Core Insights - APA reported $2.61 billion in revenue for the quarter ended June 2025, a year-over-year decline of 6.5% with an EPS of $0.87 compared to $1.17 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $2.07 billion, resulting in a surprise of +26.08%, while the EPS surprise was +93.33% against a consensus estimate of $0.45 [1] Financial Performance Metrics - Total production volume per day was 465.08 KBOE/D, surpassing the average estimate of 457.24 KBOE/D [4] - Natural gas production was 894.1 million cubic feet per day, slightly below the average estimate of 902.9 million cubic feet per day [4] - Oil production totaled 235.24 thousand barrels per day, exceeding the average estimate of 230.62 thousand barrels per day [4] - NGL production was 80.82 thousand barrels per day, above the average estimate of 76.12 thousand barrels per day [4] Revenue Breakdown - Revenues from the United States reached $1.38 billion, significantly higher than the average estimate of $957.89 million, representing a year-over-year increase of +16.3% [4] - North Sea revenues were $166 million, slightly below the average estimate of $168.18 million, reflecting a year-over-year decline of -37.8% [4] - Revenues from Egypt were $630 million, exceeding the average estimate of $616.41 million, but showing a year-over-year decrease of -15.6% [4] - Natural gas revenues were $184 million, slightly above the average estimate of $182.92 million, with a year-over-year increase of +36.3% [4] - Natural gas liquids revenues were $153 million, compared to the average estimate of $139.21 million, indicating a year-over-year decline of -3.8% [4] - Total production revenues from oil, natural gas, and natural gas liquids were $1.72 billion, exceeding the average estimate of $1.62 billion, but reflecting a year-over-year decline of -21.9% [4] - Oil revenues were $1.38 billion, slightly above the average estimate of $1.32 billion, showing a year-over-year decrease of -27.6% [4] - Purchased oil and gas sales amounted to $460 million, surpassing the average estimate of $418.35 million, with a year-over-year increase of +34.5% [4]

PART I - FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's financial statements for Q2 and H1 2025 show increased net income, reduced total assets and debt, and significantly higher operating cash flow [Statement of Consolidated Operations](index=6&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20OPERATIONS) Net income attributable to common stock increased for both Q2 and H1 2025, supported by derivative gains and divestitures, offsetting a decline in production revenues Consolidated Operations Summary (Q2 & H1 2025 vs 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | H1 2025 (Millions) | H1 2024 (Millions) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $2,178 | $2,543 | $4,814 | $4,494 | | **Total Operating Expenses** | $1,584 | $1,864 | $3,433 | $3,320 | | **Net Income Before Income Taxes** | $1,028 | $928 | $1,791 | $1,375 | | **Net Income Attributable to Common Stock** | $603 | $541 | $950 | $673 | | **Diluted EPS** | $1.67 | $1.46 | $2.62 | $2.00 | [Statement of Consolidated Comprehensive Income](index=7&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20COMPREHENSIVE%20INCOME) Comprehensive income attributable to common stock increased for both Q2 and H1 2025, closely aligning with net income with minor adjustments for benefit plans Comprehensive Income Attributable to Common Stock | Period | 2025 (Millions) | 2024 (Millions) | | :--- | :--- | :--- | | **For the Quarter Ended June 30** | $602 | $540 | | **For the Six Months Ended June 30** | $949 | $672 | [Statement of Consolidated Cash Flows](index=8&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CASH%20FLOWS) Net cash provided by operating activities significantly increased to **$2.28 billion** in H1 2025, while investing and financing activities resulted in net cash outflows, leading to a **$518 million** decrease in cash and equivalents Cash Flow Summary for the Six Months Ended June 30 | Cash Flow Activity | 2025 (Millions) | 2024 (Millions) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $2,277 | $1,245 | | **Net Cash Used in Investing Activities** | $(881) | $(152) | | **Net Cash Used in Financing