APA Corporation
Loading chart...
| ITEMS 1 and 2. | BUSINESS AND PROPERTIES |
GENERAL
APA Corporation (APA or the Company) is an independent energy company that owns subsidiaries that explore for, develop, and produce crude oil, natural gas, and NGLs. The Company’s business has oil and gas operations in three geographic areas: the U.S., Egypt, and offshore the U.K. in the North Sea (North Sea). APA also has active development, exploration, and appraisal operations ongoing in Suriname, as well as exploration interests in Uruguay, Alaska, and other international locations that may, over time, result in reportable discoveries and development opportunities. As a holding company, APA Corporation’s primary assets are its ownership interests in its consolidated subsidiaries.
The Company makes available, free of charge on its website at www.apacorp.com, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after they are filed with, or furnished to, the SEC. The Company’s filings are also available at www.sec.gov. Information contained on, or accessible through, the Company’s website or any other website is not incorporated by reference into, and does not constitute a part of, this Annual Report on Form 10-K.
BUSINESS STRATEGY
APA maintains a diversified asset portfolio, including conventional and unconventional, onshore and offshore, oil and natural gas exploration and production interests, while offering global exploration opportunities. In the U.S., operations are primarily focused in the Permian Basin of West Texas. Internationally, the Company has conventional onshore assets in Egypt’s Western Desert, offshore assets on the U.K.’s Continental Shelf, and is currently progressing with an oil field development offshore Suriname targeting first production in 2028.
APA believes energy underpins global progress, and the Company wants to be a part of the solution as society works to meet growing global demand for reliable and affordable energy. Uncertainties in the global supply chain and financial markets impact oil supply and demand and contribute to commodity price volatility. These uncertainties include the impacts of ongoing international conflicts, inflation, current and potential tariffs or other trade barriers, global trade policies, and actions taken by foreign oil and gas producing nations, including OPEC+. Despite these uncertainties, the Company is focused on its longer-term objectives: (1) to remain committed to providing affordable, reliable, and responsibly produced energy; (2) to deliver top operational performance across safety, environmental responsibility, execution, and risk management measures; (3) to maintain financial discipline by managing costs, protecting the balance sheet to underpin the generation of cash flow in excess of its upstream exploration, appraisal, and development capital program that can be directed to debt reduction, share repurchases, and other return of capital to its shareholders; and (4) to build and grow a diverse and balanced high-quality portfolio with scale through acquisitions, exploration, and organic opportunities.
The Company closely monitors hydrocarbon pricing fundamentals to reallocate capital as part of its ongoing planning process. APA’s diversified asset portfolio and operational flexibility provide the Company the ability to timely respond to near-term price volatility and effectively manage its investment programs.
1
Rigorous management of the Company’s asset portfolio plays a key role in optimizing shareholder value over the long term. Over the past several years, APA has entered into a series of transactions that have upgraded its portfolio of assets, enhanced its capital allocation process to further optimize investment returns, and increased focus on internally generated exploration with full-cycle, returns-focused growth. These transactions include:
•On April 1, 2024, APA completed its acquisition of Callon Petroleum Company (Callon) in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s debt. The acquired assets included approximately 120,000 net acres in the Delaware Basin and 25,000 net acres in the Midland Basin. The Company was able to quickly advance on opportunities to reduce costs, improve capital efficiencies, leverage economies of scale, and expand the development inventory that formed the basis of the transaction value. This transaction complemented and enhanced APA’s asset base in the Permian Basin and its inventory of high quality, short-cycle opportunities.
•Throughout the remainder of 2024, APA closed on a series of transactions to sell non-core producing properties in the Permian Basin, East Texas Austin Chalk, and Eagle Ford plays, and non-core mineral and royalty interests in the Permian Basin. Proceeds of approximately $1.6 billion from these transactions were used primarily to reduce debt.
•During 2025, APA completed the sale of certain non-core assets and leasehold in the Permian Basin, reflecting a full exit from New Mexico. Final proceeds of $571 million were primarily used for debt reduction. Combined with the Callon transaction, the Company believes its acreage position and drilling opportunities are better streamlined for longer-term growth.
For a more in-depth discussion of the Company’s 2025 results, divestitures, strategy, and its capital resources and liquidity, please see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.
2
BUSINESS OVERVIEW
The following business overview further describes the Company’s exploration and production operations and activities by geographic region.
