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What changed in APA Corporation's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of APA Corporation's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+358 added−413 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in APA Corporation's 2023 10-K

358 paragraphs added · 413 removed · 257 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

105 edited+26 added−77 removed33 unchanged
Biggest changeThese factors include demand, which fluctuates with changes in market and economic conditions, and other factors, including: • worldwide and domestic supplies and/or inventories of crude oil, natural gas, and NGLs; • actions taken by foreign oil and gas producing nations, including the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members that participate in OPEC initiatives (OPEC+); • political conditions and events (including instabilities, changes in governments, or armed conflicts) in oil and gas producing regions; • the occurrence of global events, such as epidemics or pandemics (including, specifically, the COVID-19 pandemic), and the actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors, and suppliers, in response to such epidemics or pandemics; • the price and level of imported foreign or exported domestic crude oil, natural gas, and NGLs, including as a result of the availability of facilities that process, import, or export such products; • increasing inflationary pressure; 18 • the price and availability of alternative fuels, including coal and biofuels; • increased competitiveness of, and demand for, alternative energy sources; • technological advances affecting energy supply and energy consumption, including those that alter fuel choices; • the availability of pipeline capacity and infrastructure; • the availability of crude oil transportation and refining capacity; • weather conditions; • the impact of political pressure and the influence of environmental groups and other stakeholders on decisions and policies related to the industries in which the Company and its affiliates operate, including with respect to environmental, social, and governance matters; • domestic and foreign governmental regulations and taxes, including legislative, regulatory, and policy changes or initiatives to address the impacts of global climate change, hydraulic fracturing, methane emissions, flaring, or water disposal; and • the overall economic environment.
Biggest changeThese factors include demand, which fluctuates with changes in market and economic conditions, and other factors, including: • worldwide and domestic supplies and/or inventories of crude oil, natural gas, and NGLs and the availability of related pipeline, transportation, import/export, and refining capacity and infrastructure; • actions taken by foreign oil and gas producing nations, including the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members that participate in OPEC initiatives (OPEC+); • political conditions and events in oil and gas producing regions, including instabilities, changes in governments, or armed conflicts, such as the Russian war in Ukraine and the armed conflict in Israel and Gaza; • the price, competitiveness, decision to use, and availability of alternative fuels and energy sources, including coal, biofuels, and renewables; • increased competitiveness of, and demand for, alternative energy sources; • technological advances affecting energy supply and energy consumption, including those that alter fuel choices; • the availability of pipeline capacity and infrastructure; • the availability of crude oil transportation and refining capacity; • weather conditions; • the impact of political pressure and the influence of environmental groups, investors, and other stakeholders on decisions and policies related to the oil and gas industry, including with respect to environmental, social, and governance matters; • domestic and foreign governmental regulations and taxes, including changes or initiatives to address the impacts of global climate change, hydraulic fracturing, methane emissions, flaring, or water disposal; and • the overall economic environment, including rates of growth and increasing inflationary pressure.
In addition, the Company’s exploration, development, and production activities and equipment have been and can be adversely affected by severe weather, such as freezing temperatures, hurricanes in the Gulf of Mexico, or major storms in the North Sea, which have previously caused and may cause a loss of production from temporary cessation of activity or lost or damaged equipment.
In addition, the Company’s exploration, development, and production activities and equipment have been and can be adversely affected by severe weather, such as freezing temperatures, hurricanes in the Gulf of Mexico, or major storms in the North Sea, each of which have previously caused and may cause a loss of production from temporary cessation of activity or lost or damaged equipment.
In addition, Delaware law imposes restrictions on mergers and other business combinations between the Company and any holder of 15 percent or more of APA’s outstanding common stock. These provisions may deter hostile takeover attempts that could result in an acquisition of the Company that would have been financially beneficial to APA’s shareholders. 31
In addition, Delaware law imposes restrictions on mergers and other business combinations between the Company and any holder of 15 percent or more of APA’s outstanding common stock. These provisions may deter hostile takeover attempts that could result in an acquisition of the Company that would have been financially beneficial to APA’s shareholders.
The Company’s planning for normal climatic variation, insurance programs, and emergency recovery plans may inadequately mitigate the effects of such weather conditions, and not all such effects can be predicted, eliminated, or insured against. 20 The Company’s insurance policies do not cover all of the risks the Company faces, which could result in significant financial exposure.
The Company’s planning for normal climatic variation, insurance programs, and emergency recovery plans may inadequately mitigate the effects of such weather conditions, and not all such effects can be predicted, eliminated, or insured against. The Company’s insurance policies do not cover all of the risks the Company faces, which could result in significant financial exposure.
Any such legislation, regulations, or other regulatory initiatives, if enacted, or additional or increased taxes, assessments, or GHG-related fees on the Company’s operations could lead to increased operating expenses or cause the Company to make significant capital investments for infrastructure modifications. Enhanced focus on ESG matters could have an adverse effect on the Company’s operations.
Any such legislation, regulations, or other regulatory initiatives, if enacted, or additional or increased taxes, assessments, or GHG-related fees on the Company’s operations could lead to increased operating expenses or cause the Company to make significant capital investments for infrastructure modifications. 26 Enhanced focus on ESG matters could have an adverse effect on the Company’s operations.
Uncertainty surrounding military strikes or a sustained military campaign may affect operations in unpredictable 30 ways, including disruptions of fuel supplies and markets, particularly oil, and the possibility that infrastructure facilities, including pipelines, production facilities, processing plants, and refineries, could be direct targets or indirect casualties of an act of terror or war.
Uncertainty surrounding military strikes or a sustained military campaign may affect operations in unpredictable ways, including disruptions of fuel supplies and markets, particularly oil, and the possibility that infrastructure facilities, including pipelines, production facilities, processing plants, and refineries, could be direct targets or indirect casualties of an act of terror or war.
The Company may be required to incur significant costs in the future to safeguard its assets against terrorist activities. A deterioration of conditions in Egypt or changes in the economic and political environment in Egypt could have an adverse impact on the Company’s business.
The Company may be required to incur significant costs in the future to safeguard its assets against terrorist activities. A further deterioration of conditions in Egypt or changes in the economic and political environment in Egypt could have an adverse impact on the Company’s business.
Previous legislative proposals, if enacted into law, could make significant changes to such laws, including the elimination of certain key U.S. federal income tax incentives currently available to oil and gas E&P companies.
Previous legislative proposals, if enacted into law, could make significant changes to tax laws, including the elimination of certain key U.S. federal income tax incentives currently available to oil and gas E&P companies.
Given the dynamic nature of the Company’s business, the Company generally performs annual scenario analyses with five-year time horizons. When analyzing longer-term TCFD scenarios, the Company relies on external analysis for demand scenarios, carbon pricing, and comparison-pricing scenarios, which are then compared to the Company’s internally 28 prepared base-case pricing analysis averaged out to 2040.
Given the dynamic nature of the Company’s business, the Company generally performs annual scenario analyses with five-year time horizons. When analyzing longer-term scenarios, the Company relies on external analysis for demand scenarios, carbon pricing, and comparison-pricing scenarios, which are then compared to the Company’s internally prepared base-case pricing analysis averaged out to the year 2040.
The financial markets are subject to fluctuation and are vulnerable to unpredictable shocks. The Company has a significant development project inventory and an extensive exploration portfolio, which will require substantial future investment. The Company and/or its partners may need to seek financing to fund these or other future activities.
The financial markets are subject to fluctuation and are vulnerable to unpredictable swings. The Company has a significant development project inventory and an extensive exploration portfolio, which will require substantial future investment. The Company and/or its partners may need to seek financing to fund these or other future activities.
The Company’s future access to capital, as well as that of its partners and contractors, could be limited if the debt or equity markets are constrained. This could significantly delay development of the Company’s property interests. 24 The Company’s syndicated credit facilities currently mature in April 2027.
The Company’s future access to capital, as well as that of its partners and contractors, could be limited if the debt or equity markets are constrained. This could significantly delay development of the Company’s property interests. The Company’s syndicated revolving credit facilities currently mature in April 2027.
These developments could adversely impact the demand for products powered by or manufactured with hydrocarbons and the demand for the Company’s, and in turn the prices it receives for its, crude oil, natural gas, and NGL products, which could materially and adversely affect the Company’s business and financial performance.
These developments could adversely impact the demand for products powered by or manufactured with hydrocarbons and the demand for, and in turn the prices the Company receives for, its crude oil, natural gas, and NGL products, which could materially and adversely affect the Company’s business and financial performance.
The Company’s operations rely on its workforce having access to its wells, platforms, structures, offices, and facilities.
Additionally, the Company’s operations rely on its workforce having access to its wells, platforms, structures, offices, and facilities.
Additionally, there has been discussion in other countries where the Company operates, including the U.S., regarding legislation or regulation of GHGs, including to monitor and limit existing emissions of GHGs and to restrict or eliminate future emissions.
Additionally, there has been discussion in other countries where the Company operates, including the U.S., regarding changes in legislation or heightened regulation of GHGs, including to monitor and limit existing emissions of GHGs and to restrict or eliminate future emissions.
Negative public perception could cause the permits the Company requires to conduct its operations to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct its business. The Company’s estimates used in various scenario planning analyses could differ materially from actual results and could expose the Company to new or additional risks.
Negative public perception could cause the permits or regulatory approvals the Company requires to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct its business. The Company’s estimates used in various scenario planning analyses could differ materially from actual results and could expose the Company to new or additional risks.
In addition, a number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to influence change in the business strategies in oil and gas companies, including through the investment and voting practices of investment advisers, public pension funds, universities, and other members of the investing community.
In addition, a number of advocacy groups have campaigned for governmental and private action to influence change in the business strategies of oil and gas companies, including through the investment and voting practices of investment advisers, public pension funds, universities, and other members of the investing community.
RISKS RELATED TO OPERATIONS AND DEVELOPMENT PROJECTS The Company’s operations involve a high degree of operational risk, particularly risk of personal injury, damage to or loss of equipment, and environmental accidents.
RISKS RELATED TO OPERATIONS AND DEVELOPMENT PROJECTS The Company’s operations involve a high degree of operational risk, particularly risk of personal injury, damage to or loss of property, and environmental accidents.
Deterioration in the political, economic, and social conditions or other relevant policies of the Egyptian government, such as changes in laws or regulations, export restrictions, expropriation of the Company’s assets or resource nationalization, and/or forced renegotiation or modification of the Company’s existing contracts with Egyptian General Petroleum Corporation (EGPC), or threats or acts of terrorism could materially and adversely affect the Company’s business, financial condition, and results of operations.
Further deterioration in the political, economic, and social conditions or other relevant policies of the Egyptian government, such as changes in laws or regulations, export restrictions, expropriation of the Company’s assets or resource nationalization, and/or forced renegotiation or modification of the Company’s existing contracts with Egyptian General Petroleum Corporation (EGPC), or threats or acts of terrorism could materially and adversely affect the Company’s business and operations.
This focus, together with shifting preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in increased availability of, and demand for, energy sources other than oil and natural gas, including wind, solar, and hydroelectric power; technological advances with respect to the generation, transmission, storage, and consumption of alternative energy sources; and development of, and increased demand from consumers and industries for, lower-emission products and services, including electric vehicles and renewable residential and commercial power supplies, as well as more energy-efficient products and services.
This focus, together with shifting preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in increased availability of, and demand for, energy sources other than oil and natural gas, including wind, solar, and hydroelectric power, and the development of, and increased demand from consumers and industries for, lower-emission products and services, including electric vehicles and renewable residential and commercial power supplies, as well as more energy-efficient products and services.
These changes include, but are not limited to, (i) the repeal of the percentage depletion allowance for oil and gas properties, (ii) the elimination of current deductions for intangible drilling and development costs, and (iii) an extension of the amortization period for certain geological and geophysical expenditures.
These changes include, but are not limited to, the repeal of the percentage depletion allowance for oil and gas properties, the elimination of current deductions for intangible drilling and development costs, and an extension of the amortization period for certain geological and geophysical expenditures.
There is risk that the other parties to these arrangements may have economic, business, or legal interests or goals that are inconsistent with the Company’s, and, therefore, decisions may be made that the Company does not believe are in its best interest.
The other parties to these arrangements may have economic, business, or legal interests or goals that are inconsistent with the Company’s, and, therefore, decisions may be made that the Company does not believe are in its best interest.
A change in future development plans for proved undeveloped reserves could cause the discontinuation of the classification of these reserves as proved. 22 Certain of the Company’s undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage.
A change in future development plans for proved undeveloped reserves could cause the discontinuation of the classification of these reserves as proved. Certain of the Company’s undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage. A sizeable portion of the Company’s acreage is currently undeveloped.
The Company’s drilling plans for these areas are subject to change based upon various factors, including drilling results, commodity prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, gathering system and pipeline transportation constraints, and regulatory approvals. RISKS RELATED TO COUNTERPARTIES The credit risk of financial institutions could adversely affect the Company.
The Company’s drilling plans for these areas are subject to change based upon various factors, including drilling results, commodity prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, gathering system and pipeline transportation constraints, and regulatory approvals. 22 RISKS RELATED TO COUNTERPARTIES The credit risk of financial institutions could adversely affect the Company and result in a significant loss.
RISKS RELATED TO CLIMATE CHANGE The impacts of energy transition could adversely affect the Company’s business, operating results, and financial condition. 27 In recent years, increasing attention has been given to corporate activities related to climate change and energy transition.
