How did APA perform in the second quarter of 2024?

APA reported net income attributable to common stock of $541 million, or $1.46 per diluted share, and adjusted earnings of $434 million, or $1.17 per diluted share. Both were higher than the second quarter of 2023, when net income attributable to common stock was $381 million ($1.23 per diluted share) and adjusted earnings were $264 million ($0.85 per diluted share).

How much debt does APA carry after the Callon acquisition?

Total debt was $6,743 million at June 30, 2024, and net debt was $6,583 million, compared with net debt of $5,101 million at December 31, 2023. Long-term debt increased from $5,186 million to $6,741 million over the same period, reflecting a $1.5 billion term loan facility, partly offset by payments on the Callon credit agreement and fixed-rate debt.

What drove the increase in U.S. production?

The filing states that U.S. oil production of 139,500 barrels per day was up 67% from the first quarter of 2024, driven by the addition of Callon. The company also noted significant natural gas and NGL curtailments in the Permian Basin in response to pricing extremes, although total U.S. volumes on a BOE basis were in line with guidance.

What are APA's capital and free cash flow expectations?

Second-quarter upstream capital investment was $839 million, below guidance. For the rest of 2024, APA plans to average nine to 10 rigs in the Permian Basin and 11 rigs in Egypt, and expects full-year capital at or below its $2.7 billion guidance. Management said it expects a meaningful increase in free cash flow in the second half of the year.

What are the key growth catalysts beyond the Permian?

APA and TotalEnergies remain on track for a final investment decision on Suriname Block 58 by year-end 2024, with first oil in 2028 from a 200,000 barrel per day development project. In Alaska, the company's lease position was expanded by 51,000 gross acres to 326,000 gross acres, and it is planning more exploration following a high-quality oil discovery at King Street #1.

APA 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed August 1, 2024. Cited figures are marked; the original filing is the authoritative source.

APA Corporation reported second-quarter 2024 results in a press release dated July 31, 2024, furnished as Exhibit 99.1 to this Form 8-K.

Net income attributable to common stock was $541 million^a, or $1.46 per diluted share, versus $381 million, or $1.23 per diluted share, in the second quarter of 2023. Adjusted earnings were $434 million, or $1.17 per diluted share, compared with $264 million, or $0.85 per diluted share, a year earlier. Net cash provided by operating activities was $877 million, and adjusted EBITDAX was $1.58 billion ($1,576 million).

Reported production was 473,000 BOE per day, and adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 405,000 BOE per day. U.S. oil production was 139,500 barrels per day, up 67% from the first quarter of 2024, driven by the addition of Callon. Free cash flow was $103 million^b for the quarter, and the company returned $135 million to shareholders through dividends and share buybacks.

Net debt rose to $6.58 billion^c at June 30, 2024, from $5.10 billion at December 31, 2023, after the Callon acquisition and related financing, and the term loan facility proceeds of $1.5 billion were used alongside payments on the Callon credit agreement and fixed-rate debt. Closed non-core asset sales generated approximately $660 million in net proceeds. Management raised its full-year estimate of net gain on third-party oil and gas purchases and sales to $350 million, and said Callon integration is ahead of schedule with annual cost synergies now estimated at $250 million, up $100 million from the initial estimate.

The company expects full-year 2024 capital at or below its $2.7 billion^d guidance, with nine to 10 rigs in the Permian Basin and 11 rigs in Egypt for the rest of the year. APA and TotalEnergies remain on track for a final investment decision on Suriname Block 58 by year-end 2024, with first oil targeted for 2028.

02—Key points

Key Highlights

Net income attributable to common stock of $541 million ($1.46 per diluted share), compared with $381 million ($1.23 per diluted share) in the second quarter of 2023.
Adjusted earnings of $434 million ($1.17 per diluted share), compared with $264 million ($0.85 per diluted share) in the second quarter of 2023.
Reported production of 473,000 BOE per day; adjusted production of 405,000 BOE per day, with U.S. oil production of 139,500 barrels per day, up 67% from the first quarter of 2024.
Net cash provided by operating activities of $877 million; free cash flow of $103 million; adjusted EBITDAX of $1,576 million.
Closed non-core asset sales of approximately $660 million in net proceeds; $135 million returned to shareholders through dividends and share buybacks in the quarter.
Callon integration ahead of schedule, with annual cost synergies estimate raised to $250 million, up $100 million from the initial estimate.
Full-year 2024 capital expected at or below the $2.7 billion guidance; Suriname Block 58 FID on track for year-end 2024 with first oil in 2028.

03—Questions

Frequently Asked Questions

How did APA perform in the second quarter of 2024?
APA reported net income attributable to common stock of $541 million, or $1.46 per diluted share, and adjusted earnings of $434 million, or $1.17 per diluted share. Both were higher than the second quarter of 2023, when net income attributable to common stock was $381 million ($1.23 per diluted share) and adjusted earnings were $264 million ($0.85 per diluted share).
How much debt does APA carry after the Callon acquisition?
Total debt was $6,743 million at June 30, 2024, and net debt was $6,583 million, compared with net debt of $5,101 million at December 31, 2023. Long-term debt increased from $5,186 million to $6,741 million over the same period, reflecting a $1.5 billion term loan facility, partly offset by payments on the Callon credit agreement and fixed-rate debt.
What drove the increase in U.S. production?
The filing states that U.S. oil production of 139,500 barrels per day was up 67% from the first quarter of 2024, driven by the addition of Callon. The company also noted significant natural gas and NGL curtailments in the Permian Basin in response to pricing extremes, although total U.S. volumes on a BOE basis were in line with guidance.
What are APA's capital and free cash flow expectations?
Second-quarter upstream capital investment was $839 million, below guidance. For the rest of 2024, APA plans to average nine to 10 rigs in the Permian Basin and 11 rigs in Egypt, and expects full-year capital at or below its $2.7 billion guidance. Management said it expects a meaningful increase in free cash flow in the second half of the year.
What are the key growth catalysts beyond the Permian?
APA and TotalEnergies remain on track for a final investment decision on Suriname Block 58 by year-end 2024, with first oil in 2028 from a 200,000 barrel per day development project. In Alaska, the company's lease position was expanded by 51,000 gross acres to 326,000 gross acres, and it is planning more exploration following a high-quality oil discovery at King Street #1.

04—Continue

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