Financial Data and Key Metrics Changes - The company generated $2.9 per share in adjusted earnings for the first quarter of 2025, with cash flow from operations (CFO) amounting to $5.5 billion, including $200 million from APLNG distributions [16][20] - Capital expenditures were reported at $3.4 billion, with a return of capital totaling $2.5 billion to shareholders, which represents 45% of CFO for the quarter [16][17] - The company ended the quarter with $7.5 billion in cash and short-term investments, plus $1 billion in long-term liquid investments [17] Business Line Data and Key Metrics Changes - Total production for the first quarter was 2,389,000 barrels of oil equivalent per day, exceeding production guidance [15] - In the Lower 48, production averaged 1,462,000 barrels of oil equivalent per day, with specific contributions from the Permian (816,000), Eagle Ford (370,000), and Bakken (212,000) [15] Market Data and Key Metrics Changes - The macro environment is characterized by uncertainty and volatility, with revised outlooks for global economic growth and oil demand [8] - Oil prices have softened compared to the first quarter, influenced by OPEC plus unwinding voluntary cuts quicker than expected [9] Company Strategy and Development Direction - The company is focused on maintaining a disciplined capital allocation framework and is executing well on the integration of Marathon Oil, which is ahead of schedule [10][11] - The company aims to deliver low single-digit production growth while reducing capital spending by approximately $500 million for the full year [19][20] - The long-term value proposition is centered on a deep, durable, and diverse portfolio with decades of low-cost supply inventory [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current macro uncertainties but emphasizes a long-term focus on free cash flow growth, particularly from high-quality investments in Alaska and LNG [12][13] - The company is prepared to manage through challenging environments, with flexibility in its capital program if conditions warrant [11][12] Other Important Information - Bill Bullock announced his retirement after 39 years with the company, with Andy O'Brien set to take over as CFO [13][14] - The company has identified $1 billion in synergy captures from the Marathon integration, with ongoing efficiency improvements [72][73] Q&A Session Summary Question: Return of capital and cash flow outlook - Analyst inquired about the $10 billion capital return target amidst a softer commodity macro environment and the potential for debt to support share buybacks [24] - Management reiterated the commitment to a 45% return of capital based on cash flow from operations, with flexibility to use cash on the balance sheet if necessary [26][27] Question: Capital budget reduction details - Analyst asked for details on the drivers behind the capital budget reduction and the flexibility in the program [29] - Management explained that the reduction is due to capital efficiency improvements and plan optimization, with no material changes to production guidance [31][32] Question: Cost structure and improvement opportunities - Analyst sought insights on the current cost structure and opportunities for further improvement [36] - Management emphasized a continuous focus on cost efficiency and benchmarking against peers to maintain competitive advantage [37] Question: Balancing low-cost supply with macro conditions - Analyst questioned how the company balances low-cost supply with macro conditions while preserving inventory [40] - Management highlighted the importance of low-cost supply and the focus on maximizing returns on capital investments [41][42] Question: Breakeven clarification - Analyst asked about the impact of the capital reduction on breakeven costs [48] - Management clarified that the free cash flow breakeven is in the mid-40s, with expectations for it to decrease as capital is reduced [51][52] Question: Long cycle projects and capital allocation - Analyst inquired about the trend of capital allocation to long cycle projects [93] - Management indicated that capital is expected to ramp down as projects come online, with continued investment in base businesses [94] Question: Cash taxes and outlook - Analyst asked about the higher cash taxes in the first quarter and the outlook for the remainder of the year [97] - Management explained that the increase was due to a shift in income mix and discrete deferred tax items, with expectations for the effective tax rate to be in the high thirties [100][101]

Financial Data and Key Metrics Changes - The company generated $2.9 per share in adjusted earnings for the first quarter of 2025, with cash flow from operations (CFO) amounting to $5.5 billion, including $200 million from APLNG distributions [14][15] - Capital expenditures were reported at $3.4 billion, with a return of capital to shareholders totaling $2.5 billion, which represents 45% of CFO for the quarter [14][15] - The company ended the quarter with $7.5 billion in cash and short-term investments, plus $1 billion in long-term liquid investments [15] Business Line Data and Key Metrics Changes - Total production for the first quarter was 2,389,000 barrels of oil equivalent per day, exceeding production guidance [13] - In the Lower 48, production averaged 1,462,000 barrels of oil equivalent per day, with specific contributions from the Permian (816,000), Eagle Ford (370,000), and Bakken (212,000) [13] Market Data and Key Metrics Changes - The company noted a softer oil price environment compared to the first quarter, with OPEC plus unwinding voluntary cuts quicker than expected [5][6] - The outlook for global economic growth and oil demand has been revised lower, contributing to the current volatility in the market [5] Company Strategy and Development Direction - The company is focused on