ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to APA Corporation (APA or the Company) and its consolidated subsidiaries and should be read together with the Company's Consolidated Financial Statements and accompanying notes included in Part I, Item 1-Financial Statements of this Quarterly Report on Form 10-Q, as well as related information set forth in the Company's Consolidated Financial Statements, accompanying Notes to Consolidated Financial Statements, and Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Overview

APA is an independent energy company that owns subsidiaries that explore for, develop, and produce crude oil, natural gas, and natural gas liquids (NGLs). The Company's 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 development, exploration and appraisal operations ongoing in Suriname, as well as exploration interests in Uruguay, Alaska, and other international locations that may, over time, result in reportable discoveries and development opportunities. As a holding company, APA Corporation's primary assets are its ownership interests in its consolidated subsidiaries.

APA believes energy underpins global progress, and the Company wants to be a part of the solution as society works to meet growing global demand for reliable and affordable energy. APA strives to meet those challenges while creating value for all its stakeholders.

Uncertainties in the global supply chain and financial markets impact oil supply and demand and contribute to commodity price volatility. These uncertainties include the impacts of ongoing international conflicts, inflation, current and potential tariffs or other trade barriers, global trade policies, and actions taken by foreign oil and gas producing nations, including OPEC+. Despite these uncertainties, the Company remains committed to its longer-term objectives: (1) to invest for long-term returns in pursuit of moderate, sustainable production growth; (2) to strengthen the balance sheet to underpin the generation of cash flow in excess of its upstream exploration, appraisal, and development capital program that can be directed to debt reduction, share repurchases, and other return of capital to its shareholders; and (3) to responsibly manage its cost structure regardless of the oil price environment.

The Company closely monitors hydrocarbon pricing fundamentals to reallocate capital as part of its ongoing planning process. APA's diversified asset portfolio and operational flexibility provide the Company the ability to timely respond to near-term price volatility and effectively manage its investment programs accordingly. For additional detail on the Company's forward capital investment outlook, refer to "Capital Resources and Liquidity" below.

In the first quarter of 2025, the Company announced a significant cost reduction initiative. The Company's primary objective is to drive sustainable cost savings for the long-term and is targeting over $350 million in annualized savings by the end of 2027. This will include reducing the Company's overhead costs, addressing the capital cost structure for its drilling, completions, and facility investments, and improving efficiencies of day-to-day field operating practices.

The Company remains committed to its capital return framework for equity holders to participate more directly and materially in cash returns.

•The Company believes returning 60 percent of free cash flow through dividends and share repurchases creates a good balance for providing near-term cash returns to shareholders while still recognizing the importance of longer-term balance sheet strengthening.

•The Company pays a quarterly dividend of $0.25 per share on its common stock.

•Beginning in the fourth quarter of 2021 and through the end of the first quarter of 2025, the Company has repurchased 89.7 million shares of the Company's common stock. Subsequent to the quarter ended March 31, 2025 through April 30, 2025, the Company repurchased 0.6 million shares, and as of April 30, 2025, the Company had remaining authorization to repurchase up to 29.8 million shares under the Company's share repurchase programs.

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Financial and Operational Highlights

In the first quarter of 2025, the Company reported net income attributable to common stock of $347 million, or $0.96 per diluted share, compared to net income of $132 million, or $0.44 per diluted share, in the first quarter of 2024. The increase in net income in the first quarter of 2025, compared to the first quarter of 2024, was primarily driven by increased production from drilling activity in the Permian Basin coupled with the Callon merger, as well as gains on extinguishment of debt. These increases to net income were partially offset by higher depreciation, depletion, and amortization and higher income tax expense compared to the same prior-year period.

The Company generated $1.1 billion of cash from operating activities during the first three months of 2025, 198 percent higher than the first three months of 2024. APA's higher operating cash flows for the first three months of 2025 were primarily driven by higher revenues as a result of increased oil and gas production, higher natural gas realized prices, and timing of working capital items. The Company repurchased 4.4 million shares of its common stock for $100 million and paid $91 million in dividends to APA common stockholders during the first three months of 2025. The Company exited the quarter with approximately $5.2 billion of long-term debt, a reduction of $754 million from year-end 2024.