Any such changes could adversely affect the Company’s business, financial condition, and results of operations. RISKS RELATED TO CLIMATE CHANGE The impacts of energy transition could adversely affect the Company’s business, operating results, and financial condition. In recent years, increasing attention has been given to corporate activities related to climate change and energy transition.
Furthermore, the bankruptcy of one or more of the Company’s hedge providers or some other similar proceeding or liquidity constraint might make it unlikely that the Company would be able to collect all or a significant portion of amounts owed to it by the distressed entity or entities.
Furthermore, the bankruptcy of one or more of the Company’s counterparties or some other similar proceeding or liquidity constraint might make it unlikely that the Company would be able to collect all or a significant portion of amounts owed to it by the distressed entity or entities, and the Company could incur a significant loss.
These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution cleanup and other remediation activities resulting from operations, subject the lessee to liability for pollution and other damages, limit or constrain operations in affected areas, and require suspension or cessation of operations in affected areas.
These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution cleanup and other remediation activities resulting from operations, subject the lessee to liability for pollution and other damages, limit or constrain operations in affected areas, require significant capital expenditures to comply with increasingly strict environmental laws and regulations, and require suspension or cessation of operations in affected areas.
While certain of the Company’s insurance policies may allow for coverage of associated damages resulting from such events, if the Company were to incur a significant liability for which it was not fully insured, that could have a material adverse effect on the Company’s financial position, results of operations, and cash flows.
While certain of the Company’s insurance policies may provide coverage for such events, if the Company were to incur a significant liability for which it was not fully insured, then it could have a material adverse effect on the Company’s financial position, results of operations, and cash flows.
Drilling for oil and gas involves numerous risks, including the risk that the Company will not encounter commercially productive oil or gas reservoirs. The wells the Company drills or participates in may not be productive, and the Company may not recover all or any portion of its investment in those wells.
Drilling for oil and gas involves numerous risks, including that the Company may not encounter commercially productive oil or gas reservoirs or may not recover all or any portion of its investment in the wells it drills.
As a result, a significant portion of the Company’s production and resources are subject to the increased political and economic risks and other factors associated with international operations, including, but not limited to: • general strikes and civil unrest; • the risk of war, acts of terrorism, expropriation and resource nationalization, and forced renegotiation or modification of existing contracts, including through prospective or retroactive changes in the laws and regulations applicable to such contracts; • import and export regulations; • taxation policies, including royalty and tax increases and retroactive tax claims, and investment restrictions; • price control; • transportation regulations and tariffs; • constrained oil or natural gas markets dependent on demand in a single or limited geographical area; • exchange controls, currency fluctuations, devaluations, or other activities that limit or disrupt markets and restrict payments or the movement of funds; • laws and policies of the U.S. affecting foreign trade, including trade sanctions; • the long-term effects of the U.K.’s withdrawal from the European Union, including any resulting instability in global financial markets or the value of foreign currencies such as the British pound; • the possibility of being subject to exclusive jurisdiction of foreign courts in connection with legal disputes relating to licenses to operate and concession rights in countries where the Company currently operates; • the possible inability to subject foreign persons, especially foreign oil ministries and national oil companies, to the jurisdiction of courts in the U.S.; and • difficulties in enforcing the Company’s rights against a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty over international operations.
As a result, a significant portion of the Company’s production and resources are subject to the increased political and economic risks and other factors associated with international operations, including, but not limited to strikes and civil unrest; war, acts of terrorism, expropriation and resource nationalization, forced renegotiation or modification of existing contracts, including through prospective or retroactive changes in the laws and regulations applicable to such contracts; import and export regulations; taxation policies and investment restrictions; price controls; 27 exchange controls, currency fluctuations, devaluations, or other activities that limit or disrupt markets and restrict payments or the movement of funds; constrained oil or natural gas markets dependent on demand in a single or limited geographical area; laws and policies of the U.S. affecting foreign trade, including trade sanctions; the possibility of being subject to exclusive jurisdiction of foreign courts in connection with legal disputes relating to licenses to operate and concession rights in countries where the Company currently operates; the possible inability to subject foreign persons, especially foreign oil ministries and national oil companies, to the jurisdiction of courts in the U.S.; and difficulties in enforcing the Company’s rights against a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty over international operations.
The Company cannot provide assurance that one or more of its financially distressed customers or non-operating partners will not default on their obligations to the Company or that such a default or defaults will not have a material adverse effect on the Company’s business, financial position, future results of operations, or future cash flows.
The Company cannot provide assurance that one or more of its financially distressed customers or non-operating partners will not default on their obligations to the Company (including as a result of their filing for bankruptcy or other liquidity constraints) or that such a default or defaults will not have a material adverse effect on the Company’s business, financial position, future results of operations, or future cash flows.
The Company’s international operations are also subject to political risk. The insurance coverage that the Company maintains against certain losses or liabilities arising from its operations may be inadequate to cover any such resulting liability; moreover, insurance is not available to the Company against all operational risks.
The insurance coverage that the Company maintains against certain losses or liabilities arising from its operations may be inadequate to cover any such resulting liability; moreover, insurance is not available to the Company against all operational risks.
On a barrel equivalent basis, approximately 47 percent of the Company’s 2022 production was outside the U.S., and approximately 32 percent of the Company’s estimated proved oil and gas reserves as of December 31, 2022, were located outside the U.S.
On a barrel equivalent basis, approximately 46 percent of the Company’s 2023 production was outside the U.S., and approximately 30 percent of the Company’s estimated proved oil and gas reserves as of December 31, 2023, were located outside the U.S.
A sizeable portion of the Company’s acreage is currently undeveloped. Unless production in paying quantities is established on units containing certain of these leases during their terms, the leases will expire. If the leases expire, the Company will lose its right to develop the related properties.
Unless production in paying quantities is established on units containing certain of these leases during their terms, the leases will expire. If the leases expire, the Company will lose its right to develop the related properties.
These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens, increased risk of litigation, and adverse impacts on the Company’s access to capital. Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance, and the public may engage in the permitting process, including through intervention in the courts.
These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens, increased risk of litigation, and adverse impacts on the Company’s access to capital. Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and regulatory approvals.
RISKS RELATED TO PRICING, DEMAND, AND PRODUCTION FOR CRUDE OIL, NATURAL GAS, AND NGLs Global pandemics have previously, may continue to, and may in the future adversely impact the Company’s business, financial condition, and results of operations, the global economy, and the demand for and prices of oil, natural gas, and NGLs.
Global pandemics have previously, may continue to, and may in the future adversely impact the Company’s business, financial condition, and results of operations; the global economy; the demand for and prices of oil, natural gas, and NGLs; and the performance of the Company’s workforce.
To the extent that the Company engages in price risk management activities to protect itself from commodity price declines, the Company may be prevented from realizing the benefits of price increases above the levels of the derivative instruments used to manage price risk.
To the extent that the Company engages in price risk management activities to protect itself from commodity price declines, the Company may be prevented from realizing the benefits of price increases.
Management has previously determined, and may in the future determine, that future or further drilling or development activities will not, or are unlikely to, occur for a well or reservoir based 19 on drilling results, current or future estimated commodity prices or demand for oil, natural gas, and NGLs, or other information, including drilling results in, or information related to, adjacent or nearby geographic areas or similar geologies or reservoirs.
Management has previously determined, and may in the future determine, that future drilling or development activities will not, or are unlikely to, occur for a well or reservoir, based on drilling results, current or future estimated commodity prices or demand for oil, natural gas, and NGLs, or other information.
Among other changes, the IRA introduced a new 15% corporate alternative minimum tax (Corporate AMT) for taxable years beginning after December 31, 2022 on applicable corporations with an average annual adjusted financial statement income (AFSI) that exceeds $1.0 billion for any three consecutive tax years preceding the tax year at issue.
Additionally, in the U.S., the Inflation Reduction Act of 2022 introduced a new 15 percent corporate alternative minimum tax (Corporate AMT) for taxable years beginning after December 31, 2022, on applicable corporations with an average annual adjusted financial statement income (AFSI) that exceeds $1.0 billion for any three consecutive tax years preceding the tax year at issue.
A ratings downgrade could adversely impact the Company’s ability to access debt markets in the future and increase the cost of future debt. During 2022, the Company’s credit rating was affirmed by Moody’s as Ba1/Positive and by Standard and Poor’s as BB+/Positive.
A ratings downgrade could adversely impact the Company’s ability to access debt markets in the future and increase the cost of future debt. During 2023, Moody’s upgraded the Company’s rating to Baa3/Stable, and Standard and Poor’s affirmed the Company’s rating as BB+/Positive.
The Company also competes in attracting and retaining personnel, including geologists, geophysicists, engineers, and other specialists. These competitive pressures may have a significant negative impact on the Company’s results of operations. The Company’s ability to utilize net operating losses and other tax attributes to reduce future taxable income may be limited if the Company experiences an ownership change.
These competitive pressures may have a significant negative impact on the Company’s results of operations. 24 The Company’s ability to utilize net operating losses and other tax attributes to reduce future taxable income may be limited if the Company experiences an ownership change.
Delays and differences between estimated and actual timing of critical events may adversely affect the Company’s large development projects and its ability to participate in large-scale development projects in the future.
Delays and differences between estimated and actual timing of critical events and development costs (including for equipment and personnel) may adversely affect the Company’s large development projects (including forcing the Company to abandon such projects) and its ability to participate in large-scale development projects in the future.
The Company is party to numerous transactions with counterparties in the financial services industry, including commercial banks, investment banks, insurance companies, other investment funds, and other institutions. These transactions expose the Company to credit risk in the event of default of the counterparty.
The Company is party to numerous transactions with counterparties in the financial services industry, including commercial banks, investment banks, insurance companies, other investment funds, and other institutions, including in the form of derivative transactions in connection with any hedges and claims under the Company’s insurance policies, which expose the Company to credit risk in the event of default of the counterparty.
The Company’s U.S. operations have been, and at times in the future may be, affected by political developments and by federal, state, and local laws and regulations such as restrictions on production, changes in taxes, royalties and other amounts payable to governments or governmental agencies, price or gathering rate controls, and environmental protection laws and regulations.
The Company’s U.S. operations have been, and at times in the future may be, affected by political developments and by federal, state, and local laws and regulations, including restrictions on production, changes in taxes and other amounts payable to governments, price or gathering rate controls, environmental protection laws and regulations, and security for plugging, abandonment, and decommissioning obligations, including in the Gulf of Mexico.
As an owner or lessee and operator of oil and gas properties, the Company is subject to various federal, state, local, and foreign laws and regulations relating to the discharge of materials into and protection of the environment.
RISKS RELATED TO GOVERNMENTAL REGULATION AND POLITICAL RISKS The Company may incur significant costs related to environmental matters. As an owner or lessee and operator of oil and gas properties, the Company is subject to various federal, state, local, and foreign laws and regulations relating to the discharge of materials into and protection of the environment.
Further, compliance with reporting and environmental regulations governing the withdrawal, storage, use, and discharge of water may increase the Company’s operating costs, which could materially and adversely affect its business, results of operations, and financial conditions.
Further, compliance with reporting and environmental regulations governing the withdrawal, storage, use, and discharge of water and restrictions related to disposal wells may increase the Company’s operating costs or capital expenses or cause the Company to limit production, which could materially and adversely affect its business, results of operations, and financial conditions.
RISKS RELATED TO CAPITAL MARKETS A downgrade in the Company’s credit rating could negatively impact its cost of and ability to access capital. The Company receives debt ratings from the major credit rating agencies in the U.S.
In either case, the value of the investment and the Company’s business and financial condition may be adversely affected. 23 RISKS RELATED TO CAPITAL MARKETS A downgrade in the Company’s credit rating could negatively impact its cost of and ability to access capital. The Company receives debt ratings from the major credit rating agencies in the U.S.
The Company’s operations in Egypt, excluding the impacts of a one-third noncontrolling interest, contributed 28 percent of the Company’s 2022 production and accounted for 15 percent of the Company’s year-end estimated proved reserves and 22 percent of the Company’s estimated discounted future net cash flows. The Company’s operations are sensitive to currency rate fluctuations.
The Company’s operations in Egypt, excluding the impacts of a one-third noncontrolling interest, contributed 27 percent of the Company’s 2023 production and accounted for 15 percent of the Company’s year-end estimated proved reserves and 29 percent of the Company’s estimated discounted future net cash flows.
These projects may be delayed by project approvals from joint venture partners, timely issuances of permits and licenses by governmental agencies, weather conditions, manufacturing and delivery schedules of critical equipment, and other unforeseen events.
The Company is involved in several large development projects, and the completion of these projects may be delayed beyond the Company’s anticipated completion dates. These projects may be delayed by project approvals from joint venture partners, timely issuances of permits and licenses by governmental agencies, weather conditions, manufacturing and delivery schedules of critical equipment, and other unforeseen events.
Given the numerous estimates that are required to run these scenarios, the Company’s estimates could differ materially from actual results. Additionally, by electing to set and share publicly these metrics in the Company’s sustainability report and the Company’s commitment to expand upon its disclosures, the Company’s business may also face increased scrutiny related to ESG initiatives.
Given the numerous estimates that are required to run these scenarios, the Company’s estimates could differ materially from actual results. The Company publicly discloses these metrics and its related assumptions and analysis in its annual sustainability report. By electing to disclose these metrics, the Company may face increased scrutiny related to its ESG initiatives.
