APA Corporation: A Stable Business With Good Potential

Investment Thesis - APA Corporation is considered a worthy buy for less conservative investors due to its current valuation, underpricing compared to peers, and a strong dividend yield [2] - The company has experienced a share price decline of 20-25% recently, making it more attractive for investment [2] Latest News - On September 10, APA Corp. announced a $950 million agreement to sell non-core properties in the Permian Basin, resulting in a reduction of 21,000 boe/d of oil production, viewed as a positive optimization effort [3] - The company targets a production number of 307,000 boe/d for Q3, which is higher than both Q2's 303,000 boe/d and the guidance of 298,000 boe/d [3] Production Outlook - The company expects a production value of 308 MBO/D in the next quarter, including a one-off production increase of 55-60 MBOE/D from the acquisition of Callon Petroleum [4] - Production in Egypt is expected to stagnate at around 43 MBO/d, while the North Sea production is projected at 25 MBO/D, with no significant growth anticipated due to the new EPL tax regime in the UK [5] Suriname Project - APA Corp. partners with TotalEnergies on Block S8 off the coast of Suriname, with expectations of producing 200,000 barrels of oil per day starting in 2028, which could significantly enhance the company's valuation [6] Competitor Valuation - APA Corp. has a current share price of $23.82, a market cap of $8.765 billion, and a P/E ratio of 2.58, indicating it is undervalued compared to competitors [7] - The company offers a dividend yield of 4.20%, which is higher than most competitors, making it attractive for income-focused investors [7] Financial Metrics - The company has a low P/S ratio of 0.98, the lowest among its peers, indicating potential for growth from its current price level [13] - APA Corp. has a share buyback program, with plans to buy back approximately 6.25 million shares, enhancing shareholder value [13] Future Considerations - The next quarterly report will be crucial for assessing the financial balance sheet and the company's ability to cover short-term debt, with expectations for improvement [15] - Monitoring oil prices and developments in the Suriname project will be essential for evaluating the company's profitability and growth potential [15] Summary - The current price level of $23-24 is considered attractive for investment, supported by favorable valuation metrics and a high dividend yield [16] - The management's focus on the Suriname project and recent asset sales are expected to stabilize the financial position and enhance shareholder returns [16]