Good day, everyone, and welcome to the Apache Corporation fourth quarter earnings 2007 conference call. Today's presentation will be hosted by Mr. Bob Dye, Vice President of Investor Relations. Mr. Dye, please go ahead.

Thanks for joining us today. This morning Apache Corporation released fourth quarter and annual 2007 results which on a reported basis totaled $3.19 and $8.39 respectively. But consistent with prior quarters, we have provided adjustments to those numbers which reflect one-time items which are non-GAAP that totaled $2.92 and $8.65 per share respectively. Our adjustments primarily relate to foreign currency fluctuations and changes in the Canadian federal tax rate on the deferred tax balances that are on our balance sheet. Today's discussion may contain forward-looking estimates and assumptions and no assurance can be given that those expectations will be realized. A full disclaimer is located on our website. In addition any non-GAAP numbers that we discuss, such as adjusted earnings, cash flow from operations or adjusted cost incurred will be identified as such with the reconciliation, again located on our website at www.apachecorp.com. Steve Farris, our CEO and Roger Plank, our CFO will now make prepared remarks prior to taking questions. And with that, I'll turn the call over to Steve.

Thank you, Bob. Good morning everyone and thank you for joining us for our year end 2007 earnings call. For Apache, 2007 was a year of high impact exploration success, on track development of major projects and very strong and balanced production growth. Apache achieved record results in virtually every measurable financial and operating category. Production grew at 12% to a new record average level of 561,000 barrels oil equivalent a day in 2007 which marks to the 28th year out of the last 29 that Apache has grown its production. We have grown through good and bad times in the balanced deep portfolio we have built during all those years, meaning that we now have a growth engine that is capable of continuing that stream into the foreseeable future. In 2007, we replaced a 167% of production in terms of SEC proved reserves. Proved reserves additions from the drill-bit alone replaced a 140% of production and outstanding reserve addition performance and it should support Apache's continued growth path and has led to record proved reserves at 2.450 billion barrels oil equivalent at year end. 2007 marked the 22nd year of consecutive reserve growth for Apache. Adjusted earnings of $2.9 billion increased 26% over 2006 and eclipse the previous record set in 2005 by 11%. Our balanced portfolio profile delivered outstanding results in 2007 and clearly showed the upside potential we have across commodities, plays and countries in the current environment. Adjusted earnings per share of $8.65 increased 25% over 2006 and broke the previous record set in 2005. Our cash flow from operations is $6.2 billion increased 22% over our previous record set in 2006. 2007 was a year of high impact and broad-based exploration success, most notably in Australia. We discovered the Julimar complex in April of '07.…

Thank you, Steve, and good morning, everyone. We've talked over the years about Apache's portfolio approach to the business, and our balanced commodity mix and geographic diversity have enabled a portfolio effect in the form of yet another year of consistent profitable results. We spent decades building a company capable of delivering such a performance and frankly while our approach may not always be in favor, it's certainly difficult to argue with the results. Just about anyway you slice it, 2007 was a standout with unparalleled results in our 53 years. Records were reached in all key categories of revenues, cash from operations, earnings, reserves and production. The benefits of unprecedented oil prices and our second highest gas realizations were multiplied by a 12% rise in production to 561,000 barrels of oil equivalent a day, driving Apache's oil and gas revenue up 23% to a notable $10 billion. It is also notable that $3 billion of the $10 billion was generated in the final quarter which we hope might provide sort of a sneak preview of things to come in 2008. Cash from operations crossed $6 billion for the first time and at $6.2 billion, was up 22%, almost just as we added a fifth quarter to the year's results. Cash flow per share totaled $18.52, that's more than triple of what it was just five years ago. Over one-quarter of our $10 billion in revenue made it to the bottom line, at $2.8 billion Apache's record 2007 earnings were up over a quarter of a billion dollars. Earnings per share of $8.39 increased 10% from $7.64 per share the prior year. Adjusting for the impact that foreign currency fluctuations and a reduction in Canadian taxes had on deferred tax balances, Apache earned $8.65 a share, up 25% from 2006…

(Operator Instructions). And we'll take our first question comes from Tom Gardner with Simmons & Company. Please go ahead. Tom Gardner - Simmons & Company: Yeah, good morning, guys.

