APA Corp
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
APA$44.63+2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001784031-24-000013
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0002040266-24-000003
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 147 previous paragraphs and 159 current paragraphs.
88 unchanged; 56 reworded; 15 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
On September 10, 2024, APA announced it entered into an agreement to sell non-core producing properties in the Permian Basin to an undisclosed buyer for $950 million, prior to customary closing adjustments. The properties are located in the Central Basin Platform, Texas and New Mexico Shelf, and Northwest Shelf and currently represent estimated net production of 21,000 barrels of oil equivalent per day, of which approximately 57 percent is oil. Proceeds from this sale are expected to be used primarily to reduce debt. The effective date of the transaction is July 1, 2024, and the transaction is expected to close during the fourth quarter of 2024.
Current report
•Subsequent to September 30, 2024, but prior to the date of this filing, the Company entered into a new pricing agreement for incremental gas volumes produced in Egypt, making gas exploration and development more economically competitive with oil development.
Current report
•In October 2024, the Company announced that its subsidiary reached a positive final investment decision for the first oil development, named GranMorgu, in Block 58 offshore Suriname. This development will include production from the Krabdagu and Sapakara oil discoveries. These fields, located in water depths between 100 and 1,000 meters, will be produced through a system of subsea wells connected to a floating production, storage and offloading (FPSO) unit located 150 km off the Suriname coast, with an oil production capacity of 220,000 barrels per day. The GranMorgu FPSO unit is designed to accommodate future tie-back opportunities that would extend its 4-year production plateau and will feature technology that minimizes greenhouse gas emissions. Total investment is estimated at $10.5 billion, with APA’s share of the investment subject to the existing agreement with TotalEnergies to carry a portion of Apache’s appraisal and development capital. First oil is anticipated in 2028.
Current report
Third-Quarter 2024 compared to Third-Quarter 2023
Current report
During the third quarter and the first nine months of 2024, the Company recorded $1.1 billion of impairments, which includes $793 million of oil and gas property impairments in the North Sea, $315 million impairment of assets held for sale in the Permian Basin, and $3 million of inventory impairments in the North Sea.
Current report
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA). 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 $1.0 billion for any three consecutive years preceding the tax year at issue. The CAMT is effective for tax years beginning after December 31, 2022. The Company became an applicable corporation subject to CAMT beginning on January 1, 2024. On September 12, 2024, the U.S. Department of Treasury and the Internal Revenue Service released proposed regulations relating to the application and implementation of CAMT. The Company is continuing to evaluate the proposed regulations and their effect on the Company’s consolidated financial statements.
Current report
During the nine months ended September 30, 2024, the Company recognized downward reserve revisions of approximately 26 percent of its year-end 2023 estimated proved reserves in the North Sea as a result of its economic assessment of its North Sea assets described in “Financial and Operational Highlights” above.
Current report
Payments on Term Loan Facility During the first nine months of 2024, the Company made a payment of $500 million on its syndicated credit agreement. For additional details of the credit agreement, see “Term Loan Credit Agreement”in the Liquidity section below. As of September 30, 2024, $1.0 billion remained outstanding under the term loan facility governed by the Term Loan Credit Agreement.
Current report
Long-Lived Asset Impairments
Current report
Long-lived assets used in operations, including proved oil and gas properties and GPT assets, are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in future cash flows expected to be generated by an asset. Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. If there is an indication that the carrying amount of an asset group may not be recovered, the asset is assessed by management through an established process in which changes to significant assumptions such as prices, volumes, and future development plans are reviewed. If, upon review, the sum of the undiscounted pre-tax cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is assessed by management using the income approach.
Current report
Under the income approach, the fair value of each asset group is estimated based on the present value of expected future cash flows. The income approach is dependent on a number of factors including estimates of forecasted revenue and operating costs, proved reserves, the success of future exploration for and development of unproved reserves, expected throughput volumes for GPT assets, discount rates, and other variables. Key assumptions used in developing a discounted cash flow model described above include estimated quantities of crude oil and natural gas reserves; estimates of market prices considering forward commodity price curves as of the measurement date; and estimates of operating, administrative, and capital costs adjusted for inflation. The Company discounts the resulting future cash flows using a discount rate believed to be consistent with those applied by market participants.
Current report
To assess the reasonableness of our fair value estimate, when available, management uses a market approach to compare the fair value to similar assets. This requires management to make certain judgments about the selection of comparable assets, recent comparable asset transactions, and transaction premiums.
Current report
Although the fair value estimate of each asset group is based on assumptions believed to be reasonable, those assumptions are inherently unpredictable and uncertain, and actual results could differ from the estimate. Negative revisions of estimated reserves quantities, increases in future cost estimates, divestiture of a significant component of the asset group, or sustained decreases in crude oil or natural gas prices could lead to a reduction in expected future cash flows and possibly an additional impairment of long-lived assets in future periods.
Current report
The Company has recorded material impairments of certain proved oil and gas properties and gathering, processing, and transmission facilities in the third quarter of 2024. For discussion of these impairments, see “Fair Value Measurements” of Note 1—Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements.
