We are upbeat about Apache Corporation’s (APA - Free Report) prospects and believe that it is a promising pick at the moment.
The company currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities for investors.
Let’s delve deeper to analyze the factors that make this upstream energy player an attractive investment option.
Apache is among the leading oil and natural gas explorers with a strong presence in the United States, North Sea in the United Kingdom and Western Desert of Egypt. Among the domestic resources, the company has presence in Anadarko Basin, Permian Basin, Eagle Ford shale play and the Gulf Coast.
In the Permian Basin, Apache has exposure to more than 3.1 million gross acres. This makes the company a leading explorer and producer in the prolific oil and gas basin. Per the company’s presentation, since the second quarter of 2017, there has been more than 52% jump in the company’s average Permian oil equivalent production despite rig count remaining flat. This reflects Apache’s strong operational efficiency.
Notably, the company’s production has equal weightage to oil and natural gas. With significant exposure to Brent crude and rising natural gas price with the advent of winter, Apache is well positioned to capitalize on the favorable commodity pricing scenario.
Moreover, the oil and gas explorer and producer has been slowly reducing its debt load, reflecting strengthening balance sheet. As compared to $10.5 billion of net debt, as of 2014-end, the company’s debt stands lower at $7.6 billion as of the end of the third quarter of 2018.
Apache also a strong earnings surprise history. In fact, the company managed to surpass the Zacks Consensus Estimate in each of the past four quarters, the average positive earnings surprise being 42.4%.
Other Stocks to Consider
Other prospective players in the energy space are Hess Corp. (HES - Free Report) , Enterprise Products Partners L.P. (EPD - Free Report) and Energen Corp. . All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 230.5%.
Enterprise Products surpassed the Zacks Consensus Estimate in the prior four quarters, the average positive earnings surprise being 9.3%.
Energen posted an average positive earnings surprise of 18.6% for the prior four quarters.
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