Fiscal Year Market Risk Developments
The following summarizes developments and changes in APA Corp's market risk profile disclosed during the first quarter of 2026, relative to the annual baseline established on December 31, 2025.
Commodity Price Exposure Changes
Quantitative metrics regarding commodity price exposure have significantly shifted since the end of the previous fiscal year:
Quantitative Sensitivity and Derivative Liability
- Revenue Sensitivity: The reported sensitivity for crude oil has decreased from an impact of approximately $\pm$87 million per $1 change (as of 12/31/2025) to a quarterly impact of approximately $\pm$21 million per $1 change (as of 03/31/2026).
- Non-Hedged Liability: The liability associated with open natural gas derivatives, which are not designated as cash flow hedges, increased from $77 million to $122 million.
Price Movement Trends
The realized average prices for core commodities experienced notable shifts in the first quarter of 2026:
- Crude Oil: Prices reversed their previous trend, increasing by 7% (from $73.73/bbl to $78.69/bbl).
- Natural Gas and NGLs: Both commodity prices decreased substantially, with Natural Gas declining by 25% and NGLs decreasing by 27%.
Interest Rate Profile Adjustments
The company's debt structure and short-term financial exposures were updated:
Debt Structure and Variable Exposure
- Debt Load: The net outstanding notes and debentures decreased slightly from $4.5 billion to $4.4 billion, with the weighted average interest rate adjusting marginally from 5.66% to 5.62%.
- Short-Term Investments: Specific details were provided regarding variable exposure, quantifying short-term investments at $293 million (93% held in money market funds), replacing the general "immaterial" assessment from the annual filing.
- Borrowing Status: The disclosure confirmed that the company currently has no outstanding borrowings under its term loan facility, commercial paper program, or syndicated revolving credit facilities.
Foreign Currency Risk Quantification
The management of currency risk was refined with updated notional amounts and quantified downside risk:
Hedging Strategy Updates
- FX Contract Notional: The total notional amount of foreign exchange contracts held to mitigate British pound (GBP) exposure decreased from £120 million to £108 million.
- Downside Risk Quantification: A specific potential loss was quantified, noting that a 10% weakening of the British pound against the U.S. dollar would result in a $14 million loss on its decommissioning hedges.