Key operational highlights include:

United States

•Daily boe production from the Company's U.S. assets, which increased 39 percent from the first quarter of 2024, accounted for 64 percent of the Company's worldwide production during the first quarter of 2025. The Company averaged eight drilling rigs in the Permian Basin, including four rigs in the Southern Midland Basin and four rigs in the Delaware Basin in the first quarter of 2025. The Company brought online 31 operated wells during the quarter. The Company's core Permian Basin development program continues to represent key growth areas for the U.S. assets.

•APA holds approximately 750 MMBtu/d of firm capacity on various pipelines. In the first and second quarters of 2025, the Company entered into basis swap contracts purchasing NYMEX Henry Hub/Waha and selling NYMEX Henry Hub/HSC for May to December 2025 on approximately two-thirds of its firm transport capacity, thereby locking in a significant portion of cash flows associated with its marketing activities for the remainder of the year. Refer to Note 4-Derivative Instruments and Hedging Activities for further discussion of these basis swap agreements.

•During the first quarter of 2025, the Company and its partners announced preliminary results of an exploratory well in Alaska, confirming the successful discovery of a reservoir. A successful flow test of the well was announced in April, with the well averaging 2,700 b/d during the final flow period. The Company will evaluate the data from the well to determine next steps, and further appraisal drilling will determine the ultimate size of the discovery. The Company holds a 50 percent ownership interest in the project.

•In May 2025, the Company entered into an agreement to sell certain non-core assets and leasehold in the Permian Basin, reflecting a full exit from New Mexico, for cash consideration of $608 million, subject to customary post-closing adjustments. The transaction is expected to close late in the second of 2025, and the divested assets represent less than 5 percent of the Company's Permian Basin oil production. The Company intends to use the proceeds from this transaction primarily for debt reduction.

International

•In Egypt, the Company continued its drilling and workover activity with a focus on oil prospects. The Company averaged 13 drilling rigs and drilled 18 new productive wells during the first quarter of 2025. During the same period, the Company averaged 19 workover rigs as it continues to align its drilling and workover activity with a goal of driving improved capital efficiency. First quarter 2025 gross and net production from the Company's Egypt assets decreased 5 percent and increased 3 percent, respectively, from the first quarter of 2024.

•In Egypt, following the success of the gas program and the relative softening of oil prices, the Company now expects one-third of its rig activities to be gas-focused and anticipates continued strong performance for the rest of the year, with realized gas prices increasing through the period.

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Results of Operations

Oil, Natural Gas, and Natural Gas Liquids Production Revenues

Revenue

The Company's production revenues and respective contribution to total revenues by country were as follows:

For the Quarter Ended

March 31,

20252024

$ Value%Contribution$ Value%Contribution

($ in millions)

Oil Revenues:

United States$816 51 %$588 41 %

Egypt(1)

582 36 %657 46 %

North Sea202 13 %187 13 %

Total(1)

$1,600 100 %$1,432 100 %

Natural Gas Revenues:

United States$104 45 %$57 32 %

Egypt(1)

91 39 %77 44 %

North Sea38 16 %42 24 %

Total(1)

$233 100 %$176 100 %

NGL Revenues:

United States$196 95 %$131 94 %

North Sea10 5 %9 6 %

Total(1)

$206 100 %$140 100 %

Oil and Gas Revenues:

United States$1,116 55 %$776 44 %

Egypt(1)

673 33 %734 42 %

North Sea250 12 %238 14 %

Total(1)

$2,039 100 %$1,748 100 %

(1) Includes revenues attributable to a noncontrolling interest in Egypt.

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Production

The Company's production volumes by country were as follows:

For the Quarter Ended

March 31,

2025Increase(Decrease)2024

Oil Volume (b/d)

United States125,124 50%83,520

Egypt(1)(2)

86,173 (1)%86,768

North Sea25,206 (15)%29,795

Total236,503 18%200,083

Natural Gas Volume (Mcf/d)

United States574,736 30%443,737

Egypt(1)(2)

317,209 9%290,227

North Sea31,606 (40)%52,605

Total923,551 17%786,569

NGL Volume (b/d)

United States77,405 37%56,574

North Sea1,144 (19)%1,405

Total78,549 35%57,979

BOE per day(3)

United States298,319 39%214,050

Egypt(1)(2)

139,041 3%135,140

North Sea(4)

