8-K
APA Corp false 0001841666 0001841666 2024-02-21 2024-02-21

 

 

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): February 21, 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 February 21, 2024, APA Corporation issued a press release announcing financial and operating results for the fiscal quarter and year ended December 31, 2023. 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 February 21, 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: February 22, 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 Fourth-Quarter and Full-Year 2023

Financial and Operational Results

2023 Highlights

 

   

Delivered full-year net cash from operating activities of $3.1 billion, adjusted EBITDAX of $5.3 billion and $965 million of free cash flow (FCF);

 

   

Returned $637 million to shareholders or 66% of FCF;

 

   

Increased total company oil production by 8% year-over-year;

 

   

U.S. oil increased 12% from fourth-quarter 2022 to fourth-quarter 2023, driven by strong Permian Basin execution and well performance;

 

   

Achieved primary emissions goal of converting more than 2,000 pneumatic devices to instrument air or through-valve retrofit in the U.S.;

 

   

Identified an estimated 700 million barrels of recoverable oil resource at Sapakara and Krabdagu on Block 58 offshore Suriname; initiated FEED study and progressing toward 2024 FID; and

 

   

Expanded exploration portfolio through the addition of onshore leases in Alaska and two offshore blocks in Uruguay.

2024 Outlook

 

   

Planning upstream capital budget of $1.9 to $2.0 billion;

 

   

Investing to sustain production on a year-over-year basis;

 

   

Forecasting strong U.S. oil growth in 2024, approximately 8% year-over-year and more than 10% from fourth-quarter 2023 to fourth-quarter 2024;

 

   

Pending acquisition of Callon Petroleum Company adds scale to APA’s existing Delaware Basin assets and is expected to be accretive to key financial metrics; and

 

   

Committing to return at least 60% of FCF to shareholders.

HOUSTON, Feb. 21, 2024 – APA Corporation (Nasdaq: APA) today announced its financial and operational results for the fourth-quarter and full-year 2023. During the fourth-quarter 2023, APA reported net income attributable to common stock of $1.8 billion, or $5.78 per share on a fully diluted basis. When adjusted for certain items that impact the comparability of results, APA’s fourth-quarter earnings totaled $352 million or $1.15 on a diluted share basis.

Reported fourth-quarter production was 414,000 BOE per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 341,000 BOE per day. Net cash provided by operating activities in the fourth quarter was $1.0 billion, and adjusted EBITDAX was $1.4 billion.

For the full-year 2023, APA reported net income of $2.9 billion, or $9.25 per diluted common share. On an adjusted basis, APA’s 2023 earnings totaled $1.4 billion or $4.53 per diluted common share.

 

1


APA CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 2 of 5

 

Reported full-year production was 405,000 BOE per day; adjusted production was 331,000 BOE per day. Net cash provided by operating activities was $3.1 billion, and adjusted EBITDAX was $5.3 billion.

During the year, APA generated $965 million of FCF, repurchased $329 million of common stock and paid $308 million in dividends. APA ended the year with net debt at $5.1 billion, down slightly from the end of 2022.

“The continuation of our exceptional well performance and execution in the Permian Basin drove APA’s strong results in 2023,” said John J. Christmann IV, APA’s chief executive officer. “We generated nearly $1 billion in free cash flow and returned 66% to shareholders. On the exploration front, our successful appraisal program in Suriname identified an estimated recoverable oil resource of 700 million barrels for Sapakara and Krabdagu, and we added onshore acreage in Alaska and two offshore blocks in Uruguay, which expands and diversifies our exploration portfolio.

“To build scale in the Delaware Basin and to further leverage our integrated unconventional expertise, in January, we announced the acquisition of Callon Petroleum Company. Following closing, we are confident in our ability to create substantial shareholder value through our proven workflows and Permian operating model. This will drive enhanced operational performance and capital productivity in addition to planned cost synergies.”

2024 Capital Budget and Outlook

In 2024, APA plans to invest $1.9 to $2.0 billion in upstream oil and gas capital. This investment level reflects the company’s strategy of moderating activity levels during periods of lower commodity prices. APA will invest for the long term by directing $100 million of the upstream budget toward exploration activities predominantly in Alaska and $50 million toward progressing a large scale FPSO project in Suriname.

“Given the potential for lower year-over-year commodity prices, we will prudently manage costs and high-grade capital to our most strategic opportunities,” concluded Christmann.

