APA Corporation Announces Second-Quarter 2021 Financial and Operational Results (Form 8-K)

APA Corporation Announces Second-Quarter 2021

Financial and Operational Results

Key Takeaways

•

Reported production of 395,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 342,000 BOE per day;

•

Generated net cash from operating activities of $969 million, adjusted EBITDAX of $1.01 billion, and free cash flow of $396 million;

•

Advanced agreement to modernize Egypt Production Sharing Contracts; expected review by Egyptian Parliament in the fall; and

•

Announced appraisal drilling success offshore Suriname, moving closer to goal of commercial oil development.

HOUSTON, Aug. 4, 2021 - APA Corporation (Nasdaq: APA) today announced its financial and operational results for the second-quarter 2021.

APA reported net income attributable to common stock of $316 million, or $0.82 per diluted share. When adjusted for items that impact the comparability of results, APA's second-quarter earnings were $266 million, or $0.70 per diluted share. Net cash provided by operating activities was $969 million, and adjusted EBITDAX was $1.01 billion.

'A combination of strong well performance in the U.S., continued capital and cost discipline, and a favorable price environment enabled free cash flow generation of nearly $400 million during the quarter,' said John J. Christmann IV, APA's CEO and president. 'I am also very pleased with the progress we have made on our ESG initiatives, Production Sharing Contract modernization in Egypt and appraisal drilling in Suriname.'

The company is advancing key ESG initiatives and announced that it will achieve its goal of eliminating routine flaring onshore in the U.S. in the third quarter of this year. The focus on that goal has also helped drive down flaring intensity, which is tracking below the company's goal of less than 1% for the year.

In May, the company reached an agreement in principle to modernize Production Sharing Contract terms in Egypt. The agreement has been finalized and signed by the Egyptian Ministry of Petroleum and Mineral Resources and the Egyptian General Petroleum Corporation and is proceeding through the next stages of the approval process.

In Suriname, APA and TotalEnergies announced last week a successful appraisal well in the Sapakara area, which encountered approximately 30 meters (98 feet) of net black oil pay in a single, high-quality zone of the Campano-Maastrichtian reservoir. This moves the JV closer to its goal of sanctioning the first commercial oil development in Block 58. Upon completion of drilling operations at Sapakara, the Maersk Valiant will move to the Bonboni exploration prospect approximately 45 kilometers to the north.

Second-Quarter Summary

Second-quarter reported production was 395,000 BOE per day, and adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 342,000 BOE per day. U.S. production of 242,000 BOE per day benefitted from strong well performance throughout the company's Permian Basin DUC completion program. This more than offset slightly lower international adjusted volumes of 100,000 BOE per day, which were impacted by lower cost recovery barrels in Egypt due to higher oil prices and extended operational downtime in the North Sea. APA's second-quarter upstream capital investment was $257 million, which was below guidance primarily due to timing.

APA, excluding Altus Midstream, had total debt of $8.0 billion, cash and cash equivalents of $1.2 billion, and $3.2 billion available capacity under its undrawn revolving credit facility at the end of the quarter.

Looking Ahead

'APA is capable of delivering strong and sustainable free cash flow for many years to come. At current strip prices, we expect to generate approximately $1.7 billion of free cash flow this year to support our debt reduction goals,' Christmann concluded.

APA CORPORATION ANNOUNCES SECOND-QUARTER 2021 FINANCIAL AND OPERATIONAL RESULTS

- PAGE 2 of 3

Conference Call

APA will host a conference call to discuss its second-quarter 2021 results at 10 a.m. Central time, Thursday, Aug 5. The conference call will be webcast from APA's website at www.apacorp.com and investor.apacorp.com, and the webcast replay will be archived there as well. The conference call will also be available for playback by telephone for one week beginning at approximately 4 p.m. Central time Aug. 5. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 6953249. Sign up for email alerts to be reminded of the webcast at investor.apacorp.com/alerts/email-alerts-subscription.