Good Morning Tom Gardner - Simmons & Company: Just with respect to Argentina and the gas market, do you anticipate the recent price trend to continue and is the market now at a point where you might be able to increase your gas directed capital spending in the country?

Well with respect to the gas price frankly, we do expect it to continue. If you look at some of the later contracts that we've signed over the last quarter to quarter and half, one was with major fertilizer that we contracted for three years at $3.50 that's going to $3.90 over a three year period. I don't think the current supply is certainly keeping up with demand. So, one of the reasons we got in Argentina at the time that we did we really anticipated that the current shortage and supply would have a real impact on prices. So, with respect to our capital budget what we've done is basically limited our capital budget in Argentina to our cash flow and although we're very high on Argentina, I think that's a prudent thing to do in the current environment. Tom Gardner - Simmons & Company: Got you. And then jumping over to Canada, I'd like to talk specifically about the tapering of your activity and how damaging the royalty changes have been. And then on the other side of the coin the increasing of activity in the Ootla shale play because Ootla qualify as shallow gas or it's does not impacted by that?

Well, the current structure of the Alberta royalty is both a rate and price curve. And so at lower rates you actually pay a lower rate than you would under the old regime and as you go higher you pay a disproportionate higher price, which is why we curtailed our deeper drilling activities because they generally come on at higher rates. If you get a 5 million a day well for instance, the royalty today in Canada under the new regime is 50%, which seems to absorbent to us, which is why we -- in the lower rates for Alberta to start out at 5% and cross that path at about 220 Mcf a day. In terms of the Ootla shale, I mentioned that we are going to drill nine wells up there with our partner EnCana. We currently are into our winter drilling program. We are drilling three wells right now as we speak and we will put multiple stage fracs on those wells. EnCana should start their drilling momentarily; actually they took one of our rigs and started their drilling program. So, the winter is going to be real important to the Ootla play. Tom Gardner - Simmons & Company: Following on that path, the Ootla play could you speak to perhaps the anticipated economics as a play or what you are seeing in your first horizontal that has you encouraged anything that you can add there?

Yeah, the horizontal well that we drilled this last year and we put three fracs on it and if tested came on at $3 million a day and it's been on 10 months and still making over $1 million a day, very good results with very good pressure. The ones that we are drilling today will put at least six individual fracs on and expect a higher initial rate than what we got out of the first horizontal well. Tom Gardner - Simmons & Company: Where do you hope to get the cost to?

Well, let's finish drilling our experiment. We have to drill those wells for about $5 million. Tom Gardner - Simmons & Company: Thank you, Steve.

And we'll take our next question from Ellen Hannan with Bear Sterns. Please go ahead.

Good morning. Just a coupe of questions, could you remind us what it is you have targeted for sale in the US? And the second question I had was, for Steve or Roger. In looking at the development program that you've got to bring on the 100,000 barrels of oil equivalent per day in the 2009 - 2011 timeframe. Has your idea or your thoughts on what the capital spending will be required with that, has that changed at all in the current environment?

The first part of the question was?

Sales, what was the sales?

Oh yeah, we have actually closed some at the end of the year and then following it along at the end of it, we've already closed about $250 million worth of sales and have a few pending for another, about a $120 million. Basically it's, either a non-operated or marginal production that we've sold. We sold a little bit of production at Permian basin; we sold a non-focused area for us in North Louisiana. We sold a non-operated field in the Gulf of Mexico and we also sold some non-focus area production, non-operated production in Canada. It's really the tail end of our property. We just that thought it was a good time with prices where they were to turn that into cash.

And the total was just over 5000 BOE per day I think. It's hard to say.

Of production.

Okay and then future development cost; has your projection for that changed at all in the current cost environment?

No, it really hasn't. In fact we put - the numbers that we have down there we feel very comfortable with.

