APA Corporation, the oil and gas producer behind the Apache brand, is heading into its third-quarter earnings report with expectations of steady results, according to analysts at RBC Capital Markets. The investment bank raised its forecasts for the quarter, citing solid prices for the company's oil and gas sales, and it sees the potential for a significant jump in share repurchases in the fourth quarter as APA works toward its stated goal of returning 60% of annual free cash flow to shareholders.
What RBC expects for Q3
RBC now projects APA will report earnings per share (EPS) of $1.67 and cash flow per share of $3.80 for the third quarter, both above the consensus estimates on Wall Street. The bank also expects production of 445,000 barrels of oil equivalent per day, which is ahead of both the analyst consensus and the company's own guidance. Capital spending for the quarter is pegged near $625 million.
That combination of higher output and controlled spending points to roughly $544 million in free cash flow for the quarter, RBC estimates. Free cash flow is the money a company generates after paying for the capital expenditures needed to maintain and grow its operations. It's a key metric for investors because it represents the cash available for dividends, debt reduction, or share buybacks.
Buybacks could accelerate in Q4
Looking ahead, RBC expects APA to step up its share repurchases in the fourth quarter, with buybacks in the range of $575 million to $600 million. That would be a notable increase from recent quarters and would help the company move closer to its annual target of returning 60% of free cash flow to shareholders.
Share buybacks, also known as share repurchases, are when a company uses its cash to buy its own stock on the open market. Those shares are then retired, which reduces the total number of shares outstanding. With fewer shares in circulation, the company's earnings and cash flow are divided among a smaller pool, which can boost per-share metrics like EPS and cash flow per share—even if the underlying business isn't growing much.
That dynamic is especially relevant for APA, because RBC sees production staying roughly flat into 2027 even as annual capital spending rises to $2.75 billion to $2.8 billion, up from $2.4 billion in 2026. The higher spending is largely due to more drilling rigs in the United States and new exploration wells in places like Alaska and Suriname.
Why the buyback pace matters
For investors, the pace of buybacks could matter more than small beats or misses in production numbers. If APA is spending more on capital projects but not growing output, the main way to deliver per-share growth is through repurchases. RBC's expectation of a $575 million to $600 million buyback in Q4 suggests the company is serious about its 60% commitment.
Buybacks are a common way for oil and gas companies to return cash to shareholders, especially when they have limited opportunities to reinvest in new production at attractive returns. The sector has historically favored returning cash through dividends and buybacks, and APA's pledge is in line with that trend.
It's worth noting that buybacks can also be a signal of management's confidence in the business. When a company buys its own stock, it's essentially saying it believes the shares are undervalued or that there's no better use for the cash. That can be a positive signal for investors, though it's not a guarantee of future performance.
What to watch next
When APA reports its third-quarter results, investors will be watching several things: whether the company hits or beats the raised forecasts, how it frames its capital spending plans for 2026 and 2027, and—perhaps most importantly—whether it follows through on the expected Q4 buyback.
RBC's outlook also comes against a backdrop of fluctuating oil prices, which have been influenced by geopolitical events and global supply concerns. Oil prices have eased recently on comments from former President Trump about Iran, which could affect the broader energy sector. Other oil majors like BP have seen earnings forecasts rise on a higher Brent price outlook, so APA's results will be viewed in that context.
For everyday investors, the key takeaway is that APA's story is less about production growth and more about capital discipline and shareholder returns. If the company can maintain its 60% free cash flow return pledge, that could provide a floor for the stock even if oil prices soften. But if spending rises without corresponding output gains, the buyback pace will be the metric to watch.
As always, past performance is not a guarantee of future results, and individual investors should consider their own financial situation and risk tolerance before making any decisions.