Operating Areas
APA’s business has oil and gas operations in three geographic areas: the U.S., Egypt, and offshore the U.K. in the North Sea. APA also has active development, exploration, and appraisal operations in Suriname, as well as exploration interests in Uruguay, Alaska, and other international locations that may, over time, result in reportable discoveries and development opportunities.
The following table sets out a brief comparative summary of certain key 2025 data for each of the Company’s operating areas. Additional data and discussion are provided in Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.
| Production | Percentage of Total Production | Production Revenue | Year-End Estimated Proved Reserves | Percentage of Total Estimated Proved Reserves | Gross Wells Drilled | Gross Productive Wells Drilled | |||||||||||||||||||||||||||||||
| (In MMboe) | (In millions) | (In MMboe) | |||||||||||||||||||||||||||||||||||
| United States | 105.0 | 62 | % | $ | 3,819 | 781 | 74 | % | 197 | 197 | |||||||||||||||||||||||||||
Egypt(1) | 53.3 | 31 | % | 2,637 | 176 | 17 | % | 98 | 71 | ||||||||||||||||||||||||||||
North Sea(2) | 11.2 | 7 | % | 773 | 25 | 2 | % | — | — | ||||||||||||||||||||||||||||
Suriname | — | — | % | — | 74 | ||||||||||||||||||||||||||||||||
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
| Line item |
|---|
| Period ending |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion relates to APA Corporation (APA or the Company) and its consolidated subsidiaries and should be read together with the Company’s Consolidated Financial Statements and accompanying notes included in Part I, Item 1—Financial Statements of this Quarterly Report on Form 10-Q, as well as related information set forth in the Company’s Consolidated Financial Statements, accompanying Notes to Consolidated Financial Statements, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Overview
APA is an independent energy company that owns subsidiaries that explore for, develop, and produce crude oil, natural gas, and natural gas liquids (NGLs). The Company’s business has oil and gas exploration, development, appraisal, and/or ongoing operations primarily in four geographic areas: the U.S., Egypt, offshore the U.K. in the North Sea (North Sea), and offshore Suriname. APA also has exploration interests in Uruguay, Alaska, and other international locations that may, over time, result in reportable discoveries and development opportunities. As a holding company, APA Corporation’s primary assets are its ownership interests in its consolidated subsidiaries.
APA believes energy underpins global progress, and the Company wants to be a part of the solution as society works to meet growing global demand for reliable and affordable energy. APA strives to meet those challenges while creating value for all its stakeholders.
Uncertainties in the global supply chain and financial markets impact oil supply and demand and contribute to commodity price volatility. These uncertainties include the impacts and duration of armed conflicts involving the U.S., Iran, Russia, Ukraine, Israel, and other parties in the Middle East, inflation, current and potential tariffs or other trade barriers, global trade policies, and disputes, and actions taken by foreign oil and gas producing nations, including OPEC+. Despite these uncertainties, the Company is focused on its longer-term objectives: (1) to remain committed to providing affordable, reliable, and responsibly produced energy; (2) to deliver top operational performance across safety, environmental responsibility, execution, and risk management measures; (3) to maintain financial discipline by managing costs, protecting the balance sheet to underpin the generation of cash flow in excess of its upstream exploration, appraisal, and development capital program that can be directed to debt reduction, share repurchases, and other return of capital to its shareholders; and (4) to build and grow a diverse and balanced high-quality portfolio with scale through acquisitions, exploration, and organic opportunities.
The Company closely monitors hydrocarbon pricing fundamentals to reallocate capital as part of its ongoing planning process. APA’s diversified asset portfolio and operational flexibility provide the Company the ability to timely respond to near-term price volatility and effectively manage its investment programs accordingly. For additional detail on the Company’s forward capital investment outlook, refer to “Capital Resources and Liquidity” below.
In the second quarter of 2026, the Company continued its cost reduction efforts to drive sustainable cost savings for the long-term. The Company remained focused on reducing overhead costs, improving the capital cost structure for its drilling, completions, and facility investments, and driving efficiencies of day-to-day field operating practices. The Company has raised its expected annualized savings target to $500 million by the end of 2026, an increase of $50 million from its previous guidance.
The Company remains committed to its capital return framework for equity holders to participate more directly and materially in cash returns. The Company believes returning 60 percent of free cash flow annually through dividends and share repurchases creates a good balance for providing near-term cash returns to shareholders while still recognizing the importance of continued balance sheet strengthening.