About APA

APA Corporation owns consolidated subsidiaries that explore for and produce oil and gas in the United States, Egypt and the United Kingdom and that explore for oil and gas offshore Suriname. APA posts announcements, operational updates, investor information and press releases on its website, www.apacorp.com. Specific information concerning Suriname, ESG performance and other investor-related topics are posted at investor.apacorp.com.

Additional Information

Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. APA's quarterly supplement is available at http://www.apacorp.com/financialdata.

Non-GAAP Financial Measures

APA's financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management's intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX, upstream capital investment, net debt, cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as 'anticipates,' 'intends,' 'plans,' 'seeks,' 'believes,' 'continues,' 'could,' 'estimates,' 'expects,' 'guidance,' 'may,' 'might,' 'outlook,' 'possibly,' 'potential,' 'projects,' 'prospects,' 'should,' 'will,' 'would,' and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations, and objectives for operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See 'Risk Factors' in Apache Corporation's Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 25, 2021, and in our quarterly reports on Form 10-Q for a discussion of risk factors that affect our business. Any forward-looking statement made in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. APA and Apache Corp. undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.

APA CORPORATION ANNOUNCES SECOND-QUARTER 2021 FINANCIAL AND OPERATIONAL RESULTS

- PAGE 3 of 3

Cautionary Note to Investors

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC's definitions for such terms. APA may use certain terms in this news release, such as 'resources,' 'potential resources,' 'resource potential,' 'estimated net reserves,' 'recoverable reserves,' and other similar terms that the SEC guidelines strictly prohibit APA from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache Corporation's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020 available from APA at www.apacorp.com or by writing APA at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC's website at www.sec.gov.

Contacts

Investor: (281) 302-2286 Gary Clark

Media: (713) 296-7276 Phil West

Website: www.apacorp.com

-end-

APA CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

		For the Quarter Ended June 30,			For the Six Months Ended June 30,
		2021			2020			2021			2020
REVENUES AND OTHER:
Oil, natural gas, and natural gas liquids production revenues
Oil revenues		$	1,141			$	513			$	2,132			$	1,545
Natural gas revenues			226				130				538				253
Natural gas liquids revenues			147				54				275				135
		1,514				697				2,945				1,933
Purchased oil and gas sales			242				55				682				163
Total revenues			1,756				752				3,627				2,096
Derivative instrument gain (loss), net			(113	)			(175	)			45				(278	)
Gain on divestitures, net			65				-				67				25
Other, net			74				19				135				32
		1,782				596				3,874				1,875
OPERATING EXPENSES:
Lease operating expenses			311				264				575				599
Gathering, processing, and transmission			61				72				119				143
Purchased oil and gas costs			262				46				756				132
Taxes other than income			51				23				95				56
Exploration			26				72				75				129
General and administrative			86				94				169				162
Transaction, reorganization, and separation			4				10				4				37
Depreciation, depletion, and amortization:
Oil and gas property and equipment			322				387				634				918
Other assets			29				31				59				66
Asset retirement obligation accretion			28				27				56				54
Impairments			-				20				-				4,492
Financing costs, net			107				(34	)			217				69
		1,287				1,012				2,759				6,857
NET INCOME (LOSS) BEFORE INCOME TAXES			495				(416	)			1,115				(4,982	)
Current income tax provision (benefit)			131				(27	)			280				62
Deferred income tax benefit			(44	)			(11	)			(23	)			(44	)
NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS			408				(378	)			858				(5,000	)
Net income (loss) attributable to noncontrolling interest - Egypt			41				(11	)			83				(162	)
Net income (loss) attributable to noncontrolling interest - Altus			27				-				28				(9	)
Net income attributable to Altus Preferred Unit limited partners			24				19				43				37
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK		$	316			$	(386	)		$	704			$	(4,866	)
NET INCOME (LOSS) PER COMMON SHARE:
Basic		$	0.83			$	(1.02	)		$	1.86			$	(12.88	)
Diluted		$	0.82			$	(1.02	)		$	1.86			$	(12.88	)
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic			378				378				378				378
Diluted			379				378				379				378
DIVIDENDS DECLARED PER COMMON SHARE		$	0.025			$	0.025			$	0.05			$	0.05

