U.S. energy operator APA Corporation APA reported first-quarter 2024 adjusted earnings of 78 cents per share, missing the Zacks Consensus Estimate of 90 cents and declining from the year-ago adjusted figure of $1.19. The underperformance primarily reflects lower production.
Revenues of $1.9 billion were down 6.3% from the year-ago quarter’s sales but came ahead of the Zacks Consensus Estimate by 1.6% due to higher-than-expected commodity price realizations.
Meanwhile, APA continues to reward shareholders with dividends and buybacks. APA bought back 3 million shares at $33.27 apiece during the first quarter. The company also shelled out $76 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 389,157 BOE/d, which comprises 66% liquids. The figure was down 1.3% from the year-ago quarter and below our expectation of 397,312 BOE/d.
U.S. output (accounting for 55% of the total) rose 6.2% year over year to 214,050 BOE/d but production from the company’s international operations decreased 9.1% to 175,107 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 258,062 barrels per day (Bbl/d). Natural gas output totaled 786,569 thousand cubic feet per day (Mcf/d).
The average realized crude oil price during the first quarter was $80.65 per barrel, up 2.9% from the year-ago realization of $78.37. The number also came above our projection of $74.99. Meanwhile, the average realized natural gas price fell to $2.47 per thousand cubic feet (Mcf) from $3.22 in the year-ago period but beat our estimates of $2.27.
Costs & Financial Position
APA’s first-quarter lease operating expenses totaled $338 million, up 5.3% from $321 million in the year-ago period. Moreover, a significant increase in the cost of oil/gas equipment and higher depreciation outgo meant that total operating expenses rose 19.3% from the corresponding period of 2023 to $1.5 billion. Our model put the figure at $1.4 billion.
During the quarter under review, APA generated $368 million of cash from operating activities while it incurred $568 million in upstream capital expenditures. The Zacks Rank #3 (Hold) company reported an adjusted operating cash flow of $827 million. It also registered a free cash flow of $99 million, though it plunged from $272 million a year ago.
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As of Mar 31, APA had approximately $102 million in cash and cash equivalents and $5.2 billion in long-term debt. The debt-to-capitalization ratio of the company was 66.5.
Guidance
APA expects adjusted production to average 399,000-401,000 BOE/d in Q2 and 392,000-394,000 BOE/d in 2024. Of this, oil volumes are likely to be 203,000 Bbl/d during the April-June period and 198,000 Bbl/d for the full year. The company pegged its upstream capital expenditure for the year at $2.7 billion.
Some Key E&P Earnings
While we have discussed APA’s first-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.
ConocoPhillips COP, one of the world’s largest independent oil and gas producers, reported first-quarter 2024 adjusted earnings per share of $2.03, beating the Zacks Consensus Estimate of $1.99. The bottom line, however, declined from the prior-year quarter’s $2.38 per share. ConocoPhillips’ higher oil equivalent production volumes — up 6.1% year over year — led to a better-than-expected bottom line. The positives were partially offset by lower average realized oil equivalent prices.
As of Mar 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. COP’s total long-term debt was $17.3 billion, while it had a short-term debt of $1.1 billion. Capital expenditure and investments totaled $2.9 billion. Net cash provided by operating activities was $4.9 billion.
Natural gas producer EQT Corporation EQT reported first-quarter 2024 adjusted earnings from continuing operations of 82 cents per share, which beat the Zacks Consensus Estimate of 65 cents. However, the bottom line decreased from the year-ago quarter’s reported figure of $1.70. EQT’s better-than-expected profits were driven by higher sales volumes, which increased to 534 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s 459 Bcfe.
EQT’s adjusted operating cash flow was $950.5 million in the quarter, down from $1.2 billion a year ago. Free cash flow in the quarter was $401.6 million compared with $773.6 million in the first quarter of 2023. Total capital expenditure for the company amounted to $549 million, rising from $464 million a year ago. As of Mar 31, 2024, EQT had $648 million in cash and cash equivalents. Net debt was $4.9 billion.
Diamondback Energy FANG, another U.S. energy operator, reported adjusted earnings per share of $4.50, which beat the Zacks Consensus Estimate of $4.29 and came ahead of the year-ago adjusted figure of $4.10. The outperformance primarily reflects stronger production and a drop in overall realization. FANG also executed $42 million of share repurchases during the first quarter of 2024 at $149.50 apiece.
Diamondback spent $609 million in capital expenditure — $580 million on drilling and completion, $25 million on infrastructure, environment and $4 million on midstream. The company booked $791 million in free cash flow in the first quarter. As of Mar 31, the Permian-focused operator had approximately $896 million in cash and cash equivalents and $6.6 billion in long-term debt, representing a debt-to-capitalization of 26.9%.
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