•The Company pays a quarterly dividend of $0.25 per share on its common stock.
•Beginning in the fourth quarter of 2021 and through the end of the second quarter of 2026, the Company has repurchased 101.0 million shares of the Company’s common stock. Subsequent to the quarter ended June 30, 2026 through July 31, 2026, the Company repurchased 0.3 million shares, and as of July 31, 2026, the Company had remaining authorization to repurchase up to 18.7 million shares under the Company’s share repurchase programs.
•From year-end 2021 through the date of this filing, the Company has repaid $3.7 billion of long-term debt.
23
Financial and Operational Highlights
In the second quarter of 2026, the Company reported net income attributable to common stock of $747 million, or $2.11 per diluted share, compared to net income of $603 million, or $1.67 per diluted share, in the second quarter of 2025. In the first six months of 2026, the Company reported net income attributable to common stock of $1.2 billion, or $3.37 per diluted share, compared to net income of $950 million, or $2.62 per diluted share, in the first six months of 2025. The increase in net income in the second quarter and the first six months of 2026, compared to the second quarter and first six months of 2025, was primarily driven by higher oil revenues on stronger crude oil price realizations, improved margins on third-party purchased oil and gas activity and lower operating expenses driven by prior-year cost savings initiatives.
The Company generated $2.3 billion of cash from operating activities during the first six months of 2026, remaining flat when compared to the first six months of 2025. The Company paid $177 million in dividends to APA common stockholders and repurchased approximately $100 million of Company common stock during the first six months of 2026. The Company also repaid $752 million of long-term debt principal during the first six months of 2026.
Key operational highlights include:
United States
•Daily boe production from the Company’s U.S. assets, which decreased 9 percent from the second quarter of 2025, accounted for 64 percent of the Company’s worldwide production during the second quarter of 2026. The Company averaged five drilling rigs in the Permian Basin, including four rigs in the Southern Midland Basin and one rig in the Delaware Basin in the second quarter of 2026. The Company brought online 47 operated wells during the quarter. The Company’s core Permian Basin development program continues to represent a key area for the U.S. assets.
•APA holds approximately 750,000 MMBtu/d of firm capacity on various pipelines in the Permian Basin. As of June 30, 2026, the Company had open basis swap contracts which purchased Waha and sold NYMEX Henry Hub on approximately one-third of its firm transport capacity for 2026, thereby locking in a significant portion of cash flows associated with its gas trading activities for the near term. Refer to Note 4—Derivative Instruments and Hedging Activities for further discussion of these basis swap agreements.
•During the second quarter of 2026, the Company entered into an agreement to acquire Savant Alaska, LLC for approximately $70 million in upfront consideration, plus contingent payments tied to future development of the Company’s Alaska position. The to-be acquired infrastructure is expected to support operations beginning with 2026-2027 exploration and appraisal activities, while enhancing future development flexibility. Upon closing, the transaction is expected to add approximately 104,000 gross acres and approximately 1,500 b/d of oil production. The transaction is expected to close by year-end 2026.
International
•In Egypt, the Company averaged 12 drilling rigs and drilled 11 new productive wells during the second quarter of 2026. The Company also averaged 18 workover rigs as it continues optimizing drilling and workover activity for capital efficiency. Second quarter 2026 gross production from the Company’s Egypt assets increased 2 percent while net production decreased 13 percent from the second quarter of 2025. Second quarter 2026 net production was negatively impacted by higher price realizations and lower cost recovery volumes under the merged concession agreement.
•In Egypt, the Company expects approximately one-half of its rig activities to continue to be gas-focused and anticipates continued strong performance for the rest of the year, with realized gas prices increasing through the period.
•During the quarter, the Government of Egypt awarded the Company a five-year extension covering approximately 3.4 million acres of exploration acreage that was otherwise set to expire. In addition, approximately 400,000 acres of non-prospective acreage was not renewed in accordance with the applicable concession agreement terms. In connection with the extension, the Company committed to a drilling and seismic acquisition and reprocessing program, which it expects to complete in the normal course of operations.
•In Uruguay, the Company signed an agreement with Eni S.p.A. as a strategic partner in offshore Block 6. The Company will retain a 60 percent working interest, with Eni funding most of the initial exploration well planned for 2027.