APA CORPORATION

PRODUCTION INFORMATION

		For the Quarter Ended			% Change			For the Six Months Ended
		June, 2021			March 31, 2021			June, 2020			2Q21 to 1Q21			2Q21 to 2Q20			June, 2021			June, 2020
OIL VOLUME - Barrels per day
United States			82,852				67,690				94,471				22	%			-12	%			75,313				98,042
Egypt (1, 2)			71,182				72,170				79,839				-1	%			-11	%			71,673				76,509
North Sea			31,992				43,524				47,016				-26	%			-32	%			37,726				51,139
International (1)			103,174				115,694				126,855				-11	%			-19	%			109,399				127,648
Total (1)			186,026				183,384				221,326				1	%			-16	%			184,712				225,690
NATURAL GAS VOLUME - Mcf per day
United States			541,088				507,517				518,156				7	%			4	%			524,396				557,999
Egypt (1, 2)			256,262				278,149				279,561				-8	%			-8	%			267,145				267,070
North Sea			36,769				49,840				52,612				-26	%			-30	%			43,268				59,945
International (1)			293,031				327,989				332,173				-11	%			-12	%			310,413				327,015
Total (1)			834,119				835,506				850,329				0	%			-2	%			834,809				885,014
NGL VOLUME - Barrels per day
United States			68,492				57,815				69,759				18	%			-2	%			63,183				75,570
Egypt (1, 2)			553				583				909				-5	%			-39	%			568				914
North Sea			1,095				1,368				1,733				-20	%			-37	%			1,231				1,934
International (1)			1,648				1,951				2,642				-16	%			-38	%			1,799				2,848
Total (1)			70,140				59,766				72,401				17	%			-3	%			64,982				78,418
BOE per day
United States			241,525				210,091				250,589				15	%			-4	%			225,895				266,612
Egypt (1, 2)			114,445				119,111				127,342				-4	%			-10	%			116,765				121,934
North Sea			39,216				53,199				57,517				-26	%			-32	%			46,169				63,064
International (1)			153,661				172,310				184,859				-11	%			-17	%			162,934				184,998
Total (1)			395,186				382,401				435,448				3	%			-9	%			388,829				451,610
Total excluding noncontrolling interests			356,981				342,630				393,098				4	%			-9	%			349,844				410,844
(1)  Includes net production volumes attributed to our noncontrolling partner in Egypt below:
Oil (b/d)			23,759				24,088				26,609						23,923				25,604
Gas (Mcf/d)			85,574				92,936				92,625						89,235				89,148
NGL (b/d)			184				194				303						189				304
BOE per day			38,205				39,771				42,350				-4	%			-10	%			38,985				40,766
(2)  Egypt Gross Production
Oil (b/d)			135,494				135,320				171,897						135,408				177,762
Gas (Mcf/d)			578,380				603,269				642,003						590,756				648,706
NGL (b/d)			866				897				1,649						881				1,715
BOE per day			232,757				236,762				280,547				-2	%			-17	%			234,748				287,595

APA CORPORATION

ADJUSTED PRODUCTION INFORMATION

Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) noncontrolling interest in Egypt and 2) Egypt tax barrels. Management uses adjusted production to evaluate the company's operational trends and performance and believes it is useful to investors and other third parties.