Activities** | $(1,914) | $(1,020) | | **Net (Decrease) Increase in Cash** | $(518) | $73 | | **Cash and Cash Equivalents at End of Period** | $107 | $160 | [Consolidated Balance Sheet](index=9&type=section&id=CONSOLIDATED%20BALANCE%20SHEET) As of June 30, 2025, total assets decreased to **$18.08 billion**, total liabilities decreased to **$11.18 billion** primarily due to reduced long-term debt, and total equity increased to **$6.90 billion** Balance Sheet Summary | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :--- | :--- | :--- | | **Total Current Assets** | $2,288 | $3,404 | | **Total Assets** | $18,078 | $19,390 | | **Total Current Liabilities** | $2,844 | $2,955 | | **Long-Term Debt** | $4,288 | $5,991 | | **Total Liabilities** | $11,175 | $13,028 | | **Total Equity** | $6,903 | $6,362 | [Statement of Consolidated Changes in Equity](index=10&type=section&id=STATEMENT%20OF%20CONSOLIDATED%20CHANGES%20IN%20EQUITY%20AND%20NONCONTROLLING%20INTERESTS) Total equity increased to **$6.90 billion** in H1 2025, primarily driven by net income, partially offset by dividends, treasury stock repurchases, and distributions to noncontrolling interests - Key drivers of equity change in H1 2025 include net income of **$950 million**, offset by **$181 million** in dividends, **$152 million** in treasury stock repurchases, and **$217 million** in distributions to noncontrolling interests[30](index=30&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail accounting policies, acquisitions, divestitures, derivative activities, debt, income taxes, and commitments, highlighting the **$573 million** sale of New Mexico Permian assets and a **$1.0 billion** contingent liability for decommissioning costs - In Q2 2025, the company sold its New Mexico Permian assets for **$573 million** in cash, resulting in a gain of **$282 million**, with proceeds primarily used for debt reduction[57](index=57&type=chunk) - On April 1, 2024, APA completed its acquisition of Callon Petroleum Company in an all-stock transaction valued at approximately **$4.5 billion**, including debt[58](index=58&type=chunk) - The company recorded a contingent liability of **$1.0 billion** as of June 30, 2025, for potential decommissioning costs on previously sold Gulf of America assets[124](index=124&type=chunk) - In H1 2025, the company repurchased **7.1 million** shares for **$150 million** and paid **$181 million** in dividends[128](index=128&type=chunk)[130](index=130&type=chunk) [Management's Discussion and Analysis (MD&A)](index=32&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, operational highlights, and strategic initiatives, including increased net income, a **$350 million** cost reduction program, **$1.5 billion** debt reduction, and projected **$2.3-2.4 billion** full-year capital investment [Overview](index=32&type=section&id=Overview) APA Corporation, an independent energy company, focuses on long-term returns, balance sheet strength, and cost management, including a **$350 million** cost reduction program and a commitment to return **60%** of free cash flow to shareholders - The company has initiated a significant cost reduction program aiming for over **$350 million** in annualized savings by 2026, focusing on overhead, capital costs, and field efficiencies[146](index=146&type=chunk) - APA maintains a capital return framework to return **60%** of free cash flow to shareholders via dividends (**$0.25 per share quarterly**) and share repurchases[147](index=147&type=chunk) [Financial and Operational Highlights](index=33&type=section&id=Financial%20and%20Operational%20Highlights) Q2 2025 net income increased to **$603 million**, H1 2025 operating cash flow reached **$2.3 billion** (up **83%** YoY), and debt was reduced by **$1.5 billion**, alongside the **$573 million** sale of New Mexico Permian assets - Generated **$2.3 billion** in operating cash flow in H1 2025, an **83%** increase from H1 2024, primarily due to working capital timing[150](index=150&type=chunk) - Reduced total debt by **$1.5 billion** in H1 2025, ending the quarter with approximately **$4.6 billion** of debt[150](index=150&type=chunk) - Completed the sale of New Mexico Permian assets for **$573 million**, recognizing a gain of **$282 million** and using proceeds