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Can Callon Acquisition Help APA Post Strong Q2 Earnings?
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APA Corporation (APA - Free Report) is set to release second-quarter results on Jul 31. The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at 95 cents per share on revenues of $2.3 billion.
Let’s delve into the factors that might influence this upstream operator’s results in the June quarter. But it’s worth taking a look at APA’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the independent oil and gas explorer missed the consensus mark due to lower production. APA reported adjusted earnings per share of 78 cents, missing the Zacks Consensus Estimate of 90 cents. However, revenues of $1.9 billion beat the Zacks Consensus Estimate by $29 million on the back of higher-than-expected commodity price realizations.
APA has a trailing four-quarter earnings surprise of 5.5%, on average, having surpassed the Zacks Consensus Estimate on two occasions and missing on the other two. This is depicted in the graph below:
The Zacks Consensus Estimate for the second-quarter bottom line has been revised 12% downward in the past seven days to 95 cents. The estimated figure indicates a 24.7% rise year over year. The Zacks Consensus Estimate for revenues suggests an 18% increase from the year-ago reported number to $2.3 billion.
Factors to Consider
APA is expected to have benefited from higher domestic production during the second quarter. The company continues to churn out impressive volumes from its vast inventory of drill-ready locations in the Permian Basin — America's hottest and lowest-cost shale region. Consequently, our expectation for APA’s average second-quarter volume is pegged at 292,395 barrels of oil equivalent per day (BOE/d), up 37.4% from the year-ago level of 212,786 BOE/d. The quarterly production numbers also reflect contributions from the Callon Petroleum acquisition that was closed on Apr 1.
However, as a counter to the aforementioned factor, the company’s lease operating expense and property/equipment costs in the second quarter might have gone up due to the prevailing inflationary situation. This, in turn, is likely to have affected overall earnings. In particular, our estimates for lease operating outgo and property/equipment expenses are pegged at $459.7 million and $596.2 million, indicating a 27.4% and 68.4% rise from the respective year-ago quarter figures.
What Does Our Model Say?
The proven Zacks model does not conclusively predict an earnings beat for APA for the second 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 -3.37%.
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:
Enterprise Products Partners L.P. (EPD - Free Report) has an Earnings ESP of +4.25% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30.
The 2024 Zacks Consensus Estimate for Enterprise Products Partners indicates 7.5% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of 1%, on average. Valued at around $65.1 billion, EPD has gone up 10.5% in a year.
Northern Oil and Gas (NOG - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30.
Over the past 30 days, the Zacks Consensus Estimate for Northern Oil and Gas’ 2024 earnings has moved up 2.1%. It has a trailing four-quarter earnings surprise of 4.5%, on average. Valued at around $4.1 billion, NOG has inched up 1.9% in a year.
Transocean Ltd. (RIG - Free Report) has an Earnings ESP of +20.67% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 31.
Transocean’s expected EPS growth rate for three to five years is currently 32.6%, which compares favorably with the industry's growth rate of 17.6%. It has a trailing four-quarter earnings surprise of 11.8%, on average. Valued at around $5.1 billion, RIG has lost 35.3% in a year.
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Can Callon Acquisition Help APA Post Strong Q2 Earnings?
APA Corporation (APA - Free Report) is set to release second-quarter results on Jul 31. The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at 95 cents per share on revenues of $2.3 billion.
Let’s delve into the factors that might influence this upstream operator’s results in the June quarter. But it’s worth taking a look at APA’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, the independent oil and gas explorer missed the consensus mark due to lower production. APA reported adjusted earnings per share of 78 cents, missing the Zacks Consensus Estimate of 90 cents. However, revenues of $1.9 billion beat the Zacks Consensus Estimate by $29 million on the back of higher-than-expected commodity price realizations.
APA has a trailing four-quarter earnings surprise of 5.5%, on average, having surpassed the Zacks Consensus Estimate on two occasions and missing on the other two. 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 second-quarter bottom line has been revised 12% downward in the past seven days to 95 cents. The estimated figure indicates a 24.7% rise year over year. The Zacks Consensus Estimate for revenues suggests an 18% increase from the year-ago reported number to $2.3 billion.
Factors to Consider
APA is expected to have benefited from higher domestic production during the second quarter. The company continues to churn out impressive volumes from its vast inventory of drill-ready locations in the Permian Basin — America's hottest and lowest-cost shale region. Consequently, our expectation for APA’s average second-quarter volume is pegged at 292,395 barrels of oil equivalent per day (BOE/d), up 37.4% from the year-ago level of 212,786 BOE/d. The quarterly production numbers also reflect contributions from the Callon Petroleum acquisition that was closed on Apr 1.
However, as a counter to the aforementioned factor, the company’s lease operating expense and property/equipment costs in the second quarter might have gone up due to the prevailing inflationary situation. This, in turn, is likely to have affected overall earnings. In particular, our estimates for lease operating outgo and property/equipment expenses are pegged at $459.7 million and $596.2 million, indicating a 27.4% and 68.4% rise from the respective year-ago quarter figures.
What Does Our Model Say?
The proven Zacks model does not conclusively predict an earnings beat for APA for the second 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 -3.37%.
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:
Enterprise Products Partners L.P. (EPD - Free Report) has an Earnings ESP of +4.25% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The 2024 Zacks Consensus Estimate for Enterprise Products Partners indicates 7.5% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of 1%, on average. Valued at around $65.1 billion, EPD has gone up 10.5% in a year.
Northern Oil and Gas (NOG - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30.
Over the past 30 days, the Zacks Consensus Estimate for Northern Oil and Gas’ 2024 earnings has moved up 2.1%. It has a trailing four-quarter earnings surprise of 4.5%, on average. Valued at around $4.1 billion, NOG has inched up 1.9% in a year.
Transocean Ltd. (RIG - Free Report) has an Earnings ESP of +20.67% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 31.
Transocean’s expected EPS growth rate for three to five years is currently 32.6%, which compares favorably with the industry's growth rate of 17.6%. It has a trailing four-quarter earnings surprise of 11.8%, on average. Valued at around $5.1 billion, RIG has lost 35.3% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.