(APA, 6.Nov.2024) — APA Corporation announced its financial and operational results for the third quarter of 2024.
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 $406mn of free cash flow to shareholders year-to-date through dividends and share buybacks.
APA reported a loss attributable to common stock of $223mn 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 $370mn, or $1.00 per diluted share. Net cash provided by operating activities was $1.3bn, and adjusted EBITDAX was $1.6bn.
“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.”
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 $275mn and returned $94mn 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 $645mn, 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 $2.5bn to $2.6bn, of which, $200mn is allocated to Suriname development activity and $100mn 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.
Conference Call
APA will host a conference call to discuss its third-quarter 2024 results at 10 a.m. Central time, 7 Nov. 2024. The conference call will be webcast from APA’s website at https://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.
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