Form 8-K - Current report

APA Corp false 0001841666 0001841666 2024-11-06 2024-11-06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2024

 

 

APA CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-40144		86-1430562
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

2000 W Sam Houston Pkwy S, Suite 200

Houston, Texas 77042-3643

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: [phone]

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.625 par value		APA		Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

 

Item 2.02.

Results of Operations and Financial Condition.

On November 6, 2024, APA Corporation issued a press release announcing financial and operating results for the fiscal quarter ended September 30, 2024. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press Release of APA Corporation dated November 6, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				APA CORPORATION
Date: November 7, 2024				By:		/s/ Rebecca A. Hoyt
						Rebecca A. Hoyt
						Senior Vice President, Chief Accounting Officer, and Controller
						(Principal Accounting Officer)

Exhibit 99.1

 

NEWS RELEASE

APA Corporation Announces Third-Quarter 2024

Financial and Operational Results

Key Takeaways

 

•

Reported production of 467,000 barrels of oil equivalent (BOE) per day; adjusted production, excluding Egypt noncontrolling interest and tax barrels, was 395,000 BOE per day;

 

•

Announced final investment decision (FID) on 220,000 barrels per day oil development project in Suriname;

 

•

Streamlined Permian footprint with announcement of $950 million, non-core divestiture package;

 

•

Signed agreement that raises the contractual price for natural gas production in Egypt and incentivizes increased gas exploration and development activity; and

 

•

Returned $406 million of free cash flow to shareholders year-to-date through dividends and share buybacks.

HOUSTON, Nov. 6, 2024 – APA Corporation (Nasdaq: APA) today announced its financial and operational results for the third quarter of 2024.

APA reported a loss attributable to common stock of $223 million or $0.60 per diluted share, which was primarily driven by non-cash impairments of assets in the U.K. and assets held for sale in the Permian Basin. When adjusting for this and other items that impact the comparability of results, APA’s third-quarter earnings were $370 million, or $1.00 per diluted share. Net cash provided by operating activities was $1.3 billion, and adjusted EBITDAX was $1.6 billion.

“Third-quarter results were strong across our operating areas, driven by higher-than-expected production and lower costs,” said John J. Christmann IV, APA’s CEO. “Adjusted global oil production exceeded the high-end of our guidance range and was up nearly 30% year-over-year. The integration of Callon is effectively complete, and we expect to capture most of the cost synergies by year-end. This, combined with the non-core Permian Basin asset sale, will significantly lower per unit costs as we move into next year.

“We also achieved an important milestone in Suriname with the announcement of GranMorgu, the first offshore development in the country,” he said. “This large-scale project offers the best returns in APA’s portfolio, has a very low break-even oil price, and will contribute significant oil production and cash-flow growth beginning in 2028 and continuing for many years.”

 

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APA CORPORATION ANNOUNCES THIRD-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 2 of 5

 

Third-Quarter Summary

Third-quarter reported production was 467,000 BOE per day. Adjusted production, excluding Egypt noncontrolling interest and tax barrels, was 395,000 BOE per day, approximately 2% ahead of guidance.

A number of positive factors influenced the third-quarter results, including significant free cash flow from U.S. third-party gas trading activities and the Cheniere gas supply contract; cash flow resilience to lower oil prices in Egypt under the revised PSC structure; the successful integration of Callon and associated cost synergies; and organic oil production growth. As a result, APA’s third-quarter cash flow from operations and free cash flow increased when compared to the second quarter, despite lower commodity prices.

Subsequent to quarter-end, the company received a credit rating increase to BBB- from Standard & Poor’s and has obtained investment grade status at all three rating agencies. During the quarter, APA reduced net debt by $275 million and returned $94 million of free cash flow to shareholders through dividends and share buybacks.

2024 Fourth-Quarter Capital and Production Guidance

The company expects total fourth-quarter production on a BOE basis will be the highest of the year despite ongoing curtailments in the Permian Basin in response to weak regional natural gas prices.

APA’s upstream capital investment in the fourth quarter is expected to be approximately $645 million, which includes $80 million of incremental capital for Suriname, Alaska and Egypt.