Okay, that's it from me. Thank you.

Part of the reason is we have contracted for some of those costs. So we kind of lost…

Certainly on the Pyrenees and the Van Gogh Development we have and a great extent on Reindeer. Obviously Julimar right now is a estimate. But we also maybe estimating higher than what we hopefully anticipated it actually being.

Thank you.

Thank you. And we will take our next question with Ben Dell with Bernstein. Please go ahead.

Hi, guys.

Hi.

Good morning.

I had a couple of questions. First you obviously mentioned the tightening LNG market. In terms of the majors, have you seen them approach you around the world obviously particularly in Egypt and Australia for increments of gas supply for any of the LNG expansions? And if so, are there particular expansion that you can highlight?

Both in Australia and Egypt we have, we have had discussions with LNG players in that part of the world. And those are ongoing discussions. So and it really is a very good parameter to what you are going to see happening in domestic gas markets around the world because the competition, once you put an LNG facility out there, the competition it's and now it is going offshore, it's going in country. We are seeing that certainly seeing that pressure in Australia and we are also beginning to see that pressure in Egypt.

Okay, does that make you want to look at areas like other areas of Asia such as Malaysia and Indonesia where there is already LNG schemes in terms of developing incremental gas or accessing licenses or is that not on the radar screen?

Well it's not on the radar -- Our goal is to develop core areas that have long-term potential. And I am not suggesting that those too don’t but in the areas that were in if you look at our acreage position or you look at our infrastructure position, all of them are sizable and all of them have the potential to continue to grow.

Okay and just lastly, obviously you’ve been very active in Australia also signing rigs. Are you seeing any sort of weakness in the jack-up market, as these new rigs are added in the Asian region or have you changed your rig signing strategy to just hold off a little bit while they come through?

Well you're definitely -- internationally you're definitely seeing a small reduction in prices, nothing compared to what you are seeing in North America today but they are definitely starting -- at least currently, they have hit their peak and we’re starting to see lower prices, especially on the jack-up side and especially in the Gulf of Mexico.

Okay, great, thank you

And we'll take our next question with Gil Yang with Citi. Please go ahead.

Hi, Steve, could you comment on what you expect to happen to Canadian production with the 40% drop in capital spending?

Yeah and I tried to make sure but I've said that correctly, our overall capital spending in Canada is going to be about flat. What we have done is, redirected our capital spending to other areas. And to speak a little bit to our share play, we have gas plant capacity up there right now, but takeaway capacity is about 25 million a day, which we could increase with some compression. So, all those wells are in a remote area because of some other drilling we've done many years ago. We have some capacity takeaway there. Our budget is basically flat….

Production budget?

Capital budget.

But would there be any impact to production because you are maybe spending more money on exploratory longer-term projects?

Well, I think what you saw in 2007 is probably what you will see in 2008 and that is a little drip down but not dramatic if you understand what I am saying.

Yeah, okay. And second question is, you spent $320 million or so in Argentina and you booked 19 million barrels with so pretty high F&D cost. Can you comment on what was going on there, what kind of projects you are investing in, maybe the over the long-term that we didn't see?

I mean you have got to be careful because you got an awful lot of seismic in that.

Okay.

And I would say the same thing of Canada. We spent almost a $100 million in acreage in Canada last year. So, when you look at the total E&D spend, either in Australia, I mean Argentina or Canada, we had a significant seismic program. We are shooting 680 square kilometers of 3-D seismic right now in (inaudible). And I think we announced our first well, we've made 1600 barrels a day after that 3-D seismic. So, it's paying dividends, but you get a one time hit early on and then you get the benefit of it over the several years.

Okay. And so, if you excluded that offer and investment, can you quantify what the F&D would look like?

I can't, in front of me.

Well, it's about $15 if you again remove the ARO and the capitalized interest Gill that calculation which I don't think you do.

Right. But if you think it…

What the seismic is, I don't know. But I can get that for you off-line.

Okay. Thank you very much.

Good luck.

And we'll take our next question with David Heikkinen with Tudor Pickering. Please go ahead.