The production rate from oil and natural gas properties generally declines as reserves are depleted, while related per-unit production costs generally increase as a result of decreasing reservoir pressures and other factors.
RISKS RELATED TO RESERVES AND LEASEHOLD ACREAGE Discoveries or acquisitions of additional reserves are needed to avoid a material decline in reserves and production. The production rate from oil and natural gas properties generally declines as reserves are depleted, while related per-unit production costs generally increase as a result of decreasing reservoir pressures and other factors.
The Company’s operations outside the U.S. are based primarily in Egypt and the U.K., with significant exploration and appraisal activities offshore Suriname.
RISKS RELATED TO INTERNATIONAL OPERATIONS International operations have uncertain political, economic, and other risks. The Company’s operations outside the U.S. are based primarily in Egypt and the U.K., with significant exploration and appraisal activities offshore Suriname.
Global pandemics and the actions taken by third parties, including, but not limited to, governmental authorities, businesses, and consumers, in response to such pandemics, including the COVID-19 pandemic, have previously adversely impacted and may from time to time in the future adversely impact the global economy, resulting in significant volatility in the global financial markets.
Global pandemics and the actions taken by third parties, including, but not limited to, governmental authorities, businesses, and consumers, in response to such pandemics, including the COVID-19 pandemic, have previously adversely impacted and may from time to time in the future adversely impact the global economy, resulting in significant volatility in the global financial markets, and the demand for, and the prices of, oil, natural gas, and NGLs, which may materially adversely affect the Company’s business, financial condition, cash flows, and results of operations.
The agreements relating to these transactions contain provisions pursuant to which liabilities related to past and future operations have been allocated between the parties by means of liability assumptions, indemnities, escrows, trusts, bonds, letters of credit, and similar 23 arrangements. One of the most significant of these liabilities involves the decommissioning of wells and facilities previously owned by the Company.
The agreements relating to the Company’s divestment of domestic and international assets generally contain provisions pursuant to which liabilities related to past and future operations (one of the most significant of which is the decommissioning of wells and facilities) are allocated between the parties by means of liability assumptions, indemnities, escrows, trusts, bonds, letters of credit, and similar arrangements.
The estimates of the Company’s proved reserves and estimated future net revenues also depend on a number of factors and assumptions that may vary considerably from actual results, including historical production from the area compared with production from other areas, the effects of regulations by governmental agencies, including changes to severance and excise taxes, future operating costs and capital expenditures, and workover and remediation costs.
The estimates of the Company’s proved reserves and estimated future net revenues also depend on a number of factors and assumptions that may vary considerably from actual results, including historical production from the area compared with production from other areas, the results of drilling, testing, and production for a reservoir over time, the use of volumetric analysis versus production history, the effects of changes in laws (including taxes), future operating, workover, and remediation costs, and capital expenditures.
The Company’s operations are sensitive to fluctuations in foreign currency exchange rates, particularly between the U.S. dollar and the British pound. The Company’s financial statements, presented in U.S. dollars, may be affected by foreign currency fluctuations through both translation risk and transaction risk.
The Company’s financial statements, presented in U.S. dollars, may be affected by foreign currency fluctuations through both translation risk and transaction risk. Volatility in exchange rates may adversely affect the Company’s results of operations, particularly through the weakening of the U.S. dollar relative to other currencies.
In addition, if any lender under the Company’s credit facilities is unable to fund its commitment, the Company’s liquidity will be reduced by an amount up to the aggregate amount of such lender’s commitment under the credit facilities. The Company is exposed to a risk of financial loss if a counterparty fails to perform under a derivative contract.
In addition, if any lender under the Company’s credit facilities is unable to fund its commitment, the Company’s liquidity may be reduced by an amount up to the aggregate amount of such lender’s commitment thereunder.
The payment of future dividends on the Company’s capital stock is subject to the discretion of the Company’s board of directors, which considers, among other factors, the Company’s operating results, overall financial condition, credit-risk considerations, and capital requirements, as well as general business and market conditions.
The payment of future dividends on the Company’s capital stock is subject to the discretion of the Board of Directors, taking into consideration, among other factors, the Company’s operating results, available cash, overall financial condition, credit risks, capital requirements, restrictions under the Company’s indentures and other financing agreements, and restrictions under Delaware law, as well as general business and market conditions.
If any of such events should occur, the Company’s business, financial condition, liquidity, and/or results of operations could be materially harmed, and holders and purchasers of APA’s securities could lose part or all of their investments.
If any of such events should occur, the Company’s business, financial condition, liquidity, and/or results of operations could be materially harmed, and holders and purchasers of APA’s securities could lose part or all of their investments. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also adversely affect the Company.
Future drilling activities may not be successful, and, if unsuccessful, such failure could have an adverse effect on the Company’s future results of operations and financial condition. While all drilling, whether developmental or exploratory, involves these risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons.
In addition, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons. Any such events could have an adverse effect on the Company’s future results of operations and financial condition.
Moreover, parties to such agreements or ventures may be unable to meet their economic or other obligations, and the Company may be required to fulfill those obligations alone. In either case, the value of the investment and the Company’s business and financial condition may be adversely affected.
Moreover, parties to such agreements or ventures may be unable to meet their economic or other obligations, and the Company may be required to fulfill those obligations alone.
The Company’s ability to accurately report and track its water use is necessary for its continued ability to reuse and recycle water, when possible. While the Company remains focused on reusing or recycling water over disposal of water, the Company’s costs for obtaining and disposing of water could increase significantly if reusing and recycling water becomes impractical.
While the Company remains focused on reusing or recycling water over disposal of water, the Company’s costs for obtaining and disposing of water could increase significantly if reusing and recycling water becomes impractical.
In addition, there can be no assurance that acquisitions will not have an adverse effect upon the Company’s operating results, particularly during the periods in which the operations of acquired businesses are being integrated into the Company’s ongoing operations. Crude oil, natural gas, and NGL reserves are estimates, and actual recoveries may vary significantly.
There can be no assurance that acquisitions will not adversely impact the Company’s operating results, particularly during their integration into the Company’s ongoing operations. Crude oil, natural gas, and NGL reserves are estimates, and actual recoveries may vary significantly.
Low prices have previously adversely affected and could again adversely affect the Company’s revenues, operating income, cash flow, and proved reserves, and continued low prices could have a material adverse impact on the Company’s operations and limit its ability to fund capital expenditures. Without the ability to fund capital expenditures, the Company would be unable to replace reserves and production.
Low prices have previously adversely affected and could from time to time in the future adversely affect the Company’s revenues, operating income, cash flow, and proved reserves, and a prolonged period of low prices could have a material adverse impact on the Company’s results of operations and cash flows and limit its ability to fund capital expenditures.
As a result, APA relies on cash flows from its subsidiaries, including Apache, to pay dividends with respect to APA’s common stock and to meet its financial obligations, including to service any debt obligations that the Company may incur from time to time.
As a result, APA relies on cash flows from its subsidiaries to pay dividends on its common stock and to meet its financial obligations, including to service any amounts outstanding under its credit agreement or commercial paper program, and any additional financial obligations that the Company may incur from time to time in the future.
Unauthorized access to the Company’s digital technology could lead to operational disruption, data corruption, communication interruption, loss of intellectual property, loss of confidential and fiduciary data, and loss or corruption of reserves or other proprietary information.
Unauthorized access to the Company’s data, technology, and information systems could lead to operational disruption, communication interruption, disruption in access to financial reporting systems, loss, misuse, or corruption of data and proprietary information.
For example, the NYMEX daily settlement price for the prompt month oil contract in 2022 ranged from a high of $123.64 per barrel to a low of $71.05 per barrel, and the NYMEX daily settlement price for the prompt month natural gas contract in 2022 ranged from a high of $9.85 per MMBtu to a low of $3.46 per MMBtu.
For example, the NYMEX daily settlement price for the prompt month oil contract in 2023 ranged from a high of $93.67 per barrel to a low of $66.61 per barrel, and the NYMEX daily settlement price for the prompt month natural gas contract in 2023 ranged from a high of $3.78 per MMBtu to a low of $1.74 per MMBtu.
If Apache is limited in its ability to distribute cash to the Company, or if Apache’s earnings or other available assets of are not sufficient to pay distributions or make loans to the Company in the amounts or at the times necessary for it to pay dividends with respect to its common stock and/or to meet its financial obligations, then the Company’s business, financial condition, cash flows, results of operations, and reputation may be materially adversely affected.
If the subsidiaries are limited in their ability to distribute cash to the Company, such as through legal or contractual limitations, or if the subsidiaries’ earnings or other available assets are not sufficient to pay distributions or make loans to the Company in the amounts or at the times necessary to meet the Company’s financial obligations, then the Company’s financial condition, cash flows, and reputation may be materially adversely affected.
The guidance upon which the Company’s consumptive water use reporting was modified and could be revised in the future, resulting in the over or underreporting of the Company’s consumptive water use, and could expose the Company to financial risk.
The guidance upon which the Company’s consumptive water use reporting was modified and could be revised in the future, resulting in the over or underreporting of the Company’s consumptive water use. In 2022, the Company modified the way it reports its water data compared to previous years and restated its data from prior years.
The costs of drilling, completing, and operating wells are often uncertain, and drilling operations may be curtailed, delayed, or canceled as a result of a variety of factors, including, but not limited to, unexpected drilling conditions; pressure or irregularities in formations; equipment failures or accidents; fires, explosions, blowouts, and surface cratering; marine risks, such as capsizing, collisions, and hurricanes; other adverse weather conditions; and increases in the cost of or shortages or delays in the availability of drilling rigs, equipment, and labor.
The costs of drilling, completing, and operating wells are often uncertain, and drilling operations are subject to a variety of risks, including unexpected drilling conditions (such as pressure or formation irregularities), equipment failures or accidents, catastrophic events, marine risks, adverse weather conditions, and increases in the cost of or shortages or delays in the availability of drilling rigs, equipment, and labor.
If investors or financial institutions shift funding away from companies in the oil and gas industry, the Company’s access to and costs of capital or the market for the Company’s securities may be negatively impacted. RISKS RELATED TO FINANCIAL RESULTS Future economic conditions in the U.S. and international markets may materially adversely impact the Company’s operating results.
If investors or financial institutions shift funding away from companies in the oil and gas industry, the Company’s access to and costs of capital or the market for the Company’s securities may be negatively impacted. RISKS RELATED TO FINANCIAL RESULTS The Company faces strong industry competition that may have a significant negative impact on the Company’s results of operations.
The Company routinely uses fracturing techniques in the U.S. and other regions to expand the available space for natural gas and oil to migrate toward the wellbore. It is typically done at substantial depths in formations with low permeability.
The Company routinely uses fracturing techniques in the U.S. and other regions to expand the available space for oil and natural gas to migrate toward the wellbore, typically at substantial depths in formations with low permeability. Governmental entities have previously taken actions to regulate, and several proposals are before the U.S. Congress that, if implemented, would further regulate, hydraulic fracturing.
Sustained low prices of crude oil, natural gas, and NGLs may further adversely impact the Company’s business as follows: • weakening the Company’s financial condition and reducing its liquidity; • limiting the Company’s ability to fund planned capital expenditures and operations; • reducing the amount of crude oil, natural gas, and NGLs that the Company can produce economically; • causing the Company to delay or postpone some of its capital projects or reallocate capital to different projects or regions; • reducing the Company’s revenues, operating income, and cash flows; • limiting the Company’s access to sources of capital, such as equity and long-term debt; • reducing the carrying value of the Company’s oil and gas properties, resulting in additional non-cash impairments; or • reducing the carrying value of the Company’s gathering, processing, and transmission facilities, resulting in additional impairments.
Sustained low prices of crude oil, natural gas, and NGLs could also further adversely impact the Company’s business, including by weakening the Company’s financial condition and reducing its liquidity, limiting the Company’s ability to fund planned capital expenditures and operations, causing the Company to delay or postpone some of its capital projects or reallocate capital to different projects or regions, limiting the Company’s access to sources of capital, such as equity and long-term debt, or reducing the carrying value of the Company’s oil and gas properties, resulting in additional non-cash impairments. 19 The Company’s ability to sell crude oil, natural gas, or NGLs, receive market prices for these commodities, and/or meet volume commitments under transportation services agreements may be adversely affected by pipeline and gathering system capacity constraints, the inability to procure and resell volumes economically, and various transportation interruptions.
Strong competition exists in all sectors of the oil and gas E&P industry. The Company competes with major integrated and other independent oil and gas companies for acquisitions of oil and gas leases, properties, and reserves, equipment and labor required to explore, develop, and operate those properties, and marketing of crude oil, natural gas, and NGL production.
Strong competition exists in all sectors of the oil and gas E&P industry. The Company competes for leases, equipment, labor, key personnel, and marketing of crude oil, natural gas, and NGL production, the prices of which impact the costs of properties and the financial resources available to pursue acquisitions.
Failure or loss of equipment, as the result of equipment malfunctions, cyberattacks, or natural disasters, such as hurricanes, could result in property damages, personal injury, environmental pollution, and other damages for which the Company could be liable.
These events, including ineffective containment of such events, could result in property damages, personal injury, environmental pollution, and other damages for which the Company could be liable.
Changes in tax rules and regulations, or interpretations thereof, may adversely affect the Company’s business, financial condition, and results of operations. The U.S. federal and state income tax laws affecting oil and gas exploration, development, and extraction may be modified by administrative, legislative, or judicial interpretation at any time.
