Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024

	(In millions, except share data)
REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues	$	1,718	$	2,201	$	3,757	$	3,949
Purchased oil and gas sales	460		342		1,057		545
Total revenues	2,178		2,543		4,814		4,494
Derivative instrument gains (losses), net	138		(3)		110		(7)
Gain on divestitures, net	282		276		280		283
Loss on previously sold Gulf of America properties	—		(17)		—		(83)
Other, net	14		(7)		20		8
	2,612		2,792		5,224		4,695
OPERATING EXPENSES:
Lease operating expenses	367		460		774		798
Gathering, processing, and transmission	104		121		208		205
Purchased oil and gas costs	304		210		778		373
Taxes other than income	54		78		128		135
Exploration	43		71		73		219
General and administrative	66		85		164		178
Transaction, reorganization, and separation	11		115		48		142
Depreciation, depletion, and amortization	530		588		1,173		1,018
Asset retirement obligation accretion	39		36		78		76

Financing costs, net	66		100		9		176
	1,584		1,864		3,433		3,320
NET INCOME BEFORE INCOME TAXES	1,028		928		1,791		1,375
Current income tax provision	232		285		538		585
Deferred income tax provision (benefit)	131		23		170		(42)
NET INCOME INCLUDING NONCONTROLLING INTERESTS	665		620		1,083		832
Net income attributable to noncontrolling interest	62		79		133		159
NET INCOME ATTRIBUTABLE TO COMMON STOCK	$	603	$	541	$	950	$	673

NET INCOME PER COMMON SHARE:
Basic	$	1.67	$	1.46	$	2.62	$	2.00
Diluted	$	1.67	$	1.46	$	2.62	$	2.00
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	361		371		362		337
Diluted	361		372		362		337

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

(Unaudited)


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024

	(In millions)
NET INCOME INCLUDING NONCONTROLLING INTERESTS	$	665	$	620	$	1,083	$	832
OTHER COMPREHENSIVE LOSS, NET OF TAX:

Pension and postretirement benefit plan	(1)		(1)		(1)		(1)
COMPREHENSIVE INCOME INCLUDING NONCONTROLLING INTERESTS	664		619		1,082		831
Comprehensive income attributable to noncontrolling interest	62		79		133		159
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCK	$	602	$	540	$	949	$	672

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(Unaudited)


	For the Six Months Ended June 30,
	2025		2024

	(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interests	$	1,083	$	832
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized derivative instrument (gains) losses, net	(108)		5
Gain on divestitures, net	(280)		(283)
Exploratory dry hole expense and unproved leasehold impairments	43		174
Depreciation, depletion, and amortization	1,173		1,018
Asset retirement obligation accretion	78		76

Provision for (benefit from) deferred income taxes	170		(42)
Gain on extinguishment of debt	(145)		—
Loss on previously sold Gulf of America properties	—		83
Other, net	18		31
Changes in operating assets and liabilities:
Receivables	433		(101)
Inventories	5		(2)
Drilling advances and other current assets	222		6
Deferred charges and other long-term assets	1		80
Accounts payable	(153)		(125)
Accrued expenses	(204)		(312)
Deferred credits and noncurrent liabilities	(59)		(195)
NET CASH PROVIDED BY OPERATING ACTIVITIES	2,277		1,245
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to upstream oil and gas property	(1,437)		(1,223)

Leasehold and property acquisitions	(20)		(63)
Proceeds from asset divestitures	571		729
Proceeds from sale of Kinetik Shares	—		428
Other, net	5		(23)
NET CASH USED IN INVESTING ACTIVITIES	(881)		(152)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) commercial paper and revolving credit facilities, net	(333)		63

Proceeds from (payments on) term loan facility	(900)		1,500
Payment on Callon Credit Agreement	—		(472)

Fixed-rate debt borrowings	846		—
Payments on fixed-rate debt	(954)		(1,641)
Distributions to noncontrolling interest	(217)		(123)
Treasury stock activity, net	(150)		(144)
Dividends paid to APA common stockholders	(181)		(168)
Other, net	(25)		(35)
NET CASH USED IN FINANCING ACTIVITIES	(1,914)		(1,020)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(518)		73
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	625		87
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	107	$	160

SUPPLEMENTARY CASH FLOW DATA:
Interest paid, net of capitalized interest	$	155	$	178
Income taxes paid, net of refunds	542		566

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Unaudited)


	June 30, 2025		December 31, 2024

	(In millions, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	107	$	625
Receivables, net of allowance of $122 and $123	1,509		1,959

Other current assets (Note 5)	672		820
	2,288		3,404
PROPERTY AND EQUIPMENT:
Oil and gas properties	44,630		44,698
Gathering, processing, and transmission facilities	448		433
Other	556		562
Less: Accumulated depreciation, depletion, and amortization	(32,993)		(33,047)
	12,641		12,646
OTHER ASSETS:

Decommissioning security for sold Gulf of America properties (Note 10)	21		21
Deferred tax asset (Note 9)	2,517		2,703
Deferred charges and other	611		616
	$	18,078	$	19,390

LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,074	$	1,224
Current debt	263		53

Other current liabilities (Note 6)	1,507		1,678
	2,844		2,955
LONG-TERM DEBT (Note 8)	4,288		5,991
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:
Deferred tax liability (Note 9)	—		14
Asset retirement obligation (Note 7)	2,621		2,591
Decommissioning contingency for sold Gulf of America properties (Note 10)	909		929
Other	513		548
	4,043		4,082
EQUITY:
Common stock, $0.625 par, 860,000,000 shares authorized, 492,029,841 and 491,579,646 shares issued, respectively	308		307
Paid-in capital	12,980		13,153
Accumulated deficit	(1,205)		(2,155)
Treasury stock, at cost, 133,256,513 and 126,182,497 shares, respectively	(6,189)		(6,037)
Accumulated other comprehensive income	11		12
APA SHAREHOLDERS’ EQUITY	5,905		5,280
Noncontrolling interest	998		1,082
TOTAL EQUITY	6,903		6,362
	$	18,078	$	19,390

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS

(Unaudited)


	Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		APA SHAREHOLDERS’ EQUITY		Noncontrolling Interest		TOTAL EQUITY

	(In millions)
For the Quarter Ended June 30, 2024
Balance at March 31, 2024	$	263	$	11,047	$	(2,827)	$	(5,891)	$	15	$	2,607	$	1,046	$	3,653
Net income attributable to common stock	—		—		541		—		—		541		—		541
Net income attributable to noncontrolling interest	—		—		—		—		—		—		79		79
Distributions to noncontrolling interest	—		—		—		—		—		—		(53)		(53)
Common dividends declared ($0.25 per share)	—		(93)		—		—		—		(93)		—		(93)
Issuance of common stock	44		2,370		—		—		—		2,414		—		2,414
Treasury stock activity, net	—		—		—		(43)		—		(43)		—		(43)
Other	—		(2)		—		—		(1)		(3)		—		(3)
Balance at June 30, 2024	$	307	$	13,322	$	(2,286)	$	(5,934)	$	14	$	5,423	$	1,072	$	6,495

For the Quarter Ended June 30, 2025
Balance at March 31, 2025	$	307	$	13,063	$	(1,808)	$	(6,138)	$	12	$	5,436	$	1,027	$	6,463
Net income attributable to common stock	—		—		603		—		—		603		—		603
Net income attributable to noncontrolling interest	—		—		—		—		—		—		62		62
Distributions to noncontrolling interest	—		—		—		—		—		—		(91)		(91)
Common dividends declared ($0.25 per share)	—		(90)		—		—		—		(90)		—		(90)

Treasury stock activity, net	—		—		—		(51)		—		(51)		—		(51)
Other	1		7		—		—		(1)		7		—		7
Balance at June 30, 2025	$	308	$	12,980	$	(1,205)	$	(6,189)	$	11	$	5,905	$	998	$	6,903

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS - Continued

(Unaudited)


	Common Stock		Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		APA SHAREHOLDERS’ EQUITY		Noncontrolling Interest		TOTAL EQUITY

	(In millions)
For the Six Months Ended June 30, 2024
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	—		—		673		—		—		673		—		673
Net income attributable to noncontrolling interest – Egypt	—		—		—		—		—		—		159		159
Distributions to noncontrolling interest – Egypt	—		—		—		—		—		—		(123)		(123)
Common dividends declared ($0.50 per share)	—		(168)		—		—		—		(168)		—		(168)
Issuance of common stock	44		2,370		—		—		—		2,414		—		2,414
Treasury stock activity, net	—		—		—		(144)		—		(144)		—		(144)
Other	—		(6)		—		—		(1)		(7)		—		(7)
Balance at June 30, 2024	$	307	$	13,322	$	(2,286)	$	(5,934)	$	14	$	5,423	$	1,072	$	6,495

For the Six Months Ended June 30, 2025
Balance at December 31, 2024	$	307	$	13,153	$	(2,155)	$	(6,037)	$	12	$	5,280	$	1,082	$	6,362
Net income attributable to common stock	—		—		950		—		—		950		—		950
Net income attributable to noncontrolling interest – Egypt	—		—		—		—		—		—		133		133
Distributions to noncontrolling interest – Egypt	—		—		—		—		—		—		(217)		(217)
Common dividends declared ($0.50 per share)	—		(181)		—		—		—		(181)		—		(181)

Treasury stock activity, net	—		—		—		(152)		—		(152)		—		(152)
Other	1		8		—		—		(1)		8		—		8
Balance at June 30, 2025	$	308	$	12,980	$	(1,205)	$	(6,189)	$	11	$	5,905	$	998	$	6,903

The accompanying notes to consolidated financial statements are an integral part of this statement.

APA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These consolidated financial statements have been prepared by APA Corporation (APA or the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods, on a basis consistent with the annual audited financial statements, with the exception of any recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which contains a summary of the Company’s significant accounting policies and other disclosures.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of June 30, 2025, the Company's significant accounting policies are consistent with those discussed in Note 1—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The Company’s financial statements for prior periods may include reclassifications that were made to conform to the current-year presentation.