Total company adjusted oil and natural gas production is expected to be relatively flat year-over-year while NGL volumes are anticipated to be lower as the current strip prices would lead to ethane rejection in the U.S. for most of the year.


APA CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 3 of 5

 

Year-End 2023 Proved Reserves

Worldwide estimated proved reserves totaled 807 million BOE at year-end 2023, 91% of which were classified as proved developed.

Conference Call

APA will host a conference call to discuss its fourth-quarter and full-year 2023 results at 10 a.m. Central time, Thursday, Feb. 22. 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.

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. 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.


APA CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 4 of 5

 

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,” “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, 2022, and in our quarterly reports on Form 10-Q, and in APA’s Form 10-K for the year ended December 31, 2023 when filed, 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


APA CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 5 of 5

 

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 Corporation’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2022 (and APA’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2023, 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.

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.


APA CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

     For the Quarter Ended
December 31,
    For the Year Ended
December 31,
 
     2023     2022     2023     2022  

REVENUES AND OTHER:

        

Oil, natural gas, and natural gas liquids production revenues

        

Oil revenues

   $ 1,530     $ 1,583     $ 5,997     $ 6,835  

Natural gas revenues

     222       328       880       1,569  

Natural gas liquids revenues

     133       162       508       816  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,885       2,073       7,385       9,220  

Purchased oil and gas sales

     282       399       894       1,855  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     2,167       2,472       8,279       11,075  

Derivative instrument gain (loss), net

     (5     24       99       (114

Gain on divestitures, net

     1       —        8       1,180  

Loss on previously sold Gulf of Mexico properties

     (212     (157     (212     (157

Other, net

     (59     41       18       148  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,892       2,380       8,192       12,132  
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Lease operating expenses

     360       377       1,436       1,444  

Gathering, processing, and transmission

     89       93       334       367  

Purchased oil and gas costs

     184       324       742       1,776  

Taxes other than income

     44       38       207       268  

Exploration

     51       112       195       305  

General and administrative

     75       169       351       483  

Transaction, reorganization, and separation

     4       5       15       26  

Depreciation, depletion, and amortization:

        

Oil and gas property and equipment

     414       339       1,500       1,186  

Other assets

     9       15       40       47  

Asset retirement obligation accretion

     30       30       116       117  

Impairments

     15       —        61       —   

Financing costs, net

     77       76       312       379  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,352       1,578       5,309       6,398  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME BEFORE INCOME TAXES

     540       802       2,883       5,734  

Current income tax provision

     316       343       1,338       1,507  

Deferred income tax provision (benefit)

     (1,640     (80     (1,662     145  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME INCLUDING NONCONTROLLING INTERESTS

     1,864       539       3,207       4,082  

Net income attributable to noncontrolling interest - Egypt

     91       96       352       464  

Net income attributable to noncontrolling interest - Altus

     —        —        —        14  

Net loss attributable to Altus Preferred Unit limited partners

     —        —        —        (70
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON STOCK

   $ 1,773     $ 443     $ 2,855     $ 3,674  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME PER COMMON SHARE:

        

Basic

   $ 5.79     $ 1.38     $ 9.26     $ 11.05  

Diluted

   $ 5.78     $ 1.38     $ 9.25     $ 11.02  

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

        

Basic

     306       321       308       332  

Diluted

     307       322       309       333  

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.25     $ 0.25     $ 1.00       0.75  

 

Page 6


APA CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change     For the Year Ended  
     December 31,
2023
     September 30,
2023
     December 31,
2022
     4Q23 to
3Q23
    4Q23 to
4Q22
    December 31,
2023
     December 31,
2022
 

OIL VOLUME - Barrels per day

                  

United States

     83,909        83,584        74,767        0     12     78,889        70,398  

Egypt (1, 2)

     92,365        88,521        88,715        4     4 %       89,129        85,081  

North Sea

     30,748        35,680        37,473        -14     -18     34,728        32,578  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     123,113        124,201        126,188        -1     -2     123,857        117,659  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     207,022        207,785        200,955        0     3     202,746        188,057  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

United States

     462,498        454,643        468,888        2     -1     452,281        473,292  

Egypt (1, 2)

     309,814        300,326        373,911        3     -17     325,778        356,327  

