APA lifts 2027 capex to $2.5 billion, half the increase for exploration

APA Corp. will raise 2027 capital spending to $2.5 billion, up from an expected $2.1 billion this year, with the bulk of the increase aimed at exploration and the GranMorgu development offshore Suriname.

The Houston-based producer laid out the plan on Nov. 5, after reporting third-quarter profits of $698 million on revenues of more than $2.8 billion. Chief executive officer John Christmann told analysts the split is simple: $250 million to exploration, another $250 million to GranMorgu, where APA holds 40%.

What does the money buy?

The allocation returns APA to its target of 10-15% of annual upstream capital going to exploration and early-stage development. The program has three legs, all still unsanctioned beyond GranMorgu itself:

• Suriname: Two exploration wells tied to the GranMorgu development, drilled with operator TotalEnergies, which also owns 40%. Christmann said the wells could extend the project's production plateau "or even support a second development."
• Alaska: A winter program with one exploration well plus an appraisal test of APA's Sockeye discovery.
• OFF-6 block: Spudding APA's operated well on a 60% interest, with Eni holding the rest. Executive vice-president of exploration Tracey Henderson said the block reminds her team of conditions offshore Namibia and called the work with Eni essentially a "petroleum systems test" — a well drilled to prove source rock and charge rather than delineate a find.

Takeaway: two of the three programs are rank exploration. Only Suriname sits inside a sanctioned project.

How big is GranMorgu, really?

APA and TotalEnergies teams put GranMorgu's reserves at nearly 760 million bbl, with first production targeted for mid-2028. Four wells are planned over the next 2 years. Christmann wants to move fast to gauge whether the play needs a second floating production, storage, and offloading unit (FPSO) or permanent infrastructure.

"It is important that you get after them early because it gives you some clues on what you might be able to do with it versus if they were only going to be plateau extenders and you would be more inclined to drill them later in the life cycle," he said on the call. "It is something that both us and our partner are excited to get after because they are definitely going to add more resource."

Note what is not said. The 760 million bbl figure is a company estimate, not an independent audit. The second-FPSO case is a scenario, not a commitment.

Why spend more now?

APA is not alone. Chevron Corp. said last week it could add $500 million to its 2027 exploration budget versus this year. The majors are quietly rearming the drillbit.

Christmann and chief financial officer Ben Rodgers argued the spending ramp builds on cost gains and debt reduction. Rodgers pointed to GranMorgu as the pivot.

"We have got a differentiated free cash flow inflection coming from GranMorgu in 2028 and that continues through the end of the decade," Rodgers said. "We believe that instead of being defensive on our debt balance now, we can be more on the offensive as opportunities arise and that will be accretive to shareholders over the long term."

Caveat: that inflection depends on a mid-2028 startup holding schedule, which no offshore megaproject has managed recently.

What's the market saying?

Shares of APA (ticker: APA) rose slightly to $44.53 in afternoon trading on Nov. 5. The stock is up about 8% over six months, and market capitalization stands near $15.6 billion. The market's verdict, so far, is a shrug — investors want evidence the frontier dollars convert to reserves.

Watch item: the spud of the OFF-6 well and the first of the two Suriname exploration wells. Plateau extender or second FPSO — that answer shapes APA's 2030 production curve.