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APA Misses on Q4 Earnings Despite Strong Commodity Prices
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U.S. energy explorer APA Corporation (APA - Free Report) reported fourth-quarter 2021 adjusted earnings per share of $1.29, missing the Zacks Consensus Estimate of $1.42. The underperformance reflects slightly lower-than-expected production and a rise in costs. Precisely, the average daily output came in at 385,630 barrels of oil-equivalent per day (BOE/d), just falling short of the consensus mark of 386,000 BOE/d.
However, APA’s bottom line compared favorably with the year-earlier quarter's adjusted loss of 5 cents due to sharply higher commodity prices.
Revenues of $2.3 billion outpaced the Zacks Consensus Estimate of $2.1 billion million and surged 89% from the year-ago quarter’s sales of $1.2 billion.
Concurrent with the earnings release, APA announced an oil discovery in Block 58 offshore Suriname at Krabdagu-1 well, where it owns a 50% working interest.
Production of oil and natural gas averaged 385,630 BOE/d, which comprises 64% liquids. The figure slid around 6% from the year-ago quarter.
U.S. output (accounting for 59% of the total) fell 2% year over year to 227,991 BOE/d while production from the company’s international operations decreased some 11% to 157,639 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 247,937 barrels per day (Bbl/d). Natural gas output totaled 826,160 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the fourth quarter was $78.52 per barrel, up 82% from the year-ago realization of $43.21. The number also came in slightly ahead of the Zacks Consensus Estimate of $78. Meanwhile, the average realized natural gas price jumped to $4.95 per thousand cubic feet (Mcf) from $2.27 in the year-ago period but missed the consensus mark of $5.12.
Costs & Financial Position
APA’s fourth-quarter lease operating expenses totaled $350 million, up 30% from the year-ago period. Moreover, total operating expenses rose 43% from the corresponding period of 2020 to $1.7 billion. Apart from an increase in lease operating expenses, the uptick could be blamed on higher costs on oil and gas purchased, besides impairment charges.
During the quarter under review, APA generated $1.1 billion of cash from operating activities while it incurred $334 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $990 million in the fourth quarter.
As of Dec 31, APA had approximately $302 million in cash and cash equivalents, and $6.6 billion in long-term debt.
Guidance
APA expects adjusted production to average 327,000 BOE/d in Q1 and 328,000 BOE/d in 2022. Of this, oil volumes are likely to be 145,000 Bbl/d and 150,000 Bbl/d, respectively. The company provided guidance of $1.6 billion upstream capital expenditure this year ($200 million dedicated to Suriname), up from $1.1 billion spent in 2021. APA intends to maintain this budget through 2024 when it hopes to hit pre-COVID production levels. Finally, APA believes it is capable of generating more than $2 billion in free cash flow at current strip prices in 2022. The company has committed to return at least 60% of free cash flow to its shareholders.
Zacks Rank & Stock Picks
APA currently carries a Zacks Rank #1 (Strong Buy).
Cenovus Energy: Cenovus Energy is valued at more than $30 billion. The Zacks Consensus Estimate for CVE’s 2022 earnings has been revised 16% upward over the past 30 days.
Cenovus Energy, headquartered in Alberta, delivered a 4.9% beat in Q4. CVE shares have gained around 109.3% in a year.
ConocoPhillips: ConocoPhillips is valued at around $116 billion. The consensus estimate for COP’s 2022 earnings has been revised 14.6% upward over the past 30 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 73.6% in a year.
Marathon Oil: Marathon Oil has a projected earnings growth rate of 75.8% for this year. The Zacks Consensus Estimate for MRO’s 2022 earnings has been revised 26% upward over the past 30 days.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%. MRO shares have gained around 96.4% in a year.
