Document:

<PAGE>   1
                                                                  EXHIBIT 10.05

                               APACHE CORPORATION

                             2000 STOCK OPTION PLAN

                      (AS AMENDED AND RESTATED MAY 3, 2001;
                          EFFECTIVE AS OF MAY 1, 2001)

<PAGE>   2

                               APACHE CORPORATION
                             2000 STOCK OPTION PLAN
                      (AS AMENDED AND RESTATED MAY 3, 2001;
                          EFFECTIVE AS OF MAY 1, 2001)

                                    SECTION 1

                                  INTRODUCTION

1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter
referred to, together with its Affiliated Corporations (as defined in Section
2.1 hereof) as the "Company" except where the context otherwise requires),
hereby establishes the Apache Corporation 2000 Stock Option Plan (the "Plan")
for Eligible Employees (as defined in Section 2.1 hereof). The Plan permits the
grant of stock options to Eligible Employees selected by the Committee (as
defined in Section 2.1 hereof).

1.2 Purposes. The purposes of the Plan are to provide the Eligible Employees
designated by the Committee for participation in the Plan with added incentives
to continue in the long-term service of the Company and to create in such
employees a more direct interest in the future success of the operations of the
Company by relating incentive compensation to increases in stockholder value, so
that the income of those employees is more closely aligned with the interests of
the Company's stockholders. The Plan is also designed to attract outstanding
individuals and to retain and motivate Eligible Employees by providing an
opportunity for investment in the Company.

1.3 Effective Date. The Effective Date of the Plan (the "Effective Date") is
February 10, 2000.

                                    SECTION 2

                                   DEFINITIONS

2.1 Definitions. The following terms shall have the meanings set forth below:

         (a) "Administrative Agent" means any designee or agent that may be
appointed by the Committee pursuant to Section 3.1(b) hereof.

         (b) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Apache

                                       1
<PAGE>   3

Corporation through stock ownership or otherwise and is treated as a common
employer under the provisions of Sections 414(b) and (c) or any successor
section(s) of the Internal Revenue Code.

         (c) "Board" means the Board of Directors of the Company.

         (d) "Committee" means the Stock Option Plan Committee of the Board,
which is empowered hereunder to take actions in the administration of the Plan.
The Committee shall be constituted at all times as to permit the Plan to comply
with Rule 16b-3 or any successor rule(s) promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act").

         (e) "Deferred Delivery Plan" means the Company's Deferred Delivery
Plan, effective as of February 10, 2000, as it may be amended from time to time,
or any successor plan.

         (f) "Depositary Shares" means the Depositary shares representing the
Company's preferred stock convertible into Stock.

         (g) "Eligible Employees" means full-time employees (including, without
limitation, officers and directors who are also employees), and certain
part-time employees, of the Company or any division thereof.

         (h) "Expiration Date" means the date on which the Option Period (as
defined in subsection 7.2(c) hereof) ends.

         (i) "Fair Market Value" means the per share closing price of the Stock
or Depositary Shares, as applicable, as reported on the New York Stock Exchange,
Inc. Composite Transactions Reporting System for a particular date. If on such
date there are no transactions in the Stock or Depositary Shares, as applicable,
the Fair Market Value shall be determined as of the immediately preceding date
on which there were transactions in the Stock or Depositary Shares, as
applicable.

         (j) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
it may be amended from time to time.

         (k) "Option" means a right to purchase shares of Stock at a stated
price for a specified period of time. All Options granted under the Plan shall
be Options which are not "incentive stock options" as described in Section 422
or any successor section(s) of the Internal Revenue Code.

                                        2
<PAGE>   4

         (l) "Option Price" means the price at which shares of Stock subject to
an Option may be purchased, determined in accordance with subsection 7.2(b)
hereof.

         (m) "Participant" means an Eligible Employee designated by the
Committee from time to time during the term of the Plan to receive one or more
Options under the Plan.

         (n) "Reload Option" has the meaning set forth in subsection 7.4 hereof.

         (o) "Stock" means the U.S. $1.25 par value Common Stock of the Company.

         (p) "Stock Units" means investment units under the Deferred Delivery
Plan, each of which is deemed to be equivalent to one share of Stock.

2.2 Headings; Gender and Number. The headings contained in the Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the Plan. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.

                                    SECTION 3

                               PLAN ADMINISTRATION

3.1      Administration by the Committee.

         (a) The Plan shall be administered by the Committee. In accordance with
the provisions of the Plan, the Committee shall, in its sole discretion, select
the Participants from among the Eligible Employees, determine the Options to be
granted pursuant to the Plan, the number of shares of Stock to be issued
thereunder, the time at which such Options are to be granted, fix the Option
Price, and establish such other terms and requirements as the Committee may deem
necessary or desirable and consistent with the terms of the Plan. The Committee
shall determine the form or forms of the agreements with Participants which
shall evidence the particular provisions, terms, conditions, rights and duties
of the Company and the Participants with respect to Options granted pursuant to
the Plan, which provisions need not be identical except as may be provided
herein.

                                        3
<PAGE>   5

         (b) The Committee may from time to time adopt such rules and
regulations for carrying out the purposes of the Plan as it may deem proper and
in the best interests of the Company. The Committee may appoint an
Administrative Agent, who need not be a member of the Committee or an employee
of the Company, to assist the Committee in administration of the Plan and to
whom it may delegate such powers as the Committee deems appropriate, except that
the Committee shall determine any dispute. The Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan, or in any
agreement entered into hereunder, in the manner and to the extent it shall deem
expedient and it shall be the sole and final judge of such expediency. No member
of the Committee shall be liable for any action or determination made in good
faith. The determination, interpretations and other actions of the Committee
pursuant to the provisions of the Plan shall be binding and conclusive for all
purposes and on all persons.

                                    SECTION 4

                            STOCK SUBJECT TO THE PLAN

4.1 Number of Shares. Subject to Sections 7.1 and 7.4 hereof and to adjustment
pursuant to Section 4.3 hereof, one million five hundred thousand (1,500,000)
shares of Stock are authorized for issuance under the Plan in accordance with
the provisions of the Plan and subject to such restrictions or other provisions
as the Committee may from time to time deem necessary. This authorization may be
increased from time to time by approval of the Board and the stockholders of the
Company if, on the advice of counsel for the Company, such stockholder approval
is required. Shares of Stock which may be issued upon exercise of Options shall
be applied to reduce the maximum number of shares of Stock remaining available
for use under the Plan. The Company shall at all times during the term of the
Plan and while any Options are outstanding retain as authorized and unissued
Stock, or as Stock in the Company's treasury, at least the number of shares from
time to time required under the provisions of the Plan, or otherwise assure
itself of its ability to perform its obligations hereunder.

4.2 Other Shares of Stock. Any shares of Stock that are subject to an Option
which expires, is forfeited, is cancelled, or for any reason is terminated
unexercised, and any shares of Stock that for any other reason are not issued to
a Participant or are forfeited shall automatically become available for use
under the Plan.

                                        4
<PAGE>   6

4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall at
any time increase or decrease the number of its outstanding shares of Stock or
change in any way the rights and privileges of such shares by means of the
payment of a Stock dividend or any other distribution upon such shares payable
in Stock, or through a Stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: (i) the shares of Stock as to
which Options may be granted under the Plan; and (ii) the shares of the Stock
then included in each outstanding Option granted hereunder.

4.4 Dividend Payable in Stock of Another Corporation, Etc. If the Company shall
at any time pay or make any dividend or other distribution upon the Stock
payable in securities or other property (except money or Stock), a proportionate
part of such securities or other property shall be set aside and delivered to
any Participant then holding an Option for the particular type of Stock for
which the dividend or other distribution was made, upon exercise thereof. Prior
to the time that any such securities or other property are delivered to a
Participant in accordance with the foregoing, the Company shall be the owner of
such securities or other property and shall have the right to vote the
securities, receive any dividends payable on such securities, and in all other
respects shall be treated as the owner. If securities or other property which
have been set aside by the Company in accordance with this Section are not
delivered to a Participant because an Option is not exercised, then such
securities or other property shall remain the property of the Company and shall
be dealt with by the Company as it shall determine in its sole discretion.

4.5 Other Changes in Stock. In the event there shall be any change, other than
as specified in Sections 4.3 and 4.4 hereof, in the number or kind of
outstanding shares of Stock or of any stock or other securities into which the
Stock shall be changed or for which it shall have been exchanged, and if the
Committee shall in its discretion determine that such change equitably requires
an adjustment in the number or kind of shares subject to outstanding Options or
which have been reserved for issuance pursuant to the Plan but are not then
subject to an Option, then such adjustments shall be made by the Committee and
shall be effective for all purposes of the Plan and on each outstanding Option
that involves the particular type of stock for which a change was effected.

