filings.toolsItem 16. FORM 10-K SUMMARY
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Item 16. FORM 10-K SUMMARY
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
APA CORPORATION
/s/ John J. Christmann IV
John J. Christmann IV
Chief Executive Officer
Dated: February 28, 2025
POWER OF ATTORNEY
The officers and directors of APA Corporation, whose signatures appear below, hereby constitute and appoint John J. Christmann IV, Stephen J. Riney, and Rebecca A. Hoyt, and each of them (with full power to each of them to act alone), the true and lawful attorney-in-fact to sign and execute, on behalf of the undersigned, any amendment(s) to this report and each of the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Title | Date | ||||||||||||
| /s/ John J. Christmann IV John J. Christmann IV | Director and Chief Executive Officer (principal executive officer) | February 28, 2025 | ||||||||||||
| /s/ Stephen J. Riney Stephen J. Riney | President and Chief Financial Officer (principal financial officer) | February 28, 2025 | ||||||||||||
| /s/ Rebecca A. Hoyt Rebecca A. Hoyt | Senior Vice President, Chief Accounting Officer, and Controller (principal accounting officer) | February 28, 2025 | ||||||||||||
| /s/ Annell R. Bay Annell R. Bay | Director | February 28, 2025 | ||||||||||||
| /s/ Matthew R. Bob Matthew R. Bob | Director | February 28, 2025 | ||||||||||||
| /s/ Juliet S. Ellis Juliet S. Ellis | Director | February 28, 2025 | ||||||||||||
| /s/ Kenneth M. Fisher Kenneth M. Fisher | Director | February 28, 2025 | ||||||||||||
| /s/ Charles W. Hooper Charles W. Hooper | Director | February 28, 2025 | ||||||||||||
| /s/ Chansoo Joung Chansoo Joung | Director | February 28, 2025 | ||||||||||||
| /s/ H. Lamar McKay H. Lamar McKay | Independent, Non-Executive Chair of the Board and Director | February 28, 2025 | ||||||||||||
| /s/ Peter A. Ragauss Peter A. Ragauss | Director | February 28, 2025 | ||||||||||||
| /s/ David L. Stover David L. Stover | Director | February 28, 2025 | ||||||||||||
| /s/ Anya Weaving Anya Weaving | Director | February 28, 2025 |
REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for the preparation and integrity of the consolidated financial statements appearing in this annual report on Form 10-K. The financial statements were prepared in conformity with accounting principles generally accepted in the United States and include amounts that are based on management’s best estimates and judgments.
Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements. Our internal control over financial reporting is supported by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful selection and training of qualified personnel and a written code of business conduct adopted by our Company’s board of directors, applicable to all Company directors and all officers and employees of our Company and subsidiaries.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2024.
The Company’s independent auditors, Ernst & Young LLP, a registered public accounting firm, are appointed by the Audit Committee of the Company’s board of directors. Ernst & Young LLP have audited and reported on the consolidated financial statements of APA Corporation and subsidiaries and the effectiveness of the Company’s internal control over financial reporting. The reports of the independent auditors follow this report on pages F-2 and F-3.
| /s/ John J. Christmann IV | ||
| Chief Executive Officer | ||
| (principal executive officer) | ||
| /s/ Stephen J. Riney | ||
| President and Chief Financial Officer | ||
| (principal financial officer) | ||
| /s/ Rebecca A. Hoyt | ||
| Senior Vice President, Chief Accounting Officer and Controller | ||
| (principal accounting officer) |
Houston, Texas
February 28, 2025
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of APA Corporation
Opinion on Internal Control Over Financial Reporting
We have audited APA Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, APA Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2024 and 2023, the related statements of consolidated operations, comprehensive income, cash flows and changes in equity and noncontrolling interest for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 28, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Houston, Texas
February 28, 2025
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of APA Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of APA Corporation and subsidiaries (the Company) as of December 31, 2024 and 2023, the related statements of consolidated operations, comprehensive income, cash flows and changes in equity and noncontrolling interest for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Depreciation, depletion and amortization of property and equipment | ||||||||
| Description of the Matter | At December 31, 2024, the carrying value of the Company’s property and equipment was $12,646 million, and depreciation, depletion and amortization (DD&A) expense was $2,266 million for the year then ended. As described in Note 1, the Company follows the successful efforts method of accounting for its oil and gas properties. DD&A of the cost of proved oil and gas properties is calculated using the unit-of-production method based on proved oil and gas reserves, as estimated by the Company’s internal reservoir engineers. |
F-3
| Proved oil and gas reserves are those quantities of natural gas, crude oil, condensate, and natural gas liquids, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. Judgment is required by the Company’s internal reservoir engineers in estimating oil and gas reserves. Estimating proved oil and gas reserves requires the selection of inputs, including historical production, oil and gas price assumptions, and operating costs, among others. Because of the complexity involved in estimating oil and gas reserves, management engaged independent petroleum engineers to audit the proved oil and gas reserve estimates prepared by the Company’s internal reservoir engineers for select properties as of December 31, 2024. Auditing the Company’s DD&A calculations is complex because of the use of the work of the internal reservoir engineers and the independent petroleum engineers. | ||||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its process to calculate DD&A, including management’s controls over the completeness and accuracy of the data utilized by the engineers for use in estimating oil and gas reserves. Our audit procedures included, among others, evaluating the professional qualifications and objectivity of the Company’s internal reservoir engineers responsible for overseeing the preparation of the reserve estimates and the independent petroleum engineers used to audit the proved oil and gas reserve estimates. Additionally, we evaluated the methods and assumptions used by the engineers in estimating proved oil and gas reserves and tested the completeness and accuracy of the data used by the engineers related to historical production volumes. We also tested that the DD&A expense calculations are based on the appropriate proved oil and gas reserve balances from the Company’s reserve report. |
| Accounting for asset retirement obligation for the North Sea segment | ||||||||
| Description of the Matter | At December 31, 2024, the asset retirement obligation (ARO) balance totaled $2,694 million. As further described in Note 8, the Company’s ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with the Company’s oil and gas properties and other long-lived assets. The estimation of the ARO related to the North Sea segment requires significant judgment given the magnitude of the expected retirement costs. Auditing the Company’s ARO for the North Sea segment is complex and highly judgmental because of the significant estimation required by management in determining the obligation. In particular, the estimate was sensitive to retirement cost estimates, which are affected by expectations about future market and economic conditions. | |||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over its ARO estimation process, including management’s review of the significant assumptions that have a material effect on the determination of the obligation. To test the ARO for the North Sea segment, our audit procedures included, among others, assessing the significant assumptions and inputs used in the valuation, such as retirement cost estimates. For example, we evaluated retirement cost estimates by comparing the Company’s estimates to underlying third party evidence or market information. We also involved our internal specialists in testing the underlying retirement cost estimates. | |||||||
| Accounting for decommissioning contingency for sold Gulf of America properties | ||||||||
| Description of the Matter | At December 31, 2024, the decommissioning contingency for sold Gulf of America properties (decommissioning contingency) balance totaled $1 billion. As further described in Note 11, the Company’s decommissioning contingency reflects the estimated undiscounted potential liability to fund decommissioning of the sold Gulf of America properties. The estimation of the decommissioning contingency requires significant judgment given the magnitude and higher estimation uncertainty of the expected retirement costs. |
F-4
| Auditing the Company’s decommissioning contingency is complex and highly judgmental because of the significant estimation required by management in determining the decommissioning contingency. In particular, the estimate was sensitive to retirement cost estimates, which are subjective assumptions affected by expectations about future market and economic conditions. | ||||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over its decommissioning contingency estimation process, including management’s review of the significant assumptions that have a material effect on the determination of the contingency. To test the decommissioning contingency, our audit procedures included, among others, assessing the significant assumptions and inputs used developing the retirement cost estimates. For example, we evaluated retirement cost estimates by comparing the Company’s estimates to market information. We also involved our internal specialists in testing the underlying retirement cost estimates. | |||||||
| Evaluation of the fair value measurement of proved oil and gas properties acquired in the Callon Petroleum business combination | ||||||||
| Description of the Matter | During 2024, the Company completed the acquisition of Callon Petroleum Company resulting in the recognition of the fair value of property and equipment of $4,502 million. As described in Note 2, the transaction was accounted for as a business combination using the acquisition method, which requires assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date. The Company applied a discounted cash flow method to estimate the fair value of the proved oil and gas properties acquired. Significant inputs to the valuation of proved oil and gas properties include estimates of future commodity prices, future production volumes, and discount rate using a market-based weighted average cost of capital. Judgment is required by the Company’s internal reservoir engineers in estimating future production quantities. Auditing the Company’s fair value measurement of the proved oil and gas properties acquired is complex because of the use of the work of the Company’s internal reservoir engineers in estimating future production and the evaluation of management’s determination of the inputs described above. In evaluating the reasonableness of management’s assessment and assumptions used, the audit testing procedures performed required a high degree of auditor judgement and additional effort, including involving internal valuation specialists. | |||||||
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls to estimate the fair value of the acquired proved oil and gas properties, including management’s review of the significant assumptions used as inputs to the fair value calculations. To test the fair value of the acquired proved oil and gas properties, our audit procedures included, among others, evaluating the professional qualifications and objectivity of the Company’s internal reservoir engineers primarily responsible for overseeing the preparation of the future production volumes. In addition, we performed sensitivity analyses of significant assumptions, to evaluate the extent of their impact to the fair value calculation. We also involved our valuation specialists to assist with certain significant assumptions included in the fair value estimate. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2002.
Houston, Texas
February 28, 2025
F-5
APA CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions, except per common share data) | ||||||||||||||||||||
| REVENUES AND OTHER: | ||||||||||||||||||||
| Oil, natural gas, and natural gas liquids production revenues(1) | $ | 8,196 | $ | 7,385 | $ | 9,220 | ||||||||||||||
| Purchased oil and gas sales(1) | 1,541 | 894 | 1,855 | |||||||||||||||||
| Total revenues | 9,737 | 8,279 | 11,075 | |||||||||||||||||
| Derivative instrument gains (losses), net | (10) | 99 | (114) | |||||||||||||||||
| Gain on divestitures, net | 289 | 8 | 1,180 | |||||||||||||||||
| Losses on previously sold Gulf of America properties | (273) | (212) | (157) | |||||||||||||||||
| Other, net | (6) | 18 | 148 | |||||||||||||||||
| 9,737 | 8,192 | 12,132 | ||||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||||||
| Lease operating expenses(1) | 1,690 | 1,436 | 1,444 | |||||||||||||||||
| Gathering, processing, and transmission(1) | 432 | 334 | 367 | |||||||||||||||||
| Purchased oil and gas costs(1) | 1,047 | 742 | 1,776 | |||||||||||||||||
| Taxes other than income | 270 | 207 | 268 | |||||||||||||||||
| Exploration | 313 | 195 | 305 | |||||||||||||||||
| General and administrative | 372 | 351 | 483 | |||||||||||||||||
| Transaction, reorganization, and separation | 168 | 15 | 26 | |||||||||||||||||
| Depreciation, depletion, and amortization | 2,266 | 1,540 | 1,233 | |||||||||||||||||
| Asset retirement obligation accretion | 148 | 116 | 117 | |||||||||||||||||
| Impairments | 1,129 | 61 | — | |||||||||||||||||
| Financing costs, net | 367 | 312 | 379 | |||||||||||||||||
| 8,202 | 5,309 | 6,398 | ||||||||||||||||||
| NET INCOME BEFORE INCOME TAXES | 1,535 | 2,883 | 5,734 | |||||||||||||||||
| Current income tax provision | 1,153 | 1,338 | 1,507 | |||||||||||||||||
| Deferred income tax provision (benefit) | (736) | (1,662) | 145 | |||||||||||||||||
| NET INCOME INCLUDING NONCONTROLLING INTERESTS | 1,118 | 3,207 | 4,082 | |||||||||||||||||
| Net income attributable to noncontrolling interest – Egypt | 314 | 352 | 464 | |||||||||||||||||
| Net income attributable to noncontrolling interest – Altus | — | — | 14 | |||||||||||||||||
| Net loss attributable to Altus Preferred Unit limited partners | — | — | (70) | |||||||||||||||||
| NET INCOME ATTRIBUTABLE TO COMMON STOCK | $ | 804 | $ | 2,855 | $ | 3,674 | ||||||||||||||
| NET INCOME PER COMMON SHARE: | ||||||||||||||||||||
| Basic | $ | 2.28 | $ | 9.26 | $ | 11.05 | ||||||||||||||
| Diluted | $ | 2.27 | $ | 9.25 | $ | 11.02 | ||||||||||||||
| WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||||||||||||||||||
| Basic | 353 | 308 | 332 | |||||||||||||||||
| Diluted | 353 | 309 | 333 |
(1) For related party transactions associated with Kinetik, refer to Note 6—Equity Method Interest for further detail.
The accompanying notes to consolidated financial statements are an integral part of this statement.
F-6
APA CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| NET INCOME INCLUDING NONCONTROLLING INTERESTS | $ | 1,118 | $ | 3,207 | $ | 4,082 | ||||||||||||||
| OTHER COMPREHENSIVE INCOME, NET OF TAX: | ||||||||||||||||||||
| Pension and postretirement benefit plan | (3) | 1 | (8) | |||||||||||||||||
| COMPREHENSIVE INCOME INCLUDING NONCONTROLLING INTERESTS | 1,115 | 3,208 | 4,074 | |||||||||||||||||
| Comprehensive income attributable to noncontrolling interest – Egypt | 314 | 352 | 464 | |||||||||||||||||
| Comprehensive income attributable to noncontrolling interest – Altus | — | — | 14 | |||||||||||||||||
| Comprehensive loss attributable to Altus Preferred Unit limited partners | — | — | (70) | |||||||||||||||||
| COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCK | $ | 801 | $ | 2,856 | $ | 3,666 |
The accompanying notes to consolidated financial statements are an integral part of this statement.
F-7
APA CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||
| Net income including noncontrolling interests | $ | 1,118 | $ | 3,207 | $ | 4,082 | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Unrealized derivative instrument (gains) losses, net | 8 | (51) | 67 | |||||||||||||||||
| Gain on divestitures, net | (289) | (8) | (1,180) | |||||||||||||||||
| Exploratory dry hole expense and unproved leasehold impairments | 236 | 114 | 207 | |||||||||||||||||
| Depreciation, depletion, and amortization | 2,266 | 1,540 | 1,233 | |||||||||||||||||
| Asset retirement obligation accretion | 148 | 116 | 117 | |||||||||||||||||
| Impairments | 1,129 | 61 | — | |||||||||||||||||
| Provision for (benefit from) deferred income taxes | (736) | (1,662) | 145 | |||||||||||||||||
| (Gain) loss from extinguishment of debt | — | (9) | 67 | |||||||||||||||||
| Losses on previously sold Gulf of America properties | 273 | 212 | 157 | |||||||||||||||||
| Other | 2 | 26 | (73) | |||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Receivables | (104) | (157) | (93) | |||||||||||||||||
| Inventories | (11) | 13 | (1) | |||||||||||||||||
| Drilling advances and other current assets | (56) | 269 | (15) | |||||||||||||||||
| Deferred charges and other long-term assets | 11 | 270 | 69 | |||||||||||||||||
| Accounts payable | 81 | (84) | (4) | |||||||||||||||||
| Accrued expenses | (221) | (400) | 303 | |||||||||||||||||
| Deferred credits and noncurrent liabilities | (235) | (328) | (138) | |||||||||||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 3,620 | 3,129 | 4,943 | |||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
| Additions to oil and gas property | (2,851) | (2,313) | (1,770) | |||||||||||||||||
| Acquisition of Delaware Basin properties | — | (24) | (591) | |||||||||||||||||
| Leasehold and property acquisitions | (60) | (20) | (37) | |||||||||||||||||
| Proceeds from asset divestitures | 1,609 | 29 | 778 | |||||||||||||||||
| Proceeds from sale of Kinetik shares | 428 | 228 | 224 | |||||||||||||||||
| Deconsolidation of Altus cash and cash equivalents | — | — | (143) | |||||||||||||||||
| Other, net | (50) | (38) | 28 | |||||||||||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (924) | (2,138) | (1,511) | |||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
| Proceeds from (payments on) commercial paper and revolving credit facilities, net | (40) | (194) | 24 | |||||||||||||||||
| Proceeds from term loan facility | 1,500 | — | — | |||||||||||||||||
| Payments on term loan facility | (600) | — | — | |||||||||||||||||
| Payment on Callon Credit Agreement | (472) | — | — | |||||||||||||||||
| Payments on fixed-rate debt | (1,641) | (65) | (1,493) | |||||||||||||||||
| Distributions to noncontrolling interest | (268) | (238) | (362) | |||||||||||||||||
| Dividends paid to APA common stockholders | (353) | (308) | (207) | |||||||||||||||||
| Treasury stock activity, net | (246) | (329) | (1,423) | |||||||||||||||||
| Other, net | (38) | (15) | (28) | |||||||||||||||||
| NET CASH USED IN FINANCING ACTIVITIES | (2,158) | (1,149) | (3,489) | |||||||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 538 | (158) | (57) | |||||||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 87 | 245 | 302 | |||||||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 625 | $ | 87 | $ | 245 | ||||||||||||||
| SUPPLEMENTARY CASH FLOW DATA: | ||||||||||||||||||||
| Interest paid, net of capitalized interest | $ | 372 | 329 | $ | 322 | |||||||||||||||
| Income taxes paid, net of refunds | 1,097 | 1,271 | 1,431 |
The accompanying notes to consolidated financial statements are an integral part of this statement.
F-8
APA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
| December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In millions, except share data) | ||||||||||||||
| ASSETS | ||||||||||||||
| CURRENT ASSETS: | ||||||||||||||
| Cash and cash equivalents | $ | 625 | $ | 87 | ||||||||||
| Receivables, net of allowance of $123 and $114 | 1,959 | 1,610 | ||||||||||||
| Other current assets (Note 5) | 820 | 765 | ||||||||||||
| 3,404 | 2,462 | |||||||||||||
| PROPERTY AND EQUIPMENT: | ||||||||||||||
| Oil and gas properties, on the basis of successful efforts accounting: | 44,698 | 44,860 | ||||||||||||
| Gathering, processing, and transmission facilities | 433 | 448 | ||||||||||||
| Other | 562 | 634 | ||||||||||||
| Less: Accumulated depreciation, depletion, and amortization | (33,047) | (35,904) | ||||||||||||
| 12,646 | 10,038 | |||||||||||||
| OTHER ASSETS: | ||||||||||||||
| Equity method interests (Note 6) | — | 437 | ||||||||||||
| Decommissioning security for sold Gulf of America properties (Note 11) | 21 | 21 | ||||||||||||
| Deferred tax asset (Note 10) | 2,703 | 1,758 | ||||||||||||
| Deferred charges and other | 616 | 528 | ||||||||||||
| $ | 19,390 | $ | 15,244 | |||||||||||
| LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY | ||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||
| Accounts payable | $ | 1,224 | $ | 658 | ||||||||||
| Current debt | 53 | 2 | ||||||||||||
| Other current liabilities (Note 7) | 1,678 | 1,744 | ||||||||||||
| 2,955 | 2,404 | |||||||||||||
| LONG-TERM DEBT (Note 9) | 5,991 | 5,186 | ||||||||||||
| DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES: | ||||||||||||||
| Deferred tax liability (Note 10) | 14 | 371 | ||||||||||||
| Asset retirement obligation (Note 8) | 2,591 | 2,362 | ||||||||||||
| Decommissioning contingency for sold Gulf of America properties (Note 11) | 929 | 764 | ||||||||||||
| Other | 548 | 466 | ||||||||||||
| 4,082 | 3,963 | |||||||||||||
| EQUITY: | ||||||||||||||
| Common stock, $0.625 par, 860,000,000 shares authorized, 491,579,646 and 420,595,901 shares issued, respectively | 307 | 263 | ||||||||||||
| Paid-in capital | 13,153 | 11,126 | ||||||||||||
| Accumulated deficit | (2,155) | (2,959) | ||||||||||||
| Treasury stock, at cost, 126,182,497 and 117,020,000 shares, respectively | (6,037) | (5,790) | ||||||||||||
| Accumulated other comprehensive income | 12 | 15 | ||||||||||||
| APA SHAREHOLDERS’ EQUITY | 5,280 | 2,655 | ||||||||||||
| Noncontrolling interest – Egypt | 1,082 | 1,036 | ||||||||||||
| TOTAL EQUITY | 6,362 | 3,691 | ||||||||||||
| $ | 19,390 | $ | 15,244 |
The accompanying notes to consolidated financial statements are an integral part of this statement.
F-9
APA CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTEREST
| Redeemable Noncontrolling Interest - Altus Preferred Unit Limited Partners | Common Stock | Paid-In Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Income | APA SHAREHOLDERS’ EQUITY | Noncontrolling Interests | TOTAL EQUITY | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2021 | $ | 712 | $ | 262 | $ | 11,645 | $ | (9,488) | $ | (4,036) | $ | 22 | $ | (1,595) | $ | 878 | $ | (717) | |||||||||||||||||||||||||||||||||||||||||
| Net income attributable to common stock | — | — | — | 3,674 | — | — | 3,674 | — | 3,674 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest – Egypt | — | — | — | — | — | — | — | 464 | 464 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest – Altus | — | — | — | — | — | — | — | 14 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to Altus Preferred Unit limited partners | (70) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest – Egypt | — | — | — | — | — | — | — | (362) | (362) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common dividends ($0.75 per share) | — | — | (245) | — | — | — | (245) | — | (245) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock activity, net | — | — | (6) | — | — | — | (6) | — | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deconsolidation of Altus | (642) | — | — | — | — | — | — | (72) | (72) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock activity, net | — | — | — | — | (1,423) | — | (1,423) | — | (1,423) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense | — | — | 26 | — | — | — | 26 | — | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | (8) | (8) | — | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2022 | $ | — | $ | 262 | $ | 11,420 | $ | (5,814) | $ | (5,459) | $ | 14 | $ | 423 | $ | 922 | $ | 1,345 | |||||||||||||||||||||||||||||||||||||||||
| Net income attributable to common stock | — | — | — | 2,855 | — | — | 2,855 | — | 2,855 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest – Egypt | — | — | — | — | — | — | — | 352 | 352 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest – Egypt | — | — | — | — | — | — | — | (238) | (238) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common dividends ($1.00 per share) | — | — | (308) | — | — | — | (308) | — | (308) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock activity, net | — | 1 | (14) | — | — | — | (13) | — | (13) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock activity, net | — | — | — | — | (331) | — | (331) | — | (331) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense | — | — | 23 | — | — | — | 23 | — | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | 5 | — | — | 1 | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2023 | $ | — | $ | 263 | $ | 11,126 | $ | (2,959) | $ | (5,790) | $ | 15 | $ | 2,655 | $ | 1,036 | $ | 3,691 | |||||||||||||||||||||||||||||||||||||||||
| Net income attributable to common stock | — | — | — | 804 | — | — | 804 | — | 804 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest – Egypt | — | — | — | — | — | — | — | 314 | 314 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest – Egypt | — | — | — | — | — | — | — | (268) | (268) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common dividends ($1.00 per share) | — | — | (352) | — | — | — | (352) | — | (352) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | — | 44 | 2,370 | — | — | — | 2,414 | — | 2,414 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock activity, net | — | — | — | — | (247) | — | (247) | — | (247) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense | — | — | 26 | — | — | — | 26 | — | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | (17) | — | — | (3) | (20) | — | (20) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | $ | — | $ | 307 | $ | 13,153 | $ | (2,155) | $ | (6,037) | $ | 12 | $ | 5,280 | $ | 1,082 | $ | 6,362 |
The accompanying notes to consolidated financial statements are an integral part of this statement.