31,618 (21)%39,967

Total468,978 21%389,157

(1) Gross oil, natural gas, and NGL production in Egypt were as follows:

For the Quarter Ended March 31,

20252024

Oil (b/d)128,025 137,972

Natural Gas (Mcf/d)456,955 457,248

(2) Includes net production volumes per day attributable to a noncontrolling interest in Egypt of:

For the Quarter Ended March 31,

20252024

Oil (b/d)28,746 28,943

Natural Gas (Mcf/d)105,820 96,814

(3) The table shows production on a boe basis in which natural gas is converted to an equivalent barrel of oil based on a 6:1 energy equivalent ratio. This ratio is not reflective of the price ratio between the two products.

(4) Average sales volumes from the North Sea for the first quarters of 2025 and 2024 were 36,704 boe/d and 35,078 boe/d, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings.

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Pricing

The Company's average selling prices by country were as follows:

For the Quarter Ended

March 31,

2025Increase(Decrease)2024

Average Oil Price - Per barrel

United States$72.45 (6)%$77.37

Egypt75.06 (10)%83.18

North Sea75.30 (9)%82.81

Total73.73 (9)%80.65

Average Natural Gas Price - Per Mcf

United States$2.00 41%$1.42

Egypt3.19 9%2.93

North Sea14.96 62%9.23

Total2.81 14%2.47

Average NGL Price - Per barrel

United States$28.12 11%$25.38

North Sea51.39 4%49.37

Total28.75 10%26.20

First-Quarter 2025 compared to First-Quarter 2024

Crude Oil Crude oil revenues for the first quarter of 2025 totaled $1.6 billion, a $168 million increase from the comparative 2024 quarter. An 18 percent higher average daily production increased first-quarter 2025 oil revenues by $291 million compared to the first quarter of 2024, while a 9 percent decrease in average realized prices decreased revenues by $123 million. Crude oil revenues accounted for 79 percent of total oil and gas production revenues and 50 percent of worldwide production in the first quarter of 2025. Crude oil prices realized in the first quarter of 2025 averaged $73.73 per barrel, compared with $80.65 per barrel in the comparative prior-year quarter.

The Company's worldwide oil production increased 36.4 Mb/d to 236.5 Mb/d during the first quarter of 2025 from the comparative prior-year period, primarily a result of increased drilling activity in the Permian Basin coupled with the Callon acquisition. These increases were partially offset by natural production decline in the U.S. and North Sea and the sale of non-core assets in the U.S. at the end of 2024.

Natural Gas Natural gas revenues for the first quarter of 2025 totaled $233 million, a $57 million increase from the comparative 2024 quarter. A 17 percent higher average daily production increased first-quarter 2025 natural gas revenues by $33 million compared to the first quarter of 2024, while a 14 percent increase in average realized prices increased revenues by $24 million. Natural gas revenues accounted for 11 percent of total oil and gas production revenues and 33 percent of worldwide production during the first quarter of 2025.

The Company's worldwide natural gas production increased 137.0 MMcf/d to 923.6 MMcf/d during the first quarter of 2025 from the comparative prior-year period, primarily a result of increased drilling activity in Egypt and the Permian Basin coupled with the Callon acquisition in the U.S. Natural gas production was also higher as a result of reduced volume curtailments at Alpine High compared with the 2024 period in response to extreme Waha basis differentials. These increases were partially offset by natural production decline in the U.S. and North Sea and the sale of non-core assets and operational downtime in the U.S.

NGL NGL revenues for the first quarter of 2025 totaled $206 million, a $66 million increase from the comparative 2024 quarter. A 35 percent higher average daily production increased first-quarter 2025 NGL revenues by $53 million compared to the first quarter of 2024, while a 10 percent increase in average realized prices increased revenues by $13 million. NGL revenues accounted for 10 percent of total oil and gas production revenues and 17 percent of worldwide production during the first quarter of 2025.

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The Company's worldwide NGL production increased 20.6 Mb/d to 78.5 Mb/d during the first quarter of 2025 from the comparative prior-year period, primarily a result of increased drilling activity in the Permian Basin coupled with the Callon acquisition. NGL production was also higher as a result of reduced volume curtailments at Alpine High compared with the 2024 period in response to extreme Waha basis differentials. These increases were partially offset by natural production decline, the sale of non-core assets, and operational downtime in the U.S.

