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Apache (APA) Shares Fall After Q1 Earnings Miss Estimate

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Shares of Apache Corp. (APA - Free Report) dived nearly 5% in early trade after the U.S. energy firm reported first-quarter earnings per share – excluding one-time items – of 8 cents, lower than the Zacks Consensus Estimate of 16 cents. The underperformance stems from a dip in output due to a conservative capital budget over the past two years.  

However, the bottom line improved from the year-ago loss amid and higher realizations.

Revenues of $1,878 million were above the Zacks Consensus Estimate of $1,486 million and the first-quarter 2016 sales of $1,083 million.

 

Operational Performance

The production of oil and natural gas (excluding divested assets and non-controlling interests) averaged 397,792 oil-equivalent barrels per day (BOE/d) (65% liquids), down 16% from last year. Apache’s production for oil and natural gas liquids (NGLs) was 257,534 barrels per day (Bbl/d), while natural gas output came in at 841.5 million cubic feet per day (MMcf/d).

The average realized crude oil price during the first quarter was $51.20 per barrel, representing an increase of 62% from the year-ago realization of $31.62. Moreover, the average realized natural gas price during the Mar quarter of 2017 was $2.74 per thousand cubic feet (Mcf), up 28% 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 Mar 31, 2017, Apache had approximately $1,521 million in cash and cash equivalents. The Zacks Rank #4 (Sell) company had a long-term debt of $8,327 million, representing a debt-to-capitalization ratio of 56.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

During Jan-Mar period, Apache’s exploration and development investments totaled $513 million, 8% higher than the $476 million incurred a year ago. This is in keeping with the company’s planned shift in strategic objective.

During the oil rout, Apache– 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-price environment.

But Apache is now looking to increase its capital investment after achieving cost rationalization. With returns-focused growth in mind, Apache announced a 2017 capital budget of $3.1 billion, representing a 60% increase over its 2016 spend.

Apache’s first quarter lease operating expenses totaled $336 million, down 11% from the year-ago quarter. Total costs and expenses fell 9% from the first quarter of 2016 to $1,340 million.

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