		For the Quarter Ended			% Change			For the Six Months Ended
		June 30,			March 31,			June 30,			2Q21 to			2Q21 to			June 30,			June 30,
		2021			2021			2020			1Q21			2Q20			2021			2020
OIL VOLUME - Barrels per day
United States			82,852				67,690				94,471				22	%			-12	%			75,313				98,042
Egypt			36,753				37,019				54,469				-1	%			-33	%			36,886				49,480
North Sea			31,992				43,524				47,016				-26	%			-32	%			37,726				51,139
International			68,745				80,543				101,485				-15	%			-32	%			74,612				100,619
Total			151,597				148,233				195,956				2	%			-23	%			149,925				198,661
NATURAL GAS VOLUME - Mcf per day
United States			541,088				507,517				518,156				7	%			4	%			524,396				557,999
Egypt			144,712				153,075				186,387				-5	%			-22	%			148,870				173,962
North Sea			36,769				49,840				52,612				-26	%			-30	%			43,268				59,945
International			181,481				202,915				238,999				-11	%			-24	%			192,138				233,907
Total			722,569				710,432				757,155				2	%			-5	%			716,534				791,906
NGL VOLUME - Barrels per day
United States			68,492				57,815				69,759				18	%			-2	%			63,183				75,570
Egypt			300				311				607				-4	%			-51	%			305				609
North Sea			1,095				1,368				1,733				-20	%			-37	%			1,231				1,934
International			1,395				1,679				2,340				-17	%			-40	%			1,536				2,543
Total			69,887				59,494				72,099				17	%			-3	%			64,719				78,113
BOE per day
United States			241,525				210,091				250,589				15	%			-4	%			225,895				266,612
Egypt			61,172				62,843				86,140				-3	%			-29	%			62,003				79,083
North Sea			39,216				53,199				57,517				-26	%			-32	%			46,169				63,064
International			100,388				116,042				143,657				-13	%			-30	%			108,172				142,147
Total			341,913				326,133				394,246				5	%			-13	%			334,067				408,759

APA CORPORATION

PRICE INFORMATION

		For the Quarter Ended			For the Six Months Ended
		June 30, 2021			March 31, 2021			June 30, 2020			June 30, 2021			June 30, 2020
AVERAGE OIL PRICE PER BARREL
United States		$	65.32			$	57.16			$	23.02			$	61.68			$	35.09
Egypt			66.70				61.89				25.80				64.30				37.36
North Sea			68.34				59.67				31.55				63.48				41.94
International			67.24				61.04				27.86				64.00				39.22
Total			66.40				59.62				25.77				63.06				37.44
AVERAGE NATURAL GAS PRICE PER MCF
United States		$	2.73			$	4.61			$	1.13			$	3.63			$	0.90
Egypt			2.80				2.79				2.73				2.80				2.78
North Sea			8.10				6.93				1.43				7.43				2.41
International			3.46				3.42				2.53				3.44				2.71
Total			2.99				4.14				1.68				3.56				1.57
AVERAGE NGL PRICE PER BARREL
United States		$	22.72			$	22.99			$	7.81			$	22.84			$	8.77
Egypt			38.10				44.74				20.97				41.49				26.36
North Sea			38.79				48.59				20.35				44.21				29.29
International			38.56				47.44				20.57				43.35				28.35
Total			23.10				23.79				8.28				23.41				9.48

APA CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

		For the Quarter Ended June 30,			For the Six Months Ended June 30,
		2021			2020			2021			2020
Unproved leasehold impairments		$	3			$	31			$	21			$	50
Dry hole expense			6				23				25				47
Geological and geophysical expense			6				4				10				7
Exploration overhead and other			11				14				19				25
	$	26			$	72			$	75			$	129