Purchased Oil and Gas Sales

Purchased oil and gas sales represent volumes primarily attributable to domestic oil and gas purchases that were sold by the Company to fulfill oil and natural gas takeaway obligations and delivery commitments. Sales related to purchased volumes totaled $597 million and $203 million during the first quarters of 2025 and 2024, respectively. Purchased oil and gas sales were partially offset by associated purchase costs of $474 million and $163 million during the first quarters of 2025 and 2024, respectively. The increase in purchased oil and gas sales was primarily driven by higher oil volume sales and higher gas prices, as well as activity associated with the Callon acquisition.

Operating Expenses

The Company's operating expenses were as follows and include costs attributable to a noncontrolling interest in Egypt:

For the Quarter Ended

March 31,

20252024

(In millions)

Lease operating expenses$407 $338

Gathering, processing, and transmission104 84

Purchased oil and gas costs474 163

Taxes other than income74 57

Exploration30 148

General and administrative98 93

Transaction, reorganization, and separation37 27

Depreciation, depletion, and amortization:

Oil and gas property and equipment636 419

Gathering, processing, and transmission assets1 2

Other assets6 9

Asset retirement obligation accretion39 40

Financing costs, net(57)76

Total Operating Expenses$1,849 $1,456

Lease Operating Expenses (LOE)

LOE increased $69 million from the first quarter of 2024. On a per-unit basis, LOE remained relatively flat in the first quarter of 2025 when compared to the first quarter of 2024. The increase in absolute costs was primarily driven by higher operating and labor costs coupled with higher workover activity, primarily from the Callon acquisition, and increased lifting costs in the North Sea. These increases were partially offset by the sale of non-core assets in the Permian Basin and changes in foreign exchange rates against the US dollar.

Gathering, Processing, and Transmission (GPT)

The Company's GPT expenses were as follows:

For the Quarter Ended

March 31,

20252024

(In millions)

Third-party processing and transmission costs$104 $61

Midstream service costs - Kinetik- 23

Total Gathering, processing, and transmission

$104 $84

GPT costs increased $20 million from the first quarter of 2024, primarily driven by an increase in oil, natural gas and NGL production volumes in the U.S. and increased lifting costs in the North Sea compared to the same prior-year period.

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Purchased Oil and Gas Costs

Purchased oil and gas costs increased $311 million from the first quarter of 2024, primarily driven by increased oil volume purchases and gas volumes purchased at a higher rate coupled with activity associated with the Callon acquisition. With widening margins under third-party gas agreements, purchased oil and gas costs were more than offset by associated sales to fulfill oil and natural gas takeaway obligations and delivery commitments in the first quarter of 2025, as discussed above.

Taxes Other Than Income

Taxes other than income increased $17 million from the first quarter of 2024, primarily from higher severance taxes driven by increased production volumes in the U.S. and higher ad valorem taxes, compared to the same prior-year period.

Exploration Expenses

The Company's exploration expenses were as follows:

For the Quarter Ended

March 31,

20252024

(In millions)

Unproved leasehold impairments$- $10

Dry hole expense11 123

Geological and geophysical expense4 1

Exploration overhead and other15 14

Total Exploration$30 $148

Exploration expenses decreased $118 million from the first quarter of 2024, primarily the result of higher dry hole expenses in Alaska and unproved leasehold impairments in the first quarter of 2024 compared to the current-year period.

General and Administrative (G&A) Expenses

G&A expenses increased $5 million from the first quarter of 2024, primarily driven by higher cash-based stock compensation expense resulting from changes in expected payouts for the Company's performance program, as well as higher labor costs from the Callon acquisition.

Transaction, Reorganization, and Separation (TRS) Costs

TRS costs increased $10 million from the first quarter of 2024, primarily associated with employee separations and other cost-saving initiatives.

Depreciation, Depletion, and Amortization (DD&A)

Total DD&A expenses increased $213 million from the first quarter of 2024, primarily driven by depletion on the Company's oil and gas properties. The Company's DD&A rate on its oil and gas properties increased $2.91 per boe from the first quarter of 2024. The increase in DD&A on a per boe basis was driven by year-end 2024 negative gas price-related reserve revisions in the U.S. Permian Basin coupled with higher DD&A rates resulting from the Callon acquisition. Higher absolute dollar amounts of DD&A was directly impacted by these higher rates.

