Q2 2026 APA Corp (US) Earnings Call Transcript
Key Points
- APA Corp (APA) exceeded production guidance in the Permian and Egypt while keeping capital below plan, demonstrating strong operational execution.
- The company raised its full-year oil production guidance to 123,000 barrels per day in the Permian while reducing rig count to four, highlighting significant capital efficiency gains.
- APA Corp (APA) increased its annualized run-rate cost savings target to $500 million, up from $450 million, reflecting broad-based cost reduction success.
- The company is on track to achieve its $3 billion net debt target in 2027, well ahead of schedule, and expects to generate approximately $2.3 billion in free cash flow this year.
- APA Corp (APA) continues to return at least 60% of free cash flow to shareholders, with plans for significant share buybacks in the second half of 2026.
- The GranMorgu project in Suriname remains on budget and on schedule for first oil in mid-2028, providing a clear path to production growth.
- APA Corp (APA) strengthened its exploration portfolio with the Savant Alaska acquisition and a strategic partnership with Eni in Uruguay, enhancing long-term optionality.
- APA Corp (APA) deferred some lower-pressure gas volumes at Kosser in Egypt due to outperformance from recent rich gas discoveries, slightly reducing near-term gas outlook.
- The company faces inflationary pressures, including higher global diesel costs and service costs in the Lower 48, which partially offset efficiency gains.
- Exploration capital for 2026 was slightly reduced due to the timing of Block 58 activity, with the next exploration well now expected in 2027.
- Deferred tax expense increased in the second quarter due to higher US income, which accelerated the utilization of US net operating losses, a non-cash item but impacting reported earnings.
- The company's gas production outlook for Egypt was slightly lowered, though higher associated liquids offset the impact on BOE production.
- APA Corp (APA) expects exploration spending to step up in 2027, with significant capital allocated to wells in Alaska, Suriname, and Uruguay, which could pressure free cash flow.
Good day, and thank you for standing by. Welcome to APA Corporation's second-quarter 2026 financial and operational results conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand it over to your first speaker, Stephane Aka, Managing Director, Investor Relations.
Good morning, and thank you for joining us on APA Corporation's second-quarter 2026 financial and operational results conference call.
We will begin the call with an overview by CEO, John Christmann. Ben Rodgers, CFO, will share further color on our results and outlook. Steve Riney, President; and Tracey Henderson, Executive Vice President of Exploration, are also on the call and available to answer questions. We will start with prepared remarks and allocate the remainder of time to Q&A.
In conjunction with yesterday's press release, I hope you have had the opportunity to review our financial and operational supplement, which can
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