Apache Is Drumming up Solid Results

Apache Corporation (NYSE: APA  ) , the $37 billion -- in market capitalization -- independent oil and gas producer will join a plethora of oil and gas companies that will tell us about their third-quarter results on Thursday. While the company's earnings are expected to slide somewhat year-on-year, that condition likely relates to oil and gas prices, while Apache continues to remain one of the more compelling companies in its sector.

The analysts who follow Apache have reached a consensus expectation that per-share earnings will come in at about $2.26, a 23% dip from the comparable quarter of 2011. Revenues are projected at about $4.07 billion, down from the $4.33 billion a year ago. It's important to note, however, that, of the 32 analysts who follow the company, 16, or precisely half, have the company rated a "Strong Buy," while another 11 have rated Apache a "Buy." The remaining five have pegged the company as a "Hold." It's also noteworthy that the company is the second-largest of the half-dozen companies included among the favorites of energy seer T. Boone Pickens.

A wide spread
Apache is active in the exploration for, and production of, crude oil, natural gas, and natural gas liquids primarily in the United States, Australia, Argentina, Egypt, the United Kingdom, and Canada. On our continent, it operates in and along the Gulf Coast, the Permian Basin of southwest Texas and southeastern New Mexico, Western Canada, and the midcontinent of the United States.

In the relatively recent past, Apache has been on something of a buying binge. In mid-2010, when BP (NYSE: BP  ) was scurrying to raise funds for what obviously would turn out to be significant financial obligations related to its Macondo well blowout and spill in the Gulf of Mexico, Apache paid $7 billion for properties in Texas, New Mexico, and Western Canada, along with an exploration concession in Egypt. More recently, Apache has acquired ExxonMobil's (NYSE: XOM  ) North Sea assets.

A bit of success
Among the items that the company could discuss, most likely on its conference call, is its progress in the U.S. Gulf of Mexico. In June, Apache was high bidder on 90 shelf and deepwater blocks in the Central Gulf of Mexico offshore lease sale conducted by the Bureau of Ocean Energy Management. Of the 56 companies that participated in the sale, Apache captured first place for its 61 high bids on the shelf, and was fourth overall in the deepwater, with 29 high bids. All in all, the company's bid tally came to a gross of $96 million.

Apache has developed a reputation for coaxing oil and gas from fields that other companies have considered to have become kaput. For instance, harkening back to the Beryl field, last month the company announced that its Beryl Bravo B73y development well had tested at 8,161 barrels of oil per day, along with 5.9 million cubic feet of natural gas.

At about the same time, the company announced that its Mbawa 1 offshore exploration well in Kenya had encountered natural gas at a total depth of 10,335 feet. The well indicated about 52 net meters of natural gas pay in three separate zones. Although no oil was present in the early indications, the company is undertaking further evaluations to confirm the presence, or lack thereof, of crude.

A possible Exxon embrace?
Another possibly emerging situation bears monitoring by Fools with an interest in energy. As you may have learned, rumors are rife, given its difficulty in locating significant new reserves through the drill bit, ExxonMobil may be in the early stages of a shopping spree that ultimately could garner the acquisition of an independent producer for the biggest of big oil. It appears that Apache -- along with Anadarko Petroleum (NYSE: APC  ) and EOG resources (NYSE: EOG  ) are the independents most frequently mentioned in this connection.

That possibility clearly bears monitoring, as do Apache's results and its conference call on Thursday. If you're interested in this solid independent oil and gas producer, I strongly suggest that you add its name to your individual version of My Watchlist.

David Lee Smith owns shares of BP. The Motley Fool owns shares of Apache and ExxonMobil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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