for debt reduction[153](index=153&type=chunk) - Subsequent to the quarter, the company was awarded an additional **2 million** net exploration acres in Egypt's Western Desert[154](index=154&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q2 2025 total production revenue decreased to **$1.72 billion** due to a **20%** drop in oil prices, while total production volume slightly decreased by **2%**, and operating expenses fell to **$1.58 billion** due to cost reductions Average Realized Prices (Q2 2025 vs Q2 2024) | Commodity | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Oil (per barrel)** | $65.58 | $82.28 | (20)% | | **Natural Gas (per Mcf)** | $2.28 | $1.77 | 29% | | **NGL (per barrel)** | $20.49 | $21.68 | (5)% | Average Daily Production (Q2 2025 vs Q2 2024) | Region | Q2 2025 (Mboe/d) | Q2 2024 (Mboe/d) | % Change | | :--- | :--- | :--- | :--- | | **United States** | 289.9 | 303.4 | (4)% | | **Egypt** | 143.8 | 133.2 | 8% | | **North Sea** | 31.4 | 36.8 | (15)% | | **Total** | 465.1 | 473.4 | (2)% | - Lease Operating Expenses (LOE) decreased by **$93 million** (**18%** on a per-unit basis) in Q2 2025 compared to Q2 2024, driven by lower operating costs and asset sales[173](index=173&type=chunk) - Transaction, Reorganization, and Separation (TRS) costs fell to **$11 million** in Q2 2025 from **$115 million** in Q2 2024, as prior year costs were elevated due to the Callon merger[179](index=179&type=chunk) [Capital Resources and Liquidity](index=41&type=section&id=Capital%20Resources%20and%20Liquidity) The company's liquidity relies on operating cash flow, with full-year 2025 upstream capital investment projected at **$2.3-2.4 billion**, and H1 2025 cash uses including **$1.4 billion** for property additions and **$1.2 billion** in net debt payments - Full-year 2025 upstream capital investment is projected to be between **$2.3 billion** and **$2.4 billion**[191](index=191&type=chunk) Sources and Uses of Cash (H1 2025) | Category | Amount (Millions) | | :--- | :--- | | **Sources of Cash** | | | Net cash from operations | $2,277 | | Asset divestitures | $571 | | Fixed-rate debt borrowings | $846 | | **Uses of Cash** | | | Additions to upstream property | $1,437 | | Net payments on debt/credit facilities | $1,233 | | Dividends paid | $181 | | Treasury stock activity | $150 | - As of June 30, 2025, the company had **$107 million** in cash and cash equivalents and **$3.8 billion** in available committed borrowing capacity[209](index=209&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from commodity prices, interest rates, and foreign currency, with commodity price volatility being the most significant, potentially impacting Q2 2025 revenues by **$21 million** for a **$1.00/bbl** oil price change - Commodity price risk is the company's primary market exposure; a **$1.00/bbl** change in oil price would alter Q2 2025 quarterly revenue by **~$21 million**, and a **$0.10/Mcf** change in gas price by **~$8 million**[234](index=234&type=chunk) - As of June 30, 2025, the company had **$4.6 billion** in fixed-rate debt, mitigating cash flow risk from interest rate fluctuations[236](index=236&type=chunk) - Foreign currency risk primarily stems from British pound exposure for North Sea operations, where a **10%** exchange rate change would result in a net gain or loss of approximately **$2 million**[238](index=238&type=chunk)[239](index=239&type=chunk) [Controls and Procedures](index=49&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The company's disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[240](index=240&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[242](index=242&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=50&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company refers to Note 10 of the financial statements for details on material legal proceedings, including litigation related to coastal restoration and an Australian divestiture dispute, with **$16 million** accrued for probable contingencies - For details on material legal proceedings, the report refers to Note 10 in the financial statements[244](index=244&type=chunk) [Risk Factors](index=50&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, were reported - No material changes to risk factors