4.6 Rights to Subscribe. If the Company shall at any time grant to the holders
of its Stock rights to subscribe pro rata for additional shares thereof or for
any

                                        5
<PAGE>   7
other securities of the Company or of any other corporation, there shall be
reserved with respect to the shares then under Option to any Participant of the
particular class of Stock involved the Stock or other securities which the
Participant would have been entitled to subscribe for if immediately prior to
such grant the Participant had exercised his entire Option. If, upon exercise of
any such Option, the Participant subscribes for the additional shares or other
securities, the aggregate Option Price shall be increased by the amount of the
price that is payable by the Participant for such additional shares or other
securities.

4.7 General Adjustment Rules. No adjustment or substitution provided for in this
Section 4 shall require the Company to sell a fractional share of Stock under
any Option, or otherwise issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Option shall be limited by
deleting any fractional share. In the case of any such substitution or
adjustment, the aggregate Option Price for the shares of Stock then subject to
the Option shall remain unchanged but the Option Price per share under each such
Option shall be equitably adjusted by the Committee to reflect the greater or
lesser number of shares of Stock or other securities into which the Stock
subject to the Option may have been changed.

4.8 Determination by the Committee, Etc. Adjustments under this Section 4 shall
be made by the Committee, whose determinations with regard thereto shall be
final and binding upon all parties.

                                    SECTION 5

                          REORGANIZATION OR LIQUIDATION

In the event that the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if all or substantially all
of the assets or more than 20 percent of the outstanding voting stock of the
Company is acquired by any other corporation, business entity or person, or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
8 hereof do not apply, the Committee, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to the Plan and
outstanding Options either (i) make appropriate provision for the adoption and
continuation of the Plan by the acquiring or successor corporation and for the
protection of any such outstanding Options by the substitution on an equitable
basis of appropriate stock of the Company or of the merged, consolidated or
otherwise reorganized

                                        6
<PAGE>   8

corporation which will be issuable with respect to the Stock, provided that no
additional benefits shall be conferred upon the Participants holding such
Options as a result of such substitution, and the excess of the aggregate Fair
Market Value of the shares subject to the Options immediately after such
substitution over the aggregate Option Price thereof is not more than the excess
of the aggregate Fair Market Value of the shares subject to such Options
immediately before such substitution over the aggregate Option Price thereof, or
(ii) upon written notice to the Participants, provide that all unexercised
Options shall be exercised within a specified number of days of the date of such
notice or such Options will be terminated. In the latter event, the Committee
shall accelerate the vesting dates of outstanding Options so that all Options
become fully vested and exercisable prior to any such event.

                                    SECTION 6

                                  PARTICIPATION

Participants in the Plan shall be those Eligible Employees who, in the judgment
of the Committee, are performing, or during the term of their incentive
arrangement will perform, vital services in the management, operation and
development of the Company or an Affiliated Corporation, and significantly
contribute, or are expected to significantly contribute, to the achievement of
the Company's long-term corporate economic objectives. Participants may be
granted from time to time one or more Options; provided, however, that the grant
of each such Option shall be separately approved by the Committee, and receipt
of one such Option shall not result in automatic receipt of any other Option.
Upon determination by the Committee that an Option is to be granted to a
Participant, written notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto. Each Participant shall, if
required by the Committee, enter into an agreement with the Company, in such
form as the Committee shall determine and which is consistent with the
provisions of the Plan, specifying such terms, conditions, rights and duties.
Options shall be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date shall be the date of any related
agreement with the Participant. In the event of any inconsistency between the
provisions of the Plan and any such agreement entered into hereunder, the
provisions of the Plan shall govern.

                                        7
<PAGE>   9

                                    SECTION 7

                                  STOCK OPTIONS

7.1 Grant of Stock Options. Coincident with or following designation for
participation in the Plan, an Eligible Employee may be granted one or more
Options. Grants of Options under the Plan shall be made by the Committee. In no
event shall the exercise of one Option affect the right to exercise any other
Option or affect the number of shares of Stock for which any other Option may be
exercised, except as provided in subsection 7.2(j) hereof. During the duration
of the Plan, no Eligible Employee may be granted Options which in the aggregate
cover in excess of 25 percent of the total shares of Stock authorized under the
Plan.

7.2 Stock Option Agreements. Each Option granted under the Plan shall be
evidenced by a written stock option agreement which shall be entered into by the
Company and the Participant to whom the Option is granted (the "Stock Option
Agreement"), and which shall contain the following terms and conditions, as well
as such other terms and conditions, not inconsistent therewith, as the Committee
may consider appropriate in each case:

         (a) Number of Shares. Each Stock Option Agreement shall state that it
covers a specified number of shares of Stock, as determined by the Committee.

         (b) Price. The price at which each share of Stock covered by an Option
may be purchased shall be determined in each case by the Committee and set forth
in the Stock Option Agreement, but in no event shall the price be less than the
Fair Market Value of the Stock on the date the Option is granted.

         (c) Duration of Options; Employment Required For Exercise. Each Stock
Option Agreement shall state the period of time, determined by the Committee,
within which the Option may be exercised by the Participant (the "Option
Period"). The Option Period must end, in all cases, not more than ten years from
the date an Option is granted. Except as otherwise provided in Sections 5 and 8
and subsections 7.2(d)(iv) and 7.4(a) hereof, each Option granted under the Plan
shall become exercisable in increments such that 25 percent of the Option
becomes exercisable on each of the four subsequent one-year anniversaries of the
date the Option is granted, provided that each such additional 25-percent
increment shall become exercisable only if the Participant has been continuously
employed by the Company from the date the Option is

                                        8
<PAGE>   10
granted through the date on which each such additional 25-percent increment
becomes exercisable.

         (d) Termination of Employment, Death, Disability, Etc. Each Stock
Option Agreement shall provide as follows with respect to the exercise of the
Option upon termination of the employment or the death of the Participant:

                  (i) If the employment of the Participant by the Company is
terminated within the Option Period for cause, as determined by the Company, the
Option shall thereafter be void for all purposes. As used in this subsection
7.2(d), "cause" shall mean a gross violation, as determined by the Company, of
the Company's established policies and procedures, provided that the effect of
this subsection 7.2(d) shall be limited to determining the consequences of a
termination and that nothing in this subsection 7.2(d) shall restrict or
otherwise interfere with the Company's discretion with respect to the
termination of any employee.

                  (ii) If the Participant retires from employment by the Company
on or after attaining age 60, the Option may be exercised by the Participant
within 36 months following his or her retirement (provided that such exercise
must occur within the Option Period), but not thereafter. In the event of the
Participant's death during such 36-month period, each Option may be exercised by
those entitled to do so in the manner referred to in (iv) below. In any such
case, the Option may be exercised only as to the shares as to which the Option
had become exercisable on or before the date of the Participant's retirement.

                  (iii) If the Participant becomes disabled (as determined
pursuant to the Company's Long-Term Disability Plan or any successor plan),
during the Option Period while still employed, or within the three-month period
referred to in subsection 7.2(d)(v) below, or within the 36-month period
referred to in subsection 7.2(d)(ii) above, the Option may be exercised by the
Participant or by his or her guardian or legal representative, within twelve
months following the Participant's disability, or within the 36-month period
referred to in subsection 7.2(d)(ii) above if applicable and if longer (provided
that such exercise must occur within the Option Period), but not thereafter. In
the event of the Participant's death during such twelve-month period, each
Option may be exercised by those entitled to do so in the manner referred to in
subsection 7.2(d)(iv) below. In any such case, the Option may be exercised only
as to the shares of Stock as to which the Option had become exercisable on or
before the date of the Participant's disability.

                                        9
<PAGE>   11

                  (iv) In the event of the Participant's death while still
employed by the Company, each Option of the deceased Participant may be
exercised by those entitled to do so under the Participant's will or under the
laws of descent and distribution within twelve months following the
Participant's death (provided that in any event such exercise must occur within
the Option Period), but not thereafter, as to all shares of Stock which are
subject to such Option, including each 25-percent increment of the Option, if
any, which has not yet become exercisable at the time of the Participant's
death. In the event of the Participant's death within the 36-month period
referred to in subsection 7.2(d)(ii) above or within the twelve-month period
referred to in subsection 7.2(d)(iii) above, each Option of the deceased
Participant that is exercisable at the time of death may be exercised by those
entitled to do so under the Participant's will or under the laws of descent and
distribution within twelve months following the Participant's death or within
the 36-month period referred to in subsection 7.2(d)(ii) above, if applicable
and if longer (provided that in any event such exercise must occur within the
Option Period). The provisions of this paragraph (iv) of subsection 7.2(d) shall
be applicable to each Stock Option Agreement as if set forth therein word for
word. Each Stock Option Agreement executed by the Company prior to the adoption
of this provision shall be deemed amended to include the provisions of this
paragraph and all Options granted pursuant to such Stock Option Agreements shall
be exercisable as provided herein.