Federal, state, and foreign income tax laws affecting oil and gas exploration, development, and extraction may be modified by administrative, legislative, or judicial interpretation at any time.
As a result, the Company may incur the costs of a holding company structure without realizing the anticipated benefits, which could adversely affect the Company’s business, financial condition, cash flows, and results of operations. GENERAL RISK FACTORS Certain anti-takeover provisions in the Company’s charter and Delaware law could delay or prevent a hostile takeover.
The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect the Company’s business, financial condition, results of operations, and cash flows. GENERAL RISK FACTORS Certain anti-takeover provisions in the Company’s charter and Delaware law could delay or prevent a hostile takeover.
Future oil and gas production is, therefore, highly dependent upon the Company’s level of success in acquiring or finding additional reserves on an economic basis. Furthermore, as oil or natural gas prices increase, the Company’s cost for additional reserves could also increase.
Therefore, future oil and gas production is highly dependent upon the Company’s level of success in adding reserves through exploration and development activities, identifying additional behind-pipe zones, secondary recovery reserves, or tertiary recovery reserves through engineering studies, or acquiring additional properties containing proved reserves. As oil or natural gas prices increase, the Company’s cost for additional reserves could also increase.
The treatment and disposal of produced water is becoming more highly regulated and restricted and could expose the Company to additional costs or limit certain operations. The treatment and disposal of produced water is becoming more highly regulated and restricted.
The Company’s revised reporting now reflects only fresh water and non-potable water from surface water or shallow groundwater that are consumed in oil and gas operations. The treatment and disposal of produced water is becoming more highly regulated and restricted and could expose the Company to additional costs or limit certain operations.
Crude oil, natural gas, and NGL prices and their volatility could adversely affect the Company’s operating results and the price of APA’s common stock. The Company’s revenues, operating results, and future rate of growth depend highly upon the prices it receives for its sales of crude oil, natural gas, and NGL products.
RISKS RELATED TO PRICING, DEMAND, AND PRODUCTION FOR CRUDE OIL, NATURAL GAS, AND NGLs Crude oil, natural gas, and NGL prices and their volatility could adversely affect the Company’s operating results and the price of APA’s common stock.
The Company’s operations are subject to hazards and risks inherent in the drilling, production, and transportation of crude oil, natural gas, and NGLs, including well blowouts, explosions, fires, and cratering; pipeline or other facility ruptures and spills; formations with abnormal pressures; equipment malfunctions; hurricanes, major storms, and cyclones, which could affect the Company’s operations in areas such as on and offshore the Gulf Coast, North Sea, and Suriname, and other natural and anthropogenic disasters and weather conditions; and surface spillage and surface or ground water contamination from petroleum constituents, saltwater, or hydraulic fracturing chemical additives.
The Company’s operations are subject to hazards and risks inherent in the drilling, production, and transportation of crude oil, natural gas, and NGLs, including well blowouts, explosions, fires, cratering, pipeline or other facility ruptures and spills, adverse weather conditions, including those impacting the Company’s offshore operating areas, surface spillage and 20 ground water contamination, and failure or loss of equipment.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−2 removed4 unchanged
Biggest changePeriod Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs January 1 to January 31, 2022 600,000 $ 26.96 600,000 48,195,790 February 1 to February 28, 2022 1,000,000 31.71 1,000,000 47,195,790 March 1 to March 31, 2022 5,629,450 37.83 5,629,450 41,566,340 April 1 to April 30, 2022 1,877,089 41.97 1,877,089 39,689,251 May 1 to May 31, 2022 1,920,689 41.50 1,920,689 37,768,562 June 1 to June 30, 2022 3,189,921 41.44 3,189,921 34,578,641 July 1 to July 31, 2022 6,863,858 33.88 6,863,858 27,714,783 August 1 to August 31, 2022 2,958,437 33.81 2,958,437 24,756,346 September 1 to September 30, 2022 — — — 64,756,346 October 1 to October 31, 2022 2,063,203 40.40 2,063,203 62,693,143 November 1 to November 30, 2022 445,747 44.88 445,747 62,247,396 December 1 to December 31, 2022 9,616,599 45.25 9,616,599 52,630,797 Total 36,164,993 $ 39.34 (1) During the fourth quarter of 2021, the Company's Board of Directors authorized the purchase of 40 million shares of the Company's common stock.
Biggest changePeriod Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs January 1 to January 31, 2023 1,115,162 $ 45.96 1,115,162 51,515,635 February 1 to February 28, 2023 — — — 51,515,635 March 1 to March 31, 2023 2,547,546 35.85 2,547,546 48,968,089 April 1 to April 30, 2023 — — — 48,968,089 May 1 to May 31, 2023 1,348,347 33.72 1,348,347 47,619,742 June 1 to June 30, 2023 — — — 47,619,742 July 1 to July 31, 2023 — — — 47,619,742 August 1 to August 31, 2023 — — — 47,619,742 September 1 to September 30, 2023 477,465 41.90 477,465 47,142,277 October 1 to October 31, 2023 447,228 40.26 447,228 46,695,049 November 1 to November 30, 2023 1,495,986 37.44 1,495,986 45,199,063 December 1 to December 31, 2023 1,279,444 36.95 1,279,444 43,919,619 Total 8,711,178 $ 37.81 (1) During the fourth quarter of 2021, the Company's Board of Directors authorized the purchase of 40 million shares of the Company's common stock.
Information concerning securities authorized for issuance under equity compensation plans is set forth under the caption “Equity Compensation Plan Information” in the proxy statement relating to the Company’s 2023 annual meeting of stockholders, which is incorporated herein by reference.
Information concerning securities authorized for issuance under equity compensation plans is set forth under the caption “Equity Compensation Plan Information” in the proxy statement relating to the Company’s 2024 annual meeting of stockholders, which is incorporated herein by reference.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among APA Corporation, the S&P 500 Index, and the Dow Jones U.S. Exploration & Production Index * $100 invested on 12/31/17 in stock or index, including reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among APA Corporation, the S&P 500 Index, and the Dow Jones U.S. Exploration & Production Index * $100 invested on 12/31/18 in stock or index, including reinvestment of dividends.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES APA’s common stock, par value $0.625 per share, is traded on the Nasdaq Global Select Market (Nasdaq) under the symbol “APA.” The closing price of APA’s common stock, as reported by the Nasdaq for January 31, 2023, was $44.33 per share.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES APA’s common stock, par value $0.625 per share, is traded on the Nasdaq Global Select Market (Nasdaq) under the symbol “APA.” The closing price of APA’s common stock, as reported by the Nasdaq for January 31, 2024, was $31.33 per share.
Issuer Purchases of Equity Securities The table below sets forth information with respect to shares of common stock repurchased by APA during 2022.
Issuer Purchases of Equity Securities The table below sets forth information with respect to shares of common stock repurchased by APA during 2023.
Exploration & Production Index (formerly Dow Jones Secondary Oil Stock Index) from December 31, 2017, through December 31, 2022.
Exploration & Production Index (formerly Dow Jones Secondary Oil Stock Index) from December 31, 2018, through December 31, 2023.
As of January 31, 2023, there were 310,953,174 shares of APA’s common stock outstanding held by approximately 3,100 stockholders of record and 208,000 beneficial owners. The Company has paid cash dividends on its common stock for 58 consecutive years through December 31, 2022.
As of January 31, 2024, there were 301,818,820 shares of APA’s common stock outstanding held by approximately 3,000 stockholders of record and 257,000 beneficial owners. The Company has paid cash dividends on its common stock for 59 consecutive years through December 31, 2023.
When, and if, declared by the Company’s Board of Directors, future dividend payments will depend upon the Company’s level of earnings, financial requirements, and other relevant factors.
During the third quarter of 2022, the Company’s Board of Directors increased the Company’s quarterly dividend from $0.125 per share to $0.25 per share, representing a return to pre-Covid-19 dividend levels. When, and if, declared by the Company’s Board of Directors, future dividend payments will depend upon the Company’s level of earnings, financial requirements, and other relevant factors.
Removed
In the fourth quarter of 2021 APA’s Board of Directors approved an increase in the Company’s quarterly dividend per share from $0.0625 per share to $0.125 per share paid on February 22, 2022, and during the third quarter of 2022, the Company’s Board of Directors approved a further increase to its quarterly dividend to $0.25 per share.
Added
Fiscal year ending December 31. 2018 2019 2020 2021 2022 2023 APA Corporation $ 100.00 $ 101.06 $ 56.89 $ 108.53 $ 191.58 $ 150.92 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 Dow Jones U.S. Exploration & Production Index 100.00 111.39 73.91 126.33 201.59 210.70
Removed
Fiscal year ending December 31. 2017 2018 2019 2020 2021 2022 APA Corporation $ 100.00 $ 63.62 $ 64.29 $ 36.20 $ 69.05 $ 121.88 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 Dow Jones U.S. Exploration & Production Index 100.00 82.23 91.60 60.78 103.88 165.77

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

132 edited+72 added−76 removed57 unchanged
Biggest changeFor detailed information regarding APA’s acquisitions and divestitures, refer to Note 2—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K. 38 Results of Operations Oil, Natural Gas, and Natural Gas Liquids Production Revenues The Company’s production revenues and respective contribution to total revenues by country are as follows: For the Year Ended December 31, 2022 2021 2020 $ Value % Contribution $ Value % Contribution $ Value % Contribution ($ in millions) Oil Revenues: United States $ 2,458 36 % $ 1,850 40 % $ 1,209 39 % Egypt (1) 3,145 46 % 1,806 40 % 1,102 35 % North Sea 1,232 18 % 929 20 % 795 26 % Total (1) $ 6,835 100 % $ 4,585 100 % $ 3,106 100 % Natural Gas Revenues: United States $ 918 59 % $ 754 62 % $ 251 42 % Egypt (1) 370 23 % 270 23 % 280 47 % North Sea 281 18 % 183 15 % 67 11 % Total (1) $ 1,569 100 % $ 1,207 100 % $ 598 100 % NGL Revenues: United States $ 765 94 % $ 673 95 % $ 304 91 % Egypt (1) 6 1 % 9 1 % 8 3 % North Sea 45 5 % 24 4 % 21 6 % Total (1) $ 816 100 % $ 706 100 % $ 333 100 % Oil and Gas Revenues: United States $ 4,141 45 % $ 3,277 50 % $ 1,764 44 % Egypt (1) 3,521 38 % 2,085 32 % 1,390 34 % North Sea 1,558 17 % 1,136 18 % 883 22 % Total (1) $ 9,220 100 % $ 6,498 100 % $ 4,037 100 % (1) Includes revenues attributable to a noncontrolling interest in Egypt. 39 Production The following table presents production volumes by country: For the Year Ended December 31, 2022 Increase (Decrease) 2021 Increase (Decrease) 2020 Oil Volumes – b/d: United States (5) 70,398 (6)% 75,205 (15)% 88,249 Egypt (3)(4) 85,081 21% 70,349 (7)% 75,384 North Sea 32,578 (10)% 36,265 (28)% 50,386 Total 188,057 3% 181,819 (15)% 214,019 Natural Gas Volumes – Mcf/d: United States (5) 473,292 (10)% 527,461 (6)% 561,731 Egypt (3)(4) 356,327 35% 263,653 (4)% 274,175 North Sea 35,327 (8)% 38,565 (33)% 57,464 Total 864,946 4% 829,679 (7)% 893,370 NGL Volumes – b/d: United States (5) 62,727 (5)% 66,232 (11)% 74,136 Egypt (3)(4) 196 (63)% 531 (30)% 754 North Sea 1,111 (7)% 1,199 (38)% 1,936 Total 64,034 (6)% 67,962 (12)% 76,826 BOE per day: (1) United States (5) 212,007 (8)% 229,348 (10)% 256,007 Egypt (3)(4) 144,665 26% 114,821 (6)% 121,834 North Sea (2) 39,577 (10)% 43,892 (29)% 61,899 Total 396,249 2% 388,061 (12)% 439,740 (1) 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.
