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Apache to Focus '14 E&P on N. America

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U.S. energy firm Apache Corp. (APA) announced that it plans to invest $8.5 billion in exploration and production activities in 2014. A major chunk (about 64%) of this investment will be focused on onshore North America. However, this capex is considerably lower than the $10.0 billion spent last year on account of a smaller asset base.  

With the completion of nearly 1,300 wells, Apache was an active driller in onshore North America in 2013. The company expects this trend to continue in 2014.

Apache expects North America onshore liquids production to grow 15–18% in 2014. This will be a significant growth factor for the company considering the fact that the region’s onshore assets comprise nearly 60% of Apache’s total production. The company also projects a two-figure global liquids expansion and 5–8% global oil and gas production growth in 2014.

Apache also mentioned that it intends to sell part of its 50% stake in the Kitimat liquefied natural gas project. Apache is the upstream operator of the project whereas partner, Chevron Corp. (CVX) is the operator of the downstream operations.
Apache is working toward delivering value and gaining investor confidence through dividend payments and share repurchases. The company recently increased dividend by 25% to 25 cents per share and has repurchased about $1.2 billion of stock in 2013 and year-to-date.

However, much remains to be achieved as is apparent from the dismal fourth quarter results, whereby the company reported a 13.26% negative surprise. This is also evident from the negative sentiment that prevails in the market, which resulted in a 3.9% fall in shares post the announcement.

Apache currently holds 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 consider better-ranked players from the industry such as Warren Resources Inc. (WRES) and Athlon Energy Inc. (ATHL). Both these stocks sport a Zacks Rank #1 (Strong Buy).

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