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Apache Beats Q3 Earnings, Misses on Revs - Analyst Blog

Posted: 11/7/2013 4:00:00 PM
Referenced Stocks: APA;MTDR;NOG;SM

U.S. energy firm Apache Corp. ( APA ) reported strong third quarter earnings on the back of increased liquids volume and higher crude prices.

Earnings per share - excluding one-time items - came in at $2.32, above the Zacks Consensus Estimate of $2.17 and the year-ago adjusted profit of $2.16.

However, revenues of $4,019.0 million were down 3.8% from the year-ago quarter and were also lower than the Zacks Consensus Estimate of $4,354.0 million. The underperformance reflects lower natural gas output.

Operational Performance

The production of oil and natural gas averaged 784,331 oil-equivalent barrels per day (BOE/d) (54% liquids), up approximately 1.8% year over year. Apache's production for oil and natural gas liquids (NGLs) was up roughly 8.8% at 425,097 barrels per day (Bbl/d), while natural gas production of 2,155.4 million cubic feet per day (MMcf/d) was down 5.5% from the third quarter 2012 level.

Apache's upstream growth momentum is retained organically as well as through acquisitions as it continues to explore the extensive, multi-year inventory of drillable locations in the Permian and Anadarko basins of North America.

The average realized crude oil price during the third quarter was $107.50 per barrel, representing an increase of 4.8% from the year-ago realization of $102.62. The average realized natural gas price during the Sep quarter of 2013 was $3.49 per thousand cubic feet (Mcf), down 7.2% from the year-ago period.

Apache's lease operating expenses totaled $819.0 million, up 2.3% from $801.0 million in the year-ago quarter.

Balance Sheet & Capital Spending

As of Sep 30, 2013, Apache had approximately $1,251.0 million in cash and cash equivalents. The company had a long-term debt of $10,868.0 million, representing a debt-to-capitalization ratio of 24.8%.

During the three months ended Sep 30, 2013, Apache's capital investments (excluding acquisitions) totaled $2,916.0 million.

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 Matador Resources Co. ( MTDR ), SM Energy Co. ( SM ) and Northern Oil & Gas Inc. ( NOG ) 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 current levels.

APACHE CORP (APA): Free Stock Analysis Report

MATADOR RESOURC (MTDR): Free Stock Analysis Report

NORTHRN OIL&GAS (NOG): Free Stock Analysis Report

SM ENERGY CO (SM): Free Stock Analysis Report

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