Biggest changeFor detailed information regarding APA’s acquisitions and divestitures, refer to Note 2—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K. 37 Results of Operations Oil, Natural Gas, and Natural Gas Liquids Production Revenues The Company’s production revenues and respective contribution to total revenues by country are as follows: For the Year Ended December 31, 2023 2022 2021 $ Value % Contribution $ Value % Contribution $ Value % Contribution ($ in millions) Oil Revenues: United States $ 2,241 37 % $ 2,458 36 % $ 1,850 40 % Egypt (1) 2,683 45 % 3,145 46 % 1,806 40 % North Sea 1,073 18 % 1,232 18 % 929 20 % Total (1) $ 5,997 100 % $ 6,835 100 % $ 4,585 100 % Natural Gas Revenues: United States $ 297 34 % $ 918 59 % $ 754 62 % Egypt (1) 346 39 % 370 23 % 270 23 % North Sea 237 27 % 281 18 % 183 15 % Total (1) $ 880 100 % $ 1,569 100 % $ 1,207 100 % NGL Revenues: United States $ 480 94 % $ 765 94 % $ 673 95 % Egypt (1) — — % 6 1 % 9 1 % North Sea 28 6 % 45 5 % 24 4 % Total (1) $ 508 100 % $ 816 100 % $ 706 100 % Oil and Gas Revenues: United States $ 3,018 41 % $ 4,141 45 % $ 3,277 50 % Egypt (1) 3,029 41 % 3,521 38 % 2,085 32 % North Sea 1,338 18 % 1,558 17 % 1,136 18 % Total (1) $ 7,385 100 % $ 9,220 100 % $ 6,498 100 % (1) Includes revenues attributable to a noncontrolling interest in Egypt. 38 Production The following table presents production volumes by country: For the Year Ended December 31, 2023 Increase (Decrease) 2022 Increase (Decrease) 2021 Oil Volumes – b/d: United States (5) 78,889 12% 70,398 (6)% 75,205 Egypt (3)(4) 89,129 5% 85,081 21% 70,349 North Sea 34,728 7% 32,578 (10)% 36,265 Total 202,746 8% 188,057 3% 181,819 Natural Gas Volumes – Mcf/d: United States (5) 452,281 (4)% 473,292 (10)% 527,461 Egypt (3)(4) 325,778 (9)% 356,327 35% 263,653 North Sea 50,284 42% 35,327 (8)% 38,565 Total 828,343 (4)% 864,946 4% 829,679 NGL Volumes – b/d: United States (5) 62,997 —% 62,727 (5)% 66,232 Egypt (3)(4) — NM 196 (63)% 531 North Sea 1,240 12% 1,111 (7)% 1,199 Total 64,237 —% 64,034 (6)% 67,962 BOE per day: (1) United States (5) 217,266 2% 212,007 (8)% 229,348 Egypt (3)(4) 143,425 (1)% 144,665 26% 114,821 North Sea (2) 44,349 12% 39,577 (10)% 43,892 Total 405,040 2% 396,249 2% 388,061 (1) 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.
Committed Credit Facilities On April 29, 2022, the Company entered into two unsecured syndicated credit agreements for general corporate purposes that replaced and refinanced Apache’s 2018 unsecured syndicated credit agreement (the Former Facility). • One agreement is denominated in US dollars (the USD Agreement) and provides 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 currently is committed).
Committed 2022 Credit Facilities On April 29, 2022, the Company entered into two unsecured syndicated credit agreements for general corporate purposes that replaced and refinanced Apache’s 2018 unsecured syndicated credit agreement (the Former Facility). • One agreement is denominated in US dollars (the USD Agreement) and provides 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 currently is committed).
Asset removal technologies and costs are constantly changing, as are regulatory, political, environmental, safety, and public relations considerations. ARO associated with retiring tangible long-lived assets is recognized as a liability in the period in which the legal obligation is incurred and becomes determinable. The liability is offset by a corresponding increase in the underlying asset.
Asset removal technologies and costs are constantly changing, as are regulatory, political, environmental, safety, and public relations considerations. 56 ARO associated with retiring tangible long-lived assets is recognized as a liability in the period in which the legal obligation is incurred and becomes determinable. The liability is offset by a corresponding increase in the underlying asset.
The Company’s current commitment to return capital to shareholders through a mix of dividends and share buybacks remains unchanged. 47 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’s current commitment to return capital to shareholders through a mix of dividends and share buybacks remains unchanged. 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 has elected not to disclose probable and possible reserves or reserve estimates in this filing. 56 Oil and Gas Exploration Costs The Company accounts for its exploration and production activities using the successful efforts method of accounting. Costs of acquiring unproved and proved oil and gas leasehold acreage are capitalized.
The Company has elected not to disclose probable and possible reserves or reserve estimates in this filing. Oil and Gas Exploration Costs The Company accounts for its exploration and production activities using the successful efforts method of accounting. Costs of acquiring unproved and proved oil and gas leasehold acreage are capitalized.
Borrowers under each New Agreement, which may include certain subsidiaries of APA, may borrow, prepay, and reborrow loans and obtain letters of credit, and APA may obtain letters of credit for the account of its subsidiaries, in each case subject to representations and warranties, covenants, and events of default substantially similar to those in the Former Facility, such as: • A financial covenant requires APA to maintain an adjusted debt-to-capital ratio of not greater than 60 percent at the end of any fiscal quarter.
Borrowers under each 2022 Agreement, which may include certain subsidiaries of APA, may borrow, prepay, and reborrow loans and obtain letters of credit, and APA may obtain letters of credit for the account of its subsidiaries, in each case subject to representations and warranties, covenants, and events of default substantially similar to those in the Former Facility, such as: • A financial covenant requires APA to maintain an adjusted debt-to-capital ratio of not greater than 60 percent at the end of any fiscal quarter.
The Company’s estimates of proved reserves, proved developed reserves, and PUD reserves as of December 31, 2022, 2021, and 2020, changes in estimated proved reserves during the last three years, and estimates of future net cash flows from proved reserves are contained in Note 18—Supplemental Oil and Gas Disclosures (Unaudited) in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K.
The Company’s estimates of proved reserves, proved developed reserves, and PUD reserves as of December 31, 2023, 2022, and 2021, changes in estimated proved reserves during the last three years, and estimates of future net cash flows from proved reserves are contained in Note 18—Supplemental Oil and Gas Disclosures (Unaudited) in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K.
Liens on assets also are permitted if debt secured thereby does not exceed 15 percent of APA’s consolidated net tangible assets or approximately $1.5 billion as of December 31, 2022. • Negative covenants restrict APA’s ability to merge with another entity unless it is the surviving entity, a borrower’s disposition of substantially all of its assets, prohibitions on the ability of certain subsidiaries to make payments to borrowers, and guarantees by APA or certain subsidiaries of debt of non-consolidated entities in excess of the stated threshold. • Lenders may accelerate payment maturity and terminate lending and issuance commitments for nonpayment and other breaches; if a borrower or certain subsidiaries defaults on other indebtedness in excess of the stated threshold, has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold, or has specified pension plan liabilities in excess of the stated threshold; or APA undergoes a specified change in control.
Liens on assets also are permitted if debt secured thereby does not exceed 15 percent of APA’s consolidated net tangible assets or approximately $1.9 billion as of December 31, 2023. • Negative covenants restrict APA’s ability to merge with another entity unless it is the surviving entity, a borrower’s disposition of substantially all of its assets, prohibitions on the ability of certain subsidiaries to make payments to borrowers, and guarantees by APA or certain subsidiaries of debt of non-consolidated entities in excess of the stated threshold. • Lenders may accelerate payment maturity and terminate lending and issuance commitments for nonpayment and other breaches; if a borrower or certain subsidiaries defaults on other indebtedness in excess of the stated threshold, has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold, or has specified pension plan liabilities in excess of the stated threshold; or APA undergoes a specified change in control.
The IRA includes a new 15 percent corporate alternative minimum tax (Corporate AMT) on applicable corporations with an average annual adjusted financial statement income that exceeds $1 billion for any three consecutive years preceding the tax year at issue. The Corporate AMT is effective for tax years beginning after December 31, 2022.
The IRA includes a new 15 percent corporate alternative minimum tax (CAMT) on applicable corporations with an average annual adjusted financial statement income that exceeds $1 billion for any three consecutive years preceding the tax year at issue. The CAMT is effective for tax years beginning after December 31, 2022.
Apache may borrow under the USD Agreement up to an aggregate principal amount of US$300 million outstanding at any given time. Apache has guaranteed obligations under each New Agreement effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than US$1.0 billion.
Apache may borrow under the USD Agreement up to an aggregate principal amount of US$300 million outstanding at any given time. Apache has guaranteed obligations under each 2022 Agreement effective until the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than US$1.0 billion.
NGL production, which accounted for 98 percent of the Company’s total 2022 NGL production, is sold under contracts with prices at market indices 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.
NGL production, which accounted for 98 percent of the Company’s total 2023 NGL production, is sold under contracts with prices at market indices 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.
All borrowings under the GBP Agreement bear interest at an adjusted rate per annum determined by reference to the Sterling Overnight Index Average published by the Bank of England, plus the Applicable Margin. Each New Agreement also requires the borrower to pay quarterly a facility fee on total commitments.
All borrowings under the GBP Agreement bear interest at an adjusted rate per annum determined by reference to the Sterling Overnight Index Average published by the Bank of England, plus the Applicable Margin. Each 2022 Agreement also requires the borrower to pay quarterly a facility fee on total commitments.
There is no assurance that the financial condition of banks with lending commitments to APA or its subsidiaries will not deteriorate. The Company closely monitor the ratings of the banks in its bank groups. Having large bank groups allows the Company to mitigate the potential impact of any bank’s failure to honor its lending commitment.
There is no assurance that the financial condition of banks with lending commitments to APA or its subsidiaries will not deteriorate. The Company closely monitors the ratings of the banks in its bank groups. Having large bank groups allows the Company to mitigate the potential impact of any bank’s failure to honor its lending commitment.
At December 31, 2022, APA’s debt-to-capital ratio as calculated under each New Agreement was 21 percent. • A negative covenant restricts the ability of APA and its subsidiaries to create liens securing debt on their hydrocarbon-related assets, with exceptions for liens typically arising in the oil and gas industry; liens securing debt incurred to finance the acquisition, construction, improvement, or capital lease of assets, provided that such debt, when incurred, does not exceed the subject purchase price and costs, as applicable, and related expenses; liens on subsidiary assets located outside of the U.
At December 31, 2023, APA’s debt-to-capital ratio as calculated under each 2022 Agreement was 20 percent. • A negative covenant restricts the ability of APA and its subsidiaries to create liens securing debt on their hydrocarbon-related assets, with exceptions for liens typically arising in the oil and gas industry; liens securing debt incurred to finance the acquisition, construction, improvement, or capital lease of assets, provided that such debt, when incurred, does not exceed the subject purchase price and costs, as applicable, and related expenses; liens on subsidiary assets located outside of the U.
The Company’s removal and restoration obligations are primarily associated with plugging and abandoning wells and removing and disposing of offshore oil and gas platforms in the North Sea and Gulf of Mexico. Estimating the future restoration and removal costs is difficult and requires management to make estimates and judgments.
The Company’s removal and restoration obligations are primarily associated with plugging and abandoning wells and removing and disposing of offshore oil and gas platforms in the North Sea. Estimating the future restoration and removal costs is difficult and requires management to make estimates and judgments.
While the market price received for natural gas varies among geographic areas, crude oil tends to trade within a global market. Price movements for all types and grades of crude oil generally move in the same direction.
While the market price received for natural gas varies among geographic areas, crude oil tends to trade within a global market. Prices for all types and grades of crude oil generally move in the same direction.
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 December 31, 2022, the Company had $5.5 billion in total debt outstanding, which consisted of notes and debentures of Apache, credit facility borrowings, and finance lease obligations.
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 December 31, 2023, the Company had $5.2 billion in total debt outstanding, which consisted of notes and debentures of Apache, credit facility borrowings, and finance lease obligations.
The Company’s year-to-date 2022 effective income tax rate was primarily impacted by a deferred tax expense related to the remeasurement of taxes in the U.K. as a result of the enactment of the Energy (Oil and Gas) Profits Levy Act 2022 (the Energy Profits Levy) on July 14, 2022, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets.
During 2022, the Company’s effective income tax rate was primarily impacted by a deferred tax expense related to the remeasurement of taxes in the U.K. as a result of the enactment of the Energy (Oil and Gas) Profits Levy Act of 2022 (the Energy Profits Levy) on July 14, 2022, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets.
If the combination of GOM Shelf’s net cash flow from its producing properties, the Trust A funds, the Bonds, and the remaining Letters of Credit are insufficient to fully fund decommissioning of any Legacy GOM Assets that Apache may be ordered by BSEE to perform, or if GOM Shelf’s net cash flow from its remaining producing properties after the Trust A funds, Bonds, and Letters of Credit are exhausted is insufficient to repay any loans made by Apache under the Standby Loan Agreement, then Apache may be forced to effectively use its available cash to fund the deficit.
If the combination of GOM Shelf’s net cash flow from its producing properties, the Trust A funds, the Bonds, and the remaining Letters of Credit are insufficient to fully fund decommissioning of any Legacy GOM Assets that Apache may be required to perform or fund, or if GOM Shelf’s net cash flow from its remaining producing properties after the Trust A funds, Bonds, and Letters of Credit are exhausted is insufficient to repay any loans made by Apache under the Standby Loan Agreement, then Apache may be forced to use its available cash to fund the deficit.
Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as rig rates, labor, boats, helicopters, materials, and supplies. Crude oil, which accounted for 48 percent of the Company’s total 2022 production, is inherently more expensive to produce than natural gas. Repair and maintenance costs are typically higher on offshore properties.
Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as rig rates, labor, boats, helicopters, materials, and supplies. Crude oil, which accounted for 50 percent of the Company’s total 2023 production, is inherently more expensive to produce than natural gas. Repair and maintenance costs are typically higher on offshore properties.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K are incorporated by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of Apache Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (filed with the SEC on February 22, 2022).
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K are incorporated by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of Apache Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (filed with the SEC on February 23, 2023).
For more information regarding the Company’s acquisitions and divestitures, refer to Note 2—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements in Part IV set forth in Part IV, Item 15 of this Annual Report on Form 10-K.
For more information regarding the Company’s acquisitions and divestitures and equity method interests, refer to Note 2—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K.
By letter dated April 5, 2022, replacing two prior letters dated September 8, 2021 and February 22, 2022, GOM Shelf notified the Bureau of Safety and Environmental Enforcement (BSEE) that it was unable to fund the decommissioning obligations that it is currently obligated to perform on certain of the Legacy GOM Assets.