were reported since the last Annual Report on Form 10-K[245](index=245&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) In Q2 2025, the company repurchased approximately **2.7 million** shares at an average price of **$18.53** per share, with **27.7 million** shares remaining authorized for repurchase Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | **April 2025** | 603,233 | $16.59 | | **May 2025** | — | — | | **June 2025** | 2,096,211 | $19.09 | | **Total Q2 2025** | 2,699,444 | $18.53 | [Other Information](index=50&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section notes the inclusion of pro forma financial information for the Callon acquisition in Exhibit 99.1 and confirms no Rule 10b5-1 trading arrangements were adopted or terminated by officers or directors - Pro forma financial information related to the Callon acquisition is provided in Exhibit 99.1[247](index=247&type=chunk) [Exhibits](index=51&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and unaudited pro forma financial statements related to the Callon merger - A list of exhibits filed with the report is provided, including officer certifications and financial data files[249](index=249&type=chunk)

Financial Data and Key Metrics Changes - For Q2 2025, APA reported consolidated net income of $603 million or $1.67 per diluted share, with adjusted net income at $313 million or $0.87 per share, excluding significant items [23][25] - The company reduced net debt by over $850 million, a decrease of more than 15%, driven by proceeds from asset sales and positive working capital inflows [25][26] - Free cash flow generated during the quarter was $134 million, all returned to shareholders through dividends and share repurchases [24][25] Business Line Data and Key Metrics Changes - In the Permian, oil production exceeded guidance due to efficient field execution, maintaining production flat with a reduced rig count [7][8] - In Egypt, gas production exceeded quarterly guidance, while oil production declined modestly as focus shifted to gas development [9][10] - North Sea production was ahead of guidance, reflecting optimization of field operations [11] Market Data and Key Metrics Changes - The company raised guidance for gross gas volumes in Egypt for the next two quarters, benefiting from new price agreements [16] - The North Sea is expected to see a decline in taxable income due to increased production costs and lower revenues [91] Company Strategy and Development Direction - APA is committed to shareholder returns and balance sheet strengthening through debt reduction, with a long-term net debt target of $3 billion [26][27] - The company is focusing on capital efficiency improvements and cost reduction initiatives, anticipating $200 million in savings for 2025 [12][31] - Recent acreage awards in Egypt represent a 35% increase in the company's footprint, enhancing exploration potential [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of cash flows and the ability to achieve long-term debt targets within three to five years [39][40] - The company is optimistic about the ongoing success of its gas program in Egypt and the potential for future growth in both BOE volumes and free cash flow [17][93] - Management highlighted the importance of capital efficiency in the Permian, with expectations for increased resource access and lower breakeven prices [61][66] Other Important Information - The company is advancing the Grand Morgu development in Suriname, with first oil expected in mid-2028 [17][78] - A successful discovery at Sockeye 2 in Alaska was reported, with plans for seismic reprocessing to optimize future drilling [19][84] Q&A Session Summary Question: Timeline for achieving the $3 billion long-term net debt target - Management indicated that the target is expected to be achieved in the next three to five years, depending on market conditions and cash flow generation [39][40] Question: Allocation of CapEx budget to Egypt following recent gas pricing agreements - Management confirmed that the new acreage award in Egypt would likely lead to a larger percentage of the total CapEx budget being allocated to gas development [41][42] Question: Visibility on inventory in the Permian and associated capital run rate - Management stated that they are characterizing inventory in the Permian and expect to provide more details by late this year or early next year [59][60] Question: Progress on the Grand Morgu project in Suriname - Management confirmed that the project is progressing as scheduled, with milestone payments being adjusted to reflect faster progress on certain aspects [78][79] Question: Free cash flow profile of the Egypt business - Management indicated that free cash flow for the Egypt business is expected to increase due to higher gas production and improved pricing [93]