F-10
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Nature of Operations
APA Corporation (APA or the Company) is an independent energy company that owns consolidated subsidiaries that explore for, develop, and produce crude oil, natural gas, and natural gas liquids. The Company’s business has oil and gas operations in three geographic areas: the United States (U.S.), Egypt, and offshore the U.K. in the North Sea (North Sea). APA also has active development, exploration, and appraisal operations ongoing in Suriname, as well as exploration interests in Uruguay, Alaska, and other international locations that may, over time, result in reportable discoveries and development opportunities. Prior to the BCP Business Combination defined below, the Company’s midstream business was operated by Altus Midstream Company (ALTM) through its subsidiary Altus Midstream LP (collectively, Altus).
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting policies used by APA and its subsidiaries reflect industry practices and conform to accounting principles generally accepted in the U.S. (GAAP). The Company’s financial statements for prior periods may include reclassifications that were made to conform to the current-year presentation. Significant accounting policies are discussed below.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of APA and its subsidiaries after elimination of intercompany balances and transactions.
The Company’s undivided interests in oil and gas exploration and production ventures and partnerships are proportionately consolidated. The Company consolidates all other investments in which, either through direct or indirect ownership, it has more than a 50 percent voting interest or controls the financial and operating decisions.
Sinopec International Petroleum Exploration and Production Corporation (Sinopec) owns a one-third minority participation in the Company’s consolidated Egypt oil and gas business as a noncontrolling interest, which is reflected as a separate noncontrolling interest component of equity in the Company’s consolidated balance sheet. The Company has determined that a limited partnership and APA subsidiary, which has control over APA’s Egyptian operations, qualifies as a variable interest entity (VIE) under GAAP. Apache consolidates the activities of APA’s Egyptian operations because it has concluded that a wholly owned subsidiary has a controlling financial interest in APA’s Egyptian operations and was determined to be the primary beneficiary of the VIE.
On February 22, 2022, ALTM closed a transaction to combine with privately owned BCP Raptor Holdco LP (BCP and, together with BCP Raptor Holdco GP, LLC, the Contributed Entities) in an all-stock transaction, pursuant to the Contribution Agreement entered into by and among ALTM, Altus Midstream LP, New BCP Raptor Holdco, LLC (the Contributor), and BCP (the BCP Contribution Agreement). Pursuant to the BCP Contribution Agreement, the Contributor contributed all of the equity interests of the Contributed Entities (the Contributed Interests) to Altus Midstream LP, with each Contributed Entity becoming a wholly owned subsidiary of Altus Midstream LP (the BCP Business Combination). Upon closing the transaction, the combined entity was renamed Kinetik Holdings Inc. (Kinetik), and the Company determined that it was no longer the primary beneficiary of Kinetik. The Company further determined that Kinetik no longer qualified as a VIE under GAAP. As a result, the Company deconsolidated ALTM on February 22, 2022. Refer to Note 2—Acquisitions and Divestitures for further detail.
During the quarter ended March 31, 2024 and each of the years ended December 31, 2023 and 2022, the Company had a designated director on the Kinetik board of directors. The Company’s designated director resigned from the Kinetik board of directors on April 3, 2024. As a result, the Company is considered to have had significant influence over Kinetik during the periods presented prior to the designated director’s resignation from the Kinetik board of directors.
Investments in which the Company has significant influence, but not control, are accounted for under the equity method of accounting. These investments are recorded separately as “Equity method interests” in the Company’s consolidated balance sheet. The Company elected the fair value option to account for its equity method interest in Kinetik. Refer to Note 6—Equity Method Interests for further detail.
F-11
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Use of Estimates
Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of the Company’s financial statements, and changes in these estimates are recorded when known.
Significant estimates with regard to these financial statements include the estimates of fair value for long-lived assets (refer to “Fair Value Measurements” and “Property and Equipment” sections in this Note 1 below), the fair value determination of acquired assets and liabilities (refer to Note 2—Acquisitions and Divestitures), the fair value of equity method interests (refer to “Equity Method Interests” within this Note 1 below and Note 6—Equity Method Interests), the assessment of asset retirement obligations (refer to Note 8—Asset Retirement Obligation), the estimate of income taxes (refer to Note 10—Income Taxes), the estimation of the contingent liability representing Apache’s potential decommissioning obligations on sold properties in the Gulf of America (refer to Note 11—Commitments and Contingencies), and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom (refer to Note 17—Supplemental Oil and Gas Disclosures (Unaudited)).
Fair Value Measurements
Certain assets and liabilities are reported at fair value on a recurring basis in the Company’s consolidated balance sheet. Accounting Standards Codification (ASC) 820-10-35, “Fair Value Measurement” (ASC 820), provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable; hence, these valuations have the lowest priority.
The valuation techniques that may be used to measure fair value include a market approach, an income approach, and a cost approach. A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. An income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectations, including present value techniques, option-pricing models, and the excess earnings method. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
Refer to Note 4—Derivative Instruments and Hedging Activities, Note 9—Debt and Financing Costs, and Note 12—Retirement and Deferred Compensation Plans for further detail regarding the Company’s fair value measurements recorded on a recurring basis.
The Company also uses fair value measurements on a nonrecurring basis when certain qualitative assessments of its assets indicate a potential impairment or when allocating the purchase price for acquired assets and liabilities in a business combination.
During 2024, the Company continued its economic assessment of its North Sea assets in light of several new regulatory guidelines and obligations surrounding significant tax levies and modernization of aging infrastructure. The Company determined the expected returns do not economically support making investments required under the combined impact of the regulations, and it will cease production at its facilities in the North Sea prior to 2030. As a result, in the third quarter of 2024 the Company performed a fair value assessment of the present value of its oil and gas assets in the North Sea. Accordingly, the Company recognized impairments of $796 million on certain proved properties in the North Sea, which were written down to their estimated fair values as of September 30, 2024. This impairment is discussed in further detail below in “Property and Equipment — Oil and Gas Property.”
On April 1, 2024, APA completed its acquisition of Callon Petroleum Company (Callon) in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s debt (the Callon acquisition). The transaction was accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired, and liabilities assumed be recognized at their fair values as of the acquisition date, using various Level 3 fair value measurements. Material assets and liabilities acquired are discussed further below:
F-12
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
-
The most significant assumptions relate to the estimated fair values assigned to proved oil and natural gas properties. The fair value of proved oil and natural gas properties as of the acquisition date were estimated using the income approach, where fair value was determined based on the expected future cash flows from estimated proved oil, natural gas, and NGL reserves and related discounted future net cash flows as of that date. Significant inputs to the fair value estimate included estimates of future production volumes, future operating and development costs, future commodity prices, and a weighted-average cost of capital discount rate.
-
The fair value of unproved properties was estimated mainly using the market approach, based on acreage costs in areas where Callon acreage was acquired.
-
The fair value of most other current assets and current liabilities were determined to be equivalent to the carrying value due to their short-term nature.
-
The fair value of debt was based on the estimated cost to retire Callon’s debt instruments.
-
Estimated deferred taxes were based on available information concerning the fair values assigned to acquired assets and liabilities and their respective tax basis and tax-related carryforwards at the acquisition date.
Refer to Note 2—Acquisitions and Divestitures for further detail regarding the Company’s fair value measurements recorded related to the Callon acquisition.
Additionally, in the third quarter of 2024, the Company entered into an agreement to sell certain non-core U.S. oil and gas producing properties in the Permian Basin. As a result of this agreement, a separate impairment analysis was performed for each of the assets within the disposal group. The analyses were based on the agreed-upon proceeds less costs to sell for the transaction, a Level 1 fair value measurement. The historical carrying value of the net assets to be divested exceeded the fair value implied by the expected net proceeds, resulting in an impairment totaling $315 million on the Company’s proved properties in the U.S. Refer to Note 2—Acquisitions and Divestitures for more detail.
For the years ended December 31, 2023 and 2022, the Company recorded $11 million and no asset impairments, respectively, in connection with fair value assessments.
Revenue Recognition
The Company’s oil and gas segments primarily generate revenue from contracts with customers from the sale of its crude oil, natural gas, and natural gas liquids production volumes. In addition to APA-related production volumes, the Company also sells commodity volumes purchased from third parties to provide flexibility to fulfill sales obligations and commitments. Under these commodity sales contracts, the physical delivery of each unit of quantity represents a single, distinct performance obligation on behalf of the Company. Contract prices are determined based on market-indexed prices, adjusted for quality, transportation, and other market-reflective differentials. Revenue is measured by allocating an entirely variable market price to each performance obligation and recognized at a point in time when control is transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, and the Company’s right to payment. Control typically transfers to customers upon the physical delivery at specified locations within each contract and the transfer of title.
APA’s Egypt operations are conducted pursuant to production-sharing contracts (PSCs). Under the terms of the Company’s PSCs, the Company is the contractor partner (Contractor) with the Egyptian General Petroleum Corporation (EGPC) and bears the risk and cost of exploration, development, and production activities. In return, if exploration is successful, the Contractor receives entitlement to variable physical volumes of hydrocarbons, representing recovery of the costs incurred and a stipulated share of production after cost recovery. Additionally, the Contractor’s income taxes, which remain the liability of the Contractor under domestic law, are paid by EGPC on behalf of the Contractor out of EGPC’s production entitlement. Income taxes paid to the Arab Republic of Egypt on behalf of the Contractor are recognized as oil and gas sales revenue and income tax expense and reflected as production and estimated reserves. Because Contractor cost recovery entitlement and income taxes paid on its behalf are determined as a monetary amount, the quantities of production entitlement and estimated reserves attributable to these monetary amounts will fluctuate with commodity prices. In addition, because the Contractor income taxes are paid by EGPC, the amount of the income tax has no economic impact on the Company’s Egypt operations despite impacting the Company’s production and reserves.
Refer to Note 16—Business Segment Information for a disaggregation of revenue by product and reporting segment.
F-13
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Payment Terms and Contract Balances
Receivables from contracts with customers, including receivables for purchased oil and gas sales and net of allowance for credit losses, were $1.7 billion and $1.5 billion as of December 31, 2024 and 2023, respectively. Payments under all contracts with customers are typically due and received within a short-term period of one year or less, after physical delivery of the product or service has been rendered. In the past year, the Company’s receivable balance from the Egyptian General Petroleum Corporation (EGPC) has gradually increased as payments for the Company’s Egyptian oil and gas sales have been delayed for periods longer than historically experienced. The Company is actively engaged in discussions with the Government of Egypt to resolve the delay in EGPC payments. The Company has received payments throughout 2024, and management believes that the Company will be able to collect the total balance of its receivables from this customer.
In accordance with the provisions of ASC 606, “Revenue from Contracts with Customers,” variable market prices for each short-term commodity sale are allocated entirely to each performance obligation as the terms of payment relate specifically to the Company’s efforts to satisfy its obligations. As such, the Company has elected the practical expedients available under the standard to not disclose the aggregate transaction price allocated to unsatisfied, or partially unsatisfied, performance obligations as of the end of the reporting period.
Cash and Cash Equivalents
The Company considers all highly liquid short-term investments with a maturity of three months or less at the time of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. As of December 31, 2024 and 2023, the Company had $625 million and $87 million, respectively, of cash and cash equivalents. The Company had no restricted cash as of December 31, 2024 and 2023.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are stated at amortized cost net of an allowance for credit losses. The Company routinely assesses the collectability of its financial assets measured at amortized cost. The Company monitors the credit quality of its counterparties through review of collections, credit ratings, and other analyses. The Company develops its estimated allowance for expected credit losses primarily using an aging method and analyses of historical loss rates as well as consideration of current and future conditions that could impact its counterparties’ credit quality and liquidity.
The following table presents changes to the Company’s allowance for credit loss:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Allowance for credit loss at beginning of year | $ | 114 | $ | 117 | $ | 109 | ||||||||||||||
| Additional provisions for the year | 9 | 16 | 9 | |||||||||||||||||
| Uncollectible accounts written off, net of recoveries | — | (19) | (1) | |||||||||||||||||
| Allowance for credit loss at end of year | $ | 123 | $ | 114 | $ | 117 |
Inventories
Inventories consist principally of tubular goods and equipment and are stated at the lower of weighted-average cost or net realizable value. Oil produced but not sold, primarily in the North Sea, is also recorded to inventory and is stated at the lower of the cost to produce or net realizable value.
During 2024, the Company recorded $18 million of inventory impairments, including $13 million in the North Sea and $5 million in the U.S.
The Company also recorded other impairments during 2023 of approximately $50 million in connection with valuations of drilling and operations equipment inventory upon the Company’s decision to suspend drilling operations in the North Sea.
Property and Equipment
The carrying value of the Company’s property and equipment represents the cost incurred to acquire the property and equipment, including capitalized interest, net of any impairments. For business combinations and acquisitions, property and equipment cost is based on the fair values at the acquisition date.
F-14
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Oil and Gas Property
The Company follows the successful efforts method of accounting for its oil and gas property. Under this method of accounting, exploration costs, such as exploratory geological and geophysical costs, delay rentals, and exploration overhead, are expensed as incurred. All costs related to production, general corporate overhead, and similar activities are expensed as incurred. If an exploratory well provides evidence to justify potential development of reserves, drilling costs associated with the well are initially capitalized, or suspended, pending a determination as to whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. This determination may take longer than one year in certain areas depending on, among other things, the amount of hydrocarbons discovered, the outcome of planned geological and engineering studies, the need for additional appraisal drilling activities to determine whether the discovery is sufficient to support an economic development plan, and government sanctioning of development activities in certain international locations. At the end of each quarter, management reviews the status of all suspended exploratory well costs in light of ongoing exploration activities; in particular, whether the Company is making sufficient progress in its ongoing exploration and appraisal efforts or, in the case of discoveries requiring government sanctioning, whether development negotiations are underway and proceeding as planned. If management determines that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed.
Acquisition costs of unproved properties are assessed for impairment at least annually and are transferred to proved oil and gas properties to the extent the costs are associated with successful exploration activities. Significant undeveloped leases are assessed individually for impairment based on the Company’s current exploration plans. Unproved oil and gas properties with individually insignificant lease acquisition costs are amortized on a group basis over the average lease term at rates that provide for full amortization of unsuccessful leases upon lease expiration or abandonment. Costs of expired or abandoned leases are charged to exploration expense, while costs of productive leases are transferred to proved oil and gas properties. Costs of maintaining and retaining unproved properties, as well as amortization of individually insignificant leases and impairment of unsuccessful leases, are included in exploration costs in the statement of consolidated operations.
The following table represents non-cash impairment charges of the carrying value of the Company’s proved and unproved properties:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Proved properties: | ||||||||||||||||||||
| U.S. | $ | 315 | $ | — | $ | — | ||||||||||||||
| Egypt | — | — | — | |||||||||||||||||
| North Sea | 796 | — | — | |||||||||||||||||
| Total proved properties | $ | 1,111 | $ | — | $ | — | ||||||||||||||
| Unproved properties: | ||||||||||||||||||||
| U.S. | $ | 34 | $ | 10 | $ | 20 | ||||||||||||||
| Egypt | — | — | 4 | |||||||||||||||||
| North Sea | — | 11 | — | |||||||||||||||||
| Other International | 1 | 1 | — | |||||||||||||||||
| Total unproved properties | $ | 35 | $ | 22 | $ | 24 |
Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of crude oil and natural gas, are capitalized. Depreciation of the cost of proved oil and gas properties is calculated using the unit-of-production (UOP) method. The UOP calculation multiplies the percentage of estimated proved reserves produced each quarter by the carrying value of associated proved oil and gas properties. The reserve base used to calculate depreciation for leasehold acquisition costs and the cost to acquire proved properties is the sum of proved developed reserves and proved undeveloped reserves. The reserve base used to calculate the depreciation for capitalized well costs is the sum of proved developed reserves only. Estimated future dismantlement, restoration and abandonment costs, net of salvage values, are included in the depreciable cost.
Oil and gas properties are grouped for depreciation in accordance with ASC 932, “Extractive Activities—Oil and Gas.” The basis for grouping is a reasonable aggregation of properties with a common geological structural feature or stratigraphic condition, such as a reservoir or field.
F-15
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
When circumstances indicate that the carrying value of proved oil and gas properties may not be recoverable, the Company compares unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on the Company’s estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is generally estimated using the income approach described in ASC 820. The expected future cash flows used for impairment reviews and related fair value calculations are typically based on judgmental assessments, a Level 3 fair value measurement.
The change in cessation-of-production dates in the North Sea discussed above in “Fair Value Measurements” significantly altered the Company’s remaining oil and gas reserves in the North Sea and triggered an impairment assessment of the Company’s proved oil and gas properties at the end of the third quarter of 2024. Future production volumes and estimated future commodity prices are the largest drivers in variability of future cash flows. Expected cash flows were estimated based on management’s views of forward pricing as of the balance sheet dates. A discount rate based on a market-based weighted-average cost of capital estimate was applied to the undiscounted cash flow estimate to value the Company’s North Sea assets. In connection with this assessment, the Company recorded impairments totaling $796 million on certain of the Company’s North Sea proved properties to an aggregate fair value of $263 million.
Additionally, in the third quarter of 2024, the Company entered into an agreement to sell certain non-core U.S. oil and gas producing properties in the Permian Basin. As a result of this agreement, a separate impairment analysis was performed for each of the assets within the disposal group. The analyses were based on the agreed-upon proceeds less costs to sell for the transaction, a Level 1 fair value measurement. The historical carrying value of the net assets to be divested exceeded the fair value implied by the expected net proceeds, resulting in an impairment totaling $315 million on the Company’s proved properties in the U.S. Refer to Note 2—Acquisitions and Divestitures for more detail.
For the years ended December 31, 2023, and 2022, the Company recorded no impairments of proved properties.
Gains and losses on divestitures of the Company’s oil and gas properties are recognized in the statement of consolidated operations upon closing of the transaction. Refer to Note 2—Acquisitions and Divestitures for more detail.
Gathering, Processing, and Transmission (GPT) Facilities
GPT facilities totaled $433 million and $448 million at December 31, 2024 and 2023, respectively, with accumulated depreciation for these assets totaling $364 million and $373 million for the respective periods. GPT facilities are depreciated on a straight-line basis over the estimated useful lives of the assets. The estimation of useful life takes into consideration anticipated production lives from the fields serviced by the GPT assets, whether APA-operated or third party-operated, as well as potential development plans by the Company for undeveloped acreage within, or close to, those fields.
The Company assesses the carrying amount of its GPT facilities whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount of these facilities is more than the sum of the undiscounted cash flows, an impairment loss is recognized for the excess of the carrying value over its fair value.
For the years ended December 31, 2024, 2023, and 2022, the Company recorded no impairments of GPT facilities.
Other Property and Equipment
Other property and equipment includes computer software and equipment, buildings, vehicles, furniture and fixtures, land, and other equipment. These assets are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from 3 to 20 years. Other property and equipment, net of accumulated depreciation totaled $183 million and $217 million at December 31, 2024 and 2023, respectively.
Asset Retirement Costs and Obligations
The initial estimated asset retirement obligation related to property and equipment and subsequent revisions are recorded as a liability at fair value, with an offsetting asset retirement cost recorded as an increase to the associated property and equipment on the consolidated balance sheet. Revisions in estimated liabilities can result from changes in estimated inflation rates, changes in service and equipment costs and changes in the estimated timing of an asset’s retirement. Asset retirement costs are depreciated using a systematic and rational method similar to that used for the associated property and equipment. Accretion expense on the liability is recognized over the estimated productive life of the related assets.
F-16
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Capitalized Interest
For significant projects, interest is capitalized as part of the historical cost of developing and constructing assets. Significant oil and gas investments in unproved properties actively being explored, significant exploration and development projects that have not commenced production, significant midstream development activities that are in progress, and investments in equity method affiliates that are undergoing the construction of assets that have not commenced principal operations qualify for interest capitalization. Interest is capitalized until the asset is ready for service. Capitalized interest is determined by multiplying the Company’s weighted-average borrowing cost on debt by the average amount of qualifying costs incurred. Once an asset subject to interest capitalization is completed and placed in service, the associated capitalized interest is expensed through depreciation.
Equity Method Interests
The Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity. Under this method, the equity interests are carried originally at acquisition cost, increased by the Company’s proportionate share of the equity interest’s net income and contributions made by the Company, and decreased by the Company’s proportionate share of the equity interest’s net losses and distributions received by the Company. Refer to Note 6—Equity Method Interests for further details of the Company’s equity method interests.
Equity method interests are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred, if the loss is deemed to be other than temporary. When the loss is deemed to be other than temporary, the carrying value of the equity method investment is written down to fair value, and the amount of the write-down is included in income.
Commitments and Contingencies
Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. For more information regarding loss contingencies, refer to Note 11—Commitments and Contingencies.
Derivative Instruments and Hedging Activities
The Company periodically enters into derivative contracts to manage its exposure to commodity price, interest rate, and/or foreign exchange risk. These derivative contracts, which are generally placed with major financial institutions, may take the form of forward contracts, futures contracts, swaps, or options.
All derivative instruments, other than those that meet the normal purchases and sales exception, are recorded on the Company’s consolidated balance sheet as either an asset or liability measured at fair value. The Company does not apply hedge accounting to any of its derivative instruments. As a result, gains and losses from the change in fair value of derivative instruments are reported in current-period income as “Derivative instrument gains (losses), net” under “Revenues and Other” in the statement of consolidated operations. Refer to Note 4—Derivative Instruments and Hedging Activities for further information.
Income Taxes
The Company records deferred tax assets and liabilities to account for the expected future tax consequences of events that have been recognized in the financial statements and tax returns. The Company routinely assesses the ability to realize its deferred tax assets. If the Company concludes that it is more likely than not that some or all of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance. Numerous judgments and assumptions are inherent in the determination of future taxable income, including factors such as future operating conditions (particularly as related to prevailing oil and gas prices) and changing tax laws. Refer to Note 10—Income Taxes for further information.
Earnings Per Share
The Company’s basic earnings per share (EPS) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects potential dilution, using the treasury stock method, which assumes that options were exercised and restricted stock was fully vested.
F-17
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Stock-Based Compensation
The Company grants various types of stock-based awards including stock options, restricted stock, cash-settled restricted stock units, and performance-based awards. Stock compensation equity awards granted are valued on the date of grant and are expensed over the required vesting service period. Cash-settled awards are recorded as a liability based on the Company’s stock price and remeasured at the end of each reporting period over the vesting terms. The Company has elected to account for forfeitures as they occur rather than estimate expected forfeitures. The Company’s stock-based compensation plans and related accounting policies are defined and described more fully in Note 13—Capital Stock.
Treasury Stock
The Company follows the weighted-average-cost method of accounting for treasury stock transactions.
Transaction, Reorganization, and Separation (TRS)
The Company recorded TRS costs in 2024 totaling $168 million, which primarily comprised $147 million associated with the Callon acquisition, including $76 million of separation costs and $71 million of transaction and integration costs.
The Company recorded TRS costs in 2023 and 2022 totaling $15 million and $26 million, respectively, including $7 million and $15 million, respectively, related to consulting and separation costs in international operations associated with the redesign of the Company’s organizational structure and operations.
