##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number 0-13546
 
 APACHE OFFSHORE INVESTMENT PARTNERSHIP
  Delaware
    
    41-1464066(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification Number)Suite 100, One Post Oak Central2000 Post Oak Boulevard, Houston, TX
    
    77056-4400(Address of Principal Executive Offices)
    
    (Zip Code)
   þ o
  o o þ
  o þ




---



TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1  FINANCIAL STATEMENTSITEM 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4  CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES AND USE OF PROCEEDSITEM 3. DEFAULTS UPON SENIOR SECURITIESITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. OTHER INFORMATIONITEM 6. EXHIBITS AND REPORTS ON FORM 8-KSIGNATURESExhibit IndexCertification of CEOCertification of CFOCertification of CEO and CFO    Table of Contents  
 PART I  FINANCIAL INFORMATION
 
 ITEM 1  FINANCIAL STATEMENTS
 APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF INCOME
(Unaudited)
 For the Quarter
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005REVENUES:Oil and gas sales
    
    $
    2,172,494
    
    
    $
    3,113,863
    
    
    $
    8,389,518
    
    
    $
    9,839,038Interest income
    
    
    56,558
    
    
    
    40,043
    
    
    
    118,855
    
    
    
    79,6782,229,052
    
    
    
    3,153,906
    
    
    
    8,508,373
    
    
    
    9,918,716EXPENSES:Depreciation, depletion and amortization
    
    
    344,282
    
    
    
    448,058
    
    
    
    1,186,555
    
    
    
    1,463,283Asset retirement obligation accretion
    
    
    10,576
    
    
    
    10,480
    
    
    
    31,272
    
    
    
    35,038Lease operating costs
    
    
    249,075
    
    
    
    344,508
    
    
    
    812,527
    
    
    
    942,608Gathering and transportation expense
    
    
    27,230
    
    
    
    34,155
    
    
    
    115,329
    
    
    
    118,530Administrative
    
    
    107,000
    
    
    
    107,000
    
    
    
    321,000
    
    
    
    321,000738,163
    
    
    
    944,201
    
    
    
    2,466,683
    
    
    
    2,880,459NET INCOME
    
    $
    1,490,889
    
    
    $
    2,209,705
    
    
    $
    6,041,690
    
    
    $
    7,038,257NET INCOME ALLOCATED TO:Managing Partner
    
    $
    378,288
    
    
    $
    514,513
    
    
    $
    1,427,520
    
    
    $
    1,653,873Investing Partners
    
    
    1,112,601
    
    
    
    1,695,192
    
    
    
    4,614,170
    
    
    
    5,384,384$
    1,490,889
    
    
    $
    2,209,705
    
    
    $
    6,041,690
    
    
    $
    7,038,257NET INCOME PER INVESTING PARTNER UNIT
    
    $
    1,057
    
    
    $
    1,606
    
    
    $
    4,382
    
    
    $
    5,101WEIGHTED AVERAGE INVESTING PARTNER
UNITS OUTSTANDING
    
    
    1,052.3
    
    
    
    1,055.4
    
    
    
    1,052.9
    
    
    
    1,055.5
  1




---



##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
STATEMENT OF CASH FLOWS
(Unaudited)
 For the Nine Months EndedSeptember 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    6,041,690
    
    
    $
    7,038,257Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion and amortization
    
    
    1,186,555
    
    
    
    1,463,283Asset retirement obligation accretion
    
    
    31,272
    
    
    
    35,038Dismantlement and abandonment cost
    
    
    
    
    
    
    Changes in operating assets and liabilities:(Increase) decrease in accrued revenues receivable
    
    
    989,329
    
    
    
    (55,531
    )Increase (decrease) in accrued operating expenses
    
    
    20,694
    
    
    
    14,825(Increase) decrease in payable to/receivable from
Apache Corporation
    
    
    436,185
    
    
    
    393,918Net cash provided by operating activities
    
    
    8,705,725
    
    
    
    8,889,790CASH FLOWS FROM INVESTING ACTIVITIES:Additions to oil and gas properties
    
    
    (539,828
    )
    
    
    (492,363
    )Proceeds from sale of oil and gas properties
    
    
    
    
    
    
    136,252Net cash used in investing activities
    
    
    (539,828
    )
    
    
    (356,111
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repurchase of Partnership Units
    
    
    (15,084
    )
    
    
    (3,193
    )Distributions to Investing Partners
    
    
    (3,686,932
    )
    
    
    (4,222,585
    )Distributions to Managing Partner
    
    
    (1,625,906
    )
    
    
    (1,701,939
    )Net cash used in financing activities
    
    
    (5,327,922
    )
    
    
    (5,927,717
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    2,837,975
    
    
    
    2,605,962CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    2,611,653
    
    
    