Current report
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40),” which expands disclosures around a public entity’s costs and expenses of specific items (i.e. employee compensation, DD&A), requires the inclusion of amounts that are required to be disclosed under GAAP in the same disclosure as other disaggregation requirements, requires qualitative descriptions of amounts remaining in expense captions that are not separately disaggregated quantitatively, and requires disclosure of total selling expenses, and in annual periods, the definition of selling expenses. The amendment does not change or remove existing disclosure requirements. The amendment is effective for fiscal years beginning after December 15, 2026, and interim periods with fiscal years beginning after December 15, 2027. Early adoption is permitted, and the amendment can be adopted prospectively or retrospectively to any or all periods presented in the financial statements. The Company is currently assessing the impact of adopting this standard.
Removed paragraphs (3)
Previous report
•The Company expects to average 10 drilling rigs in the Permian Basin for the remainder of 2024 as it integrates Callon operations, including contracting and logistics, well planning and design, drilling and completions, and facility construction.
Previous report
Second-Quarter 2024 compared to Second-Quarter 2023
Previous report
There were no material changes in recently issued or adopted accounting standards from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Reworded paragraphs (56)
Previous wording
•Beginning in the fourth quarter of 2021 and through the end of the second quarter of 2024, the Company has repurchased 80.6 million shares of the Company’s common stock. The Company repurchased 0.1 million shares in July 2024, and as of July 31, 2024, the Company had remaining authorization to repurchase up to 39.3 million shares under the Company’s share repurchase programs.
Current wording
•Beginning in the fourth quarter of 2021 and through the end of the third quarter of 2024, the Company has repurchased 80.7 million shares of the Company’s common stock.
Previous wording
On April 1, 2024, APA completed its acquisition of Callon Petroleum Company (Callon) in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s debt (the Callon acquisition). The transaction was approved by APA and Callon shareholders at special meetings held on March 27, 2024. The acquired assets include approximately 120,000 net acres in the Delaware Basin and 25,000 net acres in the Midland Basin. The Company believes the acquisition of Callon provides opportunities to reduce costs, improve capital efficiencies, leverage economies of scale, and expand the development inventory that formed the basis of the transaction value.
Current wording
On April 1, 2024, APA completed its acquisition of Callon Petroleum Company (Callon) in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon’s debt (the Callon acquisition). The acquired assets include approximately 120,000 net acres in the Delaware Basin and 25,000 net acres in the Midland Basin. The Company believes the acquisition of Callon provides opportunities to reduce costs, improve capital efficiencies, leverage economies of scale, and expand the development inventory that formed the basis of the transaction value.
Previous wording
In the second quarter of 2024, the Company reported net income attributable to common stock of $541 million, or $1.46 per diluted share, compared to net income of $381 million, or $1.23 per diluted share, in the second quarter of 2023. The increase in net income in the second quarter of 2024 compared to the same prior year period was primarily driven by higher revenues as a result of production from the Callon acquisition, increased drilling activity in the U.S., and higher realized oil and NGL prices during the period. Net income also benefited from $276 million of net gains on divestitures of non-core assets during the second quarter of 2024. These benefits to net income were offset by higher depreciation expense, transaction and reorganization costs, and lease operating expenses compared to the same prior year period, primarily a result of the Callon acquisition.
Current wording
In the third quarter of 2024, the Company reported a net loss attributable to common stock of $223 million, or $0.60 per diluted share, compared to net income of $459 million, or $1.49 per diluted share, in the third quarter of 2023. The decrease in net income in the third quarter of 2024 compared to the third quarter of 2023 was primarily driven by $1.1 billion of impairments, which included $793 million of oil and gas property impairments in the North Sea, a $315 million impairment of assets held for sale in the Permian Basin, and $3 million inventory impairments in the North Sea. These impacts to net loss were partially offset by lower income tax expense compared to the same prior-year period.
Previous wording
In the first six months of 2024, the Company reported net income attributable to common stock of $673 million, or $2.00 per diluted share, compared to net income of $623 million, or $2.01 per diluted share, in the first six months of 2023. The increase in net income in the first six months of 2024 compared to the first six months of 2023 was primarily driven by higher revenues as a result of production from the Callon acquisition, increased drilling activity in the Permian Basin, and higher realized oil and NGL prices. Net income also benefited from $283 million of net gains on divestitures of non-core assets and lower deferred income tax expense compared to the same prior year period. These benefits to net income were offset by higher depreciation expense, transaction and reorganization costs, and lease operating expenses compared to the same prior year period, primarily as a result of the Callon acquisition.
Current wording
In the first nine months of 2024, the Company reported net income attributable to common stock of $450 million, or $1.29 per diluted share, compared to net income of $1.1 billion, or $3.50 per diluted share, in the first nine months of 2023. The decrease in net income in the first nine months of 2024 compared to the first nine months of 2023 was primarily driven by $1.1 billion of impairments recorded during the third quarter of 2024 and the related tax impacts. Net income was further impacted by higher depreciation expense, transaction and reorganization costs, and lease operating expenses, primarily a result of the Callon acquisition. These impacts to net income were partially offset by higher revenues as a result of increased drilling activity in the Permian Basin, production from the acquired Callon properties, gain from divestitures of non-core assets, and lower income tax expense compared to the same prior-year period.
