8-K
APA Corp false 0001841666 0001841666 2024-05-01 2024-05-01

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 1, 2024

 

 

APA CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-40144   86-1430562

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

2000 Post Oak Boulevard, Suite 100

Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (713) 296-6000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.625 par value   APA   Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

 

Item 2.02.

Results of Operations and Financial Condition.

On May 1, 2024, APA Corporation issued a press release announcing financial and operating results for the fiscal quarter ended March 31, 2024. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit
No.
   Description
99.1    Press Release of APA Corporation dated May 1, 2024.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    APA CORPORATION
Date: May 2, 2024   By:  

/s/ Rebecca A. Hoyt

        Rebecca A. Hoyt
        Senior Vice President, Chief Accounting Officer, and Controller
        (Principal Accounting Officer)
EX-99.1

Exhibit 99.1

 

LOGO    NEWS RELEASE   

APA Corporation Announces First-Quarter 2024

Financial and Operational Results

Key Takeaways

 

   

Reported production of 389,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 320,000 BOE per day;

 

   

Generated net cash from operating activities of $368 million, adjusted EBITDAX of $1.24 billion;

 

   

Returned $176 million to shareholders in the first quarter through dividends and share buybacks;

 

   

Continued Permian strength drove U.S. oil volumes above guidance, marking the fifth consecutive quarter of meeting or exceeding guidance;

 

   

Completed acquisition of Callon Petroleum Company and increased expected annual cost synergies by 50% to $225 million; increases APA’s U.S. oil production by more than 80% from fourth-quarter 2023 to estimated fourth-quarter 2024;

 

   

Updated for the acquisition, Permian expected to represent more than 70% of total company capital expense and production for 2024; and

 

   

Discovered high-quality oil in two zones at King Street #1 well in joint-venture leasehold in Alaska.

HOUSTON, May 1, 2024 – APA Corporation (Nasdaq: APA) today announced its financial and operational results for the first quarter of 2024.

APA reported net income attributable to common stock of $132 million, or $0.44 per diluted share. When adjusted for items that impact the comparability of results, APA’s 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.

“Our drilling programs in the U.S. and Egypt performed well during the quarter,” said John J. Christmann IV, APA’s CEO. “In the Permian Basin, where we are consistently delivering excellent results, we added scale and oil leverage with the recently closed Callon Petroleum Company acquisition. We are currently focused on integrating the Callon assets and have identified compelling opportunities to generate value across the acquired asset base through changes in planning and well design, drilling and completions, and many aspects of daily operations. Accordingly, we have increased our expected annual cost synergies from the transaction by 50% to $225 million.”

 

1


APA CORPORATION ANNOUNCES FIRST-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 2 of 5

 

First-Quarter summary

First-quarter reported production was 389,000 BOE per day and adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 320,000 BOE per day. APA’s first-quarter upstream capital investment and lease operating expense were better than expected primarily due to the timing of planned facility, leasehold and exploration spend.

Alaska update

Exploration efforts in Alaska resulted in the confirmation of a working petroleum system and a high-quality oil discovery at King Street #1. The other two wells, Sockeye #1 and Voodoo #1, did not reach their target objectives during the drilling season due to a number of delays. The joint venture is currently analyzing the data and evaluating next steps.

2024 capital and activity update

Following the completion of the Callon acquisition, APA is providing revised full-year 2024 guidance. In 2024, APA plans to invest $2.7 billion in upstream oil and gas capital. The company expects to average approximately 10 rigs for the remainder of this year in the U.S. as it actively manages and high grades the newly combined rig fleet.

“In the month since we closed the Callon acquisition, we have made significant progress in the integration process,” Christmann said. “We believe the most compelling opportunities for value from the acquisition are in future capital efficiencies and the impact of the company’s increased oil exposure.”

Conference call

APA will host a conference call to discuss its first-quarter 2024 results at 10 a.m. Central time, Thursday, May 2. The conference call will be webcast from APA’s website at www.apacorp.com and investor.apacorp.com. Following the conference call, a replay will be available for one year on the “Investors” page of the company’s website.


APA CORPORATION ANNOUNCES FIRST-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 3 of 5

 

About APA

APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt and the United Kingdom and that explore for oil and natural gas offshore Suriname and elsewhere. APA posts announcements, operational updates, investor information and press releases on its website, www.apacorp.com.

