Back to top

Image: Bigstock

APA Q3 Earnings & Revenue Beat on Strong Energy Production

Read MoreHide Full Article

U.S. energy operator APA Corporation (APA - Free Report) reported third-quarter 2023 adjusted earnings of $1.33 per share, beating the Zacks Consensus Estimate of $1.08. The outperformance primarily reflects strong production.

However, the bottom line dropped from the year-ago adjusted figure of $1.97 due to significantly lower oil and natural gas prices.

Revenues of $2.3 billion beat the Zacks Consensus Estimate of $2 billion but were down 20.1% from the year-ago quarter’s sales.

As promised, the company is using the excess cash to reward shareholders with dividends and buybacks. APA bought back 500,000 shares at $41.90 apiece during the third quarter. The company also shelled out $77 million in dividend payment.

APA Corporation Price, Consensus and EPS Surprise

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 412,252 BOE/d, which comprises 67% liquids. The figure increased 7.9% from the year-ago quarter and was above our expectation of 410,387 BOE/d.

U.S. output (accounting for 55% of the total) rose 3.1% year over year to 225,639 BOE/d, while production from the company’s international operations increased 14.4% to 186,613 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 275,562 barrels per day (Bbl/d). Natural gas output totaled 820,137 thousand cubic feet per day (Mcf/d).

The average realized crude oil price during the third quarter was $86.15 per barrel, down 11.9% from the year-ago realization of $97.81. However, the number came above our projection of $82.79. Meanwhile, the average realized natural gas price fell to $3.12 per thousand cubic feet (Mcf) from $5.62 in the year-ago period but beat our estimates of $2.36.

Costs & Financial Position

APA’s third-quarter lease operating expenses totaled $394 million, up 8.2% from $364 million in the year-ago period. However, a significant decline in the cost of oil and gas purchased meant that total operating expenses fell 13.2% from the corresponding period of 2022 to $1.5 billion. Our model put the figure at slightly over $1.5 billion.

During the quarter under review, APA generated $764 million of cash from operating activities while it incurred $474 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $925 million in the third quarter. It also registered a free cash flow of $307 million during the period, though it plunged from $609 million a year ago.

As of Sep 30, APA had approximately $95 million in cash and cash equivalents and $5.6 billion in long-term debt. The debt-to-capitalization ratio of the company was 72.6.


APA expects adjusted production to average 334,000 BOE/d in Q4. Of this, oil volumes are likely to be 161,000 Bbl/d. Meanwhile, the company pegged its upstream capital expenditure for the December quarter at $500 million. APA is committed to returning at least 60% of free cash flow to its shareholders.

Zacks Rank & Key Picks

APA — a leading upstream oil and gas company — carries a Zacks Rank #2 (Buy) at present.       

Apart from APA, investors interested in the energy sector might also look at operators like Delek US Holdings (DK - Free Report) , EOG Resources (EOG - Free Report) and TechnipFMC plc (FTI - Free Report) . Each of these companies has a Zacks Rank of 2.

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

Delek US Holdings: DK beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters at an average of 34.2%.

Delek US Holdings is valued at around $1.6 billion. DK has seen its shares move down 22.8% in a year.

EOG Resources: EOG Resources beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. EOG has a trailing four-quarter earnings surprise of 9.2%, on average.

EOG Resources is valued at around $71.6 billion. EOG has seen its shares drop 16.5% in a year.

TechnipFMC: The 2023 Zacks Consensus Estimate for FTI indicates 1,667.7% year-over-year earnings per share growth. Over the past 60 days, TechnipFMC saw the Zacks Consensus Estimate for 2023 move up 6.8%.

TechnipFMC is valued at around $9.4 billion. FTI has seen its shares surge 75.3% in a year.

Published in