Oil prices fell sharply on Monday, reaching their lowest levels in 2025, following the unexpected decision by OPEC+ to restart some of its previously halted production. WTI crude fell 2% to settle at $68.37 per barrel, while Brent crude slipped 1.6% to $71.62 per barrel, marking their lowest levels since December.The news sent shockwaves through energy stocks, with the sector experiencing widespread losses. The Energy Select Sector SPDR, which tracks the largest U.S. energy companies, sank 3.5% on Monday, m ...

U.S. energy operator APA Corporation (APA) reported fourth-quarter 2024 adjusted earnings of 79 cents per share, missing the Zacks Consensus Estimate of 97 cents and deteriorating from the year-ago adjusted figure of $1.15. The underperformance primarily reflects lower commodity prices and higher costs.Revenues of $2.5 billion were up 32% from the year-ago quarter’s sales and came ahead of the Zacks Consensus Estimate by 10% on the back of contribution from the Callon Petroleum acquisition and higher-than-e ...

Acquisition and Asset Management - APA Corporation completed the acquisition of Callon Petroleum Company for approximately $4.5 billion, enhancing its asset base in the Permian Basin with 120,000 net acres in the Delaware Basin and 25,000 net acres in the Midland Basin[29]. - The company generated approximately $1.6 billion from the sale of non-core producing properties and mineral interests, primarily used to reduce debt, streamlining its acreage position for long-term growth[29]. - The company has a noncontrolling ownership interest in Kinetik Holdings Inc., divesting its stake for total proceeds of approximately $880 million over three years[29]. - APA's capital allocation process has been enhanced through a series of transactions that upgraded its asset portfolio and improved capital efficiencies[27]. - The company relinquished its net acreage holdings offshore the Dominican Republic in 2024, continuing to assess opportunities in other international locations[69]. Production and Reserves - In 2024, the Company achieved total production of 166.4 MMboe, generating revenues of $8,196 million, with the United States contributing 62% of production and 53% of revenues[33]. - The Company's U.S. operations have estimated year-end proved reserves of 695 MMboe, with 72% of these reserves located in the U.S.[35]. - The company's total estimated proved reserves of 500 MMbbls of crude oil, 209 MMbbls of NGLs, and 1.6 Tcf of natural gas, equivalent to 969 million boe, with liquids representing approximately 73 percent[76]. - The company's proved developed reserves totaled 669 MMboe, while estimated proved undeveloped (PUD) reserves amounted to 300 MMboe, representing approximately 31 percent of worldwide total proved reserves[76]. - The company added approximately 325 MMboe from extensions, discoveries, and other additions during 2024, with 223 MMboe derived from U.S. drilling activity in the Permian Basin[77]. Operational Strategy and Flexibility - APA's business strategy focuses on moderate, sustainable production growth while managing costs and strengthening its balance sheet to generate excess cash flow for shareholder returns[25]. - The company aims to invest for long-term returns while navigating uncertainties in global supply chains and financial markets, including inflation and geopolitical tensions[25]. - APA's operational flexibility and rigorous asset management are key to optimizing shareholder value over the long term[27]. - The company has ongoing operations in the U.S., Egypt, and offshore the U.K., with active development in Suriname and exploration interests in Uruguay and Alaska[22][31]. - APA's diversified portfolio allows for timely responses to near-term price volatility and effective management of investment programs[26]. Exploration and Development - The Company drilled 87 gross development wells in the Southern Midland Basin with a 100% success rate and acquired approximately 25,000 net acres in the Midland Basin as part of the Callon acquisition[37]. - In Egypt, the Company held 5.3 million gross acres at year-end 2024, with 67% of this acreage undeveloped, contributing 30% of total production and 17% of year-end estimated proved reserves[45][48]. - The Company completed a three-well exploration program in Alaska, confirming a working petroleum system on its 325,000 gross acres of undeveloped acreage[44]. - The Company drilled 48 gross development and 36 gross exploration wells in Egypt in 2024, utilizing 3-D