APA Corporation Q1 FY2026 earnings call

Operational Focus - Permian: Significantly improved capital efficiency, delivered resilient oil production volumes with fewer rigs and lower capital intensity, driving cost leadership. - Egypt: Strengthened base production reliability through targeted water flood investments, efficient workover program, increased uptime; expanding gas development activity. - Broader Portfolio: High-graded key assets; repositioned Permian asset base to be entirely unconventional; enhanced Egypt assets through improved fiscal terms and gas-weighted activity mix; advancing Suriname development toward first oil; building future growth through exploration. - Financial Discipline: Streamlined corporate overhead to drive sustainable structural efficiencies; disciplined capital allocation supports steady free cash flow generation; shareholder returns and progress toward $3 billion net debt target.

In the Permian, operational efficiencies and improved uptime drove oil production above guidance, while gas volumes were curtailed due to weak Waha pricing. Capital spend and operating costs were below guidance across the portfolio. In Egypt, continued success in the gas program, including on newly acquired acreage, underpins 2026 targets. Robust asset performance and favorable commodity prices generated nearly half a billion dollars in free cash flow during the quarter. The oil and gas trading portfolio is expected to generate approximately $1.1 billion of pre-tax cash flow in 2026.

U.S. - Raised four-year oil production outlook to 122,000 barrels per day. - Second quarter U.S. BOEs assume continued natural gas curtailments through end of second quarter; no price-related curtailments assumed for second half of year. - Full-year upstream capital guidance unchanged at $2.1 billion; expect 55% of spending in first half, most Permian turn-in lines in second and third quarters. - 2026 U.S. and U.K. current tax expense expected to be approximately $230 million. ### Egypt - Adjusted volume guidance lowered due to PSC impacts of higher commodity prices. ### Gas Trading - Based on current strip pricing, expect oil and gas trading portfolio to generate approximately $1.1 billion of pre-tax cash flow in 2026. ### Balance Sheet - Ended first quarter with approximately $4.1 billion in net debt, slight increase due to working capital factors. - Repaid $634 million of near-term bond maturities year-to-date. - Expect annual interest expense to be approximately $150 million lower on a run rate basis at end of 2026.

Q: Doug Leggett with Wolf Research asked about gas trading line of sight beyond 2026 and tools to protect, and on Alaska exploration.

A: Ben said gas trading portfolio expected to generate ~$400 million pre-tax cash flow in 2027, monitor basis and LNG prices, have hedges on basis for 2026, look to hedge 2027; John said took winter off to reprocess seismic, coming back with two-well program in Alaska.

Q: John Freeman with Raymond James asked about use of free cash flow and Egypt activity allocation.

A: Ben said committed to 60% returns framework, evaluating mix of paying down debt, dividends, buybacks; John said Egypt program is ~50-50 gas and oil, agnostic between gas and oil in mid-cycle, marginal gas price higher than average.

Q: Chris Baker with Evercore ISI asked about Permian inflationary pressures and progress towards $3 billion debt target.

A: John said teams doing good job in Permian, managing inflationary pressures on power diesel and tubulars; Ben said on track to achieve $3 billion net debt target, once achieved will reevaluate priorities, balance debt reduction and capital returns.

Q: Neil Dingman with William Blair asked about Suriname near-term exploration and Egypt work over rigs.

A: John said excited about additional exploration in Block 58, plan to drill exploration wells; Steve said in Egypt, work over rigs in mid to high teens, in good shape with secondary projects and water flood performance.

Q: Kevin McGrudy with Pickering Energy Partners asked about oil realizations outlook for Egypt-North Sea.

A: Ben said on both Brent and WTI, current market gives premium for spot prices, dated Brent differential and WTI premium factors considered.

Q: Leo Mariani with Roth asked about LOE drivers and Egypt gross oil volumes.

A: Ben said first quarter LOE below guide due to cost savings in U.S., inflationary pressures on diesel in Egypt offset by other savings; John said Egypt gross oil has slight long-term decline, next three quarters closer to flat around 118,000 barrels of oil a day, oil from gas volumes and efficiency on oil drilling side.