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). 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.

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 assessment of asset retirement obligations (refer to Note 7—Asset Retirement Obligation), the estimate of income taxes (refer to Note 9—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 10—Commitments and Contingencies), and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom.

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 and Note 8—Debt and Financing Costs 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.

The Company recorded no asset impairments in connection with fair value assessments during the six months ended June 30, 2025 and June 30, 2024.

Revenue Recognition

Receivables from contracts with customers, including receivables for purchased oil and gas sales and net of allowance for credit losses, were $1.3 billion and $1.7 billion as of June 30, 2025 and December 31, 2024, 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. Over the past two years, the Company’s receivable balance from the Egyptian General Petroleum Corporation (EGPC) has been delayed for periods longer than historically experienced. The Company has seen improved receipts in recent quarters for oil and gas sales to EGPC. The Company continues to be actively engaged in discussions with the Government of Egypt and EGPC to reduce the outstanding balance and management believes the Company will be able to collect the total balance of its receivables from this customer.

Oil and gas production revenues include income taxes that will be paid to the Arab Republic of Egypt by EGPC on behalf of the Company. Revenue and associated expenses related to such tax volumes are recorded as “Oil, natural gas, and natural gas liquids production revenues” and “Current income tax provision,” respectively, in the Company’s statement of consolidated operations.

Refer to Note 12—Business Segment Information for a disaggregation of oil, gas, and natural gas liquids production revenue by product and reporting segment.

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.

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. No inventory impairments were recognized during the six months ended June 30, 2025 and June 30, 2024.

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.

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, production costs, 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. At the end of each quarter, management reviews the status of all suspended exploratory well costs in light of ongoing exploration activities, and if management determines that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed.

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.

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. No proved oil and gas property impairments were recognized during the six months ended June 30, 2025 and June 30, 2024.

Unproved leasehold impairments are typically recorded as a component of “Exploration” expense in the Company’s statement of consolidated operations. Gains and losses on divestitures of the Company’s oil and gas properties are recognized under “Gain on divestitures, net” in the statement of consolidated operations upon closing of the transaction. Refer to Note 2—Acquisitions and Divestitures for more detail.

Transaction, Reorganization, and Separation (TRS)

The Company recorded $11 million and $48 million of TRS costs during the second quarter and the first six months of 2025, respectively, and $115 million and $142 million of TRS costs during the second quarter and the first six months of 2024, respectively. TRS costs incurred in the first six months of 2025 comprised primarily employee separations and other cost-saving initiatives. TRS costs incurred in the first six months of 2024 were primarily a result of transaction and separation costs related to the Callon acquisition coupled with separation costs in the North Sea.

New Pronouncements Issued But Not Yet Adopted

There were no changes in recently issued or adopted accounting standards from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 that would have an expected material effect on the Company.

2. ACQUISITIONS AND DIVESTITURES

2025 Activity

Leasehold and Property Acquisitions

During the second quarter and first six months of 2025, the Company completed leasehold acquisitions, primarily in the Permian Basin, for aggregate cash consideration of approximately $7 million and $20 million, respectively.

U.S. Divestiture

During the second quarter of 2025, the Company completed the sale of all of its New Mexico Permian assets. The assets had a carrying value of $300 million and associated retirement obligation of $9 million, which were exchanged for total cash consideration of $573 million, inclusive of post-closing adjustments. The Company received cash of $567 million during the second quarter of 2025 and expects to receive the remaining balance in the third quarter of 2025. The Company recognized a gain of $282 million during the second quarter of 2025 in association with this sale. Proceeds from the transaction were used primarily for debt reduction.

2024 Activity

Callon Petroleum Company Acquisition

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 approved by APA and Callon shareholders at special meetings held on March 27, 2024.

Subject to the terms of the 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, and following the acquisition, Callon common stock is no longer listed for trading on the NYSE.

Upon completing the acquisition, APA refinanced substantially all of Callon’s debt by borrowing under APA’s US dollar denominated syndicated credit facilities. Refer to Note 8—Debt and Financing Costs for further detail.

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. The Company has finalized the valuation of the assets acquired and liabilities assumed.


	(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 second quarter and first six months ended June 30, 2024 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 Quarter Ended June 30,		For the Six Months Ended June 30,
	2024		2024

	(In millions, except share data)
Revenues	$	2,201	$	4,513
Net income attributable to common stock	630		779
Net income per common share – basic	1.70		2.10
Net income per common share – diluted	1.69		2.10

From the date of the acquisition through June 30, 2024, revenues and net income attributable to common stockholders associated with Callon assets totaled $438 million and $109 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.

Leasehold and Property Acquisitions

During the first six months of 2024, in addition to the Callon acquisition, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of approximately $63 million.

U.S. Divestitures

During the second quarter of 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 and received aggregate cash proceeds of $255 million and the assumption of asset retirement obligations of $42 million. The Company recognized a $50 million loss during the second quarter of 2024 in association with this sale.

