U.S. energy firm Apache Corp. (APA) reported in-line third quarter earnings, reflecting strong North American liquids production, offset by lower oil prices and asset sales. Earnings per share – excluding one-time items – came in at $1.38, same as the Zacks Consensus Estimate but significantly below the year-ago adjusted profit of $2.32.
Revenues of $3,740 million were down 4.1% from the year-ago quarter but were higher than the Zacks Consensus Estimate of $3,557 million.
Operational Performance
The production of oil and natural gas (excluding divested assets) averaged 562,087 oil-equivalent barrels per day (BOE/d) (61% liquids), up 6.3% year over year. Apache’s production for oil and natural gas liquids (NGLs) was up 9.7% at 341,499 barrels per day (Bbl/d), while natural gas production of 1,323.5 million cubic feet per day (MMcf/d) was 1.4% higher from the third quarter 2013 level.
The average realized crude oil price during the third quarter was $94.69 per barrel, representing a decrease of 12.5% from the year-ago realization of $108.27. However, the average realized natural gas price during the September quarter of 2014 was $3.88 per thousand cubic feet (Mcf), up 9% from the year-ago period.
Apache’s lease operating expenses totaled $652 million, down 15.5% from $772 million in the year-ago quarter.
Balance Sheet & Capital Spending
As of Sep 30, 2014, Apache had approximately $510 million in cash and cash equivalents. The company had a long-term debt of $10,902 million, representing a debt-to-capitalization ratio of 26.1%.
During the three months ended Sep 30, 2014, Apache’s exploration and development investments (excluding acquisitions) totaled $2,538 million.
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 better-ranked players in the same industry like Cheniere Energy Inc. (LNG), Midstates Petroleum Company Inc. (MPO) and LRR Energy L.P. (LRE). All these stocks sport a Zacks Rank #2 (Buy).
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