APA (APA) has made "significant progress" on its key 2024 initiatives year-to-date, which is expected to be reflected in its Q3 results, UBS Securities said in a note Friday.

UBS expects Permian volumes to increase as anticipated, Callon Petroleum (CPE) debt to be reduced through asset sales, and the negative Waha Hub price environment to positively impact cash flow. Furthermore, a final investment decision on Suriname enhances future clarity, while the company's joint venture in Egypt has a renewed focus on gas, the note said.

"We see continued execution across all initiatives as key to narrowing the [nearly] 27% [year-to-date] underperformance vs. peers," UBS said.

For Q3 UBS has raised its cash flow per share forecast from $2.70 to $2.99 but reduced its adjusted production estimate from 388,000 barrels of oil equivalent per day, to about 384,000 boepd due to higher-than-expected Permian gas/natural gas liquids curtailments, the note said.

For 2025, UBS forecasts flat volumes in the Permian and Egypt, while the company plans to operate a 9-rig program in the Permian. Spending in Suriname is expected to rise after the FID, with net capex on Block 58 anticipated to exceed $200 million, while North Sea expenditures are likely to be constrained and Alaska exploration will occur at a slower pace than this year, it added.

UBS reiterated its neutral rating on APA with a price target of $29.

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