During the second quarter of 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 after post-closing adjustments. The Company recognized a gain of $321 million during the second quarter of 2024 in association with this sale.

Additionally, during the second quarter and first six months of 2024, the Company completed the sale of non-core assets and leasehold in multiple transactions for aggregate cash proceeds of $45 million and $72 million, respectively, recognizing a gain of approximately $1 million and $8 million, respectively, upon closing of these transactions.

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.

Sale of Kinetik Shares

On March 18, 2024, the Company sold its remaining shares of Kinetik Holdings Inc. (Kinetik) Class A Common Stock (Kinetik Shares) for cash proceeds of $428 million.

3. CAPITALIZED EXPLORATORY WELL COSTS

The Company’s capitalized exploratory well costs were $297 million and $237 million as of June 30, 2025 and December 31, 2024, respectively. The increase is attributable to additional drilling activity in Egypt and Alaska. Approximately $8 million of suspended exploratory well costs previously capitalized for greater than one year at December 31, 2024 were charged to dry hole expense during the first six months of 2025. During the first six months of 2024, approximately $51 million of suspended well costs previously capitalized for greater than one year at December 31, 2023 were charged to dry hole expense.

Projects with suspended 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 proved reserves can be attributed to these projects.

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 or foreign currency values. The Company has elected not to designate any of its derivative contracts as cash flow hedges.

Counterparty Risk

The use of derivative instruments exposes the Company to credit loss in the event of nonperformance by the counterparty. To reduce the concentration of exposure to any individual counterparty, the Company utilizes a diversified group of investment-grade rated counterparties, primarily financial institutions, for its derivative transactions. As of June 30, 2025, the Company had derivative positions with 11 counterparties. The Company monitors counterparty creditworthiness on an ongoing basis; however, it cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, the Company may be limited in its ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, the Company may not realize the benefit of some of its derivative instruments resulting from lower commodity prices.

Derivative Instruments

Commodity Derivative Instruments

As of June 30, 2025, the Company had the following open natural gas financial basis swap contracts:


		Basis Swap Purchased		Basis Swap Sold
Production Period	Settlement Index	MMBtu (in 000’s)	Weighted Average Price Differential	MMBtu (in 000’s)	Weighted Average Price Differential
July—December 2025	NYMEX Henry Hub/IF Waha	93,840	$(3.16)	—	—
July—December 2025	NYMEX Henry Hub/IF HSC	—	—	42,320	$(0.51)
January—December 2026	NYMEX Henry Hub/IF Waha	34,675	$(1.97)	—	—

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 was not clearly and closely related to the underlying agreement and therefore bifurcated this embedded feature and recorded the derivative at fair value.

Fair Value Measurements

The following table presents the Company’s derivative assets and liabilities measured at fair value on a recurring basis:


	Fair Value Measurements Using
	Quoted Price in Active Markets (Level 1)		Significant Other Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Netting(1)		Carrying Amount

	(In millions)
June 30, 2025
Assets:
Commodity derivative instruments	$	—	$	113	$	—	$	113	$	(3)	$	110

Liabilities:
Commodity derivative instruments	$	—	$	3	$	—	$	3	$	(3)	$	—


Contingent consideration arrangements	—		21		—		21		—		21
December 31, 2024


Liabilities:

Contingent consideration arrangements	$	—	$	18	$	—	$	18	$	—	$	18

(1) The derivative fair values are based on analysis of each contract on a gross basis, excluding the impact of netting agreements with counterparties.

The fair values of the Company’s commodity derivative instruments are not actively quoted in the open market. The Company primarily uses a market approach to estimate the fair values of these derivatives on a recurring basis, utilizing futures pricing for the underlying positions provided by a reputable third party, 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/or liabilities and their locations on the consolidated balance sheet are as follows:


	June 30, 2025		December 31, 2024

	(In millions)
Current Assets: Other current assets	$	103	$	—
Other Assets: Deferred charges and other	7		—
Total derivative assets	$	110	$	—

Current Liabilities: Other current liabilities	$	21	$	—
Deferred Credit and Other Noncurrent Liabilities: Other	—		18
Total derivative liabilities	$	21	$	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 Quarter Ended June 30,						For the Six Months Ended June 30,
	2025			2024			2025			2024

		(In millions)
Realized:
Commodity derivative instruments		$	2		$	(6)		$	2		$	(2)

Realized gains (losses), net		2			(6)			2			(2)
Unrealized:
Commodity derivative instruments		138			3			110			(5)
Contingent consideration arrangements		(2)			—			(2)			—



Unrealized gains (losses), net		136			3			108			(5)
Derivative instrument gains (losses), net		$	138		$	(3)		$	110		$	(7)

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 and 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:


	June 30, 2025		December 31, 2024

	(In millions)
Inventories	$	386	$	425
Drilling advances	138		184
Derivative instruments	103		—
Current decommissioning security for sold Gulf of America assets	18		157
Prepaid assets and other	27		54
Total Other current assets	$	672	$	820