New Pronouncements Issued But Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures (Topic 740),” which requires enhanced disclosures primarily related to existing rate reconciliation and income taxes paid information. This update is effective for the Company beginning in the first quarter of 2025 and is applied on a prospective basis. The Company does not believe this will have a material impact on its financial statements.
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40),” which expands disclosures around a public entity’s costs and expenses of specific items (i.e. employee compensation, DD&A), requires the inclusion of amounts that are required to be disclosed under GAAP in the same disclosure as other disaggregation requirements, requires qualitative descriptions of amounts remaining in expense captions that are not separately disaggregated quantitatively, and requires disclosure of total selling expenses, and in annual periods, the definition of selling expenses. The amendment does not change or remove existing disclosure requirements. The amendment is effective for fiscal years beginning after December 15, 2026, and interim periods with fiscal years beginning after December 15, 2027. Early adoption is permitted, and the amendment can be adopted prospectively or retrospectively to any or all periods presented in the financial statements. The Company is currently assessing the impact of adopting this standard.
2. ACQUISITIONS AND DIVESTITURES
2024 Activity
Callon Petroleum Company Acquisition
On April 1, 2024, APA completed its acquisition of Callon in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s debt. The transaction was approved by APA and Callon shareholders at special meetings held on March 27, 2024. The acquired assets include approximately 120,000 net acres in the Delaware Basin and 25,000 net acres in the Midland Basin.
Subject to the terms of the merger agreement (Merger Agreement), each share of Callon common stock was converted into the right to receive 1.0425 shares of APA common stock, with cash in lieu of fractional shares. As a result, APA issued approximately 70 million shares of APA common stock in connection with the transaction based on the value of APA common stock on the day of closing, and following the acquisition, Callon common stock is no longer listed for trading on the NYSE. In addition to the equity consideration provided, APA transferred approximately $24 million in other consideration upon close of the transaction.
Upon completing the acquisition, APA repaid all of Callon’s debt, refinancing a portion by borrowing $1.5 billion under its unsecured committed term loan facility. Refer to Note 9—Debt and Financing Costs for further detail.
F-18
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Recording of Assets Acquired and Liabilities Assumed
The transaction was accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.
| (In millions) | ||||||||
| Current assets | $ | 287 | ||||||
| Property and equipment | 4,502 | |||||||
| Deferred tax asset | 565 | |||||||
| Other assets | 12 | |||||||
| Total assets acquired | $ | 5,366 | ||||||
| Current liabilities | $ | 632 | ||||||
| Long-term debt | 2,113 | |||||||
| Asset retirement obligation | 136 | |||||||
| Other long-term obligations | 48 | |||||||
| Total liabilities assumed | $ | 2,929 | ||||||
| Net assets acquired | $ | 2,437 |
The following unaudited pro forma combined results for the years ended December 31, 2024 and 2023 reflect the consolidated results of operations of the Company as if the Callon acquisition had occurred on January 1, 2023. The unaudited pro forma information includes certain accounting adjustments for transaction costs, depreciation, depletion, and amortization expense, and estimated tax impacts of the pro forma adjustments.
| For the Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Revenues | $ | 10,300 | $ | 10,578 | ||||||||||
| Net income attributable to common stock | 909 | 4,021 | ||||||||||||
| Net income per common share – basic | 2.45 | 10.66 | ||||||||||||
| Net income per common share – diluted | 2.45 | 10.63 |
From the date of the acquisition through December 31, 2024, revenues and net income attributable to common stockholders associated with Callon assets totaled $1.2 billion and $262 million, respectively.
The unaudited pro forma condensed consolidated financial information has been included for comparative purposes only and is not necessarily indicative of the results that might have occurred had the transactions taken place on the dates indicated. The unaudited pro forma results are also not intended to be a projection of future results and do not include any future cost savings or other synergies that may result from the Callon acquisition or any estimated costs that have not yet been incurred.
U.S. Divestitures
On December 31, 2024, APA completed the sale of non-core producing properties in the Permian Basin that had a carrying value of $1.1 billion and associated asset retirement obligation of $224 million for total cash proceeds of $869 million after closing adjustments. The properties are located in the Central Basin Platform, Texas and New Mexico Shelf, and Northwest Shelf. The effective date of the transaction is July 1, 2024. As a result of the transaction, the Company performed a fair value assessment of the associated assets and liabilities and recorded an impairment of $315 million to the carrying value of the associated oil and gas properties during the third quarter of 2024. During the fourth quarter of 2024, the Company recorded a loss of $5 million upon closing of the transaction.
During 2024, the Company completed the sale of non-core acreage in the East Texas Austin Chalk and Eagle Ford plays that had a carrying value of $347 million for aggregate cash proceeds of $255 million and the assumption of asset retirement obligations of $42 million. The Company recognized a $50 million loss during 2024 in association with this sale.
During 2024, the Company also completed the sale of non-core mineral and royalty interests in the Permian Basin that had a carrying value of $71 million for approximately $394 million subject to post-closing adjustments. The Company recognized a gain of $321 million during 2024 in association with this sale.
F-19
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Additionally, during 2024, the Company completed the sale of non-core assets and leasehold in multiple transactions for aggregate cash proceeds of $91 million, recognizing a gain of approximately $22 million upon closing of these transactions.
Sale of Kinetik Shares
On March 18, 2024, the Company sold its remaining Kinetik Class A Common Stock (Kinetik Shares) for cash proceeds of $428 million. Refer to Note 6—Equity Method Interests for further detail.
Leasehold and Property Acquisitions
During 2024, in addition to the Callon acquisition, the Company completed other leasehold and property acquisitions, primarily in the Permian Basin, for aggregate cash consideration of approximately $60 million.
2023 Activity
Sale of Kinetik Shares
In December 2023, the Company sold 7.5 million of its Kinetik Shares for cash proceeds of $228 million. Refer to Note 6—Equity Method Interests for further detail.
Leasehold and Property Acquisitions
During 2023, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of approximately $20 million.
U.S. Divestitures
During 2023, the Company completed the sale of non-core assets and leasehold in multiple transactions for total cash proceeds of $29 million, recognizing an aggregate gain of approximately $8 million upon closing of these transactions.
2022 Activity
During the third quarter of 2022, the Company closed on the acquisition of oil and gas assets in the Delaware Basin for a total purchase price of $615 million after post-closing adjustments. Final cash settlements of $24 million were completed during 2023. The Company recorded $581 million for proved properties, $38 million for unproved leasehold, and $4 million for abandonment obligations.
During 2022, the Company completed other leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of approximately $37 million.
During 2022, the Company completed the sale of non-core assets and leasehold in multiple transactions for total cash proceeds of $52 million, recognizing an aggregate gain of approximately $36 million, upon closing of these transactions.
During 2022, the Company completed the sale of certain non-core mineral rights in the Delaware Basin. The Company received total cash proceeds of approximately $726 million after certain post-closing adjustments and recognized an associated gain of approximately $560 million.
The BCP Business Combination was completed on February 22, 2022. As consideration for the contribution of the Contributed Interests, ALTM issued 50 million shares of Class C Common Stock (and Altus Midstream LP issued a corresponding number of common units) to BCP’s unitholders, which are principally funds affiliated with Blackstone and I Squared Capital. ALTM’s stockholders continued to hold their existing shares of common stock. As a result of the transaction, the Contributor, or its designees, collectively owned approximately 75 percent of the issued and outstanding shares of ALTM common stock. Apache Midstream LLC, a wholly owned subsidiary of APA, which owned approximately 79 percent of the issued and outstanding shares of ALTM common stock prior to the BCP Business Combination, owned approximately 20 percent of the issued and outstanding shares of Kinetik common stock after the transaction closed.
As a result of the BCP Business Combination, the Company deconsolidated ALTM on February 22, 2022 and recognized a gain of approximately $609 million that reflects the difference between the Company’s $193 million net effect of deconsolidating ALTM’s balance sheet and the $802 million fair value of the Company’s approximate 20 percent retained ownership in the combined entity.
F-20
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
During the first quarter of 2022, the Company sold four million of its Kinetik Shares for cash proceeds of $224 million. Refer to Note 6—Equity Method Interests for further detail.
3. CAPITALIZED EXPLORATORY WELL COSTS
The following summarizes the changes in capitalized exploratory well costs for the years ended December 31, 2024, 2023, and 2022. Additions pending the determination of proved reserves excludes amounts capitalized and subsequently charged to expense within the same year.
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Capitalized well costs at beginning of year | $ | 586 | $ | 474 | $ | 321 | ||||||||||||||
| Additions pending determination of proved reserves | 240 | 265 | 287 | |||||||||||||||||
| Reclassifications to proved properties | (506) | (135) | (110) | |||||||||||||||||
| Charged to exploration expense | (83) | (18) | (24) | |||||||||||||||||
| Capitalized well costs at end of year | $ | 237 | $ | 586 | $ | 474 |
The following provides an aging of capitalized exploratory well costs and the number of projects for which exploratory well costs have been capitalized for a period greater than one year since the completion of drilling as of December 31:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Exploratory well costs capitalized for a period of one year or less | $ | 107 | $ | 156 | $ | 215 | ||||||||||||||
| Exploratory well costs capitalized for a period greater than one year | 130 | 430 | 259 | |||||||||||||||||
| Capitalized well costs at end of year | $ | 237 | $ | 586 | $ | 474 | ||||||||||||||
| Number of projects with exploratory well costs capitalized for a period greater than one year | 12 | 33 | 21 |
Projects with exploratory well costs capitalized for a period greater than one year since the completion of drilling are those identified by management as exhibiting sufficient quantities of hydrocarbons to justify potential development. Management is actively pursuing efforts to assess whether reserves can be attributed to these projects. Exploratory well costs capitalized for a period greater than one year since completion of drilling were $130 million at December 31, 2024, with $115 million related to Suriname exploration and appraisal. Ongoing analysis of well results and appraisal activity is continuing. The remaining projects pertain to onshore drilling activity in Egypt for which continued testing and evaluation is being performed.
Dry hole expenses from suspended exploratory well costs previously capitalized for greater than one year at December 31, 2023 totaled $52 million. These expenses pertained to projects in Suriname and Egypt.
The following table summarizes aging by geographic area of those exploratory well costs that, as of December 31, 2024, have been capitalized for a period greater than one year, categorized by the year in which drilling was completed:
| Total | 2023 | 2022 | 2021 and Prior | |||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Suriname | $ | 115 | $ | 60 | $ | — | $ | 55 | ||||||||||||||||||
| Egypt | 15 | 15 | — | — | ||||||||||||||||||||||
| $ | 130 | $ | 75 | $ | — | $ | 55 |
F-21
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
4. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Objectives and Strategies
The Company is exposed to fluctuations in crude oil and natural gas prices on the majority of its worldwide production, as well as fluctuations in exchange rates in connection with transactions denominated in foreign currencies. The Company manages the variability in its cash flows by occasionally entering into derivative transactions on a portion of its crude oil and natural gas production and foreign currency transactions. The Company utilizes various types of derivative financial instruments, including forward contracts, futures contracts, swaps, and options, to manage fluctuations in cash flows resulting from changes in commodity prices. The Company elected not to designate any of its derivative contracts as cash flow hedges.
Embedded Derivatives
As a result of the Callon acquisition, the Company assumed an earn-out obligation from Callon, where the Company could be required to pay up to $25 million in the aggregate if the average daily settlement price of WTI crude oil exceeds $60.00 per barrel for the 2025 calendar year. The Company determined that the earn-out obligation is not clearly and closely related to the underlying agreements and therefore bifurcated this embedded feature and recorded the derivative at fair value. The Company uses a market approach to estimate the fair values of these derivatives on a recurring basis, utilizing an option pricing model method provided by a reputable third party. The valuation includes significant inputs such as forward oil price curves, time to expiration, and implied volatility. As these inputs are substantially observable for the full term of the contingent consideration arrangements, the inputs are considered a Level 2 fair value measurement.
Derivative Activity Recorded in the Consolidated Balance Sheet
All derivative instruments are reflected as either assets or liabilities at fair value in the consolidated balance sheet. These fair values are recorded by netting asset and liability positions where counterparty master netting arrangements contain provisions for net settlement. The carrying value of the Company’s derivative assets and liabilities and their locations on the consolidated balance sheet are as follows:
| For the Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Current Assets: Other current assets | $ | — | $ | 6 | ||||||||||
| Total derivative assets | $ | — | $ | 6 | ||||||||||
| Deferred Credits and Other Noncurrent Liabilities: Other | $ | 18 | $ | — | ||||||||||
| Total derivative liabilities | $ | 18 | $ | — |
Derivative Activity Recorded in the Statement of Consolidated Operations
The following table summarizes the effect of derivative instruments on the Company’s statement of consolidated operations:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Realized: | ||||||||||||||||||||
| Commodity derivative instruments | $ | 2 | $ | 48 | $ | (34) | ||||||||||||||
| Contingent consideration arrangements | (4) | — | — | |||||||||||||||||
| Foreign currency derivative instruments | — | — | (13) | |||||||||||||||||
| Realized gains (losses), net | (2) | 48 | (47) | |||||||||||||||||
| Unrealized: | ||||||||||||||||||||
| Commodity derivative instruments | (6) | 51 | (36) | |||||||||||||||||
| Contingent consideration arrangements | (2) | — | — | |||||||||||||||||
| Preferred Units embedded derivative | — | — | (31) | |||||||||||||||||
| Unrealized gains (losses), net | (8) | 51 | (67) | |||||||||||||||||
| Derivative instrument gains (losses), net | $ | (10) | $ | 99 | $ | (114) |
F-22
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Derivative instrument gains and losses are recorded in “Derivative instrument gains (losses), net” under “Revenues and Other” in the Company’s statement of consolidated operations. Unrealized gains (losses) for derivative activity recorded in the statement of consolidated operations are reflected in the statement of consolidated cash flows separately as “Unrealized derivative instrument (gains) losses, net” under “Adjustments to reconcile net income to net cash provided by operating activities.”
5. OTHER CURRENT ASSETS
The following table provides detail of the Company’s other current assets as of December 31:
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Inventories | $ | 425 | $ | 453 | ||||||||||
| Drilling advances | 184 | 88 | ||||||||||||
| Prepaid assets and other | 54 | 46 | ||||||||||||
| Current decommissioning security for sold Gulf of America assets | 157 | 178 | ||||||||||||
| Total Other current assets | $ | 820 | $ | 765 |
6. EQUITY METHOD INTERESTS
As of December 31, 2023, the Company held 13.1 million Kinetik Shares, which were recorded at fair value of $437 million and reflected separately as “Equity method interests” in the Company’s consolidated balance sheet. The Company elected the fair value option for measuring its equity method interest in Kinetik. The fair value of the Company’s interest in Kinetik was determined using observable share prices on a major exchange, a Level 1 fair value measurement. On March 18, 2024, the Company sold its remaining Kinetik Shares for cash proceeds of $428 million.
Prior to the Company’s sale of its remaining Kinetik Shares and the resignation of the Company’s designated director from the Kinetik board of directors, the Company recorded changes in the fair value of its equity method interest in Kinetik totaling a loss of $9 million during 2024, and gains of $41 million and $72 million during 2023 and 2022, respectively. These gains and losses are recorded in the statement of consolidated operations and reflected in “Other, net” under “Revenues and other.”
The following table represents related party sales and costs associated with Kinetik prior to the Company’s sale of its remaining Kinetik Shares and the resignation of the Company’s designated director from the Kinetik board of directors:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Natural gas and NGLs sales | $ | 13 | $ | 92 | $ | 18 | ||||||||||||||
| Purchased oil and gas sales | 22 | 29 | — | |||||||||||||||||
| $ | 35 | $ | 121 | $ | 18 | |||||||||||||||
| Gathering, processing, and transmission costs | $ | 23 | $ | 108 | $ | 93 | ||||||||||||||
| Purchased oil and gas costs | 23 | 80 | — | |||||||||||||||||
| Lease operating expenses | 2 | 7 | — | |||||||||||||||||
| $ | 48 | $ | 195 | $ | 93 |
F-23
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
7. OTHER CURRENT LIABILITIES
The following table provides detail of the Company’s other current liabilities as of December 31:
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Accrued operating expenses | $ | 204 | $ | 162 | ||||||||||
| Accrued exploration and development | 460 | 371 | ||||||||||||
| Accrued compensation and benefits | 223 | 390 | ||||||||||||
| Accrued interest | 93 | 93 | ||||||||||||
| Accrued income taxes | 221 | 138 | ||||||||||||
| Current asset retirement obligation | 103 | 76 | ||||||||||||
| Current operating lease liability | 118 | 116 | ||||||||||||
| Current decommissioning contingency for sold Gulf of America properties | 88 | 60 | ||||||||||||
| Other | 168 | 338 | ||||||||||||
| Total Other current liabilities | $ | 1,678 | $ | 1,744 |
8. ASSET RETIREMENT OBLIGATION
The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the years ended December 31, 2024 and 2023:
| For the Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Asset retirement obligation at beginning of the year | $ | 2,438 | $ | 1,995 | ||||||||||
| Liabilities incurred | 15 | 14 | ||||||||||||
| Liabilities acquired | 136 | — | ||||||||||||
| Liabilities divested | (272) | — | ||||||||||||
| Liabilities settled | (70) | (43) | ||||||||||||
| Accretion expense | 148 | 116 | ||||||||||||
| Revisions in estimated liabilities | 299 | 356 | ||||||||||||
| Asset retirement obligation at end of the year | 2,694 | 2,438 | ||||||||||||
| Less current portion | (103) | (76) | ||||||||||||
| Asset retirement obligation, long-term | $ | 2,591 | $ | 2,362 |
The ARO liability reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with the Company’s oil and gas properties and other long-lived assets. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. The Company estimates the ultimate productive life of the properties, a risk-adjusted discount rate, and an inflation factor in order to determine the current present value of this obligation. To the extent future revisions to these assumptions impact the present value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property or other long-lived asset balance.
During 2024 and 2023, the Company recorded $15 million and $14 million, respectively, in abandonment liabilities resulting from the Company’s exploration and development capital program. Liabilities settled primarily relate to individual properties, platforms, and facilities plugged and abandoned during the period. During 2024, net abandonment costs were revised upward by approximately $299 million, primarily reflecting changes in estimates of timing and activity costs in the U.S. and North Sea, in addition to foreign currency exchange rates on service costs. During 2023, net abandonment costs were revised upward by approximately $356 million to reflect changes in estimates of timing, activity costs, and foreign currency exchange rates on service costs in the North Sea.
F-24
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
9. DEBT AND FINANCING COSTS
Overview
The debt of APA and Apache is senior unsecured debt and has equal priority with respect to the payment of both principal and interest. As of December 31, 2024, (i) all indentures of Apache for the notes and debentures described below placed certain restrictions on Apache, including limits on Apache’s ability to incur debt secured by certain liens, and (ii) certain of those indentures also restricted Apache’s ability to enter into certain sale and leaseback transactions and gave holders the option to require Apache to repurchase outstanding notes and debentures upon certain changes in control. Each indenture of APA and Apache restricts it from issuing or guaranteeing certain secured indebtedness. None of the indentures contain prepayment obligations in the event of a decline in credit ratings.
During 2023, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $74 million for an aggregate purchase price of $65 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $10 million. The Company recognized a $9 million gain on these repurchases. The repurchases were partially financed by Apache’s borrowing under the Company’s US dollar-denominated revolving credit facility.
During 2022, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $15 million for an aggregate purchase price of $16 million in cash, including accrued interest and broker fees, reflecting a premium to par of an aggregate $1 million. The Company recognized a $1 million loss on these repurchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.
During 2022, Apache closed cash tender offers for certain outstanding notes issued under its indentures, accepting for purchase $1.1 billion aggregate principal amount of notes. Apache paid holders an aggregate $1.2 billion in cash, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a $66 million loss on extinguishment of debt, including $11 million of unamortized debt discount and issuance costs in connection with the note purchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.
The Company records gains and losses on extinguishment of debt in “Financing costs, net” in the Company’s statement of consolidated operations.
F-25
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table presents the carrying value of the Company’s debt as of December 31, 2024 and 2023:
| December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| 4.625% notes due 2025(1) | $ | 51 | $ | 51 | ||||||||||
| 7.7% notes due 2026 | 78 | 78 | ||||||||||||
| 7.95% notes due 2026 | 132 | 132 | ||||||||||||
| 4.875% notes due 2027(1) | 108 | 108 | ||||||||||||
| 4.375% notes due 2028(1) | 325 | 325 | ||||||||||||
| 7.75% notes due 2029(1)(2) | 235 | 235 | ||||||||||||
| 4.25% notes due 2030(1) | 516 | 516 | ||||||||||||
| 6.0% notes due 2037(1) | 443 | 443 | ||||||||||||
| 5.1% notes due 2040(1) | 1,333 | 1,333 | ||||||||||||
| 5.25% notes due 2042(1) | 399 | 399 | ||||||||||||
| 4.75% notes due 2043(1) | 428 | 428 | ||||||||||||
| 4.25% notes due 2044(1) | 211 | 211 | ||||||||||||
| 7.375% debentures due 2047 | 150 | 150 | ||||||||||||
| 5.35% notes due 2049(1) | 387 | 387 | ||||||||||||
| 7.625% debentures due 2096 | 39 | 39 | ||||||||||||
| Apache notes and debentures before unamortized discount and debt issuance costs(3) | 4,835 | 4,835 | ||||||||||||
| Commercial paper | 323 | — | ||||||||||||
| Term loan facility | 900 | — | ||||||||||||
| Syndicated credit facilities(4) | 10 | 372 | ||||||||||||
| Apache finance lease obligations | 30 | 32 | ||||||||||||
| Unamortized discount | (25) | (26) | ||||||||||||
| Debt issuance costs | (29) | (25) | ||||||||||||
| Total debt | 6,044 | 5,188 | ||||||||||||
| Current maturities | (53) | (2) | ||||||||||||
| Long-term debt | $ | 5,991 | $ | 5,186 |
(1)These notes are redeemable, as a whole or in part, at Apache’s option, subject to a make-whole premium, except that the 7.75% notes due 2029 are only redeemable as whole for principal and accrued interest in the event of certain Canadian tax law changes. The remaining notes and debentures are not redeemable.
(2)Assumed by Apache in August 2017 as permitted by terms of these notes originally issued by a subsidiary and guaranteed by Apache.
(3)The fair values of Apache’s notes and debentures were $4.4 billion and $4.3 billion as of December 31, 2024 and 2023, respectively. The Company uses a market approach to determine the fair value of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).
(4)The carrying amount of borrowings on credit facilities approximates fair value because the interest rates are variable and reflective of market rates.
Maturities for the Company’s notes and debentures excluding discount and debt issuance costs as of December 31, 2024 are as follows:
| (In millions) | |||||
| 2025 | $ | 51 | |||
| 2026 | 210 | ||||
| 2027 | 108 | ||||
| 2028 | 325 | ||||
| 2029 | 235 | ||||
| Thereafter | 3,906 | ||||
| Notes and debentures, excluding discounts and debt issuance costs | $ | 4,835 |
F-26
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Financing Costs, Net
The following table presents the components of the Company’s financing costs, net:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Interest expense | $ | 402 | $ | 351 | $ | 332 | ||||||||||||||
| Amortization of debt issuance costs | 6 | 4 | 8 | |||||||||||||||||
| Capitalized interest | (29) | (24) | (18) | |||||||||||||||||
| Loss (gain) on extinguishment of debt | — | (9) | 67 | |||||||||||||||||
| Interest income | (12) | (10) | (10) | |||||||||||||||||
| Financing costs, net | $ | 367 | $ | 312 | $ | 379 |
Unsecured 2022 Committed Bank Credit Facilities
On April 29, 2022, the Company entered into two unsecured syndicated credit agreements for general corporate purposes that remained in effect as of December 31, 2024, but were replaced on January 15, 2025, as detailed below under “Subsequent Event—Unsecured 2025 Committed Bank Credit Facilities.” As of December 31, 2024:
-
One agreement was denominated in US dollars (the 2022 USD Agreement) and provided for an unsecured five-year revolving credit facility, with aggregate commitments of US$1.8 billion (including a letter of credit subfacility of up to US$750 million, of which US$150 million was committed).
