Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 2, 2023

APA CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

001-40144

86-1430562

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

2000 Post Oak Boulevard, Suite 100

Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (713) 296-6000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, $0.625 par value

APA

Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

Item 2.02.

Results of Operations and Financial Condition.

On August 2, 2023, APA Corporation issued a press release announcing financial and operating results for the fiscal quarter ended June 30, 2023. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.		Description

99.1		Press Release of APA Corporation dated August 2, 2023.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	APA CORPORATION

Date: August 3, 2023	By:	/s/ Rebecca A. Hoyt
		Rebecca A. Hoyt
		Senior Vice President, Chief Accounting Officer, and Controller
		(Principal Accounting Officer)

Exhibit 99.1

LOGO

NEWS RELEASE

APA Corporation Announces Second-Quarter 2023

Financial and Operational Results

Key Takeaways

•

Reported production of 399,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 325,000 BOE per day;

•

Generated net cash from operating activities of $1 billion;

•

Returned 131% ($123 Million) of Free Cash Flow to shareholders in the second quarter;

•

Appraisal at Krabdagu-3 on Block 58 offshore Suriname confirms extension of oil resource 14 kilometers from the discovery well;

•

Long-term natural gas supply contract with Cheniere commenced Aug. 1; and

•

On track to deliver total adjusted oil production growth of more than 10% for the year, driven by U.S. and Egypt performance.

HOUSTON, Aug. 2, 2023 – APA Corporation (Nasdaq: APA) today announced its financial and operational results for the second quarter of 2023.

APA reported net income attributable to common stock of $381 million, or $1.23 per diluted share. When adjusted for items that impact the comparability of results, APA’s second-quarter earnings were $264 million, or $0.85 per diluted share. Net cash provided by operating activities was $1.0 billion, and adjusted EBITDAX was $1.2 billion. The company generated $94 million in free cash flow during the quarter.

“APA delivered a strong second quarter, driven by steady operational execution and ongoing cost management,” said John J. Christmann IV, APA’s CEO and president. “Global adjusted production was at the high end of expectations, led by above-guidance oil production growth in the Permian Basin. In Suriname, appraisal of the Krabdagu fairway is ongoing. While there is more technical work to do, the results to date have provided more confidence as we advance toward developing the country’s first offshore oil hub.”

Second-Quarter Summary

Second-quarter reported production was 399,000 BOE per day, and adjusted production, which excludes

APA CORPORATION ANNOUNCES SECOND-QUARTER 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 2 of 5

Egypt noncontrolling interest and tax barrels, was 325,000 BOE per day. Adjusted production grew by 2% compared to the first quarter, driven primarily by a 6% increase in U.S. oil volumes. Gross oil production in Egypt was in line with guidance.

APA’s second-quarter upstream capital investment of $516 million was below guidance, as were lease operating expenditures and G&A. These results were primarily a result of the company’s continued focus on cost management.

Capital and Activity Update

For the remainder of the year, drilling activity in the U.S. and Egypt is expected to remain at current levels, as this activity pace optimizes operational efficiencies. In Suriname, the focus is on completing the Krabdagu appraisal program and scoping an oil hub project to develop the combined Sapakara and Krabdagu resource. No additional drilling will be necessary in Suriname during 2023. Accordingly, when combined with deferred platform drilling activity in the North Sea and ongoing cost management efforts, APA is reducing full-year upstream capital investment guidance to $1.9 billion. Additionally, the company is lowering its full-year LOE outlook by $100 million to $1.4 billion.

Christmann concluded, “We are tracking in line with the full-year production guidance issued in February and are particularly pleased with the oil production growth we are currently generating on a reduced capital budget.”

Conference Call

APA will host a conference call to discuss its second-quarter 2023 results at 10 a.m. Central time, Thursday, Aug. 3. The conference call will be webcast from APA’s website at www.apacorp.com and investor.apacorp.com. Following the conference call, a replay will be available for one year on the “Investors” page of the company’s website.

About APA

APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt and the United Kingdom and that explore for oil and natural gas offshore Suriname

APA CORPORATION ANNOUNCES SECOND-QUARTER 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 3 of 5

and the Dominican Republic. APA posts announcements, operational updates, investor information and press releases on its website, www.apacorp.com. Additional details regarding Suriname, ESG performance and other investor-related topics are posted at investor.apacorp.com.