seismic surveys covering three million acres to enhance drilling inventory[49]. - The Company holds a 45 percent working interest in Block 53 offshore Suriname, with approximately 13,000 net undeveloped acres in the Baja discovery area[57]. Financial Commitments and Investments - The Company announced a $10.5 billion investment for the GranMorgu oil development in Block 58 offshore Suriname, with first oil expected in 2028[56]. - The Company has long-term delivery commitments for natural gas averaging 161 Bcf per year from 2025 to 2029 and 4.2 MMbbls of crude oil in 2025[42][43]. - The new gas sales agreement in Egypt, effective January 2025, could improve pricing based on production thresholds, creating potential for significant new drilling inventory[52]. - The company spent approximately $341 million on projects associated with proved undeveloped reserves in 2024, with $321 million allocated to U.S. activities and $20 million to international areas[82]. Employee and Community Engagement - The company employed approximately 2,305 full-time equivalent employees globally as of December 31, 2024, with the majority located in the United States (1,505 employees)[95][96]. - The company has established various employee resource groups (ERGs) and expanded recruitment efforts at Historically Black Colleges & Universities (HBCUs) to enhance diversity and inclusion[100]. - The Company granted 169,000 trees to 63 community partners in the U.S. and U.K. as part of its environmental stewardship initiatives[116]. - The Company continues to support the Clean Cooking Alliance in Sub-Saharan Africa, facilitating access to technical support and funding for clean cooking entrepreneurs[117]. Safety and Compliance - Total Recordable Incident Rate (TRIR) at 0.16, which is 33% below the target of 0.24[110]. - Days Away, Restricted and Transferred Rate (DART) at 0.09, 25% below the target of 0.12[111]. - Severe Incident Rate (SIR) at 0.009, 10% below the target of 0.010[111]. - Vehicle Incident Rate (VIR) at 0.59, 28% above the target of 0.46[110]. - The company engaged Ryder Scott Company for a reserves audit, covering 90 percent of estimated proved reserves values and 82 percent of volumes, ensuring compliance with SEC regulations[88][89].

Financial Data and Key Metrics Changes - For Q4 2024, APA Corporation reported consolidated net income of $354 million or $0.96 per diluted share, with adjusted net income of $290 million or $0.79 per share [30][31] - The company generated $420 million of free cash flow in Q4 2024, the highest for any quarter in 2024, and returned 46% of this amount to shareholders [32][33] - For the full year 2024, APA generated $841 million in free cash flow, returning 71% to shareholders [33][34] Business Line Data and Key Metrics Changes - In the Permian Basin, APA's US business now comprises almost entirely unconventional assets, driving over 75% of current adjusted production [13][14] - The company achieved a breakeven oil price of $61 per barrel in 2024, down from Cowen's 2023 breakeven of $78 per barrel [21] - In Egypt, the company improved its production profile through water flood activities, leading to a more predictable oil production profile [14] Market Data and Key Metrics Changes - APA's average realized gas price is expected to increase from $2.96 per Mcf in Q4 2024 to at least $3.15 per Mcf in Q1 2025, with a full-year average expected in the $3.40 to $3.50 range [40] - The company anticipates generating a combined net gain of $600 million for 2025 from gas trading activities [44][109] Company Strategy and Development Direction - APA Corporation is focused on enhancing the quality and sustainability of its portfolio, particularly in the Permian Basin and Egypt, while also pursuing a differentiated exploration strategy [11][12] - The company plans to run an eight-rig program in the Permian and a twelve-rig program in Egypt for 2025, with a total capital budget of $2.5 to $2.6 billion [24][25] - Cost reduction initiatives are expected to generate at least $350 million in annualized savings by year-end 2027 [27][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability and predictability of production from the Permian and Egypt, with a focus on cost structure improvements [56][58] - The company aims to achieve BBB or better ratings from credit agencies, reflecting its strengthened balance sheet [34] - Management highlighted the importance of the gas program in Egypt, expecting year-over-year gas production growth for the first time