SUMMARY CASH FLOW INFORMATION

		For the Quarter Ended June 30,			For the Six Months Ended June 30,
	2021			2020			2021			2020
Net cash provided by operating activities		$	969			$	84			$	1,640			$	586
Additions to upstream oil and gas property			(306	)			(329	)			(561	)			(841	)
Additions to Altus gathering, processing, and transmission facilities			-				(6	)			(1	)			(25	)
Contributions to Altus equity method interests			(3	)			(71	)			(24	)			(154	)
Proceeds from sale of oil and gas properties			178				-				181				126
Other, net			5				(2	)			12				(23	)
Net cash used in investing activities		$	(126	)		$	(408	)		$	(393	)		$	(917	)
Apache debt borrowings and payments, net			(79	)			51				(170	)			301
Altus credit facility borrowings			-				25				33				97
Distributions to noncontrolling interest - Egypt			(20	)			(8	)			(60	)			(40	)
Distributions to Altus Preferred Unit limited partners			(12	)			-				(23	)			-
Dividends paid to APA common stockholders			(10	)			(10	)			(19	)			(104	)
Other			(11	)			(27	)			(21	)			(35	)
Net cash provided by (used in) financing activities		$	(132	)		$	31			$	(260	)		$	219

SUMMARY BALANCE SHEET INFORMATION

		June 30, 2021			December 31, 2020
Cash and cash equivalents		$	1,249			$	262
Other current assets			1,696				1,584
Property and equipment, net			8,501				8,819
Other assets			2,066				2,081
Total assets		$	13,512			$	12,746
Current debt - Apache *		$	215			$	2
Current liabilities			1,558				1,306
Long-term debt - Apache *			7,763				8,146
Long-term debt - Altus			657				624
Deferred credits and other noncurrent liabilities			2,626				2,705
Redeemable noncontrolling interest - Altus Preferred Unit limited partners			617				608
APA shareholders' deficit			(964	)			(1,639	)
Noncontrolling interest - Egypt			948				925
Noncontrolling interest - Altus			92				69
Total Liabilities and equity		$	13,512			$	12,746
Common shares outstanding at end of period			378				377

*	Excludes Altus

APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of Costs incurred to Upstream capital investment

Management believes the presentation of upstream capital investments is useful for investors to assess APA's expenditures related to our upstream capital activity. We define capital investments as costs incurred for oil and gas activities, adjusted to exclude asset retirement obligation revisions and liabilities incurred, capitalized interest, and certain exploration expenses, while including amounts paid during the period for abandonment and decommissioning expenditures. Upstream capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of APA's cash expenditures related to upstream capital activity and is consistent with how we plan our capital budget.

		For the Quarter Ended June 30,			For the Six Months Ended June 30,
		2021			2020			2021			2020
Costs incurred in oil and gas property:
Acquisitions
Proved		$	2			$	1			$	3			$	7
Unproved			1				2				3				3
Exploration and development			304				266				588				756
Total Costs incurred in oil and gas property		$	307			$	269			$	594			$	766
Reconciliation of Costs incurred to Upstream capital investment:
Total Costs incurred in oil and gas property		$	307			$	269			$	594			$	766
Asset retirement obligations settled vs. incurred - oil and gas property			6				5				8				13
Capitalized interest			(2	)			-				(4	)			-
Exploration seismic and administration costs			(17	)			(18	)			(29	)			(32	)
Upstream capital investment including noncontrolling interest - Egypt		$	294			$	256			$	569			$	747
Less noncontrolling interest - Egypt			(37	)			(40	)			(69	)			(89	)
Total Upstream capital investment		$	257			$	216			$	500			$	658

Reconciliation of Net cash provided by operating activities to Cash flows from operations before changes in operating assets and liabilities and Free cash flow

Cash flows from operations before changes in operating assets and liabilities and free cash flow are non-GAAP financial measures. APA uses these measures internally and provides this information because management believes it is useful in evaluating the company's ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt, as well as to compare our results from period to period. We believe these measures are also used by research analysts and investors to value and compare oil and gas exploration and production companies and are frequently included in published research reports when providing investment recommendations. Cash flows from operations before changes in operating assets and liabilities and free cash flow are additional measures of liquidity but are not measures of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities. Additionally, this presentation of free cash flow may not be comparable to similar measures presented by other companies in our industry.

