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U.S. energy operator APA Corporation APA reported third-quarter 2023 adjusted earnings of $1.33 per share, beating the Zacks Consensus Estimate of $1.08. The outperformance primarily reflects strong production.
However, the bottom line dropped from the year-ago adjusted figure of $1.97 due to significantly lower oil and natural gas prices.
Revenues of $2.3 billion beat the Zacks Consensus Estimate of $2 billion but were down 20.1% from the year-ago quarter’s sales.
As promised, the company is using the excess cash to reward shareholders with dividends and buybacks. APA bought back 500,000 shares at $41.90 apiece during the third quarter. The company also shelled out $77 million in dividend payment.
APA Corporation Price, Consensus and EPS Surprise
APA Corporation price-consensus-eps-surprise-chart | APA Corporation Quote
Production & Selling Prices
Production of oil and natural gas averaged 412,252 BOE/d, which comprises 67% liquids. The figure increased 7.9% from the year-ago quarter and was above our expectation of 410,387 BOE/d.
U.S. output (accounting for 55% of the total) rose 3.1% year over year to 225,639 BOE/d, while production from the company’s international operations increased 14.4% to 186,613 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 275,562 barrels per day (Bbl/d). Natural gas output totaled 820,137 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the third quarter was $86.15 per barrel, down 11.9% from the year-ago realization of $97.81. However, the number came above our projection of $82.79. Meanwhile, the average realized natural gas price fell to $3.12 per thousand cubic feet (Mcf) from $5.62 in the year-ago period but beat our estimates of $2.36.
Costs & Financial Position
APA’s third-quarter lease operating expenses totaled $394 million, up 8.2% from $364 million in the year-ago period. However, a significant decline in the cost of oil and gas purchased meant that total operating expenses fell 13.2% from the corresponding period of 2022 to $1.5 billion. Our model put the figure at slightly over $1.5 billion.
During the quarter under review, APA generated $764 million of cash from operating activities while it incurred $474 million in upstream capital expenditures. The company reported an adjusted operating cash flow of $925 million in the third quarter. It also registered a free cash flow of $307 million during the period, though it plunged from $609 million a year ago.
As of Sep 30, APA had approximately $95 million in cash and cash equivalents and $5.6 billion in long-term debt. The debt-to-capitalization ratio of the company was 72.6.