It has been about a month since the last earnings report for Apache (APA - Free Report) . Shares have lost about 12.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Apache due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Apache Q1 Earnings Beat Estimates, Sales Miss
Apache reported mixed first-quarter 2019 results, wherein earnings topped the Zacks Consensus estimates by a whisker, but sales missed the same.
The upstream explorer reported earnings per share — excluding one-time items — of 10 cents, surpassing the Zacks Consensus Estimate by a penny on the back of record Permian output. The bottom line, however, declined from the year-ago level of 32 cents owing to lower commodity price realizations.
Revenues of $1,635 million marginally missed the Zacks Consensus Estimate of $1,638 million. The top line also declined 6.4% from the year-ago period.
Production & Selling Prices
Production of oil and natural gas averaged 502,877 oil-equivalent barrels per day (BOE/d) —comprising 63% liquids — up 14% from a year ago. While ramped-up operations in the Alpine High region of the Permian Basin certainly aided Apache’s output levels, the company’s considerable acreage in Egypt and North Sea also stepped up the production rate in the quarter under review.
The U.S. output (accounting for 58% of the total production) rose 25% year over year to 291,693 BOE/d. The company’s international operations increased 2% y/y to 211,184 BOE/d. Apache’s production of oil and natural gas liquids (NGLs) was 316,759 barrels per day, while natural gas output came in at 1,116,707 thousand cubic feet per day.
In the company's Permian Basin acreage, average production volumes hit a record of 247,939 BOE/d, improving from 182,972 BOE/d recorded in first-quarter 2018. The results were aided by operational progress and the continued ramp up at its Alpine High discovery.
The average realized crude oil price during the first quarter was $57.70 per barrel, 10% lower than the year-ago realization. The average realized natural gas price also declined to $2.34 per thousand cubic feet from $2.82 in the year-ago period.
Total Costs & Financials
Lease operating expenses totaled $365 million, up 4.5% from the year-ago quarter. Moreover, total operating expenses increased 8.1% from the corresponding period of 2018 to $1.4 billion, primarily on the back of higher depreciation and general/administrative costs.
As of Mar 31, the oil giant had approximately $327 million in cash and cash equivalents. The company had a long-term debt of $8.1 billion, representing a debt-to-capitalization ratio of 53.6%. During the quarter under review, Apache generated $598 million of cash from operating activities, while shelling out $597 million on capital expenditures.
Apache reiterated its guidance for 2019 capital spending at $2.4 billion. The company also maintained its 6-10% worldwide production exit rate growth in 2019, 12-16% in the United States and 5% in the Permian Basin.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.2% due to these changes.
Currently, Apache has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Apache has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.