                  (v) If the employment of the Participant by the Company is
terminated (which for this purpose means that the Participant is no longer
employed by the Company or by an Affiliated Corporation) within the Option
Period for any reason other than cause, the Participant's retirement on or after
attaining age 60, or the Participant's disability or death, the Option may be
exercised by the Participant within three months following the date of such
termination (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the
shares as to which the Option had become exercisable on or before the date of
termination of the Participant's employment.

         (e) Transferability. Each Stock Option Agreement shall provide that the
Option granted therein is not transferable by the Participant except by will or
pursuant to the laws of descent and distribution, and that such Option is
exercisable during the Participant's lifetime only by him or her, or in the
event of the Participant's disability or incapacity, by his or her guardian or
legal representative.

         (f) Agreement to Continue in Employment. Each Stock Option Agreement
shall contain the Participant's agreement to remain in the employment

                                       10
<PAGE>   12

of the Company, at the pleasure of the Company, for a continuous period of at
least one year after the date of such Stock Option Agreement, at the salary rate
in effect on the date of such agreement or at such changed rate as may be fixed,
from time to time, by the Company.

         (g) Exercise, Payments, Etc.

                  (i) Each Stock Option Agreement shall provide that the method
for exercising the Option granted therein shall be by delivery to the Office of
the Secretary of the Company or to the Administrative Agent of written notice
specifying the number of shares of Stock with respect to which such Option is
exercised and payment to the Company of the aggregate Option Price. Such notice
shall be in a form satisfactory to the Committee and shall specify the
particular Options (or portions thereof) which are being exercised and the
number of shares of Stock with respect to which the Options are being exercised.
The exercise of the Option shall be deemed effective on the date such notice is
received by the Office of the Secretary or by the Administrative Agent and
payment is made to the Company of the aggregate Option Price (the "Exercise
Date"); however, if payment of the aggregate Option Price is made pursuant to a
sale of shares of Stock as contemplated by subsection 7.2(g)(iii)(F) below, the
Exercise Date shall be deemed to be the date of such sale. If requested by the
Company, such notice shall contain the Participant's representation that he or
she is purchasing the Stock for investment purposes only and his or her
agreement not to sell any Stock so purchased in any manner that is in violation
of the Securities Act of 1933, as amended, or any applicable state law, and such
restriction, or notice thereof, shall be placed on the certificates representing
the Stock so purchased. The purchase of such Stock shall take place upon
delivery of such notice to the Office of the Secretary of the Company or to the
Administrative Agent, at which time the aggregate Option Price shall be paid in
full to the Company by any of the methods or any combination of the methods set
forth in subsection 7.2(g)(iii) below.

                  (ii) Except as referenced below in connection with the
Deferred Delivery Plan, the shares of Stock to which the Participant is entitled
as a result of the exercise of the Option shall be issued by the Company and (A)
delivered by electronic means to an account designated by the Participant, or
(B) delivered to the Participant in the form of a properly executed certificate
or certificates representing such shares of Stock. If shares of Stock and/or
Depositary Shares are used to pay all or part of the aggregate Option Price, the
Company shall issue and deliver to the Participant the additional shares of
Stock, in excess of the aggregate Option Price or portion thereof paid using
shares of Stock or Depositary Shares, to which the Participant is entitled as a
result of the Option

                                       11
<PAGE>   13
exercise. If the Participant exercising an Option (x) is eligible for
participation in the Deferred Delivery Plan, (y) pays the aggregate Option Price
pursuant to subsection 7.2(g)(iii)(A), (B), (C), (D) or (E) below, and (z) has
made an irrevocable election at least six months prior to the Exercise Date as
required under the Deferred Delivery Plan, the income resulting from the Option
exercise shall be deferred into the Participant's Deferred Delivery Plan account
and no additional shares of Stock shall be delivered to the Participant.

                  (iii) the aggregate Option Price shall be paid by any of the
following methods or any combination of the following methods:

                           (A) in cash, including the wire transfer of funds in
U.S. dollars to one of the Company's bank accounts located in the United States,
with such bank account to be designated from time to time by the Company;

                           (B) by personal, certified or cashier's check payable
in U.S. dollars to the order of the Company;

                           (C) by delivery to the Company or the Administrative
Agent of certificates representing a number of shares of Stock then owned by the
Participant, the aggregate Fair Market Value of which (as of the Exercise Date)
is not greater than the aggregate Option Price of the Option being exercised,
properly endorsed for transfer to the Company, provided that the shares of Stock
used for this purpose must have been owned by the Participant for a period of at
least six months;

                           (D) by certification or attestation to the Company or
the Administrative Agent of the Participant's ownership (as of the Exercise
Date) of a number of shares of Stock and/or Depositary Shares, the aggregate
Fair Market Value of which (as of the Exercise Date) is not greater than the
aggregate Option Price of the Option being exercised, provided that the shares
of Stock and/or Depositary Shares used for this purpose have been owned by the
Participant for a period of at least six months;

                           (E) if the income resulting from the Option exercise
is to be deferred into the Participant's Deferred Delivery Plan account, by
certification or attestation to the Company or the Administrative Agent of the
Participant's ownership (as of the Exercise Date) of a number of vested Stock
Units held in the Participant's Deferred Delivery Plan account, the equivalent
aggregate Fair Market Value of which (as of the Exercise Date) is not greater
than the aggregate Option Price of the Option being exercised, provided that the
Stock Units used for this purpose were vested as of the Exercise Date; or

                                       12
<PAGE>   14

                           (F) by delivery to the Company or the Administrative
Agent of a properly executed notice of exercise together with irrevocable
instructions to a broker to promptly deliver to the Company, by wire transfer or
check as noted in subsection 7.2(g)(iii)(A) and (B) above, the amount of the
proceeds of the sale of all or a portion of the Stock or of a loan from the
broker to the Participant necessary to pay the aggregate Option Price.

                  (iv) For purposes of the Plan, the income resulting from an
Option exercise shall be based on the Fair Market Value of the Stock for the
Exercise Date; however, if payment of the aggregate Option Price is made
pursuant to a sale of shares of Stock as contemplated by subsection
7.2(g)(iii)(F) hereof, the Fair Market Value shall be deemed to be the per share
sale price and the Exercise Date shall be deemed to be the date of such sale.

         (h) Date of Grant. An Option shall be considered as having been granted
on the date specified in the grant resolution of the Committee.

         (i) Tax Withholding. Each Stock Option Agreement shall provide that,
upon exercise of the Option, the Participant shall make appropriate arrangements
with the Company to provide for the amount of tax withholding required by
Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code
and applicable state and local income and other tax laws, including payment of
such taxes in cash, by check, or as provided in Section 13.2 hereof.

         (j) Adjustment of Options. Subject to the provisions of Sections 4, 5,
7, 8 and 12 hereof, the Committee may make any adjustment in the number of
shares of Stock covered by, or the terms of an outstanding Option and a
subsequent granting of an Option, by amendment or by substitution for an
outstanding Option; however, except as provided in Sections 4, 5, 8 and 12
hereof, the Committee may not adjust the Option Price of any outstanding Option.
Such amendment or substitution may result in terms and conditions (including the
number of shares of Stock covered, vesting schedule or Option Period) that
differ from the terms and conditions of the original Option. The Committee may
not, however, adversely affect the rights of any Participant to previously
granted Options without the consent of such Participant. If such action is
effected by amendment, the effective date of such amendment will be the date of
grant of the original Option.

7.3 Stockholder Privileges. No Participant shall have any rights as a
stockholder with respect to any shares of Stock covered by an Option until the
Participant becomes the holder of record of such Stock. Except as provided in

                                       13
<PAGE>   15
Section 4 hereof, no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date preceding the
date on which such Participant becomes the holder of record of such Stock.

7.4 Reload Provisions.

         (a) The Committee shall have the authority, but not an obligation, to
include as a part of any Stock Option Agreement provisions under which the
Participant shall be granted a further option (a "Reload Option") when the
Participant exercises all or part of the Option represented by such Stock Option
Agreement and pays all or part of the aggregate Option Price and/or required or
excess tax withholding pursuant to subsections 7.2(g)(iii)(C), (D) or (E) and/or
subsections 13.2(a), (b) or (c) and/or subsections 13.3(a) or (b) hereof. Any
Option including such reload provisions shall become exercisable in increments
such that 25 percent of the Option becomes exercisable on the dates six months,
12 months, 18 months and 24 months following the date the Option is granted,
provided that each such additional 25-percent increment shall become exercisable
only if the Participant has been continuously employed by the Company from the
date the Option is granted through the date on which such additional 25-percent
increment becomes exercisable.