North Sea

     58,054        65,168        41,370        -11     40     50,284        35,327  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     367,868        365,494        415,281        1     -11     376,062        391,654  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     830,366        820,137        884,169        1     -6     828,343        864,946  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

United States

     67,679        66,280        64,915        2     4     62,997        62,727  

Egypt (1, 2)

     —         —         —         —        —        —         196  

North Sea

     1,335        1,497        1,203        -11     11     1,240        1,111  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     1,335        1,497        1,203        -11     11     1,240        1,307  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     69,014        67,777        66,118        2     4     64,237        64,034  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

United States

     228,671        225,639        217,830        1     5     217,266        212,007  

Egypt (1, 2)

     144,001        138,575        151,034        4     -5     143,425        144,665  

North Sea

     41,758        48,038        45,571        -13     -8     44,349        39,577  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     185,759        186,613        196,605        0     -6     187,774        184,242  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     414,430        412,252        414,435        1     0     405,040        396,249  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total excluding noncontrolling interests

     366,352        366,051        365,279        0     0     357,184        348,305  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

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

 

Oil (b/d)

     30,837        29,514        28,881            29,739        28,200  

Gas (Mcf/d)

     103,443        100,122        121,650            108,703        118,074  

NGL (b/d)

     —         —         —             —         65  

BOE per day

     48,078        46,201        49,156        4     -2     47,856        47,944  

(2) Egypt Gross Production

 

Oil (b/d)

     141,953        144,528        139,587            141,985        137,260  

Gas (Mcf/d)

     466,403        472,744        559,401            500,080        555,562  

NGL (b/d)

     —         —         0            —         297  

BOE per day

     219,687        223,319        232,821        -2     -6     225,332        230,151  

 

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     For the Year Ended  
     December 31,
2023
     September 30,
2023
     December 31,
2022
     4Q23 to
3Q23
    4Q23 to
4Q22
    December 31,
2023
     December 31,
2022
 
                  

OIL VOLUME - Barrels per day

                  

United States

     83,909        83,584        74,767        0     12     78,889        70,398  

Egypt

     45,204        42,535        41,719        6     8     43,349        39,010  

North Sea

     30,748        35,680        37,473        -14     -18     34,728        32,578  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     75,952        78,215        79,192        -3     -4     78,077        71,588  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     159,861        161,799        153,959        -1     4     156,966        141,986  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 
                  

NATURAL GAS VOLUME - Mcf per day

                  

United States

     462,498        454,643        468,888        2     -1     452,281        473,292  

Egypt

     150,212        143,211        175,184        5     -14     157,269        162,783  

North Sea

     58,054        65,168        41,370        -11     40     50,284        35,327  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     208,266        208,379        216,554        0     -4     207,553        198,110  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     670,764        663,022        685,442        1     -2     659,834        671,402  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

United States

     67,679        66,280        64,915        2     4     62,997        62,727  

Egypt

     —         —         —         —        —        —         89  

North Sea

     1,335        1,497        1,203        -11     11     1,240        1,111  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     1,335        1,497        1,203        -11     11     1,240        1,200  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     69,014        67,777        66,118        2     4     64,237        63,927  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

United States

     228,671        225,639        217,830        1     5     217,266        212,007  

Egypt

     70,239        66,403        70,917        6     -1     69,561        66,229  

North Sea

     41,758        48,038        45,571        -13     -8     44,349        39,577  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     111,997        114,441        116,488        -2     -4     113,910        105,806  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     340,668        340,080        334,318        0     2     331,176        317,813  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

Page 8


APA CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended      For the Year Ended  
     December 31,      September 30,      December 31,      December 31,      December 31,  
     2023      2023      2022      2023      2022  

AVERAGE OIL PRICE PER BARREL

              

United States

   $ 79.04      $ 82.33      $ 83.70      $ 77.84      $ 95.68  

Egypt

     83.67        88.99        87.41        82.47        101.25  

North Sea

     80.70        87.70        88.24        82.75        100.87  

International

     82.98        88.57        87.65        82.55        101.14  

Total

     81.36        86.15        86.17        80.72        99.11  

AVERAGE NATURAL GAS PRICE PER MCF

              