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Financing Costs, Net

The Company's Financing costs were as follows:

For the Quarter Ended

March 31,

20252024

(In millions)

Interest expense$91 $85

Amortization of debt issuance costs2 1

Capitalized interest(4)(7)

Gain on extinguishment of debt

(142)-

Interest income(4)(3)

Total Financing costs, net$(57)$76

Net financing costs decreased $133 million from the first quarter of 2024, reflecting gains on extinguishment of debt from the Company's cash tender purchases during the first quarter of 2025, partially offset by higher interest expense from higher weighted-average interest rates, compared to the same prior-year period.

Provision for 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 three months ended March 31, 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 three months ended March 31, 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.

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.

Capital Resources and Liquidity

Operating cash flows are the Company's primary source of liquidity. The Company's short-term and long-term operating cash flows are impacted by highly volatile commodity prices, as well as production costs and sales volumes. The Company expects commodity prices to continue to be volatile in the near term as a result of macroeconomic uncertainty, current and potential tariffs or trade barriers, supply chain disruptions, and concerns over a potential economic recession. Significant changes in commodity prices impact the Company's revenues, earnings, and cash flows. These changes potentially impact the Company's liquidity if costs do not trend with sustained decreases in commodity prices. Historically, costs have trended with commodity prices, albeit on a lag. Sales volumes also impact cash flows; however, they have a less volatile impact in the short term.

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The Company's long-term operating cash flows are dependent on reserve replacement and the level of costs required for ongoing operations. Cash investments are required to fund activity necessary to offset the inherent declines in production and proved crude oil and natural gas reserves. Future success in maintaining and growing reserves and production is highly dependent on the success of the Company's drilling program and its ability to add reserves economically. Changes in commodity prices also impact estimated quantities of proved reserves.

At this time, the Company is unable to predict to what extent recent and potential changes in trade restrictions and tariffs will impact its business. If inflationary pressures from these and other economic conditions persist or worsen, the Company may incur additional operating costs. The Company will continue to monitor the impact and consequences of these factors on its operations.

The Company expects its full-year 2025 estimated upstream capital investment to be approximately $2.2 billion to $2.3 billion. Given the scale and pace of efficiency gains in the Permian drilling program, the Company is reducing its current eight-rig program to six rigs by the end of the second quarter of 2025. The Company is planning a 12-rig program in Egypt, with one rig dedicated to gas appraisal and exploration. This activity set equates to a combined development capital budget for the Permian Basin, Egypt, and North Sea of $2.0 billion to $2.1 billion. In addition, the Company will invest approximately $200 million for Suriname development and $75 million for other exploration activities. APA remains committed to its capital return framework for equity holders to participate more directly and materially in cash returns through dividends and share repurchases.

The Company believes its available liquidity and capital resource alternatives, combined with proactive measures to adjust its capital budget to reflect volatile commodity prices and anticipated operating cash flows, will be adequate to fund short-term and long-term operations, including the Company's capital development program, repayment of debt maturities, payment of dividends, share buy-back activity, and amounts that may ultimately be paid in connection with commitments and contingencies.

The Company may also elect to utilize available cash on hand, committed borrowing capacity, access to both debt and equity capital markets, or proceeds from the sale of nonstrategic assets for all other liquidity and capital resource needs.

For additional information, refer to Part I, Items 1 and 2-Business and Properties, and Item 1A-Risk Factors, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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Sources and Uses of Cash

The following table presents the sources and uses of the Company's cash and cash equivalents for the periods presented:

For the Three Months Ended

March 31,

20252024

(In millions)

Sources of Cash and Cash Equivalents:

Net cash provided by operating activities$1,096 $368

Fixed-rate debt borrowings846 -

Proceeds from commercial paper and revolving credit facilities, net

433 -

Proceeds from asset divestitures- 27

Proceeds from sale of Kinetik Shares

• 428

Total Sources of Cash and Cash Equivalents2,375 823

Uses of Cash and Cash Equivalents:

