U.S. energy firm Apache Corp. APA reported third-quarter earnings per share – excluding one-time items – of 4 cents, versus the Zacks Consensus Estimate for a loss of 5 cents. The bottom line also turned around from the year-ago adjusted loss of 3 cents. The outperformance stems from higher oil and gas realizations, and lower cost.
Revenues of $1,575 million were above the Zacks Consensus Estimate of $1,416 million and was 9.5% above the third-quarter 2016 sales of $1,438 million.
Operational Performance
The production of oil and natural gas (excluding divested assets and non-controlling interests) averaged 353,645 oil-equivalent barrels per day (BOE/d) (68% liquids), down 6.5% from last year. Apache’s production for oil and natural gas liquids (NGLs) was 241,722 barrels per day (Bbl/d), while natural gas output came in at 671,533 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the third quarter was $49.34 per barrel, representing an increase of 11.3% from the year-ago realization of $44.35. Moreover, the average realized natural gas price during the September quarter of 2017 was $2.75 per thousand cubic feet (Mcf), up 6.2% from the year-ago period.
Apache Corporation Price, Consensus and EPS Surprise
Apache Corporation Price, Consensus and EPS Surprise | Apache Corporation Quote
Balance Sheet, Capital Spending & Lease Operating Expenses
As of Sep 30, 2017, Apache had approximately $1,846 million in cash and cash equivalents. The company had a long-term debt of $7,933 million, representing a debt-to-capitalization ratio of 53.1%.
During the oil rout, Apache – like many other oil and gas players including ConocoPhillips COP and Marathon Oil Corp. MRO – aligned its spending plans with the low-price environment.
But Apache is now looking to increase its capital investment after achieving cost rationalization. With returns-focused growth in mind, Apache announced a 2017 capital budget of $3.1 billion, representing a 60% increase over its 2016 spend. Keeping with the company’s planned shift in strategic objective, Apache’s oil and gas capital investments totaled $843 million during the July-September period, 95.1% higher than the $432 million incurred a year ago.
Apache’s third quarter lease operating expenses totaled $358 million, down 6.3% from the year-ago quarter. However, total costs and expenses fell 36.7% from the third quarter of 2016 to $1,482 million.
Zacks Rank & Stock Picks
Apache currently retains a Zacks Rank #3 (Hold).
A better-ranked player from the same space would be QEP Resources Inc. QEP that sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Denver, CO-based QEP Resources is a leading independent energy company engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. It has a 100% track of outperforming estimates over the last four quarters at an average rate of 38%.
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