2025 Preliminary Capital Budget and Production Outlook

In 2025, as a result of a softer oil price outlook, APA plans to reduce capital to $2.5 to $2.6 billion, of which, $200 million is allocated to Suriname development activity and $100 million to other exploration, primarily in Alaska. At this investment level, the company expects to run an eight-rig program in the Permian Basin and a 12-rig program in Egypt, which includes one rig dedicated to natural gas following the signing of a new gas pricing agreement. The company expects this program will roughly sustain adjusted oil production in the U.S. and Egypt, while delivering mid-single digit adjusted BOE growth.

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APA CORPORATION ANNOUNCES THIRD-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 3 of 5

 

Conference Call

APA will host a conference call to discuss its third-quarter 2024 results at 10 a.m. Central time, Thursday, Nov. 7. The conference call will be webcast from APA’s website at www.apacorp.com and investor.apacorp.com. Following the conference call, a replay will be available for one year on the “Investors” page of the company’s website.

About APA

APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt and the United Kingdom and that explore for oil and natural gas offshore Suriname and elsewhere. APA posts announcements, operational updates, investor information and press releases on its website, www.apacorp.com.

Additional Information

Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. APA’s quarterly supplement is available at http://www.apacorp.com/financialdata.

Non-GAAP Financial Measures

APA’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP measures. This non-GAAP information should be considered

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APA CORPORATION ANNOUNCES THIRD-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 4 of 5

 

by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “guidance,” “may,” “might,” “outlook,” “possibly,” “potential,” “projects,” “prospects,” “should,” “will,” “would,” and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations, and objectives for operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See “Risk Factors” in APA’s Form 10-K for the year ended December 31, 2023, and in our quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. APA and its subsidiaries undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.

Cautionary Note to Investors

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC’s definitions for such terms. APA may use certain terms in this news release, such as “resources,” “potential resources,”

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APA CORPORATION ANNOUNCES THIRD-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 5 of 5

 

“resource potential,” “estimated net reserves,” “recoverable reserves,” and other similar terms that the SEC guidelines strictly prohibit APA from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality, and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in APA’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2023 available from APA at www.apacorp.com or by writing APA at: 2000 W. Sam Houston Pkwy S, Ste. 200, Houston, TX 77042 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.

Contacts

Investor: [phone] Gary Clark

Media: [phone]  Alexandra Franceschi

Website: www.apacorp.com

Click here for the full release with quarterly financial statements.

-end-

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APA CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

		For the Quarter Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues
Oil revenues		$	1,797			$	1,705			$	5,136			$	4,467
Natural gas revenues			103				236				414				658
Natural gas liquids revenues			158				138				457				375
			2,058				2,079				6,007				5,500
Purchased oil and gas sales			473				229				1,018				612
Total revenues			2,531				2,308				7,025				6,112
Derivative instrument gain (loss), net			(10	)			—				(17	)			104
Gain on divestitures, net			1				1				284				7
Loss on previously sold Gulf of Mexico properties			—				—				(83	)			—
Other, net			18				—				26				77
			2,540				2,309				7,235				6,300
OPERATING EXPENSES:
Lease operating expenses			418				394				1,216				1,076
Gathering, processing, and transmission			123				89				328				245
Purchased oil and gas costs			292				211				665				558
Taxes other than income			70				61				205				163
Exploration			29				49				248				144
General and administrative			92				139				270				276
Transaction, reorganization, and separation			14				5				156				11
Depreciation, depletion, and amortization:
Oil and gas property and equipment			588				407				1,589				1,086
Other assets			7				11				24				31
Asset retirement obligation accretion			36				29				112				86
Impairments			1,111				—				1,111				46
Financing costs, net			100				81				276				235
			2,880				1,476				6,200				3,957
NET INCOME (LOSS) BEFORE INCOME TAXES			(340	)			833				1,035				2,343
Current income tax provision			260				422				845				1,022
Deferred income tax benefit			(461	)			(144	)			(503	)			(22	)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS			(139	)			555				693				1,343
Net income attributable to noncontrolling interest			84				96				243				261
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK		$	(223	)		$	459			$	450			$	1,082
NET INCOME (LOSS) PER COMMON SHARE:
Basic		$	(0.60	)		$	1.49			$	1.30			$	3.50
Diluted		$	(0.60	)		$	1.49			$	1.29			$	3.50
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic			370				308				348				309
Diluted			370				308				348				309
DIVIDENDS DECLARED PER COMMON SHARE		$	0.25			$	0.25			$	0.75			$	0.75

