Summary
- Apache reported a third-quarter 2019 consolidated net loss of $170 million or $0.45 per diluted common share, on October 31, 2019. Revenues were $1,477 million, down 25.5% from last year.
- The third-quarter total production dropped 5.4% to 450,644 Boep/d compared to a year ago and down 1% sequentially.
- APA has underperformed the oil sector but may have reached a bottom around $20-$21, which could be used as an excellent midterm opportunity, especially with a dividend yield of 4.23%.
Image Courtesy: Reuters - Permian Basin.
Investment Thesis
The Houston-based Apache Corp. (APA) owns oil and gas assets in three different regions and has earned $635 million in consolidated operating cash flow from operations during the third quarter of 2019. Oil and Gas revenues come from three central areas:
Source: APA Presentation
The US Shale, and particularly the Permian Basin, continues to drive the company's growth with noticeable results. However, continued weakness in natural gas prices forced the company to revise its outlook. Alpine High produced ~71K Boep/d during the third quarter, and Permian production reached 254.4K Boep/d in 3Q'19.
Apache has invested heavily in its Alpine High prospect, which is a Permian gas play that is not as attractive as a pure oil Permian play due to pricing issues.
Data by YCharts
Consequently, APA has underperformed the oil sector but may have reached a bottom around $20-$21, which could be used as an excellent midterm opportunity, especially with a solid dividend yield of 4.23% now.
Note: Just a little over a year ago, we learned that Apache and KAAC (Kayne Anderson Acquisition Corp.) formed a $3.5 billion pure-play Permian midstream called Altus Midstream (ALTM).
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