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APA (APA)
NASDAQ:APA

APA (APA) AI Stock Analysis

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AP

APA

(NASDAQ:APA)

Rating:75Outperform
Price Target:
$19.50
▲(1.14%Upside)
APA's strong financial performance and attractive valuation are the primary drivers of the overall score. The earnings call also contributed positively with strategic initiatives for cost savings and debt reduction. Technical analysis suggests neutral momentum, providing a balanced outlook.
Positive Factors
Debt Reduction
The sale of northern Del assets for $608 million aids in accelerating debt reduction, contributing to rapid de-leveraging.
Exploration Success
APA announced successful results of a flow test at its Sockeye-2 exploratory well on the North Slope of Alaska, indicating high reservoir quality.
Financial Performance
Reported adjusted EBITDA of $1.485B exceeded expectations, highlighting effective management of capex and costs.
Negative Factors
Cost Reduction Efforts
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 APA provided in November.
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.
Production Decline
Permian oil production is expected to decline due to weather-related impacts and third-party downtime.

APA (APA) vs. SPDR S&P 500 ETF (SPY)

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 exploration, development, and production of oil and natural gas. The company's key revenue streams include the sale of crude oil, natural gas, and natural gas liquids to various customers, including refineries, utilities, and other energy companies. APA's earnings are significantly influenced by global oil and gas prices, as well as its ability to efficiently manage production costs and optimize output. Strategic partnerships, particularly in international markets like Egypt, also play a crucial role in its revenue generation, providing access to key resources and enhancing operational capabilities.

APA Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 24.55%|
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 Financial Statement Overview

Summary
APA has demonstrated a strong financial recovery with significant improvements in revenue and profitability. The balance sheet shows manageable leverage, but the low equity ratio poses some risk. Cash flow generation is strong, though historical volatility suggests the need for cautious cash management.
Income Statement
78
Positive
The company has shown a strong recovery with a positive revenue growth rate from the previous year, indicating a robust upward trend. Gross profit margins are healthy, and the net profit margin has improved, reflecting enhanced profitability. However, past volatility in EBIT and EBITDA margins suggests some operational challenges.
Balance Sheet
65
Positive
The company's debt-to-equity ratio is moderate, indicating a manageable level of leverage. Return on equity (ROE) is positive, signaling effective utilization of shareholder funds. However, the equity ratio indicates a relatively low equity base compared to total assets, suggesting potential financial risk if liabilities increase.
Cash Flow
74
Positive
The operating cash flow to net income ratio is strong, indicating efficient cash generation relative to net income. Free cash flow has grown significantly, demonstrating effective cash management. However, historical fluctuations in free cash flow highlight potential volatility in cash flow stability.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
7.27B9.74B8.28B11.07B7.99B4.43B
Gross Profit
2.97B4.30B4.23B6.25B3.54B905.00M
EBIT
1.76B3.20B3.36B5.08B2.69B173.00M
EBITDA
3.88B4.22B4.75B7.61B3.88B-2.31B
Net Income Common Stockholders
-152.00M804.00M2.85B3.67B973.00M-4.86B
Balance SheetCash, Cash Equivalents and Short-Term Investments
247.00M625.00M87.00M245.00M302.00M262.00M
Total Assets
18.11B19.39B15.24B13.15B13.30B12.75B
Total Debt
8.73B6.16B5.30B5.62B7.61B8.89B
Net Debt
8.49B5.54B5.22B5.38B7.31B8.63B
Total Liabilities
13.64B13.03B11.55B11.80B13.31B12.78B
Stockholders Equity
3.25B5.28B2.65B423.00M-1.59B-1.64B
Cash FlowFree Cash Flow
-130.00M769.00M772.00M2.54B2.39B114.00M
Operating Cash Flow
3.76B3.62B3.13B4.94B3.50B1.39B
Investing Cash Flow
-3.99B-924.00M-2.14B-1.51B-833.00M-1.47B
Financing Cash Flow
-518.00M-2.16B-1.15B-3.49B-2.62B93.00M

APA Technical Analysis

Technical Analysis Sentiment
Positive
Last Price19.28
Price Trends
50DMA
16.79
Positive
100DMA
18.99
Positive
200DMA
21.15
Negative
Market Momentum
MACD
0.55
Negative
RSI
68.15
Neutral
STOCH
85.87
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For APA, the sentiment is Positive. The current price of 19.28 is above the 20-day moving average (MA) of 17.73, above the 50-day MA of 16.79, and below the 200-day MA of 21.15, indicating a neutral trend. The MACD of 0.55 indicates Negative momentum. The RSI at 68.15 is Neutral, neither overbought nor oversold. The STOCH value of 85.87 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for APA.

APA Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
$6.00B6.4419.20%2.30%21.73%1.48%
78
Outperform
$5.75B6.6712.64%5.23%31.71%-32.13%
APAPA
75
Outperform
$6.96B6.9725.34%5.37%26.76%-69.10%
NFNFG
70
Outperform
$7.41B186.811.30%2.51%7.14%-90.91%
SUSUN
68
Neutral
$8.14B9.5826.11%6.74%-3.59%22.77%
58
Neutral
$7.35B3.36-4.49%5.60%0.82%-49.15%
CRCRK
52
Neutral
$7.04B-14.17%0.66%-1.73%-608.98%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
APA
APA
19.61
-8.44
-30.09%
CRK
Comstock Resources
23.94
12.03
101.01%
MTDR
Matador Resources
49.02
-8.95
-15.44%
NFG
National Fuel Gas Company
82.02
28.51
53.28%
SUN
Sunoco
53.51
4.24
8.61%
CHRD
Chord Energy
101.68
-60.53
-37.32%

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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.