Among the North American Independent E&P firms, Apache Corporation (NYSE:APA) is expected to be the leader in terms of EPS. Apache Corporation, according to estimates, is expected to announce an EPS of USD 2.04 for the quarter ending June 30, 2013. This will be a drop of 1.4 percent in EPS over the same period last year but the Houston based firm continues to be the leader in earnings. The 55% of cash flow generated in North America as core for APA, while the strategy looks to be to improve “predictability” by classifying assets as either growth or harvest (cash flow). Production growth and the asset position in the Permian compares favorably to peers. LNG projects (13% WI Wheatstone, 50% WI Kitimat) with a long tail of flat cash flows are likely to remain central to the multi-year growth outlook. The challenge is supporting the multi-year capex commitments.
Occidental Petroleum Second Best Performer
Occidental Petroleum Corporation (NYSE:OXY) will be the second best performer in terms of EPS and is expected to announce an EPS of USD 1.75. This will be a 6.4 percent increase over the same period last year and we can expect the price of occidental petroleum to go up as a result.
Figure 1: Apache Corp and Occidental Petroleum, EPS versus Market Price
ConocoPhilips Best In Terms Of EBITDA
However, the giant in terms of EBITDA is expected to be ConocoPhillips (NYSE:COP). Despite its large CAPEX activities, ConocoPhillips is expected to turn up an EBITDA of USD 5.05 billion. This will be a 9.41 percent improvement on a year-on-year basis. Occidental Petroleum Corporation (NYSE:OXY) will be the second largest firm, with a 3.69 billion EBITDA.
The most growth among the giants can be expected in Anadarko Petroleum Corporation (NYSE:APC), a giant which has operations in Alaska, western Canada, Rocky Mountains, mid- continent, Permian, Texas, Louisiana and the Gulf of Mexico along with international operations. Anadarko is expected to grow 162 percent annually in 2Q FY13. Anadarko is actually the third largest in terms of market capitalization.
Apache Corporation Following ConocoPhilips
Among the E&Ps, ConocoPhillips (NYSE:COP) is expected to have the highest CAPEX in the coming quarter, followed by Apache Corporation (NYSE:APA) and Occidental Petroleum Corporation (NYSE:OXY). This is probably because these firms have planned extensive prospecting and development activities, especially in the shale basins. It can also be noted that the firms vested most in shale are expected to have the highest CAPEX and also the highest returns in the future. In the same period last year, Chesapeake Energy Corporation (NYSE:CHK) had the highest CAPEX but now is not even among the top 10 spenders of CAPEX.
In terms of growth in CAPEX, PDC Energy Inc (NASDAQ:PDCE) is expected to more than double its CAPEX while Gulfport Energy will experience a 96% growth in CAPEX.
Table 1: Top Five E&P Companies by Expected CAPEX in 4Q FY13
This quarter is expected to be overall stable for independent E&Ps as the top firms continue to invest and grow their earnings. E&P is one of those sectors with a long-term outlook and positive earning potential even in times of global crisis. Hence, based on forecasts, the E&P stocks of North America continue to have a positive outlook for the next quarter.