I wrote APA an email and asked what is the best price for oil to be at for them to make max profits and also asked them what their cost is to get the oil out of the ground. Here was the reply today:
I don't think anyone in the industry would like to see oil remain at recent highs for the long term. Short-term results would soon be overwhelmed by negatives.
Apache could be very profitable at $80 in this environment.
We are reporting second-quarter results today. In that period it cost us approximately $18 to bring a barrel of oil to the market. Our average realized price was approximately $77. I don't know industry averages.
THIS GOES TO SHOW YOU THAT HIGH OIL PRICES WILL CAUSE MORE DAMAGE THEN GOOD IN THE LONG TERM AS I HAVE ALWAYS SUSPECTED. SO WHY OIL CO'S GO UP WITH EVERY DOLLAR OIL RISES I DONT KNOW. I MEAN, WOULD YOU WANT TO BUY APPLE COMPUTER IF THEY ANNOUNCED THAT THEY WERE TRIPLING THE PRICE OF THEIR IPODS AND I-PHONES WITHOUT DEMAND RISING THAT MUCH? WELL GUESS WHAT, WE WILL ALL BE BETTER OFF AS A COUNTRY AND AS INVESTORS IF GAS GOES BACK UNDER $3....SOON!
ALSO....market is so manipulated. Today it tanks 200 points but gold stocks go down on rising gold prices today yet home builders go up!!! That makes sense. Not! Also,,, why did so much money go into energy and apache yesterday only to come right out the next day? Today had to be one of the craziest days I have seen and I hope this is not signaling something very ominous.
John you might be right about APA moving lockstep with oil. Thats a trend I hope will break when their next qtr earnings come out and they blow it away even with decrease in oil prices. Then what will the street do? And the quarter after that!
Good point. I would rather APA traded in line with its earnings! Traditionally the PE stays around 11 but it shot up to 12+ recently with the rise in OIL. Now it seems it's trading lockstep with crude. Makes no sense. BUT Im not going to fight the trend. I got out today at $121, and looking to get back in on the next dip.
If APA is actually saying they would rather see $80 oil, Im sure that oil dropping should make these energy stocks go up not down! You mean I am the only person they told this information too! My God, would I love to see oil keep going down and buy this gem at under 100! Wow! I also will pick up some AAV,PGH and KWK,APTG,CHK PBR and BQI. Throw in XTO too.
The only thing that could hurt us is if we wind up with an oil glut. Look up oil glut on wikopedia. It aint pretty!