APA Corporation
Energy · Oil & Gas Exploration & Production
Structural: Four-leg E&P - Permian Delaware (Callon-enlarged, ~67% of US production), Egypt Western Desert PSC (cost-recovery oil, decades of resource), UK North Sea (mature, in harvest mode), and Suriname Block 58 GranMorgu development with $TTE as operator (45% APA / 50% $TTE / 5% Staatsolie, ~220 kbpd peak, 2028 first oil).
Capital allocation tilted toward Permian short-cycle + Suriname long-cycle, returning ~60%+ of FCF via buyback + base dividend.
- Suriname Block 58 GranMorgu sanction de-risks a multi-decade offshore growth leg with proven operator $TTE
- Permian Delaware scale post-Callon supports flat-to-growing US oil at sub-$50 breakevens
- Egypt PSC mechanics make the international leg structurally more cash-generative as Brent rises
- Net debt reduction trajectory + buyback authorization shrinks share count into the cycle
- Trades at sub-3x EV/EBITDA on strip, deep discount to large-cap E&P peers $XOM $CVX $EOG
- Egypt receivables overhang + currency redenomination risk historically capped multiple
- North Sea windfall taxes (EPL extended) compress UK cash flow through 2030
- Suriname capex commitment (~$3B net to APA) front-loads spend before 2028 first oil
- Oil-levered cash flow → high beta to Brent below $65, where buyback pace slows
- Callon integration brought leverage above peer average, constrains optionality in a downturn
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