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Apache (APA) Q4 Loss Narrower Than Expected, Sales Beat

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U.S. energy explorer Apache Corporation (APA - Free Report) reported fourth-quarter 2020 loss per share — excluding one-time items — of 5 cents, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The outperformance reflects robust domestic production and a tight leash on costs. Precisely, the average daily U.S. output came in at 232,975 barrels of oil-equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 230,000 BOE/d.

However, Apache’s bottom line compared unfavorably with the year-earlier quarter's adjusted earnings of 8 cents due to sharply lower oil prices.

Revenues of $1.2 billion outpaced the Zacks Consensus Estimate of $1 billion million but fell 29.5% from the year-ago quarter’s sales of $1.7 billion.

Apache Corporation Price, Consensus and EPS Surprise

Apache Corporation Price, Consensus and EPS Surprise

Apache Corporation price-consensus-eps-surprise-chart | Apache Corporation Quote


Production & Selling Prices

Production of oil and natural gas averaged 410,758 BOE/d, which comprises 65% liquids. The figure slid 16% from the year-ago quarter.

The U.S. output (accounting for 57% of the total) fell 22% year over year to 232,975 BOE/d while production from the company’s international operations decreased 6% to 177,783 BOE/d. Apache’s oil and natural gas liquids (NGLs) production was 266,474 barrels per day (Bbl/d). Natural gas output totaled 865,704 thousand cubic feet per day (Mcf/d).

The average realized crude oil price during the fourth quarter was $43.21 per barrel, down 28% from the year-ago realization of $60.19. However, the number came ahead of the Zacks Consensus Estimate of $40.94. Meanwhile, the average realized natural gas price increased to $2.27 per thousand cubic feet (Mcf) from $2.05 in the year-ago period and topped the Zacks Consensus Estimate of $2.19.

Costs & Financial Position

Apache’s fourth-quarter lease operating expenses totaled $269 million, down 22% from the year-ago period. Moreover, total operating expenses plunged 75% from the corresponding period of 2019 to $1.2 billion. Apart from a significant drop in lease operating expenses, the improvement came on the back of lower depreciation and amortization expenses and the absence of the year-ago quarter’s impairment charges.

During the quarter under review, Apache generated $498 million of cash from operating activities while incurred $189 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $500 million in the fourth quarter.

As of Dec 31, Apache had approximately $262 million in cash and cash equivalents, and $8.1 billion in long-term debt.


The company provided guidance of $1.1 billion upstream capital expenditure this year, up from $988 million spent in 2020. Importantly, Apache expects to self-fund its capital expenditure with internally generated cash flows. This assumes WTI price of $45 and natural gas price of $3. Further, Apache is projecting a marginal (approximately 1%) decrease in adjusted oil production from the fourth quarter of 2020 to fourth quarter of 2021.

Zacks Rank & Stock Picks

Apache currently carries a Zacks Rank #2 (Buy).

Apart from Apache, investors interested in the energy space might look at other options like PDC Energy (PDCE - Free Report) , Royal Dutch Shell (RDS.A - Free Report) and Ovintiv (OVV - Free Report) . All the companies carry a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

PDC Energy has an expected earnings growth rate of 165.91% for the current year.  

Royal Dutch Shell has an expected earnings growth rate of 165.32% for the current year.

Ovintiv has an expected earnings growth rate of 465.71% for the current year.

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