Additional Information

Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. APA’s quarterly supplement is available at http://www.apacorp.com/financialdata.

Non-GAAP Financial Measures

APA’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “guidance,” “may,” “might,” “outlook,” “possibly,” “potential,” “projects,” “prospects,” “should,” “will,” “would,” and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations, and objectives

APA CORPORATION ANNOUNCES SECOND-QUARTER 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 4 of 5

for operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See “Risk Factors” in APA’s Form 10-K for the year ended December 31, 2022, and in our quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. APA and its subsidiaries undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.

Cautionary Note to Investors

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC’s definitions for such terms. APA may use certain terms in this news release, such as “resources,” “potential resources,” “resource potential,” “estimated net reserves,” “recoverable reserves,” and other similar terms that the SEC guidelines strictly prohibit APA from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality, and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in APA’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2022 available from APA at www.apacorp.com or by writing APA at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.

APA CORPORATION ANNOUNCES SECOND-QUARTER 2023

FINANCIAL AND OPERATIONAL RESULTS — PAGE 5 of 5

Contacts

Investor: (281) 302-2286 Gary Clark

Media: (713) 296-7276 Alexandra Franceschi

Website: www.apacorp.com

Click here for the full release with quarterly financial statements.

-end-

APA CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)


	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023		2022
REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues
Oil revenues	$	1,365		$	1,863		$	2,762	$	3,580
Natural gas revenues		180			433			422		813
Natural gas liquids revenues		107			229			237		452

		1,652			2,525			3,421		4,845
Purchased oil and gas sales		144			522			383		871

Total revenues		1,796			3,047			3,804		5,716
Derivative instrument gain (loss), net		51			(32	)		104		(94	)
Gain (loss) on divestitures, net		5			(27	)		6		1,149
Other, net		109			64			77		109

		1,961			3,052			3,991		6,880

OPERATING EXPENSES:
Lease operating expenses		361			359			682		703
Gathering, processing, and transmission		78			94			156		175
Purchased oil and gas costs		131			528			347		879
Taxes other than income		50			78			102		148
Exploration		43			56			95		98
General and administrative		72			89			137		245
Transaction, reorganization, and separation		2			3			6		17
Depreciation, depletion, and amortization:
Oil and gas property and equipment		354			269			679		547
Other assets		13			9			20		22
Asset retirement obligation accretion		29			29			57		58
Impairments		46			—			46		—
Financing costs, net		82			76			154		228

		1,261			1,590			2,481		3,120

NET INCOME BEFORE INCOME TAXES		700			1,462			1,510		3,760
Current income tax provision		254			415			600		807
Deferred income tax provision (benefit)		(16	)		(20	)		122		(60	)

NET INCOME INCLUDING NONCONTROLLING INTERESTS		462			1,067			788		3,013
Net income attributable to noncontrolling interest - Egypt		81			141			165		260
Net income attributable to noncontrolling interest - Altus		—			—			—		14
Net loss attributable to Altus Preferred Unit limited partners		—			—			—		(70	)

NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	381		$	926		$	623	$	2,809

NET INCOME PER COMMON SHARE:
Basic	$	1.24		$	2.72		$	2.01	$	8.18
Diluted	$	1.23		$	2.71		$	2.01	$	8.15

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		308			341			310		344
Diluted		309			342			310		344

DIVIDENDS DECLARED PER COMMON SHARE	$	0.25		$	0.125		$	0.50		0.25

Page 6

APA CORPORATION

PRODUCTION INFORMATION


	For the Quarter Ended						% Change						For the Six Months Ended
	June 30, 2023		March 31, 2023		June 30, 2022		2Q23 to 1Q23			2Q23 to 2Q22			June 30, 2023		June 30, 2022
OIL VOLUME - Barrels per day
United States		75,993		71,888		64,759		6	%		17	%		73,952		67,184
Egypt ^{(1, 2)}		87,790		87,795		85,502		0	%		3	%		87,792		85,261
North Sea		35,048		37,502		32,493		-7	%		8	%		36,268		33,860