 

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APA CORPORATION

PRODUCTION INFORMATION

 

		For the Quarter Ended												% Change								For the Nine Months Ended
		September 30, 2024				June 30, 2024				September 30, 2023				3Q24 to 2Q24				3Q24 to 3Q23				September 30, 2024				September 30, 2023
OIL VOLUME - Barrels per day
United States			143,299				139,361				83,584				3	%			71	%			122,138				77,198
Egypt (1, 2)			91,673				87,702				88,521				5	%			4	%			88,725				88,038
North Sea			21,334				26,586				35,680				-20	%			-40	%			25,888				36,070
International (1)			113,007				114,288				124,201				-1	%			-9	%			114,613				124,108
Total (1)			256,306				253,649				207,785				1	%			23	%			236,751				201,306
NATURAL GAS VOLUME - Mcf per day
United States			467,615				510,708				454,643				-8	%			3	%			473,997				448,838
Egypt (1, 2)			300,418				273,077				300,326				10	%			0	%			287,953				331,158
North Sea			18,911				51,854				65,168				-64	%			-71	%			41,042				47,665
International (1)			319,329				324,931				365,494				-2	%			-13	%			328,995				378,823
Total (1)			786,944				835,639				820,137				-6	%			-4	%			802,992				827,661
NGL VOLUME - Barrels per day
United States			79,474				78,937				66,280				1	%			20	%			71,690				61,418
North Sea			543				1,550				1,497				-65	%			-64	%			1,164				1,209
Total (1)			80,017				80,487				67,777				-1	%			18	%			72,854				62,627
BOE per day
United States			300,709				303,416				225,639				-1	%			33	%			272,827				213,423
Egypt (1, 2)			141,742				133,215				138,575				6	%			2	%			136,718				143,231
North Sea			25,029				36,778				48,038				-32	%			-48	%			33,892				45,222
International (1)			166,771				169,993				186,613				-2	%			-11	%			170,610				188,453
Total (1)			467,480				473,409				412,252				-1	%			13	%			443,437				401,876
Total excluding noncontrolling interests			420,199				428,972				366,051				-2	%			15	%			397,832				354,094
(1) Includes net production volumes attributed to our noncontrolling partner in Egypt below:
Oil (b/d)			30,579				29,255				29,514												29,596				29,369
Gas (Mcf/d)			100,210				91,094				100,122												96,054				110,476
BOE per day			47,281				44,437				46,201												45,605				47,782
(2) Egypt Gross Production
Oil (b/d)			136,670				139,490				144,528												138,039				141,995
Gas (Mcf/d)			447,173				431,750				472,744												445,397				511,430
BOE per day			211,199				211,448				223,319												212,272				227,233

 

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APA CORPORATION

ADJUSTED PRODUCTION INFORMATION

Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) noncontrolling interest in Egypt and 2) Egypt tax barrels. Management uses adjusted production to evaluate the company’s operational trends and performance and believes it is useful to investors and other third parties.

 

		For the Quarter Ended												% Change								For the Nine Months Ended
		September 30, 2024				June 30, 2024				September 30, 2023				3Q24 to 2Q24				3Q24 to 3Q23				September 30, 2024				September 30, 2023
OIL VOLUME - Barrels per day
United States			143,299				139,361				83,584				3	%			71	%			122,138				77,198
Egypt			44,627				43,099				42,535				4	%			5	%			43,414				42,724
North Sea			21,334				26,586				35,680				-20	%			-40	%			25,888				36,070
International			65,961				69,685				78,215				-5	%			-16	%			69,302				78,794
Total			209,260				209,046				161,799				0	%			29	%			191,440				155,992
NATURAL GAS VOLUME - Mcf per day
United States			467,615				510,708				454,643				-8	%			3	%			473,997				448,838
Egypt			145,190				133,184				143,211				9	%			1	%			139,860				159,648
North Sea			18,911				51,854				65,168				-64	%			-71	%			41,042				47,665
International			164,101				185,038				208,379				-11	%			-21	%			180,902				207,313
Total			631,716				695,746				663,022				-9	%			-5	%			654,899				656,151
NGL VOLUME - Barrels per day
United States			79,474				78,937				66,280				1	%			20	%			71,690				61,418
North Sea			543				1,550				1,497				-65	%			-64	%			1,164				1,209
Total			80,017				80,487				67,777				-1	%			18	%			72,854				62,627
BOE per day
United States			300,709				303,416				225,639				-1	%			33	%			272,827				213,423
Egypt			68,825				65,296				66,403				5	%			4	%			66,724				69,332
North Sea			25,029				36,778				48,038				-32	%			-48	%			33,892				45,222
International			93,854				102,074				114,441				-8	%			-18	%			100,616				114,554
Total			394,563				405,490				340,080				-3	%			16	%			373,443				327,977