24
Results of Operations
Oil, Natural Gas, and Natural Gas Liquids Production Revenues
Revenue
The Company’s production revenues and respective contribution to total revenues by country were as follows:
For the Quarter Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| $ Value | % Contribution | $ Value | % Contribution | $ Value | % Contribution | $ Value | % Contribution | |||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Oil Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 1,106 | 61 | % | $ | 730 | 53 | % | $ | 1,915 | 55 | % | $ | 1,546 | 52 | % | ||||||||||||||||||||||||||||||||||
Egypt(1) | 613 | 33 | % | 521 | 38 | % | 1,284 | 37 | % | 1,103 | 37 | % | ||||||||||||||||||||||||||||||||||||||
| North Sea | 107 | 6 | % | 130 | 9 | % | 271 | 8 | % | 332 | 11 | % | ||||||||||||||||||||||||||||||||||||||
Total(1) | $ | 1,826 | 100 | % | $ | 1,381 | 100 | % | $ | 3,470 | 100 | % | $ | 2,981 | 100 | % | ||||||||||||||||||||||||||||||||||
Natural Gas Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | (109) | (266) | % | $ | 48 | 26 | % | $ | (121) | (61) | % | $ | 152 | 36 | % | ||||||||||||||||||||||||||||||||||
Egypt(1) | 126 | 307 | % | 109 | 59 | % | 264 | 133 | % | 200 | 48 | % | ||||||||||||||||||||||||||||||||||||||
| North Sea | 24 | 59 | % | 27 | 15 | % | 55 | 28 | % | 65 | 16 | % | ||||||||||||||||||||||||||||||||||||||
Total(1) | $ | 41 | 100 | % | $ | 184 | 100 | % | $ | 198 | 100 | % | $ | 417 | 100 | % | ||||||||||||||||||||||||||||||||||
| NGL Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 161 | 95 | % | $ | 144 | 94 | % | $ | 290 | 93 | % | $ | 340 | 95 | % | ||||||||||||||||||||||||||||||||||
| North Sea | 9 | 5 | % | 9 | 6 | % | 21 | 7 | % | 19 | 5 | % | ||||||||||||||||||||||||||||||||||||||
Total(1) | $ | 170 | 100 | % | $ | 153 | 100 | % | $ | 311 | 100 | % | $ | 359 | 100 | % | ||||||||||||||||||||||||||||||||||
| Oil and Gas Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 1,158 | 57 | % | $ | 922 | 54 | % | $ | 2,084 | 52 | % | $ | 2,038 | 54 | % | ||||||||||||||||||||||||||||||||||
Egypt(1) | 739 | 36 | % | 630 | 37 | % | 1,548 | 39 | % | 1,303 | 35 | % | ||||||||||||||||||||||||||||||||||||||
| North Sea | 140 | 7 | % | 166 | 9 | % | 347 | 9 | % | 416 | 11 | % | ||||||||||||||||||||||||||||||||||||||
Total(1) | $ | 2,037 | 100 | % | $ | 1,718 | 100 | % | $ | 3,979 | 100 | % | $ | 3,757 | 100 | % | ||||||||||||||||||||||||||||||||||
(1) Includes revenues attributable to a noncontrolling interest in Egypt.
