Apache (APA) to Report Q2 Earnings: What’s in the Offing?

Apache Corporation APA is set to report second-quarter 2018 results on Aug 1, after the market closes.

Houston, TX-based Apache is an upstream energy company. In the last reported quarter, the company surpassed the Zacks Consensus Estimate aided by higher oil realizations and greater-than-expected volumes from the key Permian Basin region.

Coming to earnings surprise history, the company surpassed the Zacks Consensus Estimate in three of the last four quarters, resulting in an average positive surprise of 86.7%.

Let’s see how things are shaping up for this announcement.

Factors Worth Considering

Production

The Zacks Consensus Estimate for Apache’s total adjusted production is pegged at 457 thousand barrels of oil equivalent per day (MBoe/d), much higher than the year-ago quarter’s 388 MBoe/d. However, the company expects second-quarter adjusted production to be 383 MBoe/d.

Production boost from the Permian assets is driving estimate revisions. The Zacks Consensus Estimate for production from the region is pegged at 203 MBoe/d, much higher than year-ago period’s 146 MBoe/d.

The Zacks Consensus Estimate for oil production is pegged at 240 thousand barrels per day (MBPD) compared with the year-ago period’s 243 MBPD. Thus, the company will likely fail to take advantage of improved oil prices due to year-over-year fall in oil contribution to total production mix (from 62.6% to 52.5%).

Realized Prices

The Zacks Consensus Estimate for average price per barrel of natural gas liquids (NGL) is pegged at $24.06 compared with the year-ago quarter’s $13.03. The Zacks Consensus Estimate for average price of oil from the Permian Basin for the second quarter of 2018 is pegged at $59 per barrel, higher than the year-ago quarter’s figure of $45.09 per barrel.

However, average price of natural gas per thousand cubic feet (Mcf) is expected at $2.47 compared with the year-ago level of $2.60.

Although equivalent production of Apache is expected to surge in the second quarter of 2018 from the year-ago period especially due to the Permian production ramp up, year-over-year fall in oil contribution to total production mix can offset the improvement. While overall NGL price, along with oil price in the Permian expected to improve from second-quarter 2017 levels, total natural gas price is likely to register a year-over-year fall.

Earnings Whispers?

Our proven model does not show that Apache is likely to beat the Zacks Consensus Estimate in the second quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.0%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently,Apache carries a Zacks Rank #3. Though a Zacks Rank of #3 increases the predictive power of ESP, 0.0% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Energy Stocks With Favorable Combination

Here are some companies from the energy space, which according to our model have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Calgary, Canada-based Canadian Natural Resources Limited CNQ sports a Zacks Rank #1 and has an Earnings ESP of +1.42%. The company is scheduled to report second-quarter earnings on Aug 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Plano, TX-based Denbury Resources Inc. DNR has a Zacks Rank #2 and an Earnings ESP of +27.78%. The company will report second-quarter earnings on Aug 8.

Houston, TX-based WildHorse Resource Development Corporation WRD carries a Zacks Rank #2 and has an Earnings ESP of +2.29%. The company is anticipated to report quarterly results on Aug 7.

5 Medical Stocks to Buy Now

Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.

New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

Click here to see the 5 stocks >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research