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Apache (APA) Reports Q4 Loss, to Boost 2017 Capex by 60%

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U.S. energy firm Apache Corp. (APA - Free Report) reported a fourth-quarter loss per share – excluding one-time items – of 6 cents, contrary to the Zacks Consensus Estimate for a profit of 6. The underperformance stems from a dip in output due to a conservative capital budget. 

However, the bottom line improved from the year-ago adjusted loss of 38 cents amid cost savings and higher realizations.

Revenues of $1,451 million were below the Zacks Consensus Estimate of $1,489 million and the fourth-quarter 2015 sales of $1,482 million.

 

Operational Performance

The production of oil and natural gas (excluding divested assets and non-controlling interests) averaged 420,846 oil-equivalent barrels per day (BOE/d) (64% liquids), down 14% from last year. Apache’s production for oil and natural gas liquids (NGLs) was 271,074 barrels per day (Bbl/d), while natural gas output came in at 898.6 million cubic feet per day (MMcf/d).

The average realized crude oil price during the fourth quarter was $47.39 per barrel, representing an increase of 19% from the year-ago realization of $39.79. Moreover, the average realized natural gas price during the Dec quarter of 2016 was $2.85 per thousand cubic feet (Mcf), up 8% from the year-ago period.

Apache Corporation Price, Consensus and EPS Surprise

 

Apache Corporation Price, Consensus and EPS Surprise | Apache Corporation Quote

Balance Sheet, Capital Spending & Lease Operating Expenses

As of Dec 31, 2016, Apache had approximately $1,377 million in cash and cash equivalents. The Zacks Rank #3 (Hold) company had a long-term debt of $8,544 million, representing a debt-to-capitalization ratio of 57.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

During Oct-Dec period, Apache’s exploration and development investments totaled $112 million, 85% lower than the $735 million incurred a year ago. The company – like many other oil and gas players including ConocoPhillips (COP - Free Report) , Chesapeake Energy Corp. (CHK - Free Report) and Marathon Oil Corp. (MRO - Free Report) – aligned its spending plans with the low oil price environment.

Apache’s fourth quarter lease operating expenses totaled $375 million, down 18% from the year-ago quarter. Total costs and expenses fell 77% from the fourth quarter of 2015 to $1,565 million.

Guidance:

After following a disciplined capital allocation program over the past 2 years, Apache is now looking to shift its strategic objective. With returns-focused growth in mind, Apache announced a 2017 capital budget of $3.1 billion, representing a 60% increase over its 2016 spend. The company also aims to grow production by approximately 10% in the next year.

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