         (b) Any shares of Stock issued to a Participant as a result of an
Option exercise which resulted in the grant of a Reload Option, may not be sold
or otherwise disposed of until the term of the original Option has expired or
the Participant is no longer employed by the Company or by an Affiliated
Corporation. Any Stock Units acquired by a Participant as a result of the
deferral of income (pursuant to subsection 7.2(g)(ii) hereof) in connection with
an Option exercise which resulted in the grant of a Reload Option, may not be
sold or otherwise disposed of until the shares of Stock relating to such Stock
Units are distributed under the terms of the Deferred Delivery Plan.

         (c) A Reload Option shall be granted, without further action of the
Committee or the Participant, if one or more of the payment provisions
referenced in subsection 7.4(a) above are used and if all of the following are
satisfied as of the date of exercise of the underlying Option:

             (i) the Participant has not previously been granted a Reload Option
or there has been a period of more than six months since the Participant was
last granted a Reload Option;

             (ii) no shares of Stock have been sold or otherwise disposed of in
breach of the provisions of subsection 7.4(b) above;

                                       14
<PAGE>   16

             (iii) the Fair Market Value of the shares of Stock covered by the
original Option being exercised is at least ten percent greater than the Option
Price for such shares; and

             (iv) there is a period of more than six months remaining in the
term of the original Option.

         (d) Each Reload Option:

             (i) shall cover that certain number of shares of Stock equal to the
shares or equivalent shares of Stock actually or constructively delivered to the
Company as referenced in subsection 7.4(a) above;

             (ii) shall be deemed to be granted as of the date on which the
original Option is exercised and shall have an Option Price of 100 percent of
Fair Market Value on such date;

             (iii) shall become exercisable six months after the date of grant
and shall have the same Expiration Date as the original Option; and

             (iv) except as set forth in subsections 7.4(d)(i), (ii) and (iii)
above, shall have the same terms and conditions as those of the original Option.

                                    SECTION 8

                                CHANGE OF CONTROL

8.1 In General. In the event of the occurrence of a change of control of the
Company, as defined in Section 8.3 hereof, all outstanding Options shall become
automatically vested, without further action by the Committee or the Board, so
as to make all such Options fully vested and exercisable as of the date of such
change of control.

8.2 Limitation on Payments. If the provisions of this Section 8 would result in
the receipt by any Participant of a payment within the meaning of Section 280G
or any successor section(s) of the Internal Revenue Code, and the regulations
promulgated thereunder, and if the receipt of such payment by any Participant
would, in the opinion of independent tax counsel of recognized standing selected
by the Company, result in the payment by such Participant of any excise tax
provided for in Sections 280G and 4999 or any successor section(s) of the
Internal Revenue Code, then the amount of such payment shall be reduced to the

                                       15
<PAGE>   17

extent required, in the opinion of independent tax counsel, to prevent the
imposition of such excise tax; provided, however, that the Committee, in its
sole discretion, may authorize the payment of all or any portion of the amount
of such reduction to the Participant.

8.3 Definition. For purposes of the Plan, a "change of control" shall mean any
of the events specified in the Company's Income Continuance Plan or any
successor plan which constitute a change of control within the meaning of such
plan.

                                    SECTION 9

                        RIGHTS OF EMPLOYEES, PARTICIPANTS

9.1 Employment. Nothing contained in the Plan or in any Option granted under the
Plan shall confer upon any Participant any right with respect to the
continuation of his or her employment by the Company or any Affiliated
Corporation, or interfere in any way with the right of the Company or any
Affiliated Corporation, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to
increase or decrease the level of the Participant's compensation from the level
in existence at the time of the grant of an Option. Whether an authorized leave
of absence, or absence in military or government service, shall constitute a
termination of employment shall be determined by the Committee at the time.

9.2 Nontransferability. No right or interest of any Participant in an Option
granted pursuant to the Plan shall be assignable or transferable during the
lifetime of the Participant, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge or bankruptcy. In the
event of a Participant's death, a Participant's rights and interests in Options
shall, to the extent provided in Section 7 hereof, be transferable by
testamentary will or the laws of descent and distribution, and payment of any
amounts due under the Plan shall be made to, and exercise of any Options may be
made by, the Participant's legal representatives, heirs or legatees. If, in the
opinion of the Committee, a person entitled to payments or to exercise rights
with respect to the Plan is disabled from caring for his or her affairs because
of mental condition, physical condition or age, payment due such person may be
made to, and such rights shall be exercised by, such person's guardian,
conservator or other legal personal representative upon furnishing the Committee
with evidence of such status satisfactory to the Committee.

                                       16
<PAGE>   18

                                   SECTION 10

                              GENERAL RESTRICTIONS

10.1 Investment Representations. The Company may require a Participant, as a
condition of exercising an Option, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect that such person
is acquiring the Stock subject to the Option for his own account for investment
and not with any present intention of selling or otherwise distributing the
same, and to such other effects as the Company deems necessary or appropriate in
order to comply with federal and applicable state securities laws.

10.2 Compliance with Securities Laws. Each Option shall be subject to the
requirement that, if at any time counsel to the Company shall determine that the
listing, registration or qualification of the shares of Stock subject to such
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of shares of Stock
thereunder, such Option may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Committee. Nothing
herein shall be deemed to require the Company to apply for or to obtain such
listing, registration, qualification, consent or approval.

                                   SECTION 11

                             OTHER EMPLOYEE BENEFITS

The amount of any income deemed to be received by a Participant as a result of
an Option exercise shall not constitute "earnings" or "compensation" with
respect to which any other employee benefits of such Participant are determined
including, without limitation, benefits under any pension, profit sharing, life
insurance or salary continuation plan.

                                       17
<PAGE>   19

                                   SECTION 12

                  PLAN AMENDMENT, MODIFICATION AND TERMINATION

The Board may at any time terminate, and from time to time may amend or modify
the Plan provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the Company's
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements unless the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable.

No amendment, modification or termination of the Plan shall in any manner
adversely affect any Option theretofore granted under the Plan, without the
consent of the Participant holding such Option.

The Committee shall have the authority to adopt such modifications, procedures
and subplans as may be necessary or desirable to comply with the provisions of
the laws (including, but not limited to, tax laws and regulations) of countries
other than the United States in which the Company may operate, so as to assure
the viability of the benefits of the Plan to Participants employed in such
countries.

                                   SECTION 13

                                   WITHHOLDING

13.1 Withholding Requirement. The Company's obligations to deliver shares of
Stock upon the exercise of an Option, or to defer income resulting from an
Option exercise into the Deferred Delivery Plan, shall be subject to the
Participant's satisfaction of all applicable federal, state and local income and
other tax withholding requirements.

13.2 Satisfaction of Required Withholding. At the time the Committee grants an
Option, it may, in its sole discretion, grant the Participant an election to pay
all such amounts of required tax withholding, or any part thereof:

         (a) by the delivery to the Company or the Administrative Agent of a
number of shares of Stock then owned by the Participant, the aggregate Fair
Market Value of which (as of the Exercise Date) is not greater than the amount
required

                                       18
<PAGE>   20

to be withheld, provided that such shares have been held by the Participant for
a period of at least six months;

         (b) by certification or attestation to the Company or the
Administrative Agent of the Participant's ownership (as of the Exercise Date) of
a number of shares of Stock and/or Depositary Shares, the aggregate Fair Market
Value of which (as of the Exercise Date) is not greater than the amount required
to be withheld, provided that such shares of Stock and/or Depositary Shares have
been owned by the Participant for a period of at least six months;

         (c) if the income resulting from the Option exercise is to be deferred
into the Participant's Deferred Delivery Plan account, by certification or
attestation to the Company or the Administrative Agent of the Participant's
ownership (as of the Exercise Date) of a number of vested Stock Units held in
the Participant's Deferred Delivery Plan account, the equivalent aggregate Fair
Market Value of which (as of the Exercise Date) is not greater than the amount
required to be withheld, provided that such Stock Units were vested as of the
Exercise Date; or

         (d) by the Company or the Administrative Agent withholding from the
shares of Stock otherwise issuable to the Participant upon exercise of the
Option, a number of shares of Stock, the aggregate Fair Market Value of which
(as of the Exercise Date) is not greater than the amount required to be
withheld. Any such elections by Participants to have shares of Stock withheld
for this purpose will be subject to the following restrictions:

             (i) all elections shall be made on or prior to the Exercise Date;
and

             (ii) all elections shall be irrevocable.

