EPS from continuing operations. and indicates its capitalization level. based on a 12-month time horizon. S&P. as it does not take into account the nature of and provisions of the obligation. purchased research and development. pension costs. stocks are ranked in one of five groups. or unavailability of. a data provider to Standard & Poor's Equity Research. 4-Stock is moderately undervalued.. which are independently compiled by Capital IQ. Data used to assist in determining the STARS ranking may be the result of the analyst’s own models as well as internal proprietary models resulting from dynamic data inputs. It does not apply to any specific financial obligation. how the stock has performed versus all other companies in S&P’s universe on a rolling 13-week basis. statutory preferences. according to S&P's proprietary quantitative model that incorporates both actual and estimated variables (as opposed to only actual variables in the case of S&P Quality Ranking). which are designed to capsulize the nature of this record in a single symbol. legal and insurance settlements. restructuring or merger-related charges. 2011 | NYS Symbol: APA Apache Corp Glossary S&P STARS Since January 1. Investability Quotient (IQ) The IQ is a measure of investment desirability. plus real estate depreciation. A positive (+) or negative (-) Timing Index is placed next to the Fair Value ranking to further aid the selection process. Qualitative Risk Assessment The S&P equity analyst’s view of a given company’s operational risk.New York Stock Exchange. non-recurring. A stock with a (+) added to the Fair Value Rank simply means that this stock has a somewhat better chance to outperform other stocks with the same Fair Value Rank. or based on other circumstances. and Standard & Poor’s Information Services (Australia) Pty Ltd. Relative Strength Rank Shows. BB . S&P 12-Month Target Price The S&P equity analyst’s projection of the market price a given security will command 12 months hence. Standard & Poor’s does not perform an audit in connection with any Issuer Credit Rating and may. to Group 1. Relying heavily on a company's actual return on equity.S. The inclusion of some items. and the extent to which some types of data is disclosed by companies. recent competitive shifts. cash flow-to-price. TO . S&P EPS estimates reflect either forecasts of S&P equity analysts. earnings estimates. STARS universe. and 154 Sub-Industries. excluding gains or losses from sales of property. and depend on such factors as industry practice. suspended. Issuer Credit Ratings are based on current information furnished by obligors or obtained by Standard & Poor’s from other sources it considers reliable. S&P equity analysts rank stocks according to their individual forecast of a stock’s future total return potential versus the expected total return of a relevant benchmark (e.Nasdaq SmallCap.Toronto Stock Exchange.S. litigation risk. 68 Industries.Nasdaq National Market. relative. however. which are assigned by S&P analysts. in process research and development expenses. while Value is evaluated along four dimensions (book-to-price. Growth is evaluated along three dimensions (earnings. gains or losses on the extinguishment of debt. and generally exclude various items that are viewed as special. developed by Standard & Poor's in collaboration with Morgan Stanley Capital International (MSCI). The measure takes into account variables such as technical indicators. financial ratios and selected S&P proprietary measures. as opposed to risk and volatility measures associated with share prices. sell. write-downs of depreciable or amortizable operating assets. Certain stocks are classified as Blend. The Fair Value rankings imply the following: 5-Stock is significantly undervalued. It should be noted. Included in the Standard & Poor's definition are employee stock option grant expenses. its standing in bankruptcy or liquidation. GICS is currently comprised of 10 Sectors. etc. S&P Fair Value Calculation The price at which a stock should trade at. on occasion. Technical Evaluation In researching the past market history of prices and trading volume for each company. a regional index (S&P Asia 50 Index. sales and internal growth). Standard and Poor’s Equity Research Services has ranked a universe of common stocks based on a given stock’s potential for future performance. or. STANDARD & POOR’S. the S&P Fair Value model places a value on a security based on placing a formula-derived price-to-book multiple on a company's consensus earnings per share estimate. Standard & Poor’s Malaysia Sdn Bhd. Also. STARS was designed to meet the