APA Corporation: Good Earnings, But Sinking Production Is A Concern

Nov. 21, 2022 1:55 PM ETAPA Corporation (APA)MUR, HES, COP, MRO10 Comments

Summary

  • During the third quarter of 2022, APA Corporation reported a net income attributable to common stock of $422 million, or $1.28 per diluted share.
  • Oil-equivalent production was 381,934 Boep/d in 3Q22, which comprises 64% liquids (oil + NGL).
  • Quarterly dividend increased to $0.25 per share in 3Q22.
  • I recommend buying APA Corporation between $42.1 and $45.5, with possible lower support at $39.2 if oil turns even more bearish.
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Introduction

Houston-based APA Corporation (NASDAQ:APA) released its third quarter of 2022 results on November 2, 2022.

Note: I have followed APA quarterly since 2017, with 26 articles and counting. This new article is a quarterly update of my

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APA Assets map Presentation (APA Presentation)

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APA 3Q22 Highlights (APA Presentation)

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APA 3Q22 metrics presentation (APA Presentation)

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Data by YCharts

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APA Quarterly Revenues history (Fun Trading)

APA reported a net income attributable to common stock of $422 million or $1.28 per diluted share during the third quarter of 2021.

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APA Quarterly Oil and Gas price history (Fun Trading)

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APA Quarterly Free cash flow history (Fun Trading)

Note: The generic free cash flow is the cash from operating activities minus CapEx. The company has a different way of calculating the free cash flow because it is a non-GAAP determination.
APA's free cash flow was $609 million. However, if you look at the November presentation on page 25, you will see that the company's calculation adds "change in operating assets and liabilities" and applies a reduced CapEx.

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APA Dividend and Buyback history (APA Presentation)

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APA Quarterly Cash versus Debt history (Fun Trading)

APA was deleveraging its debt profile and continues to do an excellent job in the third quarter of 2022, even if we see a slight increase sequentially. The net debt is now $5.26 billion, up from $5 billion in 2Q22.

Since mid-2021, $3.1 billion in bond debt has been eliminated, including the recent redemption of $123 million of notes due January 2023, through tender offers, open market repurchases and early redemptions (press release).

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APA Debt Profile (APA Presentation)

4 - Oil-equivalent production was 381,934 Boep/d in 3Q22 which comprises 64% liquids (oil + NGL).

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APA Quarterly production detail history (Fun Trading)

The oil equivalent production has been declining for the past few years, and the production this quarter with 381,934 Boep/d. It confirms this recurring weakness with production below $400K Boepd.
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APA North Sea update 3Q22 (APA Presentation)

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APA Quarterly Oil equivalent Production history (Fun Trading)

In the North Sea, production was 28,855 Boep/d, and Egypt's production increased significantly to 134,253K Boep/d.
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APA Quarterly Production details 3Q22 (Fun Trading)

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APA Suriname update 3Q22 (APA Presentation)

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APA 4Q22 and full-year Guidance (APA Presentation)

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APA TA Chart short-term (Fun Trading StockCharts)

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This article was written by

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As an experienced investor, I will help you stay on task more efficiently.

I am a former test & measurement doctor engineer (geodetic metrology). I was interested in quantum metrology for a while.

I live mostly in Sweden with my loving wife.

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Note: I am not a financial advisor. All articles are my honest opinion. It is your responsibility to conduct your own due diligence before investing or trading.

Disclosure: I/we have a beneficial long position in the shares of APA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I trade short-term APA frequently and own a small long-term position, as explained in my article.

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