Good morning. Just I wanted to get your CapEx per region?

For '07 or?

'08, what's your target?

The one thing I would tell you is that when we talk about budgets as I pointed out, we allocate capital quarterly. So, I think Roger has our regional budgets but that is very subject to change.

Okay.

Very much. Well, I mean we look at it every month really and it will depend on what happens to prices, cash flow, economy, all sorts of things. But this is a very tentative budget. But in Argentina we are looking at somewhere around $250 million for the year 2008. The biggest increase is going to be on Australia, it's going to be -- we are looking to something like $900 million versus $400 million for exploration and development. In Chile we got a seismic program so we are slating something like $15 million there. Egypt is also likely to see a meaningful increase in its E&D budget to about three quarter of a $1 billion which is up maybe a 135 from the prior year. North Sea is about flat at five in a quarter. Central is about flat at 650, that's our onshore region basically split between the mid-continent and the Permian. The Gulf is perhaps flat that maybe down a $100 million to $900 million. And Canada as Steve indicated is about flat at about six in a quarter or so.

Okay.

So that should add up to about $4.5 billion or so that we referenced.

And then in the Gulf, you did sign up an abandonment plan for the next several years. Is that an internal Apache goal to kind of clean everything up? Or was that MMS mandated? Or how did you push that forward?

Well, it was really both. I think we are taking an opportunity, a big chunk of that is part of that Grand Isle 40s Complex that BP retained when we bought the Grand Isle 40s Complex; BP retained their obligation for the 37.5% we bought. And we own 37.5%, so if you are speaking to the contract that was out there, the biggest chuck of that is scheduled toward to that Grand Isle 40s Complex.

And do you think there will be an uptick kind of industrywide? Are you getting ahead of that before costs start increasing or?

Well, we really tried to get ahead of it in 2007 as well as working on it in 2008, I doubt if you will see a large increase in 2008 over our activity in 2007.

Okay. And then just trying to, the Alpha platform going off-line in the second quarter in the North Sea, how long do you have that in your budget for it to be off-line and how much production would you expect to be off-line?

Well, we project it's going to about 4,000 barrels a day for the quarter. But the platform will be down. I think we're scheduled it to be down for 13 days.

13 days. Thanks a lot guys. That's all I had.

Thank you.

And we will take our next question with Joe Allman with JP Morgan. Please go ahead.

Hi, everybody.

Good morning.

What are the plans in terms of your excess cash flow? Any specific targets for US dollars?

Well, as Raymond Plank always likes to point out is, if we really ever end up with excess cash flow, it would surprise us. We generally find things to do with it. The other thing I would say about that is that we've got in front of us and I think Ellen pointed that future development capital that we have in some of our major projects, those numbers add up to be over $2 billion net to Apache. So, we have uses, may not be short-term uses but we have long-term usage for our cash.

In terms of opportunity to make acquisitions, are you looking at significant acquisitions at this point or do you plan to look at significant acquisitions in 2008?

I think hopefully you've got to feel that we've evolved in such position with the asset base that we built. We intend to grow organically and that does not mean we would make an acquisition. Certainly we are an acquisitive company. We look at things that fit us, that are in areas that we want to be. The acquisition market is pretty floppy right now and so we're certainly not looking at anything in a major acquisition way. We always look for things that tag on to what we're doing.

Got it, that’s helpful. And then, I heard you talk about the rig rates softening a little bit internationally. Could you talk about other drilling complete cost? Do you see them still softening and can you give us specifics on that?

I think probably everybody is aware of Schlumberger's comment since I'm not commenting just on Slumber Jay but there is absolutely no doubt that with all the new equipment and what's happened in Alberta, North American cost, service cost are coming down. And we see that in rig rates and we also see that in primary services. Internationally, there are still very active programs going on in the world. We've seen [CMIs] coming down somewhat but certainly not the levels that percentage drops, if you are seeing for jack-ups and Gulf of Mexico or land rigs in the U.S.