Financial Performance & Strategy - APA Corporation aims to return at least 60% of free cash flow to investors through dividends and share repurchases[14] - The company initiated a long-term net debt target of $30 billion[14] - APA reduced net debt by over $850 million due to the New Mexico asset sale and progress on Egypt payments[29] - Share repurchases amounted to approximately $30 billion since year-end 2020[20] Operational Highlights - Permian Basin accounted for 75% of APA's total adjusted production[14] - Second quarter 2025 global reported production was 465078 BOE/D, with the United States contributing 289902 BOE/D and international operations producing 175176 BOE/D[28] - APA secured presidential approval for approximately 2 million acres, increasing its Egypt footprint by over 35%[29, 38] Cost Savings & Capital Efficiency - APA is accelerating controllable spend reduction targets, with realized savings of $200 million YTD 2025 and an expected YE25 run-rate of $300 million[15] - The company has reduced per-foot drilling and completion costs by over 20% since the first half of 2024 in both the Midland and Delaware Basins[33] Suriname Project - The Suriname Block 58 project is expected to generate significant free cash flow growth starting in 2028[14] - The Suriname GranMorgu project is on track for first oil in mid-2028, with an estimated recoverable resource of over 750 million barrels of oil[52, 53] Guidance - The company expects U S & U K current income tax expense of $240 million in FY25[74]

[APA Corporation Second-Quarter 2025 Results](index=1&type=section&id=APA%20Corporation%20Announces%20Second-Quarter%202025%20Financial%20and%20Operational%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) APA Corporation reported Q2 2025 net income of $603 million ($1.67 diluted EPS), adjusted earnings of $313 million ($0.87 diluted EPS), and strong cash flow with $1.2 billion from operations and $1.3 billion adjusted EBITDAX Q2 2025 Key Financial Metrics | Metric | Amount (in millions) | | :--- | :--- | | Net Income (attributable to common stock) | $603 | | Diluted EPS | $1.67 | | Adjusted Earnings | $313 | | Adjusted Diluted EPS | $0.87 | | Net Cash Provided by Operating Activities | $1,200 | | Adjusted EBITDAX | $1,300 | [Operational Highlights](index=1&type=section&id=Operational%20Highlights) APA exceeded Q2 2025 production guidance with 465,000 BOE/day reported (394,000 adjusted), reduced Permian rig count while maintaining outlook, and expanded Egypt's footprint Q2 2025 Production | Metric | Volume (BOE/day) | | :--- | :--- | | Reported Production | 465,000 | | Adjusted Production | 394,000 | - Permian rig count reduced from **eight to six** due to drilling efficiencies, maintaining flat Permian volumes with fewer rigs[5](index=5&type=chunk)[7](index=7&type=chunk) - Egypt exceeded gas production guidance and secured presidential approval for **2 million additional acres**, expanding its footprint by over **35%**[4](index=4&type=chunk)[5](index=5&type=chunk) [Capital Allocation and Balance Sheet](index=2&type=section&id=Capital%20Allocation%20and%20Balance%20Sheet) APA returned $140 million to shareholders, reduced net debt by over $850 million (15%), and set a new long-term net debt target of $3 billion - Returned **$140 million** to shareholders through dividends and share repurchases[5](index=5&type=chunk)[9](index=9&type=chunk) - Reduced net debt by over **$850 million** (more than **15%**), supported by asset sales and Egypt working capital inflows[5](index=5&type=chunk)[9](index=9&type=chunk) - Initiated a new long-term net debt target of **$3 billion**, reflecting confidence in durable cash flows and investment-grade