Additions to upstream oil and gas property$777 $467

Leasehold and property acquisitions13 63

Payments on commercial paper and revolving credit facilities, net

• 2

Payments on term loan facility

900 -

Payments on fixed-rate debt

905 -

Dividends paid to APA common stockholders91 76

Distributions to noncontrolling interest

126 70

Treasury stock activity, net100 101

Other, net21 29

Total Uses of Cash and Cash Equivalents2,933 808

Increase (Decrease) in Cash and Cash Equivalents

$(558)$15

Sources of Cash and Cash Equivalents

Net Cash Provided by Operating Activities Operating cash flows are the Company's primary source of capital and liquidity and are impacted, both in the short term and the long term, by volatile commodity prices. The factors that determine operating cash flows are largely the same as those that affect net earnings, with the exception of non-cash expenses such as DD&A, exploratory dry hole expense, asset impairments, asset retirement obligation accretion, and deferred income tax expense.

Net cash provided by operating activities during the first three months of 2025 totaled $1.1 billion, $728 million higher from the first three months of 2024, primarily due to higher revenues from increased oil and gas production, higher natural gas prices, and timing of working capital items.

For a detailed discussion of commodity prices, production, and operating expenses, refer to "Results of Operations" in this Item 2. For additional detail on the changes in operating assets and liabilities and the non-cash expenses that do not impact net cash provided by operating activities, refer to the Statement of Consolidated Cash Flows in the Consolidated Financial Statements set forth in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q.

Fixed-Rate Debt Borrowings During the first three months of 2025, the Company issued new notes for proceeds of $846 million, after deducting discounts and loan costs, to fund in part APA's purchase of Apache notes in APA's cash tender offers.

Proceeds from Commercial Paper and Revolving Credit Facilities, Net As of March 31, 2025, outstanding borrowings under the Company's commercial paper and U.S. dollar denominated syndicated credit facility were $766 million, an increase of $433 million since December 31, 2024. During the first three months of 2024, the Company had no net borrowings under the Company's U.S. dollar denominated syndicated credit facility.

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Uses of Cash and Cash Equivalents

Additions to Oil & Gas Property During the first three months of 2025 and 2024, exploration and development cash expenditures were $777 million and $467 million, respectively. The increase in capital investment compared to the prior-year period is reflective of the properties acquired from the Callon acquisition, which increased the number of drilling rigs being operated in the Permian Basin, partially offset by the Company's decision to eliminate drilling activity in the North Sea. The Company operated an average of approximately 22 drilling rigs during the first three months of 2025, compared to an average of approximately 23 drilling rigs during the first three months of 2024.

Leasehold and Property Acquisitions During the first three months of 2025 and 2024, the Company completed other leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $13 million and $63 million, respectively.

Payments on Term Loan Facility During the first three months of 2025, the Company made a payment of $900 million on its syndicated term loan credit agreement and fully repaid the term loans. For additional details of this credit agreement, see "Unsecured Committed Term Loan Facility" in the Liquidity section below.

Payments on Fixed-Rate Debt During the first three months of 2025, the Company settled its private exchange and cash tender offers for certain notes and debentures of Apache and made open market repurchases for an aggregate cash payment amount of $905 million, reflecting principal amounts, discount to par, and associated fees.

The Company may, and expects that Apache will continue to, reduce debt outstanding under its indentures from time to time.

Dividends Paid to APA Common Stockholders During the first three months of 2025 and 2024, the Company paid $91 million and $76 million, respectively, for dividends on its common stock.

Distributions to Noncontrolling Interest Sinopec International Petroleum Exploration and Production Corporation (Sinopec) holds a one-third minority participation interest in the Company's oil and gas operations in Egypt. During the first three months of 2025 and 2024, the Company paid $126 million and $70 million, respectively, in cash distributions to Sinopec.

Treasury Stock Activity, net In the first three months of 2025, the Company repurchased 4.4 million shares at an average price of $22.87 per share and an aggregate purchase price of approximately $100 million, and as of March 31, 2025, the Company had remaining authorization to repurchase 30.4 million shares. In the first three months of 2024, the Company repurchased 3.0 million shares at an average price of $33.27 per share and an aggregate purchase price of approximately $101 million.

