APA Corp 3Q26 Flash: Execution Train Rolls On; Setting the Table for Exploration Sizzle in 2027; Stock Reaction-Slightly Positive

JPM View: Stock Reaction – Slightly Positive. We anticipate a slightly positive reaction to the print, which featured a sizeable cash flow beat and an increase to its full-year FCF guide to $2.9bn from $2.3bn that should drive higher cash returns in 4Q26. The upside surprise relative to our model was driven by higher oil production of 221 MBo/d, which topped JPMe/STe by 3%, while natural gas volumes were 2% above JPMe/STe. 3Q26 FCF of $699mm was +16%/+4% above JPMe/STe as CFPS of $4.15 was +5%/+8% above JPMe/STe and capex of $466mm was -5% below our model. U.S. oil production of 128 MBo/d was 4 MBo/d above our model. The lower 3Q26 capex appears timing related as the 4Q26 capex guide of $525mm was 6% above consensus of $495mm. APA increased its YTD debt reduction by $450mm to $1.2bn from $752mm last quarter and lowered its long-term debt target to $2bn from $3bn. In 3Q26, APA repurchased $450mm of stock, plus $213mm in October 2026, with $650mm planned for November-December 2026. The c