in over a decade [39][92] Other Important Information - APA Corporation achieved a BBB- rating from S&P, marking its investment-grade status with all three rating agencies [13][34] - The company closed the sale of non-core conventional properties in the Permian Basin on December 31, 2024 [18] Q&A Session Summary Question: Concerns about share performance despite strong cash flow - Management acknowledged the concerns and emphasized the transformation of their asset base, focusing on cost structure and sustainable inventory [55][56] Question: Share buybacks versus debt repayment - Management stated that they are working on both share buybacks and debt repayment, believing in the value of their shares [62][63] Question: Update on Alaska exploration - Operations in Alaska are progressing well, with no comments on pay zones yet, but management is optimistic about the results [68][69] Question: Productivity in Howard County - Management reported fantastic results in Howard County and plans to return for tighter well spacing [72][73] Question: Balancing rig activity between oil and gas in Egypt - Management indicated a strong start in gas drilling and plans to potentially shift more rigs to gas as results improve [92][94] Question: Receivable situation in Egypt - Management noted that past due balances have remained stable, with expectations for progress in 2025 [102][104] Question: Breakdown of gas trading revenue - Management provided a breakdown of expected gas trading revenue, with significant contributions from both pipeline trading and LNG contracts [108][109] Question: Structural changes in cost-cutting initiatives - Management detailed their approach to cost savings, emphasizing capital, LOE, and G&A as key areas for improvement [114][115]

Fourth-Quarter 2024 Financial and Operational Supplement February 26, 2025 Notice to Investors Certain statements in this earnings supplement contain "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 including, without limitation, expectations, beliefs, plans, and objectives regarding anticipated financial and operating results, asset divestitures, estimated reserves, drilling locations, capital expenditures, p ...

Financial Performance - In Q4 2024, APA Corporation reported a net income of $354 million, or $0.96 per diluted share, with adjusted earnings of $290 million, or $0.79 per diluted share[5]. - For the full year 2024, net income attributable to common stock was $804 million, or $2.27 per diluted share, with adjusted earnings totaling $1.3 billion, or $3.77 per diluted share[7]. - The company generated $3.6 billion in net cash from operating activities and achieved $5.9 billion in adjusted EBITDAX for 2024[7]. - Free cash flow for the year ended December 31, 2024, was $841 million, down 13% from $965 million in 2023[42]. - Net cash provided by operating activities for the year ended December 31, 2024, was $3,620 million, an increase of 16% from $3,129 million in 2023[42]. - Adjusted EBITDAX for Q4 2024 was $1,550 million, compared to $1,557 million in Q4 2023, showing a slight decline of 0.4%[45]. - Net income attributable to common stock for Q4 2024 was $354 million, a decrease of 4.1% from $377 million in Q4 2023, resulting in diluted EPS of $0.96 compared to $1.00[51]. - For the year ended December 31, 2024, net income attributable to common stock was $804 million, down 64.3% from $2.255 billion in 2023, with diluted EPS decreasing to $2.27 from $9.25[51]. - Adjusted earnings (Non-GAAP) for Q4 2024 were $290 million, a decline of 17.6% from $352 million in Q4 2023, leading to an adjusted EPS of $0.79 compared to $1.15[51]. Production and Reserves - Full-year production averaged 455,000 BOE per day, with adjusted production at 385,000 BOE per day[7]. - Total adjusted production for 2025 is expected to be around 396,000 BOE per day, a 3% increase from 2024[7]. - Total oil volume increased to 220,273 barrels per day, a 5% increase from the previous quarter and a 38% increase year-over-year[30]. - Natural gas volume reached 698,245 Mcf per day, reflecting an 11% increase from the previous quarter and a 4% increase year-over-year[30]. - Total BOE per day was 418,347, representing a 6% increase from the previous quarter and a 23% increase year-over-year[30]. - The company reported a total of 511,587 Mcf per day of natural gas production in the United States, a 9% increase from the previous quarter[30]. - Total oil reserves increased to 499.711 million barrels as of December 31, 2024, up from 