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APA to Announce Q3 Earnings: A Beat in Store for the Stock?

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APA Corporation (APA - Free Report) is scheduled to release third-quarter 2021 results on Wednesday Nov 3, after the closing bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is 89 cents per share and for revenues is $1.75 billion.

Against this backdrop, let’s delve into the factors that might have impacted the company’s performance in the September quarter.

Factors at Play

APA boasts a large geographically diversified reserve base with multi-year trends in reserve replacement. The company’s high-quality drilling inventory with greater resource potential might have enabled it to deliver a decent per share growth rate in the third quarter. This, in turn, is expected to have lent its portfolio a solid competitive edge.

The company is expected to have benefited from increased commodity prices. It anticipates average realized crude oil price in the United States for the September quarter to be $70 per barrel, indicating a 76.7% rise from the year-ago quarter’s reported figure of $39.60. The same for natural gas and natural gas liquids in the United States is pegged at $3.70 per thousand cubic feet (Mcf) and $30.75 per barrel each, both increasing 164.3% and 135.5%, respectively, from the corresponding year-ago period’s reported figures.

APA’s cost management efforts have been encouraging enough for a while. This, together with the company’s initiative to generate $1.6-$1.7 billion of upstream free cash flow for the full year, is expected to have driven its third-quarter earnings and cash flows higher.

The Zacks Consensus Estimate for the company’s third-quarter adjusted oil production at international levels is pegged at 104 thousand barrels of oil per day (Mbo/d), implying an improvement from 103 Mbo/d reported a quarter ago.

All the aforesaid factors are expected to bolster APA’s third-quarter earnings results.

What Does Our Model Say?

Our proven Zacks model predicts an earnings beat for APA this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP:  APA has an Earnings ESP of +0.45%.

Zacks Rank:  APA sports a Zacks Rank of 1, currently. You can see  the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q2 Earnings & Surprise Record

In the last reported quarter, APA posted 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.

As far as earnings surprises are concerned, this oil and gas producer’s bottom line beat the Zacks Consensus Estimate in all the trailing four quarters, the average being 36.72%. This is depicted in the graph below:

APA Corporation Price and EPS Surprise

APA Corporation Price and EPS Surprise

APA Corporation price-eps-surprise | APA Corporation Quote

Stocks to Consider

Some other firms worth considering from the  energy  space with the right combination of elements to beat on earnings this season are as follows:

Whiting Petroleum Corporation (WLL - Free Report) has an Earnings ESP of +5.63% and a Zacks Rank of 1, currently. The firm is scheduled to release earnings on Nov 4.

Targa Resources Corp. (TRGP - Free Report) has an Earnings ESP of +15.01% and is Zacks #1 Ranked at present. The firm is scheduled to release earnings on Nov 4.

TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +2.53% and is presently Zacks #3 Ranked. The firm is scheduled to release earnings on Nov 5.

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