Previous wording
The Company generated $1.2 billion of cash from operating activities during the first six months of 2024, 7 percent lower than the first six months of 2023. APA’s lower operating cash flows for the first six months of 2024 were primarily driven by timing of working capital items. The Company repurchased 4.5 million shares of its common stock for $144 million and paid $168 million in dividends to APA common stockholders during the first six months of 2024.
Current wording
The Company generated $2.6 billion of cash from operating activities during the first nine months of 2024, 23 percent higher than the first nine months of 2023. APA’s higher operating cash flows for the first nine months of 2024 were primarily driven by higher revenues as a result of increased drilling activity in the Permian Basin, production from the acquired Callon properties, and timing of working capital items. The Company repurchased 4.6 million shares of its common stock for $146 million and paid $260 million in dividends to APA common stockholders during the first nine months of 2024.
Previous wording
•Daily boe production from the Company’s U.S. assets accounted for 64 percent of its total production during the second quarter of 2024 and increased 43 percent from the second quarter of 2023. Daily oil production from the Company’s U.S. assets increased 83 percent from the second quarter of 2023. During the second quarter of 2024, the Company averaged eleven drilling rigs in the Permian Basin, including six rigs in the Southern Midland Basin and five rigs in the Delaware Basin. The Company brought online 60 operated wells during the quarter, of which 25 wells were associated with the Callon acquisition. The Company’s core Permian Basin development program continues to represent key growth areas for the U.S. assets.
Current wording
•Daily boe production from the Company’s U.S. assets accounted for 64 percent of its total production during the third quarter of 2024 and increased 33 percent from the third quarter of 2023. Daily oil production from the Company’s U.S. assets increased 71 percent from the third quarter of 2023. During the third quarter of 2024, the Company averaged nine drilling rigs in the Permian Basin, including five rigs in the Southern Midland Basin and four rigs in the Delaware Basin. The Company brought online 48 operated wells during the quarter, of which 21 wells were associated with the Callon assets. The Company’s core Permian Basin development program continues to represent key growth areas for the U.S. assets. The Company expects to average 8 drilling rigs in the Permian Basin for the remainder of 2024 and into 2025.
Previous wording
•In Egypt, the Company continued its drilling and workover activity with a focus on oil production. The Company averaged 15 drilling rigs and drilled 14 new productive wells during the second quarter of 2024. During the same period, the Company averaged 20 workover rigs as it continues to align its drilling and workover activity with a goal of driving improved capital efficiency. Second quarter 2024 gross production from the Company’s Egypt assets decreased 7 percent from the second quarter of 2023, and net production decreased 8 percent, while daily oil production remained essentially flat.
Current wording
•In Egypt, the Company continued its drilling and workover activity with a focus on oil production. The Company averaged 12 drilling rigs and drilled 15 new productive wells during the third quarter of 2024. During the same period, the Company averaged 20 workover rigs as it continues to align its drilling and workover activity with a goal of driving improved capital efficiency. Third quarter 2024 gross production from the Company’s Egypt assets decreased 5 percent from the third quarter of 2023, and net production increased 2 percent.
Previous wording
•The Company suspended all new drilling activity in the North Sea during the second quarter of 2023. The Company’s investment program in the North Sea is now directed toward safety, base production management, and asset maintenance and integrity.
Current wording
•The Company suspended all new drilling activity in the North Sea during the second quarter of 2023. During the third quarter of 2024, the Company continued its economic assessment of its North Sea assets in light of several new regulatory guidelines and obligations surrounding significant tax levies and modernization of aging infrastructure. The Company determined the expected returns do not economically support making investments required under the combined impact of the regulations, and it will cease production at its facilities in the North Sea prior to 2030. The Company’s investment program in the North Sea is now directed toward asset safety and integrity.
Previous wording
(4) Average sales volumes from the North Sea for the second quarters of 2024 and 2023 were 37,491 boe/d and 40,099 boe/d, respectively, and 36,285 boe/d and 43,347 boe/d for the first six months of 2024 and 2023, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings.
Current wording
(4) Average sales volumes from the North Sea for the third quarters of 2024 and 2023 were 19,374 boe/d and 55,283 boe/d, respectively, and 30,607 boe/d and 47,370 boe/d for the first nine months of 2024 and 2023, respectively. Sales volumes may vary from production volumes as a result of the timing of liftings.
Previous wording
Crude Oil Crude oil revenues for the second quarter of 2024 totaled $1.9 billion, a $542 million increase from the comparative 2023 quarter. A 28 percent higher average daily production increased second-quarter 2024 oil revenues by $437 million compared to the second quarter of 2023, while an 8 percent increase in average realized prices increased oil revenues by $105 million. Crude oil revenues accounted for 87 percent of total oil and gas production revenues and 54 percent of worldwide production in the second quarter of 2024. Crude oil prices realized in the second quarter of 2024 averaged $82.28 per barrel, compared with $76.38 per barrel in the comparative prior-year quarter.
