APA Corporation outlined accelerated cost reductions and debt reduction at the EnerCom Denver conference on Tuesday, reporting $1.2 billion in free cash flow for the first half of 2026 and a year-end net debt target of approximately $3 billion, down from roughly $9 billion when Chief Financial Officer Ben Rodgers joined 8.5 years ago.
The company has surpassed its cost-cutting targets, achieving $500 million in annualized structural savings by August 2026—about 18 months ahead of schedule—and an additional $175 million in annualized interest expense reductions. Total cash cost reductions, including structural savings and interest, are expected to reach $700 million exiting 2026, with $350 million in annualized savings already realized by the end of 2025.
APA maintained its 2026 capital budget at $2.1 billion, with Permian Basin spending held flat at $1.3 billion. Free cash flow allocation remains at least 60% to shareholders, consistent with a policy in place since 2021. Shares have risen 74% year-to-date and 111% over the past year, trading near $40.50.
Production guidance for the Permian Basin was increased to 123,000 barrels per day for 2026, up from an initial 120,000 bpd set in November 2025, while capital spending remains unchanged. The company cited 10 years of economic inventory in the basin and integration of prior acquisitions, including the 2024 Callon deal and 2022 Delaware Basin bolt-ons.
APA also highlighted gas trading cash flow, projected at $950 million in 2026, up from $700 million in 2025 and $500 million in 2024. The company operates Egypt’s largest onshore acreage in the Western Desert as the country’s top oil producer, with a gas pricing agreement renegotiated about two years ago covering roughly half of current production.
Frontier projects remain a focus, including Suriname’s Block 58, where first oil is expected in mid-2028 under a 50/50 partnership with TotalEnergies. The Gran Morgu project targets a breakeven of $30 per barrel and is expected to contribute to compound annual production growth of more than 5% from 2026 through 2029. Two additional exploration wells are planned for 2027.
In Alaska, APA acquired Savant Alaska in Q2 2026, adding infrastructure including a 40,000 bpd processing facility, an 80,000 bpd pipeline to the Trans Alaska Pipeline System, and a two-well drilling program slated for early 2027. In Uruguay, the company holds a 50-50 stake in Block OFF-4 with Shell and a 60-40 stake in Block OFF-6 with Eni, where an exploration well is planned for the second half of 2027.