International ⁽¹⁾		122,838		125,297		117,995		-2	%		4	%		124,060		119,121

Total ⁽¹⁾		198,831		197,185		182,754		1	%		9	%		198,012		186,305

NATURAL GAS VOLUME - Mcf per day
United States		450,200		441,527		457,459		2	%		-2	%		445,887		467,493
Egypt ^{(1, 2)}		337,413		356,350		346,424		-5	%		-3	%		346,829		366,390
North Sea		37,194		40,360		42,802		-8	%		-13	%		38,769		40,645

International ⁽¹⁾		374,607		396,710		389,226		-6	%		-4	%		385,598		407,035

Total ⁽¹⁾		824,807		838,237		846,685		-2	%		-3	%		831,485		874,528

NGL VOLUME - Barrels per day
United States		61,760		56,103		59,267		10	%		4	%		58,947		60,482
Egypt ^{(1, 2)}		—		—		297		—			NM			—		394
North Sea		872		1,255		1,195		-31	%		-27	%		1,062		1,345

International ⁽¹⁾		872		1,255		1,492		-31	%		-42	%		1,062		1,739

Total ⁽¹⁾		62,632		57,358		60,759		9	%		3	%		60,009		62,221

BOE per day
United States		212,786		201,580		200,269		6	%		6	%		207,213		205,582
Egypt ^{(1, 2)}		144,026		147,186		143,536		-2	%		0	%		145,597		146,720
North Sea		42,118		45,483		40,822		-7	%		3	%		43,792		41,979

International ⁽¹⁾		186,144		192,669		184,358		-3	%		1	%		189,389		188,699

Total ⁽¹⁾		398,930		394,249		384,627		1	%		4	%		396,602		394,281

Total excluding noncontrolling interests		350,864		345,138		336,756		2	%		4	%		348,016		345,375

⁽¹⁾ Includes net production volumes attributed to our noncontrolling partner in Egypt below:
Oil (b/d)		29,298		29,294		28,516								29,296		28,423
Gas (Mcf/d)		112,609		118,903		115,534								115,738		122,112
NGL (b/d)		—		—		99								—		131
BOE per day		48,066		49,111		47,871		-2	%		0	%		48,586		48,906

⁽²⁾ Egypt Gross Production
Oil (b/d)		140,652		140,764		141,432								140,708		137,934
Gas (Mcf/d)		517,291		545,049		555,694								531,093		576,637
NGL (b/d)		—		—		464								—		599
BOE per day		226,867		231,606		234,512		-2	%		-3	%		229,224		234,639

NM - not meaningful

Page 7

APA CORPORATION

ADJUSTED PRODUCTION INFORMATION

Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) noncontrolling interest in Egypt and 2) Egypt tax barrels. Management uses adjusted production to evaluate the company’s operational trends and performance and believes it is useful to investors and other third parties.


	For the Quarter Ended						% Change						For the Six Months Ended
	June 30, 2023		March 31, 2023		June 30, 2022		2Q23 to 1Q23			2Q23 to 2Q22			June 30, 2023		June 30, 2022
OIL VOLUME - Barrels per day
United States		75,993		71,888		64,759		6	%		17	%		73,952		67,184
Egypt		43,085		42,553		37,934		1	%		14	%		42,820		38,357
North Sea		35,048		37,502		32,493		-7	%		8	%		36,268		33,860

International		78,133		80,055		70,427		-2	%		11	%		79,088		72,217

Total		154,126		151,943		135,186		1	%		14	%		153,040		139,401

NATURAL GAS VOLUME - Mcf per day
United States		450,200		441,527		457,459		2	%		-2	%		445,887		467,493
Egypt		164,096		171,952		152,775		-5	%		7	%		168,002		164,079
North Sea		37,194		40,360		42,802		-8	%		-13	%		38,769		40,645

International		201,290		212,312		195,577		-5	%		3	%		206,771		204,724

Total		651,490		653,839		653,036		0	%		0	%		652,658		672,217

NGL VOLUME - Barrels per day
United States		61,760		56,103		59,267		10	%		4	%		58,947		60,482
Egypt		—		—		133		—			NM			—		179
North Sea		872		1,255		1,195		-31	%		-27	%		1,062		1,345

