APA Corp. said it is lowering its 2025 spending plan by $175 million to protect cash flow amid uncertainty in commodity prices.
“Improved efficiencies and reduced activity will lower the company’s 2025 development capital by $150 million”, the Houston, Texas-based explorer and producer said in its quarterly report. “Combined with a $25 million reduction in exploration capital, these steps will protect free cash flow amidst volatile commodity prices.
“As the company integrated the Callon acquisition, activity was reduced to 8 rigs, a level capable of maintaining oil volumes in the Permian”.
APA completed its merger with Callon Petroleum Co. in the second quarter of 2024, in a $4.5-billion transaction that it said would raise its production to about 500,000 barrels of oil equivalent per day (boepd). The acquired assets included about 120,000 net acres in the Delaware Basin and 25,000 net acres in the Midland Basin, which are Permian sub-basins. APA has said the Permian is expected to account for about two-thirds of the production of the combined company.
“With confidence in captured operating efficiencies, APA now expects to hold Permian oil volumes sustainably flat with 6.5 rigs”, the quarterly statement said. “Given current market conditions the company is in the process of reducing activity to 6 rigs by the end of the second quarter and adjusting its completion schedule to align with this cadence”.
However, it is keeping its full-year United States oil production guidance at 125,000-127,000 bpd.
APA added, “In Egypt, given early success in the gas appraisal and development programs, gas-focused drilling has increased to over a third of the activity. The company expects 2025 gas production volumes to continue on a strong growing trajectory, leading to higher average realized gas prices through the fourth quarter”.
APA also recently signed an agreement to sell New Mexico acreage with an expected second-quarter production of about 12,000 boed to Permian Resources Corp. for $608 million. Expected to close June, the transaction would see APA offload 13,320 net acres and 8,700 net royalty acres in the northern part of the Delaware Basin including over 100 gross operated locations stretching 2 miles, according to a press release by the buyer.
In the first quarter (Q1), APA’s output averaged 469,000 boepd. Adjusted for Egyptian noncontrolling-interest and tax barrels, production was 398,000 boepd.
Net profit attributable to shareholders was $347 million, or $0.96 per diluted share. Adjusted for special items, net income becomes $385 million, or $1.06 per diluted share.
Operating activities generated $1.1 billion in net cash. Adjusted earnings before interest, taxes, depreciation, amortization and exploration expense came at $1.5 billion.
To contact the author, email jov.onsat@rigzone.com
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