U.S. energy firm
) reported in-line second quarter earnings amid strong North
American liquids production growth and higher commodity prices.
Earnings per share - excluding one-time items - came in at $1.67,
same as the Zacks Consensus Estimate.
However, Apache's performance deteriorated from the year-ago
adjusted profit of $2.04 per share, reflecting asset sales.
Apache Corporation - Earnings Surprise |
Revenues of $3,484 million were down 18.4% from the year-ago
quarter and were also lower than the Zacks Consensus Estimate of
Importantly, Apache outlined plans to get out of some LNG projects
following pressure from activist investor Jana Partners. Following
the in-line earnings and asset sale update, shares of Apache
climbed more than 2% during the early hours of regular trading.
The production of oil and natural gas (excluding divested assets)
averaged 550,356 oil-equivalent barrels per day (BOE/d) (60%
liquids), up approximately 4% year over year. Apache's production
for oil and natural gas liquids (NGLs) was up roughly 6.8% at
330,561 barrels per day (Bbl/d), while natural gas production of
1,318.8 million cubic feet per day (MMcf/d) was essentially flat
from the second quarter 2013 level.
The average realized crude oil price during the second quarter was
$103.53 per barrel, representing an increase of 5.1% from the
year-ago realization of $98.47. Moreover, the average realized
natural gas price during the June quarter of 2014 was $4.18 per
thousand cubic feet (Mcf), up 5.3% from the year-ago period.
Apache's lease operating expenses totaled $613 million, down 21.5%
from $781 million in the year-ago quarter.
Balance Sheet & Capital Spending
As of Jun 30, 2014, Apache had approximately $524 million in cash
and cash equivalents. The company had a long-term debt of $9,674
million, representing a debt-to-capitalization ratio of 22.8%.
During the three months ended June 30, 2014, Apache's exploration
and development investments (excluding acquisitions) totaled $2,554
Asset Sale Update
Pressured by activist hedge fund Jana Partners LLC, Apache informed
that it plans to exit from two major natural gas projects in
Australia and Canada. The company emphasized that it is focused on
rebalancing its portfolio, targeting predictable and
profit-oriented production growth in North America.
As part of this initiative, Apache is evaluating its overseas
assets, with a potential sale not ruled out. Last month, the
company completed the sale of its interests in deepwater Gulf of
Mexico projects to mineral explorer Freeport-McMoRan Copper &
Gold Inc.'s (
) oil and gas subsidiary for $1.4 billion.
Zacks Rank & Stock Picks
Apache currently retains a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity market
over the next one to three months.
Meanwhile, one can look at Jones Energy Inc. (
) and Newfield Exploration Co. (
) as good buying opportunities. These U.S. upstream energy
operators - sporting a Zacks Rank #1 (Strong Buy) - have solid
secular growth stories with potential to rise significantly from
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