By letter dated April 5, 2022, replacing two prior letters dated September 8, 2021 and February 22, 2022, 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 is currently obligated to perform on certain of the Legacy GOM Assets.
For information regarding potential decommissioning obligations on sold properties estimated and recorded in the third quarter of 2021, please refer to “Potential Decommissioning Obligations on Sold Properties” above and in Note 11—Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part IV, Item 5 of this Annual Report on Form 10-K.
For information regarding estimated potential decommissioning obligations on sold properties, please refer to “Potential Decommissioning Obligations on Sold Properties” above and in Note 11—Commitments and Contingencies in the Notes to Consolidated Financial Statements in Part IV, Item 5 of this Annual Report on Form 10-K.
This section of this Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
During the third quarter of 2022, the Company’s Board of Directors approved a further increase to its quarterly dividend to $0.25 per share. Distributions to Noncontrolling Interest - Egypt Sinopec holds a one-third minority participation interest in the Company’s oil and gas operations in Egypt.
During the third quarter of 2022, the Company’s Board of Directors approved an increase to its quarterly dividend from $0.125 per share to $0.25 per share. Distributions to Noncontrolling Interest - Egypt Sinopec holds a one-third minority participation interest in the Company’s oil and gas operations in Egypt.
Under terms agreed to in the Egypt modernized PSC, the Company committed to spend a minimum of $3.5 billion on exploration, development, and operating activities by March 31, 2026. As of December 31, 2022, the Company has spent $1.7 billion and believes it will be able to satisfy the remaining obligation within its current exploration and development program.
Under terms agreed to in the Egypt modernized PSC, the Company committed to spend a minimum of $3.5 billion on exploration, development, and operating activities by March 31, 2026. As of December 31, 2023, the Company has spent $2.9 billion and believes it will be able to satisfy the remaining obligation within its current exploration and development program.
Uncommitted Credit Facilities The Company from time to time has and uses uncommitted credit and letter of credit facilities for working capital and credit support purposes. As of December 31, 2022 and 2021, there were no outstanding borrowings under these facilities.
Uncommitted Credit Facilities 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 December 31, 2023 and 2022, there were no outstanding borrowings under these facilities.
Overall, the Company’s Egypt operations averaged $2.85 per Mcf in 2022, a 1 percent increase from an average of $2.81 per Mcf in 2021. • Natural gas from the North Sea Beryl field is processed through the SAGE gas plant. The gas is sold to a third party at the St.
Overall, the Company’s Egypt operations averaged $2.91 per Mcf in 2023, a 2 percent increase from an average of $2.85 per Mcf in 2022. • Natural gas from the North Sea Beryl field is processed through the SAGE gas plant. The gas is sold to a third party at the St.
As of December 31, 2022, the Company has also recorded a $667 million asset, which represents the amount the Company expects to be reimbursed from the Trust A funds, the Bonds, and the Letters of Credit for decommissioning it may be required to perform on Legacy GOM Assets.
As of December 31, 2023, the Company has also recorded a $199 million asset, which represents the remaining amount the Company expects to be reimbursed from the Trust A funds, the Bonds, and the Letters of Credit for decommissioning it may be required to perform on Legacy GOM Assets.
Of the total liability recorded, $738 million is reflected under the caption “Decommissioning contingency for sold Gulf of Mexico properties,” and $450 million is reflected under “Other current liabilities” in the Company’s consolidated balance sheet.
Of the total liability recorded, $764 million is reflected under the caption “Decommissioning contingency for sold Gulf of Mexico properties,” and $60 million is reflected under “Other current liabilities” in the Company’s consolidated balance sheet.
Under GOM Shelf’s limited liability company agreement, the proceeds of production of the Legacy GOM Assets will be used to fund decommissioning of Legacy GOM Assets.
Under GOM Shelf’s limited liability company agreement, the proceeds of production of the Legacy GOM Assets will be used to fund the operation of GOM Shelf and the decommissioning of Legacy GOM Assets.
As a result, Apache and other current and former owners in these assets have received orders from BSEE to decommission certain of the Legacy GOM Assets included in GOM Shelf’s notification to BSEE. Apache expects to receive such orders on the other Legacy GOM Assets included in GOM Shelf’s notification letter.
As a result, Apache and other current and former owners in these assets have received orders from BSEE to decommission certain of the Legacy GOM Assets included in GOM Shelf’s notifications to BSEE. Apache expects to receive similar orders on the other Legacy GOM Assets included in GOM Shelf’s notification letters.
The Company’s U.S. realizations averaged $5.31 per Mcf in 2022, a 35 percent increase from an average of $3.92 per Mcf in 2021. • In Egypt, the Company’s natural gas is sold to EGPC, primarily under an industry-pricing formula, a sliding scale based on Dated Brent crude oil with a minimum of $1.50 per MMBtu and a maximum of $2.65 per MMBtu, plus an upward adjustment for liquids content.
The Company’s U.S. realizations averaged $1.80 per Mcf in 2023, a 66 percent decrease from an average of $5.31 per Mcf in 2022. • In Egypt, the Company’s natural gas is sold to EGPC, primarily under an industry-pricing formula, a sliding scale based on Dated Brent crude oil with a minimum of $1.50 per MMBtu and a maximum of $2.65 per MMBtu, plus an upward adjustment for liquids content.
As of December 31, 2022, Apache estimates that its potential liability to fund decommissioning of Legacy GOM Assets it may be ordered to perform ranges from $1.2 billion to $1.4 billion on an undiscounted basis. Management does not believe any specific estimate within this range is a better estimate than any other.
As of December 31, 2023, Apache estimates that its potential liability to fund the remaining decommissioning of Legacy GOM Assets it may be ordered to perform or fund ranges from $824 million to $1.2 billion on an undiscounted basis. Management does not believe any specific estimate within this range is a better estimate than any other.
The Company’s management believes that it has adequately reserved for its contingent obligations, including approximately $1 million for environmental remediation and approximately $64 million for various contingent legal liabilities.
The Company’s management believes that it has adequately reserved for its contingent obligations, including approximately $5 million for environmental remediation and approximately $83 million for various contingent legal liabilities.
The Company paid $362 million and $279 million during the years ended December 31, 2022 and 2021, respectively, in cash distributions to Sinopec.
The Company paid $238 million and $362 million during the years ended December 31, 2023 and 2022, respectively, in cash distributions to Sinopec.
For a detailed discussion of the Company’s lease obligations, purchase obligations, environmental and legal contingencies, and other commitments, please see Note 11—Commitments and Contingencies and Note 12—Retirement and Deferred Compensation Plans in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K.
For a detailed discussion of the Company’s environmental and legal contingencies and other commitments, please see Note 11—Commitments and Contingencies in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K.
This ratio is not reflective of the price ratio between the two products. (2) Average sales volumes from the North Sea were 40,812 boe/d, 44,179 boe/d, and 62,157 boe/d for 2022 , 2021, and 2020, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings in the Beryl field.
This ratio is not reflective of the price ratio between the two products. (2) Average sales volumes from the North Sea were 45,476 boe/d, 40,812 boe/d, and 44,179 boe/d for 2023 , 2022, and 2021, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings.
APA is the operator and holds a 45 percent interest in Block 53. For a more detailed discussion related to the Company’s various geographic segments, refer to “Upstream Exploration and Production Properties—Operating Areas” set forth in Part I, Item 1 and 2 of this Annual Report on Form 10-K.
For a more detailed discussion related to the Company’s various geographic segments, refer to “Upstream Exploration and Production Properties—Operating Areas” set forth in Part I, Item 1 and 2 of this Annual Report on Form 10-K.
During the quarter ended March 31, 2022, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $15 million for an aggregate purchase price of $16 million in cash, including accrued interest and broker fees, reflecting a premium to par of an aggregate $1 million.
During 2022, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $15 million for an aggregate purchase price of $16 million in cash, including accrued interest and broker fees, reflecting a premium to par of an aggregate $1 million. The Company recognized a $1 million loss on these repurchases.
Purchased oil and gas sales were offset by associated purchase costs of $1.8 billion and $1.6 billion for the years ended December 31, 2022 and 2021, respectively.
Purchased oil and gas sales were partially offset by associated purchase costs of $742 million and $1.8 billion for the years ended December 31, 2023 and 2022, respectively.
On October 17, 2022, Apache redeemed the outstanding $123 million outstanding principal amount of 2.625% notes due January 15, 2023, at a redemption price equal to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed in part by Apache’s borrowing under the Company’s U.S. dollar-denominated revolving credit facility.
The redemption was financed in part by Apache’s borrowing under the Company’s U.S. dollar-denominated revolving credit facility. On January 18, 2022, Apache redeemed the outstanding $213 million principal amount of 3.25% senior notes due April 15, 2022, at a redemption price equal to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date.
Reserves Estimates Proved oil and gas reserves are the estimated quantities of natural gas, crude oil, condensate, and NGLs that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing conditions, operating conditions, and government regulations.
Reserves Estimates Proved oil and gas reserves are the estimated quantities of natural gas, crude oil, condensate, and NGLs that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing conditions, operating conditions, and government regulations. 55 Despite judgment involved in these engineering estimates, the Company’s reserves are used throughout its financial statements.
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.
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.
(3) Gross oil, natural gas, and NGL production in Egypt were as follows: 2022 2021 2020 Oil (b/d) 137,260 134,711 164,104 Natural Gas (Mcf/d) 555,562 586,663 641,069 NGL (b/d) 297 854 1,429 (4) Includes net production volumes per day attributable to a noncontrolling interest in Egypt of: 2022 2021 2020 Oil (b/d) 28,200 23,504 25,206 Natural Gas (Mcf/d) 118,074 88,409 91,540 NGL (b/d) 65 177 251 (5) Production volumes per day in the Company’s Alpine High field were as follows: 2022 2021 2020 Oil (b/d) 777 1,485 2,718 Natural Gas (Mcf/d) 192,253 258,096 274,279 NGL (b/d) 18,362 22,950 24,942 40 Pricing The following table presents pricing information by country: For the Year Ended December 31, 2022 Increase (Decrease) 2021 Increase (Decrease) 2020 Average Oil Price - Per barrel: United States $ 95.68 42% $ 67.37 80% $ 37.42 Egypt 101.25 44% 70.33 76% 39.95 North Sea 100.87 45% 69.67 62% 42.88 Total 99.11 44% 68.97 74% 39.60 Average Natural Gas Price - Per Mcf: United States $ 5.31 35% $ 3.92 221% $ 1.22 Egypt 2.85 1% 2.81 1% 2.79 North Sea 23.36 80% 12.96 306% 3.19 Total 4.98 25% 3.99 118% 1.83 Average NGL Price - Per barrel: United States $ 33.41 20% $ 27.85 148% $ 11.21 Egypt 76.80 57% 48.84 75% 27.83 North Sea 67.07 24% 54.30 83% 29.73 Total 34.51 21% 28.48 141% 11.84 Crude Oil Prices A substantial portion of the Company’s crude oil production is sold at prevailing market prices, which fluctuate in response to many factors that are outside of the Company’s control.
(3) Gross oil, natural gas, and NGL production in Egypt were as follows: 2023 2022 2021 Oil (b/d) 141,985 137,260 134,711 Natural Gas (Mcf/d) 500,080 555,562 586,663 NGL (b/d) — 297 854 (4) Includes net production volumes per day attributable to a noncontrolling interest in Egypt of: 2023 2022 2021 Oil (b/d) 29,739 28,200 23,504 Natural Gas (Mcf/d) 108,703 118,074 88,409 NGL (b/d) — 65 177 (5) Production volumes per day in the Company’s Alpine High field were as follows: 2023 2022 2021 Oil (b/d) 573 777 1,485 Natural Gas (Mcf/d) 174,454 192,253 258,096 NGL (b/d) 16,482 18,362 22,950 NM — Not Meaningful 39 Pricing The following table presents pricing information by country: For the Year Ended December 31, 2023 Increase (Decrease) 2022 Increase (Decrease) 2021 Average Oil Price - Per barrel: United States $ 77.84 (19)% $ 95.68 42% $ 67.37 Egypt 82.47 (19)% 101.25 44% 70.33 North Sea 82.75 (18)% 100.87 45% 69.67 Total 80.72 (19)% 99.11 44% 68.97 Average Natural Gas Price - Per Mcf: United States $ 1.80 (66)% $ 5.31 35% $ 3.92 Egypt 2.91 2% 2.85 1% 2.81 North Sea 13.02 (44)% 23.36 80% 12.96 Total 2.91 (42)% 4.98 25% 3.99 Average NGL Price - Per barrel: United States $ 20.85 (38)% $ 33.41 20% $ 27.85 Egypt — NM 76.80 57% 48.84 North Sea 47.77 (29)% 67.07 24% 54.30 Total 21.54 (38)% 34.51 21% 28.48 NM — Not Meaningful Crude Oil Prices A substantial portion of the Company’s crude oil production is sold at prevailing market prices, which fluctuate in response to many factors that are outside of the Company’s control.
For the Year Ended December 31, 2022 2021 2020 (In millions) Lease operating expenses $ 1,444 $ 1,241 $ 1,127 Gathering, processing, and transmission 367 264 274 Purchased oil and gas costs 1,776 1,580 357 Taxes other than income 268 204 123 Exploration 305 155 274 General and administrative 483 376 290 Transaction, reorganization, and separation 26 22 54 Depreciation, depletion, and amortization: Oil and gas property and equipment 1,186 1,255 1,643 Gathering, processing, and transmission assets 15 64 76 Other assets 32 41 53 Asset retirement obligation accretion 117 113 109 Impairments — 208 4,501 Financing costs, net 379 514 267 Lease Operating Expenses (LOE) LOE includes several key components, such as direct operating costs, repairs and maintenance, and workover costs.