Current wording
Crude Oil Crude oil revenues for the third quarter of 2024 totaled $1.8 billion, a $92 million increase from the comparative 2023 quarter. A 23 percent higher average daily production increased third-quarter 2024 oil revenues by $251 million compared to the third quarter of 2023, while a 9 percent decrease in average realized prices decreased revenues by $159 million. Crude oil revenues accounted for 87 percent of total oil and gas production revenues and 55 percent of worldwide production in the third quarter of 2024. Crude oil prices realized in the third quarter of 2024 averaged $78.06 per barrel, compared with $86.15 per barrel in the comparative prior-year quarter.
Previous wording
The Company’s worldwide oil production increased 54.8 Mb/d to 253.6 Mb/d during the second quarter of 2024 from the comparative prior-year period, primarily a result of the Callon acquisition coupled with increased drilling activity in the Permian Basin, offset by natural production decline across all assets.
Current wording
The Company’s worldwide oil production increased 48.5 Mb/d to 256.3 Mb/d during the third quarter of 2024 from the comparative prior-year period, primarily a result of increased drilling activity in the Permian Basin coupled with the Callon acquisition. These increases were offset by natural production decline, the sale of non-core assets in the U.S., and operational downtime due to maintenance activities in the North Sea.
Previous wording
Natural Gas Natural gas revenues for the second quarter of 2024 totaled $135 million, a $45 million decrease from the comparative 2023 quarter. A 26 percent decrease in average realized prices decreased second-quarter 2024 natural gas revenues by $46 million compared to the second quarter of 2023, while 1 percent higher average daily production increased revenues by $1 million. Natural gas revenues accounted for 6 percent of total oil and gas production revenues and 29 percent of worldwide production during the second quarter of 2024.
Current wording
Natural Gas Natural gas revenues for the third quarter of 2024 totaled $103 million, a $133 million decrease from the comparative 2023 quarter. A 54 percent decrease in average realized prices decreased third-quarter 2024 natural gas revenues by $128 million compared to the third quarter of 2023, while 4 percent lower average daily production decreased revenues by $5 million. Natural gas revenues accounted for 5 percent of total oil and gas production revenues and 28 percent of worldwide production during the third quarter of 2024.
Previous wording
The Company’s worldwide natural gas production increased 10.8 MMcf/d to 835.6 MMcf/d during the second quarter of 2024 from the comparative prior-year period, primarily a result of the Callon acquisition coupled with increased drilling activity and recompletions in the Permian Basin. These increases were offset by natural production decline across all assets, reduced gas-focused activity in Egypt, curtailment of volumes at Alpine High in response to extreme Waha basis differentials, and the sale of non-core assets in the U.S.
Current wording
The Company’s worldwide natural gas production decreased 33.2 MMcf/d to 786.9 MMcf/d during the third quarter of 2024 from the comparative prior-year period, primarily a result of operational downtime due to maintenance activities in the North Sea, curtailment of volumes at Alpine High in response to extreme Waha basis differentials, natural production decline, and the sale of non-core assets in the U.S. These decreases were offset by the Callon acquisition coupled with increased drilling activity and recompletions in the Permian Basin.
Previous wording
NGL NGL revenues for the second quarter of 2024 totaled $159 million, a $52 million increase from the comparative 2023 quarter. A 16 percent increase in average realized prices increased second-quarter 2024 NGL revenues by $17 million compared to the second quarter of 2023, while 29 percent higher average daily production increased revenues by $35 million. NGL revenues accounted for 7 percent of total oil and gas production revenues and 17 percent of worldwide production during the second quarter of 2024.
Current wording
NGL NGL revenues for the third quarter of 2024 totaled $158 million, a $20 million increase from the comparative 2023 quarter. An 18 percent higher average daily production increased third-quarter 2024 NGL revenues by $26 million compared to the third quarter of 2023, while a 4 percent decrease in average realized prices decreased revenues by $6 million. NGL revenues accounted for 8 percent of total oil and gas production revenues and 17 percent of worldwide production during the third quarter of 2024.
Previous wording
The Company’s worldwide NGL production increased 17.9 Mb/d to 80.5 Mb/d during the second quarter of 2024 from the comparative prior-year period, primarily a result of the Callon acquisition coupled with increased drilling activity in the Permian Basin, offset by natural production decline in the U.S. and the North Sea.
Current wording
The Company’s worldwide NGL production increased 12.2 Mb/d to 80 Mb/d during the third quarter of 2024 from the comparative prior-year period, primarily a result of the Callon acquisition coupled with increased drilling activity in the Permian Basin. These increases were offset by natural production decline, curtailment of volumes at Alpine High in response to extreme Waha basis differentials, and the sale of non-core assets in the U.S. These increases were further offset by operational downtime due to maintenance activities in the North Sea.