6. OTHER CURRENT LIABILITIES

The following table provides detail of the Company’s other current liabilities:


	June 30, 2025		December 31, 2024

	(In millions)
Accrued operating expenses	$	166	$	204
Accrued exploration and development	475		460
Accrued compensation and benefits	107		223
Accrued interest	94		93
Accrued income taxes	197		221
Current asset retirement obligation	103		103
Current operating lease liability	113		118

Current decommissioning contingency for sold Gulf of America properties	88		88
Other	164		168
Total Other current liabilities	$	1,507	$	1,678

7. ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability:


	June 30, 2025
	(In millions)
Asset retirement obligation, December 31, 2024	$	2,694
Liabilities incurred	8

Liabilities settled	(49)
Liabilities divested	(9)

Accretion expense	78
Revisions in estimated liabilities	2
Asset retirement obligation, June 30, 2025	2,724
Less current portion	(103)
Asset retirement obligation, long-term	$	2,621

8. DEBT AND FINANCING COSTS

The following table presents the carrying values of the Company’s debt:


	June 30, 2025		December 31, 2024

	(In millions)
APA notes and debentures before unamortized discount and debt issuance costs(1)	$	3,581	$	—
Apache notes and debentures before unamortized discount and debt issuance costs(2)	995		4,835

APA commercial paper, term loan, and revolving credit facilities(3)	—		1,233
Apache finance lease obligations	29		30
Unamortized discount	(24)		(25)
Debt issuance costs	(30)		(29)
Total debt	4,551		6,044
Current maturities	(263)		(53)
Long-term debt	$	4,288	$	5,991

(1) The fair values of the APA notes and debentures were $3.2 billion as of June 30, 2025. There was no APA indenture debt outstanding on December 31, 2024.

(2) The fair values of the Apache notes and debentures were $926 million and $4.4 billion as of June 30, 2025 and December 31, 2024, respectively. The Company uses a market approach to determine the fair values of its notes and debentures using estimates provided by an independent investment financial data services firm (a Level 2 fair value measurement).

(3) The carrying value of borrowings on the commercial paper, term loan, and revolving credit facilities approximates fair value because interest rates are variable and reflective of market rates.

At each of June 30, 2025 and December 31, 2024, current debt included $2 million of finance lease obligations.

Financing Costs, Net

The following table presents the components of the Company’s financing costs, net:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024

	(In millions)
Interest expense	$	86	$	108	$	177	$	193
Amortization of debt issuance costs	2		2		4		3
Capitalized interest	(16)		(7)		(20)		(14)
Gain on extinguishment of debt	(3)		—		(145)		—
Interest income	(3)		(3)		(7)		(6)
Financing costs, net	$	66	$	100	$	9	$	176

Indenture Debt Activity

During the first six months of 2025, the Company purchased in the open market and had canceled indebtedness issued under indentures of APA and Apache in an aggregate principal amount of $108 million for an aggregate purchase price of $100 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $10 million. The Company recognized a $10 million gain on these repurchases. The repurchases were partially financed by APA’s borrowing under the Company’s commercial paper program. Refer to discussion of APA exchange and tender offers for Apache indenture debt below for further details regarding the gain on extinguishment of debt during the quarter ended March 31, 2025.

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. The Company recognized a gain of $135 million on these purchases, including broker fees and loan costs.
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 were 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 were 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 was less than $1 billion, which occurred in May 2025, after which Apache’s guarantees were terminated in accordance with their terms on May 16, 2025.
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 to use 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 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, registration rights applicable to the unregistered notes, or any increase in annual interest rate for failure to comply with such registration rights) 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 at specified rates on the principal amount of such registrable securities.

Unsecured 2025 Committed Credit Facilities

On January 15, 2025, the Company entered into two unsecured syndicated credit agreements for general corporate purposes:

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 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 was less than US$1.0 billion, which occurred in May 2025, after which Apache’s guarantees were terminated in accordance with their terms on May 16, 2025.

The 2025 Agreements replaced on substantially the same terms two syndicated credit agreements that the Company entered in April 2022:

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.

On January 15, 2025, the Company terminated commitments under both the 2022 USD Agreement and 2022 GBP Agreement in connection with entry into the 2025 Agreements.

As of June 30, 2025, there were no borrowings or letters of credit outstanding under the 2025 USD Agreement and an aggregate £183 million in letters of credit outstanding under the 2025 GBP Agreement. As of December 31, 2024, there were $10 million of borrowings and no letters of credit outstanding under the 2022 USD Agreement and an aggregate £303 million in letters of credit outstanding under the 2022 GBP Agreement.

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 June 30, 2025 and December 31, 2024, there were no outstanding borrowings under these facilities. As of June 30, 2025, there were £705 million and $11 million in letters of credit outstanding under these facilities. As of December 31, 2024, there were £640 million and $11 million in letters of credit outstanding under these facilities.

Commercial Paper Program

The Company has 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 (CP Notes) up to a maximum aggregate face amount of $2.0 billion outstanding at any time. The program was established in December 2023, and the maximum aggregate face amount of CP Notes issuable thereunder was increased to $2.0 billion from $1.8 billion on June 20, 2025. 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 June 30, 2025, included the $2.0 billion 2025 USD Agreement.