United States

   $ 1.62      $ 2.12      $ 3.57      $ 1.80      $ 5.31  

Egypt

     2.89        2.91        2.92        2.91        2.85  

North Sea

     13.46        10.98        20.45        13.02        23.36  

International

     4.56        4.36        4.57        4.25        4.58  

Total

     2.92        3.12        4.04        2.91        4.98  

AVERAGE NGL PRICE PER BARREL

              

United States

   $ 19.82      $ 21.87      $ 25.06      $ 20.85      $ 33.41  

Egypt

     —         —         —         —         76.80  

North Sea

     48.16        42.78        55.86        47.77        67.07  

International

     48.16        42.78        55.86        47.77        67.99  

Total

     20.70        22.26        26.22        21.54        34.51  

 

Page 9


APA CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

 

     For the Quarter Ended
December 31,
     For the Year Ended
December 31,
 
     2023      2022      2023      2022  

Unproved leasehold impairments

   $ 2      $ 2      $ 22      $ 24  

Dry hole expense

     21        76        92        183  

Geological and geophysical expense

     16        4        19        23  

Exploration overhead and other

     12        30        62        75  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 51      $ 112      $ 195      $ 305  
  

 

 

    

 

 

    

 

 

    

 

 

 

SUMMARY CASH FLOW INFORMATION

 

     For the Quarter Ended
December 31,
    For the Year Ended
December 31,
 
     2023     2022     2023     2022  

Net cash provided by operating activities

   $ 1,030     $ 1,413     $ 3,129     $ 4,943  
  

 

 

   

 

 

   

 

 

   

 

 

 

Additions to upstream oil and gas property

     (575     (609     (2,333     (1,807

Acquisition of Delaware Basin properties

     —        (28     (24     (591

Proceeds from asset divestitures

     —        —        29       778  

Proceeds from sale of Kinetik shares

     228       —        228       224  

Deconsolidation of Altus cash and cash equivalents

     —        —        —        (143

Other, net

     (9     20       (38     28  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

   $ (356   $ (617   $ (2,138   $ (1,511
  

 

 

   

 

 

   

 

 

   

 

 

 

Proceeds from (payments on) revolving credit facilities, net

     (396     46       (194     24  

Payments on Apache fixed-rate debt

     —        (123     (65     (1,493

Distributions to noncontrolling interest - Egypt

     (84     (125     (238     (362

Treasury stock activity, net

     (121     (539     (329     (1,423

Dividends paid to APA common stockholders

     (76     (80     (308     (207

Other, net

     (5     2       (15     (28
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

   $ (682   $ (819   $ (1,149   $ (3,489
  

 

 

   

 

 

   

 

 

   

 

 

 

SUMMARY BALANCE SHEET INFORMATION

 

     December 31,      December 31,  
     2023      2022  

Cash and cash equivalents

   $ 87      $ 245  

Other current assets

     2,375        2,463  

Property and equipment, net

     10,038        9,012  

Decommissioning security for sold Gulf of Mexico properties

     21        217  

Other assets

     2,723        1,210  
  

 

 

    

 

 

 

Total assets

   $ 15,244      $ 13,147  
  

 

 

    

 

 

 

Current debt

   $ 2      $ 2  

Current liabilities

     2,402        2,914  

Long-term debt

     5,186        5,451  

Decommissioning contingency for sold Gulf of Mexico properties

     764        738  

Deferred credits and other noncurrent liabilities

     3,199        2,697  

APA shareholders’ equity

     2,655        423  

Noncontrolling interest - Egypt

     1,036        922  
  

 

 

    

 

 

 

Total Liabilities and equity

   $ 15,244      $ 13,147  
  

 

 

    

 

 

 

Common shares outstanding at end of period

     304        312  

 

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
December 31,
     For the Year Ended
December 31,
 
     2023      2022      2023      2022  

Costs incurred in oil and gas property:

           

Asset and leasehold acquisitions

           

Proved

   $ 1      $ 16      $ 5      $ 599  

Unproved

     9        15        20        66  

Exploration and development

     969        441        2,694        1,904  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Costs incurred in oil and gas property

   $ 979      $ 472      $ 2,719      $ 2,569  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

           

Total Costs incurred in oil and gas property

   $ 979      $ 472      $ 2,719      $ 2,569  

Property acquisitions

     —         (24      (1      (625

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

     (347      150        (327      174  

Capitalized interest

     (6      (5      (24      (18

Exploration seismic and administration costs

     (28      (34      (81      (98
  

 

