Company Overview - APA Corporation is an independent energy company focused on the exploration, development, and production of natural gas and oil [1] - The company operates primarily under three major segments, with the United States being the most significant in terms of production [1] Investment Focus - The company targets value opportunities linked to commodity production, emphasizing sustained free cash flows, low leverage, and sustainable debt [1] - It seeks to identify companies in distress with high recovery potential, particularly in sectors like oil & gas, metals, and mining [1] - The focus is also on companies in emerging markets that demonstrate high margins and medium to long-term investment opportunities [1] Shareholder Value - The company maintains a pro-shareholder attitude, emphasizing solid and sustained buyback programs and dividend distributions over time [1]

Core Viewpoint - APA Corporation has made significant progress in sustainability efforts, focusing on environmental stewardship, social responsibility, and corporate governance throughout 2024 [1][2]. Sustainability Reporting - APA Corporation released two key sustainability documents: "Our Approach to Sustainability" and the "2025 Sustainability Progress Report," which outlines 2024 goals, highlights, key performance data, and new goals for 2025 [1]. Environmental Initiatives - The company exceeded its goal of eliminating at least 1 million tonnes of annualized carbon dioxide equivalent (CO2e) emissions between 2021 and 2024, achieving a total reduction of 1.24 million tonnes through over 50 global projects [3]. - APA aims to minimize freshwater usage by recycling produced water and sourcing alternatives, with 97% of global water use being produced water and brackish, nonfresh water [3]. Safety and Community Engagement - APA achieved its lowest global Total Recordable Incident Rate (TRIR) in company history at 0.16, exceeding all corporate safety targets in 2024 [3]. - The company invested 44% of its operating area's budgets with local suppliers and contractors to enhance community well-being, address energy poverty, and promote conservation [3].

In the latest close session, APA (APA) was down 1.45% at $18.29. The stock's change was less than the S&P 500's daily gain of 0.52%. Elsewhere, the Dow gained 0.63%, while the tech-heavy Nasdaq added 0.48%. The stock of oil and natural gas producer has risen by 9.11% in the past month, leading the Oils-Energy sector's gain of 3.92% and the S&P 500's gain of 4.27%.The investment community will be paying close attention to the earnings performance of APA in its upcoming release. On that day, APA is projected ...

Industry Overview - The Zacks Oil and Gas Exploration and Production - United States industry presents a strong long-term investment case due to rich shale reserves, advanced extraction technologies, and sustained global energy demand [1] - Techniques like hydraulic fracturing and horizontal drilling have significantly increased U.S. oil and natural gas production, positioning the country as a leader in global exports [1][2] Geopolitical and Economic Factors - U.S. E&P companies benefit from strategic geopolitical advantages and growing LNG export opportunities, enhancing energy security [2] - Emphasis on capital discipline and shareholder-focused strategies has improved free cash flow, supporting consistent earnings generation [2] Company Profiles Occidental Petroleum Corporation (OXY) - Occidental Petroleum offers a compelling investment opportunity with a diverse asset base and strong free cash flow generation [3] - The company focuses on low-carbon initiatives and maintains resilient production and earnings, supported by disciplined capital allocation and debt reduction efforts [3] APA Corporation (APA) - APA Corporation shows promising growth prospects with a diversified reserve base and positive exploration results, particularly in Alaska [4] - The acquisition of Callon enhances its Permian Basin footprint, while the GranMorgu project boosts its offshore potential [4] Financial Performance - The Zacks Consensus Estimate for APA's earnings per share in 2025 and 2026 has increased by 3.08% and 2.53%, respectively [6] - APA outperforms OXY with a 23.22% return on equity (ROE) and a 5.39% dividend yield, compared to OXY's 16.6% ROE and 2.25% dividend yield [7][10][11] Valuation Metrics - APA is currently trading at a lower EV/EBITDA valuation of 2.68X compared to OXY's 4.97X, indicating a more attractive valuation [14] - Both companies have higher debt-to-capital ratios than the S&P 500, with APA at 45.17% and OXY at 42.17% [13] Price Performance - APA's shares have gained 9.1% over the last month, outperforming OXY's 4.5% increase and the S&P 500's 4.4% return [16] Conclusion - APA Corporation is positioned as a better investment choice in the oil and energy sector due to its superior return on equity, lower valuation, rising earnings estimates, and higher dividend yield [20][21]