13.3 Excess Withholding. At the time the Committee grants an Option, it may, in
its sole discretion, grant the Participant an election to pay additional or
excess amounts of tax withholding, beyond the required amounts and up to the
Participant's marginal tax rate:

         (a) by delivery to the Company or the Administrative Agent of a number
of Shares of Stock then owned by the Participant, the aggregate Fair Market
Value of which (as of the Exercise Date) is not greater than such excess
withholding amount, provided that such shares of Stock have been owned by the
Participant for a period of at least six months; or

                                       19
<PAGE>   21

         (b) by certification or attestation to the Company or the
Administrative Agent of the Participant's ownership (as of the Exercise Date) of
a number of shares of Stock and/or Depositary Shares, the aggregate Fair Market
Value of which (as of the Exercise Date) is not greater than such excess
withholding amount, provided that such shares of Stock and/or Depositary Shares
have been owned by the Participant for a period of at least six months.

13.4 Section 16 Requirements. If the Participant is an officer or director of
the Company within the meaning of Section 16 or any successor section(s) of the
1934 Act ("Section 16"), the Participant must satisfy the requirements of such
Section 16 and any applicable rules and regulations thereunder with respect to
the use of shares of Stock, Depositary Shares and/or Stock Units to satisfy such
tax withholding obligation.

                                   SECTION 14

                               REQUIREMENTS OF LAW

14.1 Requirements of Law. The issuance of Stock and the payment of cash pursuant
to the Plan shall be subject to all applicable laws, rules and regulations.

14.2 Federal Securities Laws Requirements. If a Participant is an officer or
director of the Company within the meaning of Section 16, Options granted
hereunder shall be subject to all conditions required under Rule 16b-3, or any
successor rule(s) promulgated under the 1934 Act, to qualify the Option for any
exception from the provisions of Section 16 available under such Rule. Such
conditions are hereby incorporated herein by reference and shall be set forth in
the Stock Option Agreement with the Participant which describes the Option.

14.3 Governing Law. The Plan and all Stock Option Agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Texas.

                                       20
<PAGE>   22

                                   SECTION 15

                              DURATION OF THE PLAN

The Plan shall terminate at such time as may be determined by the Board, and no
Option shall be granted after such termination. If not sooner terminated under
the preceding sentence, the Plan shall fully cease and expire at midnight on
February 10, 2005. Any Options outstanding at the time of the Plan termination
shall continue to be exercisable in accordance with the Stock Option Agreement
pertaining to each such Option.

Dated:    May 3, 2001

                                          APACHE CORPORATION

ATTEST:

/s/ Cheri L. Peper                        By: /s/ Jeffrey M. Bender
---------------------------                   ---------------------------------
Cheri L. Peper                                Jeffrey M. Bender
Corporate Secretary                           Vice President, Human Resources

                                       21<PAGE>   1
                                                                   EXHIBIT 10.06

                               APACHE CORPORATION

                          2000 SHARE APPRECIATION PLAN
                                  "120 BY '04"

                      (AS AMENDED AND RESTATED MAY 3, 2001)

<PAGE>   2

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                     PAGE
                                                                                                     ----
<S>                                                                                                  <C>
Section 1 - Introduction.................................................................................1

         1.1      Establishment..........................................................................1
         1.2      Purposes...............................................................................1

Section 2 - Definitions................................................................................1-6

         2.1      Definitions..........................................................................1-6
         2.2      Headings; Gender and Number............................................................6

Section 3 - Plan Administration..........................................................................6

Section 4 - Stock Subject to the Plan....................................................................6

         4.1      Number of Shares.......................................................................6
         4.2      Other Shares of Stock..................................................................7
         4.3      Certain Adjustments....................................................................7

Section 5 - Reorganization or Liquidation................................................................8

Section 6 - Grant of Plan Units.......................................................................8-13

         6.1      Grants...............................................................................8-9
         6.2      Grant Agreements.......................................................................9

                  6.2.1    Grant Terms...................................................................9
                  6.2.2    Payment of Payout Amounts.....................................................9

         6.3      Termination of Employment, Death, Disability, etc..................................10-11
         6.4      Payment and Tax Withholding........................................................11-12
         6.5      Subsequent Grant Agreements...........................................................12
         6.6      Stockholder Privileges................................................................12
         6.7      Limitations on Stock Issuable to Officers and Directors............................12-13
         6.8      Deferral of Income....................................................................13
</Table>

<PAGE>   3

<Table>
<S>                                                                                                 <C>
Section 7 - Change of Control........................................................................13-14

         7.1      In General.........................................................................13-14
         7.2      Limitation on Payments................................................................14
         7.3      Definition............................................................................14

Section 8 - Rights of Employees, Participants........................................................14-15

         8.1      Employment............................................................................14
         8.2      Non-transferability................................................................14-15

Section 9 - Other Employee Benefits.....................................................................15

Section 10 - Plan Amendment, Modification and Termination...............................................15

Section 11 - Requirements of Law........................................................................16

         11.1     Requirements of Law...................................................................16
         11.2     Section 16 Requirements...............................................................16
         11.3     Governing Law.........................................................................16

Section 12 - Duration of the Plan.......................................................................16
</Table>

<PAGE>   4

                               APACHE CORPORATION
                          2000 SHARE APPRECIATION PLAN
                      (AS AMENDED AND RESTATED MAY 3, 2001)

                                    SECTION 1

                                  INTRODUCTION

1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter
referred to, together with its Affiliated Corporations (as defined below) as the
"Company" except where the context otherwise requires), hereby establishes the
Apache Corporation 2000 Share Appreciation Plan (the "Plan"), effective as of
October 12, 2000.

1.2 Purposes. The primary purpose of this Plan is to focus the energies of the
Company's employees on significantly increasing shareholder wealth through stock
price appreciation to share prices of $100, $120 and $180 and a doubling of the
Company's currently projected oil and gas production per share for calendar year
2000. The share price goals of this Plan seek to increase shareholder wealth by
approximately $5.2 to $7.8 billion dollars with the Company's employees sharing
in approximately three percent of the additional shareholder value created. The
production goal is designed to inspire the Company's employees to significantly
improve the one factor that is most within the control of the Company,
production, and that is involved in determining the Company's earnings per share
and cash flow per share. Additional purposes of this Plan include the retention
of existing key employees and as an additional inducement in the recruitment of
talented personnel in a competitive environment.

                                    SECTION 2

                                   DEFINITIONS

2.1 Definitions. The following terms shall have the meanings set forth below:

         "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Apache
Corporation through stock ownership or otherwise and is treated as a common
employer under the provisions of Sections 414(b) and (c) or any successor
section(s) of the Internal Revenue Code.

                                       1
<PAGE>   5

         "Base Salary" means, with regard to any Participant, such Participant's
base compensation as an employee of the Company at the date of award of a Plan
Unit (except for the calculation of the Independent Production Goal Amount, in
which case the date shall be the Independent Production Goal Date), without
regard to any bonus, pension, profit sharing, stock option, life insurance or
salary continuation plan which the Participant either receives or is otherwise
entitled to have paid on his behalf.

         "Board" means the Board of Directors of the Company.

         "Category" means one of the three groupings of Participants in the Plan
whose Plan Units represent the right to receive the same multiple of their base
salary for each Payout Amount.

         "Committee" means the Stock Option Plan Committee of the Board or such
other Committee of the Board that is empowered hereunder to administer the Plan.
The Committee shall be constituted at all times so as to permit the Plan to be
administered by "non-employee directors" (as defined in Rule 16b-3 of the
Securities Exchange Act of 1934, as amended).

         "Deferred Delivery Plan" means the Company's Deferred Delivery Plan,
effective as of February 10, 2000, as it may be amended from time to time, or
any successor plan.

         "Eligible Employees" means those full-time employees (including,
without limitation, the Company's executive officers), and certain part-time
employees, of the Company.

         "Fair Market Value" means the closing price of the Stock as reported on
The New York Stock Exchange, Inc. Composite Transactions Reporting System
("Composite Tape") for a particular date. If there are no Stock transactions on
such date, the Fair Market Value shall be determined as of the immediately
preceding date on which there were Stock transactions.

         "Final Amount" means with regard to any:

                  (a) Category I Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals two (2) times
         such Participant's Base Salary divided by $180;

                  (b) Category II Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals one (1) times
         such Participant's Base Salary divided by $180; and

                                       2
<PAGE>   6

                  (c) Category III Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals 50 percent (.50)
         times such Participant's Base Salary divided by $180;

         which amount, in each case, shall be fixed and not subject to
         adjustment due to market fluctuation.