needs of investors looking to put their investment decisions in perspective. The Issuer Credit Rating is not a recommendation to purchase. may vary.Stock Report | October 22. Issuer Credit Ratings may be changed. Standard & Poor’s Equity Research Services Asia includes Standard & Poor’s LLC’s offices in Singapore. NSC . Investment Style Classification Characterizes the stock as Growth or Value. includes Standard & Poor’s Investment Advisory Services LLC. S&P 500. Under proprietary STARS (STock Appreciation Ranking System). Group 5 stocks are expected to generally outperform all others. and should be reflective of risk factors related to a company’s operations. S&P Core Earnings Standard & Poor's Core Earnings is a uniform methodology for adjusting operating earnings by focusing on a company's after-tax earnings generated from its principal businesses. such information. when designating STARS. S&P Equity Research Services Standard & Poor’s Equity Research Services U. These computer-driven evaluations may at times contradict an analyst’s qualitative assessment of a stock. including S&P Fair Value. dividend yield and sale-to-price). rely on unaudited financial information. insurers. The range of scores in the array of this sample has been aligned with the following ladder of rankings: A+ A AB+ NR Highest High Above Average Average Not Ranked B BC D Below Average Lower Lowest In Reorganization as an indicator of potential medium-to-long term return and as a caution against downside risk.American Stock Exchange. analyst judgment. or withdrawn as a result of changes in. such as stock option expense and recurring types of other charges.g. The final score for each stock is measured against a scoring matrix determined by analysis of the scores of a large and representative sample of stocks. S&P analysts assess many factors that cannot be reflected in a model. Standard & Poor’s Equity Research Services Europe includes McGraw-Hill Financial Research Europe Limited trading as Standard & Poor’s. or hold a financial obligation issued by an obligor. Standard & Poor’s Investment Advisory Services (HK) Limited in Hong Kong. 2-Stock is modestly overvalued. restructuring charges from ongoing operations. ranging from Group 5. officers and key employees who have proprietary information not available to the general public. S&P Europe 350 and STARS are registered trademarks of Standard & Poor’s Financial Services LLC. NNM . S&P's IQ Rationale: Apache Corp Proprietary S&P Measures Technical Indicators Liquidity/Volatility Measures Quantitative Measures IQ Total Raw Score 42 21 7 59 129 Max Value 115 40 20 75 250 Volatility Rates the volatility of the stock’s price over the past year. . impairment. Insider Activity Gives an insight as to insider sentiment by showing whether directors. and earnings related to operations that have been classified by the company as discontinued. as it does not comment on market price or suitability for a particular investor. Copyright © 2011 Standard & Poor's Financial Services LLC. patent expiration. For instance. 1987. impairment of goodwill charges. the quantitative evaluations described below are derived from proprietary arithmetic models. S&P’s computer models apply special technical methods and formulas to identify and project price trends for the stock. such as risks and opportunities. the cumulative effect of accounting changes. Global Industry Classification Standard (GICS) An industry classification standard. and private market valuation metrics. gains or losses from asset sales. S&P Europe 350 Index or S&P 500 Index)). M&A related expenses and unrealized gains/losses from hedging activities. NYSE . Funds From Operations FFO FFO is Funds from Operations and equal to a REIT's net income.OTC Bulletin Board. The reverse is true for Value stocks. are buying or selling the company’s stock during the most recent six months. on a scale of 1 to 99. that the process also takes into consideration certain adjustments and modifications deemed desirable in establishing such rankings. it does not take into account the creditworthiness of the guarantors. It serves Redistribution or reproduction is prohibited without written permission. Growth stocks score higher than the market average on growth dimensions and lower on value dimensions. In addition. This opinion focuses on the obligor’s capacity and willingness to meet its financial commitments as they come due. 24 Industry Groups. OT Over-the-Counter. 1-Stock is significantly overvalued. reversal of prior-year charges and provision from litigation or insurance settlements. the consensus (average) EPS estimate.

