APA Corporation Reports Strong Fourth-Quarter and Full-Year 2025 Financial and Operational Results

Key Financial and Operational Highlights

• Fourth-Quarter 2025 Production: Reported production reached 460,000 barrels of oil equivalent (BOE) per day; adjusted production (excluding Egypt noncontrolling interest and tax barrels) was 387,000 BOE per day.
• Full-Year 2025 Production: Reported average of 464,000 BOE per day; adjusted average 392,000 BOE per day. After non-core U.S. asset sales, adjusted production was 386,000 BOE per day.
• U.S. Oil Output: Fourth-quarter U.S. oil production was 132,000 barrels per day, reflecting improved run-time, more completions, and mild weather.
• Egypt Performance: Egypt gross gas production grew approximately 10% year-over-year.
• Cash Flow and Earnings: Q4 net cash from operating activities was \$808 million; free cash flow \$425 million; adjusted EBITDAX \$1.2 billion. Full-year net cash from operating activities was \$4.5 billion; free cash flow \$1.0 billion; adjusted EBITDAX \$5.4 billion.
• Debt Reduction: Total debt cut to less than \$4.5 billion, net debt under \$4 billion at year-end.
• Shareholder Returns: \$640 million returned in 2025 via dividends and share repurchases, over 60% of free cash flow.
• Cost Savings: Achieved \$350 million in run-rate controllable spend savings—two years ahead of plan; now targeting \$450 million by year-end 2026.
• Permian Inventory: Comprehensive assessment validated approximately 10 years of economic inventory with substantial technical upside.
• Year-End Proved Reserves: Total worldwide proved reserves grew 9% to 1,056 million BOE, with 734 million BOE classified as proved developed.

2026 Outlook and Strategic Priorities

• Capital Spending: Planned total upstream capital for 2026 is \$2.1 billion, a 10% reduction versus 2025. This includes \$230 million for GranMorgu development and \$70 million for exploration in Suriname Block 58 and Alaska.
• Production Guidance: Total adjusted production expected to be 371,000 BOE per day, a year-over-year decline primarily due to the North Sea, lower U.S. gas volumes, and asset sales.
• U.S. Oil Production: Expected to average 120,000 to 122,000 barrels per day in 2026, slightly higher than prior guidance.
• Permian Development: Permian capital is expected to be \$1.2 billion, plus \$100 million for projects to sustainably reduce lease operating expenses (LOE).
• Egypt Outlook: Gross Egypt production expected to slightly increase, with gas up 13%-15% year-over-year, reflecting a shift to more gas-focused drilling.

CEO Commentary

APA CEO John J. Christmann IV emphasized the company’s “fundamental transformation” over recent years, with a focus on high-grading the portfolio, reducing the cost structure, strengthening the balance sheet, and advancing exploration. The comprehensive Permian inventory review confirmed 10 years of economic inventory at current cost structure and significant technical upside, bolstering confidence in sustaining oil production for the next decade with competitive capital efficiency.

Other Notable Developments

• Asset Sales: The company continued to high-grade its portfolio by divesting non-core assets, impacting overall production numbers but improving capital efficiency.
• Non-GAAP Financials: APA provided reconciliations for non-GAAP measures such as adjusted earnings, adjusted EBITDAX, upstream capital investment, and free cash flow, underscoring its focus on transparency and capital discipline.
• Exploration Expense: Exploration expenses were \$36 million in Q4 2025 and \$131 million for the year, reflecting a continued commitment to exploration activity, especially in Suriname and Alaska.

Shareholder Considerations and Price-Sensitive Information

• Cost Structure: Achieving \$350 million in annual cost savings ahead of schedule and raising the 2026 target to \$450 million are likely to be positively received by investors, demonstrating management’s strong execution and commitment to efficiency. This should support margins and cash flow, even in a softer commodity price environment.
• Production Outlook: The guided 2026 production decline may weigh on shares, but the cause is mainly asset sales and North Sea/U.S. gas declines, with Egypt and Permian oil relatively resilient.
• Debt Reduction and Returns: The substantial reduction in both gross and net debt and the high percentage of free cash flow returned to shareholders highlight a shareholder-friendly capital allocation strategy, which could provide support to the share price.
• Permian Inventory Validation: The confirmation of 10 years of economic drilling inventory and technical upside in the Permian is a key long-term positive for valuation, suggesting years of steady oil production and cash flow generation ahead.
• Exploration Upside: Continued investment in Suriname and Alaska exploration could provide meaningful upside, depending on results.

Detailed Financial Information

• Fourth-Quarter 2025: Net income attributable to common stock was \$279 million (\$0.79 per diluted share); adjusted earnings were \$324 million (\$0.91 per share).
• Full-Year 2025: Net income attributable to common stock was \$1.434 billion (\$3.99 per share); adjusted earnings were \$1.354 billion (\$3.77 per share).
• Dividends: Declared dividend per common share was \$0.25 for the quarter.
• Balance Sheet: Cash and cash equivalents at year-end 2025 stood at \$625 million. Total assets were \$17.76 billion; APA shareholders’ equity was \$6.1 billion.

Conference Call

APA will host a conference call to discuss its results on Thursday, Feb. 26 at 10 a.m. Central Time, with a webcast and replay available on the company’s website.

Conclusion

APA Corporation’s 2025 results highlight a period of strong operational execution, capital discipline, and balance sheet strengthening. The company’s ability to generate substantial free cash flow, reduce debt, and return capital to shareholders, alongside a validated and robust Permian inventory, positions it well for future performance. The lower capital spending outlook and continued focus on cost reduction should support ongoing returns, though investors will watch the production trajectory and exploration results closely.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Forward-looking statements are inherently subject to risks and uncertainties. Investors are encouraged to review APA Corporation’s filings with the SEC and consult their financial advisor before making any investment decisions.

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