Previous wording
Crude Oil Crude oil revenues for the first six months of 2024 totaled $3.3 billion, a $577 million increase from the comparative 2023 period. A 15 percent higher average daily production increased oil revenues for the 2024 period by $427 million compared to the prior-year period, while a 5 percent increase in average realized prices increased oil revenues by $150 million compared to the prior-year period. Crude oil revenues accounted for 84 percent of total oil and gas production revenues and 53 percent of worldwide production for the first six months of 2024. Crude oil prices realized during the first six months of 2024 averaged $81.57 per barrel, compared to $77.37 per barrel in the comparative prior-year period.
Current wording
Crude Oil Crude oil revenues for the first nine months of 2024 totaled $5.1 billion, a $669 million increase from the comparative 2023 period. An 18 percent higher average daily production increased oil revenues for the 2024 period by $680 million compared to the prior-year period, while a slight decrease in average realized prices lowered oil revenues by $11 million compared to the prior-year period. Crude oil revenues accounted for 85 percent of total oil and gas production revenues and 54 percent of worldwide production for the first nine months of 2024. Crude oil prices realized during the first nine months of 2024 averaged $80.31 per barrel, compared to $80.50 per barrel in the comparative prior-year period.
Previous wording
The Company’s worldwide oil production increased 28.9 Mb/d to 226.9 Mb/d in the first six months of 2024 compared to the prior-year period, primarily a result of the Callon acquisition coupled with increased drilling activity in the Permian Basin, offset by natural production decline across all assets.
Current wording
The Company’s worldwide oil production increased 35.4 Mb/d to 236.8 Mb/d in the first nine months of 2024 compared to the prior-year period, primarily a result of increased drilling activity in the Permian Basin coupled with the Callon acquisition. These increases were offset by natural production decline across all assets, the sale of non-core assets in the U.S., and operational downtime due to maintenance activities in the North Sea.
Previous wording
Natural Gas Natural gas revenues for the first six months of 2024 totaled $311 million, a $111 million decrease from the comparative 2023 period. A 25 percent decrease in average realized prices decreased natural gas revenues for the 2024 period by $104 million compared to the prior-year period, while 2 percent lower average daily production decreased revenues by $7 million compared to the prior-year period. Natural gas revenues accounted for 8 percent of total oil and gas production revenues and 31 percent of worldwide production for the first six months of 2024.
Current wording
Natural Gas Natural gas revenues for the first nine months of 2024 totaled $414 million, a $244 million decrease from the comparative 2023 period. A 35 percent decrease in average realized prices decreased natural gas revenues for the 2024 period by $232 million compared to the prior-year period, while 3 percent lower average daily production decreased revenues by $12 million compared to the prior-year period. Natural gas revenues accounted for 7 percent of total oil and gas production revenues and 30 percent of worldwide production for the first nine months of 2024.
Previous wording
The Company’s worldwide natural gas production decreased 20.4 MMcf/d to 811.1 MMcf/d in the first six months of 2024 compared to the prior-year period, primarily a result of natural production decline across all assets, reduced gas-focused activity in Egypt, curtailment of volumes at Alpine High in response to extreme Waha basis differentials, and the sale of non-core assets in the U.S. These decreases were partially offset by the Callon acquisition and increased drilling activity in the Permian Basin.
Current wording
The Company’s worldwide natural gas production decreased 24.7 MMcf/d to 803 MMcf/d in the first nine months of 2024 compared to the prior-year period, primarily a result of operational downtime due to maintenance activities in the North Sea, reduced gas-focused activity in Egypt, natural production decline, curtailment of volumes at Alpine High in response to extreme Waha basis differentials, and the sale of non-core assets in the U.S. These decreases were partially offset by increased drilling activity in the Permian Basin coupled with the Callon acquisition.
Previous wording
NGL NGL revenues for the first six months of 2024 totaled $299 million, a $62 million increase from the comparative 2023 period. A 9 percent increase in average realized prices increased NGL revenues for the 2024 period by $22 million compared to the prior-year period, while 15 percent higher average daily production increased revenues by $40 million compared to the prior-year period. NGL revenues accounted for 8 percent of total oil and gas production revenues and 16 percent of worldwide production for the first six months of 2024.
Current wording
NGL NGL revenues for the first nine months of 2024 totaled $457 million, a $82 million increase from the comparative 2023 period. A 16 percent higher average daily production increased NGL revenues for the 2024 period by $66 million compared to the prior-year period, while a 4 percent increase in average realized prices increased revenues by $16 million. NGL revenues accounted for 8 percent of total oil and gas production revenues and 16 percent of worldwide production for the first nine months of 2024.
Previous wording
The Company’s worldwide NGL production increased 9.2 Mb/d to 69.2 Mb/d in the first six months of 2024 compared to the prior-year period, primarily a result of the Callon acquisition coupled with increased drilling activity in the Permian Basin, offset by natural production decline in the U.S. and the North Sea.
Current wording
The Company’s worldwide NGL production increased 10.2 Mb/d to 72.9 Mb/d in the first nine months of 2024 compared to the prior-year period, primarily a result of increased drilling activity in the Permian Basin coupled with the Callon acquisition, offset by natural production decline, curtailment of volumes at Alpine High in response to extreme Waha basis differentials, and the sale of non-core assets in the U.S. These increases were further offset by operational downtime due to maintenance activities in the North Sea.