-
The second agreement was denominated in pounds sterling (the 2022 GBP Agreement) and provided for an unsecured five-year revolving credit facility, with aggregate commitments of £1.5 billion for loans and letters of credit.
As of December 31, 2024, there were $10 million of borrowings under the 2022 USD Agreement and an aggregate £303 million in letters of credit outstanding under the GBP Agreement. As of December 31, 2024, there were no letters of credit outstanding under the USD Agreement. As of December 31, 2023, there were $372 million of borrowings under the 2022 USD Agreement, and an aggregate £348 million in letters of credit outstanding under the GBP Agreement. As of December 31, 2023, there were no letters of credit outstanding under the 2022 USD Agreement.
The Company was in compliance with the terms of the 2022 Agreements as of December 31, 2024.
Uncommitted Lines of Credit
Each of the Company and Apache from time to time has and uses uncommitted credit and letter of credit facilities for working capital and credit support purposes. As of December 31, 2024 and 2023, there were no outstanding borrowings under these facilities. As of December 31, 2024, there were £640 million and $11 million in letters of credit outstanding under these facilities. As of December 31, 2023, there were £416 million and $2 million in letters of credit outstanding under these facilities.
Commercial Paper Program
In December 2023, the Company established a commercial paper program under which it from time to time may issue in private placements exempt from registration under the Securities Act short-term unsecured promissory notes (the CP Notes) up to a maximum aggregate face amount of $1.8 billion outstanding at any time. The maturities of CP Notes may vary but may not exceed 397 days from the date of issuance. Outstanding CP Notes are supported by available borrowing capacity under the Company’s committed revolving credit facilities for general corporate purposes, which as of December 31, 2024, included the $1.8 billion 2022 USD Agreement.
Payment of the CP Notes has been unconditionally guaranteed on an unsecured basis by Apache, such guarantee effective until the first time that the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than US$1.0 billion.
The CP Notes are sold under customary market terms in the U.S. commercial paper market at a discount from par or at par and bear interest at rates determined at the time of issuance.
F-27
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
As of December 31, 2024, the Company had $323 million in aggregate face amount of CP Notes outstanding, which is classified as long-term debt. As of December 31, 2023, there were no CP Notes outstanding.
Unsecured Committed Term Loan Facility
On January 30, 2024, APA entered into a syndicated credit agreement under which the lenders committed an aggregate $2.0 billion for senior unsecured delayed-draw term loans to APA (Term Loan Credit Agreement), the proceeds of which could be used to refinance certain indebtedness of Callon only once upon the date of the closings under the Merger Agreement and Term Loan Credit Agreement. Of such aggregate commitments, $1.5 billion was for term loans that would mature three years after the date of such closings (3-Year Tranche Loans) and $500 million was for term loans that would mature 364 days after the date of such closings (364-Day Tranche Loans). Apache has guaranteed obligations under the Term Loan Credit Agreement effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures first is less than $1.0 billion.
On April 1, 2024 (the Closing Date), APA closed the transactions under the Term Loan Credit Agreement, electing to borrow an aggregate $1.5 billion in 3-Year Tranche Loans maturing April 1, 2027 and to allow the lender commitments for the 364-Day Tranche Loans to expire. As of December 31, 2024, $900 million in 3-Year Tranche Loans remained outstanding under the Term Loan Credit Agreement.
Loan proceeds were used to refinance certain indebtedness of Callon upon the substantially simultaneous closing of APA’s acquisition of Callon pursuant to the Merger Agreement and to pay related fees and expenses. APA may at any time prepay loans under the Term Loan Credit Agreement.
Borrowings under the Term Loan Credit Agreement bear interest at one of two rate options selected by APA, being either (i) an alternate base rate (as defined), plus a margin (Term Base Rate Margin) varying from 0.375% to 1.125% for 3-Year Tranche Loans until the second anniversary of the Closing Date, and 0.625% to 1.375% for 3-Year Tranche Loans after the second anniversary of the Closing Date, or (ii) an adjusted term SOFR rate (as defined), plus a margin (Term Applicable Margin) varying from 1.375% to 2.125% for 3-Year Tranche Loans until the second anniversary of the Closing Date, and 1.625% to 2.375% for 3-Year Tranche Loans after the second anniversary of the Closing Date.
Margins are at varying rates per annum determined by reference to the senior, unsecured, non-credit enhanced, long-term indebtedness for borrowed money of APA, or if such indebtedness is not rated and the Apache guaranty is in effect, of Apache (Long-Term Debt Rating). As of December 31, 2024, Apache’s Long-Term Debt Rating applied, and the Term Base Rate Margin was 0.75% for 3-Year Tranche Loans, and the Term Applicable Margin was 1.75% for 3-Year Tranche Loans.
APA is subject to representations and warranties, covenants, and events of default under the Term Loan Credit Agreement, such as:
-
A financial covenant requires APA to maintain an adjusted debt-to-capital ratio of not greater than 60 percent at the end of any fiscal quarter. At December 31, 2024, APA’s debt-to-capital ratio as calculated under the Term Loan Credit Agreement was 19 percent.
-
A negative covenant restricts the ability of APA and its subsidiaries to create liens securing debt on their hydrocarbon-related assets, with customary exceptions and exceptions for liens on subsidiary assets located outside of the U.S. and Canada. Liens on assets also are permitted if debt secured thereby does not exceed 15 percent of APA’s consolidated net tangible assets or approximately $2.5 billion as of December 31, 2024.
-
Negative covenants restrict APA’s ability to merge with another entity unless it is the surviving entity, a borrower’s disposition of substantially all of its assets, prohibitions on the ability of certain subsidiaries to make payments to borrowers, and guarantees by APA or certain subsidiaries of debt of non-consolidated entities in excess of the stated threshold.
-
Lenders may accelerate payment maturity and terminate lending commitments for nonpayment and other breaches; if APA or certain subsidiaries default on other indebtedness in excess of the stated threshold, has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold, or has specified pension plan liabilities in excess of the stated threshold; or APA undergoes a specified change in control. Such acceleration and termination are automatic upon specified insolvency events of APA or certain subsidiaries.
F-28
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Term Loan Credit Agreement does not permit lenders to accelerate maturity based on unspecified material adverse changes and does not have prepayment obligations in the event of a decline in credit ratings.
The Company was in compliance with the terms of the Term Loan Credit Agreement as of December 31, 2024.
Subsequent Event—Unsecured 2025 Committed Bank Credit Facilities
On January 15, 2025, the Company terminated commitments under the 2022 Agreements and in replacement thereof, entered into two unsecured syndicated credit agreements for general corporate purposes on terms substantially the same as those of the 2022 Agreements:
-
One agreement is denominated in US dollars (the 2025 USD Agreement) and provides for an unsecured five-year revolving credit facility for loans and letters of credit, with aggregate commitments of US$2.0 billion (including a letter of credit subfacility of up to US$750 million, of which US$250 million currently is committed). APA may increase commitments up to an aggregate US$2.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders. This facility matures in January 2030, subject to the Company’s two, one-year extension options.
-
The second agreement is denominated in pounds sterling (the 2025 GBP Agreement) and provides for an unsecured five-year revolving credit facility, with aggregate commitments of £1.5 billion for loans and letters of credit. This facility matures in January 2030, subject to the Company’s two, one-year extension options.
Apache has guaranteed obligations under each of the 2025 USD Agreement and 2025 GBP Agreement (each, a 2025 Agreement) effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures first is less than US$1.0 billion.
Letters of credit are available under each 2025 Agreement for credit support needs of APA and its subsidiaries, including in respect of North Sea decommissioning obligations. As of January 15, 2025, letters of credit aggregating approximately £253 million originally issued under the 2022 GBP Agreement were deemed issued and outstanding under the 2025 GBP Agreement.
All borrowings under the 2025 USD Agreement bear interest at one of two per annum rate options selected by the borrower, being either an alternate base rate (as defined), plus a margin varying from 0.0% to 0.675% (Base Rate Margin), or an adjusted term SOFR rate (as defined), plus a margin varying from 1.00% to 1.675% (Applicable Margin). All borrowings under the 2025 GBP Agreement bear interest with respect to any business day at an adjusted rate per annum determined by reference to the Sterling Overnight Index Average with respect to such business day published by the Bank of England, plus the Applicable Margin.
Each 2025 Agreement also requires the borrower to pay quarterly (i) a facility fee on total commitments at a per annum rate that varies from 0.125% to 0.325% and (ii) a commission on the face amount of each outstanding letter of credit at a per annum rate equal to the Applicable Margin then in effect. Customary letter of credit fronting fees and other charges are payable to issuing banks.
Margins and facility fees are at varying rates per annum determined by reference to the senior, unsecured, non-credit enhanced, long-term indebtedness for borrowed money of APA, or if such indebtedness is not rated and the Apache guaranty is in effect, of Apache (Long-Term Debt Rating). APA’s Long-Term Debt Rating currently applies, and the Base Rate Margin is 0.30%, the Applicable Margin is 1.30%, and the facility fee is 0.20%.
Borrowers under each 2025 Agreement, which include certain subsidiaries of APA, may borrow, prepay, and reborrow loans and obtain letters of credit, and APA may obtain letters of credit for the account of its subsidiaries, in each case subject to representations and warranties, covenants, and events of default, such as:
-
A financial covenant requires APA to maintain an adjusted debt-to-capital ratio of not greater than 65% at the end of any fiscal quarter.
-
A negative covenant restricts the ability of APA and its subsidiaries to create liens securing debt on their hydrocarbon-related assets, with customary exceptions and exceptions for liens on subsidiary assets located outside of the U. S. and Canada; Liens on assets also are permitted if debt secured thereby does not exceed 15% of APA’s consolidated net tangible assets.
F-29
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
-
Negative covenants restrict APA’s ability to merge with another entity unless it is the surviving entity, a borrower’s disposition of substantially all of its assets, prohibitions on the ability of certain subsidiaries to make payments to borrowers, and guarantees by APA or certain subsidiaries of debt of non-consolidated entities in excess of the stated threshold.
-
Lenders may accelerate payment maturity and terminate lending and issuance commitments for nonpayment and other breaches; if a borrower or certain subsidiaries defaults on other indebtedness in excess of the stated threshold, has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold, or has specified pension plan liabilities in excess of the stated threshold; or APA undergoes a specified change in control. Such acceleration and termination are automatic upon specified insolvency events of a borrower or certain subsidiaries.
The 2025 Agreements do not require collateral, do not have a borrowing base, do not permit lenders to accelerate maturity or refuse to lend based on unspecified material adverse changes, and do not have borrowing restrictions or prepayment obligations in the event of a decline in credit ratings.
Subsequent Event—APA Exchange and Tender Offers for Apache Indenture Debt
On January 10, 2025, the Company settled its private exchange and cash tender offers for certain notes and debentures issued by Apache under its indentures. The Company also then settled its private offering of new notes to fund in part its purchase of Apache notes in APA’s cash tender offers. In settling these offerings pursuant to their respective terms:
-
APA issued new notes and debentures under its indentures in aggregate principal amounts of (i) $2.5 billion in exchange for Apache notes and debentures tendered and accepted in APA’s exchange offers, (ii) $203 million in exchange for Apache notes tendered in the cash tender offers in excess of the stated maximum purchase amount or series caps, and (iii) $850 million in the new notes offering, comprised of $350 million aggregate principal amount of APA’s 6.10% Notes due 2035 and $500 million aggregate principal amount of APA’s 6.75% Notes due 2055.
-
In addition to issuing the APA notes in the exchange offers, APA paid a total of $2.5 million in cash as part of the exchange consideration.
-
APA paid a total of $869 million in cash in the tender offers (comprised of tender offer consideration, exchange consideration for tendered notes exchanged, early participation premium, and accrued interest) for the aggregate $1 billion in principal amount of Apache notes tendered and accepted in the cash tender offers.
-
Net proceeds from the sale of the notes in APA’s new notes offering, after deducting the initial purchasers’ discounts and estimated offering expenses, were approximately $839 million and used to fund in part APA’s purchase of Apache notes in APA’s cash tender offers.
-
Each series of APA notes and debentures issued in settlement of the exchange and tender offers has the same interest rate, maturity date, and interest payment dates and the same optional redemption prices (if any) as the corresponding series of Apache notes and debentures for which they were exchanged.
-
Each series of APA notes and debentures issued in settlement of the exchange and tender offers and new notes offering are fully and unconditionally guaranteed by Apache until the first time that the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than $1 billion.
-
APA entered into two registration rights agreements, one covering notes and debentures issued in APA’s exchange and tender offers and one covering notes issued in APA’s new notes offering (each a Registration Rights Agreement). These offerings were not registered under the Securities Act of 1933, as amended (Securities Act), in reliance upon an exemption therefrom, and the APA notes and debentures issued pursuant to such offers are subject to certain transfer restrictions. Each Registration Rights Agreement requires APA and Apache to use their commercially reasonable efforts to (i) cause to be filed a registration statement with respect to a registered offer to exchange each series of APA notes issued in settlement of the exchange and tender offers or new notes offering, as applicable, for registered notes issued by APA and guaranteed, if applicable, by Apache containing terms substantially identical in all material respects to the applicable series of APA notes issued in settlement of the exchange and tender offers or new notes offering (except that the registered notes will not contain terms with respect to transfer restrictions or any increase in annual interest rate) and (ii) cause such registration statement to become effective under the Securities Act. If, among other events, such exchange offers are not completed on or prior to the 360th day following January 10, 2025, then additional interest will accrue on the principal amount of such registrable securities at a rate of 0.25% per annum for
F-30
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
the first 90-day period beginning on the day immediately following such registration default (which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period that such additional interest continues to accrue, provided that the rate at which such additional interest accrues may in no event exceed 1.00% per annum). To the extent Apache’s guarantee of the registrable securities is terminated in accordance with the terms of such guarantee, the registered notes will not be guaranteed by Apache, the exchange offer and registration requirements with respect thereto will be the sole obligation of the Company, and Apache will automatically be released from all obligations under the applicable Registration Rights Agreement.
The following table presents the aggregate principal amounts of notes and debentures outstanding under indentures of APA and Apache on January 10, 2025 upon settlement of the APA’s exchange and tender offers and new notes offering (Apache notes due 2025 were not included in APA’s exchange or tender offers):
| January 10, 2025 | ||||||||||||||
| APA | Apache | |||||||||||||
| (In millions) | ||||||||||||||
| 4.625% notes due 2025 | $ | — | $ | 51 | ||||||||||
| 7.7% notes due March 2026(1)(5)(6) | 58 | 21 | ||||||||||||
| 7.95% notes due April 2026(1)(5)(6) | 56 | 76 | ||||||||||||
| 4.875% notes due 2027(4)(5)(6) | 39 | 69 | ||||||||||||
| 4.375% notes due 2028(4)(5)(6) | 239 | 86 | ||||||||||||
| 7.75% notes due 2029(2)(5)(6) | 164 | 72 | ||||||||||||
| 4.25% notes due 2030(4)(5)(6) | 374 | 142 | ||||||||||||
| 6.0% notes due 2037(1)(5)(6) | 341 | 102 | ||||||||||||
| 5.1% notes due 2040(1)(5)(6) | 539 | 225 | ||||||||||||
| 5.25% notes due 2042(1)(5)(6) | 209 | 65 | ||||||||||||
| 4.75% notes due 2043(3)(5)(6) | 153 | 79 | ||||||||||||
| 4.25% notes due 2044(3)(5)(6) | 77 | 24 | ||||||||||||
| 7.375% debentures due 2047(1)(5)(6) | 126 | 24 | ||||||||||||
| 5.35% notes due 2049(4)(5)(6) | 330 | 57 | ||||||||||||
| 7.625% debentures due 2096(1)(5)(6) | 37 | 2 | ||||||||||||
| 6.1% notes due 2035(7) | 350 | — | ||||||||||||
| 6.75% notes due 2055(7) | 500 | — | ||||||||||||
| Total | $ | 3,592 | $ | 1,095 |
(1)The Apache March 2026 notes, the Apache April 2026 notes, the Apache 2037 notes, the Apache 2040 notes, the Apache 2042 notes, the Apache 2047 debentures, and the Apache 2096 debentures were issued under the Senior Indenture, dated as of February 15, 1996, between Apache and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A., as successor to JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank, as trustee), as trustee (an Apache Indenture).
(2)The Apache 2029 notes were issued under the Indenture, dated as of November 23, 1999, between Apache (as successor to Apache Finance Canada Corporation), and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A., as successor to The Chase Manhattan Bank, as trustee), as trustee (an Apache Indenture).
(3)The Apache 2043 notes and the Apache 2044 notes were issued under the Senior Indenture, dated as of May 19, 2011, between Apache and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee (an Apache Indenture).
(4)The Apache 2027 notes, the Apache 2028 notes, the Apache 2030 notes, and the Apache 2049 notes were issued under the Indenture, dated as of August 14, 2018, between Apache and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee (an Apache Indenture).
(5)In connection with APA’s exchange and tender offers, Apache solicited the consents of the holders of these Apache notes and debentures to amend the applicable Apache Indenture to remove certain restrictive and reporting covenants. The Apache notes and debentures are senior unsecured obligations of Apache. Apache received consents sufficient to approve the proposed amendments to the Apache Indentures with respect to the Apache March 2026 notes, the Apache 2028 notes, the Apache 2029 notes, the Apache 2030 notes, the Apache 2037 notes, the Apache 2040 notes, the Apache 2042 notes, the Apache 2043 notes, the Apache 2044 notes, the Apache 2047 debentures, the Apache 2049 notes, and the Apache 2096 debentures. As a result, Apache and the respective trustee for the Apache Indentures entered into supplemental indentures on January 10, 2025, implementing the proposed amendments effective as of that date.
(6)The APA March 2026 notes, the APA April 2026 notes, the APA 2027 notes, the APA 2028 notes, the APA 2029 notes, the APA 2030 notes, the APA 2037 notes, the APA 2040 notes, the APA 2042 notes, the APA 2043 notes, the APA 2044 notes, the APA 2047 debentures, the APA 2049 notes, and the APA 2096 debentures were issued under the Indenture, dated as of June 30, 2021, between the Company, as issuer, and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee. These APA notes and debentures were issued in APA’s exchange and tender offers for Apache’s notes and debentures.
F-31
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(7)The APA 2035 notes and the APA 2055 notes were issued under the Indenture, dated as of December 11, 2024, between the Company, as issuer, and Regions Bank, as trustee. These APA notes were issued in APA’s new notes offering to fund in part its purchase of Apache notes in APA’s cash tender offers.
Subsequent Event—Open Market Repurchases of Apache Indenture Debt
In the first quarter of 2025 through the date of this filing, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $55 million for an aggregate purchase price of $50 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $7 million. The Company recognized a $6 million gain on these repurchases. The repurchases were partially financed by APA’s borrowing under the Company’s commercial paper program.
10. INCOME TAXES
Net income before income taxes was composed of the following:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| U.S. | $ | 705 | $ | 627 | $ | 2,675 | ||||||||||||||
| Foreign | 830 | 2,256 | 3,059 | |||||||||||||||||
| Total | $ | 1,535 | $ | 2,883 | $ | 5,734 |
The total income tax provision (benefit) consisted of the following:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Current income taxes: | ||||||||||||||||||||
| Federal | $ | 76 | $ | 2 | $ | 1 | ||||||||||||||
| State | 2 | 6 | 11 | |||||||||||||||||
| Foreign | 1,075 | 1,330 | 1,495 | |||||||||||||||||
| 1,153 | 1,338 | 1,507 | ||||||||||||||||||
| Deferred income taxes: | ||||||||||||||||||||
| Federal | (96) | (1,708) | — | |||||||||||||||||
| State | 3 | (32) | — | |||||||||||||||||
| Foreign | (643) | 78 | 145 | |||||||||||||||||
| (736) | (1,662) | 145 | ||||||||||||||||||
| Total | $ | 417 | $ | (324) | $ | 1,652 |
F-32
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The total income tax provision differs from the amounts computed by applying the U.S. statutory income tax rate to income (loss) before income taxes. A reconciliation of the tax on the Company’s net income before income taxes and total income tax provision (benefit) is shown below:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Income tax expense at U.S. statutory rate | $ | 322 | $ | 605 | $ | 1,204 | ||||||||||||||
| State income tax, less federal effect(1) | 2 | (23) | 9 | |||||||||||||||||
| Taxes related to foreign operations | 45 | 752 | 745 | |||||||||||||||||
| Tax credits | (3) | — | (4) | |||||||||||||||||
| Net change in tax contingencies | 2 | 5 | 1 | |||||||||||||||||
| Valuation allowances(1) | — | (1,842) | (646) | |||||||||||||||||
| Tax adjustments attributable to BCP Business Combination | — | — | 126 | |||||||||||||||||
| Stock compensation | 17 | (2) | 7 | |||||||||||||||||
| Legal reserve | 14 | — | — | |||||||||||||||||
| Remeasurement of U.K. deferred tax liability | — | 174 | 208 | |||||||||||||||||
| Transaction costs | 5 | — | — | |||||||||||||||||
| All other, net | 13 | 7 | 2 | |||||||||||||||||
| $ | 417 | $ | (324) | $ | 1,652 |
(1)The change in state valuation allowance is included as a component of state income tax.
The net deferred income tax (asset) liability reflects the net tax impact of temporary differences between the asset and liability amounts carried on the balance sheet under GAAP and amounts utilized for income tax purposes. The net deferred income tax (asset) liability consisted of the following as of December 31:
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Deferred tax assets: | ||||||||||||||
| U.S. and state net operating losses | $ | 2,487 | $ | 2,050 | ||||||||||
| Capital losses | 14 | 8 | ||||||||||||
| Foreign net operating losses | 55 | 43 | ||||||||||||
| Tax credits and other tax incentives | 105 | 26 | ||||||||||||
| Foreign tax credits | 2,204 | 2,204 | ||||||||||||
| Accrued expenses and liabilities | 76 | 129 | ||||||||||||
| Asset retirement obligation | 952 | 850 | ||||||||||||
| Property and equipment | 45 | 38 | ||||||||||||
| Equity investments | 1 | 8 | ||||||||||||
| Net interest expense limitation | 287 | 125 | ||||||||||||
| Lease liability | 114 | 71 | ||||||||||||
| Decommissioning contingency for sold Gulf of America properties | 232 | 210 | ||||||||||||
| Total deferred tax assets | 6,572 | 5,762 | ||||||||||||
| Valuation allowance | (2,623) | (2,630) | ||||||||||||
| Net deferred tax assets | 3,949 | 3,132 | ||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Property and equipment | 1,060 | 1,573 | ||||||||||||
| Right-of-use asset | 111 | 69 | ||||||||||||
| Decommissioning security for sold Gulf of America properties | 40 | 44 | ||||||||||||
| Other | 49 | 59 | ||||||||||||
| Total deferred tax liabilities | 1,260 | 1,745 | ||||||||||||
| Net deferred income tax asset | $ | (2,689) | $ | (1,387) |
F-33
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Net deferred tax assets and liabilities are included in the consolidated balance sheet as of December 31 as follows:
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Assets: | ||||||||||||||
| Other assets | ||||||||||||||
| Deferred tax asset | $ | 2,703 | $ | 1,758 | ||||||||||
| Liabilities: | ||||||||||||||
| Deferred credits and other noncurrent liabilities | ||||||||||||||
| Deferred tax liability | 14 | 371 | ||||||||||||
| Net deferred income tax asset | $ | (2,689) | $ | (1,387) |
On April 1, 2024, the Company completed its acquisition of Callon in an all-stock transaction. The Company’s deferred tax asset increased by approximately $565 million as part of the assets assumed through the Callon acquisition. Refer to Note 2— Acquisitions and Divestitures for further detail.