25
Production
The Company’s production volumes by country were as follows:
For the Quarter Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | Increase (Decrease) | 2025 | 2026 | Increase (Decrease) | 2025 | |||||||||||||||||||||||||||||||
| Oil Volume (b/d) | ||||||||||||||||||||||||||||||||||||
| United States | 123,455 | —% | 123,725 | 123,675 | (1)% | 124,420 | ||||||||||||||||||||||||||||||
Egypt(1)(2) | 70,139 | (19)% | 86,210 | 78,392 | (9)% | 86,192 | ||||||||||||||||||||||||||||||
| North Sea | 17,676 | (30)% | 25,309 | 19,496 | (23)% | 25,258 | ||||||||||||||||||||||||||||||
| Total | 211,270 | (10)% | 235,244 | 221,563 | (6)% | 235,870 | ||||||||||||||||||||||||||||||
| Natural Gas Volume (Mcf/d) | ||||||||||||||||||||||||||||||||||||
| United States | 403,474 | (22)% | 519,276 | 408,696 | (25)% | 546,853 | ||||||||||||||||||||||||||||||
Egypt(1)(2) | 327,286 | (5)% | 345,649 | 354,196 | 7% | 331,507 | ||||||||||||||||||||||||||||||
| North Sea | 21,365 | (27)% | 29,174 | 25,184 | (17)% | 30,383 | ||||||||||||||||||||||||||||||
| Total | 752,125 | (16)% | 894,099 | 788,076 | (13)% | 908,743 | ||||||||||||||||||||||||||||||
| NGL Volume (b/d) | ||||||||||||||||||||||||||||||||||||
| United States | 72,487 | (9)% | 79,632 | 72,158 | (8)% | 78,525 | ||||||||||||||||||||||||||||||
| North Sea | 848 | (28)% | 1,186 | 999 | (14)% | 1,165 | ||||||||||||||||||||||||||||||
| Total | 73,335 | (9)% | 80,818 | 73,157 | (8)% | 79,690 | ||||||||||||||||||||||||||||||
BOE per day(3) | ||||||||||||||||||||||||||||||||||||
| United States | 263,187 | (9)% | 289,902 | 263,949 | (10)% | 294,087 | ||||||||||||||||||||||||||||||
Egypt(1)(2) | 124,687 | (13)% | 143,818 | 137,425 | (3)% | 141,443 | ||||||||||||||||||||||||||||||
North Sea(4) | 22,085 | (30)% | 31,358 | 24,692 | (22)% | 31,487 | ||||||||||||||||||||||||||||||
| Total | 409,959 | (12)% | 465,078 | 426,066 | (9)% | 467,017 | ||||||||||||||||||||||||||||||
(1) Gross production volumes in Egypt were as follows:
For the Quarter Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Oil (b/d) | 117,056 | 123,852 | 119,252 | 125,927 | ||||||||||||||||||||||||||||||||
| Natural Gas (Mcf/d) | 538,925 | 479,235 | 528,333 | 468,157 | ||||||||||||||||||||||||||||||||
(2) Includes net production volumes per day attributable to a noncontrolling interest in Egypt of:
For the Quarter Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Oil (b/d) | 23,386 | 28,762 | 26,138 | 28,754 | ||||||||||||||||||||||||||||||||
| Natural Gas (Mcf/d) | 109,125 | 115,319 | 118,100 | 110,596 | ||||||||||||||||||||||||||||||||
(3) The table shows production on a boe basis in which natural gas is converted to an equivalent barrel of oil based on a 6:1 energy equivalent ratio. This ratio is not reflective of the price ratio between the two products.
(4) Average sales volumes from the North Sea for the second quarters of 2026 and 2025 were 14,877 boe/d and 28,015 boe/d, respectively, and 21,539 boe/d and 32,336 boe/d for the first six months of 2026 and 2025, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings.
26
Pricing
The Company’s average selling prices by country were as follows:
For the Quarter Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||
| 2026 | Increase (Decrease) | 2025 | 2026 | Increase (Decrease) | 2025 | |||||||||||||||||||||||||||||||
| Average Oil Price – Per barrel | ||||||||||||||||||||||||||||||||||||
| United States | $ | 98.46 | 52% | $ | 64.84 | $ | 85.54 | 25% | $ | 68.64 | ||||||||||||||||||||||||||
| Egypt | 95.95 | 45% | 66.39 | 90.48 | 28% | 70.70 | ||||||||||||||||||||||||||||||
| North Sea | 110.78 | 66% | 66.56 | 93.36 | 30% | 71.61 | ||||||||||||||||||||||||||||||
| Total | 98.24 | 50% | 65.58 | 87.89 | 26% | 69.72 | ||||||||||||||||||||||||||||||
Next expected filings
- ~2026-11-05 10-Q expected by 2026-11-10 (in 72 days)
- ~2027-02-26 10-K expected by 2027-03-04 (in 185 days)
- ~2027-05-06 10-Q expected by 2027-05-11 (in 254 days)
- ~2027-08-05 10-Q expected by 2027-08-10 (in 345 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-08-06 10-Q Quarterly Report
- 2026-08-05 8-K Earnings Release; Financial Statements and Exhibits
- 2026-07-08 8-K Earnings Release; Financial Statements and Exhibits
- 2026-06-01 S-8 Employee Benefit Plan Registration
- 2026-05-26 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2026-05-07 10-Q Quarterly Report
- 2026-05-06 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-14 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-09 DEF 14A Proxy Statement
- 2026-02-26 10-K Annual Report
- 2026-02-25 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-20 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-10 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-06 10-Q Quarterly Report
- 2025-11-05 8-K Earnings Release; Financial Statements and Exhibits