01—Abstract
Summary
Summary of the 10-Q filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
APA Corporation (filed under APA Corporation; the filing is its Form 10-Q for the quarter ended September 30, 2024) reported a third-quarter 2024 net loss attributable to common stock of $223 milliona, or $0.60 per diluted share, compared with net income of $459 million, or $1.49 per diluted share, in the third quarter of 2023.
The decline was driven by $1.1 billionb of impairments, including $793 million on North Sea oil and gas properties, a $315 million impairment of Permian Basin assets held for sale, and $3 million of North Sea inventory impairments. For the first nine months of 2024, net income attributable to common stock was $450 million, or $1.29 per diluted share, versus $1.1 billion, or $3.50 per diluted share, a year earlier. Operating cash flow strengthened, with net cash provided by operating activities of $2.6 billion for the first nine months of 2024, up from $2.1 billion, driven by higher Permian Basin volumes, production from the acquired Callon properties and working capital timing.
The April 1, 2024 all-stock acquisition of Callon Petroleum Company, valued at approximately $4.5 billionc including debt, added about 120,000 net Delaware Basin acres and 25,000 net Midland Basin acres. Total debt rose to $6.4 billion at September 30, 2024, from $5.2 billion at year-end 2023, and the company announced an agreement to sell non-core Permian Basin properties for $950 million, with closing expected in the fourth quarter of 2024.
The company also said it will cease production in the North Sea before 2030 because expected returns do not support investments required under new regulations, and it disclosed a $188 milliond asset for expected reimbursement from security tied to Gulf of Mexico decommissioning costs, against contingent liabilities of $853 million. Shareholders received a quarterly dividend of $0.25 per share, and 0.1 million shares were repurchased in the quarter, leaving authorization for 39.3 million shares.
02—Key points
Key Highlights
- Q3 2024 net loss attributable to common stock of $223 million ($0.60 per diluted share), versus net income of $459 million ($1.49 per diluted share) in Q3 2023.
- Impairments of $1.1 billion in Q3 2024, including $793 million on North Sea proved properties and $315 million on Permian Basin assets held for sale.
- Net cash provided by operating activities of $2.6 billion for the first nine months of 2024, compared with $2.1 billion a year earlier.
- Callon Petroleum acquisition completed April 1, 2024, in an all-stock transaction valued at approximately $4.5 billion including debt; APA issued about 70 million shares.
- Agreement to sell non-core Permian Basin producing properties for $950 million before customary closing adjustments, with closing expected in Q4 2024.
- Total debt of $6.4 billion at September 30, 2024, up from $5.2 billion at December 31, 2023, following the Callon refinancing and a $1.5 billion term loan borrowing.
- North Sea production to cease before 2030; Egypt and U.S. drilling continued, with an average of 9 Permian rigs in Q3 2024 and expected average of 8 for the remainder of 2024 and into 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 7, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Operating Expenses | $2.88B$1.48B | +95.1% |
| Operating Income | -$143.00M$1.06B | −113.5% |
| Interest Expense | $109.00M$89.00M | +22.5% |
| Net Income | -$223.00M$459.00M | −148.6% |
| EPS (Basic) | $-0.60$1.49 | −140.3% |
| EPS (Diluted) | $-0.60$1.49 | −140.3% |
| Shares Outstanding (Basic) | 370.00M308.00M | +20.1% |
| Shares Outstanding (Diluted) | 370.00M308.00M | +20.1% |
05—Questions
Frequently Asked Questions
Why did APA report a net loss in the third quarter of 2024?
The filing attributes the Q3 2024 net loss attributable to common stock of $223 million primarily to $1.1 billion of impairments, which included $793 million of North Sea oil and gas property impairments, a $315 million impairment of Permian Basin assets held for sale, and $3 million of North Sea inventory impairments. Lower income tax expense partially offset these charges.
How did the Callon acquisition affect APA's financial position?
The Callon acquisition, completed April 1, 2024, added about 120,000 net Delaware Basin acres and 25,000 net Midland Basin acres. Callon contributed $840 million of revenues and $192 million of net income attributable to common stockholders from the acquisition date through September 30, 2024. Callon's debt was refinanced, with APA borrowing $1.5 billion under a term loan facility, and total debt rose to $6.4 billion.
What is APA's plan for its North Sea assets?
APA determined that expected returns do not economically support the investments required under new regulations and taxes, and it will cease production at its North Sea facilities prior to 2030. Its North Sea investment program is now directed toward asset safety and integrity. The company recorded $793 million of impairments on certain North Sea proved properties, written down to an aggregate fair value of $263 million.
What is the status of the pending Permian Basin asset sale?
APA agreed to sell non-core producing Permian Basin properties for $950 million before customary closing adjustments, with estimated net production of 21,000 barrels of oil equivalent per day, about 57 percent oil. Proceeds are expected to be used primarily to reduce debt, and the transaction is expected to close in the fourth quarter of 2024. A $95 million deposit was received in the third quarter.
How is APA returning cash to shareholders?
APA paid a quarterly dividend of $0.25 per share, totaling $260 million in dividends to common stockholders for the first nine months of 2024. In the first nine months it repurchased 4.6 million shares for $146 million, and at September 30, 2024 it had remaining authorization to repurchase up to 39.3 million shares. The company states it believes returning 60 percent of cash flow over capital investment creates a good balance between near-term returns and balance sheet strengthening.
06—Continue