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Did Apache’s 3Q15 Earnings Meet Expectations?

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APA’s quarterly revenues versus consensus

Apache’s (APA) 3Q15 revenues fell short of estimates. The company’s 3Q15 adjusted revenue of $1.5 billion was 6% lower than the $1.6 billion consensus sell-side analyst revenue estimate.

On average, adjusted revenues have fallen short of consensus estimates by ~1% in the past 11 quarters. Between 3Q13 and 3Q15, APA’s adjusted revenues have decreased 63%. Revenues fell by 60% from 3Q14 to 3Q15, as energy prices plummeted during this period.

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APA’s quarterly earnings per share (or EPS) versus consensus

Apache’s 3Q15 earnings beat estimates, although the company recorded net loss per share in 3Q15. APA’s 3Q15 adjusted loss per share is $0.05 versus the consensus sell-side analyst loss per share estimate of $0.38. Adjusted earnings exclude various one-time charges including the write-downs and valuation allowance it recorded in 3Q15.

Between 3Q13 and 3Q15, adjusted EPS swung from a positive $2.32 to a $0.05 per share loss. Adjusted EPS stood at $1.38 a year ago. The fall in crude oil prices has crushed earnings from upstream companies like APA. On average, the company’s adjusted EPS has exceeded consensus EPS by 11% in the past 11 quarters.

How did APA’s adjusted earnings beat estimates?

Among the primary cost heads, APA’s lease and well costs fell 23% while gathering and transportation costs fell 28%. Savings from operating costs helped APA’s adjusted net earnings beat sell-side analysts’ estimates. APA recorded $830 million in operating income, denoted as EBITDAX (earnings before interest, tax, depreciation, depletion, amortization, and exploration) in 3Q15.

APA’s share price reaction to earnings

APA released its financial information for 3Q15 on November 5, 2015. The company’s stock reacted negatively immediately following the earnings release. On November 6, it decreased 3.7% to $18.29 from the previous day’s close. Since the beginning of this year, its share price has gone down 36%.

US energy upstream company Pioneer Natural Resources’ (PXD) share price held firm, decreasing by just 3% since the beginning of the year. Together, Apache and Pioneer Natural Resources make up 5.1% of the Energy Select Sector SPDR ETF (XLE). XLE has gone down 13% during the same period.

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