Oil and gas producer APA beat Wall Street estimates for second-quarter profit on Wednesday, helped by higher oil prices.
The U.S.-Israeli conflict with Iran, now in its sixth month, has raised concerns about disruptions to Middle East oil supplies and shipping through the Strait of Hormuz, pushing benchmark Brent crude prices up 19.2% from a year earlier to average at $89.62 a barrel during the quarter.
The Houston, Texas-based company said its realized price for each barrel of oil produced rose to $98.24 from $65.58 a year ago.
Most of APA’s operations are based in the U.S., followed by Egypt, the North Sea and Suriname. The energy company is still exposed to changes in commodity prices due to geopolitical events.
APA’s quarterly production declined nearly 12% to 410,000 barrels of oil equivalent per day (boepd), as lower volumes from its U.S., Egypt and North Sea operations weighed.
Although oil prices rose sharply this year following the Middle East conflict, U.S. shale producers largely refrained from boosting output, prioritizing spending discipline in the face of geopolitical uncertainty.
APA said it expects to achieve about $500 million in annualized savings by the end of 2026, up from its earlier target of $450 million, as it broadens cost-reduction measures.
The company, however, increased its full-year U.S. oil production forecast to 123,000 bpd from 122,000 bpd.
It posted an adjusted profit of $1.89 per share for the three months ended June 30, compared with analysts’ average estimate of $1.87, according to data compiled by LSEG.
(Reporting by Katha Kalia in Bengaluru; Editing by Shilpi Majumdar)