 

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APA CORPORATION

PRICE INFORMATION

 

		For the Quarter Ended												For the Nine Months Ended
		September 30, 2024				June 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
AVERAGE OIL PRICE PER BARREL
United States		$	76.34			$	80.54			$	82.33			$	78.16			$	77.40
Egypt			79.88				84.30				88.99				82.41				82.04
North Sea			83.36				84.62				87.70				83.67				83.25
International			80.38				84.38				88.57				82.66				82.41
Total			78.06				82.28				86.15				80.31				80.50
AVERAGE NATURAL GAS PRICE PER MCF
United States		$	0.16			$	0.31			$	2.12			$	0.61			$	1.87
Egypt			2.93				2.92				2.91				2.93				2.92
North Sea			9.76				10.61				10.98				9.89				12.83
International			3.30				4.09				4.36				3.75				4.15
Total			1.43				1.77				3.12				1.89				2.91
AVERAGE NGL PRICE PER BARREL
United States		$	20.91			$	21.22			$	21.87			$	22.20			$	21.24
North Sea			45.93				43.43				42.78				46.47				47.58
Total			21.29				21.68				22.26				22.73				21.85

 

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APA CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

 

		For the Quarter Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Unproved leasehold impairments		$	1			$	9			$	11			$	20
Dry hole expense			8				18				172				71
Geological and geophysical expense			6				1				22				3
Exploration overhead and other			14				21				43				50
		$	29			$	49			$	248			$	144

SUMMARY CASH FLOW INFORMATION

 

		For the Quarter Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Net cash provided by operating activities		$	1,339			$	764			$	2,584			$	2,099
Additions to upstream oil and gas property			(930	)			(628	)			(2,153	)			(1,747	)
Leasehold and property acquisitions			(1	)			(1	)			(64	)			(11	)
Proceeds from asset divestitures			(5	)			1				724				29
Proceeds from sale of Kinetik shares			—				—				428				—
Other, net			81				(39	)			58				(53	)
Net cash used in investing activities		$	(855	)		$	(667	)		$	(1,007	)		$	(1,782	)
Proceeds from commercial paper and revolving credit facilities, net			127				6				190				202
Proceeds from term loan facility			—				—				1,500				—
Payments on term loan facility			(500	)			—				(500	)			—
Payment on Callon Credit Agreement			—				—				(472	)			—
Payments on fixed-rate debt			—				—				(1,641	)			(65	)
Distributions to noncontrolling interest			(110	)			(54	)			(233	)			(154	)
Treasury stock activity, net			(2	)			(20	)			(146	)			(208	)
Dividends paid to APA common stockholders			(92	)			(77	)			(260	)			(232	)
Other, net			(3	)			1				(38	)			(10	)
Net cash used in financing activities		$	(580	)		$	(144	)		$	(1,600	)		$	(467	)

SUMMARY BALANCE SHEET INFORMATION

 

		September 30, 2024				December 31, 2023
Cash and cash equivalents		$	64			$	87
Assets held for sale			1,091				—
Other current assets			2,465				2,375
Property and equipment, net			12,601				10,038
Decommissioning security for sold Gulf of Mexico properties			21				21
Other assets			3,134				2,723
Total assets		$	19,376			$	15,244
Current debt		$	2			$	2
Liabilities held for sale			224				—
Current liabilities			2,699				2,402
Long-term debt			6,370				5,186
Decommissioning contingency for sold Gulf of Mexico properties			759				764
Deferred credits and other noncurrent liabilities			3,162				3,199
APA shareholders’ equity			5,114				2,655
Noncontrolling interest			1,046				1,036
Total Liabilities and equity		$	19,376			$	15,244
Common shares outstanding at end of period			370				304