    3,333,640CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    5,449,628
    
    
    $
    5,939,602
  2




---



##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
BALANCE SHEET
(Unaudited)
 September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    5,449,628
    
    
    $
    2,611,653Accrued revenues receivable
    
    
    446,411
    
    
    
    1,435,740Receivable from Apache Corporation
    
    
    
    
    
    
    357,2705,896,039
    
    
    
    4,404,663OIL AND GAS PROPERTIES, on the basis of full cost accounting:Proved properties
    
    
    185,562,160
    
    
    
    185,573,656Less  Accumulated depreciation, depletion and amortization
    
    
    (179,541,343
    )
    
    
    (178,354,788
    )6,020,817
    
    
    
    7,218,868$
    11,916,856
    
    
    $
    11,623,531LIABILITIES AND PARTNERS CAPITALCURRENT LIABILITIES:Distributions payable
    
    $
    4,209,046
    
    
    $
    Accrued exploration and development
    
    
    
    
    
    
    551,324Accrued operating expenses
    
    
    81,259
    
    
    
    60,565Payable to Apache Corporation
    
    
    78,915
    
    
    
    4,369,220
    
    
    
    611,889ASSET RETIREMENT OBLIGATION
    
    
    731,426
    
    
    
    700,154PARTNERS CAPITAL:Managing Partner
    
    
    56,899
    
    
    
    255,285Investing Partners (1,052.3 and 1,053.4 units outstanding, respectively)
    
    
    6,759,311
    
    
    
    10,056,2036,816,210
    
    
    
    10,311,488$
    11,916,856
    
    
    $
    11,623,531
  3




---



##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
  1. RECEIVABLE FROM/PAYABLE TO APACHE CORPORATION
  2. RIGHT OF PRESENTMENT
   3. ASSET RETIREMENT OBLIGATIONS
  Balance at December 31, 2005
    
    $
    700,154Accretion expense
    
    
    31,272Balance at September 30, 2006
    
    $
    731,426
 4




---



##### Table of Contents



ITEM 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS
 Net Income and Revenue
     For the Quarter Ended September 30,
    
    For the Nine Months Ended September 30,Increase
    
    
    
    
    
    
    
    
    
    Increase2006
    
    2005
    
    (Decrease)
    
    2006
    
    2005
    
    (Decrease)Gas volume  Mcf per day
    
    
    1,659
    
    
    
    2,608
    
    
    
    (36
    %)
    
    
    2,329
    
    
    
    3,146
    
    
    
    (26
    %)Average gas price  per Mcf
    
    $
    6.99
    
    
    $
    8.94
    
    
    
    (22
    %)
    
    $
    7.79
    
    
    $
    7.39
    
    
    
    5
    %Oil volume  barrels per day
    
    
    147
    
    
    
    161
    
    
    
    (9
    %)
    
    
    160
    
    
    
    211
    
    
    
    (24
    %)Average oil price  per barrel
    
    $
    69.88
    
    
    $
    60.68
    
    
    
    15
    %
    
    $
    67.24
    
    
    $
    52.36
    
    
    
    28
    %NGL volume  barrels per day
    
    
    41
    
    
    
    25
    
    
    
    64
    %
    
    
    46
    
    
    
    54
    
    
    
    (15
    %)Average NGL price  per barrel
    
    $
    43.06
    
    
    $
    31.17
    
    
    
    38
    %
    
    $
    39.73
    
    
    $
    32.33
    
    
    
    23
    %
 Oil and Gas Sales
    5




---



##### Table of Contents



Operating Expenses
    Capital Resources and Liquidity
    6




---



##### Table of Contents



Capital Commitments
       7




---



##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Risk
   Governmental Risk
  
 ITEM 4  CONTROLS AND PROCEDURES
  FORWARD-LOOKING STATEMENTS AND RISK
   8




---



##### Table of Contents



PART II  OTHER INFORMATION
 
   
   
   
   
   
   
  a.
    
    Exhibits
 31.1
    
       Certification of Chief Executive Officer31.2
    
       Certification of Chief Financial Officer32.1
    
       Certification of Chief Executive Officer and Chief Financial Officer
 b.
    
    Reports filed on Form 8-K  None.
 9




---



##### Table of Contents



SIGNATURES
  APACHE OFFSHORE INVESTMENT PARTNERSHIP
By: Apache Corporation, General PartnerDated: November 8, 2006
    
    /s/ Roger B. PlankRoger B. PlankExecutive Vice President and Chief Financial OfficerDated: November 8, 2006
    
    /s/ Rebecca A. HoytRebecca A. HoytVice President and Controller(Chief Accounting Officer)




---



##### Table of Contents



31.1
    
       Certification of Chief Executive Officer31.2
    
       Certification of Chief Financial Officer32.1
    
       Certification of Chief Executive Officer and Chief Financial Officer