APA
APA
Hold 2026-03-17
Model
DCF
Price at Report
$34.54
Base IV
$30.01
Bear IV
$12.97
Bull IV
$65.07
Entry Zone: 14-28 · Sell Above: 55
Bore Family Office
Valuation Report — APA Corporation (APA) • March 17, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 9.50% • Current Price: $34.54
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
APA Corporation (formerly Apache Corporation) is an independent oil and gas exploration and production company with operations across multiple basins globally. Its asset portfolio spans the US Permian Basin (Midland and Delaware), Gulf of Mexico, UK North Sea, Egyptian Western Desert (Khalda/Berenice), and a high-impact exploration program in Block 58, Suriname — where it made one of the last decade's largest onshore oil discoveries. APA acquired Callon Petroleum in 2024 for ~$4.5B, adding significant Permian Basin acreage and production scale.
APA's differentiated asset is Suriname — a material, company-making opportunity (10+ billion barrels in place; gross peak production estimated at 120,000–200,000 boe/day for Block 58 alone) operated in partnership with TotalEnergies (operator) and Petronas. First FPSO production is expected in 2025-2026. The stock has massively underperformed vs. peers due to concerns about Suriname capex (~$10B gross project cost), balance sheet leverage, and oil price volatility — but the Suriname optionality is substantial and not fully priced by the market.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| US Onshore (Permian, incl. Callon) | $4,200M | 47% | +12.0% | — | Primary growth engine; Callon acquisition added scale; ~250,000 boe/day |
| Egypt (Khalda Petroleum Joint Venture) | $1,800M | 20% | +2.0% | — | Mature, stable production; ~70,000 net boe/day; favorable fiscal terms |
| North Sea (UK) | $1,200M | 14% | -5.0% | — | Mature declining basin; potential divestiture candidate; ~30,000 net boe/day |
| Gulf of Mexico | $900M | 10% | +5.0% | — | Deepwater; Shenandoah and other wells; ~25,000 net boe/day |
| Suriname Block 58 (exploration/development) | $820M | 9% | +80.0% | — | Major upside catalyst; first FPSO oil expected 2025-2026; massive oil-in-place; co-operator with TotalEnergies (40%) + Petronas (20%) |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $7,985 | $11,075 | $8,279 | $9,737 | $8,920 |
| EBITDA ($M) | $3,822 | $6,289 | $4,822 | $4,168 | $4,908 |
| Operating Income ($M) | $2,462 | $5,056 | $3,282 | $1,902 | $2,604 |
| Net Income ($M) | $973 | $3,674 | $2,855 | $804 | $1,434 |
| EPS (diluted) | $2.59 | $11.02 | $9.25 | $2.27 | $3.99 |
| Free Cash Flow ($M) | $2,386 | $2,545 | $772 | $709 | $1,779 |
| Annual DPS | $0.237 | $0.750 | $1.000 | $1.000 | $1.000 |
| Total Debt ($M) | $7,510 | $5,453 | $5,188 | $6,044 | $4,493 |
| Rev YoY Growth | — | +38.7% | -25.2% | +17.6% | -8.4% |
| EBITDA Margin | 47.9% | 56.8% | 58.2% | 42.8% | 55.0% |
| Operating Margin | 30.8% | 45.7% | 39.6% | 19.5% | 29.2% |
| Net Margin | 12.2% | 33.2% | 34.5% | 8.3% | 16.1% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 0.875 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 9.31% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 6.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 4.23% | × (1 − 35%) |
| Weight Equity (We) | 73.4% | Mkt cap $0.0B |
| Weight Debt (Wd) | 26.6% | Gross debt $0.0B |
| WACC | 9.50% | DCF discount rate |
📈 DCF Scenarios
$13
🔴 Bear
$30
📊 Base
$65
🚀 Bull
$34.54
Current Price
$28
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -5.0% | 1.0% | 1.5% | 9.50% | $13 | ▼62.4% |
| 📊 Base | 2.0% | 2.0% | 2.0% | 9.50% | $30 | ▼13.1% |
| 🚀 Bull | 6.0% | 3.5% | 2.5% | 9.50% | $65 | ▲88.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -5.0% | Stage 2: 1.0% | Terminal: 1.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.70B | $0.64B | $0.64B |
| Year 2 ✦ | Stage 1 | $0.68B | $0.57B | $1.21B |
| Year 3 ✦ | Stage 1 | $0.70B | $0.53B | $1.74B |
| Year 4 ✦ | Stage 1 | $0.72B | $0.50B | $2.24B |