         "Final Price Threshold Date" means the last of any 10 trading days
(which need not be consecutive) during any period of 30 consecutive trading days
occurring prior to January 1, 2005, but not thereafter, on each of which 10 days
the closing price of the Stock as reported on the Composite Tape equaled or
exceeded $180 per share. If the above trading criteria are met more than once,
the first occurrence shall be deemed to be the Final Price Threshold Date.

         "Final Plan Unit" means an investment unit convertible into the
applicable Final Amount for a Participant upon occurrence of the Final Price
Threshold Date.

         "Grant" has the meaning set forth in Section 6 hereof.

         "Grant Agreement" has the meaning set forth in Section 6 hereof.

         "Independent Production Goal Amount" means with regard to any:

                  (a) Category I Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals one and one half
         (1.5) times such Participant's Base Salary divided by the Independent
         Production Goal Price;

                  (b) Category II Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals 75 percent (.75)
         times such Participant's Base Salary divided by the Independent
         Production Goal Price; and

                  (c) Category III Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals 37.5 percent
         (.375) times such Participant's Base Salary divided by the Independent
         Production Goal Price;

         which amount, in each case, shall be fixed and not subject to
         adjustment due to market fluctuation.

                                       3
<PAGE>   7

         "Independent Production Goal Date" means the last day of any fiscal
quarter ending on or before December 31, 2004 during which fiscal quarter the
Company's average daily production (calculated on an annualized basis) equals or
exceeds 1.54 barrels of oil equivalent per outstanding share of Stock
(calculated on a fully diluted basis), as confirmed by the Company's independent
auditors. If the above production criterion is met more than once, the first
occurrence shall be deemed to be the Independent Production Goal Date.

         "Independent Production Goal Price" means the average daily closing
price of the Stock as reported on the Composite Tape for the quarter ending on
the Independent Production Goal Date.

         "Independent Production Goal Plan Unit" means an investment unit
convertible into the applicable Independent Production Goal Amount for a
Participant upon occurrence of the Independent Production Goal Date.

         "Initial Amount" means with regard to any:

                  (a) Category I Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals one (1) times
         such Participant's Base Salary divided by $100;

                  (b) Category II Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals 50 percent (.50)
         times such Participant's Base Salary divided by $100; and

                  (c) Category III Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals 25 percent (.25)
         times such Participant's Base Salary divided by $100;

         which amount, in each case, shall be fixed and not subject to
         adjustment due to market fluctuation.

         "Initial Price Threshold Date" means the last of any 10 trading days
(which need not be consecutive) during any period of 30 consecutive trading days
occurring prior to January 1, 2005, but not thereafter, on each of which 10 days
the closing price of the Stock as reported on the Composite Tape equaled or
exceeded $100 per share. If the above trading criteria are met more than once,
the first occurrence shall be deemed to be the Initial Price Threshold Date.

         "Initial Plan Unit" means an investment unit convertible into the
applicable Initial Amount for a Participant upon occurrence of the Initial Price
Threshold Date.

                                       4
<PAGE>   8

         "Internal Revenue Code" means the Internal Revenue Code of 1986, as it
may be amended from time to time.

         "Participant" means an Eligible Employee designated by the Committee
from time to time during the term of the Plan to receive one or more grants of
Plan Units under the Plan.

         "Payout Amounts" means the Initial Amount, the Secondary Amount, the
Final Amount and/or the Independent Production Goal Amount.

         "Plan Units" means each of the Initial Plan Units, Secondary Plan
Units, Final Plan Units and/or Independent Production Goal Plan Units.

         "Price Threshold Date" means the Initial Price Threshold Date, the
Secondary Price Threshold Date, the Final Price Threshold Date and/or the
Independent Production Goal Date, as the context may require.

         "Secondary Amount" means with regard to any:

                  (a) Category I Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals three (3) times
         such Participant's Base Salary divided by $120;

                  (b) Category II Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals one and one half
         (1.5) times such Participant's Base Salary divided by $120; and

                  (c) Category III Participant, such number of shares of Stock
         (rounded down to the nearest full share) which equals 75 percent (.75)
         times such Participant's Base Salary divided by $120;

         which amount, in each case, shall be fixed and not subject to
         adjustment due to market fluctuation.

         "Secondary Price Threshold Date" means the last of any 10 trading days
(which need not be consecutive) during any period of 30 consecutive trading days
occurring prior to January 1, 2005, but not thereafter, on each of which 10 days
the closing price of the Stock as reported on the Composite Tape equaled or
exceeded $120 per share. If the above trading criteria are met more than once,
the first occurrence shall be deemed to be the Secondary Price Threshold Date.

                                       5
<PAGE>   9

         "Secondary Plan Unit" means an investment unit convertible into the
applicable Secondary Amount for a Participant upon occurrence of the Secondary
Price Threshold Date.

         "Stock" means the $1.25 par value Common Stock of the Company.

         "Stock Units" means investment units under the Deferred Delivery Plan,
each of which is deemed to be equivalent to one share of Stock.

2.2 Headings; Gender and Number. The headings contained in the Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the Plan. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.

                                    SECTION 3

                               PLAN ADMINISTRATION

The Plan shall be administered by the Committee. In accordance with the
provisions of the Plan, the Committee shall, in its sole discretion, adopt rules
and regulations for carrying out the purposes of the Plan, including, without
limitation, selecting the Participants from among the Eligible Employees and the
Category of participation for each Participant, appointing designees or agents
(who need not be members of the Committee or employees of the Company) to assist
the Committee with the administration of the Plan, and establish such other
terms and requirements as the Committee may deem necessary or desirable and
consistent with the terms of the Plan. No member of the Committee shall be
liable for any action or determination made in good faith. The determinations,
interpretations and other actions of the Committee pursuant to the provisions of
the Plan shall be binding and conclusive for all purposes and on all persons.

                                    SECTION 4

                            STOCK SUBJECT TO THE PLAN

4.1 Number of Shares. Subject to Sections 4.3 and Section 6.1 hereof, up to
three million five hundred thousand (3,500,000) shares of Stock are authorized
for issuance under the Plan upon conversion of any Plan Units in accordance with
the Plan's terms and subject to such restrictions or other provisions as the
Committee may from time to time deem necessary. Shares of Stock which may

                                       6
<PAGE>   10

be issued pursuant to the conversion of any Plan Units awarded hereunder shall
be applied to reduce the maximum number of shares of Stock remaining available
for use under the Plan. The Company shall at all times during the term of the
Plan and while any Plan Units are outstanding retain as authorized and unissued
Stock and/or Stock in the Company's treasury, at least the number of shares from
time to time required under the provisions of the Plan, or otherwise assure
itself of its ability to perform its obligations hereunder.

4.2 Other Shares of Stock. Any shares of Stock that are subject to issuance upon
conversion of a Plan Unit which expires, is forfeited, is cancelled, or for any
reason is terminated, and any shares of Stock that for any other reason are not
issued to a Participant or are forfeited shall automatically become available
for use under the Plan.

4.3 Certain Adjustments. If the Company shall at any time increase or decrease
the number of its outstanding shares of Stock (other than by way of issuing
Stock in a public or private offering for cash or property) or change in any way
the rights and privileges of such shares by means of a Stock dividend or any
other distribution upon such shares payable in Stock, or through a Stock split,
subdivision, consolidation, combination, reclassification or recapitalization
involving the Stock or a subscription for shares of Stock that has the effect of
diluting the Company's capital (hereinafter a "capital restructuring"), then for
purposes of determining the entitlement to payments under Section 6, (i) the
number of shares authorized for issuance under this Section 4, and (ii) the $100
per share amount, $120 per share amount and $180 per share amount referenced in
Section 1 and contained in the definitions set forth in Section 2 hereof and the
amount of production required to attain the Independent Production Goal shall
be, in each case, equitably and proportionally adjusted to take into account any
capital restructuring. Any adjustment under this Section shall be made by the
Committee, whose determination with regard thereto, including whether any
adjustment is needed, shall be final and binding upon all parties.

