Apache Beats Q3 Earnings, Misses on Revs

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U.S. energy firm Apache Corp. (APA) reported strong third quarter earnings on the back of increased liquids volume and higher crude prices.

Earnings per share – excluding one-time items – came in at $2.32, above the Zacks Consensus Estimate of $2.17 and the year-ago adjusted profit of $2.16.

However, revenues of $4,019.0 million were down 3.8% from the year-ago quarter and were also lower than the Zacks Consensus Estimate of $4,354.0 million. The underperformance reflects lower natural gas output.

Operational Performance

The production of oil and natural gas averaged 784,331 oil-equivalent barrels per day (BOE/d) (54% liquids), up approximately 1.8% year over year. Apache’s production for oil and natural gas liquids (NGLs) was up roughly 8.8% at 425,097 barrels per day (Bbl/d), while natural gas production of 2,155.4 million cubic feet per day (MMcf/d) was down 5.5% from the third quarter 2012 level.

Apache’s upstream growth momentum is retained organically as well as through acquisitions as it continues to explore the extensive, multi-year inventory of drillable locations in the Permian and Anadarko basins of North America.

The average realized crude oil price during the third quarter was $107.50 per barrel, representing an increase of 4.8% from the year-ago realization of $102.62. The average realized natural gas price during the Sep quarter of 2013 was $3.49 per thousand cubic feet (Mcf), down 7.2% from the year-ago period.

Apache’s lease operating expenses totaled $819.0 million, up 2.3% from $801.0 million in the year-ago quarter.

Balance Sheet & Capital Spending

As of Sep 30, 2013, Apache had approximately $1,251.0 million in cash and cash equivalents. The company had a long-term debt of $10,868.0 million, representing a debt-to-capitalization ratio of 24.8%.

During the three months ended Sep 30, 2013, Apache’s capital investments (excluding acquisitions) totaled $2,916.0 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 Matador Resources Co. (MTDR), SM Energy Co. (SM) and Northern Oil & Gas Inc. (NOG) 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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