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Apache (APA) Set to Beat Q3 Earnings on Permian Strength

Domestic energy explorer Apache Corporation APA is scheduled to report its third-quarter earnings on Thursday, Nov 2, before market opens.

In the preceding three-month period, the company reported adjusted loss per of 21 cents against the Zacks Consensus Estimate for a profit of a penny. The underperformance stems from a dip in output due to a conservative capital budget over the past two years. However, the bottom line improved from the year-ago loss of 26 cents amid higher realizations.

As far as earnings surprises are concerned, the Houston, TX-based upstream operator is on a bit of a slippery surface, having gone past the Zacks Consensus Estimate just once in the last four reports. This is depicted in the graph below:

Apache Corporation Price and EPS Surprise


Apache Corporation Price and EPS Surprise | Apache Corporation Quote


Therefore, investors are keeping their fingers crossed and hoping that Apache surpasses earnings estimate this time. Let’s delve deeper and find out the factors impacting the results.

Factors to Consider This Quarter

We believe that the improving commodity price environment and Apache’s strong production growth bode well.

We note that the Zacks Consensus Estimate of daily production (excluding divested assets and non-controlling interests) for the company is currently pegged at 453 thousand oil-equivalent barrels (MBOE), up from 388 MBOE reported in the second quarter. In particular, we expect daily output from the Permian Basin – where Apache’s operations are focused – to average 166 MBOE during the third quarter, compared with 159 MBOE reported a year ago and 146 MBOE in the previous quarter.

Analysts polled by Zacks also envision realized prices to increase Apache, which may further buoy the company’s top-line. The average oil price in the Permian is expected to improve 4.6% from the year-ago quarter to $43.79 per barrel.

What Does Our Model Say?

Our proven model too shows that Apache is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP for this company stands at +13.07%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Apache carries a Zacks Rank #3 (Hold) which, when combined with a positive ESP, makes us confident of earnings beat.

Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. On the other hand, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

Which Other Energy Companies Have Positive Surprise in Store?

Apache is not the only energy firm looking up this earnings season. Here are some companies from the space which, according to our model, also have the right combination of elements to post earnings beat this quarter:

Northern Oil and Gas Inc. NOG has an Earnings ESP of +11.11% and a Zacks Rank #1. The company is expected to release earnings results on Nov 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

Denbury Resources Inc. DNR has an Earnings ESP of +11.11% and a Zacks Rank #2. The company is likely to release earnings results on Nov 7.

Canadian Natural Resources Limited CNQ has an Earnings ESP of +1.08% and a Zacks Rank #2. The company is anticipated to release earnings results on Nov 2.

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Canadian Natural Resources Limited (CNQ): Free Stock Analysis Report
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