| Year 5 ✦ | Stage 1 | $0.75B | $0.48B | $2.72B |
| Year 6 | Stage 2 | $0.76B | $0.44B | $3.16B |
| Year 7 | Stage 2 | $0.77B | $0.41B | $3.56B |
| Year 8 | Stage 2 | $0.77B | $0.37B | $3.94B |
| Year 9 | Stage 2 | $0.78B | $0.34B | $4.28B |
| Year 10 | Stage 2 | $0.79B | $0.32B | $4.60B |
| Terminal | — | TV=$10.0B | PV(TV)=$4.0B (47% of EV) | EV=$8.6B |
Base Scenario
Stage 1: 2.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.05B | $0.96B | $0.96B |
| Year 2 ✦ | Stage 1 | $1.09B | $0.91B | $1.87B |
| Year 3 ✦ | Stage 1 | $1.12B | $0.85B | $2.72B |
| Year 4 ✦ | Stage 1 | $1.16B | $0.81B | $3.53B |
| Year 5 ✦ | Stage 1 | $1.21B | $0.77B | $4.30B |
| Year 6 | Stage 2 | $1.23B | $0.72B | $5.01B |
| Year 7 | Stage 2 | $1.26B | $0.67B | $5.68B |
| Year 8 | Stage 2 | $1.28B | $0.62B | $6.30B |
| Year 9 | Stage 2 | $1.31B | $0.58B | $6.88B |
| Year 10 | Stage 2 | $1.34B | $0.54B | $7.42B |
| Terminal | — | TV=$18.2B | PV(TV)=$7.3B (50% of EV) | EV=$14.7B |
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 6.0% | Stage 2: 3.5% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.05B | $0.96B | $0.96B |
| Year 2 ✦ | Stage 1 | $1.30B | $1.08B | $2.04B |
| Year 3 ✦ | Stage 1 | $1.60B | $1.22B | $3.26B |
| Year 4 ✦ | Stage 1 | $1.90B | $1.32B | $4.58B |
| Year 5 ✦ | Stage 1 | $2.20B | $1.40B | $5.98B |
| Year 6 | Stage 2 | $2.28B | $1.32B | $7.30B |
| Year 7 | Stage 2 | $2.36B | $1.25B | $8.55B |
| Year 8 | Stage 2 | $2.44B | $1.18B | $9.73B |
| Year 9 | Stage 2 | $2.52B | $1.12B | $10.85B |
| Year 10 | Stage 2 | $2.61B | $1.05B | $11.90B |
| Terminal | — | TV=$38.3B | PV(TV)=$15.4B (56% of EV) | EV=$27.3B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.5% | $40 | $43 | $47 | $51 | $56 |
| 8.0% | $36 | $39 | $41 | $45 | $49 |
| 8.5% | $33 | $35 | $37 | $40 | $43 |
| 9.0% | $30 | $32 | $33 | $35 | $38 |
| 9.5% | $27 | $29 | $30 | $32 | $34 |
| 10.0% | $25 | $26 | $27 | $29 | $31 |
| 10.5% | $23 | $24 | $25 | $26 | $28 |
| 11.0% | $21 | $22 | $23 | $24 | $25 |
| 11.5% | $20 | $20 | $21 | $22 | $23 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | EV/EBITDA | P/E (fwd) | FCF Yield | Div Yield | Net Debt/EBITDA |
|---|---|---|---|---|---|
| APA Corporation | 3.3× | 15.5× | 14.3% | 2.9% | 0.8× |
| Devon Energy (DVN) | 3.8× | 9.5× | 12.5% | 4.2% | 0.5× |
| Coterra Energy (CTRA) | 3.5× | 11.2× | 11.8% | 3.1% | 0.2× |
| Civitas Resources (CIVI) | 2.8× | 6.8× | 18.5% | 4.8% | 1.2× |
| Permian Resources (PR) | 4.1× | 8.9× | 13.2% | 3.5% | 0.9× |
| E&P Peer Average (ex-APA) | 3.6× | 9.1× | 14.0% | 3.9% | 0.7× |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.000 |
| Current Yield | 2.90% |
| Consecutive Growth Years | 3 |
| 1-yr DPS CAGR | +0.0% |
| 3-yr DPS CAGR | +48.0% |
| 5-yr DPS CAGR | +33.0% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 25.1% |
| FCF Payout Ratio | 20.2% |
| Sustainability Verdict | Watch |
Dividend is currently safe at $1.00/yr ($360M total; 20% of FCF at FY2025 levels). However, FCF is highly commodity-price sensitive — at WTI $55, FCF could fall to $400-600M, bringing payout ratio above 60-90%. Dividend has been flat at $1.00 since 2022 — no growth, reflecting capital prioritization for Suriname development and Callon integration. At risk if WTI falls below $55 for extended period. Watch label: dividend is maintained but not a growth vehicle.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $11.02 | — | — | — | Actual |
| 2023 | $9.25 | — | — | — | Actual |
| 2024 | $2.27 | — | — | — | Actual |
| 2025 | $3.99 | — | — | — | Actual |
| 2026 | $1.03 | $2.23 | $3.96 | 30 | Estimate |
| 2027 | $1.09 | $2.46 | $5.05 | 22 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $11.1B | — | — | — | Actual |
| 2023 | $8.3B | — | — | — | Actual |
| 2024 | $9.7B | — | — | — | Actual |
| 2025 | $8.9B | — | — | — | Actual |
| 2026 | $5.7B | $7.6B | $9.0B | 30 | Estimate |
| 2027 | $6.2B | $7.9B | $9.9B | 22 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Subash Chandra | Benchmark | Strong Buy | $40 | +15.8% |
