First-Quarter 2024
Financial and Operational Supplement
May 1, 2024
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, price estimates, typical well results and well profiles, type curve, and production and operating expense guidance included in this earnings supplement. Any matters that are not historical facts are forward looking and, accordingly, involve estimates, assumptions, risks, and uncertainties, including, without limitation, risks, uncertainties, and other factors discussed in our most recently filed Annual Report on Form 10-K, recently filed Quarterly Reports on Form 10-Q, recently filed Current Reports on Form 8-K available on our website, www.apacorp.com, and in our other public filings and press releases. These forward-looking statements are based on APA Corporation's (APA) current expectations, estimates, and projections about the company, its industry, its management's beliefs, and certain assumptions made by management. No assurance can be given that such expectations, estimates, or projections will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this earnings supplement, including the company's ability to meet its production targets, successfully manage its capital expenditures and to complete, test, and produce the wells and prospects identified in this earnings supplement, to successfully plan, secure necessary government approvals, finance, build, and operate the necessary infrastructure, and to achieve its production and budget expectations on its projects.
Whenever possible, these "forward-looking statements" are identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "continues," "could," "estimates," "expects," "goals," "guidance," "may," "might," "outlook," "possible," "potential," "projects," "prospects," "should," "would," "will," and similar phrases, but the absence of these words does not mean that a statement is not forward-looking. Because such statements involve risks and uncertainties, the company's actual results and performance may differ materially from the results expressed or implied by such forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Unless legally required, we assume no duty to update these statements as of any future date. However, you should review carefully reports and documents that the company files periodically with the Securities and Exchange Commission.
Cautionary Note to Investors: The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. We may use certain terms in this earnings supplement, such as "resource," "resource potential," "net resource potential," "potential resource," "resource base," "identified resources," "potential net recoverable," "potential reserves," "unbooked resources," "economic resources," "net resources," "undeveloped resource," "net risked resources," "inventory," "upside," and other similar terms that the SEC guidelines strictly prohibit us from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality, and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in APA's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 available at www.apacorp.comor by writing at: 2000 Post Oak Blvd., Suite 100, Houston, Texas 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov.
Certain information may be provided in this earnings supplement that includes financial measurements that are not required by, or presented in accordance with, generally accepted accounting principles (GAAP). These non-GAAP measures should not be considered as alternatives to GAAP measures, such as net income, total debt or net cash provided by operating activities, and may be calculated differently from, and therefore may not be comparable to, similarly titled measures used at other companies. For a reconciliation to the most directly comparable GAAP financial measures, please refer to APA's first quarter 2024 earnings release at www.apacorp.comand "Non-GAAP Reconciliations" of this earnings supplement.
None of the information contained in this document has been audited by any independent auditor. This earnings supplement is prepared as a convenience for securities analysts and investors and may be useful as a reference tool. We may elect to modify the format or discontinue publication at any time, without notice to securities analysts or investors.
A P A C O R P O R A T I O N
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1Q 2024 Key Metrics
1Q 2024 | |
Reported Production | 389 Mboe/d |
Adjusted Production(1) | 320 Mboe/d |
Cost Incurred in Oil and Gas Property | $717 Million |
Upstream Capital Investment(2) | $568 Million |
Net Cash Provided by Operating Activities | $368 Million |
Adjusted EBITDAX(2) | $1,235 Million |
Free Cash Flow(2) | $99 Million |
Diluted Earnings Per Share | $0.44 |
Adjusted Earnings Per Share(2) | $0.78 |
- Excludes production attributable to Egypt tax barrels and noncontrolling interest.
- For a reconciliation to the most directly comparable GAAP financial measure, please refer to the Non-GAAP Reconciliations. Please refer to the glossary of referenced terms for definitions of Free Cash Flow and Upstream Capital Investment.
A P A C O R P O R A T I O N 3
APA Strategic Framework
Remain | Build and | Maintain | Deliver Top |
Committed to | Grow a High- | Financial | Operational |
Oil and Gas | Quality Portfolio | Discipline | Performance |
Oil and gas production | APA seeks a diverse | APA manages costs, | Across safety, |
is APA's core | and balanced portfolio | protects the balance | execution, |
competency and will | with scale | sheet and returns | environmental |
drive best returns for | cash to shareholders | responsibility and risk | |
shareholders | management | ||
A P A C O R P O R A T I O N
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Recent Highlights
Continued Permian strength drove | Returned $176 Million to shareholders in |
U.S. oil volumes above guidance | 1Q24 through dividends and share buybacks |
Adjusted production(1)(2) of 320 MBOE/D | Repurchased $100 Million of stock at an |
Adjusted oil production(1)(2) of 156 MBO/D | average price of $33.27 per share in 1Q24 |
Closed acquisition of Callon Petroleum | New development & exploration program |
on April 1, 2024 | progressing across the portfolio |
Transaction enhances Permian oil leverage | Suriname: Targeting FID by YE 2024 |
Raising cost synergy estimate to $225MM | Alaska: Oil discovered at King Street #1 |
- For a reconciliation to the most directly comparable GAAP financial measure, please refer to the Non-GAAP Reconciliations. Please refer to the glossary of referenced terms for definitions of Free Cash Flow and Upstream Capital Investment.
