• Net Income: $354 million or $0.96 per diluted share for Q4 2024.
• Adjusted Net Income: $290 million or $0.79 per share for Q4 2024.
• Free Cash Flow: $420 million in Q4 2024; $841 million for the full year 2024.
• Dividends and Share Repurchases: $353 million in dividends and $246 million in share repurchases in 2024.
• Production Volumes: Above guidance in all operating regions for Q4 2024.
• Development Capital Budget for 2025: $2.5 billion to $2.6 billion.
• Cost Reduction Initiatives: Targeting $350 million in annualized savings by year-end 2027.
• Gas Trading Net Gain: Nearly $0.5 billion in 2024; anticipated $600 million in 2025.
• Credit Rating: Upgraded to BBB- by S&P in October 2024.
• Breakeven Oil Prices: Reduced to $61 per barrel in 2024 from Callon's 2023 breakeven of $78 per barrel.

• Warning! GuruFocus has detected 4 Warning Sign with APA.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• APA Corp (NASDAQ:APA) achieved a BBB- rating from S&P, marking it as investment grade with all three rating agencies.
• The company reported $420 million of free cash flow in the fourth quarter, the highest of any quarter in 2024.
• APA Corp (NASDAQ:APA) successfully integrated Callon, achieving meaningful synergies and reducing breakeven oil prices to $61 per barrel.
• The company returned 71% of free cash flow to shareholders in 2024 through dividends and share repurchases.
• APA Corp (NASDAQ:APA) is targeting $350 million in annualized cost savings by year-end 2027, with $35 million already identified and captured.

Negative Points

• The company's share price has been underperforming relative to its peer group, indicating a potential crisis of confidence among investors.
• Fourth quarter DD&A expense was higher than guidance due to accelerated depreciation at Alpine High.
• Lease operating expense came in slightly higher than guidance, largely due to an extra North Sea cargo lifting.
• There is a contingent liability increase of $190 million related to the Fieldwood properties, reflecting high cash costs for asset management.
• The company faces challenges in balancing its capital return framework with the need to address its capital structure and debt levels.

Q & A Highlights

Q: What confidence do you have that your cost-cutting measures will improve guidance and visibility, given the persistent underperformance of your share price? A: John Christmann, CEO, emphasized that APA has transformed its core assets in the Permian and Egypt into sustainable and durable businesses. He expressed confidence in the cost-cutting measures, which have already identified $35 million in savings, and believes these efforts will deliver meaningful results.

Q: Why prioritize share buybacks over paying down debt, given the current capital structure and share price performance? A: John Christmann, CEO, and Stephen Riney, CFO, stated that APA is making progress on both share buybacks and debt reduction. They believe buying back shares is leveraging to the current shareholder base and is supported by many shareholders.

Q: Can you provide an update on the exploration activities in Alaska, specifically the Saki well? A: John Christmann, CEO, reported that operations are going smoothly, and while they are not yet in the pay zones, the progress is on track. He expressed optimism about the forthcoming results.

Q: How do you balance your 12-rig activity in Egypt between oil and gas drilling, and what infrastructure is needed for gas growth? A: John Christmann, CEO, explained that APA is off to a strong start with its gas program and plans to shift more rigs to gas drilling. The existing infrastructure is adequate for now, but future success may require additional infrastructure investments.

Q: What is the current status of receivables in Egypt, and what is the outlook for 2025? A: John Christmann, CEO, noted that the past due balance has remained stable, and there is a commitment from Egypt to make progress on reducing it. Stephen Riney, CFO, clarified that receivables were flat in the quarter, with an increase in drilling inventory instead.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.