Additional information

Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. APA’s quarterly supplement is available at http://www.apacorp.com/financialdata.

Non-GAAP financial measures

APA’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “guidance,” “may,” “might,” “outlook,” “possibly,”


APA CORPORATION ANNOUNCES FIRST-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 4 of 5

 

“potential,” “projects,” “prospects,” “should,” “will,” “would,” and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations, and objectives for operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See “Risk Factors” in APA’s Form 10-K for the year ended December 31, 2023, and in our quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. APA and its subsidiaries undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.

Cautionary note to investors

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC’s definitions for such terms. APA may use certain terms in this news release, such as “resources,” “potential resources,” “resource potential,” “estimated net reserves,” “recoverable reserves,” and other similar terms that the SEC guidelines strictly prohibit APA from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality, and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in APA’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2023 available from APA at www.apacorp.com or by writing APA at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.


APA CORPORATION ANNOUNCES FIRST-QUARTER 2024

FINANCIAL AND OPERATIONAL RESULTS — PAGE 5 of 5

 

Contacts

Investor: (281) 302-2286 Gary Clark

Media:   (713) 296-7276 Alexandra Franceschi

Website:  www.apacorp.com

Click here for the full release with quarterly financial statements.

-end-


APA CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

     For the Quarter Ended
March 31,
 
     2024     2023  

REVENUES AND OTHER:

    

Oil, natural gas, and natural gas liquids production revenues

    

Oil revenues

   $ 1,432     $ 1,397  

Natural gas revenues

     176       242  

Natural gas liquids revenues

     140       130  
  

 

 

   

 

 

 
     1,748       1,769  

Purchased oil and gas sales

     203       239  
  

 

 

   

 

 

 

Total revenues

     1,951       2,008  

Derivative instrument gain (loss), net

     (4     53  

Gain on divestitures, net

     7       1  

Loss on previously sold Gulf of Mexico properties

     (66     —   

Other, net

     15       (32
  

 

 

   

 

 

 
     1,903       2,030  
  

 

 

   

 

 

 

OPERATING EXPENSES:

    

Lease operating expenses

     338       321  

Gathering, processing, and transmission

     84       78  

Purchased oil and gas costs

     163       216  

Taxes other than income

     57       52  

Exploration

     148       52  

General and administrative

     93       65  

Transaction, reorganization, and separation

     27       4  

Depreciation, depletion, and amortization:

    

Oil and gas property and equipment

     419       325  

Other assets

     11       7  

Asset retirement obligation accretion

     40       28  

Financing costs, net

     76       72  
  

 

 

   

 

 

 
     1,456       1,220  
  

 

 

   

 

 

 

NET INCOME BEFORE INCOME TAXES

     447       810  

Current income tax provision

     300       346  

Deferred income tax provision (benefit)

     (65     138  
  

 

 

   

 

 

 

NET INCOME INCLUDING NONCONTROLLING INTERESTS

     212       326  

Net income attributable to noncontrolling interest - Egypt

     80       84  
  

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON STOCK

   $ 132     $ 242  
  

 

 

   

 

 

 

NET INCOME PER COMMON SHARE:

    

Basic

   $ 0.44     $ 0.78  

Diluted

   $ 0.44     $ 0.78  

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

    

Basic

     302       311  

Diluted

     302       312  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.25     $ 0.25  

 

Page 6


APA CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change  
     March 31,
2024
     December 31,
2023
     March 31,
2023
     1Q24 to
4Q23
    1Q24 to
1Q23
 

OIL VOLUME - Barrels per day

             

United States

     83,520        83,909        71,888        0     16

Egypt (1, 2)

     86,768        92,365        87,795        -6     -1

North Sea

     29,795        30,748        37,502        -3     -21
  

 

 

    

 

 

    

 

 

      

International (1)

     116,563        123,113        125,297        -5     -7
  

 

 

    

 

 

    

 

 

      

Total (1)

     200,083        207,022        197,185        -3     1
  

 

 

    

 

 

    

 

 

      

NATURAL GAS VOLUME - Mcf per day

             

United States

     443,737        462,498        441,527        -4     1

Egypt (1, 2)

     290,227        309,814        356,350        -6     -19

North Sea

     52,605        58,054        40,360        -9     30
  

 