For the Year Ended December 31, 2023 2022 2021 (In millions) Lease operating expenses $ 1,436 $ 1,444 $ 1,241 Gathering, processing, and transmission 334 367 264 Purchased oil and gas costs 742 1,776 1,580 Taxes other than income 207 268 204 Exploration 195 305 155 General and administrative 351 483 376 Transaction, reorganization, and separation 15 26 22 Depreciation, depletion, and amortization: Oil and gas property and equipment 1,500 1,186 1,255 Gathering, processing, and transmission assets 6 15 64 Other assets 34 32 41 Asset retirement obligation accretion 116 117 113 Impairments 61 — 208 Financing costs, net 312 379 514 Lease Operating Expenses (LOE) LOE includes several key components, such as direct operating costs, repairs and maintenance, and workover costs.
The letters of credit denominated in pounds were issued to support North Sea decommissioning obligations, the terms of which required such support after Standard & Poor’s reduced Apache’s credit rating from BBB to BB+ on March 26, 2020.
The letters of credit denominated in pounds were issued to support North Sea decommissioning obligations, the terms of which require such support while Apache’s credit rating by Standard & Poor’s remains below BBB; on March 26, 2020, Standard & Poor’s reduced Apache’s rating from BBB to BB+, which was affirmed in 2023.
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 GOM Assets.
Apache has also received orders to decommission other Legacy GOM 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 GOM Assets.
Accordingly, the Company has recorded a contingent liability of $1.2 billion as of December 31, 2022, representing the estimated costs of decommissioning it may be required to perform on Legacy GOM Assets.
Accordingly, the Company has recorded a contingent liability of $824 million as of December 31, 2023, representing the estimated costs of decommissioning it may be required to perform or fund on Legacy GOM Assets.
Currently, Apache holds two bonds (Bonds) and five Letters of Credit backed by investment-grade counterparties to secure Fieldwood’s asset retirement obligations on the Legacy GOM Assets as and when Apache is required to perform or pay for decommissioning any Legacy GOM Asset over the remaining life of the Legacy GOM Assets. 54 On August 3, 2020, Fieldwood again filed for protection under Chapter 11 of the U.S.
Following the 2018 reorganization of Fieldwood, Apache held two bonds (Bonds) and five Letters of Credit securing Fieldwood’s asset retirement obligations on the Legacy GOM Assets as and when Apache is required to perform or pay for decommissioning any Legacy GOM Asset over the remaining life of the Legacy GOM Assets. 53 On August 3, 2020, Fieldwood again filed for protection under Chapter 11 of the U.S.
Average realized crude oil prices for 2022 were up 44 percent compared to 2021, a direct result of the rising benchmark oil prices over the past year. Crude oil prices realized in 2022 averaged $99.11 per barrel. Continued volatility in the commodity price environment reinforces the importance of the Company’s asset portfolio.
Average realized crude oil prices for 2023 were down 19 percent compared to 2022, a direct result of decreasing benchmark oil prices over the past year. Crude oil prices realized in 2023 averaged $80.72 per barrel. Continued volatility in the commodity price environment reinforces the importance of the Company’s asset portfolio.
This facility matures in April 2027, subject to the Company’s two, one-year extension options. 51 In connection with the Company’s entry into the USD Agreement and the GBP Agreement (each, a New Agreement), Apache terminated US$4.0 billion of commitments under the Former Facility, borrowings then outstanding under the Former Facility were deemed outstanding under the USD Agreement, and letters of credit then outstanding under the Former Facility were deemed outstanding under a New Agreement, depending upon whether denominated in US dollars or pounds sterling.
In connection with the Company’s entry into the USD Agreement and the GBP Agreement (each, a 2022 Agreement), Apache terminated US$4.0 billion of commitments under the Former Facility, borrowings then outstanding under the Former Facility were deemed outstanding under the USD Agreement, and letters of credit then outstanding under the Former Facility were deemed outstanding under a 2022 Agreement, depending upon whether denominated in US dollars or pounds sterling.
During 2021, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $22 million for an aggregate purchase price of $20 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $2 million.
Payments on Fixed-Rate Debt During 2023, Apache purchased in the open market and canceled senior notes issued under its indentures in an aggregate principal amount of $74 million for an aggregate purchase price of $65 million in cash, including accrued interest and broker fees, reflecting a discount to par of an aggregate $10 million.
Fergus entry point of the national grid on a National Balancing Point index price basis. The Company’s North Sea operations averaged $23.36 per Mcf in 2022, an 80 percent increase from an average of $12.96 per Mcf in 2021. 41 NGL Prices The Company’s U.S.
Fergus entry point of the national grid on a National Balancing Point index price basis. The Company’s North Sea operations averaged $13.02 per Mcf in 2023, a 44 percent decrease from an average of $23.36 per Mcf in 2022. 40 NGL Prices The Company’s U.S.
For additional information, refer to Part I, Items 1 and 2—Business and Properties and Part I, Item 1A—Risk Factors of this Annual Report on Form 10-K. 48 Sources and Uses of Cash The following table presents the sources and uses of the Company’s cash and cash equivalents for the years presented: For the Year Ended December 31, 2022 2021 2020 (In millions) Sources of Cash and Cash Equivalents: Net cash provided by operating activities $ 4,943 $ 3,496 $ 1,388 Proceeds from APA and Apache credit facilities, net 24 392 150 Proceeds from Altus credit facility, net — 33 228 Proceeds from asset divestitures 778 256 166 Fixed-rate debt borrowings — — 1,238 Proceeds from sale of Kinetik shares 224 — — Other, net 11 20 — 5,980 4,197 3,170 Uses of Cash and Cash Equivalents: Additions to upstream oil and gas property (1) 1,770 1,101 1,270 Acquisition of Delaware Basin properties 591 — — Leasehold and property acquisitions 37 9 4 Contributions to Altus equity method interests — 28 327 Payments on fixed-rate debt 1,493 1,795 1,243 Dividends paid to APA common stockholders 207 52 123 Distributions to noncontrolling interest - Egypt 362 279 91 Distributions to Altus Preferred Unit limited partners 11 46 23 Treasury stock activity, net 1,423 847 — Deconsolidation of Altus cash and cash equivalents 143 — — Other, net — — 74 6,037 4,157 3,155 Increase (decrease) in cash and cash equivalents $ (57) $ 40 $ 15 (1) The table presents capital expenditures on a cash basis; therefore, the amounts may differ from those discussed elsewhere in this Annual Report on Form 10-K, which include accruals.
For additional information, refer to Part I, Items 1 and 2—Business and Properties and Part I, Item 1A—Risk Factors of this Annual Report on Form 10-K. 46 Sources and Uses of Cash The following table presents the sources and uses of the Company’s cash and cash equivalents for the years presented: For the Year Ended December 31, 2023 2022 2021 (In millions) Sources of Cash and Cash Equivalents: Net cash provided by operating activities $ 3,129 $ 4,943 $ 3,496 Proceeds from revolving credit facilities, net — 24 392 Proceeds from asset divestitures 29 778 256 Proceeds from sale of Kinetik shares 228 224 — Total Sources of Cash and Cash Equivalents 3,386 5,969 4,144 Uses of Cash and Cash Equivalents: Additions to upstream oil and gas property (1) 2,313 1,770 1,101 Acquisition of Delaware Basin properties 24 591 — Leasehold and property acquisitions 20 37 9 Payments on revolving credit facilities, net 194 — — Payments on Apache fixed-rate debt 65 1,493 1,795 Dividends paid to APA common stockholders 308 207 52 Distributions to noncontrolling interest – Egypt 238 362 279 Treasury stock activity, net 329 1,423 847 Deconsolidation of Altus cash and cash equivalents — 143 — Other, net 53 — 21 Total Uses of Cash and Cash Equivalents 3,544 6,026 4,104 Increase (decrease) in cash and cash equivalents $ (158) $ (57) $ 40 (1) The table presents capital expenditures on a cash basis; therefore, the amounts may differ from those discussed elsewhere in this Annual Report on Form 10-K, which include accruals.
Such acceleration and termination are automatic upon specified insolvency events of a borrower or certain subsidiaries. 52 Consistent with the Former Facility, the New Agreements do not require collateral, do not have a borrowing base, do not permit lenders to accelerate maturity or refuse to lend based on unspecified material adverse changes, and do not have borrowing restrictions or prepayment obligations in the event of a decline in credit ratings.
Consistent with the Former Facility, the 2022 Agreements do not require collateral, do not have a borrowing base, do not permit lenders to accelerate maturity or refuse to lend based on unspecified material adverse changes, and do not have borrowing restrictions or prepayment obligations in the event of a decline in credit ratings.
General and Administrative (G&A) Expenses G&A expenses increased $107 million compared to 2021, primarily driven by higher cash-based stock compensation expense resulting from an increase in the Company’s stock price and achievement of performance and financial objectives as defined in the stock award plans.
General and Administrative (G&A) Expenses G&A expenses decreased $132 million compared to 2022, primarily driven by lower cash-based stock compensation expense during 2023 resulting from decreases in the Company’s stock price and in the achievement of performance and financial objectives as defined in the stock award plans.
As of December 31, 2022, the Company had contractual obligations totaling $3.0 billion, of which $1.0 billion is related to U.S. firm transportation contracts, $1.8 billion is related to the new merged concession agreement with the EGPC, and $0.2 billion of other items.
As of December 31, 2023, the Company had contractual obligations totaling $1.7 billion, of which $956 million is related to U.S. firm transportation contracts, $614 million is related to the merged concession agreement with the EGPC, and $135 million is related to other items.
The following table presents a summary of these expenses: For the Year Ended December 31, 2022 2021 2020 (In millions) Unproved leasehold impairments $ 24 $ 31 $ 101 Dry hole expenses 183 66 110 Geological and geophysical expenses 23 18 20 Exploration overhead and other 75 40 43 Total Exploration $ 305 $ 155 $ 274 Exploration expenses increased $150 million compared to 2021, primarily the result of higher dry hole expenses in Suriname and Egypt and higher exploration overhead, a function of increased exploration activities.
The following table presents a summary of these expenses: For the Year Ended December 31, 2023 2022 2021 (In millions) Unproved leasehold impairments $ 22 $ 24 $ 31 Dry hole expenses 92 183 66 Geological and geophysical expenses 19 23 18 Exploration overhead and other 62 75 40 Total Exploration $ 195 $ 305 $ 155 Exploration expenses decreased $110 million compared to 2022, primarily the result of higher dry hole expense in Suriname during 2022 coupled with lower exploration overhead and other activities in 2023.
The Company expects that Apache will continue to reduce debt outstanding under its indentures from time to time. 50 Dividends Paid to APA Common Stockholders The Company paid $207 million and $52 million during the years ended December 31, 2022 and 2021, respectively, for dividends on its common stock.
The redemption was financed by borrowing under Apache’s former revolving credit facility. The Company expects that Apache will continue to reduce debt outstanding under its indentures from time to time. Dividends Paid to APA Common Stockholders The Company paid $308 million and $207 million during the years ended December 31, 2023 and 2022, respectively, for dividends on its common stock.
Operational Highlights Key operational highlights for the year include: United States • Daily boe production from the Company’s U.S. assets, which decreased 8 percent from the prior year end, accounted for 53 percent of its total worldwide production during 2022.
Key operational highlights for the year include: United States • Daily boe production from the Company’s U.S. assets, which increased 2 percent from 2022, accounted for 54 percent of the Company’s worldwide production during 2023.
Average daily production in 2022 was 188 Mb/d, with prices averaging $99.11 per barrel. Crude oil sales accounted for 74 percent of the Company’s 2022 oil and gas production revenues and 48 percent of its worldwide production.
Average daily production in 2023 was 203 Mb/d, with prices averaging $80.72 per barrel. Crude oil sales accounted for 81 percent of the Company’s 2023 oil and gas production revenues and 50 percent of its worldwide production.
Average daily production in 2022 was 865 MMcf/d, with prices averaging $4.98 per Mcf. Natural gas sales accounted for 17 percent of the Company’s 2022 oil and gas production revenues and 36 percent of its worldwide production.
Average daily production in 2023 was 828 MMcf/d, with prices averaging $2.91 per Mcf. Natural gas sales accounted for 12 percent of the Company’s 2023 oil and gas production revenues and 34 percent of its worldwide production.
Service agreements, including drilling contracts, generally indemnify the Company for injuries and death of the service provider’s employees as well as subcontractors hired by the service provider. 55 The Company purchases multi-year political risk insurance from The Islamic Corporation for the Insurance of Investment and Export Credit Trade (ICIEC, an agency of the Islamic Development Bank) and highly-rated insurers covering a portion of its investments in Egypt for losses arising from confiscation, nationalization, and expropriation risks.
The Company purchases multi-year political risk insurance from The Islamic Corporation for the Insurance of Investment and Export Credit Trade (ICIEC, an agency of the Islamic Development Bank) and highly-rated insurers covering a portion of its investments in Egypt for losses arising from confiscation, nationalization, and expropriation risks.