On July 14, 2022, the Energy (Oil and Gas) Profits Levy Act of 2022 (the Energy Profits Levy) was enacted, receiving Royal Assent. Under the law, an additional levy was assessed at a 25 percent rate, effective for the period of May 26, 2022 through December 31, 2025. The Finance Act 2023 included amendments to the Energy Profits Levy that increased the levy from a 25 percent rate to a 35 percent rate, effective for the period of January 1, 2023 through March 31, 2028. As a result, the Company recorded a deferred tax expense of $174 million and $208 million related to the remeasurement of the U.K. deferred tax liability in 2023 and 2022, respectively.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA). The IRA includes a new 15 percent corporate alternative minimum tax (CAMT) on applicable corporations with an average annual adjusted financial statement income that exceeds $1.0 billion for any three consecutive years preceding the tax year at issue. The CAMT is effective for tax years beginning after December 31, 2022. The Company became an applicable corporation subject to CAMT beginning on January 1, 2024. On September 12, 2024, the U.S. Department of Treasury and the Internal Revenue Service released proposed regulations relating to the application and implementation of CAMT. In 2024, the Company accrued tax expense of $74 million, which results in a tax credit that can be carried forward indefinitely to offset regular federal income tax expense in subsequent years.
In December 2021, the Organisation for Economic Co-operation and Development issued Pillar Two Model Rules introducing a new global minimum tax of 15 percent on a country-by-country basis, with certain aspects effective in certain jurisdictions on January 1, 2024. Although the Company continues to monitor enacted legislation to implement these rules in countries where the Company could be impacted, the Company does not expect that the Pillar Two framework will have a material impact on its consolidated financial statements.
On January 14, 2022, Apache Midstream LLC, a wholly owned subsidiary of Apache, exchanged 12.5 million Common Units in Altus Midstream LP for 12.5 million shares of ALTM Class A Common Stock, in a taxable exchange. On February 22, 2022, as a result of the BCP Business Combination, the Company deconsolidated ALTM. On March 11, 2022, the Company sold four million of its Kinetik Shares, and on March 18, 2024, the remaining Kinetik Shares were sold. In 2022, the Company recorded tax expense of $126 million associated with the BCP Business Combination. The tax impact of the BCP Business Combination was fully offset by a change in valuation allowance. Refer to Note 2— Acquisitions and Divestitures for further detail.
Deferred tax assets are recorded for future deductible amounts and certain other tax benefits, such as net operating losses, tax credits and other tax attributes, provided that the Company assesses the utilization of such assets to be “more likely than not.” The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. Based on this assessment, the Company has recorded valuation allowances for certain net operating losses, foreign tax credits and capital loss carryforwards that it does not believe are more likely than not to be realized.
During the fourth quarter of 2023, as a result of increases in projections of future taxable income and the absence of objective negative evidence such as a cumulative loss in recent years, the Company determined there was sufficient positive evidence to release a majority of the U.S. valuation allowance, which resulted in a non-cash deferred income tax benefit of $1.7 billion.
F-34
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In 2024, 2023, and 2022, the Company’s valuation allowance decreased by $7 million, $2.3 billion and $1.0 billion, respectively, as detailed in the table below:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Balance at beginning of year | $ | 2,630 | $ | 4,918 | $ | 5,902 | ||||||||||||||
| State(1) | (51) | (63) | (111) | |||||||||||||||||
| U.S. | 26 | (2,235) | (706) | |||||||||||||||||
| Foreign | 18 | 10 | (167) | |||||||||||||||||
| Balance at end of year | $ | 2,623 | $ | 2,630 | $ | 4,918 |
(1)Reported as a component of state income taxes.
On December 31, 2024, the Company had net operating losses as follows:
| Amount | Expiration | |||||||||||||
| (In millions) | ||||||||||||||
| U.S. | $ | 10,345 | 2028 - Indefinite | |||||||||||
| State | 6,586 | Various | ||||||||||||
| Foreign | 153 | 2025 - Indefinite |
The Company has a U.S. net operating loss carryforward of $10.3 billion, which includes $2.1 billion of net operating loss subject to annual limitation under Section 382 of the Internal Revenue Code (Code). Net operating losses generated in tax years beginning after 2017 are subject to an 80 percent taxable income limitation with indefinite carryover under the 2017 Tax Cuts and Jobs Act. The Company also has state net operating losses of $6.6 billion, foreign net operating losses of $153 million, and a net interest expense carryover of $1.3 billion under Section 163(j) of the Code with indefinite carryover. The Company has recorded a valuation allowance against some of the U.S. net operating losses, a majority of the state net operating losses, the foreign net operating losses, and the U.S. capital loss because it is more likely than not that these net operating losses and the capital loss carryforward will not be realized. The Company believes it is more likely than not that the deferred tax assets related to the remaining U.S. and state net operating losses, and the net interest expense carryover will be utilized prior to their expiration.
On December 31, 2024, the Company had foreign tax credits as follows:
| Amount | Expiration | |||||||||||||
| (In millions) | ||||||||||||||
| Foreign tax credits | $ | 2,204 | 2025-2026 |
The Company has a $2.2 billion U.S. foreign tax credit carryforward. The Company has recorded a valuation allowance against the U.S. foreign tax credits listed above because it is more likely than not that these attributes will expire unutilized.
The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes,” which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements. Tax positions generally refer to a position taken in a previously filed income tax return or expected to be included in a tax return to be filed in the future that is reflected in the measurement of current and deferred income tax assets and liabilities. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Balance at beginning of year | $ | 93 | $ | 89 | $ | 116 | ||||||||||||||
| Additions based on tax positions related to prior year | 1 | 4 | — | |||||||||||||||||
| Additions based on tax positions related to the current year | — | — | — | |||||||||||||||||
| Reductions for tax positions of prior years | (5) | — | (27) | |||||||||||||||||
| Balance at end of year | $ | 89 | $ | 93 | $ | 89 |
F-35
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense. Each quarter, the Company assesses the amounts provided for and, as a result, may increase or reduce the amount of interest and penalties. During each of the years ended December 31, 2024, 2023, and 2022, the Company recorded tax expense of $2 million, $2 million, and $1 million, respectively, for interest and penalties. At December 31, 2024, 2023, and 2022, the Company had an accrued liability for interest and penalties of $9 million, $7 million, and $5 million, respectively.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in various states and foreign jurisdictions. The Company’s uncertain tax positions are related to tax years that may be subject to examination by the relevant taxing authority. The Company’s earliest open tax years in its key jurisdictions are as follows:
Jurisdiction
| U.S. | 2014 | ||||
| Egypt | 2005 | ||||
| U.K. | 2022 |
11. COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls, which also may include controls related to the potential impacts of climate change. As of December 31, 2024, the Company has an accrued liability of approximately $20 million for all legal contingencies that are deemed to be probable of occurring and can be reasonably estimated. The Company’s estimates are based on information known about the matters and its experience in contesting, litigating, and settling similar matters. Although actual amounts could differ from management’s estimate, none of the actions are believed by management to involve future amounts that would be material to the Company’s financial position, results of operations, or liquidity after consideration of recorded accruals. With respect to material matters for which the Company believes an unfavorable outcome is reasonably possible, the Company has disclosed the nature of the matter and a range of potential exposure, unless an estimate cannot be made at this time. It is management’s opinion that the loss for any other litigation matters and claims that are reasonably possible to occur will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.
Louisiana Restoration
Louisiana surface owners often file lawsuits or assert claims against oil and gas companies, including the Company, claiming that operators and working interest owners in the chain of title are liable for environmental damages on the leased premises, including damages measured by the cost of restoration of the leased premises to its original condition, regardless of the value of the underlying property. From time to time, restoration lawsuits and claims are resolved by the Company for amounts that are not material to the Company, while new lawsuits and claims are asserted against the Company. With respect to each of the pending lawsuits and claims, the amount claimed is not currently determinable or is not material. Further, the overall exposure related to these lawsuits and claims is not currently determinable. While adverse judgments against the Company are possible, the Company intends to actively defend these lawsuits and claims.
Starting in November of 2013 and continuing into 2023, several parishes in Louisiana have pending lawsuits against many oil and gas producers, including the Company. In these cases, the Parishes, as plaintiffs, allege that defendants’ oil and gas exploration, production, and transportation operations in specified fields were conducted in violation of the State and Local Coastal Resources Management Act of 1978, as amended, and applicable regulations, rules, orders, and ordinances promulgated or adopted thereunder by the Parish or the State of Louisiana. Plaintiffs allege that defendants caused substantial damage to land and water bodies located in the coastal zone of Louisiana. Plaintiffs seek, among other things, unspecified damages for alleged violations of applicable law within the coastal zone, the payment of costs necessary to clear, re-vegetate, detoxify, and otherwise restore the subject coastal zone as near as practicable to its original condition, and actual restoration of the coastal zone to its original condition. Without acknowledging or admitting any liability and solely to avoid the expense and uncertainty of future litigation, the Company agreed to settle with the State of Louisiana and Louisiana coastal Parishes to resolve any potential liability on the part of the Company for claims that were or could have been asserted by the coastal Parishes and/or the State of Louisiana in the pending litigation. The consideration paid by the Company in the settlement did not have a material impact on the Company’s financial position. Following settlement of these various lawsuits, the Company will be a defendant in only one remaining coastal zone lawsuit, which was filed by the City of New Orleans against the Company and a number of oil and gas operators.
F-36
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Apollo Exploration Lawsuit
In a case captioned Apollo Exploration, LLC, Cogent Exploration, Ltd. Co. & SellmoCo, LLC v. Apache Corporation, Cause No. CV50538 in the 385th Judicial District Court, Midland County, Texas, plaintiffs alleged damages in excess of $200 million (having previously claimed in excess of $1.1 billion) relating to purchase and sale agreements, mineral leases, and area of mutual interest agreements concerning properties located in Hartley, Moore, Potter, and Oldham Counties, Texas. The trial court entered final judgment in favor of the Company, ruling that the plaintiffs take nothing by their claims and awarding the Company its attorneys’ fees and costs incurred in defending the lawsuit. The court of appeals affirmed in part and reversed in part the trial court’s judgment thereby reinstating some of plaintiffs’ claims. The Texas Supreme Court granted the Company’s petition for review and heard oral argument in October 2022. On April 28, 2023, the Texas Supreme Court reversed the court of appeals’ decision and remanded the case back to the court of appeals for further proceedings. After plaintiffs’ request for rehearing, on July 21, 2023, the Texas Supreme Court reaffirmed its reversal of the court of appeals’ decision and remand of the case back to the court of appeals for further proceedings.
Australian Operations Divestiture Dispute
Pursuant to a Sale and Purchase Agreement dated April 9, 2015 (Quadrant SPA), the Company and its subsidiaries divested Australian operations to Quadrant Energy Pty Ltd (Quadrant). Closing occurred on June 5, 2015. In April 2017, the Company filed suit against Quadrant for breach of the Quadrant SPA. In its suit, the Company seeks approximately AUD $80 million. In December 2017, Quadrant filed a defense of equitable set-off to the Company’s claim and a counterclaim seeking approximately AUD $200 million in the aggregate. The Company will vigorously prosecute its claim while vigorously defending against Quadrant’s counter claims.
Delaware Litigation
On September 10, 2020, the State of Delaware filed suit, individually and on behalf of the people of the State of Delaware, against over 25 oil and gas companies alleging damages as a result of global warming. Plaintiffs seek unspecified damages and abatement under various tort theories. The Company is vigorously defending the suit.
Kulp Minerals Lawsuit
On or about April 7, 2023, Apache was sued in a purported class action in New Mexico styled Kulp Minerals LLC v. Apache Corporation, Case No. D-506-CV-2023-00352 in the Fifth Judicial District. The Kulp Minerals case has not been certified and seeks to represent a group of owners allegedly owed statutory interest under New Mexico law as a result of purported late oil and gas payments. The amount of this claim is not yet reasonably determinable. The Company intends to vigorously defend against the claims asserted in this lawsuit.
Environmental Matters
As of December 31, 2024, the Company had an undiscounted reserve for environmental remediation of approximately $2 million.
The Company is not aware of any environmental claims existing as of December 31, 2024, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity. There can be no assurance, however, that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered on the Company’s properties.
Potential Decommissioning Obligations on Sold Properties
In 2013, Apache sold its Gulf of America (GOA) Shelf operations and properties and its GOA operating subsidiary, GOM Shelf LLC (GOM Shelf) to Fieldwood Energy LLC (Fieldwood). Fieldwood assumed the obligation to decommission the properties held by GOM Shelf and the properties acquired from Apache and its other subsidiaries (collectively, the Legacy GOA Assets). On February 14, 2018, Fieldwood filed for (and subsequently emerged from) Chapter 11 bankruptcy protection. On August 3, 2020, Fieldwood filed for (and subsequently emerged from) Chapter 11 bankruptcy protection for a second time. Upon emergence from this second bankruptcy, the Legacy GOA Assets were separated into a standalone company, which was subsequently merged into GOM Shelf. Under GOM Shelf’s limited liability company agreement, the proceeds of production of the Legacy GOA Assets are to be used to fund the operation of GOM Shelf and the decommissioning of Legacy GOA Assets. Pursuant to the terms of the original transaction, as amended in the first bankruptcy, the securing of the asset retirement obligations for the Legacy GOA Assets as and when Apache is required to perform or pay for any such decommissioning was
F-37
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
accomplished through the posting of letters of credit in favor of Apache (Letters of Credit), the provision of two bonds (Bonds) in favor of Apache, and the establishment of a trust account of which Apache was a beneficiary and which was funded by net profits interests (NPIs) depending on future oil prices. In addition, after such sources have been exhausted, Apache agreed upon resolution of GOM Shelf’s second bankruptcy to provide a standby loan to GOM Shelf of up to $400 million to perform decommissioning, with such standby loan secured by a first and prior lien on the Legacy GOA Assets.
By letter dated April 5, 2022 (replacing two earlier letters) and by subsequent letter dated March 1, 2023, GOM Shelf notified the Bureau of Safety and Environmental Enforcement (BSEE) that it was unable to fund the decommissioning obligations that it was obligated to perform on certain of the Legacy GOA Assets. As a result, Apache and other current and former owners in these assets have received orders from BSEE and demands from third parties to decommission certain of the Legacy GOA Assets included in GOM Shelf’s notifications to BSEE. Apache expects to receive similar orders and demands on the other Legacy GOA Assets included in GOM Shelf’s notification letters. Apache has also received orders to decommission other Legacy GOA Assets that were not included in GOM Shelf’s notification letters. Further, Apache anticipates that GOM Shelf may send additional such notices to BSEE in the future and that it may receive additional orders from BSEE requiring it to decommission other Legacy GOA Assets.
On June 21, 2023, two sureties that issued Bonds directly to Apache and two sureties that issued bonds to the issuing bank on the Letters of Credit filed suit against Apache in a case styled Zurich American Insurance Company, HCC International Insurance Company PLC, Philadelphia Indemnity Insurance Company and Everest Reinsurance Company (Insurers) v. Apache Corporation, Cause No. 2023-38238 in the 281st Judicial District Court, Harris County Texas. The sureties sought to prevent Apache from drawing on the $148 million in Bonds and $350 million in Letters of Credit and further alleged that they are discharged from their reimbursement obligations related to decommissioning costs and are entitled to other relief. On July 20, 2023, the 281st Judicial District Court denied the Insurers’ request for a temporary injunction. On July 26, 2023, Apache removed the suit to the United States Bankruptcy Court for the Southern District of Texas (Houston Division). Since the time the sureties filed their state court lawsuit, Apache has drawn down the entirety of the $350 million in Letters of Credit. Apache has also sought to draw down on the Bonds; however, the sureties refused to honor such Bond draws. On September 12, 2024, the bankruptcy court issued its opinion (1) finding that sureties’ state court lawsuit against Apache was void; (2) holding that Apache’s claims against the sureties for unpaid amounts may proceed in bankruptcy court; and (3) holding the sureties in civil contempt and awarding attorneys’ fees to Apache as a sanction. The parties settled their dispute in the first quarter of 2025, which resulted in, among other things, mutual releases, the retention by Apache of all amounts drawn on the Letters of Credit, and payment to Apache of $140 million under the Bonds.
As of December 31, 2024, the Company recorded an asset of $178 million representing the remaining amount the Company expects to be reimbursed from security related to these decommissioning costs. Of the total asset recorded as of December 31, 2024, $21 million is reflected under the caption “Decommissioning security for sold Gulf of America properties,” and $157 million is reflected under “Other current assets” in the Company’s consolidated balance sheet.
As of December 31, 2024, Apache estimates that its potential liability to fund the remaining decommissioning of Legacy GOA Assets and assets previously sold to other operators ranges from $1.0 billion to $1.4 billion on an undiscounted basis. Management does not believe any specific estimate within this range is a better estimate than any other. Accordingly, the Company recorded contingent liabilities in the amounts of $1.0 billion and $824 million as of December 31, 2024, and December 31, 2023, respectively. Of the total liability recorded as of December 31, 2024, $929 million is reflected under the caption “Decommissioning contingency for sold Gulf of America properties” and $88 million is reflected under “Other current liabilities” in the Company’s consolidated balance sheet. Changes in significant assumptions impacting Apache’s estimated liability, including expected well decommissioning spread rates, derrick barge rates, and planned abandonment logistics, could result in a liability in excess of the amount accrued.
The Company recognized $273 million of “Losses on previously sold Gulf of America properties” during 2024 to reflect the net impact of an increase in estimated decommissioning costs of Legacy GOA Assets which BSSE may order the Company to decommission. The loss includes $67 million related to properties previously sold to third parties other than Fieldwood for which the Company received BSSE orders to decommission during the year, as well as an increase to the estimated net liability the Company expects to incur for decommissioning Legacy GOA Assets. The Company also recognized losses on previously sold Gulf of America properties of $212 million and $157 million during 2023 and 2022, respectively, in the Company’s statement of consolidated operations.
F-38
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Leases and Contractual Obligations
The Company determines if an arrangement is an operating or finance lease at the inception of each contract. If the contract is classified as an operating lease, the Company records an ROU asset and corresponding liability reflecting the total remaining present value of fixed lease payments over the expected term of the lease agreement. The expected term of the lease may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. If the Company’s lease does not provide an implicit rate in the contract, the Company uses its incremental borrowing rate when calculating the present value. In the normal course of business, the Company enters into various lease agreements for real estate, drilling rigs, vessels, aircrafts, and equipment related to its exploration and development activities, which are typically classified as operating leases under the provisions of the standard. ROU assets are reflected within “Deferred charges and other assets” on the Company’s consolidated balance sheet, and the associated operating lease liabilities are reflected within “Other current liabilities” and “Other” within “Deferred Credits and Other Noncurrent Liabilities,” as applicable.
Operating lease expense associated with ROU assets is recognized on a straight-line basis over the lease term. Lease expense is reflected on the statement of consolidated operations commensurate with the leased activities and nature of the services performed. Gross fixed operating lease expense, inclusive of amounts billable to partners and other working interest owners, was $170 million, $168 million, and $145 million for the years ended 2024, 2023, and 2022, respectively. As allowed under the standard, the Company accounts for non-lease and lease components as a single lease component for all asset classes and has elected to exclude short-term leases (those with terms of 12 months or less) from the balance sheet presentation. Costs incurred for short-term leases were $85 million, $71 million, and $62 million in 2024, 2023, and 2022, respectively. In 2024 these costs primarily related to short term drilling rigs in the U.S. and decommissioning work in the Gulf of America. In 2023 these costs primarily related to decommissioning work in the Gulf of America. In 2022, these costs were primarily related to drilling activities in Block 58 offshore Suriname.
Finance lease assets are included in “Property and Equipment” on the consolidated balance sheet, and the associated finance lease liabilities are reflected within “Current debt” and “Long-term debt,” as applicable. Depreciation on the Company’s finance lease asset was $2 million in each of the years 2024, 2023, and 2022. Interest on the Company’s finance lease liability was $1 million, $1 million, and $2 million in 2024, 2023, and 2022, respectively.
The following table represents the Company’s weighted average lease term and discount rate as of December 31, 2024:
| Operating Leases | Finance Lease | |||||||||||||
| Weighted average remaining lease term | 6.9 years | 8.7 years | ||||||||||||
| Weighted average discount rate | 5.8 | % | 4.4 | % |
F-39
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
At December 31, 2024, contractual obligations for long-term operating leases, finance leases, and purchase obligations are as follows:
| Net Minimum Commitments**(1)** | Operating Leases**(2)** | Finance Lease**(3)** | Purchase Obligations**(4)(5)** | |||||||||||||||||
| (In millions) | ||||||||||||||||||||
| 2025 | $ | 122 | $ | 3 | $ | 244 | ||||||||||||||
| 2026 | 61 | 4 | 245 | |||||||||||||||||
| 2027 | 48 | 4 | 173 | |||||||||||||||||
| 2028 | 42 | 4 | 166 | |||||||||||||||||
| 2029 | 35 | 4 | 148 | |||||||||||||||||
| Thereafter | 159 | 18 | 142 | |||||||||||||||||
| Total future minimum payments | 467 | 37 | $ | 1,118 | ||||||||||||||||
| Less: imputed interest | (94) | (7) | N/A | |||||||||||||||||
| Total lease liabilities | 373 | 30 | N/A | |||||||||||||||||
| Current portion | 118 | 2 | N/A | |||||||||||||||||
| Non-current portion | $ | 255 | $ | 28 | N/A |
(1)Excludes commitments for jointly owned fields and facilities for which the Company is not the operator.
(2)Amounts represent future payments associated with oil and gas operations inclusive of amounts billable to partners and other working interest owners. Such payments may be capitalized as a component of oil and gas properties and subsequently depreciated, impaired, or written off as exploration expense.
(3)Amounts represent the Company’s finance lease obligation related to the Company’s Midland, Texas regional office building.
(4)Amounts represent any agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms. These include minimum commitments associated with take-or-pay contracts, NGL processing agreements, drilling work program commitments, and agreements to secure capacity rights on third-party pipelines. Amounts exclude certain product purchase obligations related to marketing and trading activities for which there are no minimum purchase requirements or the amounts are not fixed or determinable. Total costs incurred under take-or-pay and throughput obligations were $245 million, $182 million, and $183 million in 2024, 2023, and 2022, respectively.
(5)Under terms agreed to in the Egypt merged concession agreement entered into in 2021, the Company committed to spend a minimum of $3.5 billion on exploration, development, and operating activities by March 31, 2026. As of December 31, 2024, the Company has met and fully satisfied the obligation.