379.125 million barrels at the end of 2023, reflecting a net increase of 31.7%[53]. - Total gas reserves reached 1.562 billion cubic feet by December 31, 2024, an increase of 2.1% from 1.530 billion cubic feet in 2023[55]. - The company reported total proved developed reserves of 969.097 million barrels of oil equivalent (Mboe) as of December 31, 2024, up from 807.480 Mboe in 2023, marking a growth of 20%[56]. Financial Position and Debt - APA's debt at year-end 2024 was $6 billion, with cash of $625 million, reflecting a net debt increase of only $300 million despite the Callon acquisition[8]. - Total debt decreased to $6,044 million in Q4 2024 from $6,372 million in Q3 2024, a reduction of 5%[48]. - Net debt as of December 31, 2024, was $5,419 million, down from $6,308 million in Q3 2024, indicating a decrease of 14%[48]. - Cash and cash equivalents increased significantly to $625 million in 2024 from $87 million in 2023, representing a growth of 618%[38]. - Total assets rose to $19,390 million in 2024, up from $15,244 million in 2023, marking an increase of 27%[38]. Capital Expenditure and Future Plans - APA plans a capital budget of $2.5 to $2.6 billion for 2025, including $200 million for the GranMorgu project and $100 million for exploration[11]. - The company aims to achieve $350 million in annual cost savings by the end of 2027 through various cost-reduction initiatives[13]. - Upstream capital investment, including noncontrolling interest in Egypt, was $650 million for Q4 2024, compared to $598 million in Q4 2023, reflecting an increase of 9%[40]. - The company plans to continue expanding its market presence and investing in new technologies to enhance operational efficiency and reserve recovery[52]. Costs and Expenses - Total costs incurred in oil and gas property for the year ended December 31, 2024, were $7,862 million, significantly higher than $2,719 million in 2023, reflecting a growth of 189%[40]. - Exploration expenses totaled $313 million for the quarter, with dry hole expenses accounting for $201 million[34]. - The company incurred transaction, reorganization, and separation costs of $138 million for the year ended December 31, 2024, compared to $10 million in 2023[51]. - Loss on previously sold Gulf of America properties for the year was $213 million, compared to $167 million in 2023, indicating an increase of 27.5%[51]. Shareholder Returns - The company returned $599 million to shareholders in 2024, representing 71% of free cash flow[7]. - Common shares outstanding increased to 365 million at the end of 2024 from 304 million in 2023, representing a growth of 20%[38].

Core Viewpoint - APA reported quarterly earnings of $0.79 per share, missing the Zacks Consensus Estimate of $0.97 per share, and down from $1.15 per share a year ago, indicating an earnings surprise of -18.56% [1] - The company posted revenues of $2.5 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 9.98%, compared to $1.89 billion in the same quarter last year [2] Group 1: Earnings Performance - Over the last four quarters, APA has surpassed consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is $0.88 on revenues of $2.16 billion, and for the current fiscal year, it is $3.63 on revenues of $8.57 billion [7] Group 2: Stock Performance and Outlook - APA shares have declined approximately 3.1% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The company's earnings outlook and management's commentary on the earnings call will be crucial for future stock price movements [3][4] Group 3: Industry Context - The Zacks Industry Rank for Oil and Gas - Exploration and Production - United States is currently in the top 14% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Group 1 - APA Corporation announced its fourth-quarter and full-year 2024 results, which are available on the company's website [1] - A conference call is scheduled for February 27 at 10 a.m. Central time to discuss the results, with a replay available for one year [1] Group 2 - APA Corporation operates in oil and natural gas exploration and production in the United States, Egypt, the United Kingdom, and offshore Suriname [2] - The company provides announcements, operational updates, investor information, and press releases on its website [2]

