Apache: The Only Energy Company With Free Cash Flow At Current Strip


Apache is the only energy company with Free cash flow using the current strip benchmark of oil and gas prices, according to Oppenheimer analysts Fadel Gheit and Luis Amadeo in a recent note to investors.

The analysts estimated that Apache will achieve $4.7 billion and $5.7 billion in operating cash flow for 2015 and 2016, respectively.

Apache 2015 surplus

Gheit and Amadeo suggested that the company’s operating cash flow could fund capex of $3.8 billion, dividend, and minority interest of ~420 million and free cash flow of $467 million and $1.4 billion excluding divestitures, acquisitions and stock buy backs.

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The analysts estimated that Apache’s surplus in 2015 would be more than $3.5 billion including its proceeds from divestiture of around $3 billion.

For 2015, Apache expected its capital spending to be around $2.1 billion to $2.3 billion onshore North America. The company is also anticipating its divestiture-adjusted production to be flat with 2014 average ~302 mboed.

Apache also anticipated its capital expenditures for its international and offshore operations at around $1.5 billion to $1.7 billion. The company expected its adjusted production to be slightly higher than the 207 mboed last year

The average production of Apache was 673 mboed (624 mboed excluding its minority interest in Egypt), a decline of 2% year-over-year, but 6% higher sequentially.

The analysts noted that the company’s production increased 12% year-over-year and 8% sequentially (pro forma for divestiture and Egypt tax barrels). Apache’s onshore liquids in North America rose increased 20% year-over-year and 5% sequentially. Permian liquids increased 29% year-over-year and 5% sequentially.

Apache financial performance/condition

Apache posted adjusted earnings of $404 million or $1.07 per share during the fourth quarter of 2014. Its earnings beat the consensus estimate of $0.78 per share, but down 32% year-over-year and 23% sequentially.

Its earnings for the full year were $2.28 billion or $5.94 per share, down 25% due to lower liquids realization. Apache’s realizations declined 20% to an average of $47.24/boe.

The company had $2.1 billion in operating cash flow and divestiture proceeds of $0.5 billion, and $2.7 billion in debt funded capex. Apache distributed $94 million in dividends and repurchased shares worth $34 million by the end of the fourth quarter.

Apache had $8.6 billion operation cash flow and $3.1 billion in divestitures funded and $10.9 billion capex by the end of 2014. The company also paid $365 million in dividends and spent $1.9 billion in stock buybacks. Its net debt ratio was 27.1%.