Market Reaction - Brent crude and WTI futures surged over 7% following Israeli airstrikes on Iranian energy assets, marking the largest single-day price increase in three years, with Brent reaching approximately $75 per barrel and WTI above $70 [2][7] - Oil-related stocks such as Civitas Resources (CIVI), APA Corporation (APA), and Diamondback Energy (FANG) saw significant gains, with increases of 6.5%, 5.3%, and 3.7% respectively, indicating strong investor interest in companies likely to benefit from price volatility [1][11] Supply Concerns - Iran contributes about 4-5% of global oil supply, and nearly 20% of global crude and LNG transit through the Strait of Hormuz, raising concerns about potential supply disruptions due to Iranian retaliatory threats [3][4] - The shutdown of Israeli gas platforms, which account for approximately 1.8 billion cubic feet of gas daily, has halted exports to Egypt and Jordan, impacting LNG markets in Asia and Europe [5] Inflation and Market Sentiment - The recent surge in oil prices has shifted market sentiment, reintroducing geopolitical risk as a central concern, leading to revised fuel price forecasts that now indicate a likely increase [6][7] - Rising oil prices are expected to contribute to inflationary pressures, with gasoline prices projected to rise by 20 cents per gallon in the U.S., potentially affecting the Consumer Price Index (CPI) in the coming months [8] Future Outlook - Actual supply disruptions remain limited, but the potential for prolonged conflict between Israel and Iran poses a growing risk to market stability [9] - OPEC's spare capacity, particularly in Saudi Arabia, may provide a buffer against rising prices, but the margin for error is decreasing, with Brent crude potentially testing triple digits if Iranian exports decline [10] Company Profiles - Civitas Resources focuses on the DJ Basin in Colorado and the Permian Basin, with strong well returns and a valuable midstream component, positioning the company for growth [12] - APA Corporation is a leading independent energy company engaged in the exploration and production of natural gas and crude oil, with significant operations in the Permian Basin and a promising portfolio in Suriname [13] - Diamondback Energy, primarily focused on the Permian Basin, emphasizes growth through acquisitions and active drilling, holding approximately 885,000 net acres in the region [14]

Core Viewpoint - The rising tensions between Israel and Iran are causing concerns over oil supply risks, leading to an increase in oil prices, which could benefit companies like APA that are involved in oil production [2][5]. Group 1: Oil Price Impact - Israeli airstrikes on Iran have prompted retaliatory drone strikes, raising investor concerns about potential disruptions to oil supplies from the Middle East [2]. - As a result of these geopolitical tensions, WTI crude oil prices have risen by 6.5% to $72.50 per barrel, while Brent Crude oil has increased by 6.4%, nearing $74 per barrel [4]. - The ongoing conflict may lead to sustained increases in oil prices as fears of broader regional instability grow [5]. Group 2: APA Company Analysis - APA stock has seen a 3.8% increase, reflecting investor sentiment regarding rising oil prices [1]. - The company reported a profit of $804 million last year, with a current trading valuation of approximately 7.2 times trailing earnings, indicating potential for growth as oil prices rise [6]. - APA offers a 5% dividend yield and generates superior free cash flow of $1.2 billion, which is about 20% more than its reported trailing-12-month earnings, making it an attractive investment option [7].

Company Overview - APA's stock closed at $19.61, reflecting a +1.71% change from the previous day, outperforming the S&P 500's loss of 0.27% [1] - Over the past month, APA shares increased by 4.44%, which is slightly below the Oils-Energy sector's gain of 4.61% and the S&P 500's gain of 6.9% [1] Financial Performance Forecast - APA is expected to report an EPS of $0.58, indicating a 50.43% decrease from the same quarter last year [2] - The projected revenue for the upcoming release is $1.88 billion, down 32.49% year-over-year [2] Full Year Estimates - For the full year, earnings are projected at $3.01 per share and revenue at $8.11 billion, representing declines of -20.16% and -16.74% respectively from the previous year [3] - Changes in analyst estimates for APA are crucial as they reflect the evolving business trends [3] Analyst Ratings and Valuation - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently rates APA at 3 (Hold) [5] - APA's Forward P/E ratio is 6.4, which is lower than the industry average of 10.86 [6] - The company has a PEG ratio of 6.1, compared to the industry average of 2.48 [7] Industry Context - The Oil and Gas - Exploration and Production - United States industry is ranked 171 out of over 250 industries, placing it in the bottom 31% [8] - Historically, industries in the top 50% outperform those in the bottom half by a factor of 2 to 1 [8]

