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Comparing Apache’s Debt Position

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Apache’s valuation

Apache’s (APA) net-debt-to-adjusted-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple has been increasing since 4Q15. In 3Q16 and 4Q16, it shot up sharply. In 4Q16, the company’s net-debt-to-adjusted-EBITDA multiple was ~2.9x.

 

Apache’s net-debt-to-adjusted-EBITDA multiple rose consistently between 3Q15 and 2Q16, matching movements in the company’s adjusted EBITDA. Its adjusted EBITDA fell sharply in 3Q16 and 4Q16, which led to the sharp rise in its net-debt-to-adjusted-EBITDA multiple.

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In 4Q16, Apache’s net debt was ~$7.2 billion, compared with ~$7.3 billion in 4Q15 and $7.5 billion in 3Q16. Its trailing-12-month EBITDA in 4Q16 stood at ~$2.5 billion, compared with ~$16.3 billion in 4Q15. While its net debt has remained unchanged since 4Q15, its trailing-12-month EBITDA fell significantly. Apache’s significantly lower trailing-12-month EBITDA in 4Q16 led to a sharp rise in its net-debt-to-adjusted-EBITDA multiple between 4Q15 and 4Q16.

Peers

In comparison, upstream peers Continental Resources (CLR), Concho Resources (CXO), and Hess (HES) had 4Q16 net-debt-to-EBITDA multiples of ~4.9x, 2.1x, and ~5.3x, respectively. These companies make up 7.8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

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