The employment of the traditional project management approach (Detailed Command) is on the rise across all industries, but so is the number of project failures. Mission Command is an alternative philosophy of management, with centralised intent and decentralised execution that is particularly suitable for complex project management. The successes of the British Military over the last two decades have flowed from embracing Mission Command, could this be the key to improving project success in other industries?

1. MISSION COMMAND
ALTERNATIVE PROJECT MANAGEMENT
(IT’S NOT ABOUT THE BOK)
MARK RICHARDSON
APACHE NORTH SEA
PROJECTS GROUP MANAGER
14 MAY 2014

2. Certain statements in this presentation may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 including, without limitation, expectations, beliefs, plans and objectives regarding production and exploration
activities. Any matters that are not historical facts are forward-looking and, accordingly, involve estimates, assumptions, risks and uncertainties,
including, without limitation, risks, uncertainties and other factors discussed in our most recently filed Annual Report on Form 10-K, recent Quarterly
Reports on Form 10-Q, recent Current Reports on Form 8-K available on our website, http://www.apachecorp.com/, and in our other public filings
and press releases. These forward-looking statements are based on Apache Corporation’s (Apache) current expectations, estimates and projections
about the company, its industry, its management’s beliefs and certain assumptions made by management. No assurance can be given that such
expectations, estimates or projections will prove to have been correct. Whenever possible, these “forward-looking statements” are identified by
words such as “expects,” “believes,” “anticipates” and similar phrases.
Because such statements involve risks and uncertainties, Apache’s actual results and performance may differ materially from the results expressed or
implied by such forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-
looking statements. Unless legally required, we assume no duty to update these statements as of any future date. However, you should review
carefully reports and documents that Apache files periodically with the Securities and Exchange Commission.
Cautionary Note to Investors: The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. Apache uses certain terms in this
presentation, such as “BO resource,” “BO Potential” and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings
with the SEC. “BO Resource,” “BO Potential” and other such terms do not take into account the certainty of resource recovery, which is contingent on
exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future
resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2011, and amendments thereto, available from Apache at www.apachecorp.com or by writing Apache at: 2000
Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330
or from the SEC's website at www.sec.gov
FORWARD LOOKING STATEMENTS

4.  Apache North Sea Limited
 Apache Projects
 Traditional Project Management Approach
 Traditional Project Management Performance
 Mission Command
 History
 Principles
 Implementation
 Discussion & Questions
4
AGENDA

5. 5
APACHE NORTH SEA

6. SAFETY PERFORMANCE
Company Improvement
Notices
Prohibition
Notices
Maersk (all sections) 13 3
Talisman 10 1
Shell U.K. Limited 8 6
CNR 8 1
Marathon 7 0
Petrofac Facilities Management 5 0
Total E&P 4 0
Chevron 4 0
Taqa 3 0
Nexen 3 0
BP 2 0
Premier Oil 2 0
Apache 2 0
Sources: OGUK Benchmarking 2013 Data and HSE http://www.hse.gov.uk/notices/notices

7. 7
2013 PRODUCTION
Forties
Beryl Area
Nelson
Scott
Nevis S Telford
Buckland Ness Maclure Bacchus
0
500
1,000
1,500
2,000
2,500
3,000
MBOE/
D
0
20
40
60
80
100
120
140
Gas
Oil

8. 8
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
APACHE
MARATHON
TULLOW
PERENCO
BHP
CENTRICA
ENQUEST
BRIDGE
NEXEN
DANA
COP
TAQA
RWE
BG
CHEVRON
ITHACA
PREMIER
SHELL
TOTAL
BP
TALISMAN
MAERSK
CNR
E.ON
2013 PRODUCTION EFFICIENCY
1
3
5
7
9
11
13
15
17
19
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
OperatorRanking
Source: OGUK Production Efficiency Task Force Data Pack

9. Forties
Acquis
ition
2003 2004 2005 2006 2007 2008 2009 2010 2011
MNSL
Acquis
ition
2012 2013
Running Costs 130 180 186 226 226 236 198 208 253 365 428
Other Capital 683 9 19 35 22 26 23 24 48 33 1250 64 84
ITS Capital 28 158 214 176 253 226 156 202 263 271 323
Drilling Capital 23 185 240 133 260 210 198 367 527 553 476
Cum. Spend ($ million) 683 873 1415 2091 2647 3412 4106 4681 5507 6583 7833 9086 10397
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
0
200
400
600
800
1,000
1,200
1,400
CumulativeSpend$million
AnnualSpend$million
9
EXPENDITURE