Okay, it's helpful. And then Roger just real quick; I missed some of your comments on the LOE. Could you again just give us the specifics why the LOE was up in the fourth quarter and why it's not going to be up to that degree on a unit basis in 2008?

Well, one reason was we had work over activity that was $0.09 of the increase and then -- I mean, I don't know whether it will go up or not but things that we need to adjust for the foreign exchange impact that was $0.18 of the increase, lingering hurricane repairs, which hopefully will die down here with $0.12, and then incentive based or stock-based compensation expense was $0.30, which happens when our stock goes up. And I think we closed the quarter at $107 of change though that was a big number at that point. But depending on what happens in those particular areas that will drive the direction of the rate to some extent in the future.

We'd expect the stock to be huge this year.

Yes. We'll model that. And then just lastly in terms of your budget for cost are you budgeting lower costs or you being conservative in budgeting kind of flat or slightly up cost?

Well, we budget for spots on the map. And all of the capital that we've allocated right now are for projects that either have an AFE on them or a real estimate of cost. So, the thing I think you're going to see is we're going to be able to drill more wells with the same amount of money.

Got you. Okay, very helpful. Thank you.

(Operator Instructions) We'll take our next question with Leo Mariani with RBC Capital Markets. Please go ahead sir.

Hey, good afternoon here guys. A couple of quick questions here for you. On the Australian gas prices, obviously, you guys are having uplift here in the fourth quarter. Curious if you could, maybe quantify for us one some of your existing contracts roll off, I don't know, if there is a way to break this up into kind of percentages in the next couple of years because clearly there could be upside from re-contracting I guess?

I think we've about three quarters of our gas that will roll off in the 2010 to 2015 period. And so we'll have to see what kind of price we can get when that happens. Frankly, we might just contract with the same users that we've now. But just have a change in prices, as the market directs. But we'll have one contract that you may be familiar with (inaudible) that would extend beyond that period. So, roughly the $200 million that we've contracted today about three quarters of it, a little loss in beginning in 2010 through '015.

Okay. Also in Australia you guys reported a very robust oil price in the fourth quarter. I was curious, if there was anything sort of going on there that was unique to one of us?

We've seen the price of Tapas become very robust because it's in the Asian markets and it kind of premium crude. So, we've been benefiting from that. As I recall, we said that last quarter as well. So it's just selling at a premium to WTI.

Okay. Switching over to Argentina real quick here, it looks like your gas productions kind of been down for the past couple of quarters. If that not at all, whether there are going to be an area of focus, you're spending more time drilling for well down there and your programs. Just trying to get a sense of what we should expect to the next couple of quarters there?

Yeah. The biggest impact is not the capability of the wells. The biggest impacts has pipeline takeaway capacity up north, and also the limit of selling gas across to Chile. And so, what will happen to do is re-inject that gas and skip the liquid that's not a performance issue that's more of a market issue.

Okay, thanks a lot guys.

Thank you.

I might just say one thing about that, we did, as Steve indicated we saw our price improved to $60 I guess for the quarter which was very nice increase. The way the market works over there we must deliver a certain volume of gas roughly 145 million cubic feet a day at a fixed price. So, when we bring on incremental gas then we can go after the kind of market that Steve was talking about $3 contract type price. So, as far you can make economics at these prices really it will be a blend of the old price from the new but to the extent we bring on incremental production, we'll get a free market price that has been $2.5 and $3.5 in Mcf. So, I think our guys are still planning to drill a number of gas wells because of that net aspect of it.

Yeah. The primary drilling for gas right now at least will be in the neck and the primary drilling for oil will be in TDS.

(Operator Instructions) And we have no further questions. I'd like to turn it back over to Mr. Dye for any additional or closing remarks.

Thanks for tuning in. Roger and I are going to head up fairly soon to the First Boston Conference in Colorado. So, you should probably direct your questions this afternoon to Dave Higgins and his number is 713-296-6690. Again, thanks for joining us.

Once again, ladies and gentlemen, this will conclude today's conference. We thank you for your participation. You may now disconnect.