- Excludes production attributable to tax barrels and noncontrolling interest.
A P A C O R P O R A T I O N
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Callon Integration and Guidance
A P A C O R P O R A T I O N
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Callon Acquisition Enhances Permian Oil Leverage
First APA planned, drilled, and completed wells on Callon legacy acreage expected to be placed on production in 4Q24
4Q23 APA | 4Q24 | % | |
Standalone | Estimate | Change | |
U.S. Oil Production (Mbo/d) | 84 | 152 | 81% |
Permian Rig Count | 6 | ~10 | 67% |
Net Permian Unconventional Acres | 322,000 | 467,000 | 45% |
APA Permian % of
Total Upstream Capex
73% | |
58% | |
FY23 Actual | FY24 Estimate |
APA Permian % of
Total Adjusted BOE Production
73% | |
60% | |
2Q23 Actual | 2Q24 Estimate |
A P A C O R P O R A T I O N 7 |
Increasing Callon Cost Synergy Estimates by 50%
Estimated Annual Run-Rate Savings
Initial Estimate | Updated Estimate | Commentary / Timing | ||
(Jan-2024) | (May-2024) | |||
Overhead | ~$55 million | ~$70 million | - Additional savings identified post-close | |
- Expect to realize ~75% of run-rate savings by the end of 2Q24 | ||||
Cost of | ~$40 million | ~$40 million | - Immediately realized 25% on initial debt refinancing | |
Capital | - Fully realized when the debt is termed out or paid off | |||
Operational | - High-grade service providers; leverage economies of scale | |||
~$55 million | ~$115 million | - Eliminate extra casing strings and reduce drilling days | ||
(LOE+DC&F) | ||||
- Surface economies such as gas lift utilization and facility design | ||||
Total | ~$150 million | ~$225 million | - Plan to achieve vast majority of synergy run-rate by year-end 2024 | |
Capital efficiency uplift to provide significant | ||||
upside beyond cost synergies in 2025+ |
A P A C O R P O R A T I O N
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Guidance
FY 2024 guidance reflects APA standalone for 1Q24; includes Callon for 2Q24-4Q24
Production (Mboe/d)
United States…………………………………………………………….
Egypt (Reported)(1)…………………………………………………….
North Sea………………………………………………………………..
Total Reported Production(1)…………………………………
Less: Egypt Tax Barrels(1)…………………………...
Less: Egypt Noncontrolling Interest(1)………………
Total Adjusted Production(1)………………………………….
Total Adjusted Oil Production (Mbo/d)(1)…………………….
United States Oil Production (Mbo/d)…………………......
Upstream Capital Investment ($ in millions)(2)…………....................
Upstream Lease Operating Expense ($ in millions)……………………..
General & Administrative Expense ($ in millions)………………….........
Gathering, Processing & Transmission Expense ($ in millions)….........
Net Gain (Loss) on Oil and Gas Purchases and Sales ($ in millions)(1)
North Sea Current Tax Expense ($ in millions)(1)…………....................
2Q 2024 | FY 2024 | |
303 | 293 | |
128 | 130 | |
34-36 | 35-37 | |
465-467 | 458-460 | |
35 | 34 | |
31 | 32 | |
399-401 | 392-394 | |
203 | 198 | |
137 | 130 | |
$890 | $2,700 | |
$460 | $1,675 | |
$125 | $435 | |
$120 | $450 | |
$100 | $230 | |
$85 | $365 | |
Commentary
Reflects curtailments of ~50 MMcf/d of gas & ~5 mb/d of NGL in 2Q24
Reduction of full-year guidance due to PSC impact of higher oil strip
Expect 4Q24 total adjusted oil production to average ~222 Mbo/d
Estimated run-rate of $110MM per quarter by year-end 2024
(1) | Guidance based off 4/25/2024 strip pricing assumptions ($80.60 WTI; $2.38 Henry Hub). | A P A C O R P O R A T I O N |
(2) | Refer to glossary of referenced terms for definition of Upstream Capital Investment. | |
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1Q 2024 Asset Update
A P A C O R P O R A T I O N
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APA Corporation published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 May 2024 20:08:07 UTC.