Previous wording
Purchased oil and gas sales represent volumes primarily attributable to U.S. domestic oil and gas purchases that were sold by the Company to fulfill oil and natural gas takeaway obligations and delivery commitments. Sales related to these purchased volumes totaled $342 million and $144 million during the second quarters of 2024 and 2023, respectively, and $545 million and $383 million during the first six months of 2024 and 2023, respectively. Purchased oil and gas sales were offset by associated purchase costs of $210 million and $131 million during the second quarters of 2024 and 2023, respectively, and $373 million and $347 million during the first six months of 2024 and 2023, respectively. Gross purchased oil and gas sales values were higher in the second quarter and the first six months of 2024, primarily driven by activity associated with the Callon acquisition as compared to the second quarter and the first six months of 2023.
Current wording
Purchased oil and gas sales represent volumes primarily attributable to U.S. domestic oil and gas purchases that were sold by the Company to fulfill oil and natural gas takeaway obligations and delivery commitments. Sales related to these purchased volumes totaled $473 million and $229 million during the third quarters of 2024 and 2023, respectively, and $1.0 billion and $612 million during the first nine months of 2024 and 2023, respectively. Purchased oil and gas sales were offset by associated purchase costs of $292 million and $211 million during the third quarters of 2024 and 2023, respectively, and $665 million and $558 million during the first nine months of 2024 and 2023, respectively. Gross purchased oil and gas sales values were higher in the third quarter and the first nine months of 2024 as compared to the third quarter and the first nine months of 2023, primarily driven by activity associated with the Callon acquisition.
Previous wording
LOE increased $99 million and $116 million compared to the second quarter and the first six months of 2023, respectively. On a per-unit basis, LOE increased 7 percent in both the second quarter and the first six months of 2024, when compared to the second quarter and the first six months of 2023. During the second quarter and first six months of 2024, higher operating and labor costs as well as higher workover activity, primarily from the Callon acquisition, drove the increase in absolute LOE costs compared to the same prior-year periods.
Current wording
LOE increased $24 million and $140 million compared to the third quarter and the first nine months of 2023, respectively. On a per-unit basis, LOE decreased 4 percent and increased 3 percent in the third quarter and the first nine months of 2024, respectively, when compared to the third quarter and the first nine months of 2023. The absolute dollar increase in the third quarter and the first nine months of 2024 compared to same prior year periods was driven by higher operating and labor costs coupled with higher workover activity, primarily from the Callon acquisition.
Previous wording
GPT costs increased $43 million and $49 million in the second quarter and the first six months of 2024, respectively, when compared to the second quarter and the first six months of 2023, primarily driven by an increase in natural gas production volumes in the U.S. when compared to the prior-year periods.
Current wording
GPT costs increased $34 million and $83 million in the third quarter and the first nine months of 2024, respectively, when compared to the third quarter and the first nine months of 2023, primarily driven by an increase in natural gas and NGL production volumes in the U.S. when compared to the prior-year periods.
Previous wording
Purchased oil and gas costs increased $79 million and $26 million in the second quarter and the first six months of 2024, respectively, when compared to the second quarter and the first six months of 2023. The increase in the second quarter and the first six months of 2024 compared to same prior year periods is primarily driven by activity associated with the Callon acquisition. With widening margins under third-party gas agreements, purchased oil and gas costs were more than offset by associated sales to fulfill oil and natural gas takeaway obligations and delivery commitments totaling $342 million and $545 million in the second quarter and the first six months of 2024, respectively, as discussed above.
Current wording
Purchased oil and gas costs increased $81 million and $107 million in the third quarter and the first nine months of 2024, respectively, when compared to the third quarter and the first nine months of 2023. The increase in the third quarter and the first nine months of 2024 compared to same prior-year periods was primarily driven by oil purchases from activity associated with the Callon acquisition. With widening margins under third-party gas agreements, purchased oil and gas costs were more than offset by associated sales to fulfill oil and natural gas takeaway obligations and delivery commitments totaling $473 million and $1.0 billion in the third quarter and the first nine months of 2024, respectively, as discussed above.
Previous wording
Taxes other than income increased $28 million and $33 million from the second quarter and the first six months of 2023, respectively, primarily from higher severance taxes driven by increased production volumes and higher oil prices in the U.S. compared to the prior-year periods.
Current wording
Taxes other than income increased $9 million and $42 million from the third quarter and the first nine months of 2023, respectively, primarily from higher severance taxes driven by increased production volumes in the U.S. compared to the same prior-year periods.
Previous wording
Exploration expenses increased $28 million and $124 million from the second quarter and the first six months of 2023, respectively. The increase in exploration expenses for the second quarter and the six months of 2024 compared to the second quarter and six months of 2023 was primarily the result of dry hole expense associated with the completion of an initial drilling campaign in Alaska where two wells were unable to reach target objectives in the allotted seasonal time window.