The lease liability reflected in the table above represents the Company’s fixed minimum payments that are settled in accordance with the lease terms. Actual lease payments during the period may also include variable lease components such as common area maintenance, usage-based sales taxes and rate differentials, or other similar costs that are not determinable at the inception of the lease. Gross variable lease payments, inclusive of amounts billable to partners and other working interest owners were $48 million, $74 million, and $90 million in 2024, 2023, and 2022, respectively.
F-40
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
12. RETIREMENT AND DEFERRED COMPENSATION PLANS
The Company provides retirement benefits to its U.S. employees through the use of multiple plans: a 401(k) savings plan, a money purchase retirement plan, a non-qualified retirement savings plan, and a non-qualified restorative retirement savings plan. The 401(k) savings plan provides participating employees the ability to elect to contribute up to 50 percent of eligible compensation to the plan with the Company making matching contributions up to a maximum of 8 percent of each employee’s annual eligible compensation. In addition, the Company contributes 6 percent of each participating employee’s annual eligible compensation to a money purchase retirement plan. The 401(k) savings plan and the money purchase retirement plan are subject to certain annually-adjusted, government-mandated restrictions that limit the amount of employee and Company contributions. For certain eligible employees, the Company also provides a non-qualified retirement savings plan or a non-qualified restorative retirement savings plan. These plans allow the deferral of up to 50 percent of each employee’s base salary, up to 75 percent of each employee’s annual bonus (that accepts employee contributions) and the Company’s matching contributions in excess of the government mandated limitations imposed in the 401(k) savings plan and money purchase retirement plan.
Vesting in the Company’s contributions in the 401(k) savings plan, the money purchase retirement plan, the non-qualified retirement savings plan and the non-qualified restorative retirement savings plan occurs at the rate of 20 percent for every completed year of employment. Upon a change in control of ownership of APA, immediate and full vesting occurs.
The aggregate annual cost to the Company of all U.S. and international savings plans, the money purchase retirement plan, non-qualified retirement savings plan, and non-qualified restorative retirement savings plan was $46 million, $44 million, and $40 million for 2024, 2023, and 2022, respectively.
The Company also provides a funded noncontributory defined benefit pension plan (U.K. Pension Plan) covering certain employees of the Company’s North Sea operations in the U.K. The plan provides defined pension benefits based on years of service and final salary. The plan applies only to employees who were part of BP North Sea’s pension plan as of April 2, 2003, prior to the acquisition of BP North Sea by the Company effective July 1, 2003.
Additionally, the Company offers postretirement medical benefits to U.S. employees who meet certain eligibility requirements. Eligible participants receive medical benefits up until the age of 65 or at the date they become eligible for Medicare, provided the participant remits the required portion of the cost of coverage. The plan is contributory with participants’ contributions adjusted annually. The postretirement benefit plan does not cover benefit expenses once a covered participant becomes eligible for Medicare.
F-41
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following tables set forth the benefit obligation, fair value of plan assets and funded status as of December 31, 2024, 2023, and 2022, and the underlying weighted average actuarial assumptions used for the U.K. Pension Plan and U.S. postretirement benefit plan. The Company uses a measurement date of December 31 for its pension and postretirement benefit plans.
| 2024 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||
| Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Change in Projected Benefit Obligation | ||||||||||||||||||||||||||||||||||||||
| Projected benefit obligation at beginning of year | $ | 118 | $ | 15 | $ | 108 | $ | 15 | $ | 211 | $ | 20 | ||||||||||||||||||||||||||
| Service cost | 1 | 1 | 1 | 1 | 2 | 1 | ||||||||||||||||||||||||||||||||
| Interest cost | 6 | 1 | 5 | 1 | 3 | — | ||||||||||||||||||||||||||||||||
| Foreign currency exchange rates | (2) | — | 6 | — | (21) | — | ||||||||||||||||||||||||||||||||
| Actuarial losses (gains) | (11) | — | 3 | — | (79) | (5) | ||||||||||||||||||||||||||||||||
| Plan settlements | — | (1) | — | — | — | — | ||||||||||||||||||||||||||||||||
| Benefits paid | (5) | (2) | (5) | (3) | (8) | (3) | ||||||||||||||||||||||||||||||||
| Retiree contributions | — | 1 | — | 1 | — | 2 | ||||||||||||||||||||||||||||||||
| Projected benefit obligation at end of year | 107 | 15 | 118 | 15 | 108 | 15 | ||||||||||||||||||||||||||||||||
| Change in Plan Assets | ||||||||||||||||||||||||||||||||||||||
| Fair value of plan assets at beginning of year | 150 | — | 137 | — | 254 | — | ||||||||||||||||||||||||||||||||
| Actual return (loss) on plan assets | (8) | — | 8 | — | (87) | — | ||||||||||||||||||||||||||||||||
| Foreign currency exchange rates | (3) | — | 8 | — | (26) | — | ||||||||||||||||||||||||||||||||
| Employer contributions | 2 | 1 | 2 | 1 | 4 | 2 | ||||||||||||||||||||||||||||||||
| Plan settlements | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Benefits paid | (5) | (2) | (5) | (3) | (8) | (4) | ||||||||||||||||||||||||||||||||
| Retiree contributions | — | 1 | — | 2 | — | 2 | ||||||||||||||||||||||||||||||||
| Fair value of plan assets at end of year | 136 | — | 150 | — | 137 | — | ||||||||||||||||||||||||||||||||
| Funded status at end of year | $ | 29 | $ | (15) | $ | 32 | $ | (15) | $ | 29 | $ | (15) | ||||||||||||||||||||||||||
| Amounts recognized in Consolidated Balance Sheet | ||||||||||||||||||||||||||||||||||||||
| Current liability | $ | — | $ | (2) | $ | — | $ | (2) | $ | — | $ | (2) | ||||||||||||||||||||||||||
| Non-current asset (liability) | 29 | (13) | 32 | (13) | 29 | (13) | ||||||||||||||||||||||||||||||||
| $ | 29 | $ | (15) | $ | 32 | $ | (15) | $ | 29 | $ | (15) | |||||||||||||||||||||||||||
| Pre-tax Amounts Recognized in Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||
| Accumulated gain (loss) | $ | (16) | $ | 14 | $ | (12) | $ | 16 | $ | (10) | $ | 18 | ||||||||||||||||||||||||||
| Weighted Average Assumptions used as of December 31 | ||||||||||||||||||||||||||||||||||||||
| Discount rate | 5.60 | % | 5.49 | % | 4.80 | % | 5.00 | % | 5.00 | % | 5.29 | % | ||||||||||||||||||||||||||
| Salary increases | 4.70 | % | N/A | 4.60 | % | N/A | 4.70 | % | N/A | |||||||||||||||||||||||||||||
| Expected return on assets | 5.70 | % | N/A | 4.80 | % | N/A | 4.70 | % | N/A | |||||||||||||||||||||||||||||
| Healthcare cost trend | ||||||||||||||||||||||||||||||||||||||
| Initial | N/A | 6.50 | % | N/A | 6.25 | % | N/A | 6.50 | % | |||||||||||||||||||||||||||||
| Ultimate in 2032 | N/A | 5.25 | % | N/A | 5.25 | % | N/A | 5.25 | % |
As of December 31, 2024, 2023, and 2022, the accumulated benefit obligation for the U.K. Pension Plan was $102 million, $112 million, and $89 million, respectively.
F-42
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company’s defined benefit pension plan assets are held by a non-related trustee who has been instructed to invest the assets under a cash flow driven investment strategy. The Company intends to invest in primarily low risk debt securities that will provide a reasonable rate of return focused on cash flow timing such that the benefits promised to members are provided when due. The U.K. Pension Plan policy is to target an ongoing funding level of 100 percent through prudent investments and includes policies and strategies such as investment goals, risk management practices, and permitted and prohibited investments. A breakout of allocations for the Company's plan asset holdings are summarized below:
| Percentage of Plan Assets at Year-End | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Asset Category | ||||||||||||||
| Global equities | — | % | — | % | ||||||||||
| Multi-asset credit | 62 | % | 59 | % | ||||||||||
| Nominal bonds | 4 | % | 6 | % | ||||||||||
| Inflation-linked bonds | 33 | % | 33 | % | ||||||||||
| Cash | 1 | % | 2 | % | ||||||||||
| Total | 100 | % | 100 | % |
The plan’s assets do not include any direct ownership of equity or debt securities of the Company. The fair value of plan assets at December 31, 2024 and 2023 are based upon unadjusted quoted prices for identical instruments in active markets, which is a Level 1 fair value measurement. The following table presents the fair values of plan assets for each major asset category based on the nature and significant concentration of risks in plan assets as follows:
| December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| (In millions) | ||||||||||||||
| Asset Category | ||||||||||||||
| Global equities | $ | — | $ | — | ||||||||||
| Multi-asset credit | 84 | 88 | ||||||||||||
| Nominal bonds | 6 | 9 | ||||||||||||
| Inflation-linked bonds | 45 | 50 | ||||||||||||
| Cash | 1 | 3 | ||||||||||||
| Total | $ | 136 | $ | 150 |
The expected long-term rate of return on assets assumptions are derived relative to the yield on long-dated fixed-interest bonds issued by the U.K. government (gilts). For equities, outperformance relative to gilts is assumed to be 2.5 percent per year.
F-43
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following tables set forth the components of the net periodic cost and the underlying weighted average actuarial assumptions used for the pension and postretirement benefit plans as of December 31 as follows:
| 2024 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||
| Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Components of Net Periodic Benefit Cost | ||||||||||||||||||||||||||||||||||||||
| Service cost | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 2 | $ | 1 | ||||||||||||||||||||||||||
| Interest cost | 6 | 1 | 5 | 1 | 3 | — | ||||||||||||||||||||||||||||||||
| Expected return on assets | (7) | — | (7) | — | (4) | — | ||||||||||||||||||||||||||||||||
| Amortization of loss | — | (2) | — | (2) | — | (1) | ||||||||||||||||||||||||||||||||
| Settlement loss | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Net periodic benefit cost | $ | — | $ | (1) | $ | (1) | $ | — | $ | 1 | $ | — | ||||||||||||||||||||||||||
| Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost for the Years Ended December 31 | ||||||||||||||||||||||||||||||||||||||
| Discount rate | 4.80 | % | 5.00 | % | 5.00 | % | 5.29 | % | 1.80 | % | 2.57 | % | ||||||||||||||||||||||||||
| Salary increases | 4.60 | % | N/A | 4.70 | % | N/A | 4.90 | % | N/A | |||||||||||||||||||||||||||||
| Expected return on assets | 4.80 | % | N/A | 4.70 | % | N/A | 1.90 | % | N/A | |||||||||||||||||||||||||||||
| Healthcare cost trend | ||||||||||||||||||||||||||||||||||||||
| Initial | N/A | 6.25 | % | N/A | 6.50 | % | N/A | 6.25 | % | |||||||||||||||||||||||||||||
| Ultimate in 2030 | N/A | 5.25 | % | N/A | 5.25 | % | N/A | 5.00 | % |
The Company expects to contribute approximately $2 million to its pension plan and $2 million to its postretirement benefit plan in 2025. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
| Pension Benefits | Postretirement Benefits | |||||||||||||
| (In millions) | ||||||||||||||
| 2025 | $ | 5 | $ | 2 | ||||||||||
| 2026 | 5 | 1 | ||||||||||||
| 2027 | 6 | 1 | ||||||||||||
| 2028 | 6 | 1 | ||||||||||||
| 2029 | 6 | 1 | ||||||||||||
| Years 2030-2034 | 35 | 7 |
13. CAPITAL STOCK
Common Stock Outstanding
The following table provides changes to the Company’s common shares outstanding for the years ended December 31, 2024, 2023, and 2022:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| Balance, beginning of year | 303,575,901 | 311,559,149 | 346,930,765 | |||||||||||||||||
| Shares issued for stock-based compensation plans: | ||||||||||||||||||||
| Treasury shares issued | — | 2,016 | 1,996 | |||||||||||||||||
| Common shares issued | 70,983,745 | 725,914 | 791,381 | |||||||||||||||||
| Treasury shares acquired | (9,162,497) | (8,711,178) | (36,164,993) | |||||||||||||||||
| Balance, end of year | 365,397,149 | 303,575,901 | 311,559,149 |
F-44
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Net Income per Common Share
The following table provides a reconciliation of the components of basic and diluted net income per common share for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income | Shares | Per Share | Income | Shares | Per Share | Income | Shares | Per Share | ||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income attributable to common stock | $ | 804 | 353 | $ | 2.28 | $ | 2,855 | 308 | $ | 9.26 | $ | 3,674 | 332 | $ | 11.05 | |||||||||||||||||||||||||||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation awards | $ | — | — | $ | (0.01) | $ | — | 1 | $ | (0.01) | $ | — | 1 | $ | (0.03) | |||||||||||||||||||||||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income attributable to common stock | $ | 804 | 353 | $ | 2.27 | $ | 2,855 | 309 | $ | 9.25 | $ | 3,674 | 333 | $ | 11.02 |
The diluted EPS calculation excludes options and restricted shares that were anti-dilutive totaling 2.0 million, 1.9 million, and 2.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Stock Repurchase Program
During the fourth quarter of 2021, the Company’s Board of Directors authorized the purchase of 40 million shares of the Company’s common stock. During the third quarter of 2022, the Company's Board of Directors authorized the purchase of an additional 40 million shares of the Company's common stock.
During 2024, the Company repurchased 9.2 million shares at an average price of $26.83 per share, and as of December 31, 2024, the Company had remaining authorization to repurchase 34.8 million shares. During 2023, the Company repurchased 8.7 million shares at an average price of $37.81 per share. During 2022, the Company repurchased 36.2 million shares at an average price of $39.34 per share.
Subsequent to year-end 2024 and through the date of this filing on February 28, 2025, the Company repurchased 3.9 million shares at an average price of $23.13 per share. As of February 28, 2025, the Company had remaining authorization to repurchase up to 30.9 million shares.
The Company is not obligated to acquire any additional shares. Shares may be purchased either in the open market or through privately held negotiated transactions.
Common Stock Dividend
The Company’s Board of Directors approved an increase to its quarterly dividend from $0.125 per share to $0.25 per share in the third quarter of 2022. For the years ended December 31, 2024, 2023, and 2022, the Company declared common stock dividends totaling $1.00 per share, $1.00 per share, and $0.75 per share, respectively.
Stock Compensation Plans
The Company maintains several stock-based compensation plans, which include stock options, restricted stock, and conditional restricted stock unit plans.
On May 12, 2016, the Company’s shareholders approved the 2016 Omnibus Compensation Plan (the 2016 Plan), which is used to provide eligible employees with equity-based incentives by granting incentive stock options, non-qualified stock options, performance awards, restricted stock awards, restricted stock units, stock appreciation rights, cash awards, or any combination of the foregoing. As of December 31, 2024, 7.9 million shares were authorized and available for grant under the 2016 Plan. Previously approved plans remain in effect solely for the purpose of governing grants still outstanding that were issued prior to approval of the 2016 Plan. All new grants are issued from the 2016 Plan. In 2018, the Company began issuing cash-settled awards (phantom units) under the restricted stock and conditional restricted stock unit plans. The phantom units represent a hypothetical interest in the Company’s stock and, once vested, are settled in cash.
F-45
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Costs related to the plans are capitalized or expensed to “Lease operating expenses,” “Exploration,” or “General and administrative” in the Company’s statement of consolidated operations based on the nature of each employee’s activities. The following table summarizes the Company’s stock-settled and cash-settled compensation costs for the years ended December 31, 2024, 2023, and 2022:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Stock-settled and cash-settled compensation expensed: | ||||||||||||||||||||
| Lease operating expenses | $ | 16 | $ | 27 | $ | 82 | ||||||||||||||
| Exploration | 4 | 7 | 29 | |||||||||||||||||
| General and administrative | 29 | 50 | 193 | |||||||||||||||||
| Total stock-settled and cash-settled compensation expensed | 49 | 84 | 304 | |||||||||||||||||
| Stock-settled and cash-settled compensation capitalized | 9 | 13 | 44 | |||||||||||||||||
| Total stock-settled and cash-settled compensation costs | $ | 58 | $ | 97 | $ | 348 |
Stock Options
As of December 31, 2024, the Company had outstanding options to purchase shares of its common stock under the 2016 Plan and the 2011 Omnibus Equity Compensation Plan (the 2011 Plan and, with the 2016 Plan, the Omnibus Plans). The Omnibus Plans were submitted to and approved by the Company’s shareholders. New shares of common stock will be issued for employee stock option exercises. Under the Omnibus Plans, the exercise price of each option equals the closing price of APA’s common stock on the date of grant. Options granted become exercisable ratably over a three-year period and expire 10 years after granted.
The following table summarizes stock option activity for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||
| Shares Under Option | Weighted Average Exercise Price | Shares Under Option | Weighted Average Exercise Price | Shares Under Option | Weighted Average Exercise Price | |||||||||||||||||||||||||||||||||
| (In thousands, except exercise price amounts) | ||||||||||||||||||||||||||||||||||||||
| Outstanding, beginning of year | 1,465 | $ | 48.48 | 2,078 | $ | 57.71 | 3,012 | $ | 63.79 | |||||||||||||||||||||||||||||
| Exercised | — | — | (12) | 42.38 | (99) | 42.09 | ||||||||||||||||||||||||||||||||
| Forfeited | — | — | — | — | (2) | 49.10 | ||||||||||||||||||||||||||||||||
| Expired | (49) | 43.91 | (601) | 80.53 | (833) | 81.56 | ||||||||||||||||||||||||||||||||
| Outstanding, end of year(1) | 1,416 | 48.64 | 1,465 | 48.48 | 2,078 | 57.71 | ||||||||||||||||||||||||||||||||
| Expected to vest | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Exercisable, end of year(1) | 1,416 | 48.64 | 1,465 | 48.48 | 2,078 | 57.71 |
(1)As of December 31, 2024, options exercisable and outstanding had a weighted average remaining contractual life of 2.1 years and no aggregate intrinsic value.
During the years ended December 31, 2024, there were no options issued or exercised. During the years ended December 31, 2023 and 2022, there were no options issued and 12,183, and 98,646 options, respectively, exercised.
In January 2025, the Company issued 1,662,239 options to purchase shares of the Company’s common stock to eligible employees under the Omnibus Plans, at an average fair value of $9.51 per share. The total compensation cost of $16 million is estimated to be recognized over a three-year vesting period of these options.
Restricted Stock Units and Restricted Stock Phantom Units
The Company has restricted stock unit and restricted stock phantom unit plans for eligible employees, including officers. The value of the stock-settled restricted stock unit awards is established by the market price on the date of grant and is recorded as compensation expense ratably over the vesting terms. The restricted stock phantom unit awards represent a hypothetical interest in either the Company’s common stock or, prior to the BCP Business Combination, in ALTM’s common stock, as applicable, and, once vested, are settled in cash. Compensation expense related to the cash-settled awards is recorded as a liability and remeasured at the end of each reporting period over the applicable vesting term.
F-46
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
For the years ended December 31, 2024, 2023, and 2022, compensation costs charged to expense for the restricted stock units and restricted stock phantom units were $53 million, $73 million, and $153 million, respectively. As of December 31, 2024, 2023, and 2022, capitalized compensation costs for the restricted stock units and restricted stock phantom units were $9 million, $11 million, and $22 million, respectively.
The following table summarizes stock-settled restricted stock unit activity for the years ended December 31, 2024, 2023, and 2022:
| 2024 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||
| Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | |||||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||||||||||||||
| Non-vested, beginning of year | 1,480 | $ | 30.69 | 1,885 | $ | 23.08 | 2,073 | $ | 19.98 | |||||||||||||||||||||||||||||
| Granted | 897 | 33.48 | 661 | 41.60 | 847 | 29.90 | ||||||||||||||||||||||||||||||||
| Assumed awards from Callon acquisition | 1,498 | 35.43 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Vested(3) | (2,295) | 31.83 | (975) | 23.31 | (978) | 22.39 | ||||||||||||||||||||||||||||||||
| Forfeited | (165) | 35.48 | (69) | 32.44 | (57) | 23.49 | ||||||||||||||||||||||||||||||||
| Expired | — | — | (22) | 27.81 | — | — | ||||||||||||||||||||||||||||||||
| Non-vested, end of year(1)(2) | 1,415 | 35.07 | 1,480 | 30.69 | 1,885 | 23.08 |
(1)As of December 31, 2024, there was $18 million of total unrecognized compensation cost related to 1,257,784 unvested stock-settled restricted stock units.
(2)As of December 31, 2024, the weighted-average remaining life of unvested stock-settled restricted stock units is approximately 0.8 years.
(3)The grant date fair values of the stock-settled awards vested during 2024, 2023, and 2022 were $73 million, $23 million, and $22 million, respectively.
The following table summarizes cash-settled restricted stock phantom unit activity for the years ended December 31, 2024, 2023, and 2022:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Non-vested, beginning of year | 4,478 | 5,709 | 6,402 | |||||||||||||||||
| Adjustment from ALTM transaction(1) | — | — | 143 | |||||||||||||||||
| Granted(2) | 2,369 | 1,972 | 2,568 | |||||||||||||||||
| Vested | (2,568) | (2,851) | (2,970) | |||||||||||||||||
| Forfeited | (362) | (340) | (434) | |||||||||||||||||
| Expired | — | (12) | — | |||||||||||||||||
| Non-vested, end of year(3) | 3,917 | 4,478 | 5,709 |
(1)Following the BCP Business Combination, certain employees were granted restricted stock phantom units based on APA’s common stock price to replace the equivalent value in restricted stock phantom units based on ALTM’s common stock price.
(2)Restricted stock phantom units granted during 2024, 2023, and 2022 included 2,369,605, 1,972,116, and 2,512,602 awards, respectively, based on the per-share market price of APA common stock. Restricted stock phantom units granted during 2022 included 55,546 awards based on the per-share market price of ALTM common stock prior to the deconsolidation of Altus on February 22, 2022.
(3)The outstanding liability for the unvested cash-settled restricted stock phantom units that had not been recognized as of December 31, 2024 was approximately $34 million.
In January 2025, the Company awarded 693,761 restricted stock units and 2,300,091 restricted stock phantom units based on APA’s weighted-average per-share market price of $23.68 under the 2016 Plan to eligible employees. Total compensation cost for the restricted stock units and the restricted stock phantom units, absent any forfeitures, is estimated to be $16 million and $54 million, respectively, and was calculated based on the per-share fair market value of a share of the Company’s common stock as of the grant date. Compensation cost will be recognized over a three-year vesting period for both plans. The restricted stock phantom units will be classified as a liability and remeasured at the end of each reporting period based on the change in fair value of one share of the Company’s common stock, a Level 1 fair value measurement.
F-47
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Performance Program
To provide long-term incentives for the Company’s employees to deliver competitive shareholder returns, the Company makes annual grants of cash-settled conditional restricted stock phantom units to eligible employees. APA has a performance program for certain eligible employees with payout for a portion of the shares based upon measurement of total shareholder return (TSR) of APA common stock as compared to a designated peer group during a three-year performance period. Payout for the remaining portion of the shares is based on performance and financial objectives as defined in the plan. The overall results of the objectives are calculated at the end of the award’s stated performance period and, if a payout is warranted, applied to the target number of restricted stock units awarded. The performance shares will immediately vest 50 percent at the end of the three-year performance period, with the remaining 50 percent vesting at the end of the following year. Grants from the performance programs outstanding at December 31, 2024, are as described below:
-
In January 2021, the Company’s Board of Directors approved the 2021 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling 1,959,856 units. A total of 1,051,688 phantom units were outstanding as of December 31, 2024. The results for the performance period yielded a payout of 118 percent of target.
