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APA 8-K Report, Material Agreement (Jan 16, 2025)

Reports
Material Agreements·Financial Events·Exhibits & Filings
Filing Date
Filed January 16, 2025
Period End
January 15, 2025
Security
APA
In the record · 2021–202610-K510-Q188-K64

APA filed 5 annual reports (10-K), 18 quarterly reports (10-Q) and 64 current reports (8-K) between 2021 and 2026.

  1. Material agreement8-K · May ’22May ’22
  2. Leadership change8-K · Apr ’24Apr ’24
  3. Leadership change8-K · May ’26May ’26

01—Abstract

Summary

Summary of the 8-K filed January 16, 2025. Cited figures are marked; the original filing is the authoritative source.

On January 15, 2025, APA Corporation entered into two new syndicated five-year revolving credit agreements with JPMorgan Chase Bank, N.A., as Administrative Agent, replacing its existing Former USD Facility ($1.8 billiona of commitments) and Former GBP Facility (£1.5 billion of commitments), both dated April 29, 2022.

The new USD Agreement provides aggregate commitments of US$2.0 billionb, with a letter of credit subfacility of up to US$750 million (of which US$250 million is currently committed), and APA may increase commitments up to an aggregate US$2.5 billion. The new GBP Agreement provides £1.5 billion of commitments for loans and letters of credit. The filing states that the agreements are on terms substantially the same as the former facilities.

Both agreements mature January 15, 2030, with APA able to request two one-year extensions. Apache Corporation, a wholly owned subsidiary, guarantees obligations under each agreement until Apache's senior notes and debentures outstanding first fall below US$1.0 billionc. Current pricing is a Base Rate Margin of 0.30%, an Applicable Margin of 1.30%, and a facility fee of 0.20%, based on APA's Long-Term Debt Rating.

The key financial covenant requires an adjusted debt-to-capital ratio of not greater than 65%d at each fiscal quarter end. As of January 15, 2025, there were no borrowings or letters of credit outstanding under the Former USD Facility, and letters of credit of approximately £253 million originally issued under the Former GBP Facility are deemed outstanding under the GBP Agreement.

The letters of credit are available for credit support needs, including North Sea decommissioning obligations. The filing also notes that the agreements do not allow lenders to accelerate maturity based on unspecified material adverse changes, and do not impose borrowing restrictions or prepayment obligations upon a credit rating decline.

02—Key points

Key Highlights

  1. Replaced US$1.8 billion USD and £1.5 billion GBP credit facilities dated April 29, 2022 with new five-year revolving credit agreements dated January 15, 2025.
  2. New USD Agreement provides US$2.0 billion of unsecured commitments, expandable to US$2.5 billion, with a US$750 million letter of credit subfacility (US$250 million currently committed).
  3. New GBP Agreement provides £1.5 billion of unsecured commitments for loans and letters of credit.
  4. All amounts mature January 15, 2030, with two possible one-year maturity extensions requested by APA.
  5. Current pricing: Base Rate Margin 0.30%, Applicable Margin 1.30%, and facility fee 0.20%, based on APA's Long-Term Debt Rating.
  6. Financial covenant requires an adjusted debt-to-capital ratio of not greater than 65% at each fiscal quarter end.
  7. As of January 15, 2025, no borrowings or letters of credit were outstanding under the former USD facility, and approximately £253 million of letters of credit are outstanding under the GBP Agreement.

03—Questions

Frequently Asked Questions

  1. Why did APA enter into these new credit agreements?

    The filing states the credit agreements are available for general corporate purposes, and letters of credit may be used for credit support needs of APA and its subsidiaries, including North Sea decommissioning obligations. The filing does not otherwise describe the rationale for the refinancing.

  2. How do the new facilities differ from the former facilities?

    The filing states the new agreements are on terms substantially the same as the former facilities. The main stated change is the USD commitment size of US$2.0 billion, versus US$1.8 billion previously, with an accordion feature allowing increases up to US$2.5 billion.

  3. Is Apache Corporation involved in these agreements?

    Yes. Apache Corporation, a wholly owned subsidiary of APA, guarantees obligations under each Credit Agreement until the aggregate principal amount of senior notes and debentures outstanding under Apache's existing indentures first falls below US$1.0 billion. Apache may also borrow under the USD Agreement up to US$300 million outstanding at any time.

  4. Can lenders accelerate repayment if APA's credit rating is downgraded?

    The filing states the Credit Agreements do not have borrowing restrictions or prepayment obligations in the event of a decline in credit ratings. Lenders may accelerate upon nonpayment, other specified breaches, cross-defaults above stated thresholds, judgments, specified pension liabilities, or a specified change in control.

04—Continue

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