U.S. energy firm Apache Corp. (APA) reported weak fourth quarter results, as asset sales reduced production.
Earnings per share – excluding one-time items – came in at $1.57, well above the Zacks Consensus Estimate of $1.80 and the year-ago adjusted profit of $2.27.
Revenues of $3,576.0 million were down 18.6% from the year-ago quarter and were also lower than the Zacks Consensus Estimate of $3,758.0 million.
Operational Performance
The production of oil and natural gas averaged 687,911 oil-equivalent barrels per day (BOE/d) (55% liquids), down approximately 14.0% year over year. Apache’s production for oil and natural gas liquids (NGLs) was down roughly 11.1% at 378,549 barrels per day (Bbl/d), while natural gas production of 1,856.2 million cubic feet per day (MMcf/d) was down 17.3% from the fourth quarter 2012 level.
The average realized crude oil price during the fourth quarter was $100.59 per barrel, representing an increase of 1.7% from the year-ago realization of $98.93. The average realized natural gas price during the Dec quarter of 2013 was $3.71 per thousand cubic feet (Mcf), down 10.4% from the year-ago period.
Apache’s lease operating expenses totaled $637.0 million, down 19.4% from $790.0 million in the year-ago quarter.
Balance Sheet & Capital Spending
As of Dec 31, 2013, Apache had approximately $1,906.0 million in cash and cash equivalents. The company had a long-term debt of $9,672.0 million, representing a debt-to-capitalization ratio of 22.5%.
During the three months ended Dec 31, 2013, Apache’s capital investments (excluding acquisitions) totaled $2,901.0 million, bringing the full-year spending to $11,617.0 million.
Exits Argentina Business
In an announcement yesterday, Apache said that it will sell its operations in Argentina to state energy company YPF S.A. (YPF) for $800 million in cash. The decision is in accordance with the Houston-based oil and gas explorer’s plan to exit business that do not fit into the company’s long-term growth plan, apart from paring borrowings and fund buybacks.
Zacks Rank & Stock Picks
Apache currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at Cabot Oil & Gas Corp. (COG) and Athlon Energy Inc. (ATHL) as good buying opportunities. These U.S. upstream energy operators – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with potential to rise significantly from current levels.
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