01—Abstract
Summary
Summary of the 10-K filed February 22, 2022. Cited figures are marked; the original filing is the authoritative source.
APA Corporation (filed under Apache Corporation's successor structure; the filing describes APA as an independent energy company that explores for, develops, and produces natural gas, crude oil, and NGLs) reported 2021 net income attributable to common stock of $973 milliona, or $2.59 per diluted share, compared with a net loss of $4.9 billion, or $12.86 per diluted share, in 2020.
Results were driven by much stronger commodity prices: average realized crude oil prices rose 74 percent to $68.97b per barrel, and natural gas realizations rose 118 percent to $3.99 per Mcf. The company generated $3.5 billion of operating cash flow, ended the year with $302 million in cash, and paid back nearly $1.4 billion of debt. Total proved reserves were 913 MMboe at year-end, 64 percent liquids, and the company recorded a $1.2 billion contingent liability for decommissioning sold Gulf of Mexico properties, with a $446 million loss in the third quarter.
The company introduced a capital return framework, targeting return of 60 percent of cash flow over capital investment. Quarterly dividends were raised from $0.025 to $0.0625c and then to $0.125 per share, and the board authorized a further 40 million share repurchase, of which 31.2 million shares were bought in the fourth quarter for $847 million. Management plans upstream capital of approximately $1.6 billion for 2022, with a 15 rig drilling program in Egypt and continued exploration offshore Suriname.
The planned sale of Delaware Basin mineral rights for about $805 milliond and the pending combination of Altus Midstream with BCP, which would reduce APA's ownership in Altus from about 79 percent to about 20 percent, are also significant near-term items. The company's cost and balance-sheet picture remains mixed.
Total equity was a deficit of $717 million at year-end, total debt was $7.5 billion, and the company recorded $208 million of impairments in 2021, compared with $4.5 billion in 2020. Egypt's modernized production-sharing contract, ratified in December 2021, consolidates 98 percent of gross acreage and is expected to support 2022 production growth, while the company is exposed to Gulf of Mexico decommissioning obligations and ongoing litigation.
02—Key points
Key Highlights
- Net income attributable to common stock of $973 million ($2.59 per diluted share) in 2021, versus a net loss of $4.9 billion ($12.86 per diluted share) in 2020.
- Operating cash flow of $3.5 billion in 2021, up $2.1 billion from 2020, with year-end cash of $302 million after paying back nearly $1.4 billion of debt.
- Average realized crude oil price rose 74 percent to $68.97 per barrel; natural gas realizations rose 118 percent to $3.99 per Mcf.
- Capital return framework returning 60 percent of cash flow over capital investment; quarterly dividend raised to $0.125 per share and 31.2 million shares repurchased for $847 million in Q4 2021.
- Year-end proved reserves of 913 MMboe, 64 percent liquids; 2021 upward revisions of 107 MMboe, including 57 MMboe from the modernized Egypt PSC.
- $1.2 billion contingent liability recorded for decommissioning sold Gulf of Mexico properties, with a $446 million loss recognized in Q3 2021.
- Planned 2022 upstream capital of about $1.6 billion, and pending Altus Midstream/BCP combination reducing APA's Altus stake from about 79 percent to about 20 percent.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 22, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Operating Expenses | $6.04B$9.15B | −34.0% |
| Operating Income | $2.86B-$4.10B | +169.7% |
| Interest Expense | $419.00M$438.00M | −4.3% |
| Net Income | $973.00M-$4.86B | +120.0% |
| EPS (Basic) | $2.60$-12.86 | +120.2% |
| EPS (Diluted) | $2.59$-12.86 | +120.1% |
| Shares Outstanding (Basic) | 374.00M378.00M | −1.1% |
| Shares Outstanding (Diluted) | 375.00M378.00M | −0.8% |
05—Questions
Frequently Asked Questions
How did APA's financial performance change from 2020 to 2021?
APA reported 2021 net income attributable to common stock of $973 million, or $2.59 per diluted share, compared with a net loss of $4.9 billion, or $12.86 per diluted share, in 2020. The improvement reflected significantly higher commodity prices, and 2020 included $4.5 billion of impairments versus $208 million in 2021.
What is APA's capital return policy?
APA implemented a capital return framework in 2021, stating it believes returning 60 percent of cash flow over capital investment balances near-term shareholder returns with balance sheet strengthening. The quarterly dividend rose from $0.025 to $0.0625 in Q3 2021 and to $0.125 per share in Q4 2021, and the company repurchased 31.2 million shares for $847 million in Q4 2021.
What are the main risks tied to the Gulf of Mexico decommissioning obligations?
APA recorded a $1.2 billion contingent liability for decommissioning sold Gulf of Mexico properties, after Fieldwood Energy's bankruptcy and GOM Shelf's inability to fund decommissioning. The filing gives a potential liability range of $1.2 billion to $1.4 billion on an undiscounted basis, and says that if reimbursement sources are insufficient, APA may have to use available cash to fund the deficit.
What is the outlook for APA's 2022 operations?
APA plans upstream capital of approximately $1.6 billion in 2022, including about $200 million for exploration and appraisal, primarily in Suriname. It expects 2022 worldwide production similar to 2021 after adjusting for divestments, with Egypt gross production rising through the year and U.S. production declining moderately.
06—Continue