Research & Development. In particular. STANDARD & POOR’S. research analysts at Standard & Poor's Equity Research Services globally recommended 41. 55555 5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark. 2011. indirect. which are determined and assigned by S&P equity analysts. Capital IQ is a business of Standard & Poor's. as well as their directors. including organizations whose securities or services they may recommend. shareholders. many organizations. 2011 | NYS Symbol: APA Apache Corp Abbreviations Used in S&P Equity Research Reports CAGR. regardless of the cause.4% with hold recommendations and 16. in Malaysia by Standard & Poor's Malaysia Sdn Bhd ("S&PM"). the English version prevails. S&P and/or one of its affiliates has performed services for and received compensation from this company during the past twelve months. Past performance is not necessarily indicative of future results. such as the S&P 500. or will be directly or indirectly. officers.9% with sell recommendations. investment advisers. Redistribution or reproduction is prohibited without written permission. including exchange-traded investments whose investment objective is to substantially replicate the returns of a proprietary Standard & Poor's index.6% with sell recommendations. assumptions and analytical methods. Ratings from Standard & Poor’s Ratings Services are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase. opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. evaluate or otherwise address.Earnings Before Interest and Taxes. 45. Standard & Poor's Quantitative Services globally recommended 44. It is not possible to invest directly in an index.7% with hold recommendations and 5. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES. which is regulated by the Hong Kong Securities Futures Commission. 555551-STARS (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months. .Free Cash Flow. FY. employees. Standard & Poor’s ratings should not be relied on and are not substitutes for the skill. related to the specific recommendations or views expressed in this research report. S&P’s quantitative evaluations are derived from S&P’s proprietary Fair Value quantitative model. BUT NOT LIMITED TO. 2011. No part of analyst compensation was. For All Regions: All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. Standard & Poor's and its affiliates provide a wide range of services to. with shares rising in price on an absolute basis. INCLUDING. or hold such investment or security.5% of issuers with buy recommendations. 52. omissions. SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. Standard & Poor’s assumes no obligation to update its opinions following publication in any form or format. with shares generally rising in price on an absolute basis. ROIC. 2011. without limitation.Calendar Year. in Australia by Standard & Poor's Information Services (Australia) Pty Ltd ("SPIS"). its affiliates.Price/Earnings .0% of issuers with buy recommendations. nor is it considered to be investment advice. Required Disclosures In contrast to the qualitative STARS recommendations covered in this report. In Asia: As of September 30. or for the results obtained from the use of the information provided by the S&P Parties.Capital Expenditures. 55555 3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months. whereas the STARS methodology is not. In Asia: As of September 30. or agents (collectively S&P Parties) do not guarantee the accuracy.Compound Annual Growth Rate.Fiscal Year. EPS. Relevant benchmarks: In North America the relevant benchmark is the S&P 500 Index. investment in the fund will generally result in Standard & Poor's or an affiliate earning compensation in addition to the subscription fees or other compensation for services rendered by Standard & Poor's. WACC.Stock Report | October 22. 2011. completeness or adequacy of this material. which is regulated by the Monetary Authority of Singapore.Present Value.6% with hold recommendations and 5. S&PM. in Hong Kong by Standard & Poor's Investment Advisory Services (HK) Limited. costs. R&D. CY. with shares rising in price on an absolute basis. 20. including issuers of securities. Standard & Poor’s rating opinions do not address the suitability of any security. In the United States. Depreciation and Amortization. investment banks. 20.Earnings Per Share. The research and analytical services performed by SPIAS. special or consequential damages. With respect to reports issued to clients in German and in the case of inconsistencies between the English and German version of a report.Discounted Cash Flow. the English version prevails. in Europe and in Asia.0% of issuers with buy recommendations. In the United States. 55555 2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months. CAPEX. judgment and experience of the user. McGraw-Hill Financial Research Europe Limited.4% of issuers with buy recommendations. Standard & Poor's Quantitative Services Asia recommended 48. EBIT. PEG RatioP/E-to-Growth Ratio. A reference to a particular investment or security by Standard & Poor's Standard & Poor’s. rate. lost income or lost profits and opportunity costs) in connection with any use of the information contained in this document even if advised of the possibility of such damages. 