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APA Misses on Q4 Earnings Despite Strong Commodity Prices
U.S. energy explorer APA Corporation (APA - Free Report) reported fourth-quarter 2021 adjusted earnings per share of $1.29, missing the Zacks Consensus Estimate of $1.42. The underperformance reflects slightly lower-than-expected production and a rise in costs. Precisely, the average daily output came in at 385,630 barrels of oil-equivalent per day (BOE/d), just falling short of the consensus mark of 386,000 BOE/d.
However, APA’s bottom line compared favorably with the year-earlier quarter's adjusted loss of 5 cents due to sharply higher commodity prices.
Revenues of $2.3 billion outpaced the Zacks Consensus Estimate of $2.1 billion million and surged 89% from the year-ago quarter’s sales of $1.2 billion.
Concurrent with the earnings release, APA announced an oil discovery in Block 58 offshore Suriname at Krabdagu-1 well, where it owns a 50% working interest.
APA Corporation Price, Consensus and EPS Surprise
APA Corporation price-consensus-eps-surprise-chart | APA Corporation Quote
Production & Selling Prices
Production of oil and natural gas averaged 385,630 BOE/d, which comprises 64% liquids. The figure slid around 6% from the year-ago quarter.
U.S. output (accounting for 59% of the total) fell 2% year over year to 227,991 BOE/d while production from the company’s international operations decreased some 11% to 157,639 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 247,937 barrels per day (Bbl/d). Natural gas output totaled 826,160 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the fourth quarter was $78.52 per barrel, up 82% from the year-ago realization of $43.21. The number also came in slightly ahead of the Zacks Consensus Estimate of $78. Meanwhile, the average realized natural gas price jumped to $4.95 per thousand cubic feet (Mcf) from $2.27 in the year-ago period but missed the consensus mark of $5.12.
Costs & Financial Position
APA’s fourth-quarter lease operating expenses totaled $350 million, up 30% from the year-ago period. Moreover, total operating expenses rose 43% from the corresponding period of 2020 to $1.7 billion. Apart from an increase in lease operating expenses, the uptick could be blamed on higher costs on oil and gas purchased, besides impairment charges.
During the quarter under review, APA generated $1.1 billion of cash from operating activities while it incurred $334 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $990 million in the fourth quarter.
As of Dec 31, APA had approximately $302 million in cash and cash equivalents, and $6.6 billion in long-term debt.
Guidance
APA expects adjusted production to average 327,000 BOE/d in Q1 and 328,000 BOE/d in 2022. Of this, oil volumes are likely to be 145,000 Bbl/d and 150,000 Bbl/d, respectively. The company provided guidance of $1.6 billion upstream capital expenditure this year ($200 million dedicated to Suriname), up from $1.1 billion spent in 2021. APA intends to maintain this budget through 2024 when it hopes to hit pre-COVID production levels. Finally, APA believes it is capable of generating more than $2 billion in free cash flow at current strip prices in 2022. The company has committed to return at least 60% of free cash flow to its shareholders.
Zacks Rank & Stock Picks
APA currently carries a Zacks Rank #1 (Strong Buy).
Some other top-ranked players in the energy space are Cenovus Energy (CVE - Free Report) , ConocoPhillips (COP - Free Report) and Marathon Oil (MRO - Free Report) . All the companies sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cenovus Energy: Cenovus Energy is valued at more than $30 billion. The Zacks Consensus Estimate for CVE’s 2022 earnings has been revised 16% upward over the past 30 days.
Cenovus Energy, headquartered in Alberta, delivered a 4.9% beat in Q4. CVE shares have gained around 109.3% in a year.
ConocoPhillips: ConocoPhillips is valued at around $116 billion. The consensus estimate for COP’s 2022 earnings has been revised 14.6% upward over the past 30 days.
COP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.6%. ConocoPhillips has rallied around 73.6% in a year.
Marathon Oil: Marathon Oil has a projected earnings growth rate of 75.8% for this year. The Zacks Consensus Estimate for MRO’s 2022 earnings has been revised 26% upward over the past 30 days.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 37.4%. MRO shares have gained around 96.4% in a year.