APA Doubled Adjusted Earnings as Oil Prices Offset Lower Output
Free cash flow climbed to $738 million as capital spending declined.
APA Corp. (APA), the oil and gas producer, more than doubled second-quarter adjusted earnings to $669 million, or $1.89 a share, from $313 million, or $0.87 a share, a year earlier.
Higher oil prices outweighed a broad production decline. APA’s average oil price rose 50% from a year earlier to $98.24 a barrel, while reported production fell 12% to 409,959 barrels of oil equivalent a day.
Total revenue increased 9% to $2.373 billion from $2.178 billion. Production revenue rose 19% to $2.037 billion, reflecting the stronger oil-price environment.
Net income attributable to common stock rose 24% to $747 million, and diluted earnings increased to $2.11 a share from $1.67. Adjusted EBITDAX climbed 41% from a year earlier and 18% sequentially to $1.837 billion.
The output decline was concentrated outside the U.S. Adjusted production in Egypt fell 16% from a year earlier, and North Sea output dropped 30%, while U.S. production decreased 9%. U.S. oil volumes remained roughly flat and finished 2,500 barrels a day above company guidance.
Natural-gas economics weakened as APA’s average gas price fell to $0.60 per Mcf from $2.28 a year earlier. The company’s U.S. gas price deteriorated to negative $2.98 per Mcf, while gas volumes declined 16%.
APA raised its full-year U.S. oil-production guidance to 123,000 barrels a day while holding U.S. capital spending at $1.3 billion. The company also lowered its full-year lease-operating-expense forecast by $25 million to $1.5 billion and increased its expected 2026 exit run-rate cost savings to about $500 million.
Net debt declined $822 million during the quarter to $3.299 billion after APA repaid $673 million of bonds. The company also agreed to acquire Savant Alaska and entered an Uruguay exploration partnership under which Eni will fund most of the initial 2027 well, extending its exploration portfolio as lower debt reduced annualized interest expense by more than $155 million.