2011. S&P Global Quantitative Recommendations Distribution In Europe: As of September 30. Standard & Poor’s does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. which is regulated by the Securities Commission. or sell any securities or to make any investment decisions. research reports are prepared by Standard & Poor's Investment Advisory Services LLC ("SPIAS"). research analysts at Standard & Poor's Equity Research Services North America recommended 42. Globally: As of September 30.Funds From Operations. Standard & Poor's or an affiliate may license certain intellectual property or provide pricing or other services to. or interruptions therein. Indexes are unmanaged. Globally: As of September 30. and S&P Parties shall have no liability for any errors. ROAReturn on Assets. ANY WARRANTIES OF MERCHANTABILITY. exemplary.4% of issuers with buy recommendations. In cases where Standard & Poor's or an affiliate is paid fees that are tied to the amount of assets that are invested in the fund or the volume of trading activity in the fund. In no event shall S&P Parties be liable to any party for any direct. DCF. incidental. with shares falling in price on an absolute basis.2% of issuers with buy recommendations. include in model portfolios. the Fair Value Ranking methodology is a relative ranking methodology. in the United Kingdom by McGraw-Hill Financial Research Europe Limited. S&P. employees. or relating to. legal fees. or losses (including. As a quantitative model. and any third-party providers. EV.Return on Equity. is. In Europe: As of September 30. and accordingly may receive fees or other economic benefits from those organizations. and one of its affiliates is not a recommendation to buy. S&P 500.4% of issuers with buy recommendations. certain issuers of securities. in Singapore by Standard & Poor's LLC.2% with hold recommendations and 3. EBITDAEarnings Before Interest. punitive. statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. sell.0% with hold recommendations and 34. 2011. 55555 4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months. 49.Selling.9% with sell recommendations. SG&A. Taxes. Other Disclosures In North America: As of September 30. its management. and SPIS are each conducted separately from any other analytical activity of Standard & Poor's. Standard & Poor’s does not act as a fiduciary. and the share price not anticipated to show a gain. Fair Value relies on history and consensus estimates and does not introduce an element of subjectivity as can be the case with equity analysts in assigning STARS recommendations. research analysts at Standard & Poor's Equity Research Services Europe recommended 34.Return on Invested Capital. ROE. advisors and/or clients when making investment and other business decisions. ROI.0% with hold recommendations and 32. the relevant benchmarks are generally the S&P Europe 350 Index and the S&P Asia 50 Index. hold. While Standard & Poor’s has obtained information from sources it believes to be reliable. Copyright © 2011 Standard & Poor's Financial Services LLC. or otherwise have a financial interest in.0% with hold recommendations and 30.Enterprise Value.0% with sell recommendations. research reports are issued by Standard & Poor's ("S&P"). Assumptions. Additional information is available upon request. FFO.0% with sell recommendations. General & Administrative Expenses. which is regulated by the Australian Securities & Investments Commission. expenses.Return on Investment. and in Korea by SPIAS. which is also registered in Korea as a cross-border investment advisory company. other financial institutions and financial intermediaries. 2011. 54. broker-dealers. S&P Global STARS Distribution Disclaimers With respect to reports issued to clients in Japan and in the case of inconsistencies between the English and Japanese version of a report. Standard & Poor's Quantitative Services Europe recommended 47.Weighted Average Cost of Capital Dividends on American Depository Receipts (ADRs) and American Depository Shares (ADSs) are net of taxes (paid in the country of origin). This report has been prepared and issued by Standard & Poor's and/or one of its affiliates.2% with sell recommendations. PV. which is authorized and regulated by the Financial Services Authority and trades as Standard & Poor's. research analysts at Standard & Poor's Equity Research Services Asia recommended 48. compensatory. Because the Fair Value model and the STARS methodology reflect different criteria. by a wide margin over the coming 12 months. Such costs would lower performance. P/E. 21.0% with sell recommendations. FCF. Neither S&P nor its affiliates guarantee the accuracy of the translation. quantitative evaluations may at times differ from (or even contradict) an equity analyst’s STARS recommendations. S&P Europe 350 and STARS are registered trademarks of Standard & Poor’s Financial Services LLC.

