APA's Strategic Pivot: Curtailing Gas Output Amid Price Slump While Accelerating Share Buybacks

HOUSTON – APA Corporation (NASDAQ: APA) is making a bold statement on capital discipline. The energy producer's latest operational update reveals it curtailed approximately 91 million cubic feet per day of U.S. natural gas and 7,600 barrels per day of natural gas liquids in the fourth quarter of 2025. This decisive move was a direct response to severely depressed, and at times negative, prices at the Waha trading hub in West Texas.

While pulling back on production, APA doubled down on returning cash to shareholders. The company repurchased 2.7 million shares for $65.3 million during the period, bringing its total buybacks under a 2018 authorization to a staggering 98.1 million shares, worth roughly $3.21 billion. This has reduced share count by over 25% since the program's inception.

The twin actions underscore a strategic recalibration. In an environment where regional gas gluts destroy margins, APA's management is signaling that protecting balance sheet health and per-share metrics trumps maintaining output. "This isn't about retreating; it's about intelligent capital stewardship," said a company spokesperson. "We will not produce into negative margins. The capital saved is being deployed directly to our shareholders."

The strategy, however, carries near-term risks. Curtailments will pressure production volumes and cash flow, potentially testing the company's ability to sustain its dividend and buyback pace if low prices persist. APA's stock has lagged behind some peers, with analyst sentiment largely neutral, reflecting concerns over its debt levels and exposure to volatile regional pricing differentials.

Market Reaction & Divergent Views

The market's reaction has been mixed, reflecting deep divisions on APA's path forward. Valuation models paint a wildly disparate picture, with some estimates as low as $11 per share and others exceeding $177, according to public financial models.

Investor Perspectives:

"Finally, a management team that gets it," said Michael Thorne, a portfolio manager at Horizon Capital. "Shutting in uneconomic production is painful but necessary. Coupled with aggressive buybacks, this is textbook value creation in a cyclical downturn. They're strengthening the foundation for the next upcycle."

"This is a short-sighted gambit that exposes their fundamental weakness," argued Lisa Chen, a sharp-tongued independent analyst. "They're cannibalizing their future production base to fund buybacks and prop up the stock price temporarily. What's the long-term plan? Pray for higher prices? It's financial engineering, not a sustainable energy strategy."

"The data is conflicting, which makes me cautious," noted David Riggs, a veteran oil & gas investor. "The buyback is impressive in scale, but the Waha exposure is a persistent headache. I need to see if these curtailments actually preserve margin or just delay the pain. I'm on hold until the next earnings call."

APA's narrative is now at a crossroads. The company has firmly chosen the path of capital returns over growth-at-any-cost. Its ability to navigate the commodity price storm while continuing to shrink its equity base will determine whether this reframed story resonates with a skeptical market or validates the concerns of its critics.

This analysis is based on publicly disclosed operational and financial data. It is for informational purposes only and does not constitute investment advice.