                                       7
<PAGE>   11

                                    SECTION 5

                          REORGANIZATION OR LIQUIDATION

In the event that the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if all or substantially all
of the assets or more than 20 percent of the outstanding voting stock of the
Company is acquired by any other corporation, business entity or person, or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
7 hereof do not apply, the Committee, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to the Plan and
outstanding Plan Units either (i) make appropriate provision for the adoption
and continuation of the Plan by the acquiring or successor corporation and for
the protection of any holders of such outstanding Plan Units by the substitution
on an equitable basis of appropriate stock of the Company or of the merged,
consolidated or otherwise reorganized corporation which will be issuable with
respect to the Stock, provided that no additional benefits shall be conferred
upon the Participants holding such Plan Units as a result of such substitution,
or (ii) provided that a Price Threshold Date has occurred, upon written notice
to the Participants, the Committee may accelerate the vesting and payment dates
of the entitlement to receive cash and Stock under outstanding Plan Units so
that all such existing entitlements are paid prior to any such event. In the
latter event, such acceleration shall only apply to entitlements to cash and
Stock payable as the result of the occurrence of the most recent Price Threshold
Date and shall not by such acceleration, deem the occurrence of a Price
Threshold Date that has not occurred by the date of the notice.

                                    SECTION 6

                               GRANT OF PLAN UNITS

6.1 Grants. Each Participant may be awarded an initial grant (a "Grant") of Plan
Units under this Plan by the Committee, which Grant shall be composed of one
Initial Plan Unit, Secondary Plan Unit, Final Plan Unit and Independent
Production Goal Unit. The Committee, in its sole discretion, may award
additional Grants to any Participant in connection with such Participant's
receiving a significant increase in salary and/or a promotion within the
Company. Each Grant awarded by the Committee shall be evidenced by a written
agreement entered into by the Company and the Participant to whom the Grant is
awarded (the "Grant Agreement"), which shall contain the terms and conditions

                                       8
<PAGE>   12

set out in this Section 6, as well as such other terms and conditions as the
Committee may consider appropriate.

6.2 Grant Agreements. Each Grant Agreement entered into by the Company and each
Participant shall specify which Category applies for such Participant and
contain at least the following terms and conditions. In the event of any
inconsistency between the provisions of the Plan and any Grant Agreement, the
provisions of the Plan shall govern.

         6.2.1 Grant Terms. Each Grant Agreement shall evidence the Grant of
Plan Units and entitle the Participant to receive the indicated Plan Units which
shall convert into the right to receive a conditional payment of cash and
issuance of Stock upon the occurrence of one or more of the Price Threshold
Dates, all as set forth below.

         (a) If at any time prior to January 1, 2005, the Initial Price
Threshold Date occurs, the Participant may become entitled to receive a portion
or all of the Initial Amount payable to Participants in such Category, as
specified in the applicable Grant Agreement, in accordance with the payment
schedule and as otherwise set out in Section 6.2.2.

         (b) If at any time prior to January 1, 2005, the Secondary Price
Threshold Date occurs, the Participant may become entitled to receive a portion
or all of the Secondary Amount payable to Participants in such Category, as
specified in the applicable Grant Agreement, in accordance with the payment
schedule and as otherwise set out in Section 6.2.2.

         (c) If at any time prior to January 1, 2005, the Final Price Threshold
Date occurs, the Participant may become entitled to receive a portion or all of
the Final Amount payable to Participants in such Category, as specified in the
applicable Grant Agreement, in accordance with the payment schedule and as
otherwise set out in Section 6.2.2.

         (d) If at any time prior to January 1, 2005, the Independent Production
Goal Date occurs, the Participant may become entitled to receive a portion or
all of the Independent Production Goal Amount payable to Participants in the
same Category, as specified in the applicable Grant Agreement, in accordance
with the payment schedule and as otherwise set out in Section 6.2.2.

         6.2.2 Payment of Payout Amounts. Subject to the provisions of Section
6.3, the Payout Amounts shall be payable in increments strictly in accordance
with the following schedule:

                                       9
<PAGE>   13

         (a) The entitlement to receive the first one-third (1/3) of any Payout
Amount shall vest on the applicable Price Threshold Date and shall be paid by
the Company to the Participant within thirty (30) days of the applicable Price
Threshold Date in the manner set out in Section 6.4 below.

         (b) The entitlement to receive the remainder of any Payout Amount shall
vest and become payable in equal parts on the dates occurring, respectively, 12
months and 24 months after the applicable Price Threshold Date, in the same
proportions and amounts as set forth in Section 6.4 below, and shall be paid by
the Company to the Participant within thirty (30) days of such date. If any of
the above dates is not a business day during which the Company is open for
business, such date of vesting or payment shall be the first business date
occurring immediately thereafter.

         (c) No Payout Amount or portion thereof shall be payable under this
Section 6.2.2 if the applicable Price Threshold Date has not occurred prior to
January 1, 2005.

6.3 Termination of Employment, Death, Disability, etc. Except as set forth
below, each Grant Agreement shall state that each Grant, the Plan Units received
thereunder and the right to receive any payment thereunder upon conversion of
the Plan Units shall be subject to the condition that the Participant has
remained an Eligible Employee from the initial award of a Grant until the
applicable vesting date as follows:

         (a) If the Participant voluntarily leaves the employment of the
Company, or if the employment of the Participant is terminated by the Company
for cause or otherwise, any Plan Units not previously converted and the right to
receive any Payout Amounts not yet paid in accordance with Section 6.2.2 shall
thereafter be void and forfeited for all purposes.

         (b) If the Participant retires from employment with the Company on or
after attaining age 60, the retired Participant shall be entitled to receive the
payments in Stock and cash in accordance with Section 6.2.2, provided that (i)
such Participant has certified in writing to the Committee his commitment not to
enter into full-time employment or a consulting arrangement with a competitor of
the Company, and (ii) the applicable Price Threshold Date has occurred prior to
the Participant's last day of employment with the Company. Such retired
Participant shall not be entitled to any payment which may arise due to the
occurrence of a Price Threshold Date after the effective date of such
Participant's retirement. If the retired Participant dies before receiving all
of the payments to which he or she is entitled under this Section 6.3(b), such
payments shall be made to those entitled under the retired Participant's will or
by the laws of descent

                                       10
<PAGE>   14

and distribution. A failure of the Participant to comply with the undertaking of
clause (i) above shall void such Participant's right to payments hereunder.

         (c) If the Participant dies, or if the Participant becomes disabled (as
determined pursuant to the Company's Long-Term Disability Plan or any successor
plan), while still employed, payment in Stock and cash in accordance with
Section 6.2.2 shall be made to the disabled Participant or to those entitled
under the Participant's will or by the laws of descent and distribution,
provided that the applicable Price Threshold Date has occurred prior to the
earlier of such Participant's disability or death. There shall be no entitlement
to any payment, which may arise due to the occurrence of a Price Threshold Date
after the earlier of such Participant's disability or death.

6.4 Payment and Tax Withholding. Each Grant Agreement shall provide that, upon
payment of any entitlement upon conversion of any Plan Units, the Participant
shall make appropriate arrangements with the Company to provide for the amount
of minimum tax withholding required by Sections 3102 and 3402 or any successor
section(s) of the Internal Revenue Code and applicable state and local income
and other tax laws, as follows:

         (a) If upon the achievement of a Threshold Date the credit rating of
the Company's long term, unsecured debt is at or above investment grade, then
each payment of the related Payout Amount shall be made in a proportion of cash
and shares of Stock, determined by the Committee, such that the cash portion
shall be sufficient to cover the withholding amount required by this Section.
The cash portion of any payment of a Payout Amount shall be based on the Fair
Market Value of the shares of Stock on the business day immediately preceding
the payment date. Such cash portion shall be withheld by the Company to satisfy
applicable tax withholding requirements.

                                       11
<PAGE>   15

         (b) If upon the achievement of a Threshold Date the Company's long
term, unsecured debt has a credit rating below investment grade, the Committee,
in its sole discretion, may either (i) provide for the payment of the
withholding amount required by this Section as set forth in Subsection (a) above
or (ii) specify that each payment of the related Payout Amount to a Participant
be made only after the Participant has made funds available to the Company
sufficient to cover the withholding amount required by this Section. The funds
required by this Subsection (b) may be obtained by the Participant by means of a
loan from a securities broker or dealer, in which case the Participant may
satisfy the requirements hereof by delivering to the Company an irrevocable
instruction to such broker or dealer to promptly deliver to the Company, by wire
transfer or certified or cashier's check, the funds necessary to meet the
Participant's obligations hereunder and such delivery instructions for the
shares issuable to the Participant as the broker or dealer may require. The
calculation of the funds to be provided by the Participant under this paragraph
shall be based on the Fair Market Value of the shares of Stock to be issued to
the Participant, on the business day immediately preceding the payment date.

         (c) Upon a request made to the Committee by a Participant, the
proportion of cash and Stock as set forth in Subsection (a) above may be, but
need not be, changed by the Committee, in its sole discretion, to provide for,
among other things, special or additional tax burdens on a Participant but, in
no event, shall the cash portion of any payment exceed fifty percent (50%).