International		872		1,255		1,328		-31	%		-34	%		1,062		1,524

Total		62,632		57,358		60,595		9	%		3	%		60,009		62,006

BOE per day
United States		212,786		201,580		200,269		6	%		6	%		207,213		205,582
Egypt		70,434		71,211		63,530		-1	%		11	%		70,821		65,882
North Sea		42,118		45,483		40,822		-7	%		3	%		43,792		41,979

International		112,552		116,694		104,352		-4	%		8	%		114,613		107,861

Total		325,338		318,274		304,621		2	%		7	%		321,826		313,443

NM - not meaningful

Page 8

APA CORPORATION

PRICE INFORMATION


	For the Quarter Ended						For the Six Months Ended
	June 30, 2023		March 31, 2023		June 30, 2022		June 30, 2023		June 30, 2022
AVERAGE OIL PRICE PER BARREL
United States	$	73.99	$	75.17	$	110.98	$	74.56	$	103.05
Egypt		77.39		79.58		115.97		78.48		109.65
North Sea		79.27		81.57		113.77		80.51		107.47
International		77.90		80.19		115.40		79.06		109.05
Total		76.38		78.37		113.79		77.37		106.87

AVERAGE NATURAL GAS PRICE PER MCF
United States	$	1.24	$	2.24	$	6.75	$	1.73	$	5.48
Egypt		2.95		2.89		2.78		2.92		2.80
North Sea		11.29		17.58		18.15		14.47		24.72
International		3.78		4.32		4.33		4.05		4.79
Total		2.39		3.22		5.65		2.81		5.16

AVERAGE NGL PRICE PER BARREL
United States	$	18.26	$	23.79	$	39.79	$	20.88	$	38.20
Egypt		—		—		75.14		—		76.80
North Sea		39.24		56.92		71.71		49.52		73.29
International		39.24		56.92		72.17		49.52		73.84
Total		18.69		24.84		40.97		21.62		39.63

Page 9

APA CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION


	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Unproved leasehold impairments	$	6		$	2		$	11		$	6
Dry hole expense		23			36			53			41
Geological and geophysical expense		1			3			2			18
Exploration overhead and other		13			15			29			33

	$	43		$	56		$	95		$	98

SUMMARY CASH FLOW INFORMATION
	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Net cash provided by operating activities	$	1,000		$	1,535		$	1,335		$	2,426

Additions to upstream oil and gas property		(580	)		(389	)		(1,129	)		(767	)
Proceeds from sale of oil and gas properties		7			(16	)		28			751
Proceeds from sale of Kinetik shares		—			—			—			224
Deconsolidation of Altus cash and cash equivalents		—			—			—			(143	)
Other, net		(10	)		(45	)		(14	)		(49	)

Net cash provided by (used in) investing activities	$	(583	)	$	(450	)	$	(1,115	)	$	16

Proceeds from (payments on) revolving credit facilities, net		(221	)		(605	)		196			(267	)
Payments on Apache fixed-rate debt		—			—			(65	)		(1,370	)
Distributions to noncontrolling interest - Egypt		(83	)		(90	)		(100	)		(159	)
Treasury stock activity, net		(46	)		(291	)		(188	)		(552	)
Dividends paid to APA common stockholders		(77	)		(43	)		(155	)		(86	)
Other		(2	)		(8	)		(11	)		(28	)

Net cash used in financing activities	$	(429	)	$	(1,037	)	$	(323	)	$	(2,462	)

SUMMARY BALANCE SHEET INFORMATION


	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	142	$	245
Other current assets		2,457		2,463
Property and equipment, net		9,368		9,012
Decommissioning security for sold Gulf of Mexico properties		57		217
Other assets		1,220		1,210

Total assets	$	13,244	$	13,147

Current debt	$	2	$	2
Current liabilities		2,628		2,914
Long-term debt		5,574		5,451
Decommissioning contingency for sold Gulf of Mexico properties		472		738
Deferred credits and other noncurrent liabilities		2,872		2,697
APA shareholders’ equity		709		423
Noncontrolling interest - Egypt		987		922

Total Liabilities and equity	$	13,244	$	13,147

Common shares outstanding at end of period		307		312

Page 10

APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of Costs incurred to Upstream capital investment

Management believes the presentation of upstream capital investments is useful for investors to assess APA’s expenditures related to our upstream capital activity. We define capital investments as costs incurred for oil and gas activities, adjusted to exclude property acquisitions, asset retirement obligation revisions and liabilities incurred, capitalized interest, and certain exploration expenses, while including amounts paid during the period for abandonment and decommissioning expenditures. Upstream capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of APA’s cash expenditures related to upstream capital activity and is consistent with how we plan our capital budget.