 

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APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of Costs incurred to Upstream capital investment

Management believes the presentation of upstream capital investments is useful for investors to assess APA’s expenditures related to our upstream capital activity. We define capital investments as costs incurred for oil and gas activities, adjusted to exclude property acquisitions, asset retirement obligation revisions and liabilities incurred, capitalized interest, and certain exploration expenses, while including amounts paid during the period for abandonment and decommissioning expenditures. Upstream capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of APA’s cash expenditures related to upstream capital activity and is consistent with how we plan our capital budget.

 

		For the Quarter Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Costs incurred in oil and gas property:
Asset and leasehold acquisitions		$	(2	)		$	3			$	4,554			$	15
Exploration and development			959				569				2,546				1,725
Total Costs incurred in oil and gas property		$	957			$	572			$	7,100			$	1,740
Reconciliation of Costs incurred to Upstream capital investment:
Total Costs incurred in oil and gas property		$	957			$	572			$	7,100			$	1,740
Property acquisitions			4				(1	)			(4,550	)			(1	)
Asset retirement obligations settled vs. incurred - oil and gas property			(174	)			7				(163	)			20
Capitalized interest			(8	)			(7	)			(22	)			(18	)
Exploration seismic and administration costs			(20	)			(22	)			(65	)			(53	)
Upstream capital investment including noncontrolling interest - Egypt		$	759			$	549			$	2,300			$	1,688
Less noncontrolling interest - Egypt			(61	)			(75	)			(195	)			(203	)
Total Upstream capital investment		$	698			$	474			$	2,105			$	1,485

Reconciliation of Net cash provided by operating activities to Cash flows from operations before changes in operating assets and liabilities and Free cash flow

Cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP financial measures. APA uses these measures internally and provides this information because management believes it is useful in evaluating the company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt, as well as to compare our results from period to period. We believe these measures are also used by research analysts and investors to value and compare oil and gas exploration and production companies and are frequently included in published research reports when providing investment recommendations. Cash flows from operations before changes in operating assets and liabilities and free cash flow are additional measures of liquidity but are not measures of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities. Additionally, this presentation of free cash flow may not be comparable to similar measures presented by other companies in our industry.

 

		For the Quarter Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Net cash provided by operating activities		$	1,339			$	764			$	2,584			$	2,099
Changes in operating assets and liabilities			(221	)			161				428				440
Cash flows from operations before changes in operating assets and liabilities		$	1,118			$	925			$	3,012			$	2,539
Adjustments to free cash flow:
Upstream capital investment including noncontrolling interest - Egypt			(759	)			(549	)			(2,300	)			(1,688	)
Decommissioning spend on previously sold Gulf of Mexico properties			(10	)			—				(39	)			—
Non oil and gas capital investment			(20	)			(15	)			(19	)			(24	)
Distributions to Sinopec noncontrolling interest			(110	)			(54	)			(233	)			(154	)
Free cash flow		$	219			$	307			$	421			$	673

Reconciliation of Net cash provided by operating activities to Adjusted EBITDAX

Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a company’s ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Company’s on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.

 

		For the Quarter Ended												For the Nine Months Ended
		September 30,				June 30,				September 30,				September 30,
		2024				2024				2023				2024				2023
Net cash provided by operating activities		$	1,339			$	877			$	764			$	2,584			$	2,099
Adjustments:
Exploration expense other than dry hole expense and unproved leasehold impairments			20				30				22				65				53
Current income tax provision			260				285				422				845				1,022
Other adjustments to reconcile net income to net cash provided by operating activities			45				(21	)			(22	)			14				45
Changes in operating assets and liabilities			(221	)			190				161				428				440
Financing costs, net			100				100				81				276				244
Transaction, reorganization & separation costs			14				115				5				156				11
Adjusted EBITDAX (Non-GAAP)		$	1,557			$	1,576			$	1,433			$	4,368			$	3,914

 

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APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions)

Reconciliation of debt to net debt

Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.

