APA Corporation Announces Fourth-Quarter and Full-Year 2021 Financial and Operational Results
- Reported production of 386,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 331,000 BOE per day;
- Delivered net cash from operating activities of $1.1 billion and adjusted EBITDAX of $1.3 billion;
- Initiated a 60% capital return framework for shareholders, raised dividend for the second time in 2021, and repurchased $847 million of stock at an average price of $27.13 per share;
- Modernized production sharing contracts in Egypt, which will result in production and free cash flow uplift;
- Advanced path to first oil development on Block 58 in Suriname with successful Sapakara South-1 flow test, and subsequent to the quarter, announced discovery at Krabdagu;
- Exceeded U.S. production guidance with strong well performance in the Permian; and
- Announced elimination of routine flaring in onshore U.S. operations, achieving this critical ESG goal three months ahead of schedule.
2022 and Longer-Term Outlook and Objectives
- Expecting to generate approximately $6.5 billion of FCF over the next three years based on a WTI price of $78/barrel (3-year strip);
- Budgeting 2022 upstream capital investment of $1.6 billion, of which $200 million is dedicated to exploration and appraisal activities, primarily in Suriname; planning similar level of capital activity in 2023 and 2024;
- Continuing to streamline portfolio; $805 million mineral rights sales package in the Delaware Basin to close by the end of February;
- Establishing new short-term incentive compensation-linked ESG goals for 2022:
o reducing upstream routine flaring in Egypt by 40%,
o initiating new programs to promote and deliver increased supplier diversity, and
o developing a future of work strategy with workplace and technology enhancements; and
- Introducing a long-term incentive compensation ESG goal to reduce carbon dioxide emissions by 1 million tonnes annually from projects by 2024.
HOUSTON, Feb. 21, 2022 – APA Corporation (Nasdaq: APA) today announced its financial and operational results for the fourth-quarter and full-year 2021.
During the fourth-quarter 2021, APA reported net income attributable to common stock of $382 million, or $1.05 per share on a fully diluted basis. When adjusted for certain items that impact the comparability of results, APA’s fourth-quarter earnings totaled $468 million or $1.29 on a diluted share basis. Net cash provided by operating activities in the fourth quarter was $1.1 billion and adjusted EBITDAX was $1.3 billion.
For the full-year 2021, APA reported net income of $973 million, or $2.59 per diluted common share. On an adjusted basis, APA’s 2021 earnings totaled $1.46 billion or $3.90 per diluted common share. Net cash provided by operating activities was $3.5 billion, and adjusted EBITDAX was $4.57 billion.
“2021 was an important turning point for APA with several key financial and operational accomplishments positioning us very well for the future,” said John J. Christmann IV, APA’s chief executive officer and president. “We generated approximately $1.8 billion in free cash flow and significantly strengthened our balance sheet, reducing upstream net debt by $1.2 billion. We also implemented a robust capital return framework, as we repurchased 8.5% of outstanding shares in the fourth quarter and raised the dividend twice during the year. The modernized production sharing contract in Egypt, which we finalized in late December, provides a foundation for increased investment and long-term production and free cash flow growth in one of our most important operating areas. Additionally, the discovery we announced today with our Krabdagu exploration well in Suriname marks another important step on our path to a first oil development in Suriname.”
Streamlining the Portfolio
APA continued to streamline its portfolio in 2021, selling $256 million of noncore assets in the Permian Basin. The company also recently signed an agreement to sell $805 million of mineral rights in the Delaware Basin, which is expected to close by the end of February.
The previously announced business combination between Altus Midstream and BCP Raptor Holdco LP, the parent company of EagleClaw Midstream, is on schedule to close by the end of February and provides APA with the option to sell up to four million shares of its ownership interest in the near-term. Together with the expected proceeds from the mineral sale this would make more than $1 billion of cash available for debt reduction, share repurchases and/or other corporate purposes.
ESG Achievements and Future Initiatives
APA is committed to progressing ESG initiatives in the areas where the company can achieve the greatest direct impact: air, water, communities and people. In 2021, APA established aggressive ESG goals tied to short-term incentive compensation for all employees. The company accomplished all of its 2021 ESG goals, most notably the elimination of routine flaring in U.S. onshore operations. For 2022, APA is introducing a number of new compensation-linked, short-term ESG goals, including: reducing upstream routine flaring in Egypt by 40%; establishing a supplier diversity program; and implementing a future-of-work strategy to enhance the employee work experience. The company is also establishing a first ever, long-term incentive compensation target linked to reducing emissions over the next three years.
Long-Term Capital Budget and Outlook
Based on the current pricing outlook, in 2022, APA plans to invest $1.6 billion in upstream oil and gas capital, which includes approximately $200 million dedicated to exploration and appraisal activities, primarily in Suriname. In aggregate, capital investment will approximate $5 billion from 2022 to 2024. This capital spend should return the company to around 2019, pre-Covid production levels on an adjusted basis in 2024.
Year-End 2021 Proved Reserves
Worldwide estimated proved reserves totaled 913 million BOE at year-end 2021, up 4% from year-end 2020. More than 90% of APA’s estimated proved reserves at year-end 2021 were classified as proved developed. During the year, APA added approximately 102 million BOE in field extensions and discoveries. Production and divestitures reduced proved reserves by 142 million BOE and 28 million BOE, respectively. Revised proved reserves increased by 107 million BOE driven by price and benefits associated with the modernized PSC terms in Egypt.
APA will host a conference call to discuss its fourth-quarter and full-year 2021 results at 10 a.m. Central time, Tuesday, Feb. 22. The conference call will be webcast from APA’s website at www.apacorp.com and investor.apacorp.com, and the webcast replay will be archived there as well. The conference call will also be available for playback by telephone for one week beginning at approximately 4 p.m. Central time Feb. 22. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 7959588. Sign up for email alerts to be reminded of the webcast at investor.apacorp.com/alerts/email-alerts-subscription.
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. APA posts announcements, operational updates, investor information and press releases on its website, www.apacorp.com. Additional details regarding Suriname, ESG performance and other investor-related topics are posted at investor.apacorp.com.
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.
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,” “guidance,” “may,” “might,” “outlook,” “possibly,” “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 Apache Corporation’s Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 25, 2021, and in APA’s Form 10-K in the year ended December 31, 2021 when filed, and in our quarterly reports on Form 10-Q 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 Apache Corporation's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020 (and APA’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2021, when filed) 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.
Investor: (281) 302-2286 Gary Clark
Media: (713) 296-7276 Alexandra Franceschi
Click here for the full release with quarterly financial statements.