credit profile[10](index=10&type=chunk) [Strategic Initiatives](index=3&type=section&id=Strategic%20Initiatives) APA accelerated cost reduction targets to $350 million run-rate savings by 2026 and increased 2025 realized savings to $200 million, while GranMorgu project remains on track Updated Cost Reduction Targets | Metric | Previous Target | New Target | | :--- | :--- | :--- | | 3-Year Run-Rate Savings Goal | $350M by YE 2027 | $350M in 2026 | | 2025 Realized Savings | $130M | $200M | | 2025 Year-End Run-Rate Savings | $225M | $300M | - GranMorgu project in Suriname remains on schedule for first oil in **mid-2028**; 2025 capital guidance raised to **$275 million** for milestone payments, with no change to total project costs[13](index=13&type=chunk)[14](index=14&type=chunk) [Financial Statements and Supplemental Data](index=7&type=section&id=Financial%20Statements%20and%20Supplemental%20Data) [Statement of Consolidated Operations](index=7&type=section&id=Statement%20of%20Consolidated%20Operations) Q2 2025 total revenues decreased to $2.18 billion from $2.54 billion, while net income attributable to common stock increased to $603 million ($1.67 diluted EPS) Q2 2025 vs Q2 2024 Income Statement Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $2,178 | $2,543 | | Net Income Before Income Taxes | $1,028 | $928 | | Net Income Attributable to Common Stock | $603 | $541 | | Diluted EPS | $1.67 | $1.46 | [Production Information](index=8&type=section&id=Production%20Information) Q2 2025 total reported production decreased 2% to 465,078 BOE/day, with US down 4% and Egypt up 8% driven by gas volumes Q2 2025 Production by Region (BOE/day) | Region | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | United States | 289,902 | 303,416 | (4)% | | Egypt | 143,818 | 133,215 | 8% | | North Sea | 31,358 | 36,778 | (15)% | | **Total** | **465,078** | **473,409** | **(2)%** | [Adjusted Production Information](index=9&type=section&id=Adjusted%20Production%20Information) Q2 2025 adjusted production decreased 3% to 394,041 BOE/day, with US and North Sea declines offset by 11% growth in Egypt's adjusted volumes Q2 2025 Adjusted Production by Region (BOE/day) | Region | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | United States | 289,902 | 303,416 | (4)% | | Egypt | 72,781 | 65,296 | 11% | | North Sea | 31,358 | 36,778 | (15)% | | **Total** | **394,041** | **405,490** | **(3)%** | [Price Information](index=10&type=section&id=Price%20Information) APA realized lower Q2 2025 oil prices at $65.58/barrel (down from $82.28) but higher natural gas prices at $2.28/Mcf (up from $1.77) Average Realized Prices | Commodity | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Oil (per barrel) | $65.58 | $82.28 | | Natural Gas (per Mcf) | $2.28 | $1.77 | | NGL (per barrel) | $20.49 | $21.68 | [Supplemental Financial Information](index=11&type=section&id=Supplemental%20Financial%20Information) Q2 2025 net cash from operations was $1.18 billion, with total assets at $18.08 billion, total debt at $4.55 billion, and cash at $107 million [Summary Cash Flow Information](index=12&type=section&id=Summary%20Cash%20Flow%20Information) Q2 2025 net cash provided by operating activities was $1.18 billion, with net cash used in investing and financing activities Q2 2025 Cash Flow Summary (in millions) | Category | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,181 | $877 | | Net cash used in investing activities | $(95) | $(64) | | Net cash used in financing activities | $(1,046) | $(755) | [Summary Balance Sheet Information](index=12&type=section&id=Summary%20Balance%20Sheet%20Information) As of June 30, 2025, total assets were $18.08 billion, total debt was $4.55 billion, and APA shareholders' equity was $5.91 billion Balance Sheet Highlights (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $107 | $625 | | Total assets | $18,078 | $19,390 | | Current debt | $263 | $53 | | Long-term debt | $4,288 | $5,991 | | Total debt | $4,551 | $6,044 | | APA shareholders' equity | $5,905 | $5,280 | [Non-GAAP Reconciliations](index=13&type=section&id=Non-GAAP%20Reconciliations) This section reconciles GAAP to non-GAAP metrics, including Q2 2025 upstream capital investment of $648 million, free cash flow of $134 million, and