About APA

APA Corporation (APA) operates as an independent energy company that owns consolidated subsidiaries that explore for, develop, and produce natural gas, crude oil, and NGLs. The company's upstream business has oil and gas operations in three geographic areas: the U.S., Egypt, and offshore the U.K. in the North Sea (North Sea). APA also has active exploration and appraisal operations ongoing in Suriname, as well as interests in Uruguay and other international locations that may, over time, result in reportable discoveries and development opportunities. Business Strategy APA maintains a diversified asset portfolio, including conventional and unconventional, onshore and offshore, oil and natural gas exploration and production interests. In the U.S., operations are primarily focused in the Permian Basin of West Texas and Eastern New Mexico, with additional operations located in the Eagle Ford shale and Austin Chalk areas of Southeast Texas, offshore in the Gulf of Mexico, and along the Gulf Coast. The company also commenced an exploration program in Alaska during the fourth quarter of 2023. Internationally, the company has conventional onshore assets in Egypt's Western Desert, offshore assets on the U.K.'s Continental Shelf, and an offshore appraisal and exploration program in Suriname. Stream Exploration And Production Operating Areas APA's upstream business has oil and gas operations in three geographic areas: the U.S., Egypt, and offshore the U.K. in the North Sea. APA also has active exploration and appraisal operations ongoing in Suriname, as well as interests in Uruguay and other international locations that may, over time, result in reportable discoveries and development opportunities. The United States In 2023, the company's U.S. upstream oil and gas operations contributed approximately 54 percent of production, 41 percent of oil and gas revenues, and 70 percent of estimated year-end proved reserves. APA has access to significant liquid hydrocarbons across its 3.7 million gross acres (1.8 million net acres) in the U.S., 76 percent of which are undeveloped. The company's U.S. assets are primarily located in the Permian Basin in West Texas and New Mexico, including the Permian sub-basins: Midland Basin, Central Basin Platform/Northwest Shelf, and Delaware Basin. Examples of shale plays being developed within these sub-basins include the Woodford, Barnett, Pennsylvanian, Cline, Wolfcamp, Bone Spring, and Spraberry. The company is one of the largest operators in the Permian Basin, operating oil and gas wells across its acreage, with additional interests in non-operated wells. APA also has operations located in the Eagle Ford shale and Austin Chalk areas of Southeast Texas, offshore in the Gulf of Mexico, and along the Gulf Coast in South Texas and Louisiana. Highlights of the company's operations in the U.S. include: Southern Midland Basin: APA holds approximately 786,000 gross acres (450,000 net acres) in the Southern Midland Basin and the Eagle Ford shale and Austin Chalk areas of southeast Texas. During 2023, the company primarily targeted oil plays in the Wolfcamp and Spraberry formations. Delaware Basin: APA holds approximately 233,000 gross acres (135,000 net acres) in the Delaware Basin, including opportunities in the Bone Spring and other formations of Eastern New Mexico and bordering West Texas, and the Alpine High play in the southern portion of the Permian Basin, primarily in Reeves County, Texas. Legacy Assets: APA holds approximately 2.4 million gross acres (1.1 million net acres) in legacy properties, of which approximately 577,000 gross acres are in the offshore waters of the Gulf of Mexico. Consistent with the company's broader portfolio management efforts, certain non-strategic leasehold positions on its legacy acreage holdings provide additional monetization opportunities that continue to be evaluated. New Venture Assets: APA separately has undeveloped acreage positions across several states, where it intends to pursue exploration interests and potential development opportunities over time. During the fourth quarter of 2023, the company commenced an exploration program in Alaska, where it anticipates drilling three exploration wells in the first half of 2024. The U.S. Marketing The company sells its U.S. natural gas production at liquid index sales points within the U.S., at either monthly or daily index-based prices. In addition, to satisfy a delivery commitment that began in 2023, the company purchases third party natural gas to sell and deliver to a U.S. LNG export facility. The tenor of the company's sales contracts span from daily to multi-year transactions. Natural gas is sold to a variety of customers that include local distribution, utility, and midstream companies, as well as end-users, marketers, and integrated major oil companies. APA primarily markets its U.S. crude oil production to integrated major oil companies, marketing and transportation companies, and refiners based on West Texas Intermediate (WTI) pricing indices (e.g., WTI Houston, West Texas Sour (WTS), WTI Midland, or West Texas Light (WTL) Midland) and some predominately Brent related international pricing indices, adjusted for quality, transportation, and a market-reflective differential. The company will enter into physical term sales contracts. These term contracts typically have a firm transportation commitment. APA's U.S. NGL production is sold under contracts with prices based on Gulf Coast supply and demand conditions, less the costs for transportation and fractionation, or on a weighted-average sales price received by the purchaser. The U.S. Delivery Commitments The company has long-term delivery commitments for natural gas and crude oil that require APA to deliver an average of 161 Bcf of natural gas per year for the period from 2024 through 2029, an average of 49 Bcf of natural gas per year for the period from 2030 through 2037, and an average of 4.9 MMbbls of crude oil per year for the period from 2024 through 2025, in each case, at variable, domestic and/or international, market-based pricing. APA expects to fulfill its delivery commitments