10. 2003 2004 2005 2006 2007 2008 2009 2010 2011
MNSL
Acqui
sition
2012 2013
Oil & Gas Revenue 273 472 1275 1355 1399 2103 1369 1605 2185 2771 2728
Total Spend -873 -542 -675 -557 -765 -694 -576 -826 -1076 -1250 -1254 -1311
Current Tax Liability -41 35 -310 -504 -439 -1091 -360 -599 -1235 -1097 -880
Cumulative Rev less Spend less Tax Liability -641 -677 -388 -94 102 419 853 1034 908 -342 78 616
-2,000
-1,500
-1,000
-500
-
500
1,000
1,500
2,000
2,500
3,000
$million
10
REVENUE STREAM

11.  Apache North Sea Limited
 Apache Projects
 Traditional Project Management Approach
 Traditional Project Management Performance
 Mission Command
 History
 Principles
 Implementation
 Discussion & Questions
11
AGENDA

12. 12
Projects Group
Manager
Mark Richardson
Topsides
Kevin Duncan
Subsea
Paul Williams
Project Services
Richard Stark
Construction
Willie Ferguson
Systems
Kieran Marr
Develops & FASP
Neil Rogerson
THE PROJECTS TEAM

13. 13
THE DELIVERY PROCESS
identity
process and control
quick reference
stage summaries
How to...
CP1 CP2 CP3 CP4 CP5 CP6
PROJECTS DELIVERY MANUAL
100 - General philosophy and approach 200 - Broader Project Management Topics 300 - Specific methods and tools

14.  FASP topsides installed - Hook up
and commissioning now 99%
complete.
 Forties Charlie Deep Gas Lift -
Commissioned and two wells
brought on line.
 Beryl's Subsea Campaign -
Reinstating shut-in subsea
production from S66/S64 plus N10
and S59, correcting integrity faults,
laying a new pipeline and installing
a new Skene umbilical.
FASP
FC Deep Gas Lift Compressor
Skene Subsea Umbilical Replacement
2013 PROJECTS

15.  Aviat Fuel Gas Tie-back - FEED
completed.
 Nevis Ness - Concept select phase
completed.
 Bacchus - Third well hooked up and
commissioned.
 Tonto Field – New field brought on
through Forties.
 Forties Delta Controls System ‘Delta
V’ upgrade - Complete with wells
now being cut over.
 Beryl Alpha Rig 2 Reinstatement
Project - Completed and now drilling.
Bacchus Third Well Tie-in Delta V Equipment Room Reactivated Drilling Rig
Ness Nevis Tie-back
Aviat Schematic
2013 PROJECTS

16.  Apache North Sea Limited
 Apache Projects
 Traditional Project Management Approach
 Traditional Project Management Performance
 Mission Command
 History
 Principles
 Implementation
 Discussion & Questions
16
AGENDA

17. 17
 Definition
Project management is the application of processes, methods, knowledge, skills and
experience to achieve the project objectives.
 General
A project is a unique, transient endeavour, undertaken to achieve planned objectives, which
could be defined in terms of outputs, outcomes or benefits. A project is usually deemed to be
a success if it achieves the objectives according to their acceptance criteria, within an agreed
timescale and budget.
171717 Source 1 : http://www.apm.org.uk/WhatIsPM
Source 2: http://projectjedi.wordpress.com/2012/04/30/a-brief-history-of-project-management/
TRADITIONAL PROJECT MANAGEMENT

18. STAGE GATE PROCESS
Defer, Delay or Do Nothing

19. 19
RISK MANAGEMENT
Probability
Cost/Time
P50
Flyvbjerg – Optimism Bias
EstimateVariance
Time
4.0 X
0.25 X
1.0 X
McConnell - Uncertainty
People, not Process Deliver Projects

20.  Apache North Sea Limited
 Apache Projects
 Traditional Project Management Approach
 Traditional Project Management Performance
 Mission Command
 History
 Principles
 Implementation
 Discussion & Questions
20
AGENDA

21. 21 Source: KPMG 2013 PROJECT MANAGEMENT SURVEY REPORT
 There has been a significant increase in project activity in the past
two years across all sectors of the economy.
 However failure rates are increasing – with survey results showing
that only one-third of projects are delivering the desired outcome.
2010 2012
Consistently on Budget 48% 33%
Consistently on Time 36% 29%
Consistently Delivering Stated
Deliverables
59% 35%
KPMG 2012 SURVEY OF PM PRACTICES IN NEW ZEALAND

