Daily boe production from the Company's U.S. assets increased 39% year-over-year in Q1 2025, contributing 64% of worldwide production. This growth was primarily driven by an average of eight drilling rigs and 31 wells brought online in the Permian Basin, a key growth area.

APA completed the $4.5 billion all-stock acquisition of Callon Petroleum Company, significantly expanding its asset base. Concurrently, the Company entered an agreement to sell non-core Permian Basin assets for $608 million, exiting New Mexico and intending to use proceeds for debt reduction, demonstrating active portfolio management.

Preliminary results from an exploratory well in Alaska confirmed a successful reservoir discovery, with a flow test averaging 2,700 b/d in April. This discovery, where the Company holds a 50% ownership interest, indicates potential for future development opportunities and reserve additions.

Management announced a significant cost reduction initiative aiming for over $350 million in annualized savings by the end of 2027. This plan focuses on reducing overhead, optimizing capital cost structure for drilling and facilities, and improving field operating practices, demonstrating proactive cost management.

The Company reduced its long-term debt by $754 million from year-end 2024, ending Q1 2025 with $5.2 billion outstanding. This was accomplished through strategic debt repurchases and exchange offers, including a $135 million gain on extinguishment, reflecting effective balance sheet strengthening.

Management actively monitors hydrocarbon pricing to reallocate capital, demonstrating operational flexibility to respond to near-term price volatility. This includes adjusting the Permian drilling program from 8 to 6 rigs by Q2 2025 while increasing the Egypt program to 12 rigs, indicating agile strategic decision-making.

The Company's financial performance is highly dependent on volatile oil, natural gas, and NGL prices, which are influenced by macroeconomic uncertainty, international conflicts, and OPEC+ actions. Average crude oil price realizations decreased 9% YoY in Q1 2025, highlighting this exposure.

Ongoing international conflicts, including the Russian war in Ukraine and the armed conflict in Israel and Gaza, contribute to global supply chain and financial market uncertainties. These external factors can significantly impact commodity prices and the Company's operational environment.

The enactment of the UK Finance Act 2025 increased the Energy (Oil and Gas) Profits Levy from 35% to 38%, effective November 1, 2024. This resulted in a $76 million deferred tax expense for the Company in Q1 2025, demonstrating direct financial impact from regulatory changes.

Despite a 9% decrease in average realized crude oil prices to $73.73/barrel in Q1 2025, total oil production revenue increased by $168 million due to an 18% higher average daily production. This indicates the Company's ability to grow volumes and mitigate price headwinds.

APA operates across the U.S., Egypt, North Sea, and has exploration interests in Suriname, Uruguay, and Alaska. This diversified portfolio provides the Company with operational flexibility to respond to near-term price volatility and effectively manage its investment programs across different regions.

The Permian Basin continues to be a key growth area, driving a 39% year-over-year increase in U.S. daily boe production in Q1 2025. The Company's core development program in this basin, with 8 active rigs, underscores its competitive focus on high-potential domestic assets.

While absolute Lease Operating Expenses (LOE) increased by $69 million in Q1 2025 compared to Q1 2024, per-unit LOE remained relatively flat. This suggests effective cost management despite higher operating and labor costs, increased workover activity from the Callon acquisition, and rising North Sea lifting costs.

Gathering, Processing, and Transmission (GPT) costs increased by $20 million to $104 million in Q1 2025 from Q1 2024. This rise is primarily a direct consequence of increased oil, natural gas, and NGL production volumes in the U.S., indicating costs are scaling with output.

Exploration expenses decreased significantly by $118 million, from $148 million in Q1 2024 to $30 million in Q1 2025. This reduction was primarily due to lower dry hole expenses and unproved leasehold impairments, suggesting more successful or focused exploration activities.

The Company's capitalized exploratory well costs increased to $283 million as of March 31, 2025, from $237 million as of December 31, 2024. This increase is primarily attributable to additional drilling activity in Egypt and Alaska, indicating continued investment in discovering new reserves and leveraging exploration technologies.

A successful exploratory well discovery in Alaska was announced, with a flow test averaging 2,700 b/d. This demonstrates the Company's capability in identifying and appraising new hydrocarbon resources, potentially leveraging advanced seismic and drilling technologies.

Management cited 'efficiency gains in the Permian drilling program,' allowing for a reduction in the rig program from eight to six rigs by Q2 2025 while maintaining production targets. This suggests the successful implementation of optimized drilling techniques or technologies.

The Company reduced its long-term debt by $754 million, ending Q1 2025 with $5.2 billion outstanding, down from $6.044 billion at year-end 2024. This was primarily driven by strategic debt repurchases and exchange offers, resulting in a $135 million gain on extinguishment of debt.

APA repurchased 4.4 million shares for $100 million in Q1 2025 and paid $91 million in common stock dividends. This aligns with the Company's stated capital return framework of returning 60% of free cash flow to shareholders, demonstrating a commitment to investor returns.

The full-year 2025 estimated upstream capital investment is $2.2 billion to $2.3 billion, with $2.0 billion to $2.1 billion allocated to development in the Permian Basin, Egypt, and North Sea, and $275 million for strategic exploration in Suriname and other international locations. This reflects a balanced approach to growth and future potential.

APA articulates its belief that 'energy underpins global progress' and aims to be 'part of the solution as society works to meet growing global demand for reliable and affordable energy,' striving to create value for all stakeholders. This statement reflects a high-level commitment to social responsibility and sustainability in its core business.

The Company acknowledges its exposure to legislative and regulatory changes, including initiatives addressing global climate change and stricter regulations on hydraulic fracturing, methane emissions, and water disposal. This highlights the continuous need for adaptation and potential compliance costs related to environmental factors.

APA is actively defending against lawsuits, including the Louisiana restoration lawsuits, alleging environmental damages from past oil and gas operations. While management believes these will not have a material adverse effect, these represent ongoing legal and potential financial liabilities related to environmental stewardship.

The Company's financial results are highly sensitive to volatile crude oil, natural gas, and NGL prices, which are impacted by macroeconomic uncertainty, inflation rates, and potential economic recession. Average crude oil prices decreased 9% YoY in Q1 2025, while natural gas and NGL prices increased, indicating a mixed but volatile environment.

Ongoing international conflicts, such as the Russian war in Ukraine and the armed conflict in Israel and Gaza, are cited as contributing to global supply chain and financial market uncertainties. These geopolitical factors can directly impact oil and gas supply and demand dynamics.

The enactment of the UK Finance Act 2025, which increased the Energy (Oil and Gas) Profits Levy from 35% to 38%, resulted in a $76 million deferred tax expense for the Company in Q1 2025. This demonstrates how evolving regulatory environments in key operating regions can directly impact financial performance.