Analyzing Apache’s moving averages
Apache (APA) is a US-based upstream oil and gas company, headquartered in Houston, Texas. The company also has operations in Canada, Egypt, the offshore North Sea, and the United Kingdom.
In this series, we’ll be discussing Apache’s past performance, management goals, and its valuation, as well as how the company compares with its peers. Let’s begin by taking a look at Apache’s 50-day and 200-day moving averages.
As we can see in the table above, on November 16, 2015, Apache was trading ~16% above its 50-day moving average, a short-term downside support for the stock. However, it was trading ~8% below its 200-day moving average, a strong upside resistance for the stock.
In comparison, Apache’s peers Hess (HES) and Pioneer Natural Resources (PXD) were trading ~8.6% and ~8.9% above their 50-day moving averages, respectively. Concho Resources (CXO), and Marathon Oil (MRO) were trading ~0.4% lower and 2.7% higher than their 50-day moving averages, respectively.
Comparing their 200-day moving averages, Hess, Pioneer Natural Resources, Concho Resources, and Marathon Oil were trading ~4.7%, ~0.2%, ~4.3%, and ~24% below their respective 200-day moving averages. This is a clear indication of the limited upside for all these companies, excepting Marathon Oil, unless their respective 200-day moving averages are decisively taken out.
All these companies are components of the Energy Select Sector SPDR ETF (XLE). APA, MRO, and HES make up ~4% of XLE.
Recent stock movements
Apache’s stock has fallen almost 20% this year. However, since October, Apache stock seems to be rising, remaining above ~$47 on an average, after falling to levels as low as $37 in September. For context, the company’s stock price at the beginning of the year was $63.83.
One of the key reasons for Apache’s improved performance is its efforts on cost reduction as well as its reduction in capital spending. We’ll be looking at these in detail in the following parts of this series.
Recently, Apache’s stock jumped ~13% on November 9, 2015, after Anadarko Petroleum’s (APC) takeover bid. However, Apache rejected the offer, which led to a significant fall of ~7.3% in its stock price.
Recent earnings overview
In its 3Q15 earnings release, Apache reported a net loss of $5.7 billion, compared to a net loss of $1.3 billion in 3Q14. This included an after-tax ceiling test write-down of $3.7 billion, which was a result of the current low commodity price levels. Excluding this and some other additional items, APA’s adjusted net loss totaled $21 million in 3Q15, versus its 3Q14 net income of $528 million.
Next, we’ll analyze Apache’s stock movements and key management objectives.