It has been about a month since the last earnings report for APA (APA Quick QuoteAPA - Free Report) . Shares have added about 9.9% 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 the most recent earnings report in order to get a better handle on the important drivers.

APA Q2 Earnings and Revenues Top Estimates

APAreported second-quarter 2021 earnings per share — excluding one-time items — of 70 cents, beating the Zacks Consensus Estimate of 54 cents. In the year-earlier quarter, the company reported a loss of 74 cents per share. The outperformance reflects stronger price realizations and better-than-expected domestic production. The average daily U.S. output came in at 241,525 barrels of oil-equivalent per day (BOE/d), beating the Zacks Consensus Estimate of 241,000 BOE/d.

Revenues of $1.78 billion outpaced the Zacks Consensus Estimate of $1.66 billion and also rose 137% from the year-ago quarter’s sales of $752 million.

Production & Selling Prices

Production of oil and natural gas averaged 395,186 BOE/d, which comprises 64.8% liquids. The figure dropped 9% from the year-ago quarter’s level.

The U.S. output (accounting for 61% of the total) fell 4% year over year to 241,525 BOE/d while production from the company’s international operations decreased 17% to 153,661 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 256,166 barrels per day (Bbl/d). Natural gas output totaled 834,119 thousand cubic feet per day (Mcf/d).

The average realized crude oil price during the second quarter was $66.40 per barrel, up 157.7% from the year-ago realization of $25.77. Moreover, the number came ahead of the Zacks Consensus Estimate of $66. The average realized natural gas price increased to $2.99 per thousand cubic feet (Mcf) from $1.68 in the year-ago period and also topped the Zacks Consensus Estimate of $2.75.

Costs & Financial Position

APA’s second-quarter lease operating expenses totaled $311 million, up 17.8% from the year-ago level. Moreover, total operating expenses jumped 27.2% from the level recorded in the corresponding period of 2020 to $1.29 billion. Apart from a rise in lease operating expenses, the deterioration was due to higher purchased oil and gas expenses and steep impairment charges.

During the quarter under review, APA generated $969 million of cash from operating activities. It spent $257 million on upstream capital expenditures. The company reported an adjusted operating cash flow of $757 million in the second quarter.

As of Jun 30, APA had $1.25 billion worth cash and cash equivalents, and $7.76 billion of long-term debt.

Guidance

The U.S. energy explorer revises its 2021 outlook and expects to generate $1.7 billion as free cash flow this year, majority of which will be used to pay down its net debt.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, 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.