APA Corp APA

APA Expects Greater Synergies From Callon Assets

APA is an upstream oil and natural gas producer with assets in the United States and overseas. The vast majority of its domestic production is derived from the Permian Basin. The firm's footprint of 500,000 net acres extends across several subbasins and mainly focuses on the same reservoirs that competitors are targeting (the Spraberry and Wolfcamp intervals in the Midland Basin and the Bone Spring and Wolfcamp formations in the Delaware). However, APA also has its own discovery in the Permian region, the Alpine High play. Alpine High wells are characterized by very strong initial production rates but with a much higher gas and natural gas liquids content than we'd expect elsewhere in the Permian. This gives the firm optionality: When natural gas prices compare favorably with oil prices, APA can allocate more capital to its gassier assets.