if necessary. but does not manage actual assets. before the person makes a commitment to purchase the investment product. Any future offer or sale thereof is subject to registration requirements under the Code unless such offer or sale qualifies as an exempt transaction. STARS does not take into account any particular investment objective. over time. Standard & Poor’s public ratings and analyses are made available on its Web sites.S. less liquidity and the potential for market volatility and political instability.375 and a cumulative net return of 27. market risk. Performance is calculated using a time-weighted rate of return. an investor’s shares may be worth more or less than their original cost.com and www. 2011 | NYS Symbol: APA Apache Corp Standard & Poor’s keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities.5 percent were imposed at the end of the period (or $1.com/usratingsfees. Thus. For example. The model performance does not consider taxes and brokerage commissions. less governmental supervision and regulation.400 5 STARS 4 STARS 3 STARS 2 STARS 1 STARS This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. The STARS performance does not show how any actual portfolio has performed. Before acting on any advice. Prices. The S&P 500 excludes ADRs and ADSs. the net return would be 8.650). For residents of Australia – This report is distributed by Standard & Poor’s Information Services (Australia) Pty Ltd ("SPIS") in Australia. . statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. The imposition of these fees and charges would cause actual performance to be lower than the performance shown. Standard & Poor’s has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. www. While model performance for some or all STARS categories performed better than the S&P 500 for the period shown. financial instruments or strategies to you.Stock Report | October 22. Indexes are unmanaged. Where an investment or security is denominated in a different currency to the investor’s currency of reference. Standard & Poor’s may receive compensation for its ratings and certain credit-related analyses. respectively. additions to the composition of the equities in each STARS category are made at the average value of the STARS category at the preceding month end with no rebalancing. and are only current as of the stated date of their issue. are subject to change without notice. For residents of the U. Advice should be sought from a financial adviser regarding the suitability of an investment. financial situation or particular needs of any particular person. objectives. you should consider whether it is suitable for your particular circumstances and. Foreign investing involves certain risks. and that any such securities will only be offered or sold through a financial institution. Some of the STARS equities may have been included in the S&P 500 index for some (but not necessarily all) of the period covered in the chart. including. changes in rates of exchange may have an adverse effect on the value. Thereafter.com (free of charge).600 800 0 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 This document does not constitute an offer of services in jurisdictions where Standard & Poor’s or its affiliates do not have the necessary licenses. This material is not intended for any specific investor and does not take into account your particular investment objectives. The S&P 500 index includes a different number of constituents and has different risk characteristics than the STARS equities. ADRs (American Depositary Receipts) and ADSs (American Depositary Shares). including via Standard & Poor’s publications and third-party redistributors. Any express or implied opinion contained in this report is limited to "General Advice" and based solely on consideration of the investment merits of the financial product(s) alone. the risk of economic recession and the risk that issuers of securities or general stock market conditions may worsen. Additional information about our ratings fees is available at www. For residents of Singapore . S&P 500. S&P Europe 350 and STARS are registered trademarks of Standard & Poor’s Financial Services LLC. and some or all of the equities that received STARS rankings during the time period shown may not have maintained their STARS ranking during the entire period. financial situation or particular needs of any person in receipt of the recommendation.com (subscription).globalcreditportal. financial situation or need and is not intended as an investment recommendation or strategy. they are not collective investment funds. financial situations or needs and is not intended as a recommendation of particular securities. seek professional advice. and there is no assurance that they will perform better than the S&P 500 in the future. STARS categories are models only.5% fee taken at year end with an assumed 10% return per year would result in a cumulative gross return of 33. For model performance calculation purposes. The U. S&P. . collectively “equities”. and some such equities may not have been included at all. Model performance has inherent limitations. please note that the amount of income that the investor will receive from such an investment may fluctuate. dollars and does not take into account the reinvestment of dividends. Performance was calculated from inception through March 31. nor does it reflect the deduction of any advisory or other fees charged by advisors or other parties that investors will incur when their accounts are managed in accordance with the models.S. so that when redeemed. the performance during any shorter period may not have. including currency fluctuations and controls. as defined in Article 19(5) or Article 49(2) (a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. values.S. The information in this report has not been prepared