		For the Quarter Ended June 30,			For the Six Months Ended June 30,
		2021			2020			2021			2020
Net cash provided by operating activities		$	969			$	84			$	1,640			$	586
Changes in operating assets and liabilities			(212	)			66				(37	)			87
Cash flows from operations before changes in operating assets and liabilities		$	757			$	150			$	1,603			$	673
Adjustments to free cash flow:
Altus Midstream cash flows from operations before changes in operating assets and liabilities			(56	)			(32	)			(95	)			(76	)
Upstream capital investment including noncontrolling interest - Egypt			(294	)			(256	)			(569	)			(747	)
Distributions to Sinopec noncontrolling interest			(20	)			(8	)			(60	)			(40	)
Dividends paid to APA common stockholders			(10	)			(10	)			(19	)			(104	)
Upstream free cash flow		$	377			$	(156	)		$	860			$	(294	)
Dividends received from Altus Midstream			19				-				38				-
Free cash flow		$	396			$	(156	)		$	898			$	(294	)

Reconciliation of Net cash provided by operating activities to Adjusted EBITDAX

Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a company's ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Company's on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.

		For the Quarter Ended			For the Six Months Ended
		June 30,			March 31,			June 30,			June 30,
	2021			2021			2020			2021			2020
Net cash provided by operating activities		$	969			$	671			$	84			$	1,640			$	586
Adjustments:
Exploration expense other than dry hole expense and unproved leasehold impairments			17				12				18				29				32
Current income tax provision (benefit)			131				149				(27	)			280				62
Other adjustments to reconcile net income to net cash provided by operating activities			(6	)			20				(22	)			14				(14	)
Changes in operating assets and liabilities			(212	)			175				66				(37	)			87
Financing costs, net			108				110				106				218				209
Transaction, reorganization & separation costs			4				-				10				4				37
Adjusted EBITDAX (Non-GAAP)		$	1,011			$	1,137			$	235			$	2,148			$	999

APA CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions)

Reconciliation of debt to net debt

Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company's outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Altus Midstream LP credit facility is unsecured and is not guaranteed by APA or any of APA's other subsidiaries.

		June 30, 2021			December 31, 2020
		APA Upstream			Altus Midstream			APA Consolidated			APA Upstream			Altus Midstream			APA Consolidated
Current debt - Apache		$	215			$	-			$	215			$	2			$	-			$	2
Long-term debt - Apache			7,763				-				7,763				8,146				-				8,146
Long-term debt - Altus			-				657				657				-				624				624
Total debt			7,978				657				8,635				8,148				624				8,772
Cash and cash equivalents			1,174				75				1,249				238				24				262
Net debt		$	6,804			$	582			$	7,386			$	7,910			$	600			$	8,510

Reconciliation of Income attributable to common stock to Adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Company's operational trends and comparability of results to our peers.

Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company's on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company's industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.

