We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is APA (APA) Up 30.5% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for APA (APA - Free Report) . Shares have added about 30.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is APA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
APA Q4 Earnings Undershoot Estimates
APA reported fourth-quarter 2021 adjusted earnings per share of $1.29, missing the Zacks Consensus Estimate of $1.42. The underperformance reflects slightly lower-than-expected production and a rise in costs. Precisely, the average daily output came in at 385,630 barrels of oil-equivalent per day (BOE/d), just falling short of the consensus mark of 386,000 BOE/d.
However, APA’s bottom line compared favorably with the year-earlier quarter's adjusted loss of 5 cents due to sharply higher commodity prices.
Revenues of $2.3 billion outpaced the Zacks Consensus Estimate of $2.1 billion million and surged 89% from the year-ago quarter’s sales of $1.2 billion.
Concurrent with the earnings release, APA announced an oil discovery in Block 58 offshore Suriname at Krabdagu-1 well, where it owns a 50% working interest.
Production & Selling Prices
Production of oil and natural gas averaged 385,630 BOE/d, which comprises 64% liquids. The figure slid around 6% from the year-ago quarter.
U.S. output (accounting for 59% of the total) fell 2% year over year to 227,991 BOE/d while production from the company’s international operations decreased some 11% to 157,639 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 247,937 barrels per day (Bbl/d). Natural gas output totaled 826,160 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the fourth quarter was $78.52 per barrel, up 82% from the year-ago realization of $43.21. The number also came in slightly ahead of the Zacks Consensus Estimate of $78. Meanwhile, the average realized natural gas price jumped to $4.95 per thousand cubic feet (Mcf) from $2.27 in the year-ago period but missed the consensus mark of $5.12.
Costs & Financial Position
APA’s fourth-quarter lease operating expenses totaled $350 million, up 30% from the year-ago period. Moreover, total operating expenses rose 43% from the corresponding period of 2020 to $1.7 billion. Apart from an increase in lease operating expenses, the uptick could be blamed on higher costs on oil and gas purchased, besides impairment charges.
During the quarter under review, APA generated $1.1 billion of cash from operating activities while it incurred $334 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $990 million in the fourth quarter.
As of Dec 31, APA had approximately $302 million in cash and cash equivalents, and $6.6 billion in long-term debt.
Guidance
APA expects adjusted production to average 327,000 BOE/d in Q1 and 328,000 BOE/d in 2022. Of this, oil volumes are likely to be 145,000 Bbl/d and 150,000 Bbl/d, respectively. The company provided guidance of $1.6 billion upstream capital expenditure this year ($200 million dedicated to Suriname), up from $1.1 billion spent in 2021. APA intends to maintain this budget through 2024 when it hopes to hit pre-COVID production levels. Finally, APA believes it is capable of generating more than $2 billion in free cash flow at current strip prices in 2022. The company has committed to return at least 60% of free cash flow to its shareholders.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, APA has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, APA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is APA (APA) Up 30.5% Since Last Earnings Report?
It has been about a month since the last earnings report for APA (APA - Free Report) . Shares have added about 30.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is APA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
APA Q4 Earnings Undershoot Estimates
APA reported fourth-quarter 2021 adjusted earnings per share of $1.29, missing the Zacks Consensus Estimate of $1.42. The underperformance reflects slightly lower-than-expected production and a rise in costs. Precisely, the average daily output came in at 385,630 barrels of oil-equivalent per day (BOE/d), just falling short of the consensus mark of 386,000 BOE/d.
However, APA’s bottom line compared favorably with the year-earlier quarter's adjusted loss of 5 cents due to sharply higher commodity prices.
Revenues of $2.3 billion outpaced the Zacks Consensus Estimate of $2.1 billion million and surged 89% from the year-ago quarter’s sales of $1.2 billion.
Concurrent with the earnings release, APA announced an oil discovery in Block 58 offshore Suriname at Krabdagu-1 well, where it owns a 50% working interest.
Production & Selling Prices
Production of oil and natural gas averaged 385,630 BOE/d, which comprises 64% liquids. The figure slid around 6% from the year-ago quarter.
U.S. output (accounting for 59% of the total) fell 2% year over year to 227,991 BOE/d while production from the company’s international operations decreased some 11% to 157,639 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 247,937 barrels per day (Bbl/d). Natural gas output totaled 826,160 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the fourth quarter was $78.52 per barrel, up 82% from the year-ago realization of $43.21. The number also came in slightly ahead of the Zacks Consensus Estimate of $78. Meanwhile, the average realized natural gas price jumped to $4.95 per thousand cubic feet (Mcf) from $2.27 in the year-ago period but missed the consensus mark of $5.12.
Costs & Financial Position
APA’s fourth-quarter lease operating expenses totaled $350 million, up 30% from the year-ago period. Moreover, total operating expenses rose 43% from the corresponding period of 2020 to $1.7 billion. Apart from an increase in lease operating expenses, the uptick could be blamed on higher costs on oil and gas purchased, besides impairment charges.
During the quarter under review, APA generated $1.1 billion of cash from operating activities while it incurred $334 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $990 million in the fourth quarter.
As of Dec 31, APA had approximately $302 million in cash and cash equivalents, and $6.6 billion in long-term debt.
Guidance
APA expects adjusted production to average 327,000 BOE/d in Q1 and 328,000 BOE/d in 2022. Of this, oil volumes are likely to be 145,000 Bbl/d and 150,000 Bbl/d, respectively. The company provided guidance of $1.6 billion upstream capital expenditure this year ($200 million dedicated to Suriname), up from $1.1 billion spent in 2021. APA intends to maintain this budget through 2024 when it hopes to hit pre-COVID production levels. Finally, APA believes it is capable of generating more than $2 billion in free cash flow at current strip prices in 2022. The company has committed to return at least 60% of free cash flow to its shareholders.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, APA has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, APA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.