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APA Corp. Third Quarter 2021 Results

Share Print Bookmark    |    Monday,November 15,2021

APA Corp. announced its financial and operational results for the third-quarter 2021.

Highlights:

• Reported production of 389,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 336,000 BOE per day; 
• Generated net cash from operating activities of $771 million and adjusted EBITDAX of $1.16 billion;
• Committing to return a minimum of 60% of Free Cash Flow to shareholders through dividends and stock repurchases;
• Increasing annualized dividend from $0.25 to $0.50 per share; repurchased 14.7 million shares in October;
• Completed $1.7 billion bond tender in August, significantly strengthening the balance sheet; and
• Ended routine flaring onshore U.S., achieving goal three months ahead of schedule.

APA reported a loss of $113 million, or $0.30 per diluted common share. When adjusted for items that impact the comparability of results, predominately a $446 million undiscounted net contingency recognized for asset retirement obligations associated with previously divested Gulf of Mexico properties, APA’s third-quarter earnings were $372 million, or $0.98 per diluted share. Net cash provided by operating activities was $771 million, and adjusted EBITDAX was $1.16 billion, making it the strongest quarterly performance of the year. The company anticipates the fourth quarter will be even stronger. 

John J. Christmann IV, APA’s CEO and president, said: “APA delivered another excellent quarter, driven by strong U.S. well performance, continued capital and cost discipline, and better-than-expected commodity prices. We generated $1.3 billion of Free Cash Flow in the first three quarters of 2021, and, at current strip pricing, we anticipate approximately $2 billion for the full-year. With the substantial strengthening of our balance sheet, a streamlined and more profitable enterprise and a planned capital program that will sustain or slightly grow production for the long term, we are committing to returning a minimum of 60% of our Free Cash Flow to shareholders. This began with the repurchase of 14.7 million shares in the month of October and today’s announced increase in our annual dividend to $0.50 per share, and we intend to continue these returns of capital to shareholders this quarter and into 2022.”

Third-Quarter Summary

Third-quarter reported production was 389,000 BOE per day, and adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 336,000 BOE per day. U.S. production was 237,000 BOE per day and international adjusted volumes were 99,000 BOE per day. APA’s third-quarter upstream capital investment was $228 million.

Production in the Southern Midland Basin and in Alpine High exceeded expectations during the quarter and the company recently added a third U.S. rig in its Austin Chalk play. Gross volumes in Egypt and the North Sea bottomed in the third quarter and have begun to move higher in the fourth quarter. In Egypt, the company has increased its rig count to 11 in anticipation of final approvals on modernized PSC terms before year end. In Block 58 Offshore Suriname, flow testing at Sapakara South and exploration work at Bonboni are continuing. Data collected from these operations will inform next steps in the exploration and appraisal program for the block.

Balance Sheet Progress and Share Repurchase Program

In August, the company significantly reduced its outstanding term debt through a $1.7 billion upsized bond tender, which was funded by cash on hand and borrowings from its revolving credit facility. At the end of the third quarter, APA’s total debt, excluding Altus Midstream, was $6.75 billion, and cash and cash equivalents were $268 million.

APA repurchased approximately 14.7 million shares in October under an existing authorization of 40 million shares. The company’s board of directors increased that authorization by an additional 40 million shares, bringing the total to 80 million shares, with approximately 65 million remaining at the end of October. In the fourth quarter, the company expects to return more than 60% of Free Cash Flow to shareholders.

ESG Progress

On Sept. 30, the company ended routine flaring in onshore U.S. operations. Through the end of the third quarter, flaring intensity in the U.S. onshore was 0.38%, significantly below the 2021 target of less than 1%.