maintaining a disciplined capital allocation framework and has reduced capital spending by $500 million while keeping production guidance unchanged [8][11] - The integration of Marathon Oil is progressing ahead of schedule, with the company finding additional opportunities to enhance capital efficiency and reduce costs [8][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the current macro uncertainties but emphasized the company's strong long-term value proposition and competitive advantages [6][10] - The company is committed to returning a significant portion of cash flow to shareholders, maintaining a long-term track record of distributing 45% of annual CFO [9][10] Other Important Information - Bill Bullock, the CFO, announced his retirement after 39 years, with Andy O'Brien set to take over the role [11][12] - The company expects to see a modest use of cash on a full-year basis, with an operating working capital outflow of $800 million anticipated in the second quarter [18] Q&A Session Summary Question: Return of capital and cash flow outlook - The company is tracking towards a $10 billion return of capital for the year, despite a softer commodity macro environment [21] - Management indicated a willingness to use cash on the balance sheet if necessary to support share buybacks [22][24] Question: Capital budget reduction details - The capital budget reduction is largely driven by efficiency improvements and does not impact production guidance [27][30] - Management emphasized a measured approach to capital allocation, focusing on maximizing returns [31] Question: Cost structure and improvement opportunities - The company is continuously benchmarking operations and seeking efficiencies to maintain competitive advantage [35][36] Question: Balancing low-cost supply with macro conditions - The company remains focused on low-cost supply and is not looking to time the market with capital investments [42][45] Question: Breakeven clarification - The capital reduction will lower the breakeven point, with the current free cash flow breakeven in the mid-40s [51][52] Question: Long cycle projects and capital allocation - The company is committed to its long cycle projects and will not slow down investments in key areas like Willow and LNG [80] Question: Non-core asset sales and portfolio optimization - The company is always optimizing its portfolio and may consider non-core asset sales if cost of supply rises [105][106]

Financial Data and Key Metrics Changes - For Q4 2024, APA 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 [19][20] - 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 [21] - For the full year 2024, APA generated $841 million in free cash flow, returning 71% to shareholders [21][22] Business Line Data and Key Metrics Changes - In the Permian Basin, APA's U.S. business is now almost entirely comprised of unconventional assets, driving over 75% of current adjusted production [7][8] - The company achieved a breakeven oil price of $61 per barrel in 2024, down from Cowen's 2023 breakeven of $78 per barrel [13] - In Egypt, APA returned to normalized workover and recompletion backlogs, improving oil production profiles [9] Market Data and Key Metrics Changes - The 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 $3.4 to $3.5 range [27] - The company anticipates generating a combined net gain of $600 million for 2025 from gas trading activities [30][78] Company Strategy and Development Direction - APA's strategy includes enhancing the quality and sustainability of its portfolio in the Permian Basin and Egypt while building long-term optionality through exploration [6][18] - The company plans to run an eight-rig program in the Permian and a 12-rig program in Egypt for 2025, with a total capital budget of $2.5 billion to $2.6 billion [14][15] - Cost reduction initiatives are expected to generate at least $350 million in annualized savings by the end of 2027 [17][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cost reduction targets and emphasized the importance of a sustainable and predictable production profile [38][39] - The company aims to reduce controllable spend to drive free cash flow growth from 2025 to 2027, ahead of Suriname's first oil in 2028 [18][34] Other Important Information - APA achieved a BBB- rating from S&P, marking it as investment grade with all three rating agencies [7][22] - The company closed the sale of non-core conventional properties in the Permian Basin on December 31, 2024 [12] Q&A Session Summary Question: Concerns about share performance despite strong cash flow - Management acknowledged the concerns and highlighted the transformation of their asset base, emphasizing cost structure improvements and sustainable inventory [36][37] 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 asset base [40][41] 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 [49][50] Question: Permian productivity and guidance - Management noted improved productivity in Howard County and clarified that 2025 guidance reflects a sustainable production base with eight rigs [56][63] 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 [66][68] Question: Receivable situation in Egypt - Management reported that past due balances have remained stable, with expectations for progress in 2025 [74][75] Question: Breakdown of gas trading revenue - Management provided a breakdown of expected gas trading revenue for 2025, with significant contributions from both pipeline trading and LNG contracts [78] Question: Cost-cutting initiatives and organizational changes - Management detailed their approach to cost savings, emphasizing a structured plan to achieve targets over three years [82][86] Question: Inventory duration in the Permian - Management expressed confidence in sustaining inventory through 2029, with ongoing efforts to characterize Cowen assets [89][92]