for use by retail investors and has been prepared without taking account of any particular person's financial or investment objectives. Standard & Poor’s reserves the right to disseminate its opinions and analyses. Standard & Poor’s maintains the models and calculates the model performance shown. investment returns and principal value will fluctuate. taking into account the specific investment The performance above represents only the results of Standard & Poor’s model portfolios. Thereafter. the model performance shown does not reflect the impact that material economic and market factors might have had on decision-making if actual investor money had been managed. The information contained in this report does not constitute advice on the tax consequences of making any particular investment decision. Such costs would lower performance. Before acting on any recommendation in this material.000 investment for a 12-month period (or $10. For residents of the Philippines . but not limited to. certain business units of Standard & Poor’s may have information that is not available to other Standard & Poor’s business units. Where an investment is described as being likely to yield income. Fees deducted on a frequency other than annual would result in a different cumulative net return in the preceding example. An investment based upon the models should only be made after consulting with a financial advisor and with an understanding of the risks associated with any investment in securities. As a result.S. STANDARD & POOR’S. The Standard & Poor’s 500 index is the benchmark for U.Anything herein that may be construed as a recommendation is intended for general circulation and does not take into account the specific investment objectives. STARS Cumulative Model Performance Hypothetical Growth Due to Price Appreciation of $100 For the Period 12/31/1986 through 09/30/2011 made at the closing price of the day that the deletion is made. S&P 500 2. Over 3 years. STARS model performance chart is only an illustration of Standard & Poor’s (S&P) research. For residents of Malaysia .standardandpoors.ratingsdirect.1%. STARS model performance does not represent the results of actual trading of investor assets. Past performance of the S&P 500 index is no guarantee of future performance.This report is only directed at and should only be relied on by persons outside of the United Kingdom or persons who are inside the United Kingdom and who have professional experience in matters relating to investments or who are high net worth persons.2% (or $27. For residents of Indonesia .35 percent (or $8. High returns are not necessarily the norm and there is no assurance that they can be sustained.This research report does not constitute an offering document and it should not be construed as an offer of securities in Indonesia. The S&P 500 index is calculated in U. a total fee of $5. price or income of or from that investment to the investor. and may be distributed through other means. who has reviewed and authorised its content as at the date of publication. 2003 on a monthly basis. The methodology for calculating the return of the S&P 500 index differs from the methodology of calculating the return for STARS. Equities in each STARS category will change over time. it shows how U. common stocks. financial situation or needs. the equities within each STARS category at December 31. Any opinions expressed herein are given in good faith. currency risk.200). 1986 were equally weighted.S.The securities being offered or sold have not been registered with the Securities and Exchange Commission under the Securities Regulation Code of the Philippines. Securities. It is not possible to invest directly in an index.K. political and credit risks.350) for the year. Past model performance of STARS is no guarantee of future performance.standardandpoors. Copyright © 2011 Standard & Poor's Financial Services LLC. U.All queries in relation to this report should be referred to Ching Wah Tam. or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor may get back less than the amount invested. performance is calculated daily. As with any investment. if a model returned 10 percent on a $100. that received particular STARS rankings performed.000) and an annual asset-based fee of 1. Investments based on the STARS methodology may lose money. an annual 1. restrictions on foreign investments. STARS. and www. normally from issuers or underwriters of securities or from obligors. any person using the advice should consider its Standard & Poor’s Ratings Services did not participate in the development of this report. 1. financial instruments or strategies mentioned herein may not be suitable for all investors. The entirety of this report is approved by Barry King. Deletions are Redistribution or reproduction is prohibited without written permission.

SPIS holds an Australian Financial Services Licence Number 258896. STANDARD & POOR’S. Copyright © 2011 Standard & Poor's Financial Services LLC.Stock Report | October 22. S&P. S&P 500.au.com. Please refer to the SPIS Financial Services Guide for more information at www. financial situation and needs. . S&P Europe 350 and STARS are registered trademarks of Standard & Poor’s Financial Services LLC. Redistribution or reproduction is prohibited without written permission. You should obtain a Product Disclosure Statement relating to the product and consider the statement before making any decision or recommendation about whether to acquire the product. 2011 | NYS Symbol: APA Apache Corp appropriateness having regard to their own or their clients' objectives.fundsinsights. Each opinion must be weighed solely as one factor in any investment decision made by or on behalf of any adviser and any such adviser must accordingly make their own assessment taking into account an individual's particular circumstances.