Industry Overview - The energy sector is experiencing a challenging earnings season, with approximately 69.2% of S&P 500 energy companies having reported their fourth-quarter results, which have not been favorable due to declining oil and gas prices [1] - The average price of West Texas Intermediate crude oil fell to $70.69 per barrel in Q4 2024, down from $78.41 the previous year, attributed to increased global oil production and a slowdown in demand growth [2] - Natural gas prices also declined, with the Henry Hub spot price averaging $2.44 per million British thermal units (MMBtu), down from $2.74 per MMBtu in the same quarter last year [2] Earnings Performance - Energy companies in the S&P 500 are projected to report a 22.5% drop in earnings year-over-year for 2023, contrasting with an expected overall earnings growth of 13.4% for the S&P 500 index [3][4] - Revenue growth for energy companies has been modest at 2.1% year-over-year, while the overall S&P 500 index has seen a revenue increase of 5.5% [5] - Sectors such as technology and finance have reported significant earnings growth of 24.2% and 19.4%, respectively, highlighting the struggles of the energy sector [6] Market Sentiment - The decline in oil and gas prices is squeezing profit margins, leading investors to seek better returns in high-growth sectors like technology and finance, making it difficult for energy companies to attract investment [7] - There is uncertainty regarding a quick recovery in oil and gas prices, prompting investors to adjust their expectations for energy stocks in 2025 [7] Company-Specific Insights - APA Corporation (APA) is expected to report a 4.8% increase in revenues, reaching $2.3 billion, driven by a 31.3% rise in purchased oil and gas sales, despite a projected earnings decrease of 15.65% year-over-year [11] - Ovintiv Inc. (OVV) is anticipated to see a 52.77% decrease in earnings year-over-year, with an Earnings ESP of -1.03% and a Zacks Rank of 2, indicating low chances of an earnings beat [12][14] - Vista Oil & Gas (VIST) is projected to report a 64.29% decrease in earnings, with an Earnings ESP of 0.00% and a Zacks Rank of 3, suggesting low chances of an earnings beat [15] - Expand Energy Corporation (EXE) is expected to see a 59.54% decrease in earnings, with an Earnings ESP of -10.14% and a Zacks Rank of 2, indicating low chances of an earnings beat [17]

Core Insights - Analysts expect APA to report quarterly earnings of $0.97 per share, reflecting a year-over-year decline of 15.7% [1] - Revenue projections stand at $2.27 billion, indicating a 20.2% increase from the previous year [1] - The consensus EPS estimate has been revised upward by 2.2% in the last 30 days, showing analysts' reassessment of their initial estimates [1][2] Revenue Estimates - 'Oil, natural gas, and natural gas liquids production revenues - Gas revenues' are projected to be $160.09 million, down 27.9% year over year [4] - Total 'Oil, natural gas, and natural gas liquids production revenues' are expected to reach $2.02 billion, up 7.2% year over year [4] - 'Oil, natural gas, and natural gas liquids production revenues - Natural gas liquids revenues' are estimated at $177.17 million, reflecting a 33.2% increase year over year [5] - 'Purchased oil and gas sales' are projected to be $374.76 million, indicating a 32.9% increase from the year-ago quarter [5] Production Volume Estimates - Total production volume per day is expected to reach 480.69 KBOE/D, up from 414.43 KBOE/D in the previous year [6] - Natural gas production volume per day is estimated at 831.28 million cubic feet, slightly up from 830.37 million cubic feet year over year [6] - Oil production volume per day is forecasted to be 260.38 thousand barrels, compared to 207.02 thousand barrels in the same quarter last year [7] - NGL production volume per day is projected at 81.84 thousand barrels, up from 69.01 thousand barrels year over year [7] Price Estimates - The average price per barrel of oil is expected to be $71.39, down from $81.36 in the same quarter last year [8] - The average price per barrel of NGL is projected at $24.05, compared to $20.70 in the same quarter last year [8] U.S. Production Estimates - Total production volume per day in the United States is expected to be 311.63 KBOE/D, up from 228.67 KBOE/D year over year [9] - Oil production volume per day in the United States is forecasted to reach 146.82 thousand barrels, compared to 83.91 thousand barrels in the previous year [9] Stock Performance - Over the past month, APA shares have recorded a return of -2.3%, while the Zacks S&P 500 composite has changed by -0.5% [10] - APA holds a Zacks Rank 3 (Hold), suggesting its performance will likely align with the overall market in the upcoming period [10]