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APA (APA)
NASDAQ:APA
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APA
(NASDAQ:APA)
Rating:73Outperform
Price Target:
$18.50
▲( 10.71% Upside)
Positive Factors
Cost Management
Cost initiatives are ahead of schedule and APA now expects to realize $170mm in savings in FY25 with rig drops in the Permian but no decrease in oil production.
Debt Reduction
The sale of northern Del assets for $608 million aids in accelerating debt reduction, contributing to rapid de-leveraging.
Financial Performance
Reported adjusted EBITDA of $1.485B exceeded expectations, highlighting effective management of capex and costs.
Negative Factors
Operational Update
APA's much-anticipated update on cost reduction efforts was underwhelming with 2025 guidance implying a ~7% YoY reduction in cash opex/Boe, below the ~10-15% target.
Production Guidance
Permian oil production is expected to decline due to weather-related impacts and third-party downtime.
US Oil Volume Guidance
The 2025 US oil volume guidance of 125-127 mbbl/d was incrementally lower vs. the ~125-130 mbbl/d range it had been messaging and ~3% below consensus.
APA (APA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.25B
Dividend Yield5.8%
Average Volume (3M)9.27M
Price to Earnings (P/E)6.3
Beta (1Y)0.88
Revenue Growth26.76%
EPS Growth-69.10%
CountryUS
Employees2,305
SectorEnergy
Sector Strength40
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)1.06
Shares Outstanding360,845,120
10 Day Avg. Volume8,976,372
30 Day Avg. Volume9,266,465
Financial Highlights & Ratios
PEG Ratio-0.11
Price to Book (P/B)1.17
Price to Sales (P/S)0.00
P/FCF Ratio7.87
Enterprise Value/Market Cap1.86
Enterprise Value/Revenue0.32
Enterprise Value/Gross Profit2.77
Enterprise Value/Ebitda0.61
Forecast
1Y Price Target
$21.73Price Target Upside30.04% Upside
Rating ConsensusHold
Number of Analyst Covering24
APA Business Overview & Revenue Model
Company DescriptionAPA Corporation, through its subsidiaries, explores for, develops, and produces oil and gas properties. It has operations in the United States, Egypt, and the United Kingdom, as well as has exploration activities offshore Suriname. The company also operates gathering, processing, and transmission assets in West Texas, as well as holds ownership in four Permian-to-Gulf Coast pipelines. APA Corporation was founded in 1954 and is based in Houston, Texas.
How the Company Makes MoneyAPA Corporation generates revenue primarily through the sale of crude oil, natural gas, and natural gas liquids. The company's financial performance is heavily influenced by the global prices of these commodities, which are subject to market fluctuations. APA's key revenue streams include production from its diverse geographic asset base, including significant operations in the Permian Basin in the U.S., as well as in Egypt and Suriname. Additionally, the company enters into joint ventures and partnerships to optimize its exploration and production activities, which can enhance its revenue potential. Strategic capital investment in high-potential projects and efficient cost management also play crucial roles in APA's ability to generate earnings.
APA Financial Statement Overview
Summary
APA demonstrates solid profitability with strong profit margins and robust cash flow generation, supporting its operations and potential future investments. However, the decline in revenue poses a challenge that the company needs to address to ensure sustained financial health.Income Statement
The company shows a strong gross profit margin of 57.73% and a net profit margin of 8.26% in the TTM, indicating good profitability. EBIT and EBITDA margins are also solid at 38.32% and 32.67% respectively. However, there is a decline in revenue compared to the previous year by 12.49%, which may pose a concern for future growth.76
Positive
Balance Sheet
The balance sheet displays a healthy equity ratio of 54.13%, suggesting a strong equity position. The debt-to-equity ratio is 0.57, indicating moderate leverage. Return on equity is 7.66%, which is decent, but there are potential risks associated with historical volatility in equity levels.68
Positive
Cash Flow
The cash flow statement reveals a robust free cash flow growth rate of 90.01% in the TTM, reflecting efficient cash management. The operating cash flow to net income ratio of 4.50 shows strong cash generation relative to profits. The free cash flow to net income ratio is 1.82, indicating substantial cash available after capital expenditures.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 9.74B | 8.28B | 11.07B | 7.99B | 4.43B | Gross Profit |
| 4.30B | 5.92B | 6.25B | 3.54B | 905.00M | EBIT |
| 3.20B | 5.21B | 4.00B | 1.56B | -1.60B | EBITDA |
| 4.22B | 4.75B | 7.61B | 3.88B | -2.31B | Net Income Common Stockholders |
| 804.00M | 2.85B | 3.60B | 1.14B | -4.90B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 625.00M | 87.00M | 245.00M | 302.00M | 262.00M | Total Assets |
| 19.39B | 15.24B | 13.15B | 13.30B | 12.75B | Total Debt |
| 6.16B | 5.30B | 5.45B | 7.51B | 8.77B | Net Debt |
| 5.54B | 5.22B | 5.21B | 7.21B | 8.51B | Total Liabilities |
| 13.03B | 11.55B | 11.80B | 14.02B | 13.39B | Stockholders Equity |
| 5.28B | 2.65B | 423.00M | -1.59B | -1.64B |
| Cash Flow | Free Cash Flow | |||
| 769.00M | 772.00M | 2.54B | 2.38B | 86.00M | Operating Cash Flow |
| 3.62B | 3.13B | 4.94B | 3.50B | 1.39B | Investing Cash Flow |
| -924.00M | -2.14B | -1.51B | -833.00M | -1.47B | Financing Cash Flow |
| -2.16B | -1.15B | -3.49B | -2.62B | 93.00M |
APA Technical Analysis
Negative
16.71
Price Trends
17.43
Negative
19.71
Negative
21.82
Negative
Market Momentum
0.12
Negative
47.90
Neutral
43.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For APA, the sentiment is Negative. The current price of 16.71 is below the 20-day moving average (MA) of 16.71, below the 50-day MA of 17.43, and below the 200-day MA of 21.82, indicating a bearish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 47.90 is Neutral, neither overbought nor oversold. The STOCH value of 43.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for APA.
