APA 6 08/01/13 D Filings — Apa Corporation - FilingSpy
APA 6 08/01/13 D
Apa Corporation
An oil and gas exploration and production company that hunts for and pumps crude oil and natural gas in the United States, Egypt, and the North Sea. Born in 1954 when four young men pooled their savings to drill in the Texas Panhandle, it grew from a small wildcat outfit into one of the world's largest independent producers. The founders reportedly picked the name "Apache" because they saw themselves as bold independents taking on the big oil companies, much like the Apache warriors of the American Southwest — and the company kept the moniker when it moved its headquarters to Houston.
APA net income rose 24% to $747M as oil prices climbed 50% and purchased gas swung to a net gain.
Oil prices drove the quarter, but U.S. natural gas prices turned so negative the company paid to have it taken away. rose 19% to $2.0 billion and reached $2.11 as a 50% increase in realized oil prices to $98.24 a barrel and a $426 million swing in purchased gas activity more than offset a 12% drop in production. The company is generating cash, paying down debt, and cutting costs, but its U.S. gas position is a growing liability.
Key takeaways
rose 24% to $747 million from $603 million a year ago, as a 50% increase in average realized oil prices to $98.24 per barrel lifted total oil and gas production revenues 19% to $2.0 billion.
U.S. natural gas revenues turned negative at -$109 million after realized prices collapsed 74% to $0.60 per Mcf, forcing the company to curtail production at its field in the .
swung from a $304 million cost a year ago to a $122 million net gain, as the company benefited from buying gas at deeply negative spot prices to fulfill sales contracts.
Section summaries
Management's Discussion and Analysis
APA Q2 2026 net income rose to $747M driven by higher oil prices and improved margins on purchased gas.
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attributable to common stock increased to $747 million, or $2.11 per diluted share, from $603 million, or $1.67 per share, in Q2 2025.
Total daily production on a barrel-of-oil-equivalent basis fell 12% , driven by the deliberate gas curtailments and natural decline in the U.S., partially offset by an 8% increase in Egypt net output.
fell 13% from a year ago to $3.7 billion after the company repaid $752 million in the first half of 2026, including a $557 million note redemption in April.
The company raised its annualized cost-savings target to $500 million by year-end 2026, up from the $450 million target set at the end of 2025, and maintained its $2.1 billion upstream capital plan.
What changed
The Q1 2026 watch item on U.S. production volumes materialized: the 11% decline deepened as curtailments persisted and total BOE production fell 12% in Q2.
The extreme negative pricing flagged in Q1 intensified, driving U.S. natural gas revenues to -$109 million and turning purchased gas activity into a $122 million net gain, a $426 million swing from the prior-year quarter.
The cost-savings initiative was accelerated again: the target was raised to $500 million in annualized savings by year-end 2026, up from the $450 million goal set after FY 2025 and the $350 million achieved in 2025.
Debt reduction continued ahead of the pace set in 2025, with $752 million repaid in the first half, including a post-quarter $557 million note redemption, bringing to $3.7 billion.
What to watch
Q3 2026 U.S. natural gas revenues and whether the curtailment strategy changes if spot prices remain negative.
Progress toward the new $500 million annualized cost-savings target by year-end 2026 and its impact on lease operating expenses and cash margins.
Movement in the $1.0 billion legacy Gulf of America decommissioning contingent liability and any further surety bond or trust recoveries.
Quarterly and the actual percentage returned to shareholders under the 60% policy, given the current focus on debt reduction.
Total oil and gas production revenues grew 19% to $2.0 billion, as a 50% increase in average realized oil prices to $98.24/bbl more than offset a 12% decline in total BOE production.
U.S. natural gas revenues turned negative at -$109 million due to extreme pricing, prompting production curtailments at .
Purchased oil and gas activity generated net proceeds of $122 million in Q2 2026 versus costs of $304 million a year ago, benefiting from negative Permian gas prices.
The Company raised its annualized cost savings target to $500 million by year-end 2026 and repaid $752 million of in the first half of the year.
APA expects to invest approximately $2.1 billion in upstream capital in 2026 and maintains $4.0 billion in available committed borrowing capacity.
Quantitative and Qualitative Disclosures About Market Risk
Commodity price risk dominates, with oil up 50% YoY and gas down 74%; the company uses derivatives and fixed-rate debt to manage exposures.
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Average realized oil prices rose 50% to $98.24/bbl, while natural gas fell 74% to $0.60/Mcf and NGLs rose 24% to $25.41/bbl in Q2 2026.
A $1/bbl oil price move impacts quarterly by ~$19M; a $0.10/Mcf gas move impacts ~$7M; a $1/bbl move impacts ~$7M, based on Q2 2026 production.
The company hedges a portion of projected oil and gas output using futures, swaps, and options, and does not trade derivatives; open gas derivatives had a $6M liability at quarter-end.
A 10% rise in natural gas prices would decrease the liability by ~$4M, while a 10% decline would increase it by ~$3M.
All $3.7B in outstanding notes and debentures is fixed-rate debt at a 5.71% weighted average rate, so near-term rate changes do not expose earnings or cash flows to loss.
Foreign exchange risk arises mainly from British pound-denominated costs in the ; a 10% strengthening of the pound yields a $4M gain, while a 10% weakening yields a $9M loss on outstanding contracts.
Refer to Part I, Item 3—Legal Proceedings of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and Note 10—Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report…
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Refer to Part I, Item 3—Legal Proceedings of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and Note 10—Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q (which is hereby incorporated by reference herein), for a description of material legal proceedings.
There have been no material changes to the risk factors disclosed in Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as supplemented by Part II, Item 1A—Risk Factors of the Company’s Quarterly Report on Form 1…
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There have been no material changes to the risk factors disclosed in Part I, Item 1A—Risk Factors of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as supplemented by Part II, Item 1A—Risk Factors of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026.