Balanced Risk-Reward at APA: Weaker Permian and Declining Legacy Oil Offset by Egyptian Gas Stability and Long-Dated Suriname Upside, Supporting a Hold Rating

In a report released yesterday, Phillip Jungwirth from BMO Capital maintained a Hold rating on APA, with a price target of $30.00.

Phillip Jungwirth has given his Hold rating due to a combination of factors tied to APA’s asset quality, production outlook, and risk/reward profile. He sees APA’s Permian footprint as relatively less advantaged versus peers, with flat oil volumes expected despite meaningful capital spending, and ongoing oil declines from the North Sea weighing on overall growth. At the same time, recent improvements in operational execution and capital efficiency have helped support free cash flow generation, partially offsetting these structural challenges.
Jungwirth also factors in the stability provided by Egypt’s gas business, which underpins consistent cash flow even as certain oil assets decline. In addition, he attributes notable long-term option value to APA’s Suriname position, which he estimates to be worth several dollars per share, but views it as more of a longer-dated catalyst than an immediate driver. Taken together, the mix of weaker relative Permian returns, declining legacy oil production, improving execution, solid Egyptian gas, and yet-to-be-realized Suriname upside leads him to conclude that APA’s upside is balanced by its risks, justifying a Hold (Market Perform) stance rather than a more aggressive rating.

In another report released yesterday, Piper Sandler also maintained a Hold rating on the stock with a $23.00 price target.