with production from its proved reserves, production from continued development, and/or third-party purchases. APA may also enter into contractual arrangements to reduce its delivery commitments. International In 2023, international assets contributed 46 percent of APA's production and 59 percent of its oil and gas revenues. APA has two international locations with ongoing development and production operations: Egypt, which includes onshore conventional assets located in Egypt's Western Desert; and The North Sea, which includes offshore assets based in the U.K. The company also has an active offshore exploration program and appraisal operations ongoing in Suriname, and interests in Uruguay and other international locations that may, over time, result in reportable discoveries and development opportunities. Egypt APA has exploration, development and operations experience in Egypt and is one of the largest acreage holders in Egypt's Western Desert. As of December 31, 2023, the company held 5.3 million gross acres in six separate concessions. The company's acreage is primarily held under one concession agreement that resulted from the ratification of a new MCA with the Egyptian Ministry of Petroleum and EGPC. The MCA, which has an effective date of April 1, 2021, consolidated 98 percent of gross acreage and 90 percent of gross production under one concession agreement and refreshed the existing development lease terms for 20 years and exploration leases for 5 years. The consolidated concession has a single cost recovery pool to provide improved access to cost recovery, a fixed 40 percent cost recovery limit, and a fixed profit-sharing rate of 30 percent for all the company's production covered under the concession. Development leases within concessions have expiration dates ranging from 1 to 20 years, with extensions possible for additional commercial discoveries or on a negotiated basis. Approximately 67 percent of the company's gross acreage in Egypt is undeveloped, providing APA with considerable exploration and development opportunities for the future. 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 EGPC and bears the risk and cost of exploration, development, and production activities. The APA subsidiary that is the sole Contractor under the MCA is owned by an APA-operated joint venture owned two-thirds by the company and one-third by Sinopec International Petroleum Exploration and Production Corporation (Sinopec). The company's estimated proved reserves in Egypt are reported under the economic interest method and exclude the host country's share of reserves. Through the joint venture, Sinopec holds a one-third minority participation interest in the company's oil and gas operations in Egypt. A key component of the company's success has been the ability to acquire and evaluate 3-D seismic surveys that enable the company's technical teams to consistently high-grade existing prospects and identify new targets across multiple pay horizons in the Cretaceous, Jurassic, and deeper Paleozoic formations. The company has completed seismic surveys covering three million acres, which has led to recent discoveries that build and enhance its drilling inventory in Egypt. North Sea The company has interests in approximately 292,000 gross acres in the U.K. North Sea. The company entered the North Sea in 2003 after acquiring an approximate 97 percent working interest in the Forties field (Forties). In 2011, the company acquired Mobil North Sea Limited, which included operated interests in the Beryl, Ness, Nevis, Nevis South, Skene, and Buckland fields and a non-operated interest in the Maclure field. The company also has a non-operated interest in the Nelson field acquired in 2011. During the second quarter of 2023, as part of the company's focus on capital allocation to optimize investment returns, it suspended all new drilling activity in the North Sea. The company's investment program there is now directed toward safety, base production management, and asset maintenance and integrity. International Marketing The company's natural gas production in Egypt is sold to EGPC. Crude oil production is sold to third parties in the export market or to EGPC when called upon to supply domestic demand. Oil production sold to third parties is sold and exported from one of two terminals on the northern coast of Egypt. Oil production sold to EGPC is sold at prices related to the export market. The company's North Sea crude oil production is sold under term, entitlement volume contracts and spot variable volume contracts with a market-based index price plus a differential to capture the higher market value under each type of arrangement. Natural gas from the Beryl field is processed through the Scottish Area Gas Evacuation (SAGE) gas plant, operated by Ancala Midstream Acquisitions Limited. Natural gas is sold to a third party at the St. Fergus entry point of the national grid on a National Balancing Point index price basis. The condensate mix from the SAGE plant is processed further downstream. The split streams of propane, butane, and condensate are sold separately on a monthly entitlement basis at the Braefoot Bay terminal using index pricing less transportation. Other Exploration New Ventures APA's international New Ventures acreage provides exposure to new growth opportunities outside of the company's traditional core areas and provides higher-risk, higher-reward exploration opportunities located in frontier basins as well as new plays in more mature basins. The company has a joint venture agreement with TotalEnergies (formerly Total S.A.) to explore and develop Block 58 offshore Suriname. The company holds a 50 percent working interest in Block 58, which comprises approximately 1.4 million gross acres in water depths ranging from less than 100 meters to more than 2,100 meters. TotalEnergies holds a 50 percent working interest in Block 58 as the operator. During 2023, the company and TotalEnergies announced the launch of development studies for a large oil project in Block 58. Successful appraisal of two key oil discoveries, with the drilling and testing of two