APA Corporation Prices $850 Million Private Notes Offering

Rhea-AI Summary

APA (Nasdaq: APA) has announced the pricing of a private notes offering totaling $850 million. The offering consists of $350 million of 6.10% notes due 2035 and $500 million of 6.75% notes due 2055. The gross proceeds are expected to be approximately $846 million.

The offering is scheduled to close on January 10, 2025. APA plans to use the net proceeds to purchase outstanding senior indebtedness from Apache , its wholly-owned subsidiary, through cash tender offers launched on December 3, 2024, with a maximum aggregate purchase price of $869 million. The Notes will be initially guaranteed by Apache until the aggregate principal amount of indebtedness under senior notes and debentures falls below $1 billion.

Positive

• Successful pricing of $850 million notes offering indicates strong market confidence
• Strategic debt restructuring through tender offers to optimize capital structure
• Attractive interest rates secured in current market conditions

Negative

• Taking on new long-term debt with substantial interest obligations
• High interest rates of 6.10% and 6.75% on the new notes

Insights

Financial Analyst

APA 's $850 million notes offering represents a strategic debt restructuring move with two tranches: $350 million at 6.10% due 2035 and $500 million at 6.75% due 2055. The proceeds will refinance existing debt through tender offers, effectively optimizing the company's capital structure. The pricing reflects current market conditions, with the longer-dated 2055 notes carrying a higher yield to compensate for duration risk. This debt restructuring could potentially lower APA's weighted average cost of capital and extend its debt maturity profile. The conditional guarantee structure, linked to Apache 's outstanding debt falling below $1 billion, indicates a gradual consolidation of the corporate structure. For a company with a market cap of $8.8 billion, this transaction represents approximately 9.7% of its market value, making it a material financial event.

Credit Risk Analyst

The structured nature of this offering reveals important credit considerations. The dual-tranche approach with different maturities helps diversify refinancing risk. The 6.10% and 6.75% coupon rates suggest relatively strong market appetite, considering the current interest rate environment. The conditional guarantee mechanism is particularly noteworthy - it's designed to protect noteholders while facilitating corporate restructuring flexibility. The Rule 144A format indicates a sophisticated institutional investor base, which typically demands stronger covenant packages. The tender offer for existing Apache debt, capped at $869 million, demonstrates a methodical approach to liability management. This refinancing should help maintain APA's credit metrics while potentially improving its debt maturity ladder.

HOUSTON, Jan. 07, 2025 (GLOBE NEWSWIRE) -- APA Corporation (“APA”) (Nasdaq: APA) announced today that it has priced $350 million in aggregate principal amount of 6.10% notes due 2035 and $500 million in aggregate principal amount of 6.75% notes due 2055 (collectively, the “Notes”) in a private offering (the “Private Offering”) that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).

Gross proceeds, before deducting the initial purchasers’ discounts and offering expenses payable by APA, are expected to be approximately $846 million. The offering is expected to close January 10, 2025, subject to the satisfaction of customary closing conditions.

APA intends to use the net proceeds from the proposed offering to purchase a portion of certain outstanding senior indebtedness issued by Apache Corporation, a Delaware corporation and a wholly-owned subsidiary of APA (“Apache”) in cash tender offers with respect to several series of its outstanding notes, which commenced on December 3, 2024, with a maximum aggregate purchase price of $869 million (including accrued and unpaid interest) (the “Tender Offers”). The settlement date of the Tender Offers and the concurrent offers to exchange certain outstanding senior indebtedness issued by Apache for new notes to be issued by APA is expected to be January 10, 2025 (the “Tender Settlement Date”).

The Notes will be initially guaranteed by Apache, until the first time that the aggregate principal amount of indebtedness under senior notes and debentures outstanding under Apache’s existing indentures is less than $1 billion, provided that if the aggregate principal amount of such indebtedness is less than $1 billion as of the Tender Settlement Date, then the reason for such guarantees would have ceased to exist and no guarantees would be issued with respect to the Notes.

The Notes will be offered and sold only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been registered under the Securities Act or the securities laws of any state or other jurisdiction, and the Notes may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws and foreign securities laws.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy any securities, nor shall there be any sales of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About APA

APA Corporation owns consolidated subsidiaries that explore for and produce oil and natural gas in the United States, Egypt and the United Kingdom and that explore for oil and natural gas offshore Suriname and elsewhere.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “guidance,” “may,” “might,” “outlook,” “possibly,” “potential,” “projects,” “prospects,” “should,” “will,” “would,” and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations, and objectives for operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under “Forward-Looking Statements and Risk” and “Risk Factors” in APA’s Annual Report on Form 10-K for the year ended December 31, 2023, and in its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and September 30, 2024 and similar sections in any subsequent filings, which describe risks and factors that could cause results to differ materially from those projected in those forward-looking statements. Any forward-looking statement made in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. APA and its subsidiaries undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.

Contacts

Investor:	(281) 302-2286	Ben Rodgers
Media:	(713) 296-7276	Alexandra Franceschi
Website:	www.apacorp.com

APA-F

FAQ

What is the total value of APA 's January 2025 notes offering?

APA 's notes offering totals $850 million, consisting of $350 million in 6.10% notes due 2035 and $500 million in 6.75% notes due 2055.

When will APA 's January 2025 notes offering close?

The notes offering is expected to close on January 10, 2025, subject to customary closing conditions.

What are the interest rates for APA's new notes issued in January 2025?

The notes carry interest rates of 6.10% for the 2035 notes and 6.75% for the 2055 notes.

How will APA use the proceeds from the January 2025 notes offering?

APA will use the net proceeds to purchase outstanding senior indebtedness from Apache through cash tender offers, with a maximum aggregate purchase price of $869 million.

When will Apache 's guarantee on APA's new notes expire?

Apache's guarantee will expire when the aggregate principal amount of indebtedness under senior notes and debentures falls below $1 billion.