01—Abstract
Summary
Summary of the 8-K filed May 2, 2024. Cited figures are marked; the original filing is the authoritative source.
APA Corporation reported first-quarter 2024 results in a press release (Exhibit 99.1) dated May 1, 2024.
The company posted net income attributable to common stock of $132 milliona, or $0.44 per diluted share, versus $242 million, or $0.78 per diluted share, in the first quarter of 2023. On an adjusted basis, first-quarter earnings were $237 million, or $0.78 per diluted share. Net cash provided by operating activities was $368 million and adjusted EBITDAX was $1.24 billion.
Reported production averaged 389,000 BOE per day, and adjusted production, which excludes Egypt noncontrolling interest and tax barrels, averaged 320,000 BOE per day. The quarter's most significant development was the completion of the Callon Petroleum Company acquisition. Management increased expected annual cost synergies from the transaction by 50% to $225 millionb and revised full-year 2024 guidance, now planning $2.7 billion of upstream oil and gas capital investment.
The company expects to average approximately 10 U.S. rigs for the remainder of 2024. Management also stated that the Permian Basin is expected to represent more than 70% of total company capital expense and production for 2024, updated for the acquisition. Other items in the quarter included a $66 millionc loss on previously sold Gulf of Mexico properties, $27 million in transaction, reorganization, and separation costs, and $148 million of exploration expense, including $123 million of dry hole expense.
Free cash flow was $99 milliond, and net debt was $5.08 billion at March 31, 2024. In Alaska, the King Street #1 well found high-quality oil in two zones, while the Sockeye #1 and Voodoo #1 wells did not reach their target objectives, and the joint venture is evaluating next steps.
02—Key points
Key Highlights
- Net income attributable to common stock was $132 million, or $0.44 per diluted share, compared with $242 million, or $0.78 per diluted share, in the first quarter of 2023.
- Adjusted earnings were $237 million, or $0.78 per diluted share, after adjusting for items affecting comparability.
- Net cash provided by operating activities was $368 million and adjusted EBITDAX was $1.24 billion.
- Completed the Callon Petroleum Company acquisition and increased expected annual cost synergies by 50% to $225 million.
- Full-year 2024 upstream oil and gas capital plan is $2.7 billion, with approximately 10 U.S. rigs expected to be averaged for the remainder of the year.
- Reported production of 389,000 BOE per day; adjusted production of 320,000 BOE per day.
- Returned $176 million to shareholders in the first quarter through dividends and share buybacks; net debt was $5.08 billion at March 31, 2024.
03—Questions
Frequently Asked Questions
Why did reported earnings decline compared with the first quarter of 2023?
Net income attributable to common stock was $132 million, or $0.44 per diluted share, versus $242 million, or $0.78 per diluted share, a year earlier. The filing shows higher exploration expense ($148 million versus $52 million, including $123 million of dry hole expense), a $66 million loss on previously sold Gulf of Mexico properties, and a lower current period income tax benefit profile, among other items. Adjusted earnings were $237 million, or $0.78 per diluted share, compared with $372 million, or $1.19 per diluted share, in the prior-year quarter.
What is the significance of the Callon Petroleum acquisition?
The acquisition was completed after the quarter ended. Management said it added scale and oil leverage in the Permian Basin and increased expected annual cost synergies by 50% to $225 million. The company said U.S. oil production is expected to rise by more than 80% from fourth-quarter 2023 to estimated fourth-quarter 2024, and that the Permian is expected to represent more than 70% of total company capital expense and production for 2024.
What are APA's revised 2024 capital and activity plans?
Following the Callon acquisition, APA is providing revised full-year 2024 guidance and plans to invest $2.7 billion in upstream oil and gas capital. The company expects to average approximately 10 rigs in the U.S. for the remainder of the year as it manages and high grades the combined rig fleet.
How did the Alaska exploration program turn out?
The King Street #1 well discovered high-quality oil in two zones and confirmed a working petroleum system. The Sockeye #1 and Voodoo #1 wells did not reach their target objectives due to delays during the drilling season. The joint venture is analyzing the data and evaluating next steps.
04—Continue