QS Research · Michael Burry's Scion Capital analyst template · 2006
APA Corp (APA)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $45.12 (close 2026-11-10)
Conclusion: WATCH
Conviction medium · base case +24% · downside -32% · upside +37%
The market is paying 7.0x TTM net income (4.9x tax-normalized operating earnings, 2.8x EV/EBITDA) for a business earning 28.6% ROIC against a 6.9% WACC, with FY2026 FCF guidance raised to ~$2.9B and debt down $2.8B since year-end 2024 (S5, S58, N22, N24, N30, N34, N35). At the independent peer-median P/E of 8.7x, TTM net income of $2.17B is worth $56.08/share, +24% from $45.12 (N13, N43). The dated 2026-11-09 guidance/deleveraging update supports a re-rate to 9.6x, an EOG-type P/E, giving $61.88/share, +37% (S58, S5). The downside assumes TTM net income falls 20% and the P/E compresses to ~5.95x (15% below today), giving $30.68, -32%; the result is a watch, not a long, because the base is below +30% and commodity price risk sits under the TTM earnings base (N13, N1).
Key numbers
- Share price: $45.12
- Market cap: $15.15B
- Latest financial period: TTM to Sep 30, 2026
- EV / EBITDA (TTM): 2.8x
- P/E (TTM): 7.0x
- Price / book: 2.11x
- Earnings-quality flags (TTM): none flagged
- P/E, operating (tax-normalized) (TTM): 4.9x
- ROIC (TTM): 28.6%
- WACC: 6.9%
- Economic profit spread: +21.6 pts
The 15 boxes
- ✓ 1. Long-form business notes
APA is an independent E&P whose FY2025 10-K reports oil and gas operations in the U.S., Egypt, and the U.K. North Sea, plus a Suriname development and other exploration interests; FY2025 production was 169.5 MMboe, production revenue $7,229 million, and year-end proved reserves 1,056 MMboe. The U.S. is the largest region at 62% of FY2025 production, 53% of oil and gas revenues, and 74% of year-end reserves. Between the FY2021 and FY2025 10-Ks the described business moved from including Altus Midstream and 3.8 million gross U.S. acres to a Permian-focused E&P with 2.6 million gross U.S. acres after the Callon acquisition and divestitures, while the North Sea is being wound down and Suriname is targeting first oil in 2028. DATA shows operating income of $3.09 billion in FY2025 and $4.31 billion TTM to September 2026, with operating cash flow of $4.54 billion and $4.44 billion, respectively.
- ✓ 2. Competitive advantage
APA competes as a commodity price-taker with a self-described diversification/scale advantage but no quantified cost, margin or switching-cost moat in the sources. The 10-K cites national oil companies, majors and other independents as rivals, some with substantially larger resources. XBRL shows operating income swinging from -$4.10B in FY2020 to $5.57B in FY2022 and $2.44B in FY2024, while operating cash flow stayed positive every year. The DATA table has no revenue line, so margin history cannot be measured from it.
- ✓ 3. 10-Q takeaways
Q3 2026 was a price-led quarter: realized oil of $92.02/bbl (+36%) lifted oil and gas revenues to $2,360 million from $1,804 million, more than offsetting a 3% drop in total volumes to 450,276 boe/d, and net income attributable to common stock came in at $698 million ($2.00/diluted) versus $205 million ($0.57) a year earlier. The quarter also carried a $190 million estimated pre-tax net gain on oil and gas purchases and sales per the Oct. 7 supplemental release, so it was not all operations. Cash generation held up (nine-month operating cash flow $3,636 million, down $101 million), funding $1,755 million of upstream additions, $550 million of buybacks, $264 million of dividends and $1,200 million of debt repayment, while cash fell to $75 million from $516 million. Capital guidance is numeric: about $2.1 billion of upstream investment for calendar 2026 and $500 million of annualized cost savings by year-end 2026; the 10-Q reports no material changes to risk factors, though the computed 10-K diff shows 11 new or rewritten paragraphs.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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