APA Raises 2026 Free Cash Flow Outlook by $600 Million to $2.9 Billion
Key Facts
APA raised its 2026 free cash flow outlook to about $2.9 billion, up $600 million from its August update, citing improved operating performance and higher commodity prices. The company announced the outlook with its third-quarter results on November 4, 2026, and said it was based on current forward prices. The update puts cash flow at the forefront of the quarterly results, reflecting the impact of price conditions alongside what the company described as strong operations. APA also raised its full-year U.S. oil production guidance, adding operational support to its annual outlook. The company said expected U.S. oil production was 124,000 barrels per day, above its initial guidance range of 120,000 to 122,000 barrels per day.
Third-quarter results showed net income attributable to common stock of $698 million, or $2.00 per diluted share, while adjusted earnings were $676 million, or $1.94 per diluted share. In the third quarter of 2025, APA reported net income of $205 million, or $0.57 per diluted share. In its filing, the company attributed the year-over-year increase in net income mainly to higher oil revenue as realized crude prices improved. The earnings improvement provides context for the higher annual outlook, alongside the company's increase in expected U.S. oil production. The figures distinguish reported net income from adjusted earnings, while the year-over-year comparison offers a measure of crude prices' impact on the period's results.
Third-quarter results followed first-half 2026 figures showing $738 million in free cash flow generated in the second quarter, bringing the first-half total to $1.2 billion. Those figures provide context for the new annual outlook of about $2.9 billion, which includes an increase of $600 million from the August update. The company linked its revised outlook to improved operations and higher commodity prices, while the increase in U.S. production guidance points to another part of the performance backdrop. In the Permian Basin, APA attributed the higher estimate for full-year U.S. oil production to improved drilling and completion efficiency. The annual outlook thus combines commodity prices with the operating results cited by the company in its filing.
APA said the stronger outlook supports substantial share repurchases in the fourth quarter alongside continued debt reduction. The company set a target to return at least 60% of its 2026 cash flow, while lowering its net debt target. This reflects a parallel use of expected cash flow for share repurchases and continued debt reduction, according to the statement. The plans come as the company raises its annual cash flow estimate to $2.9 billion, up $600 million from the August update. The company did not link the outlook to an announcement of increased returns in its statement; it cited repurchases and debt reduction as part of its financial plan.
For its investment plans for the following year, APA set an initial budget of $2.5 billion for upstream investment in 2027, an increase of $400 million year over year. The company said exploration and development of GranMorgu account for about 60% of the increase. The higher budget comes as the company continues to direct capital toward exploration and development, alongside its fourth-quarter plans to reduce debt and repurchase shares. APA said the GranMorgu project is progressing toward first oil in mid-2028. That date sets out the project's announced timeline, while the 2027 budget allocates part of the capital increase to exploration and its development.