Current wording
Exploration expenses decreased $20 million and increased $104 million from the third quarter and the first nine months of 2023, respectively. The decrease in exploration expenses for the third quarter of 2024 compared to the third quarter of 2023 was primarily the result of higher dry hole expenses in the 2023 period coupled with lower unproved leasehold impairments and exploration overhead. The increase in exploration expenses for the first nine months of 2024 compared to the first nine months of 2023 was primarily the result of dry hole expense associated with the completion of an initial drilling campaign in Alaska where two wells were unable to reach target objectives in the allotted seasonal time window.
Previous wording
G&A expenses increased $13 million and $41 million compared to the second quarter and the first six months of 2023, respectively. The increase in G&A expenses for the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by the Callon acquisition and higher overall labor costs across the Company. The increase in G&A expenses for the first six months of 2024 compared to the first six months of 2023 was primarily driven by higher overall labor costs across the Company and higher cash-based stock compensation expense resulting from changes in the Company’s stock price.
Current wording
G&A expenses decreased $47 million and $6 million from the third quarter and the first nine months of 2023, respectively. The decrease in G&A expenses for the third quarter and first nine months of 2024 compared to the same prior-year periods was primarily driven by higher cash-based stock compensation expense in the 2023 period resulting from changes in the Company’s stock price, partially offset by higher overall labor costs across the Company and the Callon acquisition.
Previous wording
TRS costs increased $113 million and $136 million from the second quarter and the first six months of 2023, respectively. Higher TRS costs during the second quarter and the first six months of 2024 were primarily a result of ongoing transaction costs related to the Callon acquisition coupled with separation costs in the North Sea. TRS costs incurred in the first six months of 2024 comprised $128 million associated with the Callon acquisition, including $62 million of separation costs and $66 million of transaction and integration costs.
Current wording
TRS costs increased $9 million and $145 million from the third quarter and the first nine months of 2023, respectively. Higher TRS costs during the third quarter and the first nine months of 2024 were primarily a result of ongoing transaction costs related to the Callon acquisition coupled with separation costs in the North Sea. TRS costs incurred in the first nine months of 2024 comprised primarily $139 million associated with the Callon acquisition, including $71 million of separation costs and $68 million of transaction and integration costs.
Previous wording
Total DD&A expenses increased $221 million and $319 million from the second quarter and the first six months of 2023, respectively, primarily driven by DD&A on the Company’s oil and gas properties. The Company’s DD&A rate on its oil and gas properties increased $3.69 per boe and $3.35 per boe from the second quarter and the first six months of 2023, respectively. The increase in DD&A on an absolute and per boe basis were driven by negative price-related reserve revisions in prior periods and impacts resulting from the Callon acquisition during the second quarter of 2024.
Current wording
Total DD&A expenses increased $177 million and $496 million from the third quarter and the first nine months of 2023, respectively, primarily driven by DD&A on the Company’s oil and gas properties. The Company’s DD&A rate on its oil and gas properties increased $3.30 per boe and $3.33 per boe from the third quarter and the first nine months of 2023, respectively. The increase in DD&A on a per boe basis was driven by negative gas price-related reserve revisions in prior periods and impacts resulting from the Callon acquisition in 2024. Higher absolute dollar amount of DD&A was driven primarily by higher capital expenditures incurred in the U.S. and Egypt.
Previous wording
During the three and six months ended June 30, 2023, the Company recorded $46 million of impairments in connection with valuations of drilling and operations equipment inventory upon the Company’s decision to suspend drilling operations in the North Sea. There were no impairments recorded during the three and six months ended June 30, 2024.
Current wording
During the first nine months of 2023, the Company recorded $46 million of impairments in connection with valuations of drilling and operations equipment inventory upon the Company’s decision to suspend drilling operations in the North Sea.
Previous wording
Net financing costs increased $18 million and $22 million from the second quarter and the first six months of 2023, respectively. The increase in costs during the second quarter and the first six months of 2024 was primarily due to higher interest expense from higher average long-term debt balances compared to the second quarter and the first six months of 2023.
Current wording
Net financing costs increased $19 million and $41 million from the third quarter and the first nine months of 2023, respectively. The increase in costs during the third quarter and the first nine months of 2024 was primarily due to higher interest expense from higher average long-term debt balances compared to the third quarter and the first nine months of 2023.
Previous wording
The Company’s effective income tax rate for the three and six months ended June 30, 2024 differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations. During the second quarter of 2023, the Company’s effective income tax rate differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations and a decrease in the amount of valuation allowance against its U.S. deferred tax assets. The Company’s effective income tax rate for the six months ended June 30, 2023 differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations, a deferred tax expense related to the remeasurement of taxes in the U.K. as a result of the enactment of Finance Act 2023, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets.
