On January 3, 2024, APA entered into a definitive agreement to acquire Callon Petroleum in an all-stock transaction valued at approximately $4.5 billion, inclusive of Callon's net debt. This transaction complements and enhances APA's asset base in the Permian Basin.

During the fourth quarter of 2023, the Company commenced an exploration program in Alaska, where it anticipates drilling three exploration wells in the first half of 2024. This represents a new venture asset for the company.

During the second quarter of 2023, as part of the Company's focus on capital allocation to optimize investment returns, it suspended all new drilling activity in the North Sea. The Company's investment program there is now directed toward safety, base production management, and asset maintenance and integrity.

Despite uncertainties, the Company remains committed to generating cash flow in excess of its upstream exploration, appraisal, and development capital program that can be directed to debt reduction, share repurchases, and other return of capital to its shareholders.

The Company continues to aggressively manage its cost structure regardless of the oil price environment and closely monitors hydrocarbon pricing fundamentals to reallocate capital as part of its ongoing planning process.

The Total Recordable Incident Rate (TRIR) was 0.22, 27% below the target of 0.30. This indicates successful efforts to improve safety performance.

The Company's revenues, operating results, future rate of growth, and carrying value of its oil and gas properties depend highly upon the prices it receives for its sales of crude oil, natural gas, and NGL products. Historically, the markets for these commodities have been volatile and are likely to continue to be volatile in the future.

To the extent that the Company engages in price risk management activities to protect itself from commodity price declines, the Company may be prevented from realizing the benefits of price increases. The Company's hedging arrangements may expose it to the risk of financial loss.

There are numerous and evolving risks to the Company's data, technology, and information systems from cyber threat actors, including criminal hackers, state-sponsored intrusions, industrial espionage, and employee malfeasance.

The Company believes its diversified portfolio of core assets, which comprises large acreage positions and well-established production bases across three geographic areas, its balanced production mix between oil and gas, its management and incentive systems, and its experienced personnel give it a strong competitive position.

Strong competition exists in all sectors of the oil and gas E&P industry. The Company competes for leases, equipment, labor, key personnel, and marketing of crude oil, natural gas, and NGL production, the prices of which impact the costs of properties and the financial resources available to pursue acquisitions.

During 2023, LOE decreased $8 million, or 1 percent, compared to 2022. On a per-boe basis, LOE decreased $0.27, or 3 percent, compared to 2022, from $9.95 per boe to $9.68 per boe. The decrease in costs was driven by lower average foreign currency exchange impacts against the U.S. dollar and decreased workover activity primarily in the North Sea.

The Company will continue to focus on driving efficiencies and managing costs under the MCA.

The Company utilizes a detailed Source Control Emergency Response Plan (SCERP) for offshore response preparedness. The SCERP has been designed to ensure that the goals of the Company's source control emergency preparedness efforts will be met in the unlikely event of an actual response to an uncontrolled well event.

The Company's recruitment framework harnesses technology and data-driven insights to identify talent pools on a global scale, while at the local level, the Company leverages the power of its people, including, looking to the Company's ERG members for recommendations and feedback during the candidate sourcing and interviewing processes.

The Company remains committed to its capital return framework for equity holders to participate more directly and materially in cash returns.

During 2023, the Company repurchased 8.7 million shares of its common stock for $329 million and paid $308 million in dividends to APA common stockholders during 2023.

Capital investment plans were then aligned across other areas of the portfolio while maintaining a focus on the Company's capital returns framework established in 2021.

APA's global giving strategy and philosophy is focused into three pillars: Community Well-being, Environmental Stewardship, and Access to Energy, through which the Company creates sustainable and positive impacts.

In 2023, the Company's environmental stewardship initiatives included grants of 206,000 trees to 61 community partners through the Apache Corporation Tree Grant Program.

In 2023, the Company installed generators in the villages of Drietabbetje and Asidonhopo in the Surinamese Amazon, in partnership with the Surinamese Ministry of Natural Resources. The generators not only provide more reliable electricity for the two communities, but they will also help provide better quality health care, increased local trade, more educational opportunities and preserved Indigenous traditions.

The Company continually monitors its market risk exposure, as oil and gas supply and demand are impacted by uncertainties in the commodity and financial markets associated with the conflict in Ukraine, the recent conflict in Israel and Gaza, actions taken by foreign oil and gas producing nations, including OPEC+, global inflation, and other current events.

The Company's operations are sensitive to fluctuations in foreign currency exchange rates, particularly between the U.S. dollar and the British pound. Volatility in exchange rates may adversely affect the Company's results of operations, particularly through the weakening of the U.S. dollar relative to other currencies.

To the extent that the Company engages in price risk management activities to protect itself from commodity price declines, the Company may be prevented from realizing the benefits of price increases.