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Is A Beat Likely for Apache (APA) This Earnings Season?

Zacks Equity Research

Apache Corporation APA is scheduled to release fourth-quarter 2019 results on Wednesday Feb 26, after the closing bell.

The current Zacks Consensus Estimate for the to-be-reported quarter’s loss is pegged at 12 cents per share on revenues of $1.61 billion. There has been no change in estimates for the bottom line over the past seven days.

Against this backdrop, let’s delve into the factors that might have impacted the company’s performance in the December quarter.

Factors at Play

Apache boasts a large geographically diversified reserve base with multi-year trends in reserve replacement. The company’s high-quality drilling inventory with greater resource potential might have enabled it to deliver a decent per share growth rate in the fourth quarter. This, in turn, should have lent its portfolio a higher competitive edge.

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On last earnings call, management expected fourth-quarter Permian Basin crude production to be approximately 100,000 BOE/d, indicating a 1.5% improvement from the prior-year reported figure. Regarding the North Sea, third-quarter production was hampered by an annual turnaround maintenance from which, the company expects a substantial recovery in its fourth-quarter production.

The Zacks Estimate for fourth-quarter output is pegged at 475,000 barrels of oil equivalent per day (Boe/d), implying improved results from the prior three quarters’ reported figures.

Moreover, the Zacks Consensus Estimate for fourth-quarter average realized oil price stands at $59 per barrel, indicating a marginal rise from the year-ago reported price of $58.37.

What Does Our Model Say?

The proven Zacks model predicts an earnings beat for Apache this season. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Apache has an Earnings ESP of +26.53%.

Zacks Rank: Apache carries a Zacks Rank #3, which increases the predictive power of ESP.

Highlights of Q3 Earnings

In the last reported quarter, Apache incurred fourth-quarter 2019 loss per share — excluding one-time items — of 29 cents, wider than the Zacks Consensus Estimate of 27 cents. Also, the bottom line came against the company’s year-ago adjusted profit of 63 cents. This underperformance stems from lower oil price realizations.

Revenues of $1.5 billion were 25.5% lower than the third-quarter 2018 sales of $2 billion but beat the Zacks Consensus Estimate of $1.4 billion owing to higher-than-expected production. Precisely, this Houston, TX-based upstream explorer’s output of 450,644 oil-equivalent barrels per day (BOE/d) surpassed the Zacks Consensus Estimate of 441,000 BOE/d.

As far as its earnings surprises are concerned, this oil and gas producer beat the Zacks Consensus Estimate in three of the trailing four quarters, missing the mark on one occasion, the average positive surprise being 50.68%. This is depicted in the graph below:

Apache Corporation Price and EPS Surprise

Apache Corporation Price and EPS Surprise
Apache Corporation Price and EPS Surprise

Apache Corporation price-eps-surprise | Apache Corporation Quote

Other Stocks to Consider

Here are some other stocks worth considering from the energy space, which per our model have the perfect combination of elements to also beat on earnings this reporting cycle:

Dril-Quip, Inc. DRQ has an Earnings ESP of +13.92% and a Zacks Rank of 3. The company is slated to announce fourth-quarter 2019 earnings on Feb 25.

EnLink Midstream, LLC. ENLC has an Earnings ESP of +14.29% and is Zacks #3 Ranked. The company is slated to announce fourth-quarter 2019 earnings on Feb 25.

California Resources Corporation CRC has an Earnings ESP of +0.51% and a Zacks Rank #2. The partnership is slated to release fourth-quarter earnings on Feb 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Apache Corporation (APA) : Free Stock Analysis Report
 
Dril-Quip, Inc. (DRQ) : Free Stock Analysis Report
 
EnLink Midstream, LLC (ENLC) : Free Stock Analysis Report
 
California Resources Corporation (CRC) : Free Stock Analysis Report
 
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