APA(APA) - 2025 Q1 - Quarterly Results

First-Quarter 2025 Highlights and Outlook APA Corporation reported strong Q1 2025 results, driven by Permian efficiency, reduced capital, and an Alaska discovery Key Takeaways and First-Quarter Summary APA Corporation achieved strong Q1 2025 financial and operational results, with significant efficiency gains and a new Alaska discovery Q1 2025 Financial Highlights | Metric | Value (Millions USD) | Per Diluted Share | | :-------------------------------- | :------------------- | :---------------- | | Net Income Attributable to Common Stock | $347 | $0.96 | | Adjusted Earnings | $385 | $1.06 | | Net Cash Provided by Operating Activities | $1,100 | | | Adjusted EBITDAX | $1,500 | | Q1 2025 Production Highlights | Metric | Value (BOE per day) | | :-------------------- | :------------------ | | Reported Production | 469,000 | | Adjusted Production | 398,000 | - Permian oil production was within guidance despite a 1,000 barrel-per-day impact from third-party and weather-related downtime. Capital expenditure came in below guidance due to significant improvements in drilling performance, especially in the Permian Basin[5] - Announced a second Alaska discovery well at Sockeye-2, encountering a high-quality reservoir with approximately 25 feet of net oil pay. Subsequent flow test indicated significantly higher reservoir quality[6][7] - Increased 2025 expected savings to $130 million from $60 million previously, and doubled annualized run-rate savings by year-end to $225 million, with capital and overhead savings ahead of schedule[7] - Streamlined Permian footprint with the announcement of a $608 million New Mexico divestiture package[7] Cost Initiatives Progress APA Corporation significantly increased its 2025 cost savings targets, primarily through Permian drilling efficiency and overhead reductions - Total realized savings on controllable spend for 2025 are now expected to be $130 million, more than double previous estimates[8] - The company targets $225 million in run-rate savings by the end of the year, up from a prior range of $100-$125 million[8] - Efficiency gains in Permian drilling are providing the majority of the uplift in capital savings, with good progress also on completions and facilities[8][9] - General and administrative (G&A) savings are being achieved through organizational streamlining and reduced discretionary third-party spend[9] Second-Quarter and Full-Year Update APA is lowering 2025 capital guidance due to efficiencies, maintaining U.S. oil production, and expecting strong Egypt gas growth - 2025 development capital will be lowered by $150 million due to improved efficiencies and reduced activity[9] - A $25 million reduction in exploration capital is also planned, aimed at protecting free cash flow amidst volatile commodity prices[9] - APA expects to sustainably hold Permian oil volumes flat with 6.5 rigs, and is reducing activity to 6 rigs by the end of Q2 2025[10] - Full-year U.S. oil production guidance range of 125,000 to 127,000 barrels per day is being maintained for 2025[10] - In Egypt, gas-focused drilling has increased to over a third of activity, with 2025 gas production volumes expected to continue on a strong growing trajectory, leading to higher average realized gas prices through Q4[11] Hedging Update APA entered natural gas basis swaps for Permian transport, updating full-year guidance for marketing income - Entered into natural gas basis swap agreements for Q2-Q4 2025 on roughly two-thirds of firm transport capacity from Permian to Gulf Coast[12] - Full-year 2025 guidance for income from third-party oil and gas marketing activities has been updated to $575 million, inclusive of these basis hedges[12] New Mexico Asset Sale APA agreed to sell New Mexico Permian assets for $608 million, focusing its portfolio and reducing debt - Agreed to sell New Mexico Permian assets to Permian Resources Corporation for $608 million, prior to customary closing adjustments[13] - These properties are expected to produce 12.4 Mboe/d (46% oil) for the full year 2025[13] - The transaction is expected to close late in the second quarter, with proceeds primarily allocated toward debt reduction[13] - The New Mexico package represents less than 5% of APA's Permian oil production and unconventional acreage, aligning with the company's focus on core assets[14] Closing Remarks The CEO highlighted significant business improvements, emphasizing cost initiatives, free cash flow protection, and long-term strategy - First-quarter performance demonstrates step-change improvements across many business aspects[15] - Strong delivery of cost initiatives enhances the ability to respond decisively to commodity price volatility while protecting free cash flow[15] - Company's focus remains on sustaining the asset