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Can High Commodity Prices Drive Strong Q3 Earnings for APA?
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APA Corporation (APA - Free Report) is set to release third-quarter results on Nov 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.92 per share on revenues of $2.6 billion.
Let’s delve into the factors that might have influenced this upstream operator’s results in the September quarter. But it’s worth taking a look at APA’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last-reported quarter, the independent oil and gas explorer met the consensus mark as the effects of sharply higher commodity prices were partly offset by lower-than-expected production. APA had reported adjusted earnings per share of $2.37, same as the Zacks Consensus Estimate. Revenues of $3 billion generated by the firm came in above the Zacks Consensus Estimate by 9.9%.
APA Corporation missed the Zacks Consensus Estimate for earnings in two of the last four quarters, resulting in an earnings surprise of -1.7%, on average. This is depicted in the graph below:
The Zacks Consensus Estimate for the third-quarter bottom line has been revised 2% downward in the last seven days. The estimated figure indicates a 95.9% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 57.9% increase from the year-ago period.
Factors to Consider
APA is expected to have benefited from the strength in oil and natural gas realizations. As a reflection of this price boost, the Zacks Consensus Estimate for third-quarter average sales price for crude and natural gas is pegged at $100 per barrel and $6.67 per thousand cubic feet, respectively, up from a year earlier when the company had fetched $71.72 and $3.87. The year-over-year improvement in realizations has most likely buoyed APA’s revenues and cash flows.
The company is also expected to have reaped the reward of slightly higher oil production during the quarter. APA continues to churn out an impressive output from its assets in the United States, Egypt and the North Sea. Consequently, the consensus mark for APA’s crude volume is pegged at 180,000 barrels per day, edging up from the prior-year quarter’s level of 179,139 barrels per day.
On a somewhat bearish note, the increase in APA’s costs might have dented the company’s to-be-reported bottom line. The company’s second-quarter lease operating expenses totaled $359 million, up 15.4% from the year-ago period. Moreover, total operating expenses rose 23.5% from the corresponding period of 2021 to $1.6 billion. The upward cost trajectory is likely to have continued in the third quarter due to the prevailing inflationary environment.
What Does Our Model Say?
The proven Zacks model does not conclusively show that APA is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -5.28%.
Zacks Rank: APA currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for APA, here are some firms from the energy space that you may want to consider on the basis of our model:
Cactus, Inc. (WHD - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 7.
For 2022, Cactus has a projected earnings growth rate of 144.4%. Valued at around $3.9 billion, WHD has gained 15% in a year.
Murphy Oil Corporation (MUR - Free Report) has an Earnings ESP of +0.79% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 3.
Murphy Oil topped the Zacks Consensus Estimate by an average of 27.1% in the trailing four quarters, including a 35.9% beat in Q2. Valued at around $7.4 billion, MUR has gained 64.2% in a year.
Canadian Natural Resources Limited (CNQ - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 3.
For 2022, Canadian Natural Resources has a projected earnings growth rate of 75.8%. Valued at around $66.4 billion, CNQ has gained 38.4% in a year.
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Can High Commodity Prices Drive Strong Q3 Earnings for APA?
APA Corporation (APA - Free Report) is set to release third-quarter results on Nov 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.92 per share on revenues of $2.6 billion.
Let’s delve into the factors that might have influenced this upstream operator’s results in the September quarter. But it’s worth taking a look at APA’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last-reported quarter, the independent oil and gas explorer met the consensus mark as the effects of sharply higher commodity prices were partly offset by lower-than-expected production. APA had reported adjusted earnings per share of $2.37, same as the Zacks Consensus Estimate. Revenues of $3 billion generated by the firm came in above the Zacks Consensus Estimate by 9.9%.
APA Corporation missed the Zacks Consensus Estimate for earnings in two of the last four quarters, resulting in an earnings surprise of -1.7%, on average. This is depicted in the graph below:
APA Corporation Price and EPS Surprise
APA Corporation price-eps-surprise | APA Corporation Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the third-quarter bottom line has been revised 2% downward in the last seven days. The estimated figure indicates a 95.9% jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 57.9% increase from the year-ago period.
Factors to Consider
APA is expected to have benefited from the strength in oil and natural gas realizations. As a reflection of this price boost, the Zacks Consensus Estimate for third-quarter average sales price for crude and natural gas is pegged at $100 per barrel and $6.67 per thousand cubic feet, respectively, up from a year earlier when the company had fetched $71.72 and $3.87. The year-over-year improvement in realizations has most likely buoyed APA’s revenues and cash flows.
The company is also expected to have reaped the reward of slightly higher oil production during the quarter. APA continues to churn out an impressive output from its assets in the United States, Egypt and the North Sea. Consequently, the consensus mark for APA’s crude volume is pegged at 180,000 barrels per day, edging up from the prior-year quarter’s level of 179,139 barrels per day.
On a somewhat bearish note, the increase in APA’s costs might have dented the company’s to-be-reported bottom line. The company’s second-quarter lease operating expenses totaled $359 million, up 15.4% from the year-ago period. Moreover, total operating expenses rose 23.5% from the corresponding period of 2021 to $1.6 billion. The upward cost trajectory is likely to have continued in the third quarter due to the prevailing inflationary environment.
What Does Our Model Say?
The proven Zacks model does not conclusively show that APA is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -5.28%.
Zacks Rank: APA currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for APA, here are some firms from the energy space that you may want to consider on the basis of our model:
Cactus, Inc. (WHD - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 7.
You can see the complete list of today’s Zacks #1 Rank stocks here.
For 2022, Cactus has a projected earnings growth rate of 144.4%. Valued at around $3.9 billion, WHD has gained 15% in a year.
Murphy Oil Corporation (MUR - Free Report) has an Earnings ESP of +0.79% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 3.
Murphy Oil topped the Zacks Consensus Estimate by an average of 27.1% in the trailing four quarters, including a 35.9% beat in Q2. Valued at around $7.4 billion, MUR has gained 64.2% in a year.
Canadian Natural Resources Limited (CNQ - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 3.
For 2022, Canadian Natural Resources has a projected earnings growth rate of 75.8%. Valued at around $66.4 billion, CNQ has gained 38.4% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.