 

    

 

 

    

 

 

    

 

 

 

Upstream capital investment including noncontrolling interest - Egypt

   $ 598      $ 559      $ 2,286      $ 2,002  

Less noncontrolling interest - Egypt

     (78      (73      (281      (235
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Upstream capital investment

   $ 520      $ 486      $ 2,005      $ 1,767  
  

 

 

    

 

 

    

 

 

    

 

 

 

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
December 31,
     For the Year Ended
December 31,
 
     2023      2022      2023      2022  

Net cash provided by operating activities

   $ 1,030      $ 1,413      $ 3,129      $ 4,943  

Changes in operating assets and liabilities

     (23      (369      417        (121
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 1,007      $ 1,044      $ 3,546      $ 4,822  

Adjustments to free cash flow:

           

Upstream capital investment including noncontrolling interest - Egypt

     (598      (559      (2,286      (2,002

Non oil and gas capital investment

     (33      —         (57      —   

Distributions to Sinopec noncontrolling interest

     (84      (125      (238      (362
  

 

 

    

 

 

    

 

 

    

 

 

 

Free cash flow

   $ 292      $ 360      $ 965      $ 2,458  
  

 

 

    

 

 

    

 

 

    

 

 

 

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     For the Year Ended  
     December 31,     September 30,     December 31,     December 31,  
     2023     2023     2022     2023     2022  

Net cash provided by operating activities

   $ 1,030     $ 764     $ 1,413     $ 3,129     $ 4,943  

Adjustments:

          

Exploration expense other than dry hole expense and unproved leasehold impairments

     28       22       34       81       98  

Current income tax provision

     316       422       343       1,338       1,507  

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

     (71     (22     (18     (26     73  

Changes in operating assets and liabilities

     (23     161       (369     417       (121

Financing costs, net

     77       81       76       321       312  

Transaction, reorganization & separation costs

     4       5       5       15       26  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 1,361     $ 1,433     $ 1,484     $ 5,275     $ 6,838  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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.

 

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

Current debt

   $ 2      $ 2      $ 2      $ 2  

Long-term debt

     5,186        5,582        5,574        5,796  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total debt

     5,188        5,584        5,576        5,798  

Cash and cash equivalents

     87        95        142        154  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net debt

   $ 5,101      $ 5,489      $ 5,434      $ 5,644  
  

 

 

    

 

 

    

 

 

    

 

 

 

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
December 31, 2023
    For the Quarter Ended
December 31, 2022
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Net income including noncontrolling interests (GAAP)

   $ 540     $ 1,324     $ 1,864     $ 6.08     $ 802     $ (263   $ 539     $ 1.68  

Income attributable to noncontrolling interests

     163       (72     91       0.30       170       (74     96       0.30  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     377       1,396       1,773       5.78       632       (189     443       1.38  

Adjustments: *

                

Asset and unproved leasehold impairments

     17       (4     13       0.04       2       —        2       —   

Noncontrolling interest & tax barrel impact on Egypt adjustments

     —        —        —        —        —        —        —        —   

Valuation allowance and other tax adjustments

     —        (1,634     (1,634     (5.33     —        (47     (47     (0.15

Unrealized derivative instrument (gain) loss

     10       (2     8       0.03       (52     11       (41     (0.13

Loss on previously sold Gulf of Mexico properties

     212       (45     167       0.54       157       (33     124       0.39  

Kinetik equity investment mark-to-market (gain) loss

     29       (6     23       0.08       (9     2       (7     (0.02

Transaction, reorganization & separation costs

     4       (2     2       0.01       5       (2     3       0.01  

Gain on divestitures, net

     (1     1       —        —        —        —        —        —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ 648     $ (296   $ 352     $ 1.15     $ 735     $ (258   $ 477     $ 1.48  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     For the Year Ended
December 31, 2023
    For the Year Ended
December 31, 2022
 
     Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
    Before
Tax
    Tax
Impact
    After
Tax
    Diluted
EPS
 

Net income including noncontrolling interests (GAAP)

   $ 2,883     $ 324     $ 3,207     $ 10.39     $ 5,734     $ (1,652   $ 4,082     $ 12.24  

Income attributable to noncontrolling interests

     628       (276     352       1.14       842       (364     478       1.43  

Loss attributable to Altus preferred unit limited partner

     —        —        —        —        (70     —        (70     (0.21
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common stock

