Apache’s adjusted 4Q14 earnings beat analysts’ estimates

Apache joins league of E&P companies reducing capex and drilling (Part 1 of 6)

4Q14 earnings overview

Apache Corporation (APA) announced its 4Q14 earnings on February 12. The company reported a net loss of $4.8 billion or $12.78 per common share for the quarter.

These results were born out of after-tax, noncash charges related primarily to the impact of falling crude and natural gas prices, among other things. Total noncash charges for the quarter came in at $5.2 billion. According to the Apache news release, the following items contributed to the company’s total noncash charges:

• “$2 billion reduction in the carrying value of oil and gas properties pursuant to quarterly ceiling test requirements for full cost accounting companies;

• $1.3 billion impairment of goodwill associated with prior year acquisitions;

• $1 billion deferred tax adjustment related to undistributed and distributed foreign earnings; and

• $750 million fair value impairment of downstream LNG assets held for sale.”

Adjusted earnings totaled $404 million, or $1.07 per share, on a revenue of $2.95 billion. Wall Street analysts’ estimates pegged earnings to come in at $0.76 on a revenue of $3.12 billion.

Revenues

For the full year, Apache posted revenues of $13.85 billion versus $15.56 billion in 2013, or ~11% lower than last year. Let’s compare this with some of Apache’s peers. Hess Corporation’s (HES) 2014 revenue was ~$11.4 billion, Marathon Oil’s (MRO) was ~$11.3 billion, and Pioneer Resources’ (PXD) was ~$5 billion. All these companies make up ~8% of the Energy Select Sector SPDR ETF (XLE).

Continue to Part 2

Browse this series on Market Realist:

• Part 2 - Apache’s operational performance up at Permian and Eagle Ford

• Part 3 - Apache plans to stay afloat by slashing rig counts

• Part 4 - Apache’s plan: Cut capex spending a whopping 60% in 2015