 

    

 

 

    

 

 

      

International (1)

     342,832        367,868        396,710        -7     -14
  

 

 

    

 

 

    

 

 

      

Total (1)

     786,569        830,366        838,237        -5     -6
  

 

 

    

 

 

    

 

 

      

NGL VOLUME - Barrels per day

             

United States

     56,574        67,679        56,103        -16     1

North Sea

     1,405        1,335        1,255        5     12
  

 

 

    

 

 

    

 

 

      

Total (1)

     57,979        69,014        57,358        -16     1
  

 

 

    

 

 

    

 

 

      

BOE per day

             

United States

     214,050        228,671        201,580        -6     6

Egypt (1, 2)

     135,140        144,001        147,186        -6     -8

North Sea

     39,967        41,758        45,483        -4     -12
  

 

 

    

 

 

    

 

 

      

International (1)

     175,107        185,759        192,669        -6     -9
  

 

 

    

 

 

    

 

 

      

Total (1)

     389,157        414,430        394,249        -6     -1
  

 

 

    

 

 

    

 

 

      

Total excluding noncontrolling interests

     344,078        366,352        345,138        -6     0

(1) Includes net production volumes attributed to our noncontrolling partner in Egypt below:

 

    

Oil (b/d)

     28,943        30,837        29,294       

Gas (Mcf/d)

     96,814        103,443        118,903       

NGL (b/d)

     —         —         —        

BOE per day

     45,079        48,078        49,111        -6     -8

(2) Egypt Gross Production

             

Oil (b/d)

     137,972        141,953        140,764       

Gas (Mcf/d)

     457,248        466,403        545,049       

NGL (b/d)

     —         —         —        

BOE per day

     214,180        219,687        231,606        -3     -8

 

Page 7


APA CORPORATION

ADJUSTED PRODUCTION INFORMATION

Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) noncontrolling interest in Egypt and 2) Egypt tax barrels. Management uses adjusted production to evaluate the company’s operational trends and performance and believes it is useful to investors and other third parties.

 

     For the Quarter Ended      % Change  
     March 31,
2024
     December 31,
2023
     March 31,
2023
     1Q24 to
4Q23
    1Q24 to
1Q23
 

OIL VOLUME - Barrels per day

             

United States

     83,520        83,909        71,888        0     16

Egypt

     42,504        45,204        42,553        -6     0

North Sea

     29,795        30,748        37,502        -3     -21
  

 

 

    

 

 

    

 

 

      

International

     72,299        75,952        80,055        -5     -10
  

 

 

    

 

 

    

 

 

      

Total

     155,819        159,861        151,943        -3     3
  

 

 

    

 

 

    

 

 

      

NATURAL GAS VOLUME - Mcf per day

             

United States

     443,737        462,498        441,527        -4     1

Egypt

     141,148        150,212        171,952        -6     -18

North Sea

     52,605        58,054        40,360        -9     30
  

 

 

    

 

 

    

 

 

      

International

     193,753        208,266        212,312        -7     -9
  

 

 

    

 

 

    

 

 

      

Total

     637,490        670,764        653,839        -5     -3
  

 

 

    

 

 

    

 

 

      

NGL VOLUME - Barrels per day

             

United States

     56,574        67,679        56,103        -16     1

North Sea

     1,405        1,335        1,255        5     12
  

 

 

    

 

 

    

 

 

      

Total

     57,979        69,014        57,358        -16     1
  

 

 

    

 

 

    

 

 

      

BOE per day

             

United States

     214,050        228,671        201,580        -6     6

Egypt

     66,029        70,239        71,211        -6     -7

North Sea

     39,967        41,758        45,483        -4     -12
  

 

 

    

 

 

    

 

 

      

International

     105,996        111,997        116,694        -5     -9
  

 

 

    

 

 

    

 

 

      

Total

     320,046        340,668        318,274        -6     1
  

 

 

    

 

 

    

 

 

      

 

Page 8


APA CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended  
     March 31,
2024
     December 31,
2023
     March 31,
2023
 

AVERAGE OIL PRICE PER BARREL

        

United States

   $ 77.37      $ 79.04      $ 75.17  

Egypt

     83.18        83.67        79.58  

North Sea

     82.81        80.70        81.57  

International

     83.10        82.98        80.19  

Total

     80.65        81.36        78.37  

AVERAGE NATURAL GAS PRICE PER MCF

        