Payment of CP Notes was 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 was less than US$1.0 billion, which occurred in May 2025, after which Apache’s guarantees were terminated in accordance with their terms on June 20, 2025.

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.

As of June 30, 2025, the Company had no CP Notes outstanding. As of December 31, 2024, the Company had $323 million in aggregate face amount of CP Notes outstanding, which was classified as long-term debt.

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 upon closings of APA’s acquisition of Callon and the 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).

On April 1, 2024, APA acquired Callon and 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, there were $900 million in 3-Year Tranche Loans remaining outstanding under the Term Loan Credit Agreement. APA could at any time prepay loans under the Term Loan Credit Agreement, which it elected to do on March 10, 2025, when APA fully repaid amounts outstanding under the Term Loan Credit Agreement. The repayment was partially financed with borrowings under APA’s 2025 USD Agreement and commercial paper program.

9. INCOME TAXES

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Non-cash impairments on the carrying value of the Company’s oil and gas properties, gains and losses on the sale of assets, statutory tax rate changes, and other significant or unusual items are recognized as discrete items in the quarter in which they occur.

The Company’s effective income tax rate for the six months ended June 30, 2025 differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations and a deferred tax expense related to the remeasurement of taxes in the U.K. as a result of the enactment of Finance Act 2025 on March 20, 2025. The Company’s effective income tax rate for the six months ended June 30, 2024 differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations.

On March 20, 2025, Finance Act 2025 was enacted, receiving Royal Assent, and included amendments to the Energy (Oil and Gas) Profits Levy Act of 2022, increasing the levy from a 35 percent rate to a 38 percent rate, among other changes, effective for the period of November 1, 2024 through March 31, 2030. Under U.S. GAAP, the financial statement impact of new legislation is recorded in the period of enactment. Therefore, in the first quarter of 2025, the Company recorded a deferred tax expense of $76 million related to the remeasurement of the December 31, 2024 U.K. deferred tax liability.

On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act of 2025 (OBBBA). Among other changes, the OBBBA expanded and made permanent 100 percent bonus depreciation for eligible assets acquired and placed in service after January 19, 2025, and aligned the treatment of intangible drilling costs for corporate alternative minimum tax (CAMT) purposes with regular tax treatment starting in 2026. The Company does not expect the OBBBA to have a material impact on total tax expense for the year ended December 31, 2025. Under U.S. GAAP, the financial statement impact of new legislation is recorded in the period of enactment. Therefore, the Company will record the impact of OBBBA in the third quarter of 2025.

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.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various states and foreign jurisdictions. The Company’s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority.

10. 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 June 30, 2025, the Company has an accrued liability of approximately $16 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.

For additional information on Legal Matters described below, refer to Note 11—Commitments and Contingencies to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Louisiana Restoration

As more fully described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, 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.

Currently, the State of Louisiana, a number of coastal parishes in Louisiana, and the City of New Orleans, as plaintiffs, are all pursuing various lawsuits against many oil and gas producers with current or historic operations in Louisiana. In these cases, the 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. Following its settlement with a number of parishes and the state, the Company is now a defendant in only one coastal zone lawsuit, which was filed by the City of New Orleans against the Company and a number of oil and gas operators and pipeline companies. The Company is vigorously defending this lawsuit.

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. Upon remand, on March 6, 2025, the court of appeals affirmed the entirety of the trial courts’ orders resulting in final judgment in favor of the Company, plaintiffs taking nothing by their claims,

and awarding the Company its attorneys’ fees and costs incurred in defending the lawsuit. The plaintiffs did not appeal the court of appeals’ March 6, 2025 opinion, meaning that the judgment in favor of the Company is final.

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. In 2018, Quadrant was acquired by Australian oil and gas company Santos, Ltd., who assumed Quadrant’s place in the ongoing litigation. In early 2025, Santos amended the pending counterclaims to abandon a number of claims that had been asserted against the Company but maintaining counterclaims for approximately AUD $57 million. Santos then filed a new lawsuit in the Supreme Court of Western Australia contending that it may be liable to the Australian Taxation Office for assessments, penalties, and interest related to the 2014 and 2015 tax years of approximately AUD $133 million and asserting that, if such amounts must be paid, the Company is liable to Santos for those amounts under the Quadrant SPA. All lawsuits related to the Quadrant SPA have now been consolidated into the same proceeding. The Company will vigorously prosecute its claim while vigorously defending against any counterclaims.

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

The Company is not aware of any environmental claims existing as of June 30, 2025, 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 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 GOM Shelf loans of up to $400 million to perform decommissioning, with such loans and related obligations secured by first and prior liens 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. 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 June 30, 2025, the Company recorded an asset of $39 million representing the remaining amount the Company expects to be reimbursed from security related to these decommissioning costs.

