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Why Is APA (APA) Down 9.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for APA (APA - Free Report) . Shares have lost about 9.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is APA due for a breakout? 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 catalysts.

APA Q3 Earnings & Sales Top Estimates

APA 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 8.43% due to these changes.

VGM Scores

At this time, APA has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, APA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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