	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Costs incurred in oil and gas property:
Asset and leasehold acquisitions
Proved	$	1		$	—		$	2		$	9
Unproved		4			6			10			17
Exploration and development		590			492			1,156			911

Total Costs incurred in oil and gas property	$	595		$	498		$	1,168		$	937

Reconciliation of Costs incurred to Upstream capital investment:
Total Costs incurred in oil and gas property	$	595		$	498		$	1,168		$	937
Property acquisitions		—			—			—			—
Asset retirement obligations settled vs. incurred - oil and gas property		7			7			13			14
Capitalized interest		(5	)		(5	)		(11	)		(8	)
Exploration seismic and administration costs		(14	)		(18	)		(31	)		(51	)

Upstream capital investment including noncontrolling interest - Egypt	$	583		$	482		$	1,139		$	892
Less noncontrolling interest - Egypt		(67	)		(54	)		(128	)		(103	)

Total Upstream capital investment	$	516		$	428		$	1,011		$	789

Reconciliation of Net cash provided by operating activities to Cash flows from operations before changes in operating assets and liabilities and Free cash flow

Cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP financial measures. APA uses these measures internally and provides this information because management believes it is useful in evaluating the company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt, as well as to compare our results from period to period. We believe these measures are also used by research analysts and investors to value and compare oil and gas exploration and production companies and are frequently included in published research reports when providing investment recommendations. Cash flows from operations before changes in operating assets and liabilities and free cash flow are additional measures of liquidity but are not measures of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities. Additionally, this presentation of free cash flow may not be comparable to similar measures presented by other companies in our industry.


	For the Quarter Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Net cash provided by operating activities	$	1,000		$	1,535		$	1,335		$	2,426
Changes in operating assets and liabilities		(232	)		(149	)		279			114

Cash flows from operations before changes in operating assets and liabilities	$	768		$	1,386		$	1,614		$	2,540

Adjustments to free cash flow:
Upstream capital investment including noncontrolling interest - Egypt		(583	)		(482	)		(1,139	)		(892	)
Non oil and gas capital investment		(8	)		—			(9	)		—
Distributions to Sinopec noncontrolling interest		(83	)		(90	)		(100	)		(159	)

Upstream free cash flow	$	94		$	814		$	366		$	1,489

Reconciliation of Net cash provided by operating activities to Adjusted EBITDAX

Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a company’s ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Company’s on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.


	For the Quarter Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,
	2023			2023			2022			2023		2022
Net cash provided by operating activities	$	1,000		$	335		$	1,535		$	1,335	$	2,426
Adjustments:
Exploration expense other than dry hole expense and unproved leasehold impairments		14			17			18			31		51
Current income tax provision		254			346			415			600		807
Other adjustments to reconcile net income (loss) to net cash provided by operating activities		97			(30	)		59			67		88
Changes in operating assets and liabilities		(232	)		511			(149	)		279		114
Financing costs, net		82			81			76			163		161
Transaction, reorganization & separation costs		2			4			3			6		17

Adjusted EBITDAX (Non-GAAP)	$	1,217		$	1,264		$	1,957		$	2,481	$	3,664

Page 11

APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions)

Reconciliation of debt to net debt

Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.


	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
Current debt	$	2	$	2	$	2	$	125
Long-term debt		5,574		5,796		5,451		5,404

Total debt		5,576		5,798		5,453		5,529
Cash and cash equivalents		142		154		245		268

Net debt	$	5,434	$	5,644	$	5,208	$	5,261

Reconciliation of Income attributable to common stock to Adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Company’s operational trends and comparability of results to our peers.

Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.


	For the Quarter Ended June 30, 2023												For the Quarter Ended June 30, 2022
	Before Tax			Tax Impact			After Tax			Diluted EPS			Before Tax			Tax Impact			After Tax			Diluted EPS
Net income including noncontrolling interests (GAAP)	$	700		$	(238	)	$	462		$	1.49		$	1,462		$	(395	)	$	1,067		$	3.12
Income attributable to noncontrolling interests		144			(63	)		81			0.26			251			(110	)		141			0.41

Net income attributable to common stock		556			(175	)		381			1.23			1,211			(285	)		926			2.71

Adjustments:*
Asset and unproved leasehold impairments		52			(37	)		15			0.05			2			—			2			—
Valuation allowance and other tax adjustments		—			(30	)		(30	)		(0.10	)		—			(157	)		(157	)		(0.46	)
(Gain) loss on extinguishment of debt		—			—			—			—			—			—			—			—
Unrealized derivative instrument (gain) loss		(47	)		9			(38	)		(0.12	)		26			(6	)		20			0.06
Kinetik equity investment mark-to-market gain		(77	)		16			(61	)		(0.20	)		(29	)		—			(29	)		(0.08	)
Transaction, reorganization & separation costs		2			(1	)		1			—			3			(1	)		2			0.01
(Gain) loss on divestitures, net		(5	)		1			(4	)		(0.01	)		27			(6	)		21			0.06

Adjusted earnings (Non-GAAP)	$	481		$	(217	)	$	264		$	0.85		$	1,240		$	(455	)	$	785		$	2.30


	For the Six Months Ended June 30, 2023												For the Six Months Ended June 30, 2022
	Before Tax			Tax Impact			After Tax			Diluted EPS			Before Tax			Tax Impact			After Tax			Diluted EPS
Net income including noncontrolling interests (GAAP)	$	1,510		$	(722	)	$	788		$	2.54		$	3,760		$	(747	)	$	3,013		$	8.75
Income attributable to noncontrolling interests		295			(130	)		165			0.53			478			(204	)		274			0.80
Income (loss) attributable to Altus preferred unit limited partner		—			—			—			—			(70	)		—			(70	)		(0.20	)

Net income attributable to common stock		1,215			(592	)		623			2.01			3,352			(543	)		2,809			8.15

Adjustments:*
Asset and unproved leasehold impairments		57			(40	)		17			0.05			6			(1	)		5			0.02
Valuation allowance and other tax adjustments **		—			100			100			0.32			—			(362	)		(362	)		(1.05	)
(Gain) / Loss on extinguishment of debt		(9	)		2			(7	)		(0.02	)		67			(14	)		53			0.15
Unrealized derivative instrument (gain) loss		(80	)		16			(64	)		(0.20	)		11			(11	)		—			—
Kinetik equity investment mark-to-market gain		(45	)		10			(35	)		(0.11	)		(53	)		—			(53	)		(0.15	)
Drilling contract termination charges		13			(10	)		3			0.01			—			—			—			—
Transaction, reorganization & separation costs		6			(2	)		4			0.01			17			(4	)		13			0.04
Gain on divestitures, net		(6	)		1			(5	)		(0.02	)		(1,149	)		119			(1,030	)		(2.99	)

Adjusted Earnings (Non-GAAP)	$	1,151		$	(515	)	$	636		$	2.05		$	2,251		$	(816	)	$	1,435		$	4.17

*	The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

**	Includes $174 million related to the remeasurement of the December 31, 2022 U.K. deferred tax liability in connection with the Energy (Oil and Gas) Profits Levy Act 2022.

Page 12

Document and Entity Information	Aug. 02, 2023
Cover [Abstract]
Entity Registrant Name	APA Corp
Amendment Flag	false
Entity Central Index Key	0001841666
Document Type	8-K
Document Period End Date	Aug. 02, 2023
Entity Incorporation State Country Code	DE
Entity File Number	001-40144
Entity Tax Identification Number	86-1430562
Entity Address, Address Line One	2000 Post Oak Boulevard
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77056-4400
City Area Code	(713)
Local Phone Number	296-6000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, $0.625 par value
Trading Symbol	APA
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false