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Apache Case

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1. A brief introduction of Apache and the issues under consideration.
Apache Corporation was conceived 50 years ago. Its gestation, with no small amount of planning, has yielded a company that is built to last. Apache was formed in 1954 with $250,000 of investor capital with the simple concept of becoming a significant and profitable oil company. Today, Apache Corporation is one of the world's top independent oil and gas exploration and production companies. The journey to this point was fueled by Apache's contrarian approach to business. Apache Corporation is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids. Apache’s mission is to grow a profitable global exploration and production company in a safe and environmentally responsible manner for the long-term benefit of our shareholders. The value’s Apache was founded upon — integrity, respect, individual initiative, innovation, and striving for excellence. Apache's continued growth and global expansion depend on these values to guide strategies, decisions and actions into the future.
Apache had just closed on the acquisition on Repsol in Egypt’s Western desert and, along with its partner Shell Overseas Holdings, had also acquired Fletcher Challenge Energy, for a combined cost of $1 billion. The value of such acquisitions, however, depended in large part on the future prices of oil and gas. To decrease its exposure to oil and gas price volatility, Apache had begun a limited hedging program centered mostly on its recently acquired properties. After initiating a hedging strategy, Apache Corp. is interested in revisiting its decision to determine if hedging is value-adding. The issues under consideration in this case are how Apache initially decided to hedge against commodity price risk and how it implemented its hedging practice.

2. What are

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