 

		September 30, 2024				June 30, 2024				March 31, 2024				December 31, 2023
Current debt		$	2			$	2			$	2			$	2
Long-term debt			6,370				6,741				5,178				5,186
Total debt			6,372				6,743				5,180				5,188
Cash and cash equivalents			64				160				102				87
Net debt		$	6,308			$	6,583			$	5,078			$	5,101

Reconciliation of Income attributable to common stock to Adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Company’s operational trends and comparability of results to our peers.

Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.

 

		For the Quarter Ended September 30, 2024																For the Quarter Ended September 30, 2023
		Before Tax				Tax Impact				After Tax				Diluted EPS				Before Tax				Tax Impact				After Tax				Diluted EPS
Net income (loss) including noncontrolling interests (GAAP)		$	(340	)		$	201			$	(139	)		$	(0.38	)		$	833			$	(278	)		$	555			$	1.80
Income attributable to noncontrolling interests			152				(68	)			84				0.22				171				(75	)			96				0.31
Net income (loss) attributable to common stock			(492	)			269				(223	)			(0.60	)			662				(203	)			459				1.49
Adjustments:*
Asset and unproved leasehold impairments			1,112				(540	)			572				1.53				9				(6	)			3				0.01
Valuation allowance and other tax adjustments			—				—				—				—				—				(93	)			(93	)			(0.30	)
Unrealized derivative instrument loss			13				(3	)			10				0.03				19				(3	)			16				0.05
Kinetik equity investment mark-to-market gain			—				—				—				—				28				(6	)			22				0.07
Transaction, reorganization & separation costs			14				(2	)			12				0.04				5				(1	)			4				0.01
Gain on divestitures, net			(1	)			—				(1	)			—				(1	)			—				(1	)			—
Adjusted earnings (Non-GAAP)		$	646			$	(276	)		$	370			$	1.00			$	722			$	(312	)		$	410			$	1.33
		For the Nine Months Ended September 30, 2024																For the Nine Months Ended September 30, 2023
		Before Tax				Tax Impact				After Tax				Diluted EPS				Before Tax				Tax Impact				After Tax				Diluted EPS
Net income including noncontrolling interests (GAAP)		$	1,035			$	(342	)		$	693			$	1.99			$	2,343			$	(1,000	)		$	1,343			$	4.34
Income attributable to noncontrolling interests			441				(198	)			243				0.70				465				(204	)			261				0.84
Net income attributable to common stock			594				(144	)			450				1.29				1,878				(796	)			1,082				3.50
Adjustments:*
Asset and unproved leasehold impairments			1,122				(542	)			580				1.66				66				(46	)			20				0.07
Valuation allowance and other tax adjustments			—				16				16				0.05				—				7				7				0.02
Gain on extinguishment of debt			—				—				—				—				(9	)			2				(7	)			(0.02	)
Unrealized derivative instrument (gain) loss			18				(4	)			14				0.04				(61	)			13				(48	)			(0.15	)
Loss on previously sold Gulf of Mexico properties			83				(18	)			65				0.19				—				—				—				—
Kinetik equity investment mark-to-market (gain) loss			9				—				9				0.03				(17	)			4				(13	)			(0.05	)
Drilling contract termination charges			—				—				—				—				13				(10	)			3				0.01
Transaction, reorganization & separation costs			156				(27	)			129				0.37				11				(3	)			8				0.02
Gain on divestitures, net			(284	)			62				(222	)			(0.64	)			(7	)			1				(6	)			(0.02	)
Adjusted Earnings (Non-GAAP)		$	1,698			$	(657	)		$	1,041			$	2.99			$	1,874			$	(828	)		$	1,046			$	3.38

 

*	The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

 

Page 7

Document and Entity Information	Nov. 06, 2024
Cover [Abstract]
Entity Registrant Name	APA Corp
Amendment Flag	false
Entity Central Index Key	0001841666
Document Type	8-K
Document Period End Date	Nov. 06, 2024
Entity Incorporation State Country Code	DE
Entity File Number	001-40144
Entity Tax Identification Number	86-1430562
Entity Address, Address Line One	2000 W Sam Houston Pkwy S
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77042-3643
City Area Code	(713)
Local Phone Number	296-6000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, $0.625 par value
Trading Symbol	APA
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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