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Apache Corp.: Suriname Is A Game Changer

Mar. 01, 2021 1:06 PM ETAPA Corporation (APA)33 Comments


  • Apache reported net income attributable to common stock of $10 million for the fourth quarter of 2020.
  • Net debt as of Dec. 31, 2020 was $8.51 billion. The debt includes Altus debt. Apache's standalone long-term debt is $8.146 billion.
  • APA is a good long-term investment. However, the stock may have reached an overbought situation.
  • Looking for a helping hand in the market? Members of The Gold And Oil Corner get exclusive ideas and guidance to navigate any climate. Get started today »

Image: Apache website

Investment Thesis

Houston-based Apache Corp. (NASDAQ:APA) released its fourth quarter and full-year 2020 results on Feb. 25, 2021.

The fourth quarter was better than expected, with an average daily U.S. output of 232,975 Boe/p, which fell 22% year over year. It was not something to brag about.

The investment thesis has changed with the recent rally in oil and gas prices. It would be best to slowly accumulate APA with a time horizon of about 12 to 18 months.

The first quarter of 2021 will not be stellar due to weak oil production, even if oil and gas prices will be much higher. This situation leaves us plenty of time to accumulate at a good discount.

If we compare APA to SPDR S&P Oil & Gas Exploration ETF (NYSEARCA: XOP), it has partially recovered and seems to improve with solid oil and gas prices.

ChartData by YCharts

The success story in Q4 was Altus Midstream (OTC: ALTM), Apache's subsidiary linked with the Permian midstream. On Dec. 10, 2020, the stock jumped sharply after Altus Midstream announced its first quarterly dividend of $1.50 per share with a dividend yield of 11.33%.

Note: Altus Midstream released its Fourth-quarter results on Feb. 25, 2021.

Apache Corp. - Balance sheet and production history for 4Q'20: The raw numbers

Apache 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20
Total Revenues and others in $ Billion 1.625 1.344 0.752 1.120 1.058
Net Income in $ Billion -2.98 -4.48 -0.367 -0.004 0.010
EBITDA $ Billion -2.22 -3.90 0.11 0.58 0.56
EPS diluted in $/share -7.89 -11.86 -1.02 -0.02 0.03
Cash from Operating activities in $ Million 778 502 84 304 498
CapEx in $ Million 613 531 335 239 197
Free Cash Flow in $ Million 165 -29 -251

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I trade short-term APA frequently.

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