Apache joins league of E&P companies reducing capex and drilling (Part 6 of 6)
(Continued from Part 5)
APA’s positive stock performance
Following Apache Corporation’s (APA) 4Q14 results, Apache’s stock jumped ~4%. This is likely due to its earnings beat and its lower planned expenditures for 2015.
In the graph above, we compare Apache’s stock returns to its peers’ from September 2014 to the present. Notice that all the stocks started declining in September when oil prices started to fall.
Apache Corporation (APA) had the most dismal performance, however, when compared to its peers Marathon Oil (MRO), Hess Corporation (HES), and Pioneer Natural Resources (PXD) and to the Energy Select Sector SPDR ETF (XLE).
Since the start of 2015, Apache (APA) has recovered slightly, and XLE underperformed all the oil stocks.
Marathon Oil, Hess, and Pioneer Natural Resources offered almost similar returns. All the oil stocks, including the XLE, offered negative returns.
All these companies make up ~8% of the Energy Select Sector SPDR ETF (XLE).
The last quarter was particularly rough on energy companies since it was the first full quarter when oil prices were on a downward trajectory. Energy companies have responded to this by reducing their 2015 capital budgets, a strategy that Apache is following as well.
However, most of these companies expect to achieve growth in production despite their capital expenditures (or capex) reductions. Apache expects its 2015 production to be flat. Refer to Part 4 of this series for more on this.
Watch out for earnings analyses of key energy companies on Market Realist’s Energy and Power page.
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