APA Q4 Earnings & Revenues Miss on Lower Oil Realizations

U.S. energy operator APA Corporation APA reported fourth-quarter 2023 adjusted earnings of $1.15 per share, missing the Zacks Consensus Estimate of $1.38 and declining from the year-ago adjusted figure of $1.48.

The underperformance primarily reflects lower oil and natural gas prices, partly offset by strong production.

Revenues of $1.9 billion fell short of the Zacks Consensus Estimate of $2 billion and were down 20.5% from the year-ago quarter’s sales.

Meanwhile, APA continues to reward shareholders with dividends and buybacks. APA bought back 3.2 million shares at $37.64 apiece during the fourth quarter. The company also shelled out $76 million in dividend payment.
 

APA Corporation Price, Consensus and EPS Surprise

APA Corporation Price, Consensus and EPS Surprise

APA Corporation price-consensus-eps-surprise-chart | APA Corporation Quote

 

Production & Selling Prices

Production of oil and natural gas averaged 414,430 BOE/d, which comprises 67% liquids. The figure was essentially unchanged from the year-ago quarter, though it was above our expectation of 406,004 BOE/d.

U.S. output (accounting for 55% of the total) rose 5% year over year to 228,671 BOE/d but production from the company’s international operations decreased 6% to 185,759 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 276,036 barrels per day (Bbl/d). Natural gas output totaled 830,366 thousand cubic feet per day (Mcf/d).

The average realized crude oil price during the fourth quarter was $81.36 per barrel, down 5.6% from the year-ago realization of $86.17. However, the number came above our projection of $76.83. Meanwhile, the average realized natural gas price fell to $2.92 per thousand cubic feet (Mcf) from $4.04 in the year-ago period but beat our estimates of $2.73.

Costs & Financial Position

APA’s fourth-quarter lease operating expenses totaled $360 million, down 4.5% from $377 million in the year-ago period. Moreover, a significant decline in the cost of oil and gas purchased meant that total operating expenses fell 14.3% from the corresponding period of 2022 to $1.4 billion. Our model also put the figure at $1.4 billion.

During the quarter under review, APA generated $1 billion of cash from operating activities while it incurred $520 million in upstream capital expenditures. The Zacks Rank #3 (Hold) company reported an adjusted operating cash flow of $1 billion . It also registered a free cash flow of $292 million, though it dropped from $360 million a year ago.

You can see the complete list of today’s Zacks #1 Rank stocks here.

As of Dec 31, APA had approximately $87 million in cash and cash equivalents and $5.2 billion in long-term debt. The debt-to-capitalization ratio of the company was 66.1.

Guidance

APA expects adjusted production to average 328,000-330,000 BOE/d in Q1 and 323,000-325,000 BOE/d in 2024. Of this, oil volumes are likely to be 157,000 Bbl/d during both periods. The company pegged its upstream capital expenditure for the year at $1.9-$2 billion.

Some Key E&P Earnings

While we have discussed APA’s fourth-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.

One of the world’s largest independent oil and gas producers, ConocoPhillips COP, reported fourth-quarter 2023 adjusted earnings per share of $2.40, beating the Zacks Consensus Estimate of $2.08. The bottom line, however, declined from the prior-year quarter’s $2.71 per share. ConocoPhillips’ higher oil equivalent production volumes — up 8.2% year over year — led to a better-than-expected bottom line. The positives were partially offset by lower average realized oil equivalent prices.

As of Dec 31, 2023, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.9 billion, while it had a short-term debt of $1.1 billion. Capital expenditure and investments totaled $2.9 billion. Net cash provided by operating activities was $5.3 billion.

Natural gas producer EQT Corporation EQT reported fourth-quarter 2023 adjusted earnings from continuing operations of 48 cents per share, in line with the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s adjusted earnings of 42 cents. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 564 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 458.6 Bcfe.

EQT’s adjusted operating cash flow was $774.6 million in the quarter, up from $621.8 million a year ago. Free cash flow in the quarter was $236 million, up from $225.5 million. Total capital expenditure for the company amounted to $538.5 million, up from $398.1 million a year ago. As of Dec 31, 2023, EQT had $81 million in cash and cash equivalents. Net debt was $5.7 billion.

Meanwhile, South Texas-focused Magnolia Oil & Gas Corporation MGY reported a fourth-quarter 2023 adjusted net income of 50 cents per share, which missed the Zacks Consensus Estimate of 54 cents. The bottom line also deteriorated from the year-ago quarter’s level of 86 cents due to a decline in commodity prices. MGY’s average daily total output of 85,414 barrels of oil equivalent per day (boe/d) increased from the year-ago quarter’s figure of 73,785 boe/d.

As of Dec 31, Magnolia had cash and cash equivalents of $401.1 million and long-term debt of $392.8 million. The total debt-to-total capital was 17.3%. MGY spent $91.5 million on its capital program in the reported quarter. Operating expenses increased to $184.5 million from $151.1 million in the year-ago period.

Top 5 ChatGPT Stocks Revealed

Zacks Senior Stock Strategist, Kevin Cook names 5 hand-picked stocks with sky-high growth potential in a brilliant sector of Artificial Intelligence. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion.

Today you can invest in the wave of the future, an automation that answers follow-up questions … admits mistakes … challenges incorrect premises … rejects inappropriate requests. As one of the selected companies puts it, “Automation frees people from the mundane so they can accomplish the miraculous.”

Download Free ChatGPT Stock Report Right Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ConocoPhillips (COP) : Free Stock Analysis Report

APA Corporation (APA) : Free Stock Analysis Report

EQT Corporation (EQT) : Free Stock Analysis Report

Magnolia Oil & Gas Corp (MGY) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.