Apache to Focus '14 E&P on N. America - Analyst Blog
February 27 2014 - 4:00PM
Zacks
U.S. energy firm Apache
Corp. (APA) announced that it plans to invest $8.5 billion
in exploration and production activities in 2014. A major chunk
(about 64%) of this investment will be focused on onshore North
America. However, this capex is considerably lower than the $10.0
billion spent last year on account of a smaller asset base.
With the completion of nearly 1,300 wells, Apache was an active
driller in onshore North America in 2013. The company expects this
trend to continue in 2014.
Apache expects North America onshore liquids production to grow
15–18% in 2014. This will be a significant growth factor for the
company considering the fact that the region’s onshore assets
comprise nearly 60% of Apache’s total production. The company also
projects a two-figure global liquids expansion and 5–8% global oil
and gas production growth in 2014.
Apache also mentioned that it intends to sell part of its 50% stake
in the Kitimat liquefied natural gas project. Apache is the
upstream operator of the project whereas partner, Chevron
Corp. (CVX) is the operator of the downstream
operations.
Apache is working toward delivering value and gaining investor
confidence through dividend payments and share repurchases. The
company recently increased dividend by 25% to 25 cents per share
and has repurchased about $1.2 billion of stock in 2013 and
year-to-date.
However, much remains to be achieved as is apparent from the dismal
fourth quarter results, whereby the company reported a 13.26%
negative surprise. This is also evident from the negative sentiment
that prevails in the market, which resulted in a 3.9% fall in
shares post the announcement.
Apache currently holds a Zacks Rank #3 (Hold), implying that it is
expected to perform in line with the broader U.S. equity market
over the next one to three months.
Meanwhile, one can consider better-ranked players from the industry
such as Warren Resources Inc. (WRES) and
Athlon Energy Inc. (ATHL). Both these stocks sport
a Zacks Rank #1 (Strong Buy).
APACHE CORP (APA): Free Stock Analysis Report
ATHLON ENERGY (ATHL): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
WARREN RSRCS (WRES): Free Stock Analysis Report
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