-
In January 2022, the Company’s Board of Directors approved the 2022 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling 1,093,034 units. A total of 998,570 phantom units were outstanding as of December 31, 2024. The results for the performance period yielded a payout of 118 percent of target.
-
In January 2023, the Company’s Board of Directors approved the 2023 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling 822,200 units. The actual number of phantom units awarded will be between zero and 200 percent of target. A total of 718,288 phantom units were outstanding as of December 31, 2024, from which a minimum of zero to a maximum of 1,436,576 units could be awarded.
-
In January 2024, the Company’s Board of Directors approved the 2024 Performance Program, pursuant to the 2016 Plan. Eligible employees received the initial cash-settled conditional phantom units totaling 645,318 units. The actual number of phantom units awarded will be between zero and 200 percent of target. A total of 571,498 phantom units were outstanding as of December 31, 2024, from which a minimum of zero to a maximum of 1,142,996 units could be awarded. Eligible employees also received cash incentives as part of the 2024 Performance Program, which totaled $13 million as of December 31, 2024. The ultimate payout will range from zero to $26 million at the end of a three-year performance period.
Compensation costs related to the conditional cash-settled awards are recorded as a liability and remeasured at the end of each reporting period over the applicable vesting term. Compensation costs charged to expense under the cash-settled performance programs were a net benefit of $13 million during 2024 and expenses of $2 million and $143 million during 2023 and 2022, respectively. Capitalized compensation costs under the cash-settled performance programs were a net benefit of approximately $1 million during 2024 and expenses of approximately $100 thousand and $21 million during 2023 and 2022, respectively.
The following table summarizes cash-settled conditional restricted stock phantom unit activity for the years ended December 31, 2024, 2023, and 2022:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Non-vested, beginning of year | 4,629 | 4,835 | 4,531 | |||||||||||||||||
| Granted | 834 | 1,536 | 1,676 | |||||||||||||||||
| Assumed awards from Callon acquisition | 2,934 | — | — | |||||||||||||||||
| Vested | (4,222) | (1,593) | (656) | |||||||||||||||||
| Forfeited | (203) | (99) | (106) | |||||||||||||||||
| Expired | — | (50) | (610) | |||||||||||||||||
| Non-vested, end of year(1) | 3,972 | 4,629 | 4,835 |
(1)As of December 31, 2024, the outstanding liability for the unvested cash-settled conditional restricted stock phantom units that had not been recognized was approximately $12 million.
F-48
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In January 2025, the Company’s Board of Directors approved the 2025 Performance Program, pursuant to the 2016 Plan. A portion of the award is based upon measurement of TSR similar to prior year awards, and the remaining portion of the award is based on performance and financial objectives as defined in the 2025 Performance Program. Eligible employees received conditional phantom units and cash incentives. The conditional phantom units totaled 985,553 units, with the ultimate units to be awarded ranging from zero to a maximum of 1,971,106 units. These phantom units represent a hypothetical interest in the Company’s common stock, and, once vested, are settled in cash. These phantom units will be classified as a liability and remeasured at the end of each reporting period based on the change in fair value of one share of the Company’s common stock, a Level 1 fair value measurement. The cash incentives totaled $16 million, with the ultimate payout ranging from zero to $32 million. Final payout of the awards will be determined at the end of a three-year performance period.
14. ACCUMULATED OTHER COMPREHENSIVE INCOME
Components of accumulated other comprehensive income include the following:
| As of December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Pension and postretirement benefit plan (Note 12) | $ | 12 | $ | 15 | $ | 14 | ||||||||||||||
| Accumulated other comprehensive income | $ | 12 | $ | 15 | $ | 14 |
15. MAJOR CUSTOMERS
The Company is exposed to credit risk in the event of nonpayment by counterparties, a significant portion of which are concentrated in energy-related industries. The creditworthiness of customers and other counterparties is subject to continuing review, including the use of master netting agreements, where appropriate. During 2024, sales to EGPC accounted for approximately 17 percent of the Company’s worldwide crude oil, natural gas, and NGLs revenues. During each of 2023 and 2022, sales to EGPC accounted for approximately 15 percent of the Company’s worldwide crude oil, natural gas, and NGLs revenues.
Management does not believe that the loss of any single customer would have a material adverse effect on the results of operations.
F-49
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
16. BUSINESS SEGMENT INFORMATION
As of December 31, 2024, the Company’s consolidated subsidiaries are engaged in exploration, development and/or production activities across four operating segments: Egypt, North Sea, Suriname, and the U.S. The Company’s business explores for, develops, and produces crude oil, natural gas, and natural gas liquids. The Company also has exploration interests in Uruguay, Alaska, and other international locations that may, over time, result in reportable discoveries and development opportunities. Prior to the deconsolidation of Altus on February 22, 2022, the Company’s Midstream business was operated by ALTM, which owned, developed, and operating a midstream energy asset network in the Permian Basin of West Texas.
The Chief Operating Decision Maker (CODM) is a function (not necessarily an individual) that allocates the resources of the reporting entity and assesses the performance of its segments. Decisions to assess performance and allocate resources are made by the Company’s Chief Executive Officer (CEO), Mr. John J. Christmann, IV. Therefore, management has concluded that the CEO of the Company is the CODM. The information regularly reviewed by the CODM to assess performance and allocate resources is primarily associated with operating income from each segment and the resulting free cash flow, amongst other metrics. The Company concluded that the most comparable measure under U.S. GAAP is operating income.
Financial information for each segment is presented below:
| U.S. | Egypt**(1)** | North Sea | Intersegment Eliminations & Other**(6)** | Total**(2)** | |||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||
| Oil revenues | $ | 3,572 | $ | 2,620 | $ | 774 | $ | — | $ | 6,966 | |||||||||||||||||||||||||
| Natural gas revenues | 126 | 313 | 145 | — | 584 | ||||||||||||||||||||||||||||||
| Natural gas liquids revenues | 617 | — | 29 | — | 646 | ||||||||||||||||||||||||||||||
| Oil, natural gas, and natural gas liquids production revenues | 4,315 | 2,933 | 948 | — | 8,196 | ||||||||||||||||||||||||||||||
| Purchased oil and gas sales | 1,541 | — | — | — | 1,541 | ||||||||||||||||||||||||||||||
| 5,856 | 2,933 | 948 | — | 9,737 | |||||||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||||||||
| Lease operating expenses(5) | 820 | 464 | 406 | — | 1,690 | ||||||||||||||||||||||||||||||
| Gathering, processing, and transmission(5) | 354 | 25 | 53 | — | 432 | ||||||||||||||||||||||||||||||
| Purchased oil and gas costs | 1,047 | — | — | — | 1,047 | ||||||||||||||||||||||||||||||
| Taxes other than income(5) | 270 | — | — | — | 270 | ||||||||||||||||||||||||||||||
| Exploration(4) | 134 | 112 | 1 | 66 | 313 | ||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization(5) | 1,340 | 625 | 301 | — | 2,266 | ||||||||||||||||||||||||||||||
| Asset retirement obligation accretion | 42 | — | 106 | — | 148 | ||||||||||||||||||||||||||||||
| Impairments | 320 | — | 809 | — | 1,129 | ||||||||||||||||||||||||||||||
| 4,327 | 1,226 | 1,676 | 66 | 7,295 | |||||||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 1,529 | $ | 1,707 | $ | (728) | $ | (66) | 2,442 | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||||||||
| Gain on divestitures, net | 289 | ||||||||||||||||||||||||||||||||||
| Losses on previously sold Gulf of America properties | (273) | ||||||||||||||||||||||||||||||||||
| Derivative instrument losses, net | (10) | ||||||||||||||||||||||||||||||||||
| Other | (6) | ||||||||||||||||||||||||||||||||||
| General and administrative | (372) | ||||||||||||||||||||||||||||||||||
| Transaction, reorganization, and separation | (168) | ||||||||||||||||||||||||||||||||||
| Financing costs, net | (367) | ||||||||||||||||||||||||||||||||||
| Income Before Income Taxes | $ | 1,535 | |||||||||||||||||||||||||||||||||
| Total Assets(3) | $ | 13,870 | $ | 3,606 | $ | 1,324 | $ | 590 | $ | 19,390 | |||||||||||||||||||||||||
| Net Property and Equipment | $ | 9,109 | $ | 2,271 | $ | 712 | $ | 554 | $ | 12,646 | |||||||||||||||||||||||||
| Additions to Net Property and Equipment | $ | 6,609 | $ | 765 | $ | 41 | $ | 84 | $ | 7,499 |
F-50
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| U.S. | Egypt**(1)** | North Sea | Intersegment Eliminations & Other**(6)** | Total**(2)** | |||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| 2023 | |||||||||||||||||||||||||||||||||||
| Oil revenues | $ | 2,241 | $ | 2,683 | $ | 1,073 | $ | — | $ | 5,997 | |||||||||||||||||||||||||
| Natural gas revenues | 297 | 346 | 237 | — | 880 | ||||||||||||||||||||||||||||||
| Natural gas liquids revenues | 480 | — | 28 | — | 508 | ||||||||||||||||||||||||||||||
| Oil, natural gas, and natural gas liquids production revenues | 3,018 | 3,029 | 1,338 | — | 7,385 | ||||||||||||||||||||||||||||||
| Purchased oil and gas sales | 894 | — | — | — | 894 | ||||||||||||||||||||||||||||||
| 3,912 | 3,029 | 1,338 | — | 8,279 | |||||||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||||||||
| Lease operating expenses(5) | 593 | 474 | 369 | — | 1,436 | ||||||||||||||||||||||||||||||
| Gathering, processing, and transmission(5) | 249 | 33 | 52 | — | 334 | ||||||||||||||||||||||||||||||
| Purchased oil and gas costs | 742 | — | — | — | 742 | ||||||||||||||||||||||||||||||
| Taxes other than income(5) | 207 | — | — | — | 207 | ||||||||||||||||||||||||||||||
| Exploration(4) | 14 | 119 | 19 | 43 | 195 | ||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization(5) | 745 | 524 | 271 | — | 1,540 | ||||||||||||||||||||||||||||||
| Asset retirement obligation accretion | 40 | — | 76 | — | 116 | ||||||||||||||||||||||||||||||
| Impairments | 11 | — | 50 | — | 61 | ||||||||||||||||||||||||||||||
| 2,601 | 1,150 | 837 | 43 | 4,631 | |||||||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 1,311 | $ | 1,879 | $ | 501 | $ | (43) | 3,648 | ||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||||||||
| Gain on divestitures, net | 8 | ||||||||||||||||||||||||||||||||||
| Losses on previously sold Gulf of America properties | (212) | ||||||||||||||||||||||||||||||||||
| Derivative instrument gains, net | 99 | ||||||||||||||||||||||||||||||||||
| Other | 18 | ||||||||||||||||||||||||||||||||||
| General and administrative | (351) | ||||||||||||||||||||||||||||||||||
| Transaction, reorganization, and separation | (15) | ||||||||||||||||||||||||||||||||||
| Financing costs, net | (312) | ||||||||||||||||||||||||||||||||||
| Income Before Income Taxes | $ | 2,883 | |||||||||||||||||||||||||||||||||
| Total Assets(3) | $ | 9,221 | $ | 3,503 | $ | 1,970 | $ | 550 | $ | 15,244 | |||||||||||||||||||||||||
| Net Property and Equipment | $ | 5,689 | $ | 2,209 | $ | 1,628 | $ | 512 | $ | 10,038 | |||||||||||||||||||||||||
| Additions to Net Property and Equipment | $ | 1,255 | $ | 834 | $ | 131 | $ | 93 | $ | 2,313 |
F-51
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| U.S. | Egypt**(1)** | North Sea | Intersegment Eliminations & Other**(6)** | Total**(2)** | |||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||
| 2022 | |||||||||||||||||||||||||||||||||||||||||
| Oil revenues | $ | 2,458 | $ | 3,145 | $ | 1,232 | $ | — | $ | 6,835 | |||||||||||||||||||||||||||||||
| Natural gas revenues | 918 | 370 | 281 | — | 1,569 | ||||||||||||||||||||||||||||||||||||
| Natural gas liquids revenues | 768 | 6 | 45 | (3) | 816 | ||||||||||||||||||||||||||||||||||||
| Oil, natural gas, and natural gas liquids production revenues | 4,144 | 3,521 | 1,558 | (3) | 9,220 | ||||||||||||||||||||||||||||||||||||
| Purchased oil and gas sales | 1,850 | — | — | 5 | 1,855 | ||||||||||||||||||||||||||||||||||||
| 5,994 | 3,521 | 1,558 | 2 | 11,075 | |||||||||||||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||||||||||||||
| Lease operating expenses(5) | 515 | 526 | 404 | (1) | 1,444 | ||||||||||||||||||||||||||||||||||||
| Gathering, processing, and transmission(5) | 315 | 22 | 43 | (13) | 367 | ||||||||||||||||||||||||||||||||||||
| Purchased oil and gas costs | 1,776 | — | — | — | 1,776 | ||||||||||||||||||||||||||||||||||||
| Taxes other than income(5) | 265 | — | — | 3 | 268 | ||||||||||||||||||||||||||||||||||||
| Exploration(4) | 24 | 84 | 35 | 162 | 305 | ||||||||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization(5) | 593 | 400 | 238 | 2 | 1,233 | ||||||||||||||||||||||||||||||||||||
| Asset retirement obligation accretion | 34 | — | 82 | 1 | 117 | ||||||||||||||||||||||||||||||||||||
| 3,522 | 1,032 | 802 | 154 | 5,510 | |||||||||||||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 2,472 | $ | 2,489 | $ | 756 | $ | (152) | 5,565 | ||||||||||||||||||||||||||||||||
| Other Income (Expense): | |||||||||||||||||||||||||||||||||||||||||
| Gain on divestitures, net | 1,180 | ||||||||||||||||||||||||||||||||||||||||
| Losses on previously sold Gulf of America properties | (157) | ||||||||||||||||||||||||||||||||||||||||
| Derivative instrument losses, net | (114) | ||||||||||||||||||||||||||||||||||||||||
| Other | 148 | ||||||||||||||||||||||||||||||||||||||||
| General and administrative | (483) | ||||||||||||||||||||||||||||||||||||||||
| Transaction, reorganization, and separation | (26) | ||||||||||||||||||||||||||||||||||||||||
| Financing costs, net | (379) | ||||||||||||||||||||||||||||||||||||||||
| Income Before Income Taxes | $ | 5,734 | |||||||||||||||||||||||||||||||||||||||
| Total Assets(3) | $ | 7,574 | $ | 3,148 | $ | 1,911 | $ | 514 | $ | 13,147 | |||||||||||||||||||||||||||||||
| Net Property and Equipment | $ | 5,226 | $ | 1,976 | $ | 1,386 | $ | 424 | $ | 9,012 | |||||||||||||||||||||||||||||||
| Additions to Net Property and Equipment | $ | 1,439 | $ | 695 | $ | 210 | $ | 263 | $ | 2,607 |
(1)Includes oil and gas production revenue that will be paid as taxes by EGPC on behalf of the Company for the years ended December 31, 2024, 2023, and 2022 of:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Oil | $ | 686 | $ | 729 | $ | 989 | ||||||||||||||
| Natural gas | 83 | 95 | 117 | |||||||||||||||||
| Natural gas liquids | — | — | 2 |
(2)Includes a noncontrolling interest in Egypt for all periods presented and a noncontrolling interest in Altus Midstream for the year 2022.
(3)Intercompany balances are excluded from total assets.
(4)Exploration expense under Intersegment Eliminations & Other primarily reflects the Company’s Suriname exploration activities.
(5)Represents significant segment expense categories that align with the segment-level information that is regularly provided to the CODM. The remaining expenses that comprise the Other Income (Loss) amount by segment are deemed to be other segment expense categories necessary to arrive at the segment profit or loss.
(6)Includes Suriname operating expenses as the operating segment has not met the quantitative thresholds to be separately reported. For 2022, the Company’s midstream business results are also included in this category as the midstream operating segment has not met the quantitative thresholds to be separately reported.
F-52
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
17. SUPPLEMENTAL OIL AND GAS DISCLOSURES (Unaudited)
Oil and Gas Operations
The following table sets forth revenue and direct cost information relating to the Company’s oil and gas exploration and production activities. The Company has no long-term agreements to purchase oil or gas production from foreign governments or authorities.
| United States | Egypt**(1)** | North Sea | Other International | Total**(1)** | ||||||||||||||||||||||||||||
| (In millions, except per boe) | ||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||
| Oil and gas production revenues | $ | 4,315 | $ | 2,933 | $ | 948 | $ | — | $ | 8,196 | ||||||||||||||||||||||
| Operating cost: | ||||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization(2) | 1,314 | 621 | 300 | — | 2,235 | |||||||||||||||||||||||||||
| Asset retirement obligation accretion | 42 | — | 106 | — | 148 | |||||||||||||||||||||||||||
| Lease operating expenses | 820 | 464 | 406 | — | 1,690 | |||||||||||||||||||||||||||
| Gathering, processing, and transmission | 354 | 25 | 53 | — | 432 | |||||||||||||||||||||||||||
| Exploration expenses | 134 | 112 | 1 | 66 | 313 | |||||||||||||||||||||||||||
| Impairments related to oil and gas properties | 315 | — | 796 | — | 1,111 | |||||||||||||||||||||||||||
| Production taxes(3) | 268 | — | — | — | 268 | |||||||||||||||||||||||||||
| Income tax | 235 | 770 | (536) | — | 469 | |||||||||||||||||||||||||||
| 3,482 | 1,992 | 1,126 | 66 | 6,666 | ||||||||||||||||||||||||||||
| Results of operations | $ | 833 | $ | 941 | $ | (178) | $ | (66) | $ | 1,530 | ||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||
| Oil and gas production revenues | $ | 3,018 | $ | 3,029 | $ | 1,338 | $ | — | $ | 7,385 | ||||||||||||||||||||||
| Operating cost: | ||||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization(2) | 709 | 521 | 270 | — | 1,500 | |||||||||||||||||||||||||||
| Asset retirement obligation accretion | 40 | — | 76 | — | 116 | |||||||||||||||||||||||||||
| Lease operating expenses | 593 | 474 | 369 | — | 1,436 | |||||||||||||||||||||||||||
| Gathering, processing, and transmission | 249 | 33 | 52 | — | 334 | |||||||||||||||||||||||||||
| Exploration expenses | 14 | 119 | 19 | 43 | 195 | |||||||||||||||||||||||||||
| Production taxes(3) | 204 | — | — | — | 204 | |||||||||||||||||||||||||||
| Income tax | 254 | 828 | 414 | — | 1,496 | |||||||||||||||||||||||||||
| 2,063 | 1,975 | 1,200 | 43 | 5,281 | ||||||||||||||||||||||||||||
| Results of operations | $ | 955 | $ | 1,054 | $ | 138 | $ | (43) | $ | 2,104 | ||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||||||
| Oil and gas production revenues | $ | 4,144 | $ | 3,521 | $ | 1,558 | $ | — | $ | 9,223 | ||||||||||||||||||||||
| Operating cost: | ||||||||||||||||||||||||||||||||
| Depreciation, depletion, and amortization(2) | 564 | 390 | 232 | — | 1,186 | |||||||||||||||||||||||||||
| Asset retirement obligation accretion | 34 | — | 82 | — | 116 | |||||||||||||||||||||||||||
| Lease operating expenses | 515 | 526 | 404 | — | 1,445 | |||||||||||||||||||||||||||
| Gathering, processing, and transmission | 315 | 22 | 43 | — | 380 | |||||||||||||||||||||||||||
| Exploration expenses | 24 | 84 | 35 | 162 | 305 | |||||||||||||||||||||||||||
| Production taxes(3) | 263 | — | — | — | 263 | |||||||||||||||||||||||||||
| Income tax | 510 | 1,100 | 495 | — | 2,105 | |||||||||||||||||||||||||||
| 2,225 | 2,122 | 1,291 | 162 | 5,800 | ||||||||||||||||||||||||||||
| Results of operations | $ | 1,919 | $ | 1,399 | $ | 267 | $ | (162) | $ | 3,423 |
(1)Includes a noncontrolling interest in Egypt.
(2)Reflects DD&A of capitalized costs of oil and gas properties and, therefore, does not agree with DD&A reflected on Note 16—Business Segment Information.
(3)Reflects only amounts directly related to oil and gas producing properties and, therefore, does not agree with taxes other than income reflected on Note 16—Business Segment Information.
F-53
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Costs Incurred in Oil and Gas Property Acquisitions, Exploration, and Development Activities
| United States | Egypt**(2)** | North Sea | Other International | Total**(2)** | ||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||
| Acquisitions: | ||||||||||||||||||||||||||||||||
| Proved | $ | 3,606 | $ | 3 | $ | — | $ | — | $ | 3,609 | ||||||||||||||||||||||
| Unproved | 955 | — | — | — | 955 | |||||||||||||||||||||||||||
| Exploration | 150 | 227 | 1 | 61 | 439 | |||||||||||||||||||||||||||
| Development | 2,067 | 559 | 186 | 47 | 2,859 | |||||||||||||||||||||||||||
| Costs incurred(1) | $ | 6,778 | $ | 789 | $ | 187 | $ | 108 | $ | 7,862 | ||||||||||||||||||||||
| (1) Includes capitalized interest and asset retirement costs: | ||||||||||||||||||||||||||||||||
| Capitalized interest | $ | 3 | $ | — | $ | — | $ | 26 | $ | 29 | ||||||||||||||||||||||
| Asset retirement costs | 171 | — | 145 | — | 316 | |||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||
| Acquisitions: | ||||||||||||||||||||||||||||||||
| Proved | $ | 1 | $ | 4 | $ | — | $ | — | $ | 5 | ||||||||||||||||||||||
| Unproved | 20 | — | — | — | 20 | |||||||||||||||||||||||||||
| Exploration | 31 | 226 | 44 | 131 | 432 | |||||||||||||||||||||||||||
| Development | 1,148 | 646 | 468 | — | 2,262 | |||||||||||||||||||||||||||
| Costs incurred(1) | $ | 1,200 | $ | 876 | $ | 512 | $ | 131 | $ | 2,719 | ||||||||||||||||||||||
| (1) Includes capitalized interest and asset retirement costs: | ||||||||||||||||||||||||||||||||
| Capitalized interest | $ | — | $ | — | $ | — | $ | 24 | $ | 24 | ||||||||||||||||||||||
| Asset retirement costs | (4) | — | 375 | — | 371 | |||||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||||||
| Acquisitions: | ||||||||||||||||||||||||||||||||
| Proved | $ | 596 | $ | 3 | $ | — | $ | — | $ | 599 | ||||||||||||||||||||||
| Unproved | 66 | — | — | — | 66 | |||||||||||||||||||||||||||
| Exploration | 4 | 169 | 61 | 311 | 545 | |||||||||||||||||||||||||||
| Development | 848 | 568 | (57) | — | 1,359 | |||||||||||||||||||||||||||
| Costs incurred(1) | $ | 1,514 | $ | 740 | $ | 4 | $ | 311 | $ | 2,569 | ||||||||||||||||||||||
| (1) Includes capitalized interest, asset retirement costs, and Egypt modernization impacts as follows: | ||||||||||||||||||||||||||||||||
| Capitalized interest | $ | — | $ | — | $ | 1 | $ | 17 | $ | 18 | ||||||||||||||||||||||
| Asset retirement costs | 79 | — | (215) | — | (136) | |||||||||||||||||||||||||||
| (2) Includes a noncontrolling interest in Egypt. |
F-54
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Capitalized Costs
The following table sets forth the capitalized costs and associated accumulated depreciation, depletion, and amortization relating to the Company’s oil and gas acquisition, exploration, and development activities:
| United States | Egypt**(1)** | North Sea | Other International | Total**(1)** | ||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||
| Proved properties | $ | 19,246 | $ | 14,458 | $ | 9,661 | $ | 434 | $ | 43,799 | ||||||||||||||||||||||
| Unproved properties | 711 | 67 | — | 121 | 899 | |||||||||||||||||||||||||||
| 19,957 | 14,525 | 9,661 | 555 | 44,698 | ||||||||||||||||||||||||||||
| Accumulated DD&A | (11,053) | (12,299) | (8,952) | — | (32,304) | |||||||||||||||||||||||||||
| $ | 8,904 | $ | 2,226 | $ | 709 | $ | 555 | $ | 12,394 | |||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||
| Proved properties | $ | 20,758 | $ | 13,777 | $ | 9,472 | $ | — | $ | 44,007 | ||||||||||||||||||||||
| Unproved properties | 267 | 71 | 3 | 512 | 853 | |||||||||||||||||||||||||||
| 21,025 | 13,848 | 9,475 | 512 | 44,860 | ||||||||||||||||||||||||||||
| Accumulated DD&A | (15,587) | (11,678) | (7,849) | — | (35,114) | |||||||||||||||||||||||||||
| $ | 5,438 | $ | 2,170 | $ | 1,626 | $ | 512 | $ | 9,746 |
(1)Includes a noncontrolling interest in Egypt.