base, providing returns to shareholders, strengthening the balance sheet, and creating long-term optionality through exploration[15] Consolidated Financial Performance APA Corporation's Q1 2025 consolidated operations showed significant revenue and net income growth year-over-year Statement of Consolidated Operations APA Corporation's Q1 2025 revenues and net income significantly increased year-over-year, driven by higher production and sales Consolidated Operations Summary (Q1 2025 vs. Q1 2024) | Metric (Millions USD) | Q1 2025 | Q1 2024 | YoY Change (%) | | :---------------------------------- | :------ | :------ | :------------- | | Oil Revenues | $1,600 | $1,432 | 11.7% | | Natural Gas Revenues | $233 | $176 | 32.4% | | Natural Gas Liquids Revenues | $206 | $140 | 47.1% | | Purchased Oil and Gas Sales | $597 | $203 | 194.1% | | Total Revenues | $2,636| $1,951| 35.1% | | Lease Operating Expenses | $407 | $338 | 20.4% | | Exploration Expense | $30 | $148 | (79.7%) | | Depreciation, Depletion, and Amortization | $636 | $419 | 51.8% | | Net Income Attributable to Common Stock | $347 | $132 | 162.9% | | Diluted EPS | $0.96 | $0.44 | 118.2% | Operational Performance Data APA Corporation's Q1 2025 reported production increased year-over-year, primarily from the U.S., despite a slight QoQ decrease Production Information APA Corporation's Q1 2025 reported production increased year-over-year, driven by the U.S., with stable Egypt and declining North Sea volumes Total Reported Production (BOE per day) | Period | Total BOE per day | QoQ Change (4Q24 to 1Q25) | YoY Change (1Q24 to 1Q25) | | :----- | :---------------- | :------------------------ | :------------------------ | | 1Q25 | 468,978 | (4)% | 21% | | 4Q24 | 488,308 | | | | 1Q24 | 389,157 | | | Reported Oil Production (Barrels per day) | Region | 1Q25 | 4Q24 | 1Q24 | QoQ Change | YoY Change | | :------------ | :-------- | :-------- | :-------- | :--------- | :--------- | | United States | 125,124 | 147,573 | 83,520 | (15)% | 50% | | Egypt | 86,173 | 89,927 | 86,768 | (4)% | (1)% | | North Sea | 25,206 | 27,683 | 29,795 | (9)% | (15)% | | Total | 236,503 | 265,183 | 200,083 | (11)% | 18% | Reported Natural Gas Production (Mcf per day) | Region | 1Q25 | 4Q24 | 1Q24 | QoQ Change | YoY Change | | :------------ | :-------- | :-------- | :-------- | :--------- | :--------- | | United States | 574,736 | 511,587 | 443,737 | 12% | 30% | | Egypt | 317,209 | 300,118 | 290,227 | 6% | 9% | | North Sea | 31,606 | 36,842 | 52,605 | (14)% | (40)% | | Total | 923,551 | 848,547 | 786,569 | 9% | 17% | Adjusted Production Information Adjusted production for Q1 2025 showed a significant year-over-year increase, reflecting strong U.S. growth - Adjusted production excludes production attributable to noncontrolling interest in Egypt and Egypt tax barrels, used by management to evaluate operational trends and performance[28] Total Adjusted Production (BOE per day) | Period | Total BOE per day | QoQ Change (4Q24 to 1Q25) | YoY Change (1Q24 to 1Q25) | | :----- | :---------------- | :------------------------ | :------------------------ | | 1Q25 | 398,384 | (5)% | 24% | | 4Q24 | 418,347 | | | | 1Q24 | 320,046 | | | Adjusted Oil Production (Barrels per day) | Region | 1Q25 | 4Q24 | 1Q24 | QoQ Change | YoY Change | | :------------ | :-------- | :-------- | :-------- | :--------- | :--------- | | United States | 125,124 | 147,573 | 83,520 | (15)% | 50% | | Egypt | 42,521 | 45,017 | 42,504 | (6)% | —% | | North Sea | 25,206 | 27,683 | 29,795 | (9)% | (15)% | | Total | 192,851 | 220,273 | 155,819 | (12)% | 24% | Price Information Average realized prices for oil, natural gas, and NGLs varied in Q1 2025, with natural gas prices showing a significant QoQ increase Average Oil Price Per Barrel | Region | 1Q25 ($) | 4Q24 ($) | 1Q24 ($) | | :------------ | :------- | :------- | :------- | | United States | 72.45 | 70.38 | 77.37 | | Egypt | 75.06 | 74.54 | 83.18 | | North Sea | 75.30 | 75.42 | 82.81 | | Total | 73.73 | 72.42 | 80.65 | Average Natural Gas Price Per Mcf | Region | 1Q25 ($) | 4Q24 ($) | 1Q24 ($) | | :------------ | :------- | :------- | :------- | | United States | 2.00 | 1.01 | 1.42 | | Egypt | 3.19 | 2.97 | 2.93 | | North Sea | 14.96 | 14.40 | 9.23 | | Total | 2.81 | 2.20 | 2.47 | Average NGL Price Per Barrel | Region | 1Q25 ($) | 4Q24 ($) | 1Q24 ($) | | :------------ | :------- | :------- | :------- | | United States | 28.12 | 24.52 | 25.38 | | North Sea | 51.39 | 50.65 | 49.37 | | Total | 28.75 | 25.08 | 26.20 | Supplemental Financial Details This section provides detailed financial information on exploration expenses, equity compensation, cash flow, and balance sheet Summary Exploration Expense Information Exploration expenses significantly decreased in Q1 2025, primarily due to reduced dry hole expense Exploration Expense (Millions USD) | Expense Type | 1Q25 ($) | 1Q24 ($) | | :---------------------------- | :------- | :------- | | Unproved leasehold impairments | — | 10 | | Dry hole expense | 11 | 123 | | Geological and geophysical expense | 4 | 1 | | Exploration overhead and other | 15 | 14 | | Total | 30 | 148 | Summary Stock-Settled and Cash-Settled Equity Compensation Information Total equity compensation costs significantly increased in Q1 2025, particularly in G&A Equity Compensation Costs (Millions USD) | Metric | 1Q25 ($) | 4Q24 ($) | 1Q24 ($) | | :---------------------------------------- | :------- | :------- | :------- | | Stock-settled and cash-settled compensation expensed: |||| | Lease operating expenses | 7 | 1 | 4 | | Exploration | 1 | 1 | 1 | | General and administrative | 17 | 11 | 3 | | Total expensed compensation | 25 | 13 | 8 | | Stock-settled and cash-settled compensation capitalized | 4 | 1 | 3 | | Total compensation costs | 29 | 14 | 11 | Summary Cash Flow Information Net cash from operating activities significantly increased in Q1 2025, but investing and financing activities also rose Cash Flow Summary (Millions USD) | Metric | 1Q25 ($) | 1Q24 ($) | | :---------------------------------------- | :------- | :------- | | Net cash provided by operating activities | 1,096 | 368 | | Additions to upstream oil and gas property | (777) | (467) | | Net cash used in investing activities | (786) | (88) | | Payments on term loan facility | (900) | — | | Payments on fixed-rate debt | (905) | — | | Net cash used in financing activities | (868) | (265) | Summary Balance Sheet Information As of March 31, 2025, total assets and long-term debt decreased, while shareholders' equity increased Balance Sheet Summary (Millions USD) | Metric | March 31, 2025 ($) | December 31, 2024 ($) | | :---------------------------- | :----------------- | :-------------------- | | Cash and cash equivalents | 67 | 625 | | Total assets | 18,531 | 19,390 | | Current debt | 131 | 53 | | Long-term debt | 5,237 | 5,991 | | Total Liabilities and equity | 18,531 | 19,390 | | Common shares outstanding at end of period | 361 | 365 | Non-GAAP Financial Reconciliations This section reconciles non-GAAP financial measures to GAAP, providing additional insights into performance Reconciliation of Costs Incurred to Upstream Capital Investment Upstream capital investment, a non-GAAP measure, increased in Q1 2025, excluding certain items - Upstream capital investment is defined as costs incurred for oil and gas activities, adjusted to exclude property and leasehold acquisitions, asset retirement additions and revisions, capitalized interest, and certain exploration expenses, as well as noncontrolling interest in Egypt[40] Upstream Capital Investment (Millions USD) | Metric | 1Q25 ($) | 1Q24 ($) | | :------------------------------------------------ | :------- | :------- | | Total Costs incurred in oil and gas property | 803 | 717 | | Upstream capital investment including noncontrolling interest - Egypt | 766 | 627 | | Less noncontrolling interest - Egypt | (56) | (69) | | Total Upstream capital investment | 710 | 558 | Reconciliation of Net Cash Provided by Operating Activities to Cash Flows from Operations Before Changes in Operating Assets and Liabilities and Free Cash Flow Non-GAAP cash flow metrics, including free cash flow, showed an increase in Q1 2025, indicating improved cash generation - These non-GAAP measures are used to evaluate the company's ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt[42] Cash Flow and Free Cash Flow (Millions USD) | Metric | 1Q25 ($) | 1Q24 ($) | | :------------------------------------------------------------------------ | :------- | :------- | | Net cash provided by operating activities | 1,096 | 368 | | Cash flows from operations before changes in operating assets and liabilities | 1,051 | 827 | | Free cash flow | 126 | 99 | Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDAX Adjusted EBITDAX, a non-GAAP measure, increased year-over-year in Q1 2025, reflecting operational performance - Adjusted EBITDAX is defined as EBITDAX adjusted for certain items, used by management to evaluate the ability to fund capital expenditures, debt services, and operational requirements, and to compare results by eliminating the impact of non-representative items[44] Adjusted EBITDAX (Millions USD) | Metric | 1Q25 ($) | 4Q24 ($) | 1Q24 ($) | | :---------------------------------------- | :------- | :------- | :------- | | Net cash provided by operating activities | 1,096 | 1,036 | 368 | | Adjusted EBITDAX (Non-GAAP) | 1,485| 1,550| 1,235| Reconciliation of Debt to Net Debt Net debt, a non-GAAP measure, decreased from Q4 2024 to Q1 2025, indicating improved financial leverage - Net debt is defined as outstanding debt obligations less cash and cash equivalents, used