22. 0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
> $5bn < $5bn
2011 E&P Projects with >50% Budget Overruns
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
1997 2005 2011
% of E&P Projects with >50% Budget Overruns
◤ Capital spend has tripled in
the past 10 years to reach
$500-600 bn.
◤ Oil and gas projects failed to
meet their original
objectives in 78% of cases.
◤ 60% of the failures suffered
severe operability problems
2 years after they entered
production.
2222
Source: SBC Capital Projects Survey 2012
SBC 2012 GLOBAL OIL AND GAS PROJECT PERFOMANCE

23. 23
US $BN
Endeavour*
TAAS-YURYAKH*
Medco*
NLNG***
Centrica*
GDFSuez*
Maersk*
Ecopetrol*
OMV
PTTEP*
Suncor*
Lukoil**
Woodside*
Petronas*
Talisman
Anadarko
Hess
Devon
BGGroup
Apache
ConocoPhillips
BP
Statoil
Shell
Chevron
Legend
Major NOC Independent
Mega developers
(average > $4bn)
Large developers
(average < $4bn)
2323 Source : Company 10-K & 20-F, Rystad, SBC Capital Projects Survey 2013
Note: * from Rystad **Global development cost expenditure was used for Lukoil *** 2012 value only
SBC 2013 SURVEY PARTICIPANTS

24. 24 Source: IHS Upstream database; US PPI Index – Only projects exceeding $1bn (in 2011 US$) were considered, representing an average of 14
projects per year
PROJECT DELAYS AND SEVERITY OF DELAY
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003200220012000
Yearsofdelay
%oftotalprojectsdelayed
201220112010200920082007200620052004
Average delay
2 to 5 years
More than 5 years
1 to 2 years

25. 25
Disappointing performance
COST ESCALATION SCHEDULE SLIPPAGE LIFECYCLE VALUE
13%
38%
50%
>40% 18%
20 - 40% 14%
10 - 20% 14%
5 - 10% 9%
0 - 5% 46%
>40% 17%
20 - 40% 26%
10 - 20% 17%
5 - 10% 7%
0 - 5% 33%
Projects capture largest
proportion of life cycle value
Significant value left in
various forms
A non-negligible part of
long-term value not captured
Source: SBC Capital Projects Survey 2013
2013 OIL AND GAS GLOBAL PROJECT PERFORMANCE

26. 26
Central project management function
Formal stage-gate review process 92%
80%
5-10 years ago>10 years ago <5 years ago
Source: SBC Capital Projects Survey 2013
STAGE GATE PROCESS AND CENTRALISED PROJECTS

27. 27
8%
8%
6%
GovernanceSupply chain
20%
28%
30%
People & organisation
. Safety & environment
 Technical & economic challenges
 External stakeholders
 Talent availability
 Training/development
 Skill pool management
 Availability & quality of critical
equipment and engineering
services
 Contracting & procurement
approach
 Decision-making
 Expectations and targets
 Risk management / assurance
 Framing and FEL
Source: SBC Capital Projects Survey 2013
2013 PROJECT CHALLENGES
Complexity

28.  Apache North Sea Limited
 Apache Projects
 Traditional Project Management Approach
 Traditional Project Management Performance
 Mission Command
 History
 Principles
 Implementation
 Discussion & Questions
28
AGENDA

29. 5/15/2014 29APA BLUE WHITE
MISSION COMMAND

30. WHAT IS MISSION COMMAND?
Mission command is a command approach that is
based upon the exercise of local initiative within
the framework of command intent. This is enabled
by an appropriate delegation of authority that
allows subordinate commanders the latitude to
plan and conduct operations based upon their
understanding of the local situation

31. MISSION COMMAND HISTORY
 Carl von Clausewitz - ‘On War’ (published posthumously
1832)
 Field Marshal Von Moltke - Father of ‘Auftragstaktik.’
“Obedience is a principle, but the man stands above the
principle.”
 Auftragstaktik - Senior commanders should not order more
than was absolutely necessary but should ensure the goal
was clear. In case of doubt, subordinate commanders
should seize the initiative
 1986 - Field Marshal Bagnall KCB GCB CVO MC* -
Introduces principles of Auftragstaktik to UK Military
doctrine and influences NATO doctrine. Doctrine becomes
known as ‘Mission Command.’ and is adopted by US
Military
 Successfully deployed in all operations since 1986