adjusted EBITDAX of $1.3 billion [Reconciliation to Upstream capital investment](index=13&type=section&id=Reconciliation%20to%20Upstream%20capital%20investment) Q2 2025 total upstream capital investment was $648 million, a decrease from $827 million in the prior year - Total Upstream capital investment for Q2 2025 was **$648 million**, down from **$827 million** in Q2 2024[40](index=40&type=chunk) [Reconciliation to Free cash flow](index=13&type=section&id=Reconciliation%20to%20Free%20cash%20flow) Q2 2025 free cash flow was $134 million, an increase compared to $103 million in the prior-year quarter - Free cash flow for Q2 2025 was **$134 million**, compared to **$103 million** in Q2 2024[42](index=42&type=chunk) [Reconciliation to Adjusted EBITDAX](index=14&type=section&id=Reconciliation%20to%20Adjusted%20EBITDAX) Q2 2025 Adjusted EBITDAX was $1.3 billion, a decrease from $1.58 billion in the prior-year quarter - Adjusted EBITDAX for Q2 2025 was **$1,299 million**, compared to **$1,576 million** in Q2 2024[44](index=44&type=chunk) [Reconciliation to net debt](index=14&type=section&id=Reconciliation%20to%20net%20debt) Net debt as of June 30, 2025, was $4.44 billion, a significant reduction from $5.42 billion at year-end 2024 - Net debt as of June 30, 2025, was **$4,444 million**, a significant reduction from **$5,419 million** at the end of 2024[46](index=46&type=chunk) [Reconciliation to Adjusted earnings](index=15&type=section&id=Reconciliation%20to%20Adjusted%20earnings) Q2 2025 adjusted earnings were $313 million, or $0.87 per diluted share, after accounting for various adjustments Q2 2025 Adjusted Earnings Reconciliation | Metric | Amount (in millions) | Per Diluted Share | | :--- | :--- | :--- | | Net income attributable to common stock (GAAP) | $603 | $1.67 | | Adjustments (net) | $(290) | $(0.80) | | **Adjusted earnings (Non-GAAP)** | **$313** | **$0.87** |

Core Insights - APA reported a revenue of $2.61 billion for the quarter ended June 2025, reflecting a year-over-year decline of 6.5% and an EPS of $0.87 compared to $1.17 a year ago, with a revenue surprise of +26.08% over the Zacks Consensus Estimate of $2.07 billion and an EPS surprise of +93.33% over the consensus estimate of $0.45 [1] Financial Performance - The stock has returned -9.3% over the past month, while the Zacks S&P 500 composite has changed by +0.5%, indicating underperformance relative to the broader market [3] - The company holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the market in the near term [3] Production Metrics - Total production volume per day was 465.08 KBOE/D, exceeding the average estimate of 457.24 KBOE/D [4] - Natural gas production was 894.1 million cubic feet per day, slightly below the average estimate of 902.9 million cubic feet per day [4] - Oil production was 235.24 thousand barrels per day, above the average estimate of 230.62 thousand barrels per day [4] - NGL production was 80.82 thousand barrels per day, surpassing the average estimate of 76.12 thousand barrels per day [4] Pricing Metrics - Average price for natural gas was $2.28, slightly above the average estimate of $2.27 [4] - Average price per barrel of oil was $65.58, exceeding the average estimate of $63.60 [4] - Average price per barrel of NGL was $20.49, above the average estimate of $20.10 [4] Revenue Breakdown - Natural gas revenues were $184 million, slightly above the estimated $182.92 million, representing a +36.3% change year-over-year [4] - Natural gas liquids revenues were $153 million, below the estimated $139.21 million, reflecting a -3.8% change year-over-year [4] - Total revenues from oil, natural gas, and NGL production were $1.72 billion, exceeding the average estimate of $1.62 billion, but showing a -21.9% change year-over-year [4] - Oil revenues were $1.38 billion, above the estimated $1.32 billion, but down -27.6% year-over-year [4] - Purchased oil and gas sales reached $460 million, surpassing the average estimate of $418.35 million, with a +34.5% change year-over-year [4]