Crude Oil Revenues Crude oil revenues for 2022 totaled $6.8 billion, a $2.2 billion increase from the 2021 total of $4.6 billion. A 44 percent increase in average realized prices increased 2022 revenues by $2.0 billion compared to 2021, while 3 percent higher average daily production increased revenues by $251 million.
Crude Oil Revenues Crude oil revenues for 2023 totaled $6.0 billion, an $838 million decrease from the 2022 total of $6.8 billion. A 19 percent decrease in average realized prices reduced 2023 revenues by $1.3 billion compared to 2022, while 8 percent higher average daily production increased revenues by $430 million.
The Company recognized a $66 million loss on extinguishment of debt, including $11 million of unamortized debt discount and issuance costs in connection with the note purchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.
Apache paid holders an aggregate $1.2 billion in cash, reflecting principal, premium to par, and accrued and unpaid interest. The Company recognized a $66 million loss on extinguishment of debt, including $11 million of unamortized debt discount and issuance costs in connection with the note purchases. The repurchases were partially financed by borrowing under Apache’s former revolving credit facility.
The Company is also subject to a variety of other taxes, including U.S. franchise taxes. Taxes other than income increased $64 million compared to 2021, primarily from higher severance taxes driven by higher commodity prices.
The Company is also subject to a variety of other taxes, including U.S. franchise taxes. Taxes other than income decreased $61 million compared to 2022, primarily from lower severance taxes driven by lower commodity prices and lower ad valorem tax rates.
Payments on Fixed-Rate Debt On January 18, 2022, Apache redeemed the outstanding $213 million principal amount of 3.25% senior notes due April 15, 2022, at a redemption price equal to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date. The redemption was financed by borrowing under Apache’s former revolving credit facility.
The repurchases were partially financed by borrowing under Apache’s former revolving credit facility. On October 17, 2022, Apache redeemed the outstanding $123 million outstanding principal amount of 2.625% notes due January 15, 2023, at a redemption price equal to 100 percent of their principal amount, plus accrued and unpaid interest to the redemption date.
The following table presents a summary of these expenses: For the Year Ended December 31, 2022 2021 2020 (In millions) Third-party processing and transmission costs $ 269 $ 232 $ 236 Midstream service costs - ALTM 18 128 143 Midstream service costs - Kinetik 93 — — Upstream processing and transmission costs 380 360 379 Midstream operating expenses 5 32 38 Intersegment eliminations (18) (128) (143) Total Gathering, processing, and transmission $ 367 $ 264 $ 274 43 GPT costs increased $103 million compared to 2021.
The following table presents a summary of these expenses: For the Year Ended December 31, 2023 2022 2021 (In millions) Third-party processing and transmission costs $ 225 $ 269 $ 232 Midstream service costs – ALTM — 18 128 Midstream service costs – Kinetik 109 93 — Upstream processing and transmission costs 334 380 360 Midstream operating expenses — 5 32 Intersegment eliminations — (18) (128) Total Gathering, processing, and transmission $ 334 $ 367 $ 264 42 GPT costs decreased $33 million compared to 2022, primarily the result of lower upstream processing and transmission costs, partially offset by impacts of the BCP Business Combination.
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. A significant piece of negative evidence evaluated was the U.S. pre-tax book cumulative loss incurred over the three-year period ended December 31, 2022.
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. The Company showed positive income over the three-year period ended December 31, 2023.
The Company also received $224 million of cash proceeds from the sale of four million of its shares in Kinetik during 2022.
Proceeds from Sale of Kinetik Shares The Company received $228 million and $224 million of cash proceeds from the sales of its Kinetik Shares during 2023 and 2022, respectively.
The Company continues to build and enhance its drilling inventory in Egypt, supplemented with recent seismic acquisitions and new play concept evaluations on both new and existing acreage. The Company continues to increase drilling and workover activity as a result of the merged concession agreement.
The Company continues to build and enhance its drilling inventory in Egypt, supplemented with recent seismic acquisitions and new play concept evaluations on both new and existing acreage opportunities provided by the 2021 merged concession agreement. • The Company suspended all new drilling activity in the North Sea during the second quarter of 2023.
For additional information regarding income taxes, refer to Note 10—Income Taxes in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K. The Company and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various state and foreign jurisdictions.
The remaining U.S. valuation allowance relates primarily to foreign tax credit and capital loss carryforwards. For additional information regarding income taxes, refer to Note 10—Income Taxes in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report on Form 10-K.
The Company remains committed to its capital return framework established in 2021 for equity holders to participate more directly and materially in cash returns. • The Company believes returning 60 percent of cash flow over capital investment 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’s quarterly dividend was increased in the fourth quarter of 2021 from $0.0625 per share to $0.125 per share.
Capital investment plans were then aligned across other areas of the portfolio while maintaining a focus on the Company’s capital returns framework established in 2021. 35 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 cash flow over capital investment 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’s quarterly dividend was increased in the third quarter of 2022 from $0.125 per share to $0.25 per share, representing a return to pre-COVID-19 dividend levels. • Beginning in the fourth quarter of 2021 and through the end of 2023, the Company has repurchased 76.1 million shares of the Company’s common stock.
As of December 31, 2021, there were $657 million of borrowings and $2 million letters of credit outstanding under the facility. There is no assurance of the terms upon which potential lenders under future credit facilities will make loans or other extensions of credit available to APA or its subsidiaries or the composition of such lenders.
The Company was in compliance with the terms of each 2022 Agreement as of December 31, 2023. There is no assurance of the terms upon which potential lenders under future credit facilities will make loans or other extensions of credit available to APA or its subsidiaries or the composition of such lenders.
Cash consideration paid totaled $591 million, with final cash settlement anticipated to be completed during the first quarter of 2023. Leasehold and Property Acquisitions During 2022 and 2021, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $37 million and $9 million, respectively.
Leasehold and Property Acquisitions During 2023 and 2022, the Company completed leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $20 million and $37 million, respectively.
Therefore, in the first quarter of 2023, the Company expects to record a deferred tax expense of approximately $170 million to $190 million related to the remeasurement of the December 31, 2022 U.K. deferred tax liability. On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA).
As a result, the Company recorded a deferred tax expense of $208 million and $174 million related to the remeasurement of the U.K. deferred tax liability in 2022 and 2023, respectively . On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA).
If Apache incurs costs to decommission any Legacy GOM Asset and GOM Shelf does not reimburse Apache for such costs, then Apache expects to obtain reimbursement from Trust A, the Bonds, and the Letters of Credit until such funds and securities are fully utilized.
If GOM Shelf does not reimburse Apache for further decommissioning costs incurred with respect to Legacy GOM Assets, then Apache will continue to seek reimbursement from Trust A, to the extent of available funds, and thereafter, will seek reimbursement from the Bonds and the Letters of Credit until all such funds and securities are fully utilized.
Natural Gas Revenues Natural gas revenues for 2022 totaled $1.6 billion, a $362 million increase from the 2021 total of $1.2 billion. A 25 percent increase in average realized prices increased 2022 revenues by $301 million compared to 2021, while 4 percent higher average daily production increased revenues by $61 million.
Natural Gas Revenues Natural gas revenues for 2023 totaled $880 million, a $689 million decrease from the 2022 total of $1.6 billion. A 42 percent decrease in average realized prices reduced 2023 revenues by $652 million compared to 2022, while 4 percent lower average daily production decreased revenues by $37 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+2 added−1 removed6 unchanged
Biggest changeA change in the interest rate applicable to short-term investments and credit facility borrowings would have an immaterial impact on earnings and cash flows but could impact interest costs associated with future debt issuances or any future borrowings.
Biggest changeChanges in the interest rate applicable to short-term investments and credit facility borrowings are expected to have an immaterial impact on earnings and cash flows but could impact interest costs associated with future debt issuances or any future borrowings. 58 Foreign Currency Exchange Rate Risk The Company’s cash activities relating to certain international operations is based on the U.S. dollar equivalent of cash flows measured in foreign currencies.
A foreign currency net gain or loss of $3 million would result from a 10 percent weakening or strengthening, respectively, in the British pound as of December 31, 2022. 59
Foreign currency net gain or loss of $3 million would result from a 10 percent weakening or strengthening, respectively, in the British pound as of December 31, 2023.
Based on average daily production for 2022, a $1.00 per barrel change in the weighted average realized oil price would have increased or decreased revenues for the year by approximately $69 million, a $0.10 per Mcf change in the weighted average realized natural gas price would have increased or decreased revenues for the year by approximately $32 million, and a $1.00 per barrel change in the weighted average realized NGL price would have increased or decreased revenues for the year by approximately $23 million.
Based on average daily production for 2023, a $1.00 per barrel change in the weighted average realized oil price would have increased or decreased revenues for the year by approximately $74 million, a $0.10 per Mcf change in the weighted average realized natural gas price would have increased or decreased revenues for the year by approximately $30 million, and a $1.00 per barrel change in the weighted average realized NGL price would have increased or decreased revenues for the year by approximately $23 million.
Interest Rate Risk At December 31, 2022, the Company had $4.9 billion, net, in outstanding notes and debentures, all of which was fixed-rate debt, with a weighted average interest rate of 5.32 percent.
Interest Rate Risk At December 31, 2023, the Company had $4.8 billion, net, in outstanding notes and debentures, all of which was fixed-rate debt, with a weighted average interest rate of 5.34 percent.
As of December 31, 2022, the Company had approximately $245 million in cash and cash equivalents, approximately 60 percent of which was invested in money market funds and short-term investments with major financial institutions. As of December 31, 2022, there were $566 million of borrowings outstanding under the Company’s syndicated revolving credit facilities.
As of December 31, 2023, the Company had approximately $87 million in cash and cash equivalents, approximately 85 percent of which was invested in money market funds and short-term investments with major financial institutions. As of December 31, 2023, there were $372 million of borrowings outstanding under the Company’s syndicated revolving credit facilities.
The Company does not hold or issue derivative instruments for trading purposes. As of December 31, 2022, the Company had open natural gas derivatives not designated as cash flow hedges in a liability position with a fair value of $45 million.
The Company does not hold or issue derivative instruments for trading purposes. As of December 31, 2023, the Company had open natural gas derivatives not designated as cash flow hedges in an asset position with a fair value of $6 million.
The forward-looking information provides indicators of how the Company views and manages its ongoing market risk exposures. 58 Commodity Price Risk The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices the Company receives for its crude oil, natural gas, and NGLs, which have historically been very volatile because of unpredictable events such as economic growth or retraction, weather, political climate, and global supply and demand.
Commodity Price Risk The Company’s revenues, earnings, cash flow, capital investments and, ultimately, future rate of growth are highly dependent on the prices the Company receives for its crude oil, natural gas, and NGLs, which have historically been very volatile because of unpredictable events such as economic growth or retraction, weather, political climate, and global supply and demand.
A 10 percent increase in gas prices would decrease the liability by approximately $4 million, while a 10 percent decrease in prices would increase the liability by approximately $4 million. These fair value changes assume volatility based on prevailing market parameters as of December 31, 2022.
A 10 percent increase in natural gas prices would decrease the asset by approximately $1 million, while a 10 percent decrease in prices would increase the asset by approximately $1 million. These fair value changes assume volatility based on prevailing market parameters as of December 31, 2023.
The Company’s Egypt production is sold under U.S. dollar contracts, and the majority of costs incurred are denominated in U.S. dollars. Transactions denominated in British pounds are converted to U.S. dollar equivalents based on the average exchange rates during the period.
The Company’s North Sea production is sold under U.S. dollar contracts, while the majority of costs incurred are paid in British pounds. The Company’s Egypt production is sold under U.S. dollar contracts, and the majority of costs incurred are denominated in U.S. dollars.
The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses.
The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how the Company views and manages its ongoing market risk exposures.
The Company continually monitors its market risk exposure, as oil and gas supply and demand are impacted by uncertainties in the commodity and financial markets associated with the conflict in Ukraine, global inflation, and other current events. The Company’s average crude oil price realizations increased 44 percent to $99.11 per barrel in 2022 from $68.97 per barrel in 2021.
The Company continually monitors its market risk exposure, as oil and gas supply and demand are impacted by uncertainties in the commodity and financial markets associated with the conflict in Ukraine, the recent conflict in Israel and Gaza, actions taken by foreign oil and gas producing nations, including OPEC+, global inflation, and other current events.
The Company’s average natural gas price realizations increased 25 percent to $4.98 per Mcf in 2022 from $3.99 per Mcf in 2021. The Company’s average NGL price realizations increased 21 percent to $34.51 per barrel in 2022 from $28.48 per barrel in 2021.
The Company’s average NGL price realizations decreased 38 percent to $21.54 per barrel in 2023 from $34.51 per barrel in 2022.
Removed
Foreign Currency Exchange Rate Risk The Company’s cash activities relating to certain international operations is based on the U.S. dollar equivalent of cash flows measured in foreign currencies. The Company’s North Sea production is sold under U.S. dollar contracts, while the majority of costs incurred are paid in British pounds.
Added
The Company’s average crude oil price realizations decreased 19 percent to $80.72 per barrel in 2023 from $99.11 per barrel in 2022. The Company’s average natural gas price realizations decreased 42 percent to $2.91 per Mcf in 2023 from $4.98 per Mcf in 2022.
Added
Transactions denominated in British pounds are converted to U.S. dollar equivalents based on the average exchange rates during the period. The Company monitors foreign currency exchange rates of countries in which it is conducting business and may, from time to time, implement measures to protect against foreign currency exchange rate risk.

Other APA 10-K year-over-year comparisons