32. British Army’s Field Publication, Volume 2, Mission Command:
‘The Army's philosophy of command is described in British Military
Doctrine and has three enduring tenets: timely decision making, the
importance of understanding a superior commander's intention, and,
by applying this to one's own actions, a clear responsibility to fulfil
that intention. The underlying requirement is the fundamental
responsibility to act (or, in certain circumstances, to decide not to
act) within the framework of the commander's intentions. Together,
this requires a style of command, which promotes decentralised
command, freedom and speed of action, and initiative.’
BRITISH MILITARY MISSION COMMAND

33. 33
US Forces Mission Command Principles:
 Build cohesive teams through mutual trust
 Create shared understanding
 Provide a clear commander’s intent
 Exercise disciplined initiative
 Use mission orders
 Accept prudent risk
MISSION COMMAND PHILOSOPOHY
British Military Tenets:
 Timely decision making
 Understanding the senior leader’s
intent
 Responsibility to fulfil that intent
Leadership Requirements:
 Decentralised decision making (formal
delegation/empowerment)
 Freedom (and speed) of action
 Initiative

34. HOW DOES MISSION COMMAND DIFFER?
Mission Command Detailed Command
Probabilistic Assumes War/Project is Deterministic
Unpredictable Predicable
Disorder Accepts Order
Uncertainty Certainty
Decentralisation Leads to Centralisation
Spontaneity Coercion
Informality Formality
Loose Rein Tight Rein
Self-Discipline Imposed Discipline
Initiative Obedience
Cooperation Compliance
Acceptable Decisions Faster Optimal Decisions but Later
Ability at all Levels Ability Focused at the Top
Implicit Communication used Explicit
Vertical and Horizontal Vertical
Interactive Linear
Organic Organisation type Hierarchic
Ad Hoc Bureaucratic
Delegating Leadership Styles Directing
Transformational Transactional
Art of Delivery Appropriate for Science of Delivery
Conduct of Operations Technical and Procedural Tasks

35.  The Commander retains ultimate responsibility
 Genuinely empowers their people
 Trust is essential
 Leadership at all Levels
 Action in accordance with commander’s intent
MISSION COMMAND IMPLEMENTATION

36. The Commander:
 Briefs his intent to 2 levels down
 Explains the limitations, e.g. time, boundaries, mission, tasks,
resources
 Allocates resources
 States WHAT is to be achieved, not HOW it is to be achieved
 Gives decision-making criteria
The Subordinate Commander:
 Understands role in commander’s plan 2 levels up
 Devises his own plan in achieving the commander’s intent
 Asks for more resources if needed, but offers back resources
not needed
 Briefs his subordinates 2 levels down
MISSION COMMAND PROCESS

37. 37
COMMAND, CONTROL AND COMMUNICATION
Source: http://www.fas.org/irp/doddir/army/adrp6_0.pdf
Leadership
Command
Control Communication

38. 38
“… Never tell people how to do things, tell them what to do and
they will surprise you with their ingenuity”
 Sense of urgency
 Devolved decision making
 Best answers win
 Respect, integrity and trust
BEHAVIOURAL REQUIREMENTS
 Leadership
 Responsibility, accountability and authority

39. y = 102,948,194x-0.4120
R² = 0.5327
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
0 5 10 15 20 25
CostperMaximumNumberofWellConnections(USD)
Maximum Number of Well Connections
Non-Deepwater Subsea Tiebacks
Cost per Well (subsea only projects)
Eng, Mat, Inst
North Sea Asia/Australia Africa ss_only Precision Range +/- ss_only Trend
Some points on this chart may be obscured
by others with near-identical values.
Outlier with y > 120,000,000 is not shown.
Bacchus Project 4
Wells
BACCHUS BENCHMARKING

40. 40
FASP
$54,865/Tonne
FASP 4.8%
FASP AWARD WINNING EFFICIENCY

41. ‘It Works in Practice,
but does it Work
Theory’
41

42.  Apache North Sea Limited
 Apache Projects
 Traditional Project Management Approach
 Traditional Project Management Performance
 Mission Command
History
Principles
Implementation
 Discussion & Questions
42
AGENDA

43. 43
PROJECTSd e l i v e r y a t p a c e
Recommended Reading:
 ADRP 6.0 Mission Command (www.fas.org/irp/doddir/army/adrp6_0.pdf)
 British Army Doctrine
(https://www.gov.uk/government/uploads/.../ADPOperationsDec10.pdf)
 Transforming Command: The Pursuit of Mission Command in the U.S., British
and Israeli Armies (http://www.amazon.co.uk/Transforming-Command-
Pursuit-Mission-British/dp/0804772037)