APA downgraded at Roth on weak oil macro, shorter U.S. inventory life vs. peers

[Oil pumps and rig at sunset]
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APA Corp. (NASDAQ:APA [https://seekingalpha.com/symbol/APA]) shares wobble between small gains and losses in Wednesday's trading as Roth Capital downgraded the oil and gas explorer to Neutral from Buy with a $22 price target, citing its slightly higher leverage compared to peers, a shorter U.S. inventory life vs. Permian peers, and reliance on riskier exploration to backfill inventory needs.

Roth analyst Leo Mariani sees global oil prices heading lower in the near term, with downside risk for H1 2026 as well, as OPEC+ appears poised to add back ~2.5M bbl/day to global markets between April 1 and September 30, and those volumes should send global oil markets into "quite an oversupplied state," while global oil demand outlook looks uncertain due to the current tariff war - both factors likely will result in rising global oil inventory levels in H2 2025.

APA (NASDAQ:APA [https://seekingalpha.com/symbol/APA]) has a shorter U.S. inventory life than many peers, and the economics of its inventory in the Permian Basin will deteriorate over next several years, Mariani said; the Permian comprises just over 60% of APA's net production, and the company likely has just over five years of quality inventory remaining, with the quality of the company's Permian wells starting to deteriorate towards the end of this decade as it generally has acreage that is less economic than some of
its better positioned peers.

Finally, APA (NASDAQ:APA [https://seekingalpha.com/symbol/APA]) does not expect first oil production in Suriname until mid-2028, and early cash flows will be minimal, and the company is more reliant on exploratory efforts in Alaska and Uruguay, which raises the risk profile, according to Mariani.

MORE ON APA CORP.

* APA Corp: Getting Leaner And Meaner [https://seekingalpha.com/article/4812152-apa-corp-getting-leaner-and-meaner]
* Low Sugar Halloween Treats: APA Corp. [https://seekingalpha.com/article/4811327-low-sugar-halloween-treats-apa-corporation]
* APA Corp.: Suriname Prospects Improve In Block 53 (Rating Upgrade) [https://seekingalpha.com/article/4799056-apa-corporation-suriname-prospects-improve-in-block-53-rating-upgrade]