U.S. energy operator APA Corporation APA reported fourth-quarter 2024 adjusted earnings of 79 cents per share, missing the Zacks Consensus Estimate of 97 cents and deteriorating from the year-ago adjusted figure of $1.15. The underperformance primarily reflects lower commodity prices and higher costs.

Revenues of $2.5 billion were up 32% from the year-ago quarter’s sales and came ahead of the Zacks Consensus Estimate by 10% on the back of contribution from the Callon Petroleum acquisition and higher-than-expected production. 

Meanwhile, APA continues to reward shareholders with dividends and buybacks. APA bought back 4.6 million shares at $21.90 apiece during the fourth quarter. The company also shelled out $93 million in dividend payments.

Production & Selling Prices

Production of oil and natural gas averaged 488,308 BOE/d, which comprised 71% liquids. The figure was up 17.8% from the year-ago quarter and surpassed our expectation of 480,997  BOE/d.

U.S. output (accounting for 64% of the total) jumped 37% year over year to 313,227 BOE/d but production from the company’s international operations decreased 5.7% to 175,081 BOE/d. APA’s oil and natural gas liquids (NGLs) production was 346,884 barrels per day (Bbl/d). Natural gas output totaled 848,547 thousand cubic feet per day (Mcf/d).

The average realized crude oil price during the fourth quarter was $72.42 per barrel, down 11% from the year-ago realization of $81.36. However, the number came above our projection of $68. Meanwhile, the average realized natural gas price fell to $2.20 per thousand cubic feet (Mcf) from $2.92 in the year-ago period, though it beat our estimate of $1.26.

Costs & Financial Position

APA’s fourth-quarter lease operating expenses totaled $474 million, up 31.7% from $360 million in the year-ago period. Moreover, a significant increase in the cost of oil/gas equipment and higher depreciation outgo meant that total operating expenses surged 48.1% from the corresponding period of 2023 to $2 billion. Our model put the figure at $2.9 billion.

During the quarter under review, APA generated $1 billion of cash from operating activities while it incurred $592 million in upstream capital expenditures. The Zacks Rank #3 (Hold) company reported an adjusted operating cash flow of $1.1 billion. It also registered a free cash flow of $420 million compared to $292 million a year ago.

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As of Dec. 31, APA had approximately $625 million in cash and cash equivalents and $6 billion in long-term debt, representing a debt-to-capitalization of 53.2%.

Guidance

APA expects adjusted production to average 399,000 BOE/d in Q1 and 396000 BOE/d in 2025 (up 3% year over year). Of this, oil volumes are likely to be 193,000 Bbl/d during the January-March period and 191,000 Bbl/d for the full year. The company pegged its upstream capital expenditure for the year at $2.5-$2.6 billion.

Some Key E&P Earnings

While we have discussed APA’s fourth-quarter results in detail, let’s see how some other upstream companies have fared this earnings season.

ConocoPhillips COP, one of the world’s largest independent oil and gas producers, reported fourth-quarter 2024 adjusted earnings per share of $1.98, which beat the Zacks Consensus Estimate of $1.89. The outperformance can be attributed to higher oil equivalent production volumes, partly offset by decreased realized oil prices.

As of Dec. 31, 2024, ConocoPhillips had $5.6 billion in cash and cash equivalents. The company had a total long-term debt of $23.3 billion and a short-term debt of $1.04 billion as of the same date. Capital expenditure and investments totaled $3.3 billion. Net cash provided by operating activities was $4.5 billion.

Another U.S. energy operator Diamondback Energy FANG reported fourth-quarter 2024 adjusted earnings per share of $3.64, which beat the Zacks Consensus Estimate of $3.26 on strong production and lower costs. FANG’s production of oil and natural gas averaged 883,424 BOE/d, comprising 54% oil. The figure was up 91% from the year-ago quarter and beat our estimate of 845,967.5 BOE/d.

Diamondback logged $933 million in capital expenditure — spending $834 million on drilling and completion, $93 million on infrastructure and environment, and $6 million on midstream. The company booked $1.4 billion in free cash flow in the fourth quarter. As of Dec. 31, the Permian-focused operator had approximately $161 million in cash and cash equivalents and $12.1 billion in long-term debt, representing a debt-to-capitalization of 30.6%.

Natural gas producer EQT Corporation EQT reported earnings from continuing operations of 69 cents per share, which beat the Zacks Consensus Estimate of 50 cents. The better-than-expected quarterly earnings were driven by higher sales volume, increased average realized prices and lower total operating expenses.

EQT’s sales volume increased to 605 billion cubic feet equivalent (Bcfe) from the year-ago quarter’s level of 564 Bcfe. The reported figure also beat our estimate of 597 Bcfe. Natural gas sales volume was 565.8 Bcf, up from 532.8 Bcf in the year-ago quarter. The figure also beat our estimate of 561.8 Bcf.

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