by management as a measure of the Company's outstanding debt obligations not readily satisfied by cash on hand[46] Net Debt (Millions USD) | Metric | March 31, 2025 ($) | December 31, 2024 ($) | September 30, 2024 ($) | June 30, 2024 ($) | | :------------------------ | :----------------- | :-------------------- | :--------------------- | :---------------- | | Current debt | 131 | 53 | 2 | 2 | | Long-term debt | 5,237 | 5,991 | 6,370 | 6,741 | | Total debt | 5,368 | 6,044 | 6,372 | 6,743 | | Cash and cash equivalents | 67 | 625 | 64 | 160 | | Net Debt | 5,301 | 5,419 | 6,308 | 6,583 | Reconciliation of Income Attributable to Common Stock to Adjusted Earnings Adjusted earnings, a non-GAAP measure, significantly increased in Q1 2025, providing a clearer view of ongoing operations - Adjusted earnings and adjusted earnings per share are used to evaluate operating and financial performance by eliminating the impact of items not considered representative of ongoing business operations, facilitating comparisons to peers[48][49] Adjusted Earnings (Millions USD, except per share data) | Metric | 1Q25 After Tax ($) | 1Q25 Diluted EPS ($) | 1Q24 After Tax ($) | 1Q24 Diluted EPS ($) | | :---------------------------------------- | :----------------- | :------------------- | :----------------- | :------------------- | | Net income attributable to common stock | 347 | 0.96 | 132 | 0.44 | | Adjustments (net of tax): | | | | | | Valuation allowance and EPL revaluation | 98 | 0.27 | 16 | 0.05 | | Gain on extinguishment of debt | (111) | (0.30) | — | — | | Unrealized derivative instrument loss | 22 | 0.06 | 6 | 0.02 | | Transaction, reorganization & separation costs | 28 | 0.07 | 19 | 0.06 | | Adjusted earnings (Non-GAAP) | 385 | 1.06 | 237 | 0.78 | Corporate Information and Disclosures This section provides essential corporate information, including conference call details, company overview, and legal disclaimers Conference Call Details APA Corporation will host a conference call on May 8, 2025, to discuss Q1 results, with webcast and replay available - Conference call to discuss Q1 2025 results scheduled for 10 a.m. Central time, Thursday, May 8[16] - Webcast available on APA's website (www.apacorp.com and investor.apacorp.com), with a replay available for one year[16] About APA Corporation APA Corporation is an independent energy company engaged in oil and gas exploration and production across multiple regions - APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt, and the United Kingdom[17] - The company also explores for oil and natural gas offshore Suriname and other locations[17] - APA posts announcements, operational updates, investor information, and press releases on its website, www.apacorp.com[17](index=17&type=chunk) Additional Information and Non-GAAP Financial Measures Explanation The report includes non-GAAP reconciliations to enhance understanding of financial information and performance - Additional information includes 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[18] - Non-GAAP financial information is provided to enhance understanding of consolidated financial information prepared in accordance with GAAP, and should be considered in addition to, not instead of, GAAP statements[19] Forward-Looking Statements This news release contains forward-looking statements subject to risks and uncertainties, with no obligation for updates - Statements about future plans, expectations, and objectives for operations, including capital plans, drilling plans, production expectations, asset sales, and monetizations, are forward-looking[20] - Forward-looking statements are based on reasonable assumptions but are subject to risks and uncertainties that could cause actual results to differ materially[20] - APA and its subsidiaries undertake no obligation to publicly update any forward-looking statement, except as required by law[20] Cautionary Note to Investors Investors are cautioned regarding non-SEC compliant terms and advised to refer to the Form 10-K for detailed disclosures - The SEC permits disclosure only of proved, probable, and possible reserves that meet SEC definitions[21] - Terms like 'resources,' 'potential resources,' 'resource potential,' 'estimated net reserves,' and 'recoverable reserves' are strictly prohibited by SEC guidelines for filings and should not be relied upon as they do not account for certainty of recovery[21] - Investors are urged to carefully consider disclosures in APA's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, available on APA's website or the SEC's website[21] Contacts Contact information for investor relations and media inquiries, along with the company's website, is provided - Investor contact: (281) 302-2286[22] - Media contact: (713) 296-7276[22] - Website: www.apacorp.com[22](index=22&type=chunk)