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APA Sees Further Production Upside After Strong First Quarter, TPH Says

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APA (APA) could continue beating consensus oil production forecasts through 2026 after a stronger-than-expected start to the year, TPH Energy said in a Friday note.

APA shares have gained about 20% since late February, outperforming the SPDR S&P Oil & Gas Exploration & Production ETF's 7% rise, as higher oil prices over the past three months boosted several parts of its portfolio.

APA still has room to outperform near-term Street expectations following its strong start to the year, although the company trades at a higher valuation than some peers based on 2027 metrics, TPH Energy said.

Following first-quarter results and updated development timing, TPH Energy raised its second-quarter US oil forecast to 124,200 barrels of oil per day from Street expectations of 120,700 b/d and company guidance of 121,000 b/d.

For the third quarter, the firm expects production to increase to 127,200 b/d, above the Street's 121,800 b/d estimate, as larger pads come online during the second and third quarters.

TPH Energy forecasts full-year 2026 US oil production at 124,400 b/d, exceeding consensus of 122,400 b/d and company guidance of 122,000 b/d, while modeling capital spending of about $2.125 billion versus guidance of $2.1 billion.

At current assumptions of about $85 per barrel West Texas Intermediate crude and $3.60 per million cubic feet Henry Hub gas, APA generates roughly 17% free cash flow-to-enterprise value in 2026, the firm said.

Using its 2027 commodity price assumptions of about $75 per barrel West Texas Intermediate crude and $3.40 per million cubic feet Henry Hub gas, TPH Energy estimates APA will generate about 9.3% free cash flow-to-enterprise value.

TPH Energy attributed the gap between its 2026 and 2027 cash flow outlook to a weaker forward oil curve, reduced support from Brent-linked pricing and a stronger marketing contribution expected in 2026.

Higher spending on longer-cycle international and exploration projects in Suriname, Alaska and Uruguay could increase capital expenditures by about $240 million over the year in 2027, while APA may also restart share repurchases in the coming quarters, TPH Energy added.

Price: $35.87, Change: $-0.66, Percent Change: -1.81%

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