Core Viewpoint - APA reported quarterly earnings of $0.87 per share, significantly exceeding the Zacks Consensus Estimate of $0.45 per share, but down from $1.17 per share a year ago, indicating a +93.33% earnings surprise [1] - The company generated revenues of $2.61 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 26.08%, although this is a decrease from $2.79 billion in the same quarter last year [2] Group 1: Earnings Performance - APA's earnings surprise of +93.33% reflects a strong performance compared to expectations, following a previous quarter where it also exceeded estimates by +27.71% [1][2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped revenue estimates four times [2] Group 2: Stock Performance and Outlook - APA shares have declined approximately 19.5% year-to-date, contrasting with the S&P 500's gain of 7.1%, indicating underperformance in the market [3] - The company's current Zacks Rank is 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [6] Group 3: Future Earnings Expectations - The current consensus EPS estimate for the upcoming quarter is $0.68 on revenues of $2.12 billion, while for the current fiscal year, the estimate is $2.92 on revenues of $8.97 billion [7] - The trend of earnings estimate revisions is mixed ahead of the earnings release, which could influence future stock performance [6] Group 4: Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently ranked in the bottom 27% of over 250 Zacks industries, which may impact APA's stock performance [8] - Empirical research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1, highlighting the importance of industry performance on individual stocks [8]

Core Viewpoint - APA Corporation announced its second-quarter 2025 results and will host a conference call to discuss these results on August 7, 2025 [1]. Group 1: Company Overview - APA Corporation engages in the exploration and production of oil and natural gas in the United States, Egypt, and the United Kingdom, as well as offshore Suriname and other locations [2]. Group 2: Investor Relations - The results of the second quarter can be accessed on the company's website, and a replay of the conference call will be available for one year on the "Investors" page [1].

Key Takeaways The oil/energy sector is under pressure in the second quarter of 2025, as falling crude oil prices and narrowing profit margins create a difficult operating environment. With roughly 25% of S&P 500 energy companies having reported second-quarter results, early indications confirm that the challenges are impacting earnings. Although a rise in natural gas demand has offered some support, it hasn't been sufficient to offset the broader issues affecting the industry. Ongoing global economic uncert ...

Core Viewpoint - APA Corporation is expected to report second-quarter earnings on August 6, with an estimated profit of 45 cents per share and revenues of $2.07 billion, reflecting a significant decline compared to the previous year [1][7]. Group 1: Previous Quarter Performance - In the last reported quarter, APA exceeded consensus estimates with adjusted earnings per share of $1.06, surpassing the Zacks Consensus Estimate of 83 cents, and revenues of $2 billion, which beat the estimate by 37.3% [2]. - The company has had mixed results in the past four quarters, beating estimates in two and missing in the other two, resulting in an average surprise of 7.35% [3]. Group 2: Revenue and Earnings Estimates - The Zacks Consensus Estimate for second-quarter earnings indicates a 61.54% decline year over year, while revenues are expected to decrease by 25.80% compared to the previous year [3]. - Revenues for the upcoming quarter are projected to drop from $2.54 billion in the year-ago quarter, with a 31.4% decline in revenues from core oil, natural gas, and natural gas liquids segments [5]. Group 3: Cost Management - APA's total expenses are anticipated to reach $1.52 billion in the second quarter, down 18.5% from the previous year, with lease operating expenses expected to decrease from $489.6 million to $460 million [6]. - Costs associated with gathering, processing, and transmission are also projected to decline from $121 million to $105.1 million, and the cost of purchased oil and gas is expected to drop from $210 million to $156.9 million [6]. Group 4: Earnings Prediction Model - The Zacks model does not predict a definitive earnings beat for APA this season, with an Earnings ESP of 0.00% and a Zacks Rank of 3 [7][8].