wells at Sapakara South and three wells at Krabdagu, confirmed combined recoverable resources of an estimated 700 million barrels of oil for the two fields. These fields, located in water depths between 100 and 1,000 meters, are expected to be produced through a system of subsea wells connected to a floating production, storage and offloading unit located 150 kilometers off the Suriname coast, with an oil production capacity of 200,000 b/d. Detailed engineering studies are underway, and a final investment decision is expected by year-end 2024, with a first production target in 2028. No additional drilling is anticipated on Block 58 through the end of 2024. The company is also the operator of Block 53 offshore Suriname and holds a 45 percent working interest in the block. Exploration and evaluation of the area is ongoing. During 2023, the company was granted an extension to retain approximately 13,000 net undeveloped acres for its operated Baja discovery area, allowing the remaining net undeveloped acres to expire in Block 53 as of the end of 2023. During 2023, the company signed a production sharing contract for Block 6 offshore Uruguay covering approximately four million net undeveloped acres and expects to commence exploration activities in 2024. In February 2024, the company also signed a production sharing contract for Block 4 offshore Uruguay. In December 2023, the company suspended further exploration activities in its approximately 630,000 net undeveloped acres offshore the Dominican Republic. The company has elected to voluntarily relinquish its net acreage holdings and anticipates completion of its withdrawal in early 2024. The company continues to assess, contract, and potentially explore undeveloped acreage positions in other international locations. Gross and Net Undeveloped and Developed Acreage As of December 31, 2023, the company held approximately 117,000 net undeveloped acres that are scheduled to expire by year-end 2024 if production is not established or the company takes no action to extend the terms. Nearly all of the company's acreage expiring in 2024 is offshore the U.K. in the North Sea. The company also held approximately 16,000 and 724,000 net undeveloped acres set to expire by year-end 2025 and 2026, respectively. Exploration concessions covering the company's Egyptian acreage were extended in 2021 upon ratification of the MCA with the EGPC, and no acreage is scheduled to expire before 2026. The company will continue to pursue acreage extensions and access to new concessions in areas in which it believes exploration opportunities exist. The company strives to extend the terms of many of these licenses and concession areas through operational or administrative actions but cannot assure that such extensions can be achieved on an economic basis or otherwise on terms agreeable to both the company and third parties, including governments. No oil and gas reserves were recorded on this undeveloped acreage set to expire. As of December 31, 2023, approximately 88 percent of U.S. net undeveloped acreage was held by production or owned as undeveloped mineral rights. The company held approximately 5.4 million net undeveloped acres as of December 31, 2023, in international locations separate from positions held in its established U.K. and Egypt locations. Exploration interests include Block 53 and Block 58 offshore Suriname, Block 6 offshore Uruguay, and offshore the Dominican Republic. The company continues to actively evaluate and analyze several discoveries on its Block 58 offshore Suriname exploration acreage with its operator partner, TotalEnergies. Approximately 720,000 net undeveloped acres in Block 58 have a current expiration date of June 2026 assuming no further actions are taken to extend. Separately during 2023, the company was granted an extension to retain approximately 13,000 net undeveloped acres for its operated Baja discovery area, allowing the remaining net undeveloped acres to expire in Block 53 as of the end of 2023. During 2023, the company also signed a production sharing contract for Block 6 offshore Uruguay covering approximately four million net undeveloped acres and expects to commence exploration activities in 2024. In February of 2024, the company also signed a production sharing contract for Block 4 offshore Uruguay. In December 2023, the company suspended further exploration activities in its approximately 630,000 net undeveloped acres offshore the Dominican Republic. The company has elected to voluntarily relinquish its net acreage holdings and anticipates completion of its withdrawal in early 2024. The company continues to assess, contract, and potentially explore undeveloped acreage positions in other international locations. Altus Midstream In November 2018, Apache Midstream LLC, one of the company's wholly owned subsidiaries completed a transaction with ALTM and its then wholly owned subsidiary Altus Midstream LP to create a pure-play, Permian Basin midstream C-corporation anchored by gathering, processing, and transmission assets at Alpine High. Pursuant to the agreement, the company's subsidiary contributed certain Alpine High midstream assets and options to acquire equity interests in five separate third-party pipeline projects to Altus Midstream LP and/or its subsidiaries. In exchange for the assets, the company's subsidiary received economic voting and non-economic voting shares in ALTM and limited partner interests in Altus Midstream LP, representing an approximate 79 percent ownership interest in the combined entities. As a result, APA fully consolidated the assets and liabilities of ALTM in its consolidated financial statements, with a corresponding noncontrolling interest reflected separately. As of December 31, 2023, the company owned 13.1 million Kinetik Shares, representing approximately 9 percent of Kinetik's outstanding common stock. Major Customers During 2023, sales to EGPC accounted for approximately 15 percent of the company's worldwide crude oil, natural gas, and NGLs revenues. History APA Corporation, a Delaware corporation, was founded in 1954. The company was incorporated in 1954.