Current wording
The Company’s effective income tax rate for the three and nine months ended September 30, 2024 differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations. During the third quarter of 2023, the Company’s effective income tax rate differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations and a decrease in the amount of valuation allowance against its U.S. deferred tax assets. The Company’s effective income tax rate for the nine months ended September 30, 2023 differed from the U.S. federal statutory income tax rate of 21 percent due to taxes on foreign operations, a deferred tax expense related to the remeasurement of taxes in the U.K. as a result of the enactment of Finance Act 2023, and a decrease in the amount of valuation allowance against its U.S. deferred tax assets.
Previous wording
Following the completion of the Callon acquisition, the Company revised its full-year 2024 estimated upstream capital investment to approximately $2.7 billion and remains committed to its capital return framework for equity holders to participate more directly and materially in cash returns through dividends and share repurchases.
Current wording
Following the completion of the Callon acquisition, the Company revised its full-year 2024 estimated upstream capital investment to approximately $2.8 billion and remains committed to its capital return framework for equity holders to participate more directly and materially in cash returns through dividends and share repurchases.
Previous wording
Net cash provided by operating activities during the first six months of 2024 totaled $1.2 billion, down $90 million from the first six months of 2023, primarily the result of timing of working capital items.
Current wording
Net cash provided by operating activities during the first nine months of 2024 totaled $2.6 billion, $485 million higher from the first nine months of 2023, primarily due to higher revenues from increased oil and gas production and timing of working capital items.
Previous wording
Proceeds from Commercial Paper and Revolving Credit Facilities, Net As of June 30, 2024, outstanding borrowings under the Company’s commercial paper and U.S. dollar denominated syndicated credit facility were $435 million, an increase of $63 million since December 31, 2023. During the six months ended June 30, 2023, the Company had net borrowings of $196 million under the Company’s U.S. dollar denominated syndicated credit facility.
Current wording
Proceeds from Commercial Paper and Revolving Credit Facilities, Net As of September 30, 2024, outstanding borrowings under the Company’s commercial paper and U.S. dollar denominated syndicated credit facility were $562 million, an increase of $190 million since December 31, 2023. During the nine months ended September 30, 2023, the Company had net borrowings of $202 million under the Company’s U.S. dollar denominated syndicated credit facility.
Previous wording
Proceeds from Term Loan Facility On April 1, 2024, the Company borrowed an aggregate $1.5 billion under a syndicated credit agreement. Loan proceeds were used to refinance certain indebtedness of Callon upon the closing of the Callon acquisition. For additional details of the credit agreement, see “Term Loan Credit Agreement”in the section below under Liquidity. As of June 30, 2024, $1.5 billion remained outstanding under the term loan facility governed by the Term Loan Credit Agreement.
Current wording
Proceeds from Term Loan Facility On April 1, 2024, the Company borrowed an aggregate $1.5 billion under a syndicated credit agreement. Loan proceeds were used to refinance certain indebtedness of Callon upon the closing of the Callon acquisition. For additional details of the credit agreement, see “Term Loan Credit Agreement”in the Liquidity section below. As of September 30, 2024, $1.0 billion remained outstanding under the term loan facility governed by the Term Loan Credit Agreement.
Previous wording
Proceeds from Asset Divestitures The Company received $729 million and $28 million in proceeds from the divestiture of certain non-core assets during the first six months of 2024 and 2023, respectively. 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 I, Item 1 of this Quarterly Report on Form 10-Q.
Current wording
Proceeds from Asset Divestitures The Company received $724 million and $29 million in proceeds from the divestiture of certain non-core assets during the first nine months of 2024 and 2023, respectively. 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 I, Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
Additions to Upstream Oil & Gas Property Exploration and development cash expenditures were $1.2 billion and $1.1 billion during the first six months of 2024 and 2023, respectively. The increase in capital investment compared to the prior-year period is reflective of the Company’s acquisition of Callon, which increased the number of drilling rigs being operated in the Permian Basin, partially offset by the Company’s efforts to balance workover activity in Egypt and reduce drilling activity in the North Sea as it continually assesses inventory opportunities across its diverse portfolio. The Company operated an average of approximately 25 drilling rigs during the first six months of 2024, compared to an average of approximately 24 drilling rigs during the first six months of 2023.
Current wording
Additions to Upstream Oil & Gas Property Exploration and development cash expenditures were $2.2 billion and $1.7 billion during the first nine months of 2024 and 2023, respectively. The increase in capital investment compared to the prior-year period is reflective of the Company’s acquisition of Callon, which increased the number of drilling rigs being operated in the Permian Basin, partially offset by the Company’s efforts to balance workover activity in Egypt and reduce drilling activity in the North Sea as it continually assesses inventory opportunities across its diverse portfolio. The Company operated an average of approximately 23 drilling rigs during the first nine months of 2024, compared to an average of approximately 24 drilling rigs during the first nine months of 2023.
Previous wording
Leasehold and Property Acquisitions During the first six months of 2024 and 2023, in addition to the Callon acquisition, the Company completed other leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $63 million and $10 million, respectively.
Current wording
Leasehold and Property Acquisitions During the first nine months of 2024 and 2023, in addition to the Callon acquisition, the Company completed other leasehold and property acquisitions, primarily in the Permian Basin, for total cash consideration of $64 million and $11 million, respectively.
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