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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 and EPS Surprise

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

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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.

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