APA Corp Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
APA Corp's Q3 2025 earnings call highlighted strong financial and operational results, progress in cost reduction initiatives, and a disciplined approach to capital allocation amid a volatile macro environment. Key discussion points included exceeding production guidance, reducing controllable spend, advancements in Egypt's gas program, and preliminary plans for 2026 focused on free cash flow generation.
Key Financial Results
Q3 2025 adjusted net income was $332 million, or $0.93 per share.
Free cash flow generated was $339 million.
$154 million was returned to investors through dividends and share buybacks.
Net debt was reduced by approximately $430 million.
Net financing cost savings, excluding gains on debt extinguishment, amounted to $75 million so far in 2025, compared to the same period in 2024.
The company ended the quarter with $475 million in cash.
Business Segment Results
In the Permian, oil production exceeded guidance due to strong operational execution.
In Egypt, gross BOEs grew sequentially, driven by the gas program.
In the North Sea, higher production and lower costs were achieved through operating efficiency and cost management.
In Suriname, progress at GranMorgu continues, with first oil expected by mid-2028.
Capital Allocation
Evaluating multiple capital allocation scenarios for 2026, focusing on free cash flow generation.
Preliminary plan includes maintaining consistent activity levels and capital spend in Egypt.
Development capital, inclusive of approximately $250 million for Suriname development, is expected to be 10% lower than 2025.
Capital investments are being directed toward projects aimed at sustainably lowering future Permian operating costs.
Industry Trends and Dynamics
The macro environment has been challenging, with volatility and uncertainty in commodity prices.
Commodity prices are largely driven by shifting trade policies and geopolitical tensions.
Recent dislocation to Waha pricing is impacting gas production guidance, leading to temporary curtailments in the field.
Macroeconomic Environment
The macro environment is characterized by heightened volatility and uncertainty in commodity prices.
Commodity price fluctuations are largely due to shifting trade policies and geopolitical tensions.
Growth Opportunities and Strategies
Continued progress across key strategic initiatives.
Focus on lowering controllable spend to improve cost structure.
Disciplined capital allocation and a reshaped portfolio.
Gas exploration program in the Western Desert of Egypt.
Advancing the world-class opportunity in Suriname Block 58.
Financial Guidance and Outlook
Raising guidance for oil production in the Permian for the fourth quarter, while maintaining the outlook for capital spend.
Adjusting gas production guidance to reflect temporary curtailments in the field due to Waha pricing.
Slightly increasing fourth quarter production estimates for Egypt, in line with the gas program's momentum.
Targeting an additional $50 million to $100 million in combined run rate savings across G&A, capital, and LOE by the end of next year.
At a pace of five rigs, consistent year-over-year oil production of approximately 120,000 barrels per day is expected in the Permian, with capital investment of around $1.3 billion.
Formal guidance for 2026 will be provided in February.
Based on current strip pricing, expect $630 million in pre-tax income from trading activities for 2025.
For 2026, combined ARO and decommissioning spend is expected to increase, primarily due to higher planned activity in the North Sea.
Expects to owe little to no US taxes in 2025 and 2026.