United States

   $ 1.42      $ 1.62      $ 2.24  

Egypt

     2.93        2.89        2.89  

North Sea

     9.23        13.46        17.58  

International

     3.85        4.56        4.32  

Total

     2.47        2.92        3.22  

AVERAGE NGL PRICE PER BARREL

        

United States

   $ 25.38      $ 19.82      $ 23.79  

North Sea

     49.37        48.16        56.92  

Total

     26.20        20.70        24.84  

 

Page 9


APA CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

 

     For the Quarter Ended
March 31,
 
       2024          2023    

Unproved leasehold impairments

   $ 10      $ 5  

Dry hole expense

     123        30  

Geological and geophysical expense

     1        1  

Exploration overhead and other

     14        16  
  

 

 

    

 

 

 
   $ 148      $ 52  
  

 

 

    

 

 

 

SUMMARY CASH FLOW INFORMATION

 

     For the Quarter Ended
March 31,
 
       2024         2023    

Net cash provided by operating activities

   $ 368     $ 335  
  

 

 

   

 

 

 

Additions to upstream oil and gas property

     (467     (543

Leasehold and property acquisitions

     (63     (6

Proceeds from asset divestitures

     27       21  

Proceeds from sale of Kinetik shares

     428       —   

Other, net

     (13     (4
  

 

 

   

 

 

 

Net cash used in investing activities

   $ (88   $ (532
  

 

 

   

 

 

 

Proceeds from (payments on) commercial paper and revolving credit facilities, net

     (2     417  

Payments on Apache fixed-rate debt

     —        (65

Distributions to noncontrolling interest

     (70     (17

Treasury stock activity, net

     (101     (142

Dividends paid to APA common stockholders

     (76     (78

Other, net

     (16     (9
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

   $ (265   $ 106  
  

 

 

   

 

 

 

SUMMARY BALANCE SHEET INFORMATION

 

     March 31,
2024
     December 31,
2023
 

Cash and cash equivalents

   $ 102      $ 87  

Other current assets

     2,404        2,375  

Property and equipment, net

     10,143        10,038  

Decommissioning security for sold Gulf of Mexico properties

     21        21  

Other assets

     2,282        2,723  
  

 

 

    

 

 

 

Total assets

   $ 14,952      $ 15,244  
  

 

 

    

 

 

 

Current debt

   $ 2      $ 2  

Current liabilities

     2,150        2,402  

Long-term debt

     5,178        5,186  

Decommissioning contingency for sold Gulf of Mexico properties

     807        764  

Deferred credits and other noncurrent liabilities

     3,162        3,199  

APA shareholders’ equity

     2,607        2,655  

Noncontrolling interest—Egypt

     1,046        1,036  
  

 

 

    

 

 

 

Total Liabilities and equity

   $ 14,952      $ 15,244  
  

 

 

    

 

 

 

Common shares outstanding at end of period

     301        304  

 

Page 10


APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of Costs incurred to Upstream capital investment

Management believes the presentation of upstream capital investments is useful for investors to assess APA’s expenditures related to our upstream capital activity. We define capital investments as costs incurred for oil and gas activities, adjusted to exclude property acquisitions, asset retirement obligation revisions and liabilities incurred, capitalized interest, and certain exploration expenses, while including amounts paid during the period for abandonment and decommissioning expenditures. Upstream capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of APA’s cash expenditures related to upstream capital activity and is consistent with how we plan our capital budget.

 

     For the Quarter Ended
March 31,
 
     2024     2023  

Costs incurred in oil and gas property:

    

Asset and leasehold acquisitions

    

Proved

   $ 56     $ 1  

Unproved

     7       6  

Exploration and development

     654       566  
  

 

 

   

 

 

 

Total Costs incurred in oil and gas property

   $ 717     $ 573  
  

 

 

   

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

    

Total Costs incurred in oil and gas property

   $ 717     $ 573  

Property acquisitions

     (62     —   

Asset retirement obligations settled vs. incurred - oil and gas property

     4       6  

Capitalized interest

     (7     (6

Exploration seismic and administration costs

     (15     (17
  

 

 

   

 

 

 