APA Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $5.55B | 5.95 | 19.20% | 2.17% | 21.73% | 1.48% | |
81 Outperform | $5.49B | 6.37 | 12.64% | 5.34% | 31.71% | -32.13% | |
75 Outperform | $8.71B | 10.26 | 26.11% | 6.28% | -3.59% | 22.77% | |
73 Outperform | $6.25B | 6.26 | 25.34% | 5.80% | 26.76% | -69.10% | |
70 Outperform | $7.35B | 185.42 | 1.30% | 2.53% | 7.14% | -90.91% | |
57 Neutral | $7.14B | 3.33 | -3.45% | 5.75% | 0.66% | -50.76% | |
47 Neutral | $6.95B | ― | -14.17% | 0.66% | -1.73% | -608.98% |
* Energy Sector Average
Performance Comparison
APA
APA
16.71
-12.10
-42.00%
CRK
Comstock Resources
23.39
12.30
110.91%
MTDR
Matador Resources
43.55
-15.81
-26.63%
NFG
National Fuel Gas Company
81.32
27.28
50.48%
SUN
Sunoco
55.19
7.33
15.32%
CHRD
Chord Energy
90.54
-77.69
-46.18%
APA Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 7.95%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a generally positive sentiment due to strong first quarter results, significant cost savings, and strategic asset sales for debt reduction. However, there are some challenges, particularly in Egypt's oil volume decline and upward pressure on LOE costs in the Permian.Q1-2025 Updates
Positive Updates
Strong First Quarter Results
APA Corporation delivered strong first quarter results with in-line production and lower capital investment relative to guidance, achieving significant improvements in drilling performance.
Cost Reduction Initiatives
APA is making significant progress on cost reduction initiatives, increasing the 2025 savings target to $130 million and annualized run rate savings to $225 million by year-end. Permian drilling efficiencies are the largest driver of capital savings.
Egypt Gas Production
First quarter gas production in Egypt exceeded guidance due to outperformance from the development program and efforts to optimize existing infrastructure. Gas development is now economically attractive relative to oil drilling.
Asset Sale for Debt Reduction
APA signed an agreement to monetize New Mexico Permian properties for $608 million, intending to allocate most of the proceeds toward debt reduction.
Permian Well Cost Savings
Achieved $800,000 in cost savings per well in the Permian, with significant improvements in drilling efficiencies.
Positive Progress in Egypt Receivables
Significant progress in normalizing past due receivables from the Egyptian government, reaching the lowest levels since the end of 2022.
Negative Updates
Egypt Oil Volume Decline
Gross oil volumes in Egypt are expected to be on a slight decline due to the shift in focus towards gas production.
Operational Challenges in LOE
APA is experiencing upward pressure on LOE costs in the Permian due to inflationary pressures in compression and water disposal.
Potential Impact of Lower Oil Prices
APA may reduce rig count and frac crews in the Permian if oil prices drop to very low 50s for WTI, indicating potential challenges in maintaining current production levels.
Company Guidance
During APA Corporation's First Quarter 2025 Results Conference Call, significant guidance was provided regarding operational improvements and financial outlook. The company achieved strong first-quarter results, maintaining production within guidance while reducing capital investment. Key metrics highlighted include a $150 million reduction in development capital guidance for the year, and the expectation to sustain Permian oil volumes with only 6.5 rigs, down from the previous requirement of 8 rigs. APA also reported a substantial $800,000 cost reduction per well, contributing to an updated target of $130 million in realized savings and a $225 million annualized run rate savings by year-end. Additionally, the company announced the divestiture of New Mexico Permian properties for $608 million, with proceeds intended for debt reduction. As part of its cost optimization strategy, APA aims to achieve top quartile operational performance, especially in the Permian, and expects its cost and capital efficiency initiatives to underpin free cash flow growth through 2027.APA Corporate Events
Executive/Board Changes
APA Corporation Updates Executive Compensation Plan
Neutral
Jan 10, 2025
APA Corporation’s Board of Directors has approved updated agreements for performance shares and stock options under its 2016 Omnibus Compensation Plan. These changes aim to refine executive compensation, with vesting of performance shares now linked to Relative Total Shareholder Return and Cash Return on Invested Capital, enhancing alignment with shareholder interests.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.