APA Expects Strong Q3 Production and Oil Output Amid Challenges
APA Corp. APA released supplemental information regarding its financial and operational results for the third quarter of 2023. The company anticipates its quarterly total adjusted production and adjusted oil production to be in the upper half of its guidance range. This can be mainly attributed to strong Permian oil and U.K. North Sea volumes.
APA's robust production was driven by several factors, including increased drilling activity, higher completion rates and improved well performance. The company also benefited from higher oil and gas prices.
Unveiling the Anticipation
The company expects its adjusted production and adjusted oil production figures to fall within the upper half of its guided range. It anticipates adjusted production to be in the range of 337-339 Mboe/d and adjusted oil production in the band of 159-161 Mboe/d.
The Power of Diverse Assets
One of the driving forces behind APA's optimistic outlook is the impressive performance of its assets, particularly those in the Permian oil region and the U.K. North Sea. These regions have consistently demonstrated their value, contributing significantly to the company's overall production.
In particular, strong Permian oil production and robust volumes from the U.K. North Sea have played pivotal roles in bolstering APA's guidance.
Egypt: A Key Player
Egypt has been a focal point of the company’s operations, with a substantial impact on its overall production. While APA’s guidance for the country’s gross oil production stands at 148 thousand barrels per day (KBPD), the quarterly estimate is slightly lower at 145 KBPD. This minor variance reflects the dynamic nature of the energy industry, where various factors can influence production levels.
Price Realization Expectations
APA's financial health is not solely determined by production volume; it is also influenced by pricing. In the United States, the company expects realized prices of $82.00 per barrel for oil, $21.50 per barrel for NGL and $2.00 per Mcf for Natural Gas in the third quarter. These expectations are a testament to APA's astute market analysis and pricing strategies.
On the international front, realized prices are projected to be even more favorable, with $88.00 per barrel for oil, $50.00 per barrel for NGL and $4.25 per Mcf for Natural Gas. This highlights APA's ability to adapt and thrive in different market conditions.
Navigating Q4 Challenges
While the third quarter holds a promising picture, the company acknowledges the challenges that lie ahead in the next quarter. Production in the U.K. North Sea is expected to decline 10% from the third-quarter level to 15%. This is primarily attributed to unscheduled compressor motor repairs, necessitating platform downtime until the end of the year. APA remains committed to addressing these challenges effectively and efficiently, holding a testament to its dedication to maintaining operational excellence.
APA's focus on the Permian Basin is paying off. The Permian is one of the most prolific oil and gas basins in the world, and APA is a leading producer in the region.
The company is also well-positioned in the U.K. North Sea, which is a mature oil and gas basin with a long history of production. Its strong production and positive outlook are particularly noteworthy, given the current economic uncertainty. APA is well-positioned to weather any economic storms that may come its way.
Zacks Rank and Other Key Picks
Currently, APA sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the energy sector are CVR Energy CVI and USA Compression Partners USAC, each sporting a Zacks Rank #1, and Harbour Energy HBRIY, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy is valued at $3.08 billion. In the past year, its shares have lost 7.1%.
CVI currently pays a dividend of $2 per share or 6.52% on an annual basis. Its payout ratio currently sits at 30% of earnings.
USA Compression Partners is valued at around $2.49 billion. USAC currently pays a dividend of $2.10 per unit, or 8.28% on an annual basis.
USAC provides natural gas compression services. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.
Harbour Energy is worth approximately $2.19 billion. HBRIY currently pays a dividend of 21 cents per share, or 7.20% on an annual basis.
The company's activities include acquiring, exploring, developing, and producing oil and gas reserves. It has ownership stakes in a number of properties in the United Kingdom, Norway, Indonesia, Vietnam and Mexico.
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