     2,255       600       2,855       9.25       4,962       (1,288     3,674       11.02  

Adjustments: *

                

Asset and unproved leasehold impairments

     83       (50     33       0.11       24       (4     20       0.06  

Noncontrolling interest & tax barrel impact on Egypt adjustments

     —        —        —        —        1       (2     (1     —   

Valuation allowance and other tax adjustments **

     —        (1,627     (1,627     (5.27     —        (226     (226     (0.68

(Gain) / Loss on extinguishment of debt

     (9     2       (7     (0.02     67       (14     53       0.15  

Unrealized derivative instrument gain

     (51     11       (40     (0.13     (5     (7     (12     (0.03

Loss on previously sold Gulf of Mexico properties

     212       (45     167       0.54       157       (33     124       0.37  

Kinetik equity investment mark-to-market (gain) loss

     12       (2     10       0.03       (32     2       (30     (0.08

Drilling contract termination charges

     13       (10     3       0.01       —        —        —        —   

Transaction, reorganization & separation costs

     15       (5     10       0.03       26       (8     18       0.05  

Gain on divestitures, net

     (8     2       (6     (0.02     (1,180     125       (1,055     (3.17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Earnings (Non-GAAP)

   $ 2,522     $ (1,124   $ 1,398     $ 4.53     $ 4,020     $ (1,455   $ 2,565     $ 7.69  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

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

 

Page 12


APACHE CORPORATION

OIL & GAS RESERVES INFORMATION

For the Year Ended December 31, 2023

 

OIL (Mbbl)                            
     U.S.      Egypt1      North Sea      Total1  

Balance - Dec 31, 2022

     199,947        116,607        85,453        402,007  

Extensions and Discoveries

     43,613        12,979        301        56,893  

Purchases

     20        —         —         20  

Revisions

     (3,520      10,505        (12,002      (5,017

Production

     (28,795      (32,532      (12,676      (74,003

Sales

     (775      —         —         (775
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance - Dec 31, 2023

     210,490        107,559        61,076        379,125  
  

 

 

    

 

 

    

 

 

    

 

 

 
NGL’s (Mbbl)                            
     U.S.      Egypt1      North Sea      Total1  

Balance - Dec 31, 2022

     177,749        —         2,306        180,055  

Extensions and Discoveries

     25,711        —         371        26,082  

Purchases

     21        —         —         21  

Revisions

     (8,568      —         (764      (9,332

Production

     (22,993      —         (453      (23,446

Sales

     (33      —         —         (33
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance - Dec 31, 2023

     171,887        —         1,460        173,347  
  

 

 

    

 

 

    

 

 

    

 

 

 
GAS (MMcf)                            
     U.S.      Egypt1      North Sea      Total1  

Balance - Dec 31, 2022

     1,377,080        400,570        68,596        1,846,246  

Extensions and Discoveries

     158,118        14,188        3,335        175,641  

Purchases

     136        —         —         136  

Revisions

     (266,664      83,907        (6,739      (189,496

Production

     (165,083      (118,909      (18,353      (302,345

Sales

     (136      —         —         (136
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance - Dec 31, 2023

     1,103,451        379,756        46,839        1,530,046  
  

 

 

    

 

 

    

 

 

    

 

 

 
TOTAL BOE (Mboe)                            
     U.S.      Egypt1      North Sea      Total1  

Balance - Dec 31, 2022

     607,209        183,368        99,192        889,769  

Extensions and Discoveries

     95,677        15,344        1,228        112,249  

Purchases

     64        —         —         64  

Revisions

     (56,532      24,490        (13,889      (45,931

Production

     (79,302      (52,350      (16,188      (147,840

Sales

     (831      —         —         (831
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance - Dec 31, 2023

     566,285        170,852        70,343        807,480  
  

 

 

    

 

 

    

 

 

    

 

 

 

Proved developed reserves:

           

Oil (Mbbls)

     179,542        102,305        61,076        342,923  

NGL’s (Mbbls)

     153,486        —         1,460        154,946  

Gas (Mboe)

     167,326        62,857        7,807        237,990  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance - Dec 31, 2023 (Mboe)

     500,354        165,162        70,343        735,859  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) 

Includes reserves attributable to noncontrolling interest in Egypt.

 

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