APA

• Strategic Priorities
  • Overarching long-term commitment to oil and gas, guided by three core pillars: delivering top-tier operational performance, building and growing a high-quality portfolio, and maintaining strict financial discipline
  • Core operating philosophy focused on

• Full-year 2026 annualized run rate cost savings target raised to $500 million, up from the prior $450 million target set at the start of the year. Full-year 2026 lease operating expense guidance is cut by $25 million to $1.5 billion.
• Full-year 2026 Permian oil production guidance raised to 123,000 barrels per day from 120,000 barrels per day, while the full-year Permian capital budget remains unchanged at $1.3 billion, with only four rigs planned to operate for the remainder of the year (down from an original estimate of eight rigs).
• Full-year 2026 total consolidated free cash flow is expected to reach ~$2.3 billion at current strip pricing.
• Egypt's full-year BOE production outlook is maintained at original levels, despite a minor near-term gas production downward adjustment from deferred lower pressure volumes, which is fully offset by higher associated liquids.
• The $3 billion net debt target is now expected to be achieved in 2027, well ahead of the original 3-4 year timeline announced when the target was set.
• At least 60% of 2026 full-year free cash flow will be returned to shareholders via dividends and share repurchases, consistent with the company's longstanding capital allocation framework. Higher buyback activity is planned for the second half of 2026 to meet this commitment.

Consolidated results for Q2 2026: GAAP net income was $747 million ($2.11 per diluted share), while adjusted net income (excluding an unrealized $92 million after-tax gain on basis hedges and other small items) was $669 million ($1.89 per diluted share). The company generated $738 million in free cash flow in Q2 2026, and over $1.2 billion in free cash flow through the first half of 2026. The gas trading portfolio is expected to generate ~$950 million in pre-tax cash flow for full-year 2026 inclusive of basis hedges. By business segment: 1) Permian: Q2 2026 oil production exceeded guidance, with capital spending in line with plan. Operational improvements have reduced capital requirements to sustain current production, with the company on track to hit a $3.5 million per month run rate operating cost savings target by end-2026. Full-year 2026 Permian oil production guidance is raised to 123,000 barrels per day, with full-year capital budget held at $1.3 billion. 2) Egypt: Adjusted BOE production was in line with guidance. Gross gas production grew meaningfully in Q2, with ~50% of gas production now benefiting from a revised pricing agreement. Full-year 2026 guidance calls for ~118,000 barrels per day gross oil production and 535 million cubic feet per day gross gas production, with the full-year BOE production outlook maintained at original levels. Full-year net capital investment to APA remains ~$500 million. 3) Suriname: The Grand Morgue development continues to progress on budget and on schedule for first oil in mid-2028. 4) Exploration & Growth: APA completed the acquisition of Savant Alaska, securing key adjacent infrastructure to support appraisal of the company's Alaska North Slope discoveries. A strategic partnership was formed with E&I for Uruguay Block 6, with APA retaining a 60% working interest and E&I funding most of the initial exploration well planned for 2027.

The earnings call did not include explicit discussion of new material operational risks or failures beyond standard forward-looking statement disclosure that actual results could differ materially from current estimates due to unforeseen factors.

Q: What is APA's outlook for the recently acquired Savant Alaska position, and what are the next steps for evaluating the resource? / A: APA now controls ~500,000 acres on Alaska's North Slope, with two existing successful discoveries (King Street and Sockeye). The Savant acquisition adds critical adjacent infrastructure including an 80,000 barrel per day pipeline, 40,000 barrel per day processing facility, and logistics support that will benefit both appraisal and potential future development. Two wells are planned for winter 2027: one appraisal well for Sockeye, and one exploration well targeting the larger independent Chinook prospect. No development plan will be finalized until after these wells are completed.

Q: Can you elaborate on the geology and prospectivity of Uruguay Block 6, and why APA attracted E&I as a partner? / A: Prospectivity in Uruguay is driven by proven source rock on the conjugate Namibian side of the Atlantic margin, which was recently confirmed by industry discoveries. The only existing deepwater well (Raya) did not drill deep enough to test the prospective Cretaceous source rock and reservoirs that match the successful geology on the Namibian side. APA will retain 60% working interest, with E&I funding most of the 2027 exploration well. E&I's participation, secured via a competitive process, confirms the high quality of the block's prospectivity.

Q: Can you clarify the company's capital allocation framework and priority between debt paydown and share repurchases after hitting the $3 billion net debt target? / A: The company will reach the $3 billion net debt target in 2027, less than two years after the target was announced, and will end 2026 with net debt of ~$3.3 billion, the lowest debt level in over 15 years. Hitting the target will provide significant operational and financial optionality: the company can choose to further de-lever, increase shareholder returns, or accelerate high-value exploration and development opportunities. APA will remain committed to returning at least 60% of annual free cash flow to shareholders regardless of exploration spending increases, as the step-up in exploration spend from 2027 will only bring total exploration capital to 10-15% of total capital, which aligns with the existing framework.

Q: Have further capital efficiency improvements reduced sustaining capital requirements for Permian production, and will this trend continue? / A: After the Cowan merger, APA initially estimated it would need 8 rigs to sustain 120,000 barrels per day of Permian oil production. The company will average 4.5 rigs in 2026 to sustain 123,000 barrels per day, with these 4.5 rigs drilling more lateral feet and completing as many wells as the originally planned 5 rigs. Further incremental efficiency gains are expected from fine-tuning well designs, streamlining operational processes, and optimizing well placement across additional formations, though full 2027 guidance will be released in February 2027 after board review.