		For the Quarter Ended June 30, 2021			For the Quarter Ended June 30, 2020
		Before Tax			Tax Impact			After Tax			Diluted EPS			Before Tax			Tax Impact			After Tax			Diluted EPS
Net income (loss) including noncontrolling interests (GAAP)		$	495			$	(87	)		$	408			$	1.07			$	(416	)		$	38			$	(378	)		$	(1.00	)
Income (loss) attributable to noncontrolling interests			104				(36	)			68				0.18				(17	)			6				(11	)			(0.03	)
Income attributable to Altus preferred unit limited partner			24				-				24				0.06				19				-				19				0.05
Net income (loss) attributable to common stock - Basic			367				(51	)			316				0.83				(418	)			32				(386	)			(1.02	)
Effect of dilutive securities **			(6	)			-				(6	)			(0.01	)			-				-				-				-
Net income (loss) attributable to common stock			361				(51	)			310				0.82				(418	)			32				(386	)			(1.02	)
Adjustments: *
Asset and unproved leasehold impairments			3				-				3				0.01				51				(6	)			45				0.12
Noncontrolling interest & tax barrel impact on Egypt adjustments			-				-				-				-				(7	)			-				(7	)			(0.02	)
Valuation allowance and other tax adjustments			-				(60	)			(60	)			(0.16	)			-				64				64				0.17
Gain on extinguishment of debt			(1	)			-				(1	)			-				(140	)			29				(111	)			(0.29	)
Unrealized derivative instrument loss			65				(13	)			52				0.14				138				(30	)			108				0.29
Noncontrolling interest on Altus preferred units embedded derivative			7				(2	)			5				0.01				(2	)			1				(1	)			(0.01	)
Effect of dilutive securities **			6				-				6				0.01				-				-				-				-
Transaction, reorganization & separation costs			4				(1	)			3				0.01				10				(3	)			7				0.02
Gain on divestitures, net			(65	)			14				(51	)			(0.13	)			-				-				-				-
Drilling contract termination charges and other			(1	)			-				(1	)			(0.01	)			-				-				-				-
Adjusted earnings (Non-GAAP)		$	379			$	(113	)		$	266			$	0.70			$	(368	)		$	87			$	(281	)		$	(0.74	)
		For the Six Months Ended June 30, 2021			For the Six Months Ended June 30, 2020
		Before Tax			Tax Impact			After Tax			Diluted EPS			Before Tax			Tax Impact			After Tax			Diluted EPS
Net income (loss) including noncontrolling interests (GAAP)		$	1,115			$	(257	)		$	858			$	2.26			$	(4,982	)		$	(18	)		$	(5,000	)		$	(13.23	)
Income (loss) attributable to noncontrolling interests			182				(71	)			111				0.29				(161	)			(10	)			(171	)			(0.45	)
Income attributable to Altus preferred unit limited partner			43				-				43				0.11				37				-				37				0.10
Net income (loss) attributable to common stock - Basic			890				(186	)			704				1.86				(4,858	)			(8	)			(4,866	)			(12.88	)
Effect of dilutive securities **			-				-				-				-				-				-				-				-
Net income (loss) attributable to common stock			890				(186	)			704				1.86				(4,858	)			(8	)			(4,866	)			(12.88	)
Adjustments: *
Asset and unproved leasehold impairments			21				(4	)			17				0.05				4,542				(844	)			3,698				9.79
Noncontrolling interest & tax barrel impact on Egypt adjustments			(1	)			-				(1	)			-				(170	)			(7	)			(177	)			(0.47	)
Valuation allowance and other tax adjustments			-				(103	)			(103	)			(0.27	)			-				932				932				2.46
Gain on extinguishment of debt			(1	)			-				(1	)			-				(140	)			29				(111	)			(0.29	)
Unrealized derivative instrument loss			55				(11	)			44				0.11				241				(51	)			190				0.50
Noncontrolling interest on Altus preferred units embedded derivative			3				(1	)			2				0.01				(15	)			4				(11	)			(0.03	)
Transaction, reorganization & separation costs			4				(1	)			3				0.01				37				(9	)			28				0.07
Gain on divestitures, net			(67	)			15				(52	)			(0.14	)			(25	)			8				(17	)			(0.04	)
Drilling contract termination charges and other			(1	)			-				(1	)			(0.01	)			3				(1	)			2				0.01
Adjusted Earnings (Non-GAAP)		$	903			$	(291	)		$	612			$	1.62			$	(385	)		$	53			$	(332	)		$	(0.88	)

*	The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

**	The assumed conversion of Altus' Preferred Unit limited partner is primarily associated with unrealized gains on the Preferred Unit embedded derivative. These amounts are antidilutive for the six-months ended 2021 and 2020 and for the second quarter 2020.

Public link

Please use the above public link if you want to share this noodl on another website.