6.5 Subsequent Grant Agreements. Following the award of Grants in 2000,
additional Participants may be designated by the Committee for grants of Plan
Units thereafter subject to the same terms and conditions set forth above for
initial grants except that the Committee, in its sole discretion, may reduce the
value of the Initial Amount, Secondary Amount, Final Amount or Independent
Production Goal Amount to which subsequent Participants may become entitled and
the applicable Grant Agreement shall be modified to reflect such reduction.

6.6 Stockholder Privileges. No Participant shall have any rights as a
stockholder with respect to any shares of Stock into which a Plan Unit is
convertible until the Participant becomes the holder of record of such Stock.

6.7 Limitations on Stock Issuable to Officers and Directors. Any provision of
the Plan notwithstanding, the total number of shares of Stock issuable to
Participants who are directors or officers of the Company (as defined for the
purposes of Section 16 of the Securities Exchange Act of 1934, as amended) shall
not exceed 49 percent of the total shares issuable under the Plan (the "D&O
Limitation"). If the total number of shares of Stock issuable to all of the
Company's directors and officers who are Participants in the Plan shall exceed

                                       12
<PAGE>   16

the D&O Limitation, then the total number of shares of Stock issuable to such
Participants shall be reduced to a number equal to the D&O Limitation and the
number of shares of Stock issuable to each such Participant upon conversion of
any Plan Unit shall be reduced pro rata.

6.8 Deferral of Income. For Participants eligible for participation in the
Deferred Delivery Plan, all or a portion of the income resulting from the
conversion of Plan Units into Payout Amounts is subject to deferral into the
Participant's Deferred Delivery Plan account, if the Participant has made an
irrevocable election to make such a deferral, as follows: (a) with respect to
the first payment to be made upon the occurrence of a Price Threshold Date, no
more than 30 days after the Participant executes the applicable Grant Agreement
and/or (b) with respect to any other payment to be made after the occurrence of
a Price Threshold Date, at least six months prior to the date such payment is to
be made by the Company. If the Participant has complied with the above
requirements, all or a portion of the income resulting from any payment upon the
conversion of Plan Units into Payout Amounts shall be deferred into the
Participant's Deferred Delivery Plan account and no additional cash or shares of
Stock shall be delivered to the Participant.

                                    SECTION 7

                                CHANGE OF CONTROL

7.1 In General. In the event of the occurrence of a change of control of the
Company as defined in Section 7.3 hereof, and assuming the occurrence of a Price
Threshold Date, the entitlement to receive cash and Stock upon conversion of any
Plan Units shall vest automatically, without further action by the Committee or
the Board, and shall become payable as follows:

         (a) If such change of control occurs subsequent to the occurrence of a
Price Threshold Date, (i) the first one-third (1/3) of the applicable Payout
Amount shall vest and be paid pursuant to Section 6.2.2(a) hereof, and (ii) the
remainder of such Payout Amount shall vest as of the date of such change of
control and shall be paid by the Company to the Participant within thirty (30)
days of the date of such change of control in the manner set out in Section 6.4
hereof.

         (b) If the occurrence of a Price Threshold Date occurs subsequent to
the date of a change of control, the applicable Payout Amount shall vest in full
as of such Price Threshold Date and shall be paid by the Company to the
Participant within thirty (30) days of such Price Threshold Date in the manner
set out in Section 6.4 hereof.

                                       13
<PAGE>   17

7.2 Limitation on Payments. If the provisions of this Section 7 would result in
the receipt by any Participant of a payment within the meaning of Section 280G
or any successor section(s) of the Internal Revenue Code, and the regulations
promulgated thereunder, and if the receipt of such payment by any Participant
would, in the opinion of independent tax counsel of recognized standing selected
by the Company, result in the payment by such Participant of any excise tax
provided for in Sections 280G and 4999 or any successor section(s) of the
Internal Revenue Code, then the amount of such payment shall be reduced to the
extent required, in the opinion of independent tax counsel, to prevent the
imposition of such excise tax; provided, however, that the Committee, in its
sole discretion, may authorize the payment of all or any portion of the amount
of such reduction to the Participant.

7.3 Definition. For purposes of the Plan, a "change of control" shall mean any
of the events specified in the Company's Income Continuance Plan or any
successor plan which constitute a change of control within the meaning of such
plan.

                                    SECTION 8

                        RIGHTS OF EMPLOYEES, PARTICIPANTS

8.1 Employment. Neither anything contained in the Plan or any Grant Agreement
nor the granting of any Plan Units under the Plan shall confer upon any
Participant any right with respect to the continuation of his or her employment
by the Company or any Affiliated Corporation, or interfere in any way with the
right of the Company or any Affiliated Corporation, at any time to terminate
such employment or to increase or decrease the level of the Participant's
compensation from the level in existence at the time of the award of Plan Units.

8.2 Non-transferability. No right or interest of any Participant in a Plan Unit
granted pursuant to the Plan shall be assignable or transferable during the
lifetime of the Participant, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge or bankruptcy. In the
event of a Participant's death, a Participant's rights and interests in any Plan
Unit shall, to the extent provided in Section 6.3 hereof, be transferable by
testamentary will or the laws of descent and distribution, and payment of any
entitlements due under the Plan shall be made to the Participant's legal
representatives, heirs or legatees. If in the opinion of the Committee a person
entitled to payments or to exercise rights with respect to the Plan is disabled
from caring for his or her affairs because of mental condition, physical
condition or age, payment due such

                                       14
<PAGE>   18

person may be made to, and such rights shall be exercised by, such person's
guardian, conservator or other legal personal representative upon furnishing the
Committee with evidence satisfactory to the Committee of such status.

                                    SECTION 9

                             OTHER EMPLOYEE BENEFITS

The amount of any income deemed to be received by a Participant as a result of
the payment upon conversion of a Plan Unit shall not constitute "earnings" or
"compensation" with respect to which any other employee benefits of such
Participant are determined, including without limitation benefits under any
pension, profit sharing, life insurance or salary continuation plan.

                                   SECTION 10

                  PLAN AMENDMENT, MODIFICATION AND TERMINATION

The Committee or the Board may at any time terminate, and from time to time may
amend or modify the Plan. No amendment, modification or termination of the Plan
shall in any manner adversely affect any Plan Unit theretofore awarded under the
Plan, without the consent of the Participant holding such Plan Unit.

The Committee shall have the authority to adopt such modifications, procedures
and subplans as may be necessary or desirable to comply with the provisions of
the laws (including, but not limited to, tax laws and regulations) of countries
other than the United States in which the Company may operate, so as to assure
the viability of the benefits of the Plan to Participants employed in such
countries.

                                       15
<PAGE>   19

                                   SECTION 11

                               REQUIREMENTS OF LAW

11.1 Requirements of Law. The issuance of Stock and the payment of cash pursuant
to the Plan shall be subject to all applicable laws, rules and regulations,
including applicable federal and state securities laws. The Company may require
a Participant, as a condition of receiving payment upon conversion of a Plan
Unit, to give written assurances in substance and form satisfactory to the
Company and its counsel to such effect as the Company deems necessary or
appropriate in order to comply with federal and applicable state securities
laws.

11.2 Section 16 Requirements. If a Participant is an officer or director of the
Company within the meaning of Section 16, Grants awarded hereunder shall be
subject to all conditions required under Rule 16b-3, or any successor rule(s)
promulgated under the Securities Exchange Act of 1934, as amended, to qualify
the Plan Units for any exemption from the provisions of Section 16 available
under such Rule. Such conditions are hereby incorporated herein by reference and
shall be set forth in the agreement with the Participant, which describes the
Grant.

11.3 Governing Law. The Plan and all Grant Agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Texas.

                                   SECTION 12

                              DURATION OF THE PLAN

The Plan shall terminate at such time as may be determined by the Committee, and
no Plan Units shall be awarded after such termination. If not sooner terminated
under the preceding sentence, the Plan shall fully cease and expire at midnight
on December 31, 2004. Payout Amounts for which one or more of the Price
Threshold Dates has occurred and which remain outstanding at the time of the
Plan termination shall continue in accordance with the Grant Agreement
pertaining to such Plan Units.

                                       16
<PAGE>   20

Dated:    May 3, 2001

                                             APACHE CORPORATION

ATTEST:

/s/ Cheri L. Peper                       By: /s/ Jeffrey M. Bender
--------------------------------             -----------------------------------
Cheri L. Peper                               Jeffrey M. Bender
Corporate Secretary                          Vice President

                                       17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00028-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00028-of-00352.parquet"}]]