APA - Embedded Expectations Analysis - 2020 10 20
Apache Corporation (APA:USA) currently trades at a discount to UAFRS-based (Uniform) assets, with a 0.5x Uniform P/B. At these levels, the market has expectations for profitability to remain muted, and management may have concerns about their costs, drill stem tests, and SurinameSpecifically, management may lack confidence in their ability to return incremental free cash flow to investors through debt reduction as well as their ability to reduce annualized overhead and LOE costs, and they may be overstating the position of oil as the driver for initial development. In addition, they may be overstating the size of their discovery in Block 58 in Suriname and the potential of the Keskesi well. Additionally, they may have concerns about the structure of their joint venture and about continued losses in their core earnings. Finally, they may be exaggerating their focus on paying down debt and funding Suriname, the benefits of having fairways, and the oil amounts in the Santonian
Apache is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids. The company had exploration and production operations in United States, Egypt, and offshore United Kingdom in the North Sea. The company also has exploration interests in Suriname. The company markets its United States crude oil production to main oil companies, marketing, and transportation companies, and refiners based on a West Texas Intermediate price or other regional pricing indices. The company has two international regions: The Egypt includes onshore conventional assets in Egypt's Western Desert. The North Sea region includes offshore assets based in United Kingdom.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.