The Company has also recorded contingent liabilities in the amounts of $1.0 billion for each of the periods ended June 30, 2025 and December 31, 2024, representing the estimated costs of decommissioning it may be required to perform on the Legacy GOA Assets. There have been no other changes in estimates from December 31, 2024 that would have a material impact on the Company’s financial position, results of operations, or liquidity.

The Company recognized $17 million and $83 million in the second quarter and first six months of 2024, respectively, of losses for estimated decommissioning costs on GOA properties previously sold to Fieldwood and other GOA operators.

11. CAPITAL STOCK

Net Income per Common Share

The following table presents a reconciliation of the components of basic and diluted net income per common share in the consolidated financial statements:


	For the Quarter Ended June 30,
	2025					2024
	Income		Shares	Per Share		Income		Shares	Per Share

	(In millions, except per share amounts)
Basic:
Income attributable to common stock	$	603	361	$	1.67	$	541	371	$	1.46
Effect of Dilutive Securities:
Stock compensation awards	$	—	—	$	—	$	—	1	$	—
Diluted:
Income attributable to common stock	$	603	361	$	1.67	$	541	372	$	1.46

	For the Six Months Ended June 30,
	2025					2024
	Income		Shares	Per Share		Income		Shares	Per Share

	(In millions, except per share amounts)
Basic:
Income attributable to common stock	$	950	362	$	2.62	$	673	337	$	2.00



Diluted:
Income attributable to common stock	$	950	362	$	2.62	$	673	337	$	2.00

The diluted earnings per share calculation excludes 3.6 million and 2.3 million of options and restricted stock units that were anti-dilutive during the second quarters of 2025 and 2024, respectively, and 3.6 million and 2.1 million during the first six months of 2025 and 2024, respectively.

Stock Repurchase Program

In the second quarter of 2025, the Company repurchased approximately 2.7 million shares at an average price of $18.53 per share. For the six months ended June 30, 2025, the Company repurchased 7.1 million shares at an average price of $21.21 per share, and as of June 30, 2025, the Company had remaining authorization to repurchase up to 27.7 million shares. In the second quarter of 2024, the Company repurchased approximately 1.5 million shares at an average price of $28.72 per share. For the six months ended June 30, 2024, the Company repurchased 4.5 million shares at an average price of $31.77 per share

The Company repurchased 1.0 million shares at an average price of $19.28 per share in July 2025, and as of July 31, 2025, the Company had remaining authorization to repurchase up to 26.7 million shares.

The Company is not obligated to acquire any additional shares. Shares may be purchased either in the open market or through privately negotiated transactions.

Common Stock Dividend

For the quarters ended June 30, 2025 and June 30, 2024, the Company paid $90 million and $92 million, respectively, in dividends on its common stock. For the six months ended June 30, 2025 and June 30, 2024, the Company paid $181 million and $168 million, respectively, in dividends on its common stock.

Common Stock Issuance

In the second quarter of 2024, in connection with the Callon acquisition, the Company issued approximately 70 million shares of common stock in exchange for Callon common stock. The total value of stock consideration was approximately $2.4 billion based on APA’s stock price on the closing date of the acquisition.

12. BUSINESS SEGMENT INFORMATION

As of June 30, 2025, the Company’s consolidated subsidiaries are engaged in exploration, development, and/or production across four operating segments: the U.S., Egypt, North Sea, and Suriname. The Company’s business explores for, develops, and produces crude oil, natural gas, and natural gas liquids. The Company also has exploration interests in Alaska, Uruguay, and other international locations that may, over time, result in reportable discoveries and development opportunities.

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(2)		Total(3)


For the Quarter Ended June 30, 2025	(In millions)
Revenues:
Oil revenues	$	730	$	521	$	130	$	—	$	1,381
Natural gas revenues	48		109		27		—		184
Natural gas liquids revenues	144		—		9		—		153
Oil, natural gas, and natural gas liquids production revenues	922		630		166		—		1,718
Purchased oil and gas sales	460		—		—		—		460

	1,382		630		166		—		2,178
Operating Expenses:
Lease operating expenses(4)	196		100		71		—		367
Gathering, processing, and transmission(4)	85		7		12		—		104
Purchased oil and gas costs	304		—		—		—		304
Taxes other than income(4)	54		—		—		—		54
Exploration(5)	1		40		—		2		43
Depreciation, depletion, and amortization(4)	328		149		53		—		530
Asset retirement obligation accretion	11		—		28		—		39

	979		296		164		2		1,441
Operating Income (Loss)(6)	$	403	$	334	$	2	$	(2)	737

Other Income (Expense):
Derivative instrument gains, net									138

Gain on divestitures, net									282
Other, net									14
General and administrative									(66)
Transaction, reorganization, and separation									(11)
Financing costs, net									(66)
Income Before Income Taxes									$	1,028


	U.S.		Egypt(1)		North Sea		Intersegment Eliminations & Other(2)		Total(3)


