Analyzing Apache’s Stock Performance before Its 4Q15 Earnings



Apache’s stock performance

Apache Corporation’s (APA) stock started off on an uptrend in 2015. After a brief declining trend between February and March, the stock rose to a 2015 high of $71.40 in April.

However, since then, the stock had mostly been on a downtrend until October 2015, when the stock started rising again. Again, this was short-lived as crude oil prices began spiraling lower. Crude oil prices fell below $40 per barrel in early December.

Year-over-year, APA has declined by ~43%. Crude oil prices have fallen ~45% in the same period. The broader Energy Select Sector SPDR ETF (XLE) declined by 31% in the same period.

Apache’s peers Hess Corporation (HES), Marathon Oil (MRO), and Anadarko Petroleum (APC) saw their stock prices dropping by 47%, ~74%, and ~55%, respectively, on a year-over-year basis. These companies make up ~6.7% of the Energy Select Sector SPDR ETF (XLE).

APA pays $0.25 per share per quarter in dividend payments ($1 per share on an annualized basis), yielding 2.8%.

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Apache’s key management objective

Apache (APA) has been divesting its non-core assets to reduce debt levels and focus more on its North America operations, its core business. Key assets that Apache had divested in 2015 include its Wheatstone LNG (liquefied natural gas) assets in Australia and its Kitimat LNG project in Canada.

Apache’s CEO and president, John J. Christmann, noted in the company’s 3Q15 earnings release, “Our extensive, high-quality position in North American resource plays will continue to be the driver of our long-term growth.”

Apache holds key acreage positions in the Permian Basin, Eagle Ford Shale, Woodford Shale, as well as the Duvernay and Montney shale plays in Canada. The January 2016 presentation noted that all of Apache’s key plays have economic drilling opportunities at $40 oil.


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