Core Insights - Paul Franke is a seasoned investor with 39 years of trading experience, recognized for his stock picking and macro views, having been ranked among the top investment advisors nationally during the 1990s [1] - Franke developed a stock selection system called "Victory Formation," which focuses on supply/demand imbalances indicated by specific stock price and volume movements [1] - The "Bottom Fishing Club" articles highlight deep value stocks or those showing significant upward technical momentum reversals, while "Volume Breakout Report" articles discuss positive trend changes supported by strong trading action [1] Investment Strategy - Franke recommends a diversified approach, suggesting investors hold at least 50 well-positioned stocks to achieve consistent outperformance in the stock market [1] - A stop-loss level of 10% to 20% on individual stock choices is advised to manage risk effectively [1]

Company Overview - APA has seen a share price increase of approximately 10.3% over the past month, outperforming the S&P 500 [1] - The most recent earnings report is crucial for understanding the key drivers behind this performance [1] Earnings Estimates - Estimates for APA have trended downward in the past month, with a consensus estimate shift of -19.4% [2] - The overall outlook indicates a downward shift in estimates, leading to a Zacks Rank of 3 (Hold) for APA [4] VGM Scores - APA has a strong Growth Score of A, but a low Momentum Score of F, while maintaining a Value Score of A, placing it in the top quintile for this investment strategy [3] - The aggregate VGM Score for APA is A, which is significant for investors not focused on a single strategy [3] Industry Performance - APA is part of the Zacks Oil and Gas - Exploration and Production - United States industry, where another player, Northern Oil and Gas (NOG), has gained 5.7% over the past month [5] - Northern Oil and Gas reported revenues of $576.95 million for the last quarter, reflecting a year-over-year increase of +8.4% [6] - The expected earnings for Northern Oil and Gas for the current quarter is $0.98 per share, indicating a year-over-year change of -32.9% [6] - Northern Oil and Gas also holds a Zacks Rank of 3 (Hold) and has a VGM Score of A [7]

Industry Overview - The global oil and gas sector faces challenges and opportunities, influenced by various factors affecting prices, production, and consumption [1] - The sector is under pressure to reduce emissions while remaining a significant source of global energy demand [1] - The oil market has experienced significant price volatility since the pandemic, but dividend-paying stocks in the sector are relatively less volatile [2][8] Market Dynamics - OPEC+'s recent production increases are conflicting with signs of weakening demand and rising geopolitical tensions, leading to instability in the oil market [3] - The CBOE Volatility Index is near 19.65, indicating elevated market uncertainty due to geopolitical tensions and fluctuating supply-demand dynamics [4] - Brent crude oil prices are projected to rise to $65 per barrel in 2025, while natural gas prices are expected to exceed $4 per million Btus later this year [5] Financial Performance and Projections - The U.S. Energy Information Administration (EIA) forecasts a WTI oil price of $61.81 per barrel in 2025, down from $76.60 in 2024, highlighting the sector's susceptibility to external disruptions [6] - The oil and gas industry paid out approximately $213 billion in dividends and $136 billion in buybacks globally between January 2024 and mid-November 2024 [2] Dividend-Paying Companies - Companies like APA Corporation, Petrobras, and Permian Resources Corporation are positioned for growth due to their stable dividend-paying histories and lower volatility [2][11] - APA Corporation maintains a dividend policy returning at least 60% of its free cash flow, with a quarterly dividend of $0.25 per share [12] - Petrobras generated $4.5 billion in free cash flow in Q1 2025 and approved dividends of R$11.7 billion, reflecting a balanced capital allocation strategy [14][15] - Permian Resources declared a base dividend of $0.15 per share, equating to an annualized rate of $0.60 per share, with a robust financial foundation supporting its dividend policy [16][17]