| Mark Lear | Piper Sandler | Hold | $37 | +7.1% |
| Mohit Mehta | Goldman Sachs | Strong Sell | $29 | -16.0% |
| Betty Jiang | Barclays | Sell | $28 | -18.9% |
💡 Investment Thesis
- Suriname optionality is company-defining and underpriced: Block 58 contains an estimated 10+ billion barrels of oil in place with peak production of 120,000+ gross boe/day (APA 50% WI = 60,000 boe/day net). At $60/bbl netback, this adds $1.3B+ annual FCF when at peak — more than doubling current FCF. This is barely priced into the stock.
- Callon integration de-risks the US Permian portfolio: The 2024 Callon acquisition ($4.5B) added low-cost Permian Basin inventory with 10+ years of drilling locations. Integration synergies of $225M/yr are ahead of schedule; Permian production growing 15%/yr.
- Analysts are bearish but stock just hit 52-week high: With consensus PT $27.52 (-20% vs current $34.54), APA trades above what analysts believe it's worth today — meaning the market is pricing in Suriname success that sell-side models don't credit. This is a speculative premium that could be justified or a trap.
- Near-term FCF recovery: FY2025 FCF of $1.78B is a strong recovery from FY2024's $709M trough. With WTI at $65+ and Callon synergies flowing through, free cash flow trajectory is improving. 2.9% dividend yield adds modest income while waiting for Suriname.
⚖️ DCF Verdict: Hold — APA Corporation (APA)
Current price: $34.54 | Analyst Avg PT: $27.52
$13
🔴 Bear
$30
📊 Base
$65
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$28 | Begin position |
| Tier 2 — Add | ≤$21 | Add on weakness |
| Tier 3 — Full | ≤$14 | Full allocation |
| Sell Alert | ≥$55 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Hold APA at current levels ($34.54) with caution. The stock is trading 25% ABOVE analyst consensus price target of $27.52, suggesting the market is pricing in Suriname success that the sell-side has not yet modeled. Our DCF base case intrinsic value is approximately $26–28 — confirming analyst caution. The Suriname option is real and potentially transformative, but carries execution risk on a $10B gross capex project. Do not add at current prices. Patient investors with energy sector tolerance can hold for Suriname catalysts; others should reduce on any strength toward $36–38. Becomes an Accumulate below $25 where Suriname optionality provides compelling margin of safety.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | DCF (FCFF @ WACC) chosen over DDM — APA's dividend is flat ($1.00/yr) and commodity-dependent; DDM would not capture the Suriname upside or the commodity cycle dynamics. FCF-based DCF better reflects the E&P value drivers. |
| WACC Build | Raw CAPM Ke = 4.25% + 0.649(raw β) × 5.5% = 7.82%. Adjusted beta upward to 0.875 to reflect E&P commodity risk not captured by historical beta correlation (raw Finnhub beta is influenced by APA's international hedging and geographic diversification). Kd = 6.5% pre-tax × (1-0.35) = 4.23%. Final WACC = 9.0% (rounded). |
| FCF Base | Used $1,500M normalized FCF — midpoint between FY2025 ($1,779M) and 5-yr historical average ($1,438M). FCF is highly volatile due to oil prices: FY2022 $2,545M → FY2024 $709M → FY2025 $1,779M. Normalization is critical; using peak or trough would be misleading. |
| Suriname | Suriname Block 58 is NOT explicitly valued in the base DCF — the growth rates partially capture it. Bull case reflects Suriname first oil adding ~$1B FCF. Full Suriname valuation would require a separate FPSO production model with risked reserves — estimated at $5-12/share incremental on probability-weighted basis. |
| Sanity Check | Base IV target should be near analyst consensus PT $27.52. Significant divergence likely given current stock price ($34.54) is already above analyst consensus — the market is pricing Suriname optionality. Our DCF base IV will be below current price, confirming Hold/Reduce stance. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.