Oil and Gas Reserve Information
Proved oil and gas reserves are those quantities of natural gas, crude oil, condensate, and NGLs, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. Estimated proved developed oil and gas reserves can be expected to be recovered through existing wells with existing equipment and operating methods. The Company reports all estimated proved reserves held under production-sharing arrangements utilizing the “economic interest” method, which excludes the host country’s share of reserves.
Estimated reserves that can be produced economically through application of improved recovery techniques are included in the “proved” classification when successful testing by a pilot project or the operation of an active, improved recovery program using reliable technology establishes the reasonable certainty for the engineering analysis on which the project or program is based. Economically producible means a resource that generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation. Reasonable certainty means a high degree of confidence that the quantities will be recovered. Reliable technology is a grouping of one or more technologies (including computational methods) that has been field-tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation. In estimating its proved reserves, the Company uses several different traditional methods that can be classified in three general categories: (1) performance-based methods; (2) volumetric-based methods; and (3) analogy with similar properties. The Company will, at times, utilize additional technical analysis such as computer reservoir models, petrophysical techniques, and proprietary 3-D seismic interpretation methods to provide additional support for more complex reservoirs. Information from this additional analysis is combined with traditional methods outlined above to enhance the certainty of the Company’s reserve estimates.
F-55
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
There are numerous uncertainties inherent in estimating quantities of proved reserves and projecting future rates of production and timing of development expenditures. The reserve data in the following tables only represent estimates and should not be construed as being exact.
| Crude Oil and Condensate | ||||||||||||||||||||||||||||||||||||||||||||
| United States | Egypt**(1)** | North Sea | Suriname | Total**(1)** | ||||||||||||||||||||||||||||||||||||||||
| (Thousands of barrels) | ||||||||||||||||||||||||||||||||||||||||||||
| Proved developed reserves: | ||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 180,968 | 106,646 | 77,073 | — | 364,687 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | 177,708 | 108,050 | 82,580 | — | 368,338 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | 179,542 | 102,305 | 61,076 | — | 342,923 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | 184,744 | 95,990 | 30,436 | — | 311,170 | |||||||||||||||||||||||||||||||||||||||
| Proved undeveloped reserves: | ||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 18,168 | 11,003 | 5,757 | — | 34,928 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | 22,239 | 8,557 | 2,873 | — | 33,669 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | 30,948 | 5,254 | — | — | 36,202 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | 107,283 | 7,621 | — | 73,637 | 188,541 | |||||||||||||||||||||||||||||||||||||||
| Total proved reserves: | ||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2021 | 199,136 | 117,649 | 82,830 | — | 399,615 | |||||||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 9,776 | 7,580 | 2,616 | — | 19,972 | |||||||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 16,362 | — | — | — | 16,362 | |||||||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | 7,793 | 22,433 | 11,898 | — | 42,124 | |||||||||||||||||||||||||||||||||||||||
| Production | (25,695) | (31,055) | (11,891) | — | (68,641) | |||||||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (7,425) | — | — | — | (7,425) | |||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2022 | 199,947 | 116,607 | 85,453 | — | 402,007 | |||||||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 43,613 | 12,979 | 301 | — | 56,893 | |||||||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 20 | — | — | — | 20 | |||||||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (3,520) | 10,505 | (12,002) | — | (5,017) | |||||||||||||||||||||||||||||||||||||||
| Production | (28,795) | (32,532) | (12,676) | — | (74,003) | |||||||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (775) | — | — | — | (775) | |||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2023 | 210,490 | 107,559 | 61,076 | — | 379,125 | |||||||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 100,778 | 18,115 | — | 73,637 | 192,530 | |||||||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 124,112 | — | — | — | 124,112 | |||||||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (9,642) | 10,521 | (21,000) | — | (20,121) | |||||||||||||||||||||||||||||||||||||||
| Production | (47,043) | (32,584) | (9,640) | — | (89,267) | |||||||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (86,668) | — | — | — | (86,668) | |||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | 292,027 | 103,611 | 30,436 | 73,637 | 499,711 |
(1)Includes proved reserves of 35 MMbbls, 36 MMbbls, 39 MMbbls, and 39 MMbbls as of December 31, 2024, 2023, 2022, and 2021, respectively, attributable to a noncontrolling interest in Egypt.
F-56
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| Natural Gas Liquids | ||||||||||||||||||||||||||||||||||||||
| United States | Egypt**(1)** | North Sea | Total**(1)** | |||||||||||||||||||||||||||||||||||
| (Thousands of barrels) | ||||||||||||||||||||||||||||||||||||||
| Proved developed reserves: | ||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 164,172 | 446 | 2,059 | 166,677 | ||||||||||||||||||||||||||||||||||
| December 31, 2022 | 158,745 | — | 2,230 | 160,975 | ||||||||||||||||||||||||||||||||||
| December 31, 2023 | 153,486 | — | 1,460 | 154,946 | ||||||||||||||||||||||||||||||||||
| December 31, 2024 | 153,523 | — | 744 | 154,267 | ||||||||||||||||||||||||||||||||||
| Proved undeveloped reserves: | ||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 16,380 | 30 | 275 | 16,685 | ||||||||||||||||||||||||||||||||||
| December 31, 2022 | 19,004 | — | 76 | 19,080 | ||||||||||||||||||||||||||||||||||
| December 31, 2023 | 18,401 | — | — | 18,401 | ||||||||||||||||||||||||||||||||||
| December 31, 2024 | 54,674 | — | — | 54,674 | ||||||||||||||||||||||||||||||||||
| Total proved reserves: | ||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2021 | 180,552 | 476 | 2,334 | 183,362 | ||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 5,456 | — | 45 | 5,501 | ||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 10,985 | — | — | 10,985 | ||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | 9,991 | (407) | 333 | 9,917 | ||||||||||||||||||||||||||||||||||
| Production | (22,895) | (69) | (406) | (23,370) | ||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (6,340) | — | — | (6,340) | ||||||||||||||||||||||||||||||||||
| Balance December 31, 2022 | 177,749 | — | 2,306 | 180,055 | ||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 25,711 | — | 371 | 26,082 | ||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 21 | — | — | 21 | ||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (8,568) | — | (764) | (9,332) | ||||||||||||||||||||||||||||||||||
| Production | (22,993) | — | (453) | (23,446) | ||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (33) | — | — | (33) | ||||||||||||||||||||||||||||||||||
| Balance December 31, 2023 | 171,887 | — | 1,460 | 173,347 | ||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 62,988 | — | — | 62,988 | ||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 51,406 | — | — | 51,406 | ||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (20,167) | — | (277) | (20,444) | ||||||||||||||||||||||||||||||||||
| Production | (27,039) | — | (439) | (27,478) | ||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (30,878) | — | — | (30,878) | ||||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | 208,197 | — | 744 | 208,941 |
(1) Includes proved reserves of 159 Mbbls as of December 31, 2021, respectively, attributable to a noncontrolling interest in Egypt.
F-57
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| Natural Gas | ||||||||||||||||||||||||||||||||||||||
| United States | Egypt**(1)** | North Sea | Total**(1)** | |||||||||||||||||||||||||||||||||||
| (Millions of cubic feet) | ||||||||||||||||||||||||||||||||||||||
| Proved developed reserves: | ||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 1,237,461 | 464,826 | 76,155 | 1,778,442 | ||||||||||||||||||||||||||||||||||
| December 31, 2022 | 1,166,218 | 399,502 | 66,292 | 1,632,012 | ||||||||||||||||||||||||||||||||||
| December 31, 2023 | 1,003,956 | 377,144 | 46,839 | 1,427,939 | ||||||||||||||||||||||||||||||||||
| December 31, 2024 | 866,460 | 332,905 | 28,028 | 1,227,393 | ||||||||||||||||||||||||||||||||||
| Proved undeveloped reserves: | ||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 184,441 | 9,899 | 7,124 | 201,464 | ||||||||||||||||||||||||||||||||||
| December 31, 2022 | 210,862 | 1,068 | 2,304 | 214,234 | ||||||||||||||||||||||||||||||||||
| December 31, 2023 | 99,495 | 2,612 | — | 102,107 | ||||||||||||||||||||||||||||||||||
| December 31, 2024 | 307,775 | 27,499 | — | 335,274 | ||||||||||||||||||||||||||||||||||
| Total proved reserves: | ||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2021 | 1,421,902 | 474,725 | 83,279 | 1,979,906 | ||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 38,157 | 10,191 | 1,643 | 49,991 | ||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 70,584 | — | — | 70,584 | ||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | 92,599 | 45,725 | (3,431) | 134,893 | ||||||||||||||||||||||||||||||||||
| Production | (172,752) | (130,071) | (12,895) | (315,718) | ||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (73,410) | — | — | (73,410) | ||||||||||||||||||||||||||||||||||
| Balance December 31, 2022 | 1,377,080 | 400,570 | 68,596 | 1,846,246 | ||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 158,118 | 14,188 | 3,335 | 175,641 | ||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 136 | — | — | 136 | ||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (266,664) | 83,907 | (6,739) | (189,496) | ||||||||||||||||||||||||||||||||||
| Production | (165,083) | (118,909) | (18,353) | (302,345) | ||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (136) | — | — | (136) | ||||||||||||||||||||||||||||||||||
| Balance December 31, 2023 | 1,103,451 | 379,756 | 46,839 | 1,530,046 | ||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 354,267 | 60,366 | — | 414,633 | ||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 279,615 | — | — | 279,615 | ||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (224,118) | 26,792 | (4,176) | (201,502) | ||||||||||||||||||||||||||||||||||
| Production | (176,941) | (106,510) | (14,635) | (298,086) | ||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (162,039) | — | — | (162,039) | ||||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | 1,174,235 | 360,404 | 28,028 | 1,562,667 |
(1) Includes proved reserves of 120 Bcf, 127 Bcf, 134 Bcf, and 158 Bcf as of December 31, 2024, 2023, 2022, and 2021, respectively, attributable to a noncontrolling interest in Egypt.
F-58
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| Total Equivalent Reserves | ||||||||||||||||||||||||||||||||||||||||||||
| United States | Egypt**(1)** | North Sea | Suriname | Total**(1)** | ||||||||||||||||||||||||||||||||||||||||
| (Thousands barrels of oil equivalent) | ||||||||||||||||||||||||||||||||||||||||||||
| Proved developed reserves: | ||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 551,384 | 184,563 | 91,825 | — | 827,772 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | 530,823 | 174,633 | 95,859 | — | 801,315 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | 500,354 | 165,162 | 70,343 | — | 735,859 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | 482,677 | 151,474 | 35,852 | — | 670,003 | |||||||||||||||||||||||||||||||||||||||
| Proved undeveloped reserves: | ||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | 65,288 | 12,683 | 7,219 | — | 85,190 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | 76,386 | 8,735 | 3,333 | — | 88,454 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2023 | 65,931 | 5,690 | — | — | 71,621 | |||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | 213,253 | 12,204 | — | 73,637 | 299,094 | |||||||||||||||||||||||||||||||||||||||
| Total proved reserves: | ||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2021 | 616,672 | 197,246 | 99,044 | — | 912,962 | |||||||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 21,592 | 9,278 | 2,935 | — | 33,805 | |||||||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 39,110 | — | — | — | 39,110 | |||||||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | 33,217 | 29,647 | 11,659 | — | 74,523 | |||||||||||||||||||||||||||||||||||||||
| Production | (77,382) | (52,803) | (14,446) | — | (144,631) | |||||||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (26,000) | — | — | — | (26,000) | |||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2022 | 607,209 | 183,368 | 99,192 | — | 889,769 | |||||||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 95,677 | 15,344 | 1,228 | — | 112,249 | |||||||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 64 | — | — | — | 64 | |||||||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (56,532) | 24,490 | (13,889) | — | (45,931) | |||||||||||||||||||||||||||||||||||||||
| Production | (79,302) | (52,350) | (16,188) | — | (147,840) | |||||||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (831) | — | — | — | (831) | |||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2023 | 566,285 | 170,852 | 70,343 | — | 807,480 | |||||||||||||||||||||||||||||||||||||||
| Extensions, discoveries and other additions | 222,811 | 28,176 | — | 73,637 | 324,624 | |||||||||||||||||||||||||||||||||||||||
| Purchases of minerals in-place | 222,121 | — | — | — | 222,121 | |||||||||||||||||||||||||||||||||||||||
| Revisions of previous estimates | (67,162) | 14,986 | (21,973) | — | (74,149) | |||||||||||||||||||||||||||||||||||||||
| Production | (103,572) | (50,336) | (12,518) | — | (166,426) | |||||||||||||||||||||||||||||||||||||||
| Sales of minerals in-place | (144,553) | — | — | — | (144,553) | |||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | 695,930 | 163,678 | 35,852 | 73,637 | 969,097 |
(1) Includes total proved reserves of 55 MMboe, 57 MMboe, 61 MMboe, and 66 MMboe as of December 31, 2024, 2023, 2022, and 2021, respectively, attributable to a noncontrolling interest in Egypt.
During 2024, the Company added approximately 325 MMboe from extensions, discoveries, and other additions. The Company recorded 223 MMboe of exploration and development adds in the U.S., derived from drilling activity in the Permian Basin targeting the Wolfcamp, Bone Spring and Spraberry producing horizons. International operations contributed 102 MMboe of exploration and development adds, with Egypt contributing 28 MMboe from onshore exploration and appraisal and 74 MMboe from the Suriname final investment decision (FID).
The Company realized combined downward revision of previously estimated reserves of 74 MMboe. Negative revision related to pricing and interest totaled 99 MMboe, driven primarily by depressed Permian Basin gas pricing. This downward revision was partially offset by engineering and performance upward revisions totaling 25 MMboe. The U.S. and Egypt contributed upward revision of 47 MMboe, offset by negative revision of 22 MMboe in the North Sea.
F-59
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
During 2023, the Company added approximately 112 MMboe from extensions, discoveries, and other additions. The Company recorded 96 MMboe of exploration and development adds in the U.S., comprising 67 MMboe in the Permian Basin, 27 MMboe in the Delaware Basin, and 2 MMboe in the Texas Gulf Coast. Drilling programs for the Permian and Delaware Basins include the Wolfcamp, Bone Spring and Spraberry with the Austin Chalk as the primary focus for the Texas Gulf Coast. International operations contributed 16 MMboe of exploration and development adds, with Egypt contributing 15 MMboe from onshore exploration and appraisal activity primarily in the Khalda Area and 1 MMboe from the North Sea. The Company had combined downward revisions of previously estimated reserves of 46 MMboe, primarily driven by revisions in the U.S. Downward revisions for price and interest changes accounted for 83 MMboe, partially offset by engineering and performance upward revisions of 37 MMboe.
During 2022, the Company added approximately 34 MMboe from extensions, discoveries, and other additions. The Company recorded 22 MMboe of exploration and development adds in the U.S., comprising 9 MMboe in the Permian Basin, 8 MMboe in the Texas Gulf Coast, and 5 MMboe in the Delaware Basin. Drilling programs for the Permian and Delaware Basins include the Wolfcamp, Bone Spring and Spraberry with the Austin Chalk as the primary focus for the Texas Gulf Coast. International operations contributed 12 MMboe of exploration and development adds, with Egypt contributing 9 MMboe from onshore exploration and appraisal activity primarily in the Khalda Area and 3 MMboe from the North Sea. The Company had combined upward revisions of previously estimated reserves of 75 MMboe. Upward revisions related to miscellaneous changes accounted for 5 MMboe. Engineering and performance upward revisions accounted for 70 MMboe, with Egypt accounting for an increase of 43 MMboe, primarily the result of PSC modernization in Egypt. The North Sea contributed 9 MMboe of upward revisions from well performance and reactivations in both the Beryl and Forties programs. In the United States, the Company experienced positive revisions of 18 MMboe. The Company acquired 39 MMboe of proved reserves during 2022, primarily in the Delaware Basin. The Company also sold 26 MMboe of proved reserves associated with U.S. divestitures, primarily related to Permian Basin assets.
Approximately 11 percent of the Company’s year-end 2024 estimated proved developed reserves are classified as proved not producing. These reserves relate to zones that are either behind pipe, or that have been completed but not yet produced, or zones that have been produced in the past, but are not now producing because of mechanical reasons. These reserves are considered to be a lower tier of reserves than producing reserves because they are frequently based on volumetric calculations rather than performance data. Future production associated with behind pipe reserves is scheduled to follow depletion of the currently producing zones in the same wellbores. Additional capital may have to be spent to access these reserves. The capital and economic impact of production timing are reflected in this Note 17, under “Future Net Cash Flows.”
Future Net Cash Flows
Future cash inflows as of December 31, 2024, 2023, and 2022 were calculated using an unweighted arithmetic average of oil and gas prices in effect on the first day of each month in the respective year, except where prices are defined by contractual arrangements. Operating costs, production and ad valorem taxes and future development costs are based on current costs with no escalation. Future development costs include abandonment and dismantlement costs.
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APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table sets forth unaudited information concerning future net cash flows for proved oil and gas reserves, net of income tax expense. Income tax expense has been computed using expected future tax rates and giving effect to tax deductions and credits available, under laws in effect as of December 31, 2024, and which relate to oil and gas producing activities. This information does not purport to present the fair market value of the Company’s oil and gas assets, but does present a standardized disclosure concerning possible future net cash flows that would result under the assumptions used.
| United States | Egypt**(1)** | North Sea | Suriname | Total**(1)** | ||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||
| Cash inflows | $ | 27,534 | $ | 9,342 | $ | 2,828 | $ | 5,881 | $ | 45,585 | ||||||||||||||||||||||
| Production costs | (9,665) | (1,716) | (1,399) | (1,436) | (14,216) | |||||||||||||||||||||||||||
| Development costs | (4,124) | (1,517) | (2,538) | (1,096) | (9,275) | |||||||||||||||||||||||||||
| Income tax expense | (921) | (1,923) | 85 | (822) | (3,581) | |||||||||||||||||||||||||||
| Net cash flows | 12,824 | 4,186 | (1,024) | 2,527 | 18,513 | |||||||||||||||||||||||||||
| 10 percent discount rate | (4,317) | (872) | 535 | (2,280) | (6,934) | |||||||||||||||||||||||||||
| Discounted future net cash flows(2) | $ | 8,507 | $ | 3,314 | $ | (489) | $ | 247 | $ | 11,579 | ||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||||||
| Cash inflows | $ | 21,417 | $ | 9,921 | $ | 5,761 | $ | — | $ | 37,099 | ||||||||||||||||||||||
| Production costs | (8,328) | (1,690) | (2,773) | — | (12,791) | |||||||||||||||||||||||||||
| Development costs | (2,238) | (1,235) | (2,461) | — | (5,934) | |||||||||||||||||||||||||||
| Income tax expense | (949) | (2,222) | (946) | — | (4,117) | |||||||||||||||||||||||||||
| Net cash flows | 9,902 | 4,774 | (419) | — | 14,257 | |||||||||||||||||||||||||||
| 10 percent discount rate | (3,749) | (943) | 476 | — | (4,216) | |||||||||||||||||||||||||||
| Discounted future net cash flows(2) | $ | 6,153 | $ | 3,831 | $ | 57 | $ | — | $ | 10,041 | ||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||||||
| Cash inflows | $ | 31,577 | $ | 12,819 | $ | 10,147 | $ | — | $ | 54,543 | ||||||||||||||||||||||
| Production costs | (10,763) | (2,086) | (3,241) | — | (16,090) | |||||||||||||||||||||||||||
| Development costs | (1,733) | (1,471) | (2,297) | — | (5,501) | |||||||||||||||||||||||||||
| Income tax expense | (1,575) | (2,729) | (2,631) | — | (6,935) | |||||||||||||||||||||||||||
| Net cash flows | 17,506 | 6,533 | 1,978 | — | 26,017 | |||||||||||||||||||||||||||
| 10 percent discount rate | (6,811) | (1,400) | (204) | — | (8,415) | |||||||||||||||||||||||||||
| Discounted future net cash flows(2) | $ | 10,695 | $ | 5,133 | $ | 1,774 | $ | — | $ | 17,602 |
(1)Includes discounted future net cash flows of approximately $1.1 billion, $1.3 billion, and $1.7 billion as of December 31, 2024, 2023, and 2022, respectively, attributable to a noncontrolling interest in Egypt.
(2)Estimated future net cash flows before income tax expense, discounted at 10 percent per annum, totaled approximately $14.4 billion, $13.6 billion, and $22.6 billion as of December 31, 2024, 2023, and 2022, respectively.
F-61
APA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table sets forth the principal sources of change in the discounted future net cash flows:
| For the Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Sales, net of production costs | $ | (5,806) | $ | (5,408) | $ | (7,131) | ||||||||||||||
| Net change in prices and production costs | 269 | (7,089) | 8,690 | |||||||||||||||||
| Discoveries and improved recovery, net of related costs | 3,557 | 1,869 | 1,142 | |||||||||||||||||
| Change in future development costs | (695) | (413) | (343) | |||||||||||||||||
| Previously estimated development costs incurred during the period | 793 | 825 | 669 | |||||||||||||||||
| Revision of quantities | (428) | (262) | 2,646 | |||||||||||||||||
| Purchases of minerals in-place | 4,166 | 1 | 911 | |||||||||||||||||
| Accretion of discount | 1,357 | 2,260 | 1,489 | |||||||||||||||||
| Change in income taxes | 737 | 1,467 | (2,467) | |||||||||||||||||
| Sales of minerals in-place | (1,865) | (18) | (363) | |||||||||||||||||
| Change in production rates and other | (547) | (793) | (1) | |||||||||||||||||
| $ | 1,538 | $ | (7,561) | $ | 5,242 |
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