Liquidity

The following table presents a summary of the Company's key financial indicators:

March 31,

2025

December 31,

2024

(In millions)

Cash and cash equivalents$67 $625

Total debt - APA and Apache5,368 6,044

Total equity6,463 6,362

Available committed borrowing capacity under syndicated credit facilities2,936 2,966

Cash and Cash Equivalents As of March 31, 2025, the Company had $67 million in cash and cash equivalents. The majority of the Company's cash is invested in highly liquid, investment-grade instruments with maturities of three months or less at the time of purchase.

Debt As of March 31, 2025, the Company had $5.4 billion in total debt outstanding, which consisted of notes and debentures of APA and Apache, credit facility and/or commercial paper borrowings, and finance lease obligations. As of March 31, 2025, current debt included $2 million of finance lease obligations and $129 million of APA and Apache notes coming due within the next year.

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Indenture Debt Activity During the quarter ended March 31, 2025, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $55 million for an aggregate purchase price of $50 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $7 million. The Company recognized a $7 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.

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 are fully and unconditionally guaranteed by Apache until the first time that the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache's existing indentures is less than $1 billion.

•APA entered into two registration rights agreements, one covering notes and debentures issued in APA's exchange and tender offers and one covering notes issued in APA's new notes offering (each a Registration Rights Agreement). These offerings were not registered under the Securities Act of 1933, as amended (Securities Act), in reliance upon an exemption therefrom, and the APA notes and debentures issued pursuant to such offers are subject to certain transfer restrictions. Each Registration Rights Agreement requires APA (and if applicable, Apache) 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 and guaranteed, if applicable, by Apache containing terms substantially identical in all material respects to the applicable series of APA notes issued in settlement of the exchange and tender offers or new notes offering (except that the registered notes will not contain terms with respect to transfer restrictions or any increase in annual interest rate) and (ii) cause such registration statement to become effective under the Securities Act. If, among other events, such exchange offers are not completed on or prior to the 360th day following January 10, 2025, then additional interest will accrue at specified rates on the principal amount of such registrable securities.

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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 has guaranteed obligations under each of the 2025 USD Agreement and 2025 GBP Agreement (each, a 2025 Agreement) effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache's existing indentures first is less than US$1.0 billion.

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 March 31, 2025, there were no borrowings under the 2025 USD Agreement and an aggregate £183 million in letters of credit outstanding under the 2025 GBP Agreement. As of March 31, 2025, there were no letters of credit outstanding under the 2025 USD Agreement. As of December 31, 2024, there were $10 million of borrowings under the 2022 USD Agreement and an aggregate £303 million in letters of credit outstanding under the 2022 GBP Agreement. As of December 31, 2024, there were no letters of credit outstanding under the 2022 USD 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 March 31, 2025 and December 31, 2024, there were no outstanding borrowings under these facilities. As of March 31, 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 In December 2023, the Company established a commercial paper program under which it from time to time may issue in private placements exempt from registration under the Securities Act short-term unsecured promissory notes (CP Notes) up to a maximum aggregate face amount of $1.8 billion outstanding at any time. The maturities of CP Notes may vary but may not exceed 397 days from the date of issuance. Outstanding CP Notes are supported by available borrowing capacity under the Company's committed revolving credit facilities for general corporate purposes, which as of March 31, 2025, included the $2.0 billion 2025 USD Agreement.

Payment of CP Notes has been unconditionally guaranteed on an unsecured basis by Apache, such guarantee effective until the first time that the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache's existing indentures is less than US$1.0 billion.

The CP Notes are sold under customary market terms in the U.S. commercial paper market at a discount from par or at par and bear interest at rates determined at the time of issuance.

As of March 31, 2025 and December 31, 2024, the Company had $765 million and $323 million, respectively, in aggregate face amount of CP Notes outstanding, which is classified as long-term debt.

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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.

Off-Balance Sheet Arrangements The Company enters into customary agreements in the oil and gas industry for drilling rig commitments, firm transportation agreements, and other obligations that may not be recorded on the Company's consolidated balance sheet. For more information regarding these and other contractual arrangements, please refer to "Contractual Obligations" in Part II, Item 7 of APA's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes to the contractual obligations described therein.

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.

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As of March 31, 2025, the Company recorded an asset of $40 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 March 31, 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.

During the first quarter of 2024, the Company recognized a $66 million loss for estimated decommissioning costs on GOA properties previously sold to Fieldwood and other GOA operators.