For the Six Months Ended June 30, 2025	(In millions)
Revenues:
Oil revenues	$	1,546	$	1,103	$	332	$	—	$	2,981
Natural gas revenues	152		200		65		—		417
Natural gas liquids revenues	340		—		19		—		359
Oil, natural gas, and natural gas liquids production revenues	2,038		1,303		416		—		3,757
Purchased oil and gas sales	1,057		—		—		—		1,057
	3,095		1,303		416		—		4,814
Operating Expenses:
Lease operating expenses(4)	396		210		168		—		774
Gathering, processing, and transmission(4)	170		12		26		—		208
Purchased oil and gas costs	778		—		—		—		778
Taxes other than income(4)	128		—		—		—		128
Exploration(5)	3		60		1		9		73
Depreciation, depletion, and amortization(4)	747		302		124		—		1,173
Asset retirement obligation accretion	21		—		57		—		78

	2,243		584		376		9		3,212
Operating Income (Loss)(6)	$	852	$	719	$	40	$	(9)	1,602

Other Income (Expense):
Derivative instrument gains, net									110

Gain on divestitures, net									280
Other, net									20
General and administrative									(164)
Transaction, reorganization, and separation									(48)
Financing costs, net									(9)
Income Before Income Taxes									$	1,791

Total Assets(7)	$	12,752	$	3,386	$	1,163	$	777	$	18,078


	U.S.		Egypt(1)		North Sea		Intersegment Eliminations & Other(2)		Total(3)


For the Quarter Ended June 30, 2024	(In millions)
Revenues:
Oil revenues	$	1,021	$	673	$	213	$	—	$	1,907
Natural gas revenues	15		73		47		—		135
Natural gas liquids revenues	152		—		7		—		159
Oil, natural gas, and natural gas liquids production revenues	1,188		746		267		—		2,201
Purchased oil and gas sales	342		—		—		—		342
	1,530		746		267		—		2,543
Operating Expenses:
Lease operating expenses(4)	220		123		117		—		460
Gathering, processing, and transmission(4)	98		7		16		—		121
Purchased oil and gas costs	210		—		—		—		210
Taxes other than income(4)	78		—		—		—		78
Exploration(5)	37		25		1		8		71
Depreciation, depletion, and amortization(4)	361		152		75		—		588
Asset retirement obligation accretion	10		—		26		—		36

	1,014		307		235		8		1,564
Operating Income (Loss)(6)	$	516	$	439	$	32	$	(8)	979

Other Income (Expense):
Derivative instrument losses, net									(3)
Loss on previously sold Gulf of America properties									(17)
Gain on divestitures, net									276
Other, net									(7)
General and administrative									(85)
Transaction, reorganization, and separation									(115)
Financing costs, net									(100)
Income Before Income Taxes									$	928


	U.S.		Egypt(1)		North Sea		Intersegment Eliminations & Other(2)		Total(3)


For the Six Months Ended June 30, 2024	(In millions)
Revenues:
Oil revenues	$	1,609	$	1,330	$	400	$	—	$	3,339
Natural gas revenues	72		150		89		—		311
Natural gas liquids revenues	283		—		16		—		299
Oil, natural gas, and natural gas liquids production revenues	1,964		1,480		505		—		3,949
Purchased oil and gas sales	545		—		—		—		545
	2,509		1,480		505		—		4,494
Operating Expenses:
Lease operating expenses(4)	360		243		195		—		798
Gathering, processing, and transmission(4)	162		13		30		—		205
Purchased oil and gas costs	373		—		—		—		373
Taxes other than income(4)	135		—		—		—		135
Exploration(5)	107		56		1		55		219
Depreciation, depletion, and amortization(4)	575		297		146		—		1,018
Asset retirement obligation accretion	25		—		51		—		76

	1,737		609		423		55		2,824
Operating Income (Loss)(6)	$	772	$	871	$	82	$	(55)	1,670

Other Income (Expense):
Derivative instrument losses, net									(7)
Loss on previously sold Gulf of America properties									(83)
Gain on divestitures, net									283
Other, net									8
General and administrative									(178)
Transaction, reorganization, and separation									(142)
Financing costs, net									(176)
Income Before Income Taxes									$	1,375


Total Assets(7)	$	14,075	$	3,740	$	1,844	$	536	$	20,195

(1)Includes oil and gas production revenue that will be paid as taxes by EGPC on behalf of the Company for the quarters and six months ended June 30, 2025 and June 30, 2024 of:


	For the Quarter Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024

	(In millions)
Oil	$	125	$	177	$	276	$	351
Natural gas	26		19		50		40

(2)Includes Suriname operating expenses as the operating segment has not met the quantitative thresholds to be separately reported.

(3)Includes noncontrolling interests in Egypt.

(4)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 Operating Income (Loss) amount by segment are deemed to be other segment expense categories necessary to arrive at the segment profit or loss.

(5)Exploration expense under Intersegment Eliminations & Other primarily reflects the Company’s Suriname exploration activities.

(6)Operating income includes no leasehold impairments for the second quarters of 2025 and 2024. Operating income includes no leasehold impairments for the first six months of 2025. Operating income of U.S. includes leasehold impairments of $10 million for the first six months of 2024.

(7)Intercompany balances are excluded from total assets.

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