Upstream capital investment including noncontrolling interest - Egypt

   $ 637     $ 556  

Less noncontrolling interest - Egypt

     (69     (61
  

 

 

   

 

 

 

Total Upstream capital investment

   $ 568     $ 495  
  

 

 

   

 

 

 

Reconciliation of Net cash provided by operating activities to Cash flows from operations before changes in operating assets and liabilities and Free cash flow

Cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP financial measures. APA uses these measures internally and provides this information because management believes it is useful in evaluating the company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt, as well as to compare our results from period to period. We believe these measures are also used by research analysts and investors to value and compare oil and gas exploration and production companies and are frequently included in published research reports when providing investment recommendations. Cash flows from operations before changes in operating assets and liabilities and free cash flow are additional measures of liquidity but are not measures of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities. Additionally, this presentation of free cash flow may not be comparable to similar measures presented by other companies in our industry.

 

     For the Quarter Ended
March 31,
 
     2024     2023  

Net cash provided by operating activities

   $ 368     $ 335  

Changes in operating assets and liabilities

     459       511  
  

 

 

   

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 827     $ 846  

Adjustments to free cash flow:

    

Upstream capital investment including noncontrolling interest - Egypt

     (637     (556

Decommissioning spend on previously sold Gulf of Mexico properties

     (30     —   

Non oil and gas capital investment

     9       (1

Distributions to Sinopec noncontrolling interest

     (70     (17
  

 

 

   

 

 

 

Free cash flow

   $ 99     $ 272  
  

 

 

   

 

 

 

Reconciliation of Net cash provided by operating activities to Adjusted EBITDAX

Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a company’s ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Company’s on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.

 

     For the Quarter Ended  
     March 31,
2024
    December 31,
2023
    March 31,
2023
 

Net cash provided by operating activities

   $ 368     $ 1,030     $ 335  

Adjustments:

      

Exploration expense other than dry hole expense and unproved leasehold impairments

     15       28       17  

Current income tax provision

     300       316       346  

Other adjustments to reconcile net income (loss) to net cash provided by operating activities

     (10     (71     (30

Changes in operating assets and liabilities

     459       (23     511  

Financing costs, net

     76       77       81  

Transaction, reorganization & separation costs

     27       4       4  
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 1,235     $ 1,361     $ 1,264  
  

 

 

   

 

 

   

 

 

 

 

Page 11


APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions)

Reconciliation of debt to net debt

Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.

 

     March 31,
2024
     December 31,
2023
     September 30,
2023
     June 30,
2023
 

Current debt

   $ 2      $ 2      $ 2      $ 2  

Long-term debt

     5,178        5,186        5,582        5,574  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total debt

     5,180        5,188        5,584        5,576  

Cash and cash equivalents

     102        87        95        142  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net debt

   $ 5,078      $ 5,101      $ 5,489      $ 5,434  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Income attributable to common stock to Adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Company’s operational trends and comparability of results to our peers.

Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.

 

     For the Quarter Ended
March 31, 2024
    For the Quarter Ended
March 31, 2023
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Net income including noncontrolling interests (GAAP)

   $ 447     $ (235   $ 212     $ 0.70     $ 810     $ (484   $ 326     $ 1.05  

Income attributable to noncontrolling interests

     145       (65     80       0.26       150       (66     84       0.27  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     302       (170     132       0.44       660       (418     242       0.78  

Adjustments:*

                

Asset and unproved leasehold impairments

     10       (2     8       0.03       5       (3     2       —   

Valuation allowance and other tax adjustments

     —        16       16       0.05       —        130       130       0.41  

Gain on extinguishment of debt

     —        —        —        —        (9     2       (7     (0.02

Unrealized derivative instrument (gain) loss

     8       (2     6       0.02       (33     7       (26     (0.08

Loss on previously sold Gulf of Mexico properties

     66       (14     52       0.17          

Kinetik equity investment mark-to-market loss

     9       —        9       0.03       32       (6     26       0.08  

Drilling contract termination charges

     —        —        —        —        13       (10     3       0.01  

Transaction, reorganization & separation costs

     27       (8     19       0.06       4       (1     3       0.01  

Gain on divestitures, net

     (7     2       (5     (0.02     (1     —        (1     —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ 415     $ (178   $ 237     $ 0.78     $ 671     $ (299   $ 372     $ 1.19  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

 

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