- Cost Reduction Progress: Achieved $350M controllable spend reduction by end-2027 early; expects $200M further decline in 2026, totaling $550M annualized savings.
- Permian Production Stability: Maintained oil output at 120,000–122,000 barrels/day in 2026, with 10+ year sustainability and 2/3 technical upside in Delaware Basin.
- Free Cash Flow & Returns: Generated $425M FCF in Q4 2025 ($154M shareholder returns); full-year $1B+ FCF returned 63% to investors via dividends and buybacks.
- Reserve Growth: 9% YoY proved reserves increase to >1 billion boe, with 160%+ reserve replacement ratio and net debt down $1.4B to $4B.
Operational Highlights
The company's operational performance was strong, with oil production guidance met or exceeded in the Permian every quarter in 2025. The Permian Basin inventory confirmed the depth and quality of drilling opportunities, validating substantial upside potential. In Egypt, focused activity under the new gas pricing framework drove meaningful production growth. As Stephen Riney mentioned, the company is continuing to test and appraise its Permian assets, with a steady diet of testing and appraisal planned.
Cost Reduction and Capital Allocation
APA Corporation achieved significant cost reductions, with controllable spend reduced by $350 million on a run-rate basis by the end of 2025. The company expects further cost savings of $200 million in 2026, with half being incremental savings and the remainder driven by lower Permian activity. The capital program for 2026 is $1.3 billion, designed to maintain relatively flat oil production year-over-year. The company's focus remains on disciplined capital allocation, further cost efficiencies, and continued balance sheet improvement.
Valuation and Outlook
With a P/E Ratio of 7.2, P/B Ratio of 0.93, and EV/EBITDA of 3.15, APA Corporation's valuation multiples indicate a relatively attractive price. The company's ROIC of 15.29% and ROE of 20.18% demonstrate strong profitability. As Ben Rodgers stated, the company is on track to reach its $3 billion balance sheet target by 2027-2028, indicating a positive outlook. The expected gross oil volumes